LLC Member Dissociation, Withdrawal, and Expulsion Requirements in New York
At a glance
| Governing law, member status exit, and scope | New York Limited Liability Company Law arts. 5-7 and 11; ordinary domestic LLC withdrawal, complete-assignment status exit, death/incapacity representation, payout, records, and dissolution boundaries. Act does not use a revised-uniform dissociation article or general expulsion event list (§§ 509, 603, 606, 608, 702, 1102) |
|---|---|
| Operating agreement, articles, and status-exit limits | Members must adopt written operating agreement, which may govern member rights, powers, limitations, responsibilities, withdrawal timing/events, payout, assignment, and any agreement-based status exit if consistent with law/articles. Current § 606 makes agreement controlling; articles supply no independent withdrawal/expulsion route (§§ 417, 509, 603, 606) |
| Voluntary withdrawal: power, right, notice, and effective date | Modern default: withdrawal only at agreement-specified time/event and according to agreement; otherwise no pre-winding-up withdrawal. Current § 606(b) preserves former rule for LLCs with original articles effective before subdivision's effective date: two-thirds-in-interest remaining-member consent, or absent consent ≥6 months' written LLC notice if agreement neither provides otherwise nor prohibits (§ 606; Matter of Jacobs) |
| Wrongful dissociation, damages, and other liability | No general statutory 'wrongful dissociation' category, causation-based damages rule, or automatic post-exit release in ordinary LLC Law. Agreement and other contract/duty/remedy law control without a survey prediction. Former-rule notice validity and payout can still be governed by agreement (§§ 417, 509, 606) |
| Agreement-based and unanimous-consent expulsion | LLC Law art. 6 states no general unanimous-other-member expulsion list or default majority/no-cause expulsion route. Written operating agreement may regulate member rights, limitations, responsibilities, and status-exit terms if lawful; this survey does not infer an expulsion power from ordinary voting rules (§§ 417, 606; art. 6 index) |
| Judicial expulsion: applicant, procedure, and grounds | Ordinary LLC Law states no judicial member-expulsion applicant or materially-adverse-conduct/material-breach/not-reasonably-practicable continuation grounds. Section 702 instead permits judicial dissolution when business cannot reasonably practicably continue in conformity with articles/agreement; dissolution is not member expulsion (§§ 606, 702; art. 6 index) |
| Death, incapacity, insolvency, entity, and transaction events | No general uniform-act automatic dissociation list for bankruptcy, entity termination, or transactions. Complete assignment ends membership. On natural-person death/incompetence, representative may exercise all member rights for estate/property administration; dissolved/terminated entity's representative/successor may exercise its powers (§§ 603(a)(4), 608) |
| Management, voting, authority, and post-exit duties | Complete assignor ceases membership and all member rights/powers; assignee receives no management/member rights absent admission. Withdrawal consequences follow governing agreement and applicable law; ordinary statute states no general future-duty cutoff, separate manager-office rule, or authority filing for former members (§§ 417, 603, 606) |
| Transferable interest, distributions, buyout, and economics | On withdrawal, agreement controls distributions; if silent, withdrawing member receives within reasonable time fair value as of withdrawal based on distribution-sharing right. Complete assignment gives assignee distributions and profit/loss allocations only, absent admission. No automatic forfeiture; valuation method beyond statutory measure is unstated (§§ 509, 603) |
| Prior liability, information, records, filings, and dissolution | Statute states no general withdrawal-based release, former-member inspection right, or immediate public status-exit filing. Member inspection under § 1102 ends with member status unless agreement/other law provides otherwise; assignee's default rights are economic only. Judicial dissolution and its 30-day order filing remain separate (§§ 603, 606, 702, 1102) |
Requirements one by one
Modern withdrawal exists only through the agreement
Under N.Y. LLC Law § 417(a), (c), members adopt a written operating agreement that may govern their rights, powers, limitations, and responsibilities within the statute and articles. N.Y. LLC Law § 606 makes that agreement decisive for modern withdrawal: the member may leave only at a specified time or event and according to the agreement. Without another agreement rule, pre-winding-up withdrawal is barred.
The section states no fallback notice form, advance period, acceptance, or company-consent route for a modern LLC. It also allows an agreement to prohibit pre-winding-up assignment.
Legacy LLCs retain former § 606
Current § 606(b) preserves former § 606 for an LLC whose original articles were filed and effective before that subdivision's effective date, unless the operating agreement provides otherwise. The current code page does not restate the former text.
