Noblesville, IN asked in Business Law for Michigan

Q: Can majority merge LLC with a newly created LLC that has an Operating Ammendment to buyout partners involuntarily?

I am being forced out of an business in which i own 4% of in Michigan. The operating agreement currently states that you can be bought out only voluntarily, or under circumstances of bankrupty, death, etc. However, not involuntairy.

After bringing up we are not interested in selling, we received an emergecy meeting notice to merge our LLC1 with a newly created LLC2, in which they added 2 sections that you can be voted out and bought out at market rate.

I keep reading about good faith and fair dealing, and the fact that when originally signing the agreement that ammendments can be made based on majority vote. However when originally agreeing to this stipulation, the assumption wasnt that the majority can kick out the minority.

I dont know what to do, or say.

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1 Lawyer Answer
Michael Zamzow
PREMIUM
Michael Zamzow
Answered
  • Grand Rapids, MI
  • Licensed in Michigan

A: Maybe.

Generally, Michigan LLC members, whether constituting a majority or minority have different rights. The operating agreement that you're referring to as well as the Michigan Limited Liability Company Act allocate such rights and procedures. Minority members do have some rights. Some of those rights include the voting at shareholder meetings, viewing company books, records, and lists of members, and they have the right to vote on material corporate events such as selecting management, approving mergers, dissolution, major asset sales, and amendments to the articles of organization or operating agreement. However the operating agreement can attempt to modify or restrict the ability of minority members to exercise those rights.

If you believe your rights are being suppressed unfairly it may be worth calling an attorney about it. Particularly if the majority is partaking in illegal, fraudulent, or willfully unfair and oppressive conduct. Pushing out a minority owner by revising the operating agreement might constitute willfully unfair and oppressive conduct. When it comes down to it a lawsuit against a majority owner and the company is often the only and last resort, these cases can be expensive so it is advisable to consult with a number of attorneys before settling on your pick.

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