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Publication date: 08.04.2024
I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.
The right of a participant to withdraw from a limited liability company (LLC) is regulated by the legislation of Ukraine, as well as the constituent documents of the LLC itself. The terms of the exit may be determined by the LLC's founding documents, such as the articles of incorporation. The articles of association may contain terms about how a member can leave the LLC, what procedures must be followed, and what restrictions may exist. LLC members can establish internal agreements or understandings regarding the terms of the participant's withdrawal from the LLC. This may include conditions for the redemption of shares by other participants, procedures for selling shares to third parties, etc. The legislation of Ukraine also regulates the procedures for the withdrawal of a participant from an LLC. Under this legislation, a member has the right to withdraw from the LLC in accordance with the conditions and procedures established by law. A member may decide to leave the LLC at his own request. However, this may only be possible within the conditions provided by the articles of association or legislation and may require compliance with certain procedures. In some cases, a member's withdrawal from an LLC may require the permission of other members or compliance with certain conditions specified by the charter or law. In each specific case, the right to withdraw from an LLC and the conditions for exit may be different, so it is important to study the constituent documents of the LLC and the legislation before making a decision to withdraw. It is also recommended that you obtain legal advice regarding this matter.
Methods for a participant to exit an LLC:
Sale of units (shares): An LLC member can sell his shares (shares) to another member or a third party who agrees to purchase them.
Redemption of shares by other members: The remaining members of the LLC may have the right to buy out shares from the original member in accordance with the terms of the articles of association or agreements between the parties.
Voluntary withdrawal: A participant can simply sell his shares and leave the LLC if the articles of association do not contain restrictions on this.
Sale of shares due to making a contribution to the authorized capital: A participant can leave the LLC by selling his shares due to making a contribution to the authorized capital.
Reorganization or liquidation of an LLC: A participant may leave the LLC as a result of reorganization or liquidation, if this is provided for by the relevant decision of the meeting of participants.
In each specific case, the withdrawal of a participant from the LLC must be carried out in accordance with the requirements of the legislation of Ukraine and the charter of the LLC, and may also require the approval of other participants or management bodies of the LLC.
Legal consequences of a participant’s withdrawal from the company:
Alienation of a share (share): A participant leaving an LLC can sell his share (share) to another participant or a third party who has agreed to purchase it. This may be consistent with the terms of the original contract or the LLC's bylaws.
Distribution of profits or losses: When a member leaves an LLC, he may be entitled to a share of the profits or liability for a share of the losses of the LLC, which is determined by his share in the authorized capital.
Repayment of Debts: Based on an LLC, a member may be obligated to fulfill his obligations to the LLC if such obligations are provided for in the terms of the agreement or bylaws.
Transfer of rights and obligations: When a member leaves the LLC, his rights and obligations may be transferred to other members or the LLC as a whole in accordance with established procedures.
Participation in management: After leaving the LLC, a participant loses the right to participate in the management and decision-making of the LLC.
Distribution of property: In the event of liquidation of an LLC after the distribution of all liabilities and property, the participation of the exiting participant in the distribution of property may be determined by his share in the authorized capital.
These consequences may vary depending on the terms of exit, the charter and the legislation of Ukraine. Therefore, before deciding to leave the LLC, it is important to study all the conditions and legal consequences.
Lawyer for business when a participant leaves an LLC:
The procedure for exiting a business company depends on the size of the participant’s share, and the larger it is, the more difficult it is to exit, and therefore the legal services for business may be needed. A business lawyer will analyze the situation, documents and legal requirements and, based on this, provide advice to the client on the most appropriate way to exit the society and will also be able to provide legal protection of business. A business lawyer will eliminate the possibility of disputes or other negative consequences as a result of leaving the limited liability company as a business entity as a whole.
