LLC Member Dissociation, Withdrawal, and Expulsion Requirements in South Dakota

At a glance

Requirements one by one

The operating agreement may eliminate withdrawal power

Under SDCL § 47-34A-602(a), a member has power to dissociate at any time, rightfully or wrongfully, unless the operating agreement provides otherwise. If power remains, § 47-34A-601(1) 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.

Wrongfulness turns on agreement breach and the term

Section 47-34A-602 makes an exit wrongful for agreement breach. Before an articles-stated term 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 caused damages in addition to other obligations.

The agreement governs most internal terms under § 47-34A-103, subject to its loyalty, good-faith, expulsion, winding-up, and outsider floors.

Full transfer and expulsion use different triggers

Section 47-34A-601 makes transfer of the entire distributional interest an automatic exit, except for security or an unforeclosed charging order. Separately, all other members may expel after substantially-all transfer, illegality, an uncured corporate-status problem after 90 days, or dissolution and winding up of an entity member. An agreement event or expulsion also works.

Under §§ 47-34A-501 to 47-34A-504, a transferee receives distributions but not member rights, and transfer does not release prior liability.

The company or another member may seek judicial expulsion

Under § 47-34A-601(6), the LLC or another member may apply. The grounds are adverse material wrongful conduct; willful or persistent material agreement or § 47-34A-409 duty breach; or conduct making continuation with the member not reasonably practicable. The agreement cannot vary this statutory route.

Personal, insolvency, and entity events are detailed

Section 47-34A-601 covers bankruptcy, creditor assignment, consensual fiduciary appointment, uncured nonconsensual appointment after the 90-day periods, death, guardian or general-conservator appointment, incapacity, trust or estate full-rights distribution, and entity termination.

The list states no separate merger, conversion, domestication, or interest- exchange exit event. Charging-order foreclosure is unavailable even for a single-member LLC under § 47-34A-504.

Governance ends but past-period records survive

Under § 47-34A-603, the person ceases membership, loses management, and is treated as a transferee. Noncompetition loyalty ends; other loyalty and care continue only for preexit matters.

Member-status agency under § 47-34A-301 ends with membership; a separately held manager office and manager authority still require their own analysis.

Section 47-34A-408 preserves former-member proper-purpose access to records from the membership period. The Act does not say dissociation automatically ends a separately held manager office; the management form and capacity must be checked separately.

There is no statutory buyout

Dissociation creates no automatic purchase, fair-value payment, redemption, or forfeiture. The former member instead has transferee economics under §§ 47-34A-502 to -503. The operating agreement may change economic consequences.

Prior obligations remain with the transferor. The Act states no event-driven public member-exit filing or owner-report requirement.

Dissociation never itself dissolves the LLC

Section 47-34A-603(a) states the rule directly: member dissociation does not dissolve and wind up the company. § 47-34A-801 separately uses agreement, consent, illegality, and judicial routes. Status exit and entity winding up therefore must not be collapsed.

What trips people up

• The agreement can eliminate withdrawal power. South Dakota does not only regulate whether an otherwise effective exit is wrongful.
• Full transfer automatically ends status. The unanimous route separately uses “substantially all.”
• There is no dissociation buyout. The former member keeps transferee distributions, not a statutory cashout.
• Former-member records access survives. It is distinct from the no-records rule for a transferee acting only as transferee.

Common questions

Must express-will notice be written?

Not under the statutory default, although the operating agreement may impose a valid writing or delivery rule.

May another member seek judicial expulsion?

Yes. Section 47-34A-601(6) names the company or another member as applicant.

Does dissociation require a buyout?

No. The former member becomes a transferee and continues with the associated distribution rights unless the agreement provides another result.

Does dissociation dissolve the LLC?

No. Section 47-34A-603 expressly says it does not.

Statutes and sources

• SDCL §§ 47-34A-101, -103, -301, and -408 to -409 — definitions, agreement floors, agency, duties, and former-member records. Official § 47-34A-408 (accessed August 30, 2026).
• SDCL §§ 47-34A-501 to -504 and -601 to -603 — transferee economics, charging order, events, power, wrongfulness, damages, governance, and duties. Official § 47-34A-601, § 47-34A-602, and § 47-34A-603 (accessed August 30, 2026).
• SDCL § 47-34A-801 — separate dissolution routes. Official current text (accessed August 30, 2026).