LLC is considered a demanded organizational form. One person or several persons can open such a society. In the presence of several founders, different disagreements or disputes between managers often arise. There are cases when one of the leaders in various ways violates the requirements of the charter documentation or otherwise harms the company. Under such conditions, the exclusion of a participant from the LLC is required. The procedure can be performed voluntarily or forcefully.
Ways to leave a participant from the company
The exclusion of an LLC participant from the company is a complex and specific procedure, which assumes that the share of this manager is transferred to another participant or distributed equally among all other managers. When performing this procedure, the requirements of the law, as well as internal regulations, must be observed.
The process of exclusion of a participant from an LLC may be:
- voluntary, when the co-owner of the company independently makes a decision to cease to engage in the affairs of the enterprise, therefore, transfers its share to another participant or to the company as a whole, for which they correctly draw up a withdrawal statement;
- coercive when the decision is made by other participants, and it must be weighty and reasonable.
Firms in which there are several founders regularly encounter such a problem when one manager does not want to follow a common strategy, therefore often by his actions it harms the financial condition of the enterprise. In this case, the managers have no choice but to exclude the participant from the LLC.
In the law, such an opportunity is provided for by the provisions of the Federal Law No. 14 “On LLC”. During the forced process, other participants of the enterprise are initiators.
The exclusion from the number of LLC participants leads to the fact that a person loses his part of the company. Leaders resort to this method only if they cannot influence the co-founder by other methods.
Is it possible to withdraw a participant from the company without consent?
It is possible to expel a participant from an LLC in a judicial proceeding even without his consent, but there must be really good reasons for this. Additionally, the following features are taken into account:
- the right to engage in this process is exclusively reserved for participants with a 10% stake in the company;
- such a measure is considered extreme and is implemented solely through the court;
- previously, the participants of the enterprise should act on the founder by peaceful means to achieve a compromise, therefore, evidence of such communication should be submitted to the court as confirmation of the use of pre-trial order;
- if the reason for the exclusion is not significant, the court will refuse to conduct the trial.
The exclusion of a participant from an LLC without a court is possible only if the specialist voluntarily leaves the organization. He must realize that such an action on his part will give positive results for each co-owner of the business.
Reasons to exclude
The grounds for expelling a participant from an LLC may be numerous, but they are usually associated with the fact that the founder performs certain actions that cause irreparable harm to the company itself. Most often, other participants resort to coercive measures if there are reasons:
- systematically, the founder does not fulfill his duties or they are implemented poorly;
- confidential information about the work of the enterprise is disclosed;
- within the prescribed time period, a share in the capital of the organization was not paid;
- actions are taken to form obstacles to achieving the goals of the company;
- the work of the company is blocked in various ways, as a result of which the company cannot function normally.
Often a situation arises when a participant who needs to be expelled from the company has more than 50% of the share. In this case, his withdrawal from the enterprise is possible in a situation if it is provided for by the charter documents of the company.
Judicial practice of exclusion of LLC participants from the list of participants shows that this procedure is possible only if other managers have evidence that the actions of a citizen lead to company losses.
What actions harm the company?
Most often, a participant’s exclusion from an LLC is required when the following actions are detected:
- the participant does not pay a share in the company or regular payments are not made;
- a protocol is forged, on the basis of which the director of the enterprise is appointed;
- important transactions are made without notifying other founders about them;
- Provides counterparties with false information about the financial condition of the company;
- unprofitable transactions leading to the occurrence of losses;
- the participant does not attend general meetings; therefore, other managers fail to make important decisions for the company.
In judicial practice, there have been situations when, indeed, the founder was expelled from the company due to the fact that he did not regularly attend meetings. This led to the fact that other managers could not properly manage the enterprise. They filed a lawsuit, after which their demands were satisfied.
Causing a company by doing different things
The exclusion of the LLC participant from the company is possible if there is evidence from other founders that he, by his decisions and actions, causes certain damage to the company. This leads to conflicts between leaders and hinders the normal work and development of society. The most common such actions include:
- provision of a power of attorney to manage or dispose of property to a citizen who has sold valuables or has taken other actions that led to the occurrence of losses;
- the dissemination of false information that the company will soon be closed, which led to the fact that large customers and counterparties began to cooperate with other organizations, therefore, the company's profit decreased significantly;
- intentionally bringing the company to bankruptcy through various actions.
