Admission and Withdrawal of Members

MCA tit. 35, ch. 8, pt. 8

in effect

Mont. Code Ann. § 35-8-803 Events causing member's dissociation

35-8-803. Events causing member's dissociation (1) A member is dissociated from a limited liability company upon the occurrence of any of the following events: (a) the company's having notice of the member's express will to withdraw upon the date of notice or on a later date if specified by the member; (b) an event agreed to in the operating agreement as causing the member's dissociation; (c) upon transfer of all of a member's distributional interest, other than a transfer for security purposes or pursuant to a court order charging the member's distributional interest that has not been foreclosed; (d) the member's expulsion pursuant to the operating agreement; (e) the member's expulsion by unanimous vote of the other members if: (i) it is unlawful to carry on the company's business with the member; (ii) there has been a transfer of substantially all of the member's distributional interest, other than a transfer for security purposes or pursuant to a court order charging the member's distributional interest, which has not been foreclosed; (iii) within 90 days after the company notifies a corporate member that it will be expelled because it has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, the member fails to obtain a revocation of the certificate of dissolution or a reinstatement of its charter or its right to conduct business; or (iv) a partnership or a limited liability company that is a member has been dissolved, and its business is being wound up; (f) on application by the company or another member, the member's expulsion by judicial determination because the member: (i) engaged in wrongful conduct that adversely and materially affected the company's business; (ii) willfully or persistently committed a material breach of the operating agreement or of a duty owed to the company or the other members under 35-8-310 ; or (iii) engaged in conduct relating to the company's business that makes it not reasonably practicable to carry on the business with the member; (g) the member's: (i) becoming a debtor in bankruptcy; (ii) executing an assignment for the benefit of creditors; (iii) seeking, consenting to, or acquiescing in the appointment of a trustee, receiver, or liquidator of all or substantially all of the member's property; or (iv) failing, within 90 days after the appointment, to have vacated or stayed the appointment of a trustee, receiver, or liquidator of the member or of all or substantially all of the member's property obtained without the member's consent or acquiescence or failing within 90 days after the expiration of stay to have the appointment vacated; (h) in the case of a member who is an individual: (i) the member's death; (ii) the appointment of a guardian or general conservator for the member; or (iii) a judicial determination that the member has otherwise become incapable of performing the member's duties under the operating agreement; (i) in the case of a member that is a trust or is acting as a member by virtue of being a trustee of a trust, distribution of the trust's entire rights to receive distributions from the company, except that this subsection does not apply to the substitution of a successor trustee; (j) in the case of a member that is an estate or is acting as a member by virtue of being a personal representative of an estate, distribution of the estate's entire rights to receive distributions from the company, but not merely the substitution of a successor personal representative; or (k) termination of the existence of a member if the member is not an individual, estate, or trust other than a business trust. (2) (a) Unless otherwise provided in the articles of organization or operating agreement, any event described in this chapter or in the articles of organization or operating agreement that causes a manager to cease to be a manager with respect to a series of members does not, in itself, cause the manager to cease to be a manager with respect to the limited liability company or with respect to any other series of members. (b) Unless otherwise provided in the articles of organization or operating agreement, any event described in this chapter or in the articles of organization or operating agreement that causes a manager to cease to be associated with a series of members does not, in itself, cause any member to cease to be associated with any other series of members, terminate the continued membership of any member in the limited liability company, or cause the termination of the series of members, regardless of whether the member was the last remaining member associated with the series. En. Sec. 30, Ch. 302, L. 1999; amd. Sec. 10, Ch. 183, L. 2013.

Mont. Code Ann. § 35-8-804 Member's power to dissociate -- wrongful dissociation

35-8-804. Member's power to dissociate -- wrongful dissociation (1) Unless otherwise provided in the operating agreement, a member has the power to dissociate from a limited liability company at any time, rightfully or wrongfully, pursuant to 35-8-803 (1)(a). (2) If the operating agreement has not eliminated a member's power to dissociate, the member's dissociation from a limited liability company is wrongful only if: (a) it is in breach of an express provision of the agreement; or (b) before the expiration of the specified term of a term company: (i) the member withdraws by express will; (ii) the member is expelled by judicial determination under 35-8-803 (1)(f); (iii) the member is dissociated by becoming a debtor in bankruptcy; or (iv) in the case of a member that is not an individual, trust, other than a business trust, or estate, the member is expelled or otherwise dissociated because it willfully dissolved or terminated its existence. (3) A member that wrongfully dissociates from a limited liability company is liable to the company and to the other members for damages caused by the dissociation. The liability is in addition to any other obligation of the member to the company or to the other members. (4) If a limited liability company does not dissolve and wind up its business as a result of a member's wrongful dissociation under subsection (2), damages sustained by the company for the wrongful dissociation must be offset against distributions otherwise due the member after the dissociation. En. Sec. 31, Ch. 302, L. 1999; amd. Sec. 11, Ch. 183, L. 2013.

Mont. Code Ann. § 35-8-805 Effect of member's dissociation

35-8-805. Effect of member's dissociation (1) Upon a member's dissociation: (a) in an at-will company, the company shall cause the dissociated member's distributional interest to be purchased as provided under 35-8-808 and 35-8-809 ; and (b) in a term company: (i) if the company dissolves and winds up its business on or before the expiration of its specified term, part 9 of this chapter applies to determine the dissociated member's rights to distributions; and (ii) if the company does not dissolve and wind up its business on or before the expiration of its specified term, the company shall ensure that the dissociated member's distributional interest is purchased under 35-8-808 and 35-8-809 on the date that was specified for the expiration of the term at the time of the member's dissociation. (2) Upon a member's dissociation from a limited liability company: (a) the member's right to participate in the management and conduct of the company's business terminates, except as otherwise provided in 35-8-903 , and the member ceases to be a member and must be treated the same as a transferee of a member; (b) the member's duty of loyalty under 35-8-310 (2)(c) terminates; and (c) the member's duty of loyalty under 35-8-310 (2)(a) and (2)(b) and duty of care under 35-8-310 (3) continue only with regard to matters arising and events occurring before the member's dissociation, unless the member participates in winding up the company's business pursuant to 35-8-903 . En. Sec. 32, Ch. 302, L. 1999.

