LLC Member Dissociation, Withdrawal, and Expulsion Requirements in Massachusetts
At a glance
| Governing law, member status exit, and scope | Massachusetts Limited Liability Company Act, G.L. c. 156C; ordinary domestic LLC member resignation under § 36, distribution under § 32, complete-assignment exit under § 39, and agreement/legacy dissolution boundaries. Member, manager, assignee, and LLC interest remain distinct (§§ 9-10, 24-25, 32, 36, 39-44) |
|---|---|
| Operating agreement, articles, and status-exit limits | Agreement sets resignation times/events and procedure and may deny resignation, but cannot defeat member's ≥6-month statutory notice route. Written agreement controls withdrawal payout, assignment/admission, expulsion, other exit events, and legacy continuation; certificate supplies LLC office for notice (§§ 32, 36, 39, 41, 43) |
| Voluntary withdrawal: power, right, notice, and effective date | Agreement-authorized route applies first. Regardless of no-resignation term, member may resign on ≥6 months' prior written notice to LLC at certificate-listed Massachusetts office and to every other member/manager at record address. No statutory acceptance/consent; notice must precede effective resignation by at least six months (§ 36) |
| Wrongful dissociation, damages, and other liability | No general 'wrongful dissociation' code or event list. If resignation violates agreement, LLC may recover breach damages in addition to other applicable-law remedies and offset them against amounts otherwise distributable. No statutory fixed damages or express other-member claim in § 36 (§ 36) |
| Agreement-based and unanimous-consent expulsion | Operating agreement may provide expulsion or another membership-ending event. Chapter states no general majority, unanimous-other-member, no-cause, illegality, complete-transfer, or entity-status expulsion vote. Complete assignment independently ends assignor membership by default (§§ 39(b)(2), 43(2), (4)) |
| Judicial expulsion: applicant, procedure, and grounds | No ordinary judicial member-expulsion applicant or conduct/breach/continuation grounds in Chapter 156C. Member or manager may seek entity dissolution when business cannot reasonably practicably continue in conformity with certificate/agreement; that company remedy is not expulsion (§ 44) |
| Death, incapacity, insolvency, entity, and transaction events | Ordinary modern Act states no general automatic dissociation list for death, incapacity, bankruptcy, trust/estate distribution, entity termination, merger, conversion, domestication, or foreclosure. Death/incompetence and entity dissolution/termination instead preserve representative/successor exercise of rights. Pre-1/1/1997 LLC has separate event-triggered dissolution/90-day continuation default (§§ 42-43) |
| Management, voting, authority, and post-exit duties | Resignation ends member status and member management; complete assignment ends all member rights/powers. Manager office is separate—manager need not be member and agreement governs office cessation—so member exit does not itself state manager termination. Act states no general future-duty cutoff (§§ 24-25, 39(b)(2)) |
| Transferable interest, distributions, buyout, and economics | Written agreement controls resignation distribution. If it permits resignation but does not otherwise provide payout, resigning member receives fair value within reasonable time, measured at resignation from distribution-sharing right. Assignment gives economics; full assignment ends membership. No automatic payout solely for expulsion/other event (§§ 32, 36, 39) |
| Prior liability, information, records, filings, and dissolution | Agreement-breach damages survive; complete assignor remains liable under §§ 31-37. Statutory records/information belongs to current member or manager; no general former-member route or immediate public exit filing. Modern LLC dissolution list excludes memberlessness; pre-1997 member exit can dissolve absent timely unanimous continuation/agreement right (§§ 9-10, 22, 41(c), 43-44) |
Requirements one by one
Six months' notice overrides a no-resignation clause
Under Mass. Gen. Laws ch. 156C, § 36, an agreement may specify resignation times/events and procedure or may say that a member has no resignation right. But regardless of a no-resignation term, a member may resign on at least six months' prior written notice.
The notice must go to the LLC at the Massachusetts office stated in its filed certificate of organization and to every other member and every manager at the addresses shown in the LLC's records on the notice date. The section states no acceptance or company-consent requirement, but the notice must precede the resignation by at least six months.
Agreement breach produces damages and an offset
Section 36 does not use a general “wrongful dissociation” definition. Instead, if resignation violates the operating agreement, the LLC may recover damages for breach in addition to otherwise available remedies and may offset those damages against amounts otherwise distributable to the resigning member.
