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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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2 other partners and I, got together to form an llc in georgia.

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2 other partners and I, got together to form an llc in georgia. We came up with an idea together and the idea has grown through all of us. Now two of us have been paying operating expenses and we've asked the third to join in. Currently the business has no income and only expenses. We have no operating agreement signed. If he refuses to pay his third of operating expenses we would like to remove him and carry on with the business. Is this possible and what do we need to do?
Well, you would first have to create an operating agreement that clearly defines addition and removal of partners in your LLC. Make sure you place "non-payment of expenses" as a valid cause for removal, so long as the other owners agree. Then set it to be based on otustanding shares (or percentage of ownership) in case you dilute the LLC more, but wills till need to remove a non-productive member. Just be aware that if you remove someone, you will owe them severance and itnerest of what the LLC is worth--if it is currently operating at a loss, that is not an issue.

Sincerely,

Dimitry Alexander Kaplun, Esq.
Customer: replied 7 years ago.
What if he doesn't want to sign an operating agreement where he can be removed for non-payment.
Then don't bring him into the business. Simple as that. All partners must be equally bound by any agreements (that means the original partners as well). Otherwise you will later have a mess on your hands removing a non-working partner from your entity.

Sincerely,

Dimitry Alexander Kaplun, Esq.
Customer: replied 7 years ago.
I think he's already part of the business. He's listed in the "articles of organization" that is filed, but we never signed an "operating agreement" explaining rules/regulations of membership. Are you saying that without the operating agreement, he's not part of the business yet?
How exactly is he listed on the articles? What is his title?
Customer: replied 7 years ago.
as an organizer
I am sorry, what type of an organizer? Just the organizer of the firm, but no official title as an officr of the LLC? (such as president, vice president, treasurer, secretary)
Customer: replied 7 years ago.
Yes, not listed as an official title, just as one of three organizers on the "certificate of organization". No one has a specific title on there, just names.
If he is listed, but nobody as yet has titles, then he can argue that he is already part of the organization.

Sincerely,

Dimitry Alexander Kaplun, Esq.
Customer: replied 7 years ago.
And without an operating agreement, no way to remove him?
If you did not place any safeguards on how to remove a partner, your only surefire way is a dissolution of the current LLC, and a creation of a new one, without him.

Sincerely,

Dimitry Alexander Kaplun, Esq.
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