LLC Member Dissociation, Withdrawal, and Expulsion Requirements in Montana
At a glance
| Governing law, member status exit, and scope | Montana LLC Act, MCA Title 35 ch. 8; ordinary domestic at-will or term LLC. Covers notice, agreement, full distributional-interest transfer, expulsion, insolvency, death/incapacity, trust/estate distribution, entity termination, buyout, and dissociation filing (§§ 35-8-101 to -102, -803 to -805, -808, -812) |
|---|---|
| Operating agreement, articles, and status-exit limits | OA may eliminate express-will dissociation power and controls agreement events, expulsion, valuation/terms, and many consequences. It cannot unreasonably restrict information or vary the specified § 35-8-803 expulsion right, required winding up, good-faith/loyalty/care floors, or protected outsiders (§§ 35-8-109, -804, -808(3)) |
| Voluntary withdrawal: power, right, notice, and effective date | Unless OA eliminates power, member may dissociate any time rightfully or wrongfully. LLC notice ends status on notice date or member's stated later date. No universal writing, signature, advance period, acceptance, or consent rule (§§ 35-8-803(1)(a), -804(1)) |
| Wrongful dissociation, damages, and other liability | If power remains: wrongful for OA breach or, before term expiration, express withdrawal, judicial expulsion, bankruptcy, or specified nontrust/nonestate/nonindividual willful dissolution/termination. Caused damages run to LLC/members, add to other obligations, and offset distributions/purchase price (§§ 35-8-804(2)-(4), -808(6)) |
| Agreement-based and unanimous-consent expulsion | OA event or OA expulsion causes exit. Other members may unanimously expel for illegality; substantially-all distributional-interest transfer excluding security/unforeclosed charge; uncured corporate dissolution/charter/suspension after 90 days; or dissolved, winding-up partnership/LLC. Entire economic transfer independently dissociates (§ 35-8-803(1)(b)-(e)) |
| Judicial expulsion: applicant, procedure, and grounds | LLC or another member may apply. Court may expel for wrongful conduct with adverse material effect; willful/persistent material OA or § 35-8-310 duty breach; or company-business conduct making continuation with member not reasonably practicable. OA cannot vary this right (§§ 35-8-109(4)(e), -803(1)(f)) |
| Death, incapacity, insolvency, entity, and transaction events | Bankruptcy, creditor assignment, consensual fiduciary appointment, or uncured nonconsensual appointment after stated 90-day periods; individual death, guardian/general-conservator appointment, or incapacity determination; trust/estate full-rights distribution; qualifying entity termination. No separate merger/conversion/domestication/interest-exchange event in § 35-8-803 (§ 35-8-803(1)(g)-(k)) |
| Management, voting, authority, and post-exit duties | Member status/management end and former member becomes transferee. Noncompetition loyalty ends; other loyalty/care continue only for preexit matters unless person winds up. Act states no automatic end to separate manager office; filing gives outsider notice after 90 days and affects member/manager agency questions (§§ 35-8-301, -310, -805(2), -812) |
| Transferable interest, distributions, buyout, and economics | At-will LLC buys at dissociation-date fair value; term LLC generally buys at term expiration using then-value. Offer due within 30 days; no agreement within 120 days opens another 120-day enforcement window; wrongful-exit damages/other amounts offset. Former member otherwise has transferee economics (§§ 35-8-707, -805(1), -808) |
| Prior liability, information, records, filings, and dissolution | Transfer/admission does not release transferor liability; former member has membership-period record access. Dissociated member or LLC must file statement; outsider notice after 90 days. Annual report lists all members or managers. Dissolution follows written document event, specified consent, illegality, term expiration, or decree—not ordinary dissociation alone (§§ 35-8-208, -405, -707(4), -812, -901) |
Requirements one by one
The operating agreement may eliminate withdrawal power
Under MCA § 35-8-804(1), a member has power to dissociate at any time, rightfully or wrongfully, unless the operating agreement provides otherwise. If the power remains, § 35-8-803(1)(a) makes exit effective when the LLC has notice, on the notice date or a later date the member states. The statute sets no universal writing, signature, advance period, acceptance, or consent rule.
The governing law is the Montana Limited Liability Company Act. §§ 35-8-101 to 35-8-102 separate at-will and term companies and member status from the distributional interest.
Wrongfulness turns on agreement breach and the term
Section 35-8-804 makes an exit wrongful for breach of an express agreement term. Before a term company expires, express withdrawal, judicial expulsion, bankruptcy, and specified willful entity dissolution or termination are also wrongful.
The former member owes the LLC and other members damages caused, in addition to other obligations. Company damages offset later distributions, and § 35-8-808(6) offsets wrongful-exit damages and all other amounts owed against the purchase price.