The official state-law reporter fills that historical-text gap. Matter of Jacobs v. Cartalemi, applying former § 606, quotes two alternatives: at least two-thirds-in-interest vote or written consent of the remaining members; or, if consent is not given and the agreement neither provides otherwise nor prohibits withdrawal, at least six months' prior written notice to the LLC. Formation date and the governing agreement must be checked before choosing the modern or legacy branch.
Agreement controls payout, with a fair-value fallback
Under N.Y. LLC Law § 509, the withdrawing member receives the distribution provided by the operating agreement. If the agreement does not otherwise provide, the statute entitles the member within a reasonable time to fair value as of the withdrawal date, based on the right to share in distributions.
The statute does not prescribe a complete appraisal procedure, discount rule, interest rate, security, or dispute process. This survey does not value an interest or interpret a payout clause.
Complete assignment is a separate status-exit route
N.Y. LLC Law § 603(a) makes a full assignment end membership and all member rights and powers unless the operating agreement provides otherwise. The assignee receives only assigned distributions and profit/loss allocations and does not become a member or manager merely through assignment.
A pledge, security interest, lien, or encumbrance does not end membership by default. Complete assignment should not be confused with agreement-based withdrawal under § 606 or its payout rule under § 509.
The ordinary statute has no general expulsion code
The complete current N.Y. LLC Law article 6 contains membership, assignment, withdrawal, creditor, estate, liability, action, and transaction sections but no general unanimous-other-member expulsion list, judicial- expulsion applicant, automatic bankruptcy/entity/transaction dissociation schedule, or wrongful-dissociation damages provision.
An agreement may regulate member limitations and responsibilities, but this survey does not infer a no-cause expulsion power from general voting law. N.Y. LLC Law § 702 provides judicial dissolution when continued business in conformity with the articles or agreement is not reasonably practicable; that entity remedy is not statutory member expulsion.
Death and incapacity preserve representative powers
Under N.Y. LLC Law § 608, the legal representative of a deceased or adjudicated-incompetent natural-person member may exercise all member rights to settle the estate or administer property. A dissolved or terminated entity member's legal representative or successor may exercise that member's powers.
The section does not describe those events as a general automatic dissociation, forfeiture, or buyout. Agreement terms, probate/entity law, and the separate assignment provisions remain relevant.
Records rights track current member status
N.Y. LLC Law § 1102(a)-(b) requires current manager/member lists, formation and agreement documents, and recent tax records. It grants purpose-related inspection to a “member.” The ordinary sections state no general former-member inspection right, automatic liability release, or immediate Department of State withdrawal filing.
Agreement rights and other law may add remedies or access. Dissolution order filing, merger filings, manager changes, and business-divorce claims remain outside this member-status survey.
What trips people up
- Formation date can change the rule. Current § 606(b) sends qualifying legacy LLCs back to former § 606 rather than the modern no-withdrawal default.
- Payout is agreement-first. Section 509's fair-value rule applies only when the agreement does not otherwise provide.
- Full assignment ends membership by default. This differs from the retained-member rule used in many revised-uniform states.
- Dissolution is not expulsion. Section 702 addresses the entity, not a court-ordered member removal under a dissociation statute.
Common questions
Can a modern New York LLC member withdraw before dissolution?
Only if the operating agreement specifies the time or event and the member follows it.
What is the legacy withdrawal route?
Former § 606 used two-thirds-in-interest remaining-member consent or, under its agreement conditions, at least six months' prior written notice to the LLC.
Does withdrawal require a fair-value payment?
The agreement controls first. If it does not otherwise provide, § 509 supplies the reasonable-time fair-value rule measured at withdrawal.
Does assigning the whole interest end membership?
Yes by default under § 603(a)(4), although the operating agreement may provide otherwise.
Statutes and sources
- N.Y. LLC Law §§ 417 and 606 — written operating agreement and modern/ legacy withdrawal structure. Official New York Senate § 417 and § 606 (accessed August 30, 2026).
- Former N.Y. LLC Law § 606 — legacy consent and six-month-notice text. Official New York State Law Reporting Bureau, Matter of Jacobs v. Cartalemi (accessed August 30, 2026).
- N.Y. LLC Law §§ 509, 603, and 608 — withdrawal economics, complete- assignment status exit, and representative powers. Official New York Senate § 509, § 603, and § 608 (accessed August 30, 2026).
- N.Y. LLC Law article 6 and §§ 702 and 1102 — complete membership scheme, dissolution boundary, and records. Official Article 6, § 702, and § 1102 (accessed August 30, 2026).
Source links
Every statute quoted above, linked, with the date we checked it.
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