Removing a Member from Tennessee LLC | Things You Need to Know

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Remove Member From Tennessee LLC

Limited Liability Companies (LLCs) are popular business structures in Tennessee because they provide flexibility in management and taxation while offering personal liability protection for their members. However, there may come a time when a member of an LLC needs to be removed for various reasons, such as retirement, disputes, or other personal circumstances. Removing a member from an LLC in Tennessee can be complicated, but understanding the legal requirements and following the proper steps can help ensure a smooth transition.

This article will guide you through Removing a Member from an LLC in Tennessee by discussing the legal requirements, preparing necessary documents, and providing helpful tips to avoid potential pitfalls.

Webinarcare Editorial Team will help you understand the process of removing a member. It would be best if all the factors in this article guided you.

What is a Limited Liability Company?

An LLC, or Limited Liability Company, is a type of business structure that offers a mix of features from partnerships and corporations. It provides its owners, known as members, with limited liability about the company’s debts or potential lawsuits, much like a corporation. At the same time, an LLC provides flexibility in management and profit distribution, similar to a partnership or sole proprietorship. LLCs can be owned by one or more individuals, corporations, or other LLCs. However, taxation in an LLC is pass-through by default, which means the profits or losses are reported on the owners’ individual tax returns.

Before you start a removing a member, it is advised that you consult with a legal expert. They will be aware of what’s best for you and your business. You can always start an LLC in Tennessee, if you wish to protect your personal assets from business debts.


Reasons for Member Removal in Tennessee LLC

There could be several reasons why a member needs to be removed from an LLC in Tennessee:

  1. Breach of Agreement: All members are bound by the operating agreement of the LLC. If a member violates the agreed terms knowingly or unknowingly, this can be a reason for removal.
  2. Financial Mismanagement: If a member is found guilty of embezzling funds or other related financial misconduct, they should be removed to protect the company’s financial health.
  3. Criminal Activity: If a member is involved in criminal activity, this can put the entire company at risk. In such cases, removal is crucial to protect the LLC’s reputation and legality.
  4. Lack of Participation: If a member consistently fails to contribute to the business, either through capital, time, or expertise, they might be removed.
  5. Conflict of Interest: An LLC’s members must prioritize the business’s interests. If a member’s activities conflict with these interests, they might need to be removed.
  6. Irresolvable Disputes: Sometimes, members might have disputes that harm the company’s functioning. Removing one or more members involved might be necessary if such disputes cannot be resolved.
  7. Personal Reasons: Personal reasons such as bankruptcy, divorce, or incapacity can also necessitate removing a member from an LLC.

Removing a member from an LLC is a legal procedure. It may require a majority vote from the other members or depend on specific LLC operating agreement clauses. Legal advice from Tennessee Business Attorney should be sought when considering this action.

How to Remove a Member from Tennessee LLC

To remove a member from an LLC, you must follow the guidelines that include reviewing the operating agreement, consulting with a business attorney, obtaining the consent of the remaining members, preparing and executing a written agreement, updating the operating agreement, notifying the Tennessee Secretary of State, and updating the tax and financial records. These are the basic ones, so read the whole article until the end. 

Step 1: Review the Tennessee Operating Agreement

The first step in removing a member from an LLC in Tennessee is carefully reviewing the Tennessee Operating Agreement for your LLC. The operating agreement is the document that outlines how the Tennessee LLC will be managed and governed, including provisions for the removal of members. If the operating agreement contains specific guidelines for removing a member, those guidelines must be followed. If the operating agreement does not address the removal of members, then the default provisions under Tennessee law will apply.

The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

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Step 2: Consult with an Attorney

Given the potential legal and financial consequences of removing a member from Tennessee LLC, consulting with a Business Attorney in Tennessee before taking any action is advisable. A business attorney experienced in Tennessee LLC law can help you understand the legal requirements, ensure compliance, and avoid potential pitfalls.

The qualities of an excellent business attorney can make a significant difference in the success and growth of your business. Here are some key qualities to look for when choosing a business attorney in Tennessee:

  • Expertise in Tennessee Business Law: The best business attorney should have a deep understanding of federal, state, and local laws and regulations governing businesses in Tennessee. In terms of business laws and regulations, a business attorney should be familiar with forming of the Tennessee Articles of Organization so that they will guide you in regulating the Tennessee Secretary of State and other laws that need to abide by.
  • Experience In Your Industry: An attorney with experience working with businesses in your industry will be better equipped to understand your company’s unique challenges and opportunities. They will be familiar with industry-specific regulations and can provide more targeted and relevant advice.
  • Strong Communication Skills: Effective communication is critical to a successful attorney-client relationship. A top-notch business attorney should be able to explain complex legal concepts in clear, easy-to-understand language and be responsive to your questions and concerns.
  • Proven Track Record: A great business attorney should have a history of successful client outcomes. They should be able to provide references or case studies that demonstrate their ability to achieve favorable results for businesses like yours.
  • Strategic Thinking: The best business attorney can think strategically, helping your company proactively address potential legal issues and identify opportunities for growth and success.
  • Commitment to Client Success: A truly exceptional attorney is not just focused on billable hours but genuinely committed to helping your business succeed. They should be willing to invest time and effort in understanding your company’s goals and work diligently to help you achieve them.

