Legal Question in Business Law in California

You need to sign a resignation agreement which releases any liability and you need to make sure that an updated Statement of Information is filed with the Secretary of State.

There may be a lot more that you have to do than what Mr. Jefferson says, depending on your governing documents.

Mr. McCormick is correct. You should review the LLC's Operating Agreements along with any addendum and amendments to see if there are any specific procedures you need to follow to leave the LLC.

Disclaimer: This communication does not create an attorney-client relationship and such a relationship can only be formed through a signed written agreement. This communication is not legal advice and should not be solely relied upon in making your legal decisions. Any situation depends on many different facts and specific laws that require an in-depth legal consultation to evaluate the best solution for your needs.

The other attorneys are right on point here. Read your LLC's operating agreements in their entirety and follow any and all procedures specified for a member departing the LLC. Consult with a good business attorney in your area for specific advice.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

First, note that LLCs have members and managers. A person can be a member without being a manager, and vice-versa, but in smaller LLCs, they are usually 100% overlapping, i.e., all the owners are both members and managers and there are no non-member managers and no non-manager members.

Then, go the the California Secretary of State's Web site at www.ss.ca.gov and find the business forms section and then the LLC forms sub-section. Look at samples of the following forms and their instructions: LLC-1, LLC-2, and LLC-12. You should look at the LLC-1 that was filed to start your LLC, then prepare, or have the company prepare, an LLC-2 and an LLC-12 to reflect your dis-affiliation. Make sure they are signed and filed with the correct filing fee. That will take care of Sacramento.

If by any chance the LLC was using a fictitious business name (this would be unusual, since the name under which it is registered with the Sec. of State is "real," not fictitious), any registration done with the County Clerk may need to be brought current.

The operating agreement probably needs to be re-written.

If you have a significant capital investment in the company, you should negotiate the amount you're entitled to receive to retire your economic interest. This can be part of a comprehensive parting-of-the-ways agreement. Technically, you can retain your economic interest in an LLC after dissociating as a member, but that's not a good practice.