Has your business partner, LLC member or LLC manager harmed your business? You are not stuck! There are ways to remove a rogue member or manager from your business, LLC, or partnership (similar to removing a rogue officer or shareholder from a company). Find out more about how we can help you here.

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According to Section 417 of the New York Limited Liability Company Law, the members of a New York LLC are required to adopt a written operating agreement.  The operating agreement may be entered into before, at the time of, or within 90 days after the filing of the Articles of Organization.   The operating agreement is the primary document that establishes the rights, powers, duties, liabilities and obligations of the members between themselves and with respect to the limited liability company. It is an internal document of the LLC and is not filed with the Department of State. Note, New York law is is silent on the consequences of not adopting an operating agreement, but as a general rule, it is best to have an operating agreement when the LLC has more than 1 member.

New York limited liability companies are required to publish a notice of formation.  Section 206 of the New York Limited Liability Company Law requires a notice related to the formation of a limited liability company (LLC) to be published in two newspapers. The newspapers must be designated by the county clerk of the county in which the office of the LLC is located. An affidavit of publication from each newspaper must be filed with the Department of State. A Certificate of Publication, with the affidavits of publication of the newspapers annexed thereto, must be submitted to the Department of State, with the appropriate filing fee.

Of course, it is best to discuss the Special Responsibilities and Formalities Associated With Forming a New York Limited Liability Company with a New York Small Business Lawyer (or company lawyer).

If a manager or a member of the LLC engages in conduct that harms the LLC, the other members do have standing to bring what is known as a “derivative action” to remove the member or manager from the LLC.

Generally, derivative actions are typically brought by a corporate attorney on behalf of the shareholders of a corporation demanding that the corporation take action against its directors, officers, or others for their actions that harmed the corporation (usually the acts are done outside the scope of their duties or exceeds the standard of reasonable “business judgement”).

Of course, your LLC operating agreement may set forth the rights of the members and the process to remove a manager or other member from the LLC in the event of bad behavior or for other reasons.

Although the New York Limited Liability Company Law does not explicitly provide for derivative actions to remove a manager or member from the LLC, New York Courts have recognized that LLC members do have standing to bring such a claim.  Of course, each case stands on its own facts and merits — but if you believe your fellow LLC member or manager is acting in a way that harms your business, you should contact us (or any New York Business Lawyer or corporate attorney) to discuss your options on how to remove them from your LLC.