LLC Member Dissociation, Withdrawal, and Expulsion Requirements in Arkansas

At a glance

Requirements one by one

Knowledge or notice causes exit even when it is wrongful

Ark. Code § 4-38-101 names Chapter 38 the Uniform Limited Liability Company Act. § 4-38-105 and § 4-38-107 make the operating agreement the primary source within statutory limits. Under § 4-38-601, a person has the power to dissociate at any time, rightfully or wrongfully. Under § 4-38-602, status ends when the LLC knows or has notice of express will to withdraw or on a later date the member specifies. The statute states no acceptance, consent, advance period, or public filing.

Under the statutory default, an express-will exit before completion of winding up is wrongful. Breach of an express operating-agreement provision is an independent wrongful-exit route.

Wrongful exit creates causation-based damages

The other specified pre-wind-up wrongful events are judicial expulsion, a member-managed insolvency event under § 4-38-602(8), and a qualifying nonindividual member's willful dissolution or termination. A wrongfully dissociating person owes the LLC and, subject to the direct-action statute, the other members damages caused by the dissociation, in addition to other liabilities.

Agreement, all-other-member, and court expulsion differ

An agreement event or agreement-authorized expulsion causes dissociation. All other members may expel only for the closed list: illegality; a complete transfer other than security or an unforeclosed charging order; a notified entity-status defect uncured after 90 days; or a dissolved and winding-up unincorporated entity.

The LLC or a member in a direct action may seek judicial expulsion. The court must find materially adverse wrongful conduct; willful or persistent material breach of the agreement or a § 4-38-409 duty or obligation; or company-related conduct making continuation with the person not reasonably practicable.

The foreclosure event is stranded by a later amendment

The original event list still says a person's entire interest transferred in a foreclosure sale under § 4-38-503(f) causes dissociation. But enacted 2025 Act 461 replaced § 4-38-503 and now states that a charging-order lien “shall not be foreclosed on under this subchapter or any other law.” The retained event has no current charging-order foreclosure route.

The operative personal and transaction events otherwise include death; member-managed incapacity and insolvency events; trust/estate full distribution; nonindividual termination; merger, interest exchange, conversion, domestication results; and completion of winding up.

Governance ends while economics continue

Under § 4-38-603, member management ends at dissociation, and statutory member duties under § 4-38-409 end only for postexit matters and events. A member who is also manager loses that office; ending the manager office alone does not end membership.

The former member owns the preexit transferable interest solely as a transferee, retaining distributions without member governance. Under § 4-38-404, dissociation alone creates no interim distribution, automatic buyout, redemption, fair-value payment, or deadline. In an oppression-dissolution proceeding, § 4-38-701 permits an unspecified alternative remedy but supplies no statutory purchase formula.

Information, prior liability, reporting, and dissolution stay separate

Dissociation does not discharge member-incurred debt, obligation, or liability. Under § 4-38-410, a former member may demand preexit-period information on ten days' record notice, good faith, and the same proper-purpose and particularity conditions imposed on a manager-managed member.

Arkansas creates no event-driven member-exit filing. Under § 4-38-212, its annual franchise-tax report names at least one member if member-managed or one manager if manager- managed, and must be current when signed. Ninety consecutive memberless days trigger dissolution unless majority-distribution transferees consent to a specified person and at least one person becomes a member within the period.

What trips people up

• The foreclosure cross-reference is obsolete. Current § 4-38-503 bars the sale that § 4-38-602(3) still names.
• Exit and rightfulness are separate. Knowledge or notice can end status even though the default pre-wind-up express exit is wrongful.
• All-other-member expulsion is a closed list. It is not a general no-cause power.
• The annual report is only a role sample. It names at least one member or manager, not every owner.

Common questions

Must the LLC accept a withdrawal notice?

No. Status ends when the LLC knows or has notice or on the member's stated later date, though the exit can still be wrongful.

Does dissociation force a buyout?

No. The former member ordinarily becomes a transferee, and dissociation alone does not create an interim distribution or fair-value payment.

May all other members expel someone for any reason?

No. Their statutory route is limited to the listed illegality, transfer, and entity-status circumstances. Agreement and judicial expulsion are separate.

Can a creditor foreclose a charging order against the sole member?

Not under current § 4-38-503. Act 461 says the charging-order lien may not be foreclosed, despite the old foreclosure event still printed in § 4-38-602(3).

Statutes and sources

• Ark. Code §§ 4-38-101, -105, -107, -212, -404, -407, and -410 — Act name, agreement control, distribution, management, information, and reporting. Official Arkansas Act 1041 of 2021 (accessed August 30, 2026).
• Ark. Code §§ 4-38-502 and -601 to -603 — transferee economics, withdrawal, wrongfulness, expulsion, automatic events, and status effects. Official Act 1041 (accessed August 30, 2026).
• Ark. Code § 4-38-701 — 90-day memberless dissolution. Official Act 1041 (accessed August 30, 2026).
• Current Ark. Code § 4-38-503 — charging-order foreclosure prohibition. Official 2025 Act 461 (accessed August 30, 2026).