Legal Question in Business Law in Delaware

Lazy Partner in an LLC

I would like to know if there is any legal way to remove or reduce a partners share of ownership in a company (2 person LLC, delaware) where they are 52% owner but contributing almost zero of the effort (perhaps 3 hours a month) and put in zero $$$ to start it. For years has done nothing and now wants to draw their share of the profits (substantial) for doing no work at all. I've put in 90 hour weeks, year round, and the partner has ignored the company.

In the boilerplate agreement the ''duties of members'' states ''members shall devote such time to the operations of the company as they, in their sole diescretion, deem to be reasonably required to conduct the company business and to operate and manage the company property in an efficient manner. The members shall use their best efforts to manage the business and affairs of the company. The doing of any act or failure to do any act which may result in a loss to the company, if done in good faith and in a manner reasonably believed to be in the best interest of the company, shall not subject the members to any liability to the company''

Do I have to just accept the fact that the partner can sit on their hands yet draw their share of hundreds of thousands out of the co?


Asked on 12/28/07, 8:22 am

1 Answer from Attorneys
Michael Hendrickson Law Office Michael E. Hendrickson

Re: Lazy Partner in an LLC

With that kind of "boilerplate agreement", yep, I'd say you do (unless you can buy out this malingerer's interest in the company).

In your partner's mind, his three hours of work per month devoted to the company's business may more than satisfy the requirements of the operating agreement as you've described it. (After all, it's not any objective test, but, apparently, rather in the sole discretion of the members as to whether they're devoting the time to company operations "reasonably required to conduct the company business and to operate and manage the company property in an efficient manner." (Sounds almost as if this malingering partner may have been personally responsible for including this provision in the operating agreement.)

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Answered on 12/28/07, 1:48 pm


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