The founder can take other actions to worsen the financial condition of the company. Therefore, before going to court to exclude an LLC participant, you should consult with a lawyer as to whether the actions of the head are illegal.
Vote against company interests
Often, the exclusion of one founder from LLC participants is due to the fact that he votes at meetings against decisions that could lead to development and increase profits. In this case, he acts against the interests of the whole society. Typically, such voting is conducted in the process of deciding to sign a contract for a large supply of goods.
But the judicial practice of expelling participants from the LLC shows that not always such a basis is an opportunity to eliminate a person from managing the company. Therefore, other managers must really prove that it was through the vote of a particular participant that the company was harmed.
Submission of unjustified complaints to state bodies
Often one has to face the fact that one of the participants systematically sends complaints to other authorities or other companies to state authorities, which becomes the basis for additional inspections and holding the company liable for violations. In this case, a decision is often made to expel an LLC participant. This is due to the fact that it intentionally creates difficulties for the normal operation of the company.
If the complaints of the company’s participant are well-founded, therefore, according to the results of the audit, various violations and problems are really revealed, the court will not accept the plaintiff’s arguments, since the actions of the founder are aimed at compliance with the law.
The court must understand the reasons for this behavior on the part of one of the leaders of the company. Often, he really has good reason for drawing up applications to various government agencies. Through state bodies, he is trying to exercise his rights, so the court does not satisfy such a claim. Exclusion of the LLC participant is allowed only if there are good reasons and evidence of unlawful actions on the part of the founder.
The process of expelling a member from a company
Exclusion from the LLC participants is a rather long and specific procedure. Rarely does the founder agree to voluntarily leave the company, so most often you have to use the help of the court. Even in this case, the correct sequence of actions must be followed:
- initially, at a general meeting, a decision is made to expel a participant from the LLC;
- it is correctly drawn up, and relevant information is also entered in the minutes of the meeting;
- after this, the participant is offered the opportunity to voluntarily leave the company;
- if he refuses to carry out the process in a peaceful manner, a statement of claim is filed with the arbitration court;
- the claim is formed only by the founders, whose share in the organization exceeds 10%;
- a court session is held where the evidence and opinions of each party are examined;
- if the court satisfies the claims, then the participation of one leader in the company is terminated;
- the founder deprives him of the rights that he was endowed with at the opening of the organization, therefore, he cannot continue to participate in general meetings, and he also ceases obligations to the company;
- information that one of the participants was expelled from the company is transferred to the Unified State Register of Legal Entities, for which a statement is generated in the form of P14001, and a court decision is attached to it;
- the share of the expelled participant is transferred to the company, therefore, the founders must pay the citizen the required amount of funds, which can be replaced by the property of the enterprise, the value of which is equivalent to the received share.
Then, within one year, the remaining participants in the enterprise must decide how the remaining share will be distributed. For this, it can be transferred only to one founder or distributed among all other participants. Also, it is often acquired at all by a third party, who then takes part in the management of the company.
As soon as the decision on the share is made, the company must notify the tax office about it within one month, otherwise it will be considered that the share is still owned by the organization.
Rules for making a statement of claim
If a decision is made to expel an LLC participant, the company must take the correct steps to implement it. Usually, in a peaceful way, the founders do not want to give their share, therefore, in any case, you have to turn to the court for help. For this, it is important to correctly draw up a statement of claim to expel a participant from the LLC, for which the following rules are taken into account:
- a lawsuit is filed with the arbitration court
- it indicates the name of the court;
- Claims are provided for company members;
- the reason is prescribed for the exclusion of one founder from the company;
- evidence of the plaintiff's correctness is applied to the claim;
- additionally, confirmation is required that an attempt was made to resolve the disagreements in a pre-trial way, so the founder was offered the opportunity to leave the company on her own.
Before accepting the claim, the court must make sure that the application is submitted by the founder, who has at least a 10% stake in the company.
