Running a Limited Liability Company with a partner can be a successful venture, fostering shared goals and combined expertise. But what happens when a partner betrays your trust by misappropriating company funds? Fortunately, Florida law provides options for removing a dishonest member from your LLC. Here, we discuss the grounds for dissociation of an LLC member in Florida, with a particular focus on misappropriation of funds.

Dissociation essentially severs a member’s management ties to the LLC. While an Operating Agreement outlines various member rights and responsibilities, the Florida Statutes provide additional legal grounds for dissociation. Understanding these grounds is crucial, especially when dealing with a partner who has stolen from the company.

Here, we delve into some relevant grounds for dissociation:

  • Wrongful Misappropriation of Assets: Florida Statutes § 608.453(1)(a) allows for dissociation if a member uses LLC assets for personal gain without authorization. Misappropriating funds clearly falls under this category.
  • Material Breach of the Operating Agreement: The Operating Agreement is a binding contract. If a member’s actions significantly violate the agreement’s terms, of which stealing money is just one example, it can be grounds for dissociation. A well-drafted Operating Agreement should explicitly outline the consequences of member misconduct, including procedures for dissociation.
  • Fraud, Misrepresentation, or Oppressive Conduct: Deception or behavior that harms the LLC’s interests can also be a reason for dissociation.

If you suspect your partner is misappropriating funds, taking immediate action is critical:

  • Gather Evidence: Document any suspicious activity. This could include financial statements, bank records, or witness accounts. The more evidence you have, the stronger your position will be.
  • Review the Operating Agreement: Identify any specific clauses regarding member conduct or removal procedures. Understanding the terms of your agreement can help guide your next steps.
  • Consult with a Business Litigation Attorney: An experienced business litigation attorney can advise you on the best course of action based on the specifics of your partnership dispute. They can help you navigate the dissociation process and protect your legal interests. The sooner you involve an attorney, the better chance you have of a successful outcome.

A strong Operating Agreement is your best defense against a dishonest partner. It should clearly outline the consequences of member misconduct. If you don’t currently have an Operating Agreement, or if your existing agreement is outdated, consulting with a business law attorney is highly recommended.

Our team of experienced business law attorneys understands the sensitive nature of removing a member from your Florida LLC. We are dedicated to protecting your business and its assets. Contact us today to schedule a consultation and discuss your options. We will work diligently to guide you through this challenging situation.


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