Creating your own enterprise is something that many people strive for, but they do not always understand what they are subscribing to. Many individual entrepreneurs cannot adequately assess their capabilities, so their business either barely keeps afloat, or is quickly sinking in the face of fierce competition. Some people make more serious plans and open their own limited liability company, in which they distribute their shares in the enterprise. But here, by no means always everything goes smoothly, as evidenced by the fact that the exclusion of a participant from the LLC is a fairly common topic. People ask how they can get rid of a partner who just pulls the company to the bottom.
How to exclude an LLC board member?
Many people think that it is incredibly difficult or even almost impossible to do, but this is not so. All you need is good reason, as well as knowledge of article ten of the Federal Law “On Limited Liability Companies,” that is, LLC. It just refers to the exclusion of a participant from the LLC, on what grounds this can be done, what needs to be done for this, and so on. To study this issue in more detail, you should familiarize yourself with this article, which will detail all the recommendations regarding what you need to do to exclude one of the participants in your Limited Liability Company.
Background
Before you consider directly the exclusion of a participant from an LLC, you need to look at some of the premises. The fact is that most people who gather their forces together to organize a company almost never think that in the future something can go wrong. Often these are best friends or reliable business partners. What could possibly happen? However, you will quickly realize that doing business together can make a big difference. And if your company also becomes successful, then you can always find the person who wants to ascribe the maximum share of success (and with it the income) to himself. This leads to conflicts within the enterprise, which far from always succeeds in settling peacefully and in a friendly manner. As a result, it becomes necessary to exclude some members, but how exactly can this be done? Exclusion of a participant from an LLC largely depends on what form of activity you have chosen.
Form of activity
In this case, we are talking about LLC, that is, a limited liability company. But there is also an AO, that is, a Joint Stock Company, and it is worth mentioning for drawing parallels with LLC. So, if you open a joint-stock company, then there is a majority holder of shares and minority holders who have a significantly (or slightly) lower percentage of the block of shares. And if the majority holder in any way violates the charter, does not attend meetings, does not participate in the activities of the enterprise, then minority holders can do nothing about it. Similarly, they cannot do anything to each other without the consent of the majority holder. There is no way out in this case, so you should not start your first business right away with AO.
Differences of LLC from AO
What is different LLC? The fact is that such a society specifically in the issue of exclusion of participants has one big advantage. If the participant has ten or more percent of the shares, then he can directly influence the affairs of the company. That is, even one sole participant holding 10 percent of the shares may apply for the exclusion of another participant from the LLC, which holds more than fifty percent of the shares. Naturally, at the same time, you should have sufficient reasons, since exclusion from the membership of LLCs is far from the easiest process. That is why you need to read this article. Here you will find everything you need: examples, recommendations, useful information and so on. After reading this material, you will be much better oriented in how and on what conditions exclusion from the membership of LLCs occurs.
Simplest example
So, for starters, you need to give a simple example of how a participant is expelled from an LLC. Limited liability companies, as you already know, do not have a specific member who makes all the most important decisions, so each member can do this. In this example, the general director’s activity has expired, and under the terms of the contract, a new general director is elected 2/3 of the votes. But this does not happen. Why? Several members of the LLC, which in total own 60 percent of the shares (less than 2/3), can not choose a new CEO without the participation of the last participant, who has 40 percent of the shares. And he, in turn, is blackmailing them without appearing at company meetings. In this case, a lawsuit is prepared, which is sent directly to the court. In most cases, the "blackmailer" appears rather quickly at the meeting and fulfills his role, but this does not always happen. And here you need to be ready for one hundred percent, because judicial practice does not speak in favor of the plaintiffs. In most cases, the lawsuit is denied, but this happens precisely because the plaintiffs go, so to speak, with drafts naked, not having prepared and not studied the necessary materials in detail. So that you do not repeat their path, this article will help you carefully examine the exclusion of a participant from the LLC. Limited liability companies are an interesting topic that will help you better understand the world of modern business.
What you need to know when filing a lawsuit?
It's time to find out what exactly you need to cook when you are about to file a lawsuit. Exclusion of an LLC participant is a very serious step, so do not think that the court will make decisions in favor of the plaintiffs right and left. To achieve the exclusion of one of the participants, you will need a large amount of evidence, and they must be very significant. If you intend to file a lawsuit, then you should know a few points. Firstly, this is your share in the enterprise. As mentioned above, the plaintiff must have at least ten percent of the shares in the enterprise in order to be able to apply for the exclusion of other members of the organization.
