Events Resulting in Cessation of Membership

  1. Law
  2. Georgia Code
  3. Corporations, Partnerships, and Associations
  4. Limited Liability Companies
  5. Events of Dissociation, Withdrawal, and Dissolution
  6. Events Resulting in Cessation of Membership

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  1. This Code section is effective for limited liability companies formed on or after July 1, 1999.
  2. A person ceases to be a member of a limited liability company upon the occurrence of any of the following events:
    1. The member ceases to be a member of the limited liability company as provided in paragraph (6) of Code Section 14-11-502;
    2. The member is removed as a member:
      1. In accordance with the articles of organization or a written operating agreement; or
      2. Subject to contrary provision in the articles of organization or in a written operating agreement, when the member assigns all of his or her limited liability company interest, by an affirmative vote of a majority in number of the members who have not assigned all of their limited liability company interests;
    3. The member's entire interest in the limited liability company is purchased or redeemed by the limited liability company;
    4. Subject to contrary provision in the articles of organization or a written operating agreement, or written consent of all other members at the time, the member (A) makes an assignment for the benefit of creditors; (B) files a voluntary petition in bankruptcy; (C) is adjudicated a bankrupt or insolvent; (D) files a petition or answer seeking for the member any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation; (E) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the member in any proceeding of this nature; or (F) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the member or of all or any substantial part of the member's properties;
    5. Subject to contrary provision in the articles of organization or a written operating agreement, or written consent of all other members at the time, if within 120 days after the commencement of any proceeding against the member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation, the proceeding has not been dismissed, or if within 90 days after the appointment without his or her consent or acquiescence of a trustee, receiver, or liquidator of the member or of all or any substantial part of his or her properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any stay, the appointment is not vacated; or
    6. Subject to contrary provision in the articles of organization or a written operating agreement, or written consent of all other members at the time, in the case of a member who is an individual:
      1. On the date of his or her death; or
      2. On the date of the entry of an order by a court of competent jurisdiction adjudicating the member incompetent to manage his or her person or his or her property.
  3. The articles of organization or a written operating agreement may provide for other events the occurrence of which result in a person ceasing to be a member of the limited liability company.
  4. Except as otherwise provided in the articles of organization or a written operating agreement, a member may not withdraw from the limited liability company.

(Code 1981, §14-11-601.1, enacted by Ga. L. 1999, p. 822, § 3; Ga. L. 2002, p. 1235, § 6.)

Law reviews.

- For annual survey on business associations, see 68 Mercer L. Rev. 71 (2016).

JUDICIAL DECISIONS

Standing argument raised on appeal.

- In an action seeking reorganization of an LLC, a standing argument raised by defendants was rejected on appeal, as: (1) the statute they relied on did not say that a member who sought reorganization for a different member ceased, personally, to be a member of the company; and (2) plaintiffs sought the disassociation of defendants, not of themselves. Sayers v. Artistic Kitchen Design, LLC, 280 Ga. App. 223, 633 S.E.2d 619 (2006).

Action did not cause member to cease being a member.

- Trial court erred in determining that the sister's petition to dissolve the limited liability companies caused the sister to cease to be a member of those companies. Crumpton v. Vick's Mobile Homes, LLC, 335 Ga. App. 155, 779 S.E.2d 136 (2015), cert. denied, 2016 Ga. LEXIS 271 (Ga. 2016).

RESEARCH REFERENCES

ALR.

- Construction and application of limited liability company acts - issues relating to formation of limited liability company and addition or disassociation of members thereto, 43 A.L.R.6th 611.

Issues concerning bankruptcy proceedings of limited liability companies, 37 A.L.R. Fed. 2d 129.


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