If I filed for an LLC that is solely in my name, what rights do investors have to vote me out or take control of assets?
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If I filed for an LLC that is solely in my name, what rights do investors have to vote me out or take control of assets?
Myself and 10 others started doing business/ After 2 months and 10 investors we are shutting down since we tried to get the operating agreement signed but failed. What right do they have to vote me out or take control of everyone’s assets if I am the only one on the LLC filing? I want to make sure everyone gets a fair deal and 2 of the investors are trying to take control of the whole situation.
Asked on December 11, 2014 under Business Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 9 years ago | Contributor
If you are the only member of the LLC, they can't "vote you out," since you control 100% of the LLC. But you owe various legal duties, including a fiduciary duty, to your investors, and if they provided money or other assets, you can't simply fold the business and dispose of (or keep) their investments and other assets without regard to them. If you try to do so, they could bring a lawsuit against you--and individual investors who feel you are disregarding their interests could bring such a suit (i.e. of two feel they are being treated unfairly, those two could bring legal action even if the other 8 are happy). If possible, resolve a situation like this by negotiation, not litigation, since this type of lawsut can be expensive for everyone.
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