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Ask a Lawyer -- LLCs
LLC Question 75
Question: I and one other person formed an LLC in the State of Georgia. Other than the minimum requirements listed on the Secretary of State's website, there were no specific articles of organization or other agreements filed. One of the members (not the managing member) wants to withdraw from the LLC, leaving only the managing member. Can that be done in Georgia, and what needs to filed where, if anything?
Response: This question (i.e., how do I withdraw form my LLC?) is getting old. See this link for responses to prior questions on this topic. As I have not commented on withdrawal from Georgia LLCs, I'll respond.
>>There were no specific articles of organization or other agreements filed.<<
Impossible. Articles of organization had to have been filed in order for the Georgia Secretary of State's office to issue the LLC franchise. You may want to contact the Georgia Secretary of State's office directly to get further clarification.
Generally, the LLC operating agreement is the document that details how a member withdraws from the LLC and what rights the withdrawing member possesses on withdrawal. I assume your LLC lacks an operating agreement or, if one exists, it is silent on the topic of withdrawal. In such a case, the right of a member to withdraw is governed by the Georgia Limited Liability Company Act.
Georgia has two separate statutes for withdrawal of members from LLCs: Section 14-11-601.1 for LLCs formed on or after July 1, 1999 and Section 14-11-601 for LLCs formed prior to July 1, 1999. The salient difference is to be found in subsection (d) of each.
Section 14-11-601.1(d) Except as otherwise provided in the articles of organization or a written operating agreement, a member may not withdraw from the limited liability company. (formed on or after July 1, 1999.)
Section 14-11-601(d) Except as otherwise provided in the articles of organization or a written operating agreement, a member may withdraw from the limited liability company at any time by giving written notice to the other members at least 30 days in advance of his or her withdrawal or such other notice as is provided for in a written operating agreement. (formed prior to July 1, 1999.)
If your LLC was formed on or after 7-1-1999, I read the statute as stating that a member cannot withdraw absent a written operating agreement giving the member this right. If you want to allow the other member of your LLC to withdraw, then my suggestion would be that the two of you enter into an operating agreement setting forth how a member withdraws and what a member gets upon withdrawal (i.e., his capital account, $-0-, ect.). Best to contact the Georgia Secretary of State's office to see what needs to be filed with them. As long as the managers are not changing, it could be that nothing currently needs to be filed after the withdrawal. However, the next annual report and tax returns filed would reflect the new ownership.
Submitted: 8-1-2006; James, Georgia
Response: 8-2-2006; JJR
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