LLC Member Dissociation, Withdrawal, and Expulsion Requirements in Utah
At a glance
| Governing law, member status exit, and scope | Utah Revised Uniform LLC Act, Title 16 ch. 20; ordinary domestic LLC withdrawal, 16 event categories, status/economic effects and memberless dissolution (§§ 16-20-601 to -603, -701) |
|---|---|
| Operating agreement, articles, and status-exit limits | Agreement governs internal relations and may set exit/expulsion events and obligations to a former member; later amendment cannot impose new liability on former member. Statutory filing, duty/good-faith, information/action, dissolution and nonparty floors remain (§§ 16-20-107, -109) |
| Voluntary withdrawal: power, right, notice, and effective date | Power to leave anytime, rightfully or wrongfully, by express will. Dissociation when LLC has notice or on member’s stated later date; no statutory acceptance or advance-period condition. Pre-wind-up express exit wrongful by default (§§ 16-20-601(1)-(2), -602(1)) |
| Wrongful dissociation, damages, and other liability | Wrongful if express agreement breach or specified pre-wind-up event: express withdrawal, judicial expulsion, member-managed insolvency event, or willful qualifying entity dissolution/termination. Damages caused owed to LLC and, subject to direct-action rule, other members, plus other liability (§ 16-20-601(2)-(3)) |
| Agreement-based and unanimous-consent expulsion | Agreement event/expulsion causes exit. Unanimous-other-member route only for illegality; complete transfer except security/unforeclosed charging order; corporation defect uncured 90 days after notice; or dissolved/winding unincorporated entity. Sole-member charging-order foreclosure separately dissociates (§§ 16-20-503(6), -602(2)-(5)) |
| Judicial expulsion: applicant, procedure, and grounds | LLC or member in direct action may apply for judicial expulsion: materially adverse wrongful conduct, willful/persistent material agreement or § 16-20-409 breach, or company-related conduct making continuation not reasonably practicable (§ 16-20-602(6)) |
| Death, incapacity, insolvency, entity, and transaction events | Death; member-managed guardian/conservator/court incapacity and bankruptcy/creditor-assignment/receiver events; trust/estate whole-interest distribution; entity termination; specified merger, exchange, conversion and domestication results; winding-up completion (§ 16-20-602(7)-(16)) |
| Management, voting, authority, and post-exit duties | Member governance ends; member-manager removed as manager. In member-managed LLC, § 16-20-409 duties end for postexit matters/events. Interest becomes transferee-only; ending manager office alone does not end membership (§§ 16-20-407(3)(e), -603(1)) |
| Transferable interest, distributions, buyout, and economics | Former member holds preexit transferable interest only as transferee; dissociation alone creates no interim distribution or automatic buyout. Separate oppression-dissolution proceeding has a purchase-election route (§§ 16-20-404(2), -603(1)(c), -702(1)) |
| Prior liability, information, records, filings, and dissolution | No discharge of incurred liability. Former member may demand preexit information on 10 days’ record notice with good faith and particularized related purpose. Certificate correction only if filed fact inaccurate; 90 memberless days cause dissolution unless qualifying transferees consent and a member joins (§§ 16-20-202(4), -410(3)-(4), -603(2), -701(3)) |
Requirements one by one
Agreement and withdrawal
The operating agreement governs internal relations and may specify dissociation events or expulsion. It also governs company and member obligations to a former member, but a later amendment cannot impose a new liability on that person. Statutory limits preserve filing, duty, good-faith, information, member-action, dissolution and nonparty protections. Utah Code § 16-20-107; Utah Code § 16-20-109(2).
A person has the power to leave at any time, rightfully or wrongfully. Status ends when the LLC has notice of the member's express will to withdraw, or on a later date the member specifies. The statute states no acceptance, consent or advance-period condition. An express-will exit before completion of winding up is wrongful by default. Utah Code §§ 16-20-601(1)-(2), -602(1).
