Tennessee § 48-216-101 - Termination of membership interest.

§ 48-216-101. Termination of membership interest.

Member's Power to Terminate Membership. If an LLC formed prior to July 1, