How can you remove a member from an LLC?

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How can you remove a member from an LLC?

In July of 2018, I started a business with one other member. We are 50/50 through the state of Minnesota and that’s how it is setup at the bank. We then decided to add on another member for 30 in August of 2018. We signed a piece of paper stating our percentages. We have not signed an LLC operating agreement or made an amendment to the original LLC filing. Nothing has the 3rd member on the paperwork. We want him out of the company because he has not held up his end of the deal. We have not had any income since he we signed that piece of paper. We also don’t want him to run off and start the same business and compete as we are in a profitable niche field. What are my options? He has contributed about 100 total since August.

Asked on September 24, 2018 under Business Law, Minnesota

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You can't remove a member against his will: his ownership interest in the LLC is a property interest--it is something he owns--and you can't take away another's property. 
That said, if there is no operating agreement listing his percentage, it is possible he is not an owner: it depends on exactly that that e "piece of paper stating our percentages" said: did it meet the criteria to be a contract, so that in signing it, you obligated yourselves to give him his percentage of the LLC? Bring the paper to an attorney to review with you and see what, if anything, you did obligate yourselves to do in terms of giving him a share of the business.
Note that you have no legal basis to stop him from "running off and starting the same business and competing" unless he signed an enforceable noncompete agreement.


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