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.Â Of course, each case stands on its own facts and merits â€” 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.
For more information, click to watch the video, “How Do I Remove an LLC Member or Manager From My LLC” .