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Loren
Loren, Attorney
Category: Business Law
Satisfied Customers: 20340
Experience:  30 years experience representing clients .
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I am a 50% member/manager/officer of a California LLC. The

Customer Question

I am a 50% member/manager/officer of a California LLC. The remaining 50% is also a member/manager/officer. The LLC operating agreement specifies that it is a manager-managed LLC.

I wish to resign/withdraw as both a manager and officer. There are no prohibitions against these actions in the operating agreement.

Is it true that upon resigning/withdraw as above, I would no longer be bound by the duty of loyalty to the LLC, while still maintaining my 50% ownership as a member? I ask because I have been approached to join a company that would be competitive with the LLC of which I am currently a member/manager/officer. Thanks in advance.
Submitted: 9 months ago.
Category: Business Law
Expert:  Loren replied 9 months ago.
Thank you for using JustAnswer. I am Loren and I will do whatever I can to answer your question and provide you excellent service.

I am sorry to hear of your dilemma. I realize how frustrating this is for you, but I believe I have information which you will find helpful.

Members are passive investors. As a member of a manager managed LLC you would have no prohibition to working for a competitor, unless the operating agreement so provided. Additionally, you would still be obligated by any contractual covenants or nondisclosure agreements you entered into as a manager or officer.

It is my privilege to assist you.  Let me know if you need further information.  I hope I have helped you beyond your expectations in the service I have provided to you.  I am here for you.

Since this forum is no substitute for your own legal counsel, be sure to verify the information I have provided with a local attorney who is familiar with your local laws and procedures.

I am happy to answer your follow-up questions and assist you until I am able to explain the answer to your satisfaction. 

Thank you.

Loren.    
Customer: replied 9 months ago.

Thank you for your quick response. It validates my own conclusions, but I do have one follow-up question:


 


Once I resign as a manager/officer, while maintaining my membership position, I know I can negotiate a buy-out of my 50% membership, which I would probably do. But does my duty of loyalty end immediately with my resignation as manager/officer, or is there a waiting period. The operating agreement specifies no rules for such an action.


 


Again, thank you.

Expert:  Loren replied 9 months ago.
Thank you, XXXXX XXXXX following up with me.

It ends as soon as you are no longer manager. You are selling a membership interest as a member, not a manager. If you are negotiating a buyout your first loyalty is to negotiate the best deal you can.

I hope this is helpful.

Thank you.

Loren
Loren, Attorney
Category: Business Law
Satisfied Customers: 20340
Experience: 30 years experience representing clients .
Loren and 2 other Business Law Specialists are ready to help you
Expert:  Loren replied 9 months ago.
Thank you for your positive rating of my service to you. Let me know if you need more help or have future questions. I will be here for you. Just ask for me by name at the start of your question - "Loren" or use the following link (which you can bookmark in your browser):  http://www.justanswer.com/law/expert-Loren/
          

Best wishes and good luck to you.

If it is not too much trouble, Allan, when you receive a Customer Satisfaction Survey from JA/Pearl in a day or two, please consider rating me highly (9 or 10). It affects my ability to continue to assist you and other customers on JA/Pearl and would be most appreciated.  
Customer: replied 9 months ago.

Loren,


 


Happy to do so.


 


Kind regards, Allan


 


 

Expert:  Loren replied 9 months ago.
Thank you Allan.

Good luck.
Customer: replied 9 months ago.

No more questions at the moment. And yes, I gave you a very positive rating..

Expert:  Loren replied 9 months ago.
Much appreciated.

Best regards to you.

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