Start with the operating agreement, because a member is dissociated when the member is expelled as a member pursuant to the operating agreement. Outside the operating agreement, the statute lets the other members expel you without going to court only on limited grounds, and that statutory route requires the unanimous consent of the other members, not a majority.

If the real problem is a freeze-out rather than a formal expulsion, a member who has not dissociated may apply to a court in the county where the company’s registered office is located to dissolve the company because those in control have acted oppressively, in the specific sense the statute defines, in a way that was, is, or will be directly harmful to that member, and the court may instead order another remedy, such as a fair-value buyout of a member’s interest by the company or other members.

That is the short version. The rest of this guide explains how expulsion works under Minnesota’s LLC Act, what to look for in your operating agreement, the duties the majority owes you, how to seek a court-ordered buyout, what happens to your interest if you are removed, and how to get the books when you are being shut out. Make no move, especially a resignation, until you have read the agreement and know which of these paths you are on.

Can the Majority Owner Force You Out of a Minnesota LLC?

Under Minn. Stat. § 322C.0602(3), you are dissociated (removed as a member) when you are expelled as a member pursuant to the operating agreement, and the same section lists other events that also cause dissociation, including an event the operating agreement states as causing your dissociation. Practically, then, the first question is not how many units the majority holds. It is what the agreement the majority signed with you says.

Separate from the operating agreement, the statute’s own expulsion route is narrow. The statutory text speaks of “the unanimous consent of the other members,” so this route is not a majority vote.

Under Minn. Stat. § 322C.0602(5), on the company’s application, a court may expel a member who (1) has engaged or is engaging in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the company’s activities; (2) has willfully or persistently committed, or is willfully and persistently committing, a material breach of the operating agreement or of the member’s duties or obligations under section 322C.0409; or (3) has engaged or is engaging in conduct relating to the company’s activities that makes it not reasonably practicable to carry on those activities with that person as a member. If the majority threatens court, ask in writing which of those three grounds it claims and what facts it relies on.

Why you should not resign in frustration

How you leave matters as much as whether you leave. Under Minn. Stat. § 322C.0601, subd. 2, a dissociation is wrongful if it breaches an express provision of the operating agreement, or if it occurs before the company terminates and the member withdraws by express will or is expelled by judicial order under section 322C.0602, clause (5). Under Minn. Stat. § 322C.0601, subd. 3, a member who wrongfully dissociates is liable to the LLC and, subject to section 322C.0901, to the other members for damages caused by the dissociation, in addition to any other debt, obligation, or liability the member owes the company or the other members. A resignation sent in anger while the company is still operating can therefore hand the majority a damages claim against you.

Expulsion also changes what you hold. Under Minn. Stat. § 322C.0603, subd. 1, once you are dissociated, your right to take part, as a member, in managing and conducting the company’s activities ends. The section on your ownership interest below explains what remains. For a closer look at removal when no cause is stated, see LLC member expulsion without cause.

What the Operating Agreement Must Say for the Majority to Remove a Member

Your operating agreement is usually the first document that matters in a freeze-out fight. Under Minn. Stat. § 322C.0111, subd. 2, a person who becomes a member of a Minnesota LLC is deemed to assent to the operating agreement. Under Minn. Stat. § 322C.0111, subd. 1, a limited liability company formed under chapter 322C is bound by and may enforce its operating agreement, whether or not the company itself has manifested assent to it.

Under Minn. Stat. § 322C.0602(3), a member of a Minnesota LLC is dissociated when the member is expelled as a member pursuant to the operating agreement. Under Minn. Stat. § 322C.0602(2), a member is also dissociated when an event that the operating agreement states as causing that member’s dissociation occurs. Expulsion rules written into the operating agreement might not require unanimity, unlike the statute’s own route for expulsion by the other members.

Read your agreement for these provisions:

  1. An expulsion clause, and the vote or approval it requires.
  2. Any listed events that end a member’s membership, such as the end of employment or a defined breach.
  3. Any definition of “cause,” and any notice or cure period the agreement describes.
  4. The buyout price, valuation method, and payment terms that apply when a member leaves.
  5. Whether the company is member-managed or manager-managed, which changes the duties and records rights discussed below.

