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I just spoke with a representative from D.C.s Department of

I just spoke with a...
I just spoke with a representative from D.C.'s Department of Consumer and Regulatory Affairs
(DCRA) office regarding removal of a member from an LLC. We are new business owners, didn't do thorough research and failed to create an operating agreement. The individual was playing the fence (or so we realized after the fact) between joining the LLC and waiting to be rehired from a former employer. Since he'd been rehired, we haven't heard from or seen him except in passing and you would think the LLC doesn't exist. The representative from DCRA said that we could leave his name off of the 2-year domestic filing form and that would take care of him no longer being a member of the LLC. Is that correct and if not, how do we remove someone that cleary wants no part of the LLC? We wouldn't want him to appear out of the blue one day only to reap benefits in a company that he's abandoned.
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Answered in 1 minute by:
5/3/2011
Dimitry K., Esq.
Category: Business Law
Satisfied Customers: 41,221
Experience: Run my own successful business/contract law practice.
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Thank you for your question.

Have you actually spoken to the other member to see if he is willing to voluntarily remove his name from the business entity? (If so, that may be the cheapest and easiest solution).
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Customer reply replied 6 years ago

He was asked quite a few times to meet and discuss it but to no avail.

Ahh, I see.

May I ask what percentage of ownership does he have? When was the company set up? How many other shareholders are out there? Also, do you have a nominated President or Chief Executive Officer of the company? To be clear, you are incorporated in DC, correct?
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Customer reply replied 6 years ago
We are incorporated in DC. The CEO is my husband and I'm the other member so there's 3 of us. We incorporated on 12/15/09. My husband filled out the form and filed it with D.C. He said he doesn't recall allocating percentages on the paperwork so I guess it would be equal? I don't have it in front of me and won't have access to it until later/
Thank you for your follow-up.

Last question. Has the person done anything at all toward the business? (I assume that his name was on the docs when you filed however).
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Customer reply replied 6 years ago
He contributed $20 or $25 toward the filing fee. Nothing more than that. All expenses and such were paid by my husband and I. He was rehired shortly after we filed so I'd say he was around physically for maybe 1.5 months at the most.
Wow, ok.

In that situation the only thing you have to do besides the domestic filing form is to send Articles of Amendment to the Articles of Organization of Limited Liability Company (or whatever your structure is), have the President (your husband) sign it, and formally state that his ownership was removed. Otherwise simply withholding him from the subsequent filings will not change the actual structure or ownership--it will make a mess later with the tax filing as he would be able to come back later and claim part of the business. You MUST file a formal amendment to terminate ownership as he would otherwise stay on as part owner and shareholder.

Good luck.
Dimitry K., Esq.
Category: Business Law
Satisfied Customers: 41,221
Experience: Run my own successful business/contract law practice.
Verified
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