Mont. Code Ann. § 35-8-806 and 35-8-807 reserved

Mont. Code Ann. § 35-8-808 Company purchase of distributional interest

35-8-808. Company purchase of distributional interest (1) A limited liability company shall purchase a distributional interest of a: (a) member of an at-will company for its fair value determined as of the date of the member's dissociation if the member's dissociation does not result in a dissolution and winding up of the company's business under 35-8-901 ; or (b) member of a term company for its fair value determined as of the date of the expiration of the specified term that existed on the date of the member's dissociation if the expiration of the specified term does not result in a dissolution and winding up of the company's business under 35-8-903 . (2) A limited liability company shall deliver a purchase offer to the dissociated member whose distributional interest is entitled to be purchased not later than 30 days after the date determined under subsection (1). The purchase offer must be accompanied by: (a) a statement of the company's assets and liabilities as of the date determined under subsection (1); (b) the latest available balance sheet and income statement, if any; and (c) an explanation of how the estimated amount of the payment was calculated. (3) If the price and other terms of a purchase of a distributional interest are fixed or are to be determined by the operating agreement, the price and terms so fixed or determined govern the purchase unless the purchaser defaults. If a default occurs, the dissociated member is entitled to commence a proceeding to have the company dissolved under 35-8-902 (1)(d). (4) If an agreement to purchase the distributional interest is not made within 120 days after the date determined under subsection (1), the dissociated member, within another 120 days, may commence a proceeding against the limited liability company to enforce the purchase. The company, at its expense, shall notify in writing all of the remaining members and any other person that the court directs of the commencement of the proceeding. The jurisdiction of the court in which a proceeding is commenced under this subsection is plenary and exclusive. (5) The court shall determine the fair value of the distributional interest in accordance with the standards set forth in 35-8-809 , together with the terms for the purchase. Upon making these determinations, the court shall order the limited liability company to purchase or cause the purchase of the interest. (6) Damages for wrongful dissociation under 35-8-804 (2) and all other amounts owing, whether or not currently due, from the dissociated member to a limited liability company, must be offset against the purchase price. En. Sec. 33, Ch. 302, L. 1999.

Mont. Code Ann. § 35-8-809 Court action to determine fair value of distributional interest

35-8-809. Court action to determine fair value of distributional interest (1) In an action brought to determine the fair value of a distributional interest in a limited liability company, the court shall: (a) determine the fair value of the interest, considering among other relevant evidence the going concern value of the company, any agreement among some or all of the members fixing the price or specifying a formula for determining value of distributional interests for any other purpose, the recommendations of any appraiser appointed by the court, and any legal constraints on the company's ability to purchase the interest; (b) specify the terms of the purchase, including, if appropriate, terms for installment payments, subordination of the purchase obligation to the rights of the company's other creditors, security for a deferred purchase price, and a covenant not to compete or other restriction on a dissociated member; and (c) require the dissociated member to deliver an assignment of the interest to the purchaser upon receipt of the purchase price or the first installment of the purchase price. (2) After the dissociated member delivers the assignment, the dissociated member has no further claim against the company, its members, officers, or managers, if any, other than a claim to any unpaid balance of the purchase price or a claim under any agreement with the company or the remaining members that is not terminated by the court. (3) If the purchase is not completed in accordance with the court's specified terms, the company is to be dissolved upon application under 35-8-902 (1)(d). If a limited liability company is so dissolved, the dissociated member has the same rights and priorities in the company's assets as if the sale of the distributional interest had not been ordered. (4) If the court finds that a party to the proceeding acted arbitrarily, vexatiously, or not in good faith, it may award one or more other parties reasonable expenses, including attorney fees and the expenses of appraisers or other experts, incurred in the proceeding. The finding may be based on the company's failure to make an offer to pay or to comply with 35-8-808 (2). (5) Interest must be paid on the amount awarded from the date determined under 35-8-808 (1) to the date of payment. En. Sec. 34, Ch. 302, L. 1999.

Mont. Code Ann. § 35-8-810 reserved

Mont. Code Ann. § 35-8-811 Dissociated member's power to bind limited liability company

35-8-811. Dissociated member's power to bind limited liability company For 2 years after a member dissociates without the dissociation resulting in a dissolution and winding up of a limited liability company's business, the company, including a surviving company under part 12 of this chapter, is bound by an act of the dissociated member that would have bound the company under 35-8-301 before dissociation only if at the time of entering into the transaction the other party: (1) reasonably believed that the dissociated member was then a member; (2) did not have notice of the member's dissociation; and (3) is not considered to have had notice under 35-8-812 . En. Sec. 35, Ch. 302, L. 1999.

Mont. Code Ann. § 35-8-812 Statement of dissociation

35-8-812. Statement of dissociation (1) A dissociated member or a limited liability company shall file in the office of the secretary of state a statement of dissociation, stating the name of the company and that the member is dissociated from the company. (2) For the purposes of 35-8-301 and 35-8-811 , a person not a member is considered to have notice of the dissociation 90 days after the statement of dissociation is filed. En. Sec. 36, Ch. 302, L. 1999.

Source: Montana Legislative Services Division (mca.legmt.gov)URL: https://mca.legmt.gov/bills/mca/title_0350/chapter_0080/part_0080/sections_index.htmlFetched: 10/20/2026