The client sentence is always some version of the same thing: I am done. I want out.
In a Minnesota LLC, getting out is easy. Minn. Stat. § 322C.0601, subd. 1 guarantees it:
A person has the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will under section 322C.0602, clause (1).
Read the noun. The statute grants a power, not a right — the drafting distinction between an act that is legally effective and an act that is legally permitted. You can always do it. Whether you were allowed to is a separate question, and the answer is frequently no.
And nothing in chapter 322C pays you for doing it. A departing member does not get a buyout, an appraisal, a redemption, or a right to demand any of them. What the member gets is the same economic interest, stripped of everything that made it worth owning, in a company now controlled entirely by the people they just left — who are also free to amend the agreement that governs what they owe the departed.
That is the opposite of what nearly every departing member expects, and the expectation has a respectable source. It is what happens in a partnership.
Do I get bought out when I leave a Minnesota LLC?
No. There is no statutory buyout on dissociation, and the contrast with Minnesota partnership law is stark.
Minnesota’s Uniform Partnership Act contains an express mandatory purchase. Minn. Stat. § 323A.0701(a):
If a partner is dissociated from a partnership without resulting in a dissolution and winding up of the partnership business under section 323A.0801, the partnership shall cause the dissociated partner’s interest in the partnership to be purchased for a buyout price determined pursuant to subsection (b).
Subsection (b) defines that price by reference to the greater of liquidation value or going-concern value without the dissociated partner. Subsection (e) sets a 120-day deadline to pay an estimate if no agreement is reached, subsection (g) requires a statement of assets and liabilities and an explanation of the calculation, and subsection (i) lets the dissociated partner sue to determine the price, with fee-shifting available against a party that “acted arbitrarily, vexatiously, or not in good faith.”
Chapter 322C contains none of that. A full-text search of the LLC act returns exactly one occurrence of “fair value,” and it is not a departure remedy — it is § 322C.0701, subd. 2, the alternative relief a court may order in a proceeding brought by a member alleging illegality, fraud, or oppression.
The LLC act instead says the quiet part directly. Minn. Stat. § 322C.0404, subd. 2:
A person has a right to a distribution before the dissolution and winding up of a limited liability company only if the company decides to make an interim distribution. A person’s dissociation does not entitle the person to a distribution.
Two sentences, and together they describe the departing member’s entire economic position: you are owed nothing now, and leaving did not change that.
What you actually lose the moment you dissociate
Minn. Stat. § 322C.0603, subd. 1 does the work in three clauses:
(1) the person’s right to participate as a member in the management and conduct of the company’s activities terminates;
(2) if the company is member-managed, the person’s fiduciary duties as a member end with regard to matters arising and events occurring after the person’s dissociation; and
(3) subject to sections 322C.0504 and 322C.1001 to 322C.1015, any transferable interest owned by the person immediately before dissociation in the person’s capacity as a member is owned by the person solely as a transferee.
| While a member | After dissociation | |
|---|---|---|
| Vote and management | Yes, per § 322C.0407 and the agreement | Gone — § 322C.0603, subd. 1(1) |
| Fiduciary duties owed by you (member-managed) | Yes, § 322C.0409 | End prospectively — subd. 1(2) |
| Fiduciary duties owed to you | Per § 322C.0409 and the management structure | You are no longer a member for whose benefit they run |
| Character of the interest | Membership interest | Transferable interest held “solely as a transferee” — subd. 1(3) |
| Right to a distribution | Only if the company declares one | Same — and § 322C.0404, subd. 2 confirms dissociation adds nothing |
| Statutory buyout | — | None |
| Debts you already owe the company | Owed | Still owed — § 322C.0603, subd. 2 |
Subdivision 2 is worth stating plainly: “A person’s dissociation as a member of a limited liability company does not of itself discharge the person from any debt, obligation, or other liability to the company or the other members that the person incurred while a member.” Leaving sheds the rights and keeps the liabilities. A member who guaranteed company debt, or who committed to fund capital under a provision enforceable through § 322C.0403, walks out still owing it.
