Iowa Code 489.602 – Events causing dissociation
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A person is dissociated as a member from a limited liability company when any of the following applies:
1. The company has notice of the person’s express will to withdraw as a member, but, if the person specified a withdrawal date later than the date the company had notice, on that later date.
Terms Used In Iowa Code 489.602
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Member: means a person that has become a member of a limited liability company under section 489. See Iowa Code 489.102
- Member-managed limited liability company: means a limited liability company that is not a manager-managed limited liability company. See Iowa Code 489.102
- Operating agreement: means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in section 489. See Iowa Code 489.102
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Iowa Code 489.102
- property: includes personal and real property. See Iowa Code 4.1
- Transfer: includes an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift, or transfer by operation of law. See Iowa Code 489.102
- Transferable interest: means the right, as originally associated with a person's capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right. See Iowa Code 489.102
- Trustee: A person or institution holding and administering property in trust.
2. An event stated in the operating agreement as causing the person’s dissociation occurs.
3. The person is expelled as a member pursuant to the operating agreement.
4. The person is expelled as a member by the unanimous consent of the other members if any of the following applies:
a. It is unlawful to carry on the company’s activities with the person as a member.
b. There has been a transfer of all of the person’s transferable interest in the company, other than any of the following:
(1) A transfer for security purposes.
(2) A charging order in effect under section 489.503 which has not been foreclosed.
c. The person is a corporation and, within ninety days after the company notifies the person that it will be expelled as a member because the person 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 certificate of dissolution has not been revoked or its charter or right to conduct business has not been reinstated.
d. The person is a limited liability company or partnership that has been dissolved and whose business is being wound up.
5. On application by the company, the person is expelled as a member by judicial order because the person has done any of the following:
a. Has engaged, or is engaging, in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the company’s activities.
b. Has willfully or persistently committed, or is willfully and persistently committing, a material breach of the operating agreement or the person’s duties or obligations under section 489.409.
c. Has engaged in, or is engaging in, conduct relating to the company’s activities which makes it not reasonably practicable to carry on the activities with the person as a member.
6. In the case of a person who is an individual, any of the following applies:
a. The person dies.
b. In a member-managed limited liability company, any of the following applies:
(1) A guardian or general conservator for the person is appointed.
(2) There is a judicial order that the person has otherwise become incapable of performing the person’s duties as a member under this chapter or the operating agreement.
7. In a member-managed limited liability company, the person does any of the following:
a. Becomes a debtor in bankruptcy.
b. Executes an assignment for the benefit of creditors.
c. Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all of the person’s property.
8. In the case of a person that is a trust or is acting as a member by virtue of being a trustee of a trust, the trust’s entire transferable interest in the company is distributed.
9. In the case of a person that is an estate or is acting as a member by virtue of being a personal representative of an estate, the estate’s entire transferable interest in the company is distributed.
10. In the case of a member that is not an individual, partnership, limited liability company, corporation, trust, or estate, the termination of the member.
11. The company participates in a merger under article 10, if any of the following applies:
a. The company is not the surviving entity.
b. Otherwise as a result of the merger, the person ceases to be a member.
12. The company participates in a conversion under article 10.
13. The company participates in a domestication under article 10, if, as a result of the domestication, the person ceases to be a member.
14. The company terminates.