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How to withdraw from the members of a problem company?

There have been cases in our practice when a person - a member or a founder of an LLC - contacted us with a request to help with withdrawal from the founding members. The situation may be complicated by the fact that he owns only 50% of the shares of the LLC, and the other person is no longer interested in the activities of the LLC and does not get in touch.

Today we will tell you how to act if you want to withdraw from the list of the founders of the company, but you cannot do it yourself quickly and problem-free.

What problems can arise if the distribution of shares is 50/50?

Fifty-fifty-share companies are fairly common.

On one hand, this is a guarantee that none of the participants will take some decisions critical for the company without the other. On the other hand, participants become attached to each other, and sometimes even hostages of the situation. This is most evident when one of the participants “forgets” about company.

Decisions related to the competence of the general meeting are divided into three categories:

  • accepted by a simple majority;

  • ¾ votes of all participants are accepted;

  • accepted unanimously by all participants.

Therefore, in the event of the “disappearance” of one of the participants of the company with a distribution of shares of 50/50, this company will be completely blocked in terms of decision making.

Related article: Why can’t change of membership and the manager of an LLC be made in one day?

What if the participant does not get in touch?

1) Remove from the list of participants?

Not so simple. Until recently, a “repeat” violator could be forcibly excluded from the list of participants for failure to appear at the general meeting. But now there are only two cases where a participant can leave the company not of his/her own free will:

  • in case of a delay in making a share in the authorized capital;

  • in case of his death (if the participant is a legal entity - then in case of its termination).

But even after his/her death, the "repeat" violator will not stop blocking decision-making. The remaining participants will have to wait for his/her successor for another year after the opening of the inheritance, and if this heir is found - to accept him.

But! The case when the deceased owns 50 percent or more of the authorized capital is regulated separately by law. The remaining participants may decide to liquidate the company. Moreover, the law does not regulate whether this is the only possible solution.

The need to wait for the heir to such a participant is not provided. That is, based on the logic of this rule, the death of a participant who owned 50% or more automatically entails the liquidation of company.

Related article: Changing the ltd members in relation to the heritance of share in the authorized capital

2) To withdraw from the membership of the company, about which the participant, owning 50% or more, “forgot”.

If you are not the second participant who remains with his 50%, then to exit you need to submit an application for withdrawal to the state registrar. But if you own 50% of the authorized capital, then this is not an easy task.

According to the law, if a member of the company owns 50 percent or more of the authorized capital, to exit the company, you need to:

  • obtain the consent of other participants;

  • submit an application that can be reviewed within one month (unless otherwise specified by the charter). However, the law does not specify in whose name the application is submitted and who should consider it. However, just as the legal consequences are not provided for, as well as which specific ones and for whom there will be legal consequences if the application is not considered.

That is, if in a company there are two participants with a distribution of 50/50, then in the event of the “disappearance” of one of them the other will not even be able to leave the company.

It should also be noted that going to court is unlikely to help solve this issue. After all, the court cannot make an illegal decision.

How can you give up membership of an LLC after all?

If you really need to get rid of your share in the company, the best option would be to yield it (sell).

The contract of sale is signed in a simple form (does not require notarization), and an act of acceptance of the share, the signatures of which are notarized, is submitted to the state registrar, 

Important! The primary right to buy back the shares is held by current participants. Therefore, before the sale, it is worth informing them of your intention, without forgetting to send a registered one with a notification of delivery, rather than a regular letter. And if the participant who has long “forgotten” about his participation in the company does not get in touch, the documents for the sale can be easily drawn up.

Related article: OUR LAW FIRM ASSISTED WITH EXIT OF AN INDIVIDUAL PARTICIPANT FROM LLC

There is one more nuance: a change in the composition of participants will be registered in a Unified State Register. But the new member(s) will not be able to approve the new revision of the charter. From the moment of purchase and sale of a share, all the efforts of the blocked company are transferred to a new participant. Therefore, is is hard to find those willing to buy such a share of labor.

If you have questions about withdrawing your  membership from a problem company or you need help with a similar issue, please contact our specialists.

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