If you are negotiating or amending the agreement, the drafting points in how to draft effective buyout clauses are a useful checklist. Bring the signed agreement, every amendment, and any buy-sell agreement to your first meeting with a Minnesota business attorney such as Aaron Hall; unsigned drafts and email summaries are not a substitute.

What Duties the Majority Member Owes You in a Minnesota LLC

Under Minn. Stat. § 322C.0409, subd. 1, in a member-managed Minnesota LLC, a member owes the company and, subject to section 322C.0901, subdivision 2, the other members the fiduciary duties of loyalty and care. Those duties are owed by current members, meaning persons who have not dissociated.

Under Minn. Stat. § 322C.0409, subd. 2, the duty of loyalty in a member-managed LLC includes the duty to account to the company and hold as trustee for it any property, profit, or benefit the member derives in the conduct or winding up of the company’s activities, from the member’s use of company property, or from appropriating a company opportunity, and the duty to refrain from dealing with the company, in the conduct or winding up of its activities, as or on behalf of a person having an interest adverse to the company. It is a defense to an adverse-dealing claim that the transaction was fair to the company, and all of the members may authorize or ratify a specific act that would otherwise breach the duty of loyalty after full disclosure of all material facts. For a related problem, see unlawful personal use of company funds.

Under Minn. Stat. § 322C.0409, subd. 4, a member “shall discharge the member’s duties and exercise any rights under this chapter or under the operating agreement consistently with the contractual obligation of good faith and fair dealing”. In plain English, even when the majority exercises a right the operating agreement gives it, it must act in a manner that is honest, fair, and reasonable in light of the operating agreement.

Check whether your agreement trims these duties.

Asking a Court for a Buyout When You Are Frozen Out

Freeze-outs sit within the broader set of ownership disputes between co-owners, and Minnesota’s LLC Act gives a frozen-out member a court path. Under Minn. Stat. § 322C.0701, subd. 1, a member who has not dissociated may apply for a court order dissolving the company on the grounds that the managers, governors, or members in control have acted, are acting, or will act illegally or fraudulently, or have acted or are acting in a manner that is oppressive and was, is, or will be directly harmful to the applicant. Under Minn. Stat. § 322C.0701, subd. 3, that proceeding must be brought in a court in the county where the LLC’s registered office is located.

Dissolution is often not what a frozen-out owner actually wants, which makes the alternative remedy the part of the statute to study. The court may order such a remedy in any case where it would be appropriate under all the facts and circumstances. For how a negotiated exit compares, see buying out a Minnesota co-owner and whether a shareholder can force the sale of the business.

What counts as oppressive conduct

Under Minn. Stat. § 322C.0102, subd. 18(a), conduct is oppressive for this application only if it was engaged in by members of a member-managed LLC or members otherwise in control of the LLC, by managers of a manager-managed LLC, or by governors of a board-managed LLC; it affects you as a member, manager, or governor, or as an employee of an LLC with 35 or fewer members; and it is unfairly prejudicial to you in that capacity because it frustrated an expectation of yours that meets four conditions. Those four conditions are that the expectation is reasonable in light of the other members’ reasonable expectations, was material to your decision to become a member or for a substantial time has been material during your membership, was known to the other members or they had reason to know of it, and is not contrary to the operating agreement as applied consistently with the contractual obligation of good faith and fair dealing. If you also work in the business, conduct relating to your role as an employee of an LLC with 35 or fewer members can qualify, but only if the other requirements of the definition are also met.

Under Minn. Stat. § 322C.0102, subd. 18(b), conduct includes words, action, inaction, or any combination of them, but conduct is not oppressive solely because of a good faith disagreement about the content, interpretation, or application of the company’s operating agreement. A majority that simply stops paying you, stops inviting you to meetings, or stops answering your questions is engaging in inaction that can count as conduct, although it must still meet every other part of the definition.

Steps that build the record for this kind of claim:

  1. Write down the expectations you had when you joined or invested, such as a management role, a salary, or a voice in major decisions, and who knew about them.
  2. Gather the emails, texts, pitch materials, and meeting notes that show those expectations were shared.
  3. Keep a dated log of each change: when you were removed from a role, cut off from information, or left out of decisions.

