Can a partner kick me out of an LLC and not give me any money?

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Can a partner kick me out of an LLC and not give me any money?

I have a subcontracting business and my 2 partners are teaming up and want to kick me

out. They don’t want to give me a royalty or any money. Is this legal? And what can I do?

Asked on December 11, 2016 under Business Law, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, they can't: if you are a member of an LLC (an owner of; "member," not "partner" is the correct term for an LLC), your partners can *NOT* take away your ownership interest without your agreement (e.g.  unless you agreed to sell your interest to them), with one exception discussed below. Your ownership interest is like an ownership interest in any other property, like in  real estate, a car, securities, etc.--someone else cannot take away your ownership of property against your will.
What they can do is, if they together own the majority of the LLC (and 2 of 3 members typically would have a majority, as compared to the remaining 3rd member), is cut you out of all business decisions and management and not pay you a salary, wage, commission, etc. They can take away everything *but* your basic ownership interest, which means that if the LLC were sold, you'd have to get your share of it, and could sue if you did not--but you might not get any other money from it.
The exception: if there is an operating agreement giving them the right to force you to sell or give up your shares, such an agreement is enforceable; they can compel you to do whatever the operating agreement says.
 


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