What makes a company impossible?
Secondly, you need to remember that, in accordance with the law, you can only apply for the exclusion of one of the participants if it makes the activity of the company impossible or substantially complicates it with its action or inaction. For example, as described in the example above, such actions may include the absence of a participant in the compulsory meetings of members of the company, which makes it impossible to make certain decisions that require the votes of all participants.
Reasons for guilt
Thirdly, the court will always consider the degree of guilt of the defendant, the reasons why the enterprise cannot function. And this means that you will have to collect an impressive amount of evidence that would directly link the fact that your company began to function much worse or even ceased its activity, with negative actions or inaction of the participant who is being sued. Exclusion of an LLC participant is a difficult decision, therefore, before filing a lawsuit, read a few examples of how events can develop.
Attention to detail
Before you make a statement of claim to expel a participant from the LLC, you must independently determine the degree of his guilt. Many people rush to court, not trying to understand what their real chances are. In the example described above, a member holding 40 percent of the shares did not participate in the meetings. Naturally, without it it is impossible to vote on the appointment of a new CEO, since 40 percent is more than one third, which can be ignored if two-thirds vote unanimously. But if his share was 30 percent? Participants turn to the court and report that one of the members of the board impedes the activities of the company, as it does not appear at general meetings. However, 70 percent is more than 2/3, so it makes no sense to even spend time visiting the courtroom. Naturally, the situation is completely different if a decision is made according to which the participation of all members is strictly spelled out - in this case, it makes sense to sue, but do not forget that you may be guilty. There are a huge number of details that you need to observe when preparing and conducting meetings, otherwise the defendant may be found not guilty, because, for example, you incorrectly or untimely informed him of the meeting. Do not rush to write a statement of exclusion of the participant from the LLC, if you do not have iron evidence. To better understand the issue, the article will give an example of situations that you may encounter if you do not prepare properly.
Example
Even if you have a specific sample of a decision to exclude a participant from the LLC, you need to think through all the smallest details. In this example, one of the participants in the LLC filed a lawsuit against another in order to exclude it from the organization’s board of directors. However, the court rejected the lawsuit, although the second participant did not really appear at general meetings, which in fact impeded the activities of the company. Why? You should know that notification of members of general meetings should be sent in accordance with the law, that is, by registered mail indicating the date and time of the meeting, as well as with an approximate agenda. In this example, in one case the letter was not registered, and in the other it did not contain an agenda. As you can see, even such trifles can lead to the fact that the exclusion from the number of LLC participants of one of your partners will end in defeat for you.
What is not a basis?
Well, now that you understand that this process is much more complicated than you might initially think, you can examine the reasons for expelling a participant from an LLC. But first of all, of course, it is worth highlighting those moments that, on the contrary, are not grounds for you not to be in an unpleasant situation. For example, many LLC participants are trying to exclude others for violating labor laws. However, the courts in all cases take the position of the defendant, even if he actually seriously violated the Labor Code. Why? The fact is that you need to distinguish between labor and corporate activities and, accordingly, labor and corporate laws. Based on violations of the TC, the participant is not expelled from the LLC. Judicial practice in this case shows that the situation does not have two decisions, and the court always wins the defendant. Also, the basis for filing a lawsuit in court is not a violation of its obligations by the LLC participant as the sole executive body. This means that the executive body is responsible for the losses incurred by the company, however this fact itself does not imply the possibility of its exclusion from the LLC.
What is the basis?
Given all of the above, what is the full basis for filing a lawsuit to expel one of the participants in the LLC. How can one achieve a positive decision to expel a participant from an LLC? A positive example of judicial practice is not the only one, there are many cases, and based on them, some conclusions can be drawn regarding what may be a good reason to exclude one of the participants in the LLC. Firstly, this is the creation of certain obstacles by him through action or inaction to bring the company's documents in proper form in accordance with the law. Secondly, it is an illegal holding by a participant of a general meeting. Thirdly, it is a power seizure of LLC property. Finally, this is the initiation of a transaction by the participant, which in fact entailed serious negative consequences for the LLC.
conclusions
Now that you know everything about the exclusion of one of the participants in the LLC, you should understand several things. For example, you should not invite people to the LLC whom you are not 100% sure of. You need to hold meetings of participants according to all the rules, observing all the smallest details. Naturally, you should go to court only if you have strong evidence and arguments.