California  |  Business Law

Legal Question

Asked on: 5/08/13, 5:32 pm

New LLC created no operating agreement has signed. One partner 25% wants to sale his 25%share to new guy whom other partners are not approving because new partner is very week financialy, can we stop transfer of partnership.

1 Answer

Answered on: 5/09/13, 2:15 am by Charles Perry

Since there is no operating agreement, the transfer of a membership interest in an LLC requires majority approval of the other owners of membership interests. The other owners, however, cannot block the transfer of an economic interest that any owner wants to transfer. See CA Corporations Code Section 17301.

The result is that the selling partner still has votes, and the buying partner gets the profits.

You need to get a lawyer involved here, and fast. This is one of the types of situations that leads to expensive litigation. The lawyer will draft an operating agreement and document the trasnfer within the LLC, and help prevent future problems.

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Law Offices of Charles R. Perry 1500 Bayberry Street Hollister, 95023

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