How to get rid of a disinterested partner in Limited Liability Company (LLC)?

How to get rid of a disinterested partner in Limited Liability Company (LLC)?

Mission almost possible!

Imagine being a partner in LLC and losing the relationship with your partner, or he does not even provide minimal support for the work of the general meeting and the company itself. You find yourself in a situation where you cannot convene a general meeting of the company because you cannot notify your partner of its convening, or even manage to inform him about the meeting, your partner does not show up and you cannot form a quorum and take important decisions for the company, such as making additional cash contributions for example. After multiple, unsuccessful attempts to contact your partner, it turns out that the only option is to try to exclude him in the manner provided by the Commercial Law. In this situation, you will need skilled assistance of good commercial law attorneys, but even for them will be difficult if you do not do the necessary when setting up the company. In the Partners Agreement should be specified correspondence addresses between the parties to which the correspondence is to be made in connection with the performance or non-performance of the Agreement. Note that the company agreement is still a contract, not just a formality for the company registration, as in Sole Proprietor LLC for example, where the sole proprietor has the power to make decisions on the company independently. Partners’ correspondence addresses are not a mandatory requirement of a partnership agreement, which is why very often addresses are not entered at all. For many people, setting up an LLC is just a formality that requires forms to simply sign and “to pass” the registration procedure at the Registry Agency. At a later stage, this understanding puts the interested partner in a very bad situation for months trying to convene a general meeting or duly warn the partner that he or she will be expelled under Art. 126, para. 3 of the Commercial Law, but he cannot, because it is not agreed on how this will happen.

Let’s take a closer look at the situations in which a partner can be excluded. According to Art. 126, para. 3 of the Commercial Law, the partner may be excluded from the general meeting after written notice, when:

1. fails to fulfill its obligations to assist in the performance of the company;

2. does not implement the decisions of the General Assembly;

3. act against the interests of the company;

4. in case of non-payment of additional financial contribution, in case the partner has not exercised his right to leave under Art. 134, para. 2 of the Commercial Law.

We will look at the hypotheses under items 1 and 3 because the other hypotheses assume that the partner was present at the general meeting.

First, note that the partner should be warned in writing. i.e., you must notify him to discontinue the behavior that interferes with the conducting of the business of the company, a general meeting cannot be convened to adopt an annual financial statement, for example, or with which he acts against the interests of the company. According to the court practice, reaching of the warning to the partner is a prerequisite for deciding on his exclusion. The question arises, and if your partner is a foreigner and you do not have his or her address, or the address he gave you does not exist or is no longer occupied by the person? At this point, you would like to have been approached by a lawyer, who to describe the procedure for notification in the Partners Agreement at the time of incorporation. Please note that current legislation does not provide an option for notification through the announcement of invitation or other act in the Commercial Register. This would be a good solution to the problem since the register is public and if, for example, 1 year from the announcement of the warning, you are not interested in what is happening with your own company, then your disinterest is obvious.

Please note that the foregoing is a non-binding opinion and does not constitute legal advice. If you would like us to advise you on a specific case, please contact us at the specified contacts.