Tuesday, April 14, 2009

How to Withdraw From A New York LLC

Question: We have father and son LLC. The son started an independent practice and no longer wants to continue with LLC as member.
What is the procedure for withdrawal from membership of the LLC? DOLAT, NEW YORK
Response: New York Consolidated Laws, LLC § 606 covers withdrawal of LLC members. It states, in pertinent part:
§ 606. Withdrawal of a member. (a) A member may withdraw as a member of a limited liability company only at the time or upon the happening of events specified in the operating agreement and in accordance with the operating agreement. Notwithstanding anything to the contrary under applicable law, unless an operating agreement provides otherwise, a member may not withdraw from a limited liability company prior to the dissolution and winding up of the limited liability company.
Under this provision of New York law, an LLC member cannot withdraw unless the LLC operating agreement provides the authority to do so. What is the procedure for withdrawal? The statute merely refers to the operating agreement for the procedure meaning the withdrawing member follows whatever procedures, such as written notice to all other members, found in the operating agreement.

If you don't have an operating agreement for your LLC, you'll need one that both authorizes withdrawal of a member and contains procedures for withdrawal. The MedLawPlus.com® operating agreement template contains these features.

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