There is one asymmetry in the departing member’s favor, and it is smaller than it looks. Under the default rule at § 322C.0404, subd. 1, distributions made before dissolution “must be in equal shares among members and dissociated members.” So a dissociated member is not cut out of distributions that are actually made. The trouble is that subdivision 2 makes the decision to distribute entirely discretionary, and the people making it are the ones who remain.
The trap: dissociating destroys the remedy you were about to use
This is the part that turns a bad decision into an irreversible one, and it is hidden in a definition.
Minn. Stat. § 322C.0102, subd. 15:
“Member” means a person that has become a member of a limited liability company under section 322C.0401 and has not dissociated under section 322C.0602.
Now read that definition into the remedies.
- The oppression and deadlock petition. Section 322C.0701, subd. 1(4) and (5) each begin “on application by a member.” That is the petition that produces the buyout at fair value under subd. 2 — the remedy discussed in Your LLC Partner Is Freezing You Out. A person who has dissociated is not a member and does not fit the opening words of the clause.
- The direct action. Section 322C.0901, subd. 1: “a member may maintain a direct action against another member, a manager, a governor, or the limited liability company.”
- The derivative action. Section 322C.0903, subd. 1 is the most explicit of the three: a derivative action “may be maintained only by a person that is a member at the time the action is commenced and remains a member while the action continues.”
Put those together. A member being frozen out of a Minnesota LLC holds one meaningful piece of leverage: the statutory ability to put the company in front of a judge and ask to be bought out at fair value. Resigning is the single act most likely to extinguish it — and it is the act the frozen-out member most wants to take, because staying is intolerable and quitting feels like taking control.
Worse, § 322C.0903, subd. 1 reaches backward and forward. It requires membership at commencement and continuously while the action continues. A member who files a derivative claim and then resigns in frustration mid-litigation has a standing problem of their own making.
Is voluntarily quitting “wrongful”? On the face of the statute, usually yes
Minn. Stat. § 322C.0601, subd. 2:
A person’s dissociation from a limited liability company is wrongful only if the dissociation:
(1) is in breach of an express provision of the operating agreement; or
(2) occurs before the termination of the company and:
(i) the person withdraws as a member by express will;
(ii) the person is expelled as a member by judicial order under section 322C.0602, clause (5);
(iii) the person is dissociated under section 322C.0602, clause (7), item (i), by becoming a debtor in bankruptcy; or
(iv) in the case of a person that is not a trust other than a business trust, an estate, or an individual, the person is expelled or otherwise dissociated as a member because it willfully dissolved or terminated.
Read clause (2)(i) against the definition of dissociation in § 322C.0602(1), which is triggered “when the company has notice of the person’s express will to withdraw as a member.” The ordinary act of quitting a going concern — telling the company you are out — is, by the terms of subdivision 2(2)(i), a wrongful dissociation. The operating agreement need not prohibit it. Nothing need be breached. The word “only” in the lead-in is a limit on the category, not a safe harbor for voluntary departure; voluntary departure is the first item inside the category.
What that costs is a separate question, and it is where the exposure is actually sized. Subdivision 3:
A person that wrongfully dissociates as a member is liable to the limited liability company and, subject to section 322C.0901, to the other members for damages caused by the dissociation. The liability is in addition to any other debt, obligation, or other liability of the member to the company or the other members.
Two limits are built into that sentence. The liability runs to damages caused by the dissociation — the label without proof of harm is worth nothing, and where the departing member was passive there may be no harm to prove. And the members’ claim is “subject to section 322C.0901,” which requires a direct-action plaintiff to plead and prove an injury “not solely the result of an injury suffered or threatened to be suffered by the limited liability company.” The other members cannot re-plead the company’s loss as their own.
The exposure is real where the departure has a cost: a key operator leaving mid-project, a licensed professional whose departure costs the company a credential, a withdrawal that trips a lender’s default provision.
After you leave, the remaining members can change the deal
Most departing members assume the operating agreement they signed is the agreement that will govern what they are owed. Minn. Stat. § 322C.0112, subd. 2 says otherwise:
The obligations of a limited liability company and its members to a person in the person’s capacity as a transferee or dissociated member are governed by the operating agreement. Subject only to any court order issued under section 322C.0503, subdivision 2, clause (2), to effectuate a charging order, an amendment to the operating agreement made after a person becomes a transferee or dissociated member is effective with regard to any debt, obligation, or other liability of the limited liability company or its members to the person in the person’s capacity as a transferee or dissociated member.
The people you left may amend the document that measures what they owe you, after you leave, and it binds you. The one carve-out in the sentence is not for you — it protects a judgment creditor holding a charging order.
What information can a dissociated member still get?
A narrow, backward-looking slice — and it is the one thing that survives the conversion to transferee status.
Section 322C.0603, subd. 1(3) says the interest is held “solely as a transferee,” and § 322C.0410, subd. 6 provides that the information rights in that section “do not extend to a person as transferee.” Read alone, that would leave a departing member blind.
Subdivision 3 of the same section rescues part of it:
On ten days’ demand made in a record received by a limited liability company, a dissociated member may have access to information to which the person was entitled while a member if the information pertains to the period during which the person was a member, the person seeks the information in good faith, and the person satisfies the requirements imposed on a member by subdivision 2, clause (2).
Note the conditions. A record demand. Ten days. Good faith. A purpose material to the interest, described with reasonable particularity, with the information sought directly connected to that purpose. And a hard ceiling: only the period during which the person was a member. Whatever happens at the company after you resign is, as to you, none of your business.
The same is true of accounting. Under § 322C.0502, subd. 3, a transferee “is entitled to an account of the company’s transactions only from the date of dissolution.”
What to do instead
If you are the member who wants out:
- Do not resign to get leverage. It is the one move that converts a statutory claim into a contract claim you may not have. If you have an oppression case under § 322C.0701, subd. 1(5), file it as a member.
- Negotiate the exit before you take it. There is no statutory price, so the only price is the one you agree to. A signed redemption or purchase agreement, not a resignation letter, is the document that gets you paid.
- Make your information demand before you go. A member’s rights under § 322C.0410, subds. 1 and 2 are broader than a dissociated member’s under subd. 3, and the latter cannot reach anything after the departure date.
- Check what the departure triggers elsewhere. Personal guaranties, capital commitments enforceable under § 322C.0403, non-competes, and lender consent provisions all survive it. Section 322C.0603, subd. 2 discharges nothing.
- Price the wrongful-dissociation exposure honestly. Under § 322C.0601, subd. 2(2)(i) a voluntary withdrawal before termination is within the wrongful category on the face of the statute. What matters is whether the company can prove damages caused by it.
If you are drafting the agreement, before any of this happens:
- Write the buyout the statute does not supply. Section 322C.0602(2) lets the operating agreement state events causing dissociation, and nothing in § 322C.0110 forbids a purchase obligation. A price mechanism, a payment term, and a funding source are the whole ballgame — see Buy-Sell Agreements in Minnesota Closely Held Businesses.
- Decide what a dissociated member keeps, and whether post-departure amendments bind. The § 322C.0404, subd. 1 default shares distributions equally among members and dissociated members, and § 322C.0112, subd. 2 hands the remaining members unilateral power over a departed member’s economics. If the parties want either fixed at the departure date, the agreement must fix it.
- Say whether withdrawal is permitted at all. Section 322C.0601, subd. 2(1) makes dissociation wrongful if it breaches an express provision — so the agreement can define both the wrong and the remedy.
The default architecture these provisions sit inside is covered in Minnesota LLC Operating Agreements, and the limits on duty terms in Your Minnesota Operating Agreement Will Be Judged on the Day You Signed It. If the company is ending rather than the membership, see Dissolving a Minnesota Company Does Not End Its Liabilities.
The observation
The intuition that a departing owner gets paid comes from partnership law, and in Minnesota that intuition is correct — for partnerships. Section 323A.0701 makes the purchase mandatory, sets the valuation standard, imposes a payment deadline, requires a written explanation of the calculation, and authorizes fee-shifting against a partnership that stonewalls.
The LLC act made a different choice, deliberately. It supplies a power to leave and no consequence for leaving, on the theory that owners who want an exit price should negotiate one. That is a defensible allocation between a statute and a contract. It is also a trap for exactly the people least likely to have negotiated anything — the minority owner in a three-person company who signed a template in an afternoon and now cannot stand to be in the room.
The practical rule is short. In a Minnesota LLC, leaving is not a remedy. It is the surrender of every remedy you had, in exchange for a right to receive distributions that the people you left are under no obligation to declare.
Madgett Law, LLC represents Minnesota LLC members on exits, buyouts, and freeze-out disputes, and drafts the departure and purchase terms that keep a resignation from becoming a forfeiture. If you are thinking about leaving a company, or a co-owner has just left yours, send us a message or call 612-470-6529.
Sources: Minn. Stat. § 322C.0102 (definitions) — subd. 15 (“Member” means a person that has become a member under § 322C.0401 “and has not dissociated under section 322C.0602”); subd. 28 (transferable interest). Minn. Stat. § 322C.0404 — subd. 1 (distributions before dissolution in equal shares among members and dissociated members); subd. 2 (right to an interim distribution only if the company decides to make one; dissociation does not entitle a person to a distribution). Minn. Stat. § 322C.0410 — subd. 2(2) (manager- and board-managed demand requirements); subd. 3 (dissociated member access on ten days’ demand, limited to the period during which the person was a member); subd. 6 (rights do not extend to a person as transferee). Minn. Stat. § 322C.0502, subd. 3 (transferee entitled to an account only from the date of dissolution). Minn. Stat. § 322C.0112, subd. 2 (obligations to a transferee or dissociated member governed by the operating agreement; a post-departure amendment is effective as to those obligations, subject only to a court order under § 322C.0503, subd. 2(2)). Minn. Stat. § 322C.0601 — subd. 1 (power to dissociate at any time, rightfully or wrongfully); subd. 2 (wrongful dissociation, including clause (2)(i), withdrawal by express will before termination of the company); subd. 3 (liability to the company and, subject to § 322C.0901, to the other members for damages caused by the dissociation). Minn. Stat. § 322C.0602 (events causing dissociation, including clause (1), notice of express will to withdraw, and clause (2), an event stated in the operating agreement). Minn. Stat. § 322C.0603 — subd. 1 (management rights terminate; fiduciary duties end prospectively in a member-managed company; the transferable interest is owned solely as a transferee); subd. 2 (no discharge of debts incurred while a member). Minn. Stat. § 322C.0701, subd. 1(4)–(5) and subd. 2 (“on application by a member”; alternative remedies including sale for fair value). Minn. Stat. § 322C.0901, subd. 1–2 (direct action by a member; separate-injury pleading requirement). Minn. Stat. § 322C.0903, subd. 1 (derivative action maintainable only by a person that is a member at commencement and remains a member while the action continues). Minn. Stat. § 322C.0403 (liability for contributions). Minn. Stat. § 323A.0701 (purchase of a dissociated partner’s interest) — subsection (a) (the partnership “shall cause” the interest to be purchased); (b) (buyout price); (e) (120-day estimate payment); (g) (required statement and explanation); (i) (action to determine buyout price; fee-shifting against a party that “acted arbitrarily, vexatiously, or not in good faith”). All from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes. Currency: the Revisor’s section histories show §§ 322C.0601, 322C.0602, 322C.0603, 322C.0701, 322C.0112, 322C.0403, 322C.0901–0903, and 322C.0502 last amended no later than the 2015 Regular Session (2014 c 157; 2015 c 39), § 322C.0102 at 2015 c 21, and § 323A.0701 at 1997 c 174; there are no 2025 or 2026 session entries for any of them. A full-text search of chapter 322C locates the phrase “fair value” only at § 322C.0701, subd. 2.
This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular departure is wrongful, what it costs, and what a departing member is owed depend on the operating agreement and the circumstances. No outcome is promised or implied.