Legal Question in Business Law in Illinois

LLC voting out member

I am a member of an LLC, formed by

myself 7 other partners. Five of our

members met together and decided to

vote out another member and decided

that myself and another member were

not eligible to vote, since we were in

close friendship with voted-out

member. I am questioning the legality

of this move. I have a couple of specific

questions:

1. Is a unanimous vote needed by all

members of the LLC? They stated that

in order to kick out our member, the

only thing necessary was a unanimous

vote by all eligible members, therefore

negating our votes and allowing them

to get their unanimous decision.

2. Is there really a conflict of interest,

since the other member and I are close

friends with the voted out member?

That seems a bit petty to me.

I am very new to legal matters and I'm

not really interested in pursuing any

sort of lawsuit, but just want to point

out their errors in the facts.

Thank you very much.


Asked on 12/23/06, 11:21 pm

3 Answers from Attorneys
Zedrick Braden III Ainsworth & Associates PC

Re: LLC voting out member

Hello and season's greetings. In my

opinion you and your associate should

have been allowed to vote. You are

board members and if there is no con-

flict with your presence on the board,

then there is no conflict with your votes. All three of you sat on the LLC Board; how is there a conflict now. I will be happy to discuss this with you further.

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Answered on 12/24/06, 2:46 am
David K. Staub Staub Anderson LLC

Re: LLC voting out member

If the LLC has an operating agreement and it contains provisions dealing with expulsion, then the operating agreement controls. Keep in mind that the Illinois LLC Act does not require an operating agreement for a multiple member LLC or require that it be in writing. You may have an "operating agreement" even if you don't think of it as such.

If there is no operating agreement, removal of a member (called "dissociation") is governed by the LLC Act. Under Section 35-45, a member may be expelled by unanimous vote of the other members in certain circumstances. There is no statutory basis for a less-than-unanimous vote or for disqualifying certain members from voting. There is certainly no provision that would count friendship as a conflict of interest.

The key is whether an operating agreement exists and, if so, what it provides.

I hope this helps clarify the issue for you.

David K. Staub, an Illinois business attorney

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Answered on 1/03/07, 3:31 pm
Burton Padove Indiana and Illinois Lawyer, Burton A. Padove

Re: LLC voting out member

There is no conflict of interest. Your operating agreement governs the means of voting out a member as well as whether a unanimous vote is necessary.

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Answered on 12/28/06, 10:51 pm


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