Legal Question in Business Law in Virginia

Re: LLC business

Even though you did not sign an Operating Agreement, when you set up your LLC in VA, your business is governed by "default" VA Statutes that regulate your LLC. See, http://law.justia.com/virginia/codes/toc1301000/toc13010000012000000000000.html

To disassociate, the Code states:

� 13.1-1040.1. Events causing member's dissociation.

Except as otherwise provided in the articles of organization or an operating agreement, a member is dissociated from a limited liability company upon the occurrence of any of the following events:

1. To the extent resignation of a member is provided for in writing in the articles of organization or an operating agreement, the limited liability company's having notice of the member's express will to resign as a member on a later date specified by the member in the notice or, if no later date is specified, the date of notice;

. . .

4. The member's expulsion by the unanimous vote of the other members if:

a. It is unlawful to carry on the business of the limited liability company with that member; or

b. There has been an assignment or transfer of all or substantially all of that member's membership interest, other than a transfer for security purposes or a court order charging the member's interest which, in either case has not been foreclosed;

. . .

7. In the case of a member who is an individual:

a. The member's death;

b. The appointment of a guardian, committee or conservator for the member; or

c. A judicial determination that the member has otherwise become incapable of performing the member's duties under the articles of organization or an operating agreement;

. . .

So, you and the other member could disassociate with the LLC, but you would still have to resolve a distribution of any LLC assets (if any). In addition, the LLC will still exist after your disassociation and you may want to consider how that might impact any new business entity that you set up. If the existing LLC has a tax identification number, then federal and state taxes still need to be filed, even if the LLC did not generate any revenue, so you'll want to try to reach an agreement if there is a TIN on the LLC tax filings with the third member or at least set them forth in a letter.

And, with the next entity that you set up, take some time to set up an operating agreement.

Note that there are plenty of gray areas that might come up and this is not meant to substitute for legal advice that is tailored to additional details of your matter. There is no attorney-client relationship, and if you think that you need an attorney because the third member is going to later raise a claim, then you probably do need to hire an attorney.

Good luck,

Bambi