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Step 3: Obtain Consent of the Remaining Members

In most cases, removing a member from Tennessee LLC requires the consent of the remaining members. This is typically achieved through a vote of the members, with the required percentage of votes needed for approval varying based on Tennessee’s operating agreement or Tennessee law.

If the operating agreement does not specify the percentage of votes required, you should consult your business attorney or refer to the default provisions under Tennessee law.

Step 4: Prepare and Execute a Written Agreement

Once the required consent has been obtained, the next step is to draft a written agreement outlining the terms of the member’s removal. This agreement should include, but is not limited to:

  • The effective date of the removal
  • The reason for the removal
  • The method of calculating the member’s buyout or distribution of assets
  • Any other relevant terms or conditions

All members, including the departing member, should sign the agreement. This written agreement is evidence of the removal and can be used to update the LLC’s records and filings with the Tennessee Secretary of State.

Step 5: Update the Operating Agreement

After removing a member, Tennessee LLC’s operating agreement should be updated to reflect the change in membership. This may include amending the list of members, updating the ownership percentages, and revising any other relevant provisions. It is crucial to ensure that the updated operating agreement accurately reflects the current structure and governance of the LLC.

Suppose you wonder what the Tennessee operating agreement entails. It includes the following:

  • Name of the LLC: Your LLC’s name must include the words “Limited Liability Company” or the abbreviation “LLC” or “L.L.C.” and comply with the Tennessee LLC naming requirements. In Tennessee, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 4 months. You must file a name reservation application with the Tennessee Secretary of State to keep the name. The online name reservation fee costs $20, while the mail name reservation fee costs $20.
  • Principal Office Address: This is where your LLC’s primary business activities will be conducted.
  • Registered Agent Information: Your Registered Agent is a person or entity designated to receive legal documents on behalf of your LLC. The Registered Agent must have a physical street address in Tennessee. Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. You can serve as your Registered Agent, appoint a friend or family member, or hire a Professional Tennessee Registered Agent Services.
  • Purpose of the LLC: This section should describe the primary purpose of your LLC and the business activities it will engage in.
  • Duration of the LLC: You may choose to have your LLC exist for a specific period or continue indefinitely.

Step 6: Notify the Tennessee Secretary of State

Depending on the specific circumstances and requirements under Tennessee law, you may need to file a notice of the member’s removal with the Tennessee Secretary of State. This could involve filing the Amended Tennessee Articles of Organization or other appropriate documents. 

The filing fee for amending your Articles of Organization costs $300; however, it varies depending on your specific situation and the nature of the amendments. Consult your business attorney or refer to the Tennessee Secretary of State’s website for further guidance.

Step 7: Update Tax and Financial Records

Finally, updating the Tennessee LLC’s tax and financial records to reflect the member’s removal is essential. This may involve notifying the Internal Revenue Service (IRS) and the Tennessee Department of Revenue and updating the bank accounts, bookkeeping, and other financial records. By profession, you can manage your finances using spreadsheets, accounting software, or becoming a CPA in Tennessee.

Is It Important to Update the Operating Agreement?

It is important to update the operating agreement when you remove a member from your Tennessee LLC. The operating agreement is a key document outlining your LLC’s rules, procedures, and ownership structure. When a member is removed, it is crucial to ensure that the updated operating agreement accurately reflects the current structure and governance of the LLC.

Updating the operating agreement after removing a member may include the following:

  • Amending the list of members to remove the departing member’s name
  • Updating the ownership percentages to reflect the change in membership
  • Revising any provisions related to the management, voting rights, and decision-making processes to account for the change in membership
  • Addressing any other relevant sections that may be affected by the member’s removal

By updating the operating agreement, you can maintain clear and accurate records of your LLC’s structure, which can be crucial for legal and financial reasons and the smooth operation and management of the business.


