How Can a Partner Withdraw from a Limited Liability Company?

A partner in a limited liability company may, over time, wish to withdraw for reasons that were not foreseen when the company was established. This withdrawal is addressed by law through several different routes.

A Contractual Right of Withdrawal

The company's articles of association may grant partners a right of withdrawal; in that case, the partner may leave the company under the conditions and procedure set out in the articles, without needing a court order. For this reason, including such a provision in the articles at the time of incorporation reduces the likelihood of future disputes.

An Action for Withdrawal for Just Cause

Where the articles of association do not provide a right of withdrawal, a partner may apply to the court for permission to withdraw where just cause exists. Just cause may include conduct by other partners that undermines trust, the company sustaining continuous losses, or the relationship between the partners becoming untenable. The court decides after assessing the circumstances of the specific case.

Withdrawal Through Transfer of Shares

A partner may also effectively leave the company by transferring their share to another partner or to a third party. In limited liability companies, however, a share transfer is generally subject to approval by the general assembly and to a transfer agreement executed before a notary; a transfer made without meeting these requirements is not valid against the company.

What Happens as a Result of Withdrawal?

The withdrawing partner is paid a settlement amount corresponding to their share, calculated on the basis of the company's real value. Calculating this value generally requires a valuation based on the company's financial statements and is one of the matters most frequently disputed between the parties.

Practical Tips

If you are planning to leave a company, first check whether your articles of association contain a withdrawal provision. If you are considering an action for withdrawal for just cause, supporting the conduct of other partners that undermines trust with concrete documents (correspondence, financial records, etc.) strengthens the case.

This article is provided for informational purposes only and does not constitute legal advice. Please contact our team regarding your specific situation.