LLC Member Dissociation, Withdrawal, and Expulsion Requirements in Texas
At a glance
| Governing law, member status exit, and scope | Texas Business Organizations Code Chapters 1, 11, and 101; ordinary domestic LLC member withdrawal/expulsion defaults, company-agreement variation, withdrawal distribution, assignment/death economics, records, and last-member winding-up boundary. Texas does not use a general Article 6 dissociation scheme (§§ 101.052-.054, .107, .205; 11.056) |
|---|---|
| Operating agreement, articles, and status-exit limits | Company agreement governs member/manager/assignee/company relations and may waive or modify applicable Chapter 101 rules except § 101.054's protected list. Section 101.107 is not on that list, so agreement may create withdrawal/expulsion terms. Certificate supplies no independent ordinary status-exit route (§§ 101.052-.054, .107) |
| Voluntary withdrawal: power, right, notice, and effective date | Default: member may not withdraw. If company agreement grants a right, its conditions control; § 101.205 recognizes a valid exercise and withdrawal date but states no universal notice form, recipient, advance period, acceptance, or later-date rule (§§ 101.052, .107, .205) |
| Wrongful dissociation, damages, and other liability | No general statutory 'wrongful dissociation' category, causation-based damages rule, or post-exit release in Chapter 101. Agreement and other applicable contract/duty/remedy law control without a survey prediction; assignment separately does not release assignor's company liability (§§ 101.052, .107, .111, .205) |
| Agreement-based and unanimous-consent expulsion | Default: member may not be expelled. Company agreement may waive/modify that default and state an expulsion event, actor, vote, cause, notice, or consequence. Code states no default unanimous-other-member expulsion list and no general majority/no-cause route (§§ 101.052-.054, .107) |
| Judicial expulsion: applicant, procedure, and grounds | Chapter 101 states no ordinary judicial member-expulsion applicant or wrongful-conduct/material-breach/not-reasonably-practicable grounds. Judicial winding up under Chapter 11 is a separate entity remedy, not authority to rewrite the default as member expulsion (§§ 101.107, 11.051) |
| Death, incapacity, insolvency, entity, and transaction events | No general automatic dissociation list for death, incapacity, bankruptcy, entity termination, or transactions. On death, spouse/heir/devisee/personal representative/other successor is assignee to extent of inherited interest; purchase/sale agreement remains effective. Last-member membership termination has separate company-continuation rules (§§ 101.1115, 11.056) |
| Management, voting, authority, and post-exit duties | Because default withdrawal/expulsion is prohibited, Code supplies no general post-dissociation management, voting, agency, manager-office, or future-duty rule. Valid agreement-based status exit follows the agreement and other applicable law. Economic assignment alone gives assignee no member management and leaves assignor a member until assignee admission (§§ 101.052, .107-.111) |
| Transferable interest, distributions, buyout, and economics | Valid exercise of agreement-granted withdrawal right: fair value of member's interest as of withdrawal date, payable within reasonable time; agreement may vary § 101.205 and statutory distribution limit applies. Death successors are assignees; ordinary assignment transfers allocations/distributions and records rights, not membership/management (§§ 101.108-.1115, .205-.206) |
| Prior liability, information, records, filings, and dissolution | No general withdrawal-based release or former-member information rule. Assignee has proper-purpose records rights; LLC keeps current member interests/classes and admission dates. Ordinary status-exit sections state no immediate SOS dissociation filing. Last-member membership termination requires winding up unless continued within 1 year or agreement period under § 11.056 (§§ 101.501-.502, 11.056) |
Requirements one by one
Texas starts with no withdrawal or expulsion
Tex. Bus. Orgs. Code § 101.107 states the default in one sentence: a member may not withdraw or be expelled. Texas therefore has no ordinary statutory express-will withdrawal, unanimous-other-member expulsion list, judicial-expulsion applicant, or wrongful-dissociation damages code.
This is not the last word when a company agreement exists. Under Tex. Bus. Orgs. Code §§ 101.052 and 101.054, the company agreement governs internal relations and may waive or modify an applicable Chapter 101 provision unless § 101.054 protects it. Section 101.107 is not on that protected list. An agreement may therefore create and condition a withdrawal or expulsion route.
Agreement-based withdrawal carries a fair-value rule
Under Tex. Bus. Orgs. Code §§ 101.205-.206, a member who validly exercises a withdrawal right granted by the company agreement is entitled to the fair value of the interest within a reasonable time after withdrawal. Value is measured as of the withdrawal date.
Section 101.205 does not prescribe a universal notice form, recipient, advance period, acceptance step, appraisal procedure, or dispute process. The company agreement may modify the section, while § 101.206's protected distribution limit remains. This survey does not calculate fair value or decide whether an agreement condition was satisfied.
The ordinary Code supplies no automatic or judicial event list
Chapter 101 does not provide a general member-status exit upon death, incapacity, bankruptcy, entity termination, merger, or another automatic event. It also does not create the uniform-act judicial grounds for materially adverse conduct, persistent breach, or impracticable continuation with a member. Company-agreement terms and other applicable law must be examined without converting judicial winding up into member expulsion.
Death has a narrower economic rule. Tex. Bus. Orgs. Code § 101.1115 treats the surviving spouse, heir, devisee, personal representative, or other successor as an assignee to the extent of the inherited interest and preserves an agreement to purchase or sell the interest. It does not itself supply a general member-expulsion procedure.
Assignment is not a substitute for status exit
Under Tex. Bus. Orgs. Code §§ 101.108-.111, assignment carries the assigned allocations, distributions, and record rights but not management, membership, or other member rights. The assignor remains a member with unassigned rights until the assignee becomes a member, and assignment does not release the assignor's company liability.
That structure differs from a valid agreement-based withdrawal under § 101.205. Do not describe an assignment alone as resignation, dissociation, or the fair-value withdrawal payout.
Records and last-member winding up remain separate
Tex. Bus. Orgs. Code §§ 101.501-.502 requires current member-interest, class/group, and admission-date records and gives members and assignees agreement-sensitive proper-purpose inspection rights. The ordinary withdrawal and expulsion sections state no immediate Secretary of State member-status filing and no distinct former-member inspection right.
Under Tex. Bus. Orgs. Code §§ 11.051 and 11.056, termination of the last remaining member's continued membership triggers winding up unless the company is continued within one year or the agreement's period through the statutory successor, representative, or admission route. That company-level consequence does not turn every individual membership change into dissolution.
What trips people up
- The prohibition is a default. The company agreement can waive or modify § 101.107 because it is not on § 101.054's protected list.
- A valid withdrawal has a payout rule. Texas is not a retained-transferee- economics state for the specific § 101.205 route; it uses fair value within a reasonable time unless valid agreement terms change it.
- Assignment and withdrawal are different. An assignor can remain a member after assigning economics.
- Judicial winding up is not judicial expulsion. The ordinary LLC statute supplies no general court-ordered member-removal grounds.
Common questions
May a Texas LLC member simply resign?
Not under the statutory default. A company agreement must grant and govern the withdrawal right.
May the remaining members expel someone by majority vote?
No default majority-expulsion power appears. Any nonjudicial route must come from the company agreement or other applicable authority.
Does a valid withdrawal require a buyout?
Section 101.205 entitles the withdrawing member to fair value measured on the withdrawal date and paid within a reasonable time, subject to valid agreement terms and the statutory distribution limit.
Does assigning the whole interest end membership?
Not by itself. The assignor remains a member with unassigned rights until the assignee becomes a member.
Statutes and sources
- Tex. Bus. Orgs. Code §§ 101.052, 101.054, and 101.107 — company- agreement control and the no-withdrawal/no-expulsion default. Official Texas Legislative Council Chapter 101 (accessed August 30, 2026).
- Tex. Bus. Orgs. Code §§ 101.108 to 101.1115 — assignment, continuing member status and liability, and death-successor assignee treatment. Official Texas Legislative Council Chapter 101 (accessed August 30, 2026).
- Tex. Bus. Orgs. Code §§ 101.205 to 101.206 — fair-value withdrawal distribution and protected distribution limit. Official Texas Legislative Council Chapter 101 (accessed August 30, 2026).
- Tex. Bus. Orgs. Code §§ 101.501 to 101.502 — member records and member/ assignee inspection rights. Official Texas Legislative Council Chapter 101 (accessed August 30, 2026).
- Tex. Bus. Orgs. Code §§ 11.051 and 11.056 — entity winding-up events and last-member continuation. Official Texas Legislative Council Chapter 11 (accessed August 30, 2026).
Source links
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