LLC Member Dissociation, Withdrawal, and Expulsion Requirements in Arizona

At a glance

Requirements one by one

Notice can end status even when the exit is wrongful

Under A.R.S. § 29-3601(A), a person has power to dissociate at any time, rightfully or wrongfully, by express will. Section 29-3602(1) makes the company's knowledge or notice the trigger; if the member specifies a later date, status ends then. The sections state no universal writing, signature, advance period, company consent, or acceptance requirement.

The operating agreement still matters. Section 29-3105 gives it broad internal control within listed nonwaivable floors, and breach of an express agreement provision is one statutory way the dissociation becomes wrongful.

Wrongful dissociation creates damages and an offset

Under A.R.S. § 29-3601(B)-(C), agreement breach is one category. A dissociation before completion of winding up is also wrongful when it occurs by judicial expulsion or any § 29-3602(7) debtor-bankruptcy, creditor-assignment, or consensual trustee/receiver/liquidator event.

The person is liable to the LLC and, subject to § 29-3807, the other members for damages caused by the dissociation, in addition to other liability. The LLC may offset its damages against an amount otherwise distributable to the person. This survey does not decide breach, causation, damages, offset amount, or waiver.

Agreement, unanimous consent, and court are distinct expulsion routes

An agreement-defined event and expulsion under the agreement each cause dissociation. The other members may act unanimously only within § 29-3602(4)'s list: illegality; complete transfer other than for security or a charging order; an uncured entity dissolution, charter, or business-right problem after 90-day notice; or a dissolved unincorporated entity winding up.

The LLC or a member bringing a direct action may apply for judicial expulsion. The grounds are materially adverse wrongful conduct, willful or persistent material agreement or modified-duty breach, and conduct making continuation with the person not reasonably practicable. The section states no special hearing schedule, damages formula, or mandatory interest sale.

Personal, insolvency, entity, and transaction events are unusually broad

The individual list includes death, guardian or general-conservator appointment, an incapacity order, and an incompetency order. The insolvency list is not limited to a member-managed LLC. Trust and estate full-interest distributions and termination of any nonindividual member also appear.

Arizona separately lists merger, interest exchange, conversion, domestication, division, completion of winding up, and a complete transfer coupled with transferee admission. Every conversion triggers dissociation; merger, interest exchange, domestication, and division use the section's stated result branches. A complete economic transfer alone does not necessarily dissociate until one of § 29-3602(17)'s transferee-admission conditions occurs.

Governance and future duties end while economics continue

Under A.R.S. § 29-3603(A), member management participation ends, and the person's § 29-3409 member duties and obligations end for matters arising and events occurring after dissociation. The section does not state that a separately held manager office or third-party authority automatically ends.

Any retained transferable interest becomes owned solely as a transferee interest. Under § 29-3502, a transferee receives distributions and has distribution-purpose information rights but not member management. Article 6 creates no automatic buyout, redemption, fair-value payment, forfeiture, or dissociation distribution; transaction effects and the wrongful-damages offset remain separate.

Prior liability and memberless dissolution remain separate

Section 29-3603(B) says dissociation does not itself discharge debt, obligation, or other liability incurred while a member. Article 6 states no immediate public dissociation filing. A former member holding a transferable interest has the transferee information rights tied to distributions rather than a separate general former-member inspection right.

If every member leaves, A.R.S. § 29-3701(A)(3) supplies a 180-day window. Before it ends, transferees entitled to more than half the liquidation value must consent in a signed record to admit a specified person, and at least one person must become a member. Otherwise the LLC dissolves.

What trips people up

• Power and rightfulness differ. Knowledge or notice can end status even though agreement breach makes the exit wrongful.
• Arizona permits a damages offset. Wrongful-exit damages may be set against amounts otherwise distributable; the statute does not fix the amount.
• Complete transfer and admission interact. A full economic transfer has a unanimous-expulsion route and a separate admission-coupled dissociation route.
• The no-member window is 180 days. The rescue requires both signed majority- value transferee consent and actual admission.

Common questions

May an Arizona LLC member withdraw at any time?

The statute gives the power to withdraw by express will at any time, but the exit may be wrongful under the operating agreement or another § 29-3601 branch.

When does express-will withdrawal take effect?

When the LLC knows or has notice, unless the member specifies a later date.

Does dissociation require a buyout?

No automatic buyout appears. Retained economics ordinarily continue as a transferee interest, subject to the agreement, transactions, and any wrongful- damages offset.

Who may seek judicial expulsion?

The LLC or a member bringing the direct action described in § 29-3602(5).

Statutes and sources

• A.R.S. §§ 29-3105 and 29-3502 — agreement hierarchy/floors and transferee economics and information. Official § 29-3105 and § 29-3502 (accessed August 30, 2026).
• A.R.S. §§ 29-3601 to -3603 — withdrawal power, wrongfulness, damages/offset, expulsion, automatic events, governance, duties, economics, and prior liability. Official § 29-3601, § 29-3602, and § 29-3603 (accessed August 30, 2026).
• A.R.S. § 29-3701 — 180-day no-member rescue and dissolution boundary. Official text (accessed August 30, 2026).