The agreement governs most internal terms under § 35-8-109, subject to its information, duty, expulsion, winding-up, and outsider floors.
Full transfer and expulsion use different triggers
Section 35-8-803(1)(c) makes transfer of the entire distributional interest an automatic dissociation event, except for a security transfer or an unforeclosed charging order. Separately, the other members may unanimously expel after transfer of substantially all of the interest.
The other unanimous grounds are illegality; an uncured corporate dissolution, charter revocation, or business suspension after 90 days; and a dissolved, winding-up partnership or LLC. An agreement event or agreement-based expulsion also causes dissociation.
Under §§ 35-8-703 to 35-8-707, a transferee receives distributions but not member rights, and transfer does not release the transferor's liability.
The company or another member may seek judicial expulsion
Under § 35-8-803(1)(f), the LLC or another member may apply. The grounds are adverse and material wrongful conduct; a willful or persistent material agreement or § 35-8-310 duty breach; or company-business conduct making continuation with the member not reasonably practicable.
The agreement cannot vary this statutory expulsion right. The subsection states no separate valuation or damages procedure.
Insolvency and personal or entity status can end membership
Section 35-8-803(1)(g)-(k) covers bankruptcy, creditor assignment, a consensual trustee/receiver/liquidator appointment, and a nonconsensual appointment not vacated or stayed within the stated 90-day and post-stay periods. It also covers individual death, guardian or general-conservator appointment, adjudicated incapacity, trust or estate full-rights distribution, and a qualifying entity member's termination.
The event list states no separate merger, conversion, domestication, or interest-exchange dissociation event. Those company transactions remain outside this status-event list.
Governance ends and a public filing follows
Under § 35-8-805(2), the person ceases membership, loses member management, and is treated as a transferee. Noncompetition loyalty ends; other loyalty and care duties continue only for preexit matters unless the former member winds up the company.
§ 35-8-812 requires the dissociated member or LLC to file a statement of dissociation. For member/manager agency purposes, a nonmember is considered to have notice 90 days after filing. That filing matters separately from internal status and the annual-report roster.
A continuing company has a detailed fair-value purchase
Under §§ 35-8-805 and 35-8-808, a continuing at-will LLC must buy the former member's distributional interest at fair value measured on the dissociation date. For a term company that does not wind up by term expiration, purchase and valuation ordinarily occur at expiration.
The LLC must make a supported offer within 30 days. If no agreement is made within 120 days, the former member has another 120 days to file an enforcement proceeding. Agreement-set price and terms govern unless the purchaser defaults; court valuation and payment terms follow the companion section.
Records, prior liability, and dissolution remain separate
Under § 35-8-405, a former member and the former member's agents or attorneys retain access and copying rights for membership-period records. Transfer and dissociation do not erase liabilities already owed.
The annual report under § 35-8-208 lists every member in a member-managed LLC or every manager in a manager-managed LLC and must be current when executed. § 35-8-901 separately lists written document events, specified member consent, uncured illegality, term expiration, and a judicial decree as dissolution events. Ordinary dissociation alone is not one of them.
What trips people up
- The agreement can eliminate withdrawal power. Montana does not merely regulate whether an otherwise effective exit is rightful.
- Full transfer automatically ends status. The unanimous-expulsion route separately uses “substantially all.”
- Term-company payment may wait until expiration. The value date moves to that future point too.
- A statement of dissociation is mandatory. Outsider notice follows 90 days after filing, not merely at internal exit.
Common questions
May another member seek judicial expulsion?
Yes. Section 35-8-803(1)(f) names the company or another member as applicant.
Does every dissociation cause an immediate buyout?
No. A term-company purchase ordinarily waits until term expiration, and dissolution sends economics through winding up.
Does a charging-order foreclosure itself end membership?
A full transfer generally does, but § 35-8-803 expressly excludes a charging order that has not been foreclosed. The foreclosure purchaser receives transferee rights under § 35-8-705.
Who files the statement of dissociation?
Either the dissociated member or the LLC must file the statement under § 35-8-812.
Statutes and sources
- MCA §§ 35-8-101 to -102, -109, -208, -301, -310, and -405 — Act, company types, agreement floors, reporting, agency, duties, and former-member records. Official § 35-8-109 (accessed August 30, 2026).
- MCA §§ 35-8-703 to -707 and -803 to -805 — transferee rights, transfer liability, events, power, wrongfulness, damages, management, and duties. Official § 35-8-803, § 35-8-804, and § 35-8-805 (accessed August 30, 2026).
- MCA §§ 35-8-808, -812, and -901 — fair-value purchase, offsets, dissociation filing and outsider notice, and dissolution boundaries. Official § 35-8-808 and § 35-8-812 (accessed August 30, 2026).
Source links
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