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How can you remove a member from your LLC after its formation?

When you initially form a limited liability corporation (LLC), you work with a group of people who have similar goals and values in order to take an idea and turn it into a viable business. These people become investors or members who have a financial – and perhaps operational – interest in the business you form together.

However, it is possible for your hopes and values to diverge from theirs at some point after the business begins operation. If you find yourself in a circumstance where a member of your LLC no longer gels with the company’s goals, you may need to take action to remove them. Doing so will likely involve a careful review of your existing contract and a specially tailored or negotiated offer.

How much control do they have, and what do you think it is worth?

The more members your LLC has, the less authority and financial investment any one of them has in the company. In a situation with only three members in an LLC, for example, you may have to carefully examine your financial circumstances and determine what sort of offer would be reasonable and feasible. 

In order to make a reasonable buyout offer, you will need to look at both short- and long-term prospects for your company. You should also have figures to back up the offer when attempting to buy out a member. 

Any steps you take should be in accordance with your operating agreement and any relevant contracts. If the member doesn't agree, they may ask the courts to intervene. In that case, the courts will decide whether you can buy out the member or whether you need to dissolve the LLC and form a new one. 

Whenever any change of ownership or structure of your business occurs, it’s always wise to consult with a business lawyer first. They can help you understand your rights and options – and help protect you from unnecessary litigation.

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