The consequences of exclusion
A court decision to expel a participant from an LLC must be strictly enforced. It gives a positive result for the company, as the founder who does not want or is not able to engage in this process is removed from management. This allows the company to function normally. But at the same time there are some negative consequences, which include:
- the financial condition of the company may worsen, as its share may be transferred to unauthorized persons who are not interested in the company developing in a promising direction;
- counterparties and large partners trust the company less, since their representatives could work directly with a specific founder who was expelled from the company;
- within the company, numerous conflicts may arise between the remaining participants or employees;
- often the expelled participant disagrees with what payment is assigned to him for his share, which leads to regular litigation;
- unscheduled inspections may be carried out by the Federal Tax Service and other state bodies;
- the expelled participant often disagrees with such a court decision, therefore, has the right to appeal, which will lead to repeated court hearings.
Therefore, it is advisable to use a compulsory method of eliminating any participant from management solely with confidence that the benefit from this process will be really significant. You can try to get the participant a more responsible attitude to managing the company or try to negotiate in other ways. Often, a peaceful solution to the problem is considered the most optimal for the company.
Share Cost Conflicts
The procedure for exclusion of a participant from the LLC implies that after a court decision is made, the share of the founder is returned to the company. He receives a sum of money or property whose value is equal to the value of the share.
Often between the founders there are conflicts regarding the value of the share. This leads to the need to re-apply to the court and invite an independent appraiser. For this, the market value of shares of similar companies, the existing assets of the enterprise and other parameters are analyzed. Under such conditions, all disputed issues will have to be resolved exclusively through the court.
When it is impossible to expel a participant from the company?
There are certain situations when it is impossible to exclude the founder from the organization. It will not work out even when going to court. These situations include:
- it is impossible to establish a causal relationship between the actions or omissions of the participant and losses or other negative aspects of the company’s work, therefore, even the court will not be able to prove that the founder is guilty of certain troubles of the company;
- the absence of the leader at the meetings is due to the fact that he was not notified about their holding, therefore, he simply did not know when and where this event was being held, since the systematic evasion of participation in the management of the company can be proved only if there is confirmation that the leader notified of meetings;
- the participant paid only a certain part of the share in the company, and in this case, the unpaid part simply goes back to the company, but this cannot be the basis for his exclusion from the company.
Under such conditions, the participant himself will be able to prove that his exclusion will not be lawful. The claims are not satisfied, and the founder can file a counterclaim, on the basis of which he wants to bring other managers of the enterprise to justice.
Voluntary exit
Often, participants realize that they can no longer work together, as conflicts constantly arise between them. Under such conditions, one of the founders may agree to voluntarily withdraw from the LLC. The procedure is considered quite simple, but it should be properly designed. To do this, the following actions are performed:
- a decision is taken at the meeting on the withdrawal of one participant from the company;
- such a decision and protocol are correctly drawn up;
- the founder draws up an application for withdrawal from the LLC, which is then transferred to the employees of the Federal Tax Service along with the documents generated at the meeting;
- The documentation must be pre-signed by the general director of the organization, and it must also be certified by a notary;
- the amount of compensation for the share of the retiring participant is determined, for which independent evaluators are usually invited;
- the required amount of funds is paid, which can be replaced by property whose value is equal to the share price;
- information about the withdrawal of the participant is entered in the register.
The share owned by the exiting participant remains in the company. The remaining founders can independently decide where exactly it will be directed. Most often, it is distributed among all participants based on their share in the organization. Such a decision should be correctly made at the next meeting. Additionally, information within a month after the decision is made is transmitted to the tax office, otherwise the distribution of the share will not have legal force.
Conclusion
The need to expel any member of the company from the company may arise for various reasons. Most often, this is associated with different actions or inaction of the manager, which lead to certain losses for the company.
The procedure for leaving the LLC may be voluntary or compulsory. In the first case, the participant independently decides to abandon his share in the company. For her, he receives the optimal cash payment. If the founder does not want to solve the problems peacefully, he is expelled from the company through the court. For this, the plaintiffs must have evidence that it was the actions of a particular founder that led to negative consequences for the company.