Publication date: 31.05.2024
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.
Exclusion of a participant from a business partnership may occur in case of violation of the terms of cooperation, failure to fulfill his functions or other circumstances provided for by the statute or agreement between participants. The exclusion procedure is usually regulated by law and the company's articles of association.
Usually, the exclusion of a participant involves holding a general meeting of company members, at which a decision on exclusion is made. At the same time, a certain majority of votes may be required to make such a decision. After a decision on exclusion is made, it is usually possible to appeal this decision in court. It is also important to note that certain legal consequences, such as the payment of compensation or the distribution of property belonging to the partnership, may apply in the event of the expulsion of a member. Avoiding conflicts and ensuring that legal procedures are followed when expelling a member is important for maintaining business relationships and the company's reputation.
Grounds for exclusion from the LLC:
1. Violation of statutory requirements or terms of the agreement between the members of the company.
2. Non-fulfillment of obligations assigned to the participant in accordance with the agreement or the company's charter.
3. Carrying out actions that contradict the interests of the company or cause losses to it.
These grounds can be detailed in the company's charter itself or in relevant sections of the legislation that regulates the activities of business companies. It is also important to take into account that the exclusion of a participant must take place in accordance with the requirements of the law and the company's charter, as well as in compliance with the procedures provided for this.
The procedure for excluding a participant from an LLC:
Compulsory exclusion of a participant from a limited liability company (LLC) can be carried out in accordance with the legislation of the country where the LLC is located and the relevant provisions of the company's charter. The procedure for such exclusion usually includes the following steps:
1. Meeting of general meetings of members (participants) of the company: Meetings of members of the company are held, at which the issue of excluding a specific member is considered. Before holding a meeting, it may be important to notify the participant of the intention to hold such a meeting and of the grounds for his exclusion. It is important to comply with the quorum requirement at the meeting, namely, the participants must be present at the meeting, who collectively hold less than 50% of the total number of votes.
2. Making a decision: At the general meeting of members of the company, a decision is made to exclude a participant. Usually, this decision is taken by the majority of votes specified in the company's charter.
3. Drafting of the decision: After the decision has been made, a corresponding protocol is drawn up at the meeting, which contains information about the decision made and grounds for exclusion.
4. Participant notification: The Participant is notified of the decision made and the grounds for his exclusion. This can be done in writing by letter or official notification.
Consequences of exclusion from the LLC:
Loss of the right to participate in decision-making: After the exclusion of a participant, he loses the right to vote at the general meeting of the company.
Loss of the right to receive profit: A Participant may lose the right to receive part of the profit of the company, if such a right is provided for by the agreement or the charter of the company.
Damages: In the event that the participant's exclusion is related to his actions that caused damage to the company, damages may be demanded.
Payment of the value of the property: If the exclusion procedure is implemented in an LLC, then upon exit, the participant is paid the value of the property, which is proportional to his share.
Lawyer services in case of exclusion of a participant from the company:
The legal services will analyze the situation, documents and requirements of the legislation and, based on this, will advise the client on the most appropriate method of exclusion from the company, will conduct a legal analysis of the situation. The lawyer advice will prevent the occurrence of disputes or other negative consequences as a result of leaving the business partnership and will ensure compliance of all steps with the requirements of the law.
