How to Remove a Member from an LLC

By Stephanie Kurose, J.D.

How to Remove a Member from an LLC

By Stephanie Kurose, J.D.

A multimember limited liability company (LLC) sometimes has reason to remove one of its members. Some common reasons for the removal of an individual include death, retirement, and disputes with other members.

Man holding pen over document

 

The options available to the LLC depend on whether the company's operating agreement or articles of organization cover the topic of member removal.

Here are the steps you should follow.

1. Determine whether the LLC's governing documents set out formal procedures.

Look to the LLC's articles of organization or operating agreement to see if there is already an established procedure for removing a member. States treat both the articles of organization and operating agreement as governing documents. If the owners set out specific provisions for adding or removing a member from an LLC in either of those documents, the state requires the business to comply with those provisions. Oftentimes, the procedure for adding or removing a member involves a formal vote by the remaining members.

If there is no relevant provision governing this situation, the LLC must follow the state's procedures. The LLC laws of all 50 states and Washington, D.C., are based on the Uniform Limited Liability Company Act (ULLCA), which permits the formation of LLCs. If the LLC does not provide for the removal of a member in a formal governing document, the business must follow the default procedures set forth in the ULLCA.

2. Implement the formal procedure.

To remove a member from the LLC, the remaining members must follow the formal voting procedure set forth in the governing documents or in the ULLCA. If there is no procedure in place that handles involuntary withdrawal, the default state rules do not include involuntary removal provisions.

3. Have the former member submit a written notice of withdrawal.

The member being removed from the LLC must submit a written notice of withdrawal. If they are willing to do so, they are entitled to a share of the LLC's profits.

If the member is unwilling to leave the LLC, the remaining members can offer a buyout in exchange for her interest in the company. There are no provisions in the ULLCA that govern involuntary withdrawal, so if the LLC member is unwilling to accept a buyout, the next option is to go to court.

4. File a petition for judicial dissolution.

In the event that the LLC member is not willing to withdraw voluntarily or take a buyout, the remaining members can petition for judicial dissolution of the LLC. If the court grants the petition and determines that it is not practical to resume business operations, the next step is to begin the process of dissolving the LLC.

The easiest way to remove a member from an LLC is to establish your own procedures for doing so. This can be as easy as formally voting on the member's removal. The provisions of the ULLCA should be avoided at all costs, because they do not allow for the flexibility often necessary to keep the business running smoothly, so be sure that your company's governing documents clearly state the process for adding and removing members.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.