Minnesota LLC Dissociation

 Minnesota LLC Dissociation

Minnesota LLC Dissociation

Dissociate – verb – to separate one person from association or union with another person.

Minnesota LLC Dissociation – Events

While M.S. Chapter 322C does not define the term dissociate, M.S. § 322C.0602, identifies the events which will cause the dissociation of one or more members from a Minnesota limited liability company.

Minnesota LLC Dissociation – Express Will to Withdraw As a Member

M.S. § 322C.0602 (1) identifies that a member’s express will to withdraw as a member will cause the member to be dissociated from a Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(1)     the company has notice of the person’s express will to withdraw as a member, but, if the person specified a withdrawal date later than the date the company had notice, on that later date;

Minnesota LLC Dissociation – Events Specified in an Operating Agreement

M.S. § 322C.0602 (2) identifies that the occurrence of an event specified in an operating agreement will cause a Minnesota LLC Dissociation, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(2)     an event stated in the operating agreement as causing the person’s dissociation occurs;

Minnesota LLC Dissociation – Expulsion of a Member

M.S. § 322C.0602 (3) identifies that the expulsion of a member pursuant to the terms of an operating agreement will cause a Minnesota LLC Dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(3)     the person is expelled as a member pursuant to the operating agreement;

M.S. § 322C.0602 (4) identifies that the expulsion of a member by the unanimous consent of the other members in certain situations will cause a Minnesota LLC Dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(4)     the person is expelled as a member by the unanimous consent of the other members if:

(i)      it is unlawful to carry on the company’s activities with the person as a member;

(ii)      there has been a transfer of all of the person’s transferable interest in the company, other than:

(A)     a transfer for security purposes; or

(B)     a charging order in effect under section 322C.0503 which has not been foreclosed;

(iii)     the person is a corporation and, within 90 days after the company notifies the person that it will be expelled as a member because the person has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, the certificate of dissolution has not been revoked or its charter or right to conduct business has not been reinstated; or

(iv)     the person is a limited liability company or partnership that has been dissolved and whose business is being wound up;

Minnesota LLC Dissociation – Judicial Order

M.S. § 322C.0602 (5) identifies that the expulsion of a member pursuant to the terms of a judicial order will cause a Minnesota LLC dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(5)     on application by the company, the person is expelled as a member by judicial order because the person:

(i)      has engaged, or is engaging, in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the company’s activities

(ii)      has willfully or persistently committed, or is willfully and persistently committing, a material breach of the operating agreement or the person’s duties or obligations under section 322C.0409; or

(iii)     has engaged, or is engaging, in conduct relating to the company’s activities which makes it not reasonably practicable to carry on the activities with the person as a member;

Minnesota LLC Dissociation – Individual Members

M.S. § 322C.0602 (6) identifies certain events with respect to a member who is an individual which will cause a Minnesota LLC Dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(6)     in the case of a person who is an individual:

          (i)      the person dies; or

          (ii)      in a member-managed limited liability company:

(A)     a guardian or general conservator for the person is appointed; or

(B)     there is a judicial order that the person has otherwise become incapable of performing the person’s duties as a member under this chapter or the operating agreement;

Minnesota LLC Dissociation – Member-Managed LLCs

M.S. § 322C.0602 (7) identifies certain events with respect to a membermanaged Minnesota limited liability company which will cause a Minnesota LLC Dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(7)     in a member-managed limited liability company, the person:

(i)      becomes a debtor in bankruptcy;

(ii)      executes an assignment for the benefit of creditors; or

(iii)     seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all of the person’s property;

Minnesota LLC Dissociation – Trust Membership

M.S. § 322C.0602 (8) identifies certain events with respect to a trust membership in a Minnesota limited liability company which will cause a Minnesota LLC Dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(8)     in the case of a person that is a trust or is acting as a member by virtue of being a trustee of a trust, the trust’s entire transferable interest in the company is distributed;

Minnesota LLC Dissociation – Estate Membership

M.S. § 322C.0602 (9) identifies certain events with respect to an estate membership in a Minnesota limited liability company which will cause a Minnesota LLC Dissociation by the member being dissociated from the Minnesota limited liability company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(9)     in the case of a person that is an estate or is acting as a member by virtue of being a personal representative of an estate, the estate’s entire transferable interest in the company is distributed;

Minnesota LLC Dissociation – Termination

M.S. § 322C.0602 (10) perhaps identifies that when the legal existence of certain members is terminated, the member will be dissociated from the Company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(10)    in the case of a member that is not an individual, partnership, limited liability company, corporation, trust, or estate, the termination of the member;

Alternatively, M.S. § 322C.0602 (10) perhaps refers to the termination of the member’s interest in the Minnesota liability company – which will necessarily result in the dissociation of that member.