The statute supplies no fixed damages amount and does not create an express other-member damages claim in this section. This survey does not decide breach, causation, damages, offset amount, waiver, or enforceability.
Written payout terms control before the fair-value fallback
Under Mass. Gen. Laws ch. 156C, § 32, a written operating agreement controls the distribution due on resignation. If it does not otherwise provide, the resigning member is entitled within a reasonable time to fair value as of the resignation date, based on the right to share in LLC distributions.
The section does not supply a complete appraisal procedure, discount rule, interest rate, security requirement, or dispute schedule. Its resignation payout should not be generalized to an agreement-based expulsion or other event without a governing provision.
Expulsion and judicial dissolution are not the same
Chapter 156C contains no ordinary statutory majority, unanimous-other-member, or judicial member-expulsion procedure. An operating agreement may define expulsion or another membership-ending event. A complete assignment separately ends membership by default under § 39(b)(2); a pledge or other encumbrance does not.
Under § 44, a member or manager may apply for judicial dissolution when it is not reasonably practicable to carry on the business in conformity with the certificate or operating agreement. That entity remedy is not statutory member expulsion.
Death and incapacity preserve representative powers
Under Mass. Gen. Laws ch. 156C, § 42, a deceased or adjudicated-incompetent individual member's legal representative may exercise all member rights to settle the estate or administer property. A dissolved or terminated entity member's representative or successor may exercise its powers. The ordinary modern Act does not call those events automatic dissociation.
There is a formation-date exception at the company level. Under §§ 43-44, for an LLC formed before January 1, 1997, § 43(4) defaults death, insanity, retirement, resignation, expulsion, bankruptcy, dissolution, or another membership-ending event into LLC dissolution unless a written agreement provides otherwise or all remaining members continue the business within 90 days. Later LLCs have no parallel member-event dissolution default.
Status, manager office, records, and liability remain distinct
Resignation ends membership and the member management attached to that status. A full assignment likewise ends every member right and power. But § 25 says a manager need not be a member, and § 24 makes the operating agreement govern manager office and cessation. Member exit therefore does not itself decide a separately held manager office; the two provisions are §§ 24-25.
Sections 9 and 10 grant records and information rights to a current member or manager and state no general former-member inspection route. Chapter 156C also states no immediate public member-exit filing. Section 22 prevents personal LLC-debt liability solely from status, but it is not a release from a person's own prior obligations. Section 41(c) expressly says a complete assignor remains liable to the LLC under §§ 31 through 37, which include the distribution and resignation provisions.
What trips people up
- A no-resignation clause is not absolute. The member still has the six- month written-notice route, although using it may breach the agreement.
- Payout is written-agreement first. The statutory fair-value rule fills a gap; it does not override a written distribution provision.
- Modern and pre-1997 dissolution rules differ. Only the legacy branch turns a member-status event into default company dissolution.
- Member and manager status are separate. Resignation does not necessarily end a separately held manager office.
Common questions
Can a Massachusetts LLC agreement prohibit resignation?
It may say so, but § 36 still permits resignation on at least six months' prior written notice to the LLC, every other member, and every manager.
What happens if that resignation violates the agreement?
The LLC may recover breach damages and offset them against amounts otherwise distributable to the resigning member.
Is a fair-value payout always required?
The written operating agreement controls first. If it does not otherwise provide, § 32 supplies fair value within a reasonable time.
Does death automatically end membership?
The ordinary modern statute instead lets the representative exercise member rights. A pre-1997 LLC has a separate dissolution/continuation rule.
Statutes and sources
- Mass. Gen. Laws ch. 156C, §§ 9-10, 22, and 24-25 — records, information, status-only liability, management, and separate manager office. Official § 9, § 10, § 22, § 24, and § 25 (accessed August 30, 2026).
- Mass. Gen. Laws ch. 156C, §§ 32, 35-36, and 38-39 — resignation payout, damages/offset, interest status, and complete-assignment exit. Official § 32, § 35, § 36, § 38, and § 39 (accessed August 30, 2026).
- Mass. Gen. Laws ch. 156C, §§ 41-44 — retained assignment liability, representative powers, legacy dissolution, and judicial dissolution. Official § 41, § 42, § 43, and § 44 (accessed August 30, 2026).
Source links
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