For the broader dynamics of these disputes, see resolving conflicts between minority and majority owners.

What Happens to Your Ownership Interest and Its Value If You Are Removed

Under Minn. Stat. § 322C.0603, subd. 1, once you are dissociated as a member of a Minnesota LLC, your right to participate as a member in managing and conducting the company’s activities ends, and if the company is member-managed, your fiduciary duties as a member end for matters arising and events occurring after the dissociation. Subject to sections 322C.0504 and 322C.1001 to 322C.1015, any transferable interest you owned as a member immediately before dissociation is then owned by you solely as a transferee. A transferable interest is only the right to receive distributions from the company under the operating agreement.

Under Minn. Stat. § 322C.0502, subd. 2, a transferee has the right to receive, in accordance with the transfer, the distributions the transferor would otherwise be entitled to, but the company need not honor that right until it has notice of the transfer, and before dissolution there is a right to a distribution only if the company decides to make an interim distribution. A transfer that violates an operating-agreement transfer restriction is ineffective against anyone who knew of the restriction when the transfer was made.

Under Minn. Stat. § 322C.0502, subd. 3, in a dissolution and winding up, a transferee is entitled to an account of the company’s transactions only from the date of dissolution, and the company need not honor that right until it has notice of the transfer.

Removal also does not wipe the slate clean. Under Minn. Stat. § 322C.0603, subd. 2, dissociation does not by itself release you from any debt, obligation, or other liability to the company or the other members that you incurred while a member.

If your company has a buy-sell agreement, the structural choices described in cross-purchase vs. redemption buy-sell agreements will shape who would be the buyer.

Getting the Books and Records When the Majority Shuts You Out

Under Minn. Stat. § 322C.0410, subd. 1(1), in a member-managed Minnesota LLC, a current member may, on reasonable notice, inspect and copy during regular business hours, at a reasonable location the company specifies, any record the company maintains regarding its activities, financial condition, and other circumstances, to the extent the information is material to the member’s rights and duties under the operating agreement or chapter 322C. The company may charge reasonable copying costs limited to labor and material, may impose reasonable restrictions and conditions such as confidentiality and nondisclosure obligations, and bears the burden of proving that a restriction it imposes is reasonable.

Under Minn. Stat. § 322C.0410, subd. 2(1), in a manager-managed or board-managed LLC, those broad information rights belong to the managers or governors instead of the members. Under Minn. Stat. § 322C.0410, subd. 2(2), a current member of such a company may, during regular business hours at a reasonable location the company specifies, obtain, inspect, and copy full information regarding the company’s activities, financial condition, and other circumstances as is just and reasonable, if the member seeks it for a purpose material to the member’s interest as a member, makes a demand in a record received by the company describing with reasonable particularity the information sought and the purpose, and the information is directly connected to that purpose. Within ten days after receiving that demand, the company must inform the member in a record of the information it will provide and when and where, and give its reasons for declining any demanded information.

These information rights do not belong to a person in the capacity of a mere transferee.

How to make the request work:

  1. In a manager-managed LLC, or after you have been dissociated, put the demand in a record the company receives and describe with reasonable particularity the information you want and your purpose.
  2. State the purpose plainly, for example evaluating whether distributions have been withheld or valuing your interest, and connect each category of records to that purpose.
  3. In a manager-managed or board-managed LLC, calendar ten days from the company’s receipt of your demand, because the company must respond in a record within that time.
Can a majority vote remove a member from a Minnesota LLC?

Not under the statute’s own expulsion route, which applies only on limited grounds and requires the unanimous consent of the other members rather than a majority, but your operating agreement may set its own expulsion rules that might not require unanimity.

Can I get a buyout if I am being frozen out of my LLC?

Possibly: a member may apply to a court in the county where the LLC’s registered office is located on the grounds that those in control have acted illegally or fraudulently, or have acted oppressively, as the statute defines that term, in a way that was, is, or will be directly harmful to that member, and the court may order a remedy other than dissolution, including the sale for fair value of all membership interests a member owns to the LLC or to one or more of the other members.