What is the process for removing a member from an LLC in Tennessee?
Typically, the LLC operating agreement outlines the process for removing a member from the LLC.
Can a member be forced to leave an LLC in Tennessee?
Under certain circumstances, a member may be removed involuntarily. However, this typically requires a unanimous vote by the remaining members.
What happens to the member’s ownership interest if they are removed from the LLC in Tennessee?
The member’s ownership interest is usually bought out by the LLC.
Can a member be removed for violating the LLC operating agreement in Tennessee?
Yes, a member can be removed for violating the LLC operating agreement. However, the precise terms governing removal will depend on the language included in the agreement.
What happens if an LLC member is removed without following the proper process in Tennessee?
If an LLC member is removed improperly, the LLC could be exposed to legal liability and may face consequences.
Does Tennessee state law provide guidance on how to remove a member from an LLC?
The state of Tennessee defers to the operating agreement in terms of the process for how to remove a member from an LLC.
Can a member be removed for failing to make capital contributions in Tennessee?
Yes, a member can be removed for failing to meet their contribution obligations under the LLC operating agreement in Tennessee.
Do all members need to agree before a member can be removed in Tennessee?
It depends on the provisions outlined in the LLC operating agreement but typically a majority vote is required.
Can an LLC member be removed for misconduct in Tennessee?
Yes, if a member engages in unlawful misconduct, they can be removed from the LLC in Tennessee.
Is there a specific timeline for removing a member from an LLC in Tennessee?
The timeline for removing an LLC member in Tennessee usually depends on the provisions outlined in the LLC operating agreement.
Can a member refuse to be bought out after being removed from an LLC in Tennessee?
No, if a member is properly removed from an LLC in Tennessee, the LLC has the right to buyout their ownership interest.
What is the impact on the LLC if a member is removed in Tennessee?
The impact will depend on the nature of the involvement and contributions made by that specific member.
Are there financial penalties associated with removing a member from an LLC in Tennessee?
There may be financial consequences if a member was co-signer/co-obligant of any company debts and obligations.
How do I update the LLC’s filing paperwork if a member is removed in Tennessee?
Members interested in changing the LLC’s operating agreement will need to go through the required amendments as is dictated by the filing paperwork.
Can a member waive their right to notice before being removed from an LLC in Tennessee?
Yes, LLC members who are to be removed via notice can do so via written consent to the LLC.
Do LLCs in Tennessee need board approval to remove a member?
Generally, LLCs can remove members without first seeking board approval in Tennessee.
Can a member be removed if they have no violations, but the other members wish to restructure the LLC in Tennessee?
If restructuring the LLC has the potential to result in a shift in essential duties or liability policies, members could be removed on veto purposes.
What rights does a member have in Tennessee if they are being removed from an LLC?
Members have the right to comment on their matter and usually have the right to obtain a proportional portion of the LLC’s assets.
Is there a trial-like process that takes place when a member is being removed from the LLC in Tennessee?
Oftentimes, there will be a hearing or other legal proceeding before sustaining any removal.
Can a member’s Family Push for Dismissal in Tennessee?
Many states just afford co-owners the privilege of momentarily seceding against another co-owner; hence, the first alternative that the group frequently likes is to extort their interest instead.
Are there procedures in place to cover assessment disputes between the removed member and the LLC after the removal has been made in Tennessee?
LLC members typically have a strategy to deal with evaluation conflicts between the eliminated member and the LLC.
Can a removed LLC member initiate dispute complaints in Tennessee?
Yes. Some operators might look to pursue litigation, or if they anticipate their share value is esteemed below the market rate, they could try to dispute.
What are some basic legal principles to follow when removing a member from an LLC in Tennessee?
Members who are about to be removed from LLCs need to use strategy, patience, and adhere to validation requirements in Tennessee.
If a member violates the LLC tax agreement in Tennessee, can they be removed?
Both political subdivision fees or comparable laws require excise sanctions to remain operable. Offenders may have lawsuit filings initiated against them.
Will work visas for a removed member be amplified if membership issues in Tennessee have been sustained?
Yes. Eligibility, allowances allowed, and drawbacks often rely on several reasons surrounding the exchange mechanisms attributable to visa proficiency.
Are there any added claims associated with freeing a member and the prospective sale of an LLC option during an initiation stage inside Tennessee?
Fighting over coordinating any separate holdings between sides might entail trial certificates for pecuniary funds for members removed from a nascent enterprise.
Can a removed member partake in dues assessments for LLC in Tennessee as part of the terms of removal?
When a member sells or eliminates domestic qualities via an LLC, they will necessitate each assessed charge related correspondence during the service acceleration.
Can other members buy the ownership interest of the removed member after their removal in Tennessee?
Typically, when you initiate a buy-sell agreement, another non-removed member absorbs the distributed stake from the perpetrator in Tennessee.
Can removed members still have liability in Tennessee due to choices made during their time with the LLC?
Unlike S-shaped, or Private Businesses, LLCs appoint shielding emanations, often secluded from law factions in Tennessee. Dejected characters still uphold explicit situations just like other extensive reports.
What background information can be requested regarding the removed member in Tennessee before their activity with the LLC?
Members have due diligence privileges in identifying company history and inquiry outside estimations under the Uniform Fraudulent Transfer Act in Tennesse.

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Removing a member from an LLC in Tennessee can be complex and requires careful attention to detail. By following these steps and consulting with an experienced attorney, you can ensure that your LLC remains compliant with Tennessee law and continues to operate smoothly during this transition.

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