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Loren, Attorney
Category: Business Law
Satisfied Customers: 34003
Experience:  30 years experience representing clients .
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I am a 50% member/manager/officer of a California LLC. The

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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.
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.

Customer: replied 3 years 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.

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 and other Business Law Specialists are ready to help you
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):

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 3 years ago.



Happy to do so.


Kind regards, Allan



Thank you Allan.

Good luck.
Customer: replied 3 years ago.

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

Much appreciated.

Best regards to you.