If I’m currently in a LLC with my spouse and he continually makes financial and business decisions without my knowledge or consent, what are my rights?

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If I’m currently in a LLC with my spouse and he continually makes financial and business decisions without my knowledge or consent, what are my rights?

Recently I was served with a summons named as a defendant in a lawsuit. This gets messy. My spouse employees his father and brother at one of our business. I have no say in who gets hired, especially when it involves his family. They recently purchased a large sum of equipment at auction and forged my husband’s name on the check which is listed as evidence in the summons. My husband swears he had no knowledge of them forging it.

Asked on August 31, 2015 under Business Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Are you a 50% owner of the LLC with your spouse? If so, neither of you can make business decisions without the consent of the other, since neither is a majority owner, unless there is an operating agreement which states that one of you e.g. him can make such decisions--if there is an operating agreement spelling out authority and management arrangements, then that agreement is enforceable and the two of you should be managing the company in accordance with it.
If your husband owns a majority of the business and you do not, he can, as a majority owner, make these decisions unilaterally on his own, unless again, there is an operating agreement to the contrary.
If your husband is acting in accordance with an operating agreement or his majority stake, you can't change how he runs the business. If he is exceeding his authority under the agreement or as per his ownership interest, you could bring a lawsuit in chancery court seeking a court order to prevent him from doing this.
If his father and brother forged your husband's name on a check, that is a crime your husband should report it as a crime and, by doing so, he may be able to get you, him, and the LLC off the hook, since a company is not liable for unauthorized criminal acts. If he won't report it as a crime, he is effectively sanctioning or authorizing it, and so the LLC can be liable for the action.
You however, should not be liable even if the LLC is, since the owner of an LLC is not responsible for business debts unless she guaranteed them or for the criminal acts of other persons if she did not participate in the acts.
And if your husband will do these things without your knowledge or consent, what else will he do--will he transfer property interests without telling you? Use joint money or put joint money into some other account which he is the sole owner of? Can you trust what he says about finances? You may wish to double check family, as well as business, finances.
There are many, many issues here you should speak in depth with an attorney about them.


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