Minnesota LLC Dissociation – Merger

M.S. § 322C.0602 (11) identifies situations when a member will be dissociated from the Company in the event of a merger by the Company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(11)    the company participates in a merger under sections 322C.1001 to 322C.1015, if:

(i)      the company is not the surviving entity; or

(ii)      otherwise as a result of the merger, the person ceases to be a member;

Minnesota LLC Dissociation – Conversion

M.S. § 322C.0602 (12) identifies a situation when all members will be dissociated from the Company in the event of a statutory conversion by the Company into a different form of entity, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(12)    the company participates in a conversion under sections 322C.1001 to 322C.1015;

Minnesota LLC Dissociation – Domestication

M.S. § 322C.0602 (13) identifies a situation when all members will be dissociated from the Company in the event the Company participates in a statutory domestication, by providing as follows:

(13)    the company participates in a domestication under sections 322C.1001 to 322C.1015, if, as a result of the domestication, the person ceases to be a member

Domestication does not by itself dissociate a member, because the domesticated entity remains both a limited liability company, and the same entity without interruption as the domesticating company.

Minnesota LLC Dissociation – Termination of the Company

M.S. § 322C.0602 (14) identifies that when a Minnesota limited liability Company’s legal existence is terminated, all members will be dissociated from the Company, by providing as follows:

A person is dissociated as a member from a limited liability company when:

(14)    the company terminates.

Minnesota LLC Dissociation – Effect

M.S. § 322C.0603 identifies the effect of a person’s dissociation as a member, by providing as follows:

322C.0603 EFFECT OF PERSON’S DISSOCIATION AS MEMBER.

Subdivision 1.   Effect of dissociation.

When a person is dissociated as a member of a limited liability company:

(1)     the person’s right to participate as a member in the management and conduct of the company’s activities terminates;

(2)     if the company is member-managed, the person’s fiduciary duties as a member end with regard to matters arising and events occurring after the person’s dissociation; and

(3)     subject to sections 322C.0504 and 322C.1001 to 322C.1015, any transferable interest owned by the person immediately before dissociation in the person’s capacity as a member is owned by the person solely as a transferee.

Subd. 2.   No discharge.

A person’s dissociation as a member of a limited liability company does not of itself discharge the person from any debt, obligation, or other liability to the company or the other members that the person incurred while a member.

Minnesota LLC Dissociation – Power

M.S. § 322C.0601, Subd. 1 identifies a person’s continuous power to dissociate as a member, by providing as follows:

Subdivision 1.   Power to dissociate.

A person has the power to dissociate as a member at any time,

rightfully or wrongfully,

by withdrawing as a member by express will under section 322C.0602, clause (1).

Minnesota LLC Dissociation – Wrongful Dissociation

M.S. § 322C.0601, Subd. 2 identifies when a person’s dissociation as a member is wrongful, by providing as follows:

Subd. 2.   Wrongful dissociation.

A person’s dissociation from a limited liability company is wrongful only if the dissociation:

(1)     is in breach of an express provision of the operating agreement; or

(2)     occurs before the termination of the company and:

(i)      the person withdraws as a member by express will;

(ii)      the person is expelled as a member by judicial order under section 322C.0602, clause (5);

(iii)     the person is dissociated under section 322C.0602, clause (7), item (i), by becoming a debtor in bankruptcy; or

(iv)     in the case of a person that is not a trust other than a business trust, an estate, or an individual, the person is expelled or otherwise dissociated as a member because it willfully dissolved or terminated.

Minnesota LLC Dissociation – Consequences of Wrongful Dissociation

M.S. § 322C.0601, Subd. 3 identifies the consequences of a person’s wrongful dissociation as a member, by providing as follows:

Subd. 3.   Liability for wrongful dissociation.

A person that wrongfully dissociates as a member is liable to the limited liability company and, subject to section 322C.0901, to the other members for damages caused by the dissociation.

The liability is in addition to any other debt, obligation, or other liability of the member to the company or the other members.

Conclusion;

Minnesota LLC Dissociation

Please contact Minnesota Attorney Gary C. Dahle for legal assistance with respect to any Minnesota LLC dissociation issues.

Legal fees will be applicable for services rendered – and advance payment may be required.

Minnesota LLC Articles of Organization

Minnesota LLC Board Management

Minnesota LLC Contributions

Minnesota LLC Dissolution

Minnesota LLC Dissolution Distribution

Minnesota LLC Distribution

Minnesota LLC Governance

Minnesota LLC Members

Minnesota LLC Operating Agreements

Minnesota LLC Transferable Interest

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No claim to original government works.

Gary C. Dahle – Attorney at Law

2704 County Road 10, Mounds View, MN 55112

Phone: 763-780-8390  Fax: 763-780-1735

Gary@dahlelaw.com

Minnesota Secretary of State

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