Some features of forced withdrawal of a member from the LLC
Under the law, one can be withdrawn from the LLC as a shareholder (member), when one interferes with the objectives of the company by his/her actions (or inaction) and his/her conduct significantly complicates the activity of the company or makes it virtually impossible. The law does not provide a list of specific situations that would be the grounds for member’s withdrawal, but in practice, the most common example of such member’s misconduct is the rejection of contributing to the registered capital of the company as well as ignoring the appearance at the meeting of shareholders.
The issue of member’s withdrawal should be considered only at the general meeting of shareholders. It means that any other authority, including the court, does not have the right to pass decisions on forced withdrawal of a person as a shareholder from the company.
There must be discussed all the circumstances that led to the consideration of the issue of the member’s withdrawal from the LLC at the general meeting of shareholders: there should be established all the negative consequences for the company arising from the misconduct of a member, pointing the cause-and-effect relations between the member’s misconduct and losses of the enterprise. If these negative consequences have not occurred yet, but assume, there must be discussed the probability of their occurrence at the general meeting of shareholders. In addition, all the possible reasons for member’s misconduct are to be considered at the meeting.
The obligatory justification should be presented for the forced withdrawal of a person as a shareholder. It should be proved that his/her misconduct really complicates the activity of the company or makes it impossible. That is, if a member has a very small share in the company (e.g. up to 1 percent), and his/her absence is not an obstacle for calling of a general meeting and passing the decision, then there are no reasons for the forced withdrawal of such member in connection with his absenteeism at the general meeting of the company.
Participants may be withdrawn from the LLC as shareholders only then members, who together own more than 50 percent of the total votes, voted for such a decision.
In order to avoid the procedure of member’s withdrawal from a limited liability company against the he law and unnecessary litigation, the lawyers of the Colares Law Company are always ready to provide you with expert legal assistance in holding the general meeting of the shareholders and are always ready to conduct the registration of the founders, change of the name of the company, its director, and conduct the registration of change of the economic activities.