Can I Remove a Member from an LLC?

There are several ways that you can remove a member of an LLC from the company. Whether it’s through the operating agreement of the company or by following Florida’s Revised Limited Liability Act, rest assured that you have options.

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VOLUNTARY WITHDRAWAL

The easiest way to remove is a member from an LLC is to have that member voluntarily withdraw from the company. You can encourage the member’s resignation by offering an appealing buy-out of their interest in the company.

Once you’ve made the decision to attempt to remove a member from the LLC, you’ll want to immediately turn to your company’s operating agreement. A proper operating agreement will have specific provisions in place for how to go about buying out another member’s interest. If your operating agreement has such provisions, make sure to follow them exactly.

Oftentimes, you’re wanting to remove a member due to an issue with their performance or because your relationship has deteriorated. As such, you can benefit from having an attorney negotiate the buy-out for you – this way you remove yourself from the situation and allow your attorney to negotiate on your behalf.

OPERATING AGREEMENT ALLOWS FOR IT

If a buy-out is not an option, or the member does not agree to it, then your next step should be to consult the operating agreement for any provisions on removing members. Your operating agreement should have a detailed procedure for how to remove a member without their consent. Once again, if your operating agreement has such provisions, make sure to follow them exactly.

UNANIMOUS DECISION BY MEMBERS

Sometimes a company’s operating agreement does not have any provisions regarding removal of a member, or perhaps your company never had an operating agreement. If that’s the case, the default rules to abide by are found in Florida’s Revised Limited Liability Act. Under the Act, a unanimous decision by the remaining members can expel a member from the company. However, this can only be done if:

  • it is illegal for the LLC to perform its activities with that individual as a member;
  • there has been a transfer of the member’s entire transferable interest in the company (other than for security purposes or by charging order); or
  • the member is an entity (corporation or otherwise) that has been dissolved

Any one of these three requirement is sufficient for the remaining members to unanimously vote to remove a member.

BY COURT ORDER

If all else fails, you must then ask the court’s permission to remove the member. Florida statute’s give the court power to remove a member from an LLC if any of the following has occured:

  • the member’s wrongful actions have adversely and materially affected the company;
  • the member is willfully or persistently materially breaching the operating agreement, or a duty/obligation under Florida law;
  • the member’s acts make it impractical to carry on the business activities with the person as a member.

BRYANT TAYLOR LAW CAN HELP

Choosing which method to remove a member from an LLC is best for you can be an overwhelming decision. At Bryant Taylor Law we can help you develop a strategy that best fits the needs of you and your company.

Contact us today for a free business strategy session.

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