A member (or owner) may be removed from a limited liability company (LLC) for any number of reasons. While it’s common for a business to remove a member and the process is pretty straightforward, the procedure in California is more specific than most. Here’s what you need to know:
1. Review Your CA Formation Documents
The process for removing a member from a California LLC is usually stipulated in the company’s California Articles of Organization or its California LLC Operating Agreement. You will need to follow the procedure laid-out in your formation documents, which usually requires approval from most members by way of a vote.
2. Submit a Statement of Information Form
California requires all LLCs to periodically file a document called the California Statement of Information, which is similar to what most states call an annual or biennial report. In addition to filing a statement of information every two years, CA LLCs must also file one 90 days after their business is formed.
Because the statement of information form (LLC-112) requires LLCs to list all managers’ names and business addresses, LLCs are also required to submit a new statement of information when they lose, replace, or add a member.
3. Update Your Operating Agreement or Articles
Any official document that includes members’ names—like your operating agreement—will need to be revised if one of your members is removed from your LLC. Since your operating agreement is an internal document, you should follow the rules outlined in the operating agreement itself when making any changes to it. If you don’t have an operating agreement, you’ll need to abide by California’s default LLC statutes.
If you included member names in your articles of organization, you’ll have to file an amendment with the state (Form LLC-2) to update it. Alternatively, you can replace your existing articles with a new set of articles that reflects the recent change in LLC membership by filing Restated Articles or Organization (Form LLC-10).