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Ask a Lawyer -- LLCs
LLC Question 145
Question:
I am a 35% ownership member of an LLC and wish to sell and/or surrender my ownership portion of the LLC to the remaining members of the LLC. This is due to irreconcilable differences with one of my business partners. What legal documentation or notarization is necessary to terminate my involvement with the company and limit any future personal liability for the company?
Response: First issue: do you have the right to withdraw from the LLC? If so, how do you go about it? Start with LLC operating agreement. It controls this if it deals with member withdrawal. California Corporate Code Section 17252 provides the following regarding the power of an operating agreement to restrict withdrawal:Notwithstanding any restriction upon the right of a member to withdraw, resign, or retire [contained in the operating agreement], a member may withdraw from a limited liability company at any time by giving written notice to the other members. However, unless the articles of organization or written operating agreement provide otherwise, the withdrawn member shall not be entitled to payment for the member's interest in the limited liability company ... . Essentially, a member has an absolute right to withdraw from a California LLC by giving written notice to the other members.
Submitted: 11/14/2007; Kevin, California
Response: 11/14/2007; JJR
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