Wrongful-exit liability
Dissociation is wrongful if it breaches an express agreement term or if, before completion of winding up, it follows express withdrawal, judicial expulsion, a member-managed insolvency event, or a qualifying nonindividual member's willful dissolution or termination. A wrongfully dissociating person owes damages caused to the LLC and, subject to the direct-action rule, other members, in addition to other liabilities. Utah Code § 16-20-601(2)-(3).
Expulsion routes
An agreement event or agreement-authorized expulsion causes dissociation. The other members can unanimously expel only for illegality; complete transfer except security or an un-foreclosed charging order; a stated corporate status defect not cured within 90 days after notice; or a dissolved, winding-up unincorporated entity. The LLC or a member in a direct action can seek judicial expulsion for materially adverse wrongful conduct, willful or persistent material agreement or duty breach, or conduct making continued operation with the person not reasonably practicable. Utah Code § 16-20-602(2), (4)-(6).
Automatic events
Death dissociates an individual. Guardian, conservator or court incapacity and bankruptcy, creditor assignment or receiver events apply in member-managed LLCs. The list also covers whole-interest trust or estate distribution, specified entity termination, merger and exchange results, conversion, specified domestication results, and completion of winding up. A court-confirmed foreclosure against a sole member has its own status-exit effect. Utah Code § 16-20-602(3), (7)-(16); Utah Code § 16-20-503(6).
Governance, duties and economics
Dissociation ends the person's member management rights. In a member-managed LLC, member duties under § 16-20-409 end for matters and events after exit, not earlier ones. A member-manager also loses manager office, but loss of manager office alone does not end membership. An economic-interest transfer alone does not cause dissociation, and the transferee receives distributions without member management rights. The former member holds any preexit transferable interest solely as a transferee. Dissociation does not itself create an interim distribution or automatic buyout. The election to purchase under § 16-20-702 belongs to a separate dissolution case. Utah Code § 16-20-407(3)(e); Utah Code § 16-20-409; Utah Code § 16-20-502(1)-(2); Utah Code § 16-20-404(2); Utah Code § 16-20-603(1); Utah Code § 16-20-702(1).
Prior obligations, information and filing
Exit does not discharge debt or liability incurred while a member. A former member may seek information from the membership period on ten days' recorded demand, in good faith, meeting the particularized purpose test. A filed certificate fact that becomes inaccurate must be promptly corrected. Ninety consecutive days without members causes dissolution unless transferees holding rights to a majority of distributions consent to admit a specified person and at least one person becomes a member. Utah Code § 16-20-603(2); Utah Code § 16-20-410(2)-(4); Utah Code § 16-20-202(4); Utah Code § 16-20-701(3).
What trips people up
- Notice can end member status even when withdrawal is wrongful. Utah Code §§ 16-20-601(1)-(2), -602(1).
- The unanimous expulsion route has a specific list of grounds. Utah Code § 16-20-602(5).
- Dissociation leaves economic rights with the former member as transferee, without a general statutory cash-out. Utah Code §§ 16-20-404(2), -603(1)(c), -702(1).
Common questions
Must the LLC accept a withdrawal notice?
No acceptance is stated. Status ends when the LLC has notice or on the member's specified later date; damages can still follow a wrongful exit. Utah Code §§ 16-20-601, -602(1).
Can the other members expel by majority vote?
The statutory consent route requires all other members and a listed ground. Agreement-based and judicial routes are separate. Utah Code § 16-20-602(4)-(6).
Statutes and sources
- Utah Code §§ 16-20-107, -109, -202, -404, -407, -410, -502 to -503, -601 to -603, -701 to -702; 2026 S.B. 40 § 297. Current agreement, withdrawal, wrongfulness, expulsion, status-effect, information, filing and memberless-dissolution rules. Official enrolled S.B. 40 (accessed October 1, 2026). Brackets mark deleted prior words; unbracketed replacements govern.
Source links
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