Can you remove a person from an LLC if they don’t perform?
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Can you remove a person from an LLC if they don’t perform?
I am a partner in a business. The business was my idea, the domain and name are all mine, and I own the majority of the business LLC based in DE. One of my partners is not performing the way they should and I would like to
move forward independently. What is the best course of action? I will of course speak with them but wanted to know what legally I might have to do, what papers would need to be filed, etc.
Asked on October 25, 2018 under Business Law, New York
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
No, you can NOT remove a member (that, and not partner, is the correct term for an owner of an LLC, by the way) against his/her will unless there is a buy-out agreement of some kind already in place, giving the majority owner the right to buy them out at some pre-determined price. Otherwise, you cannot take away the other member's property--and his/her interest in the company IS property, like shares of stock in a corporation would be--without his/her consent. As a majority owner, you control how the business is run, and can lock the other individual out from any operational or decision making role (e.g. "fire them" from working there), but even if you do, they will will own their percentage share of the business and are still entitled to that percentage of any distributions or the proceeds should you sell the business. You need to negotiate a buy-out/removal with them; you cannot force or require it unless you already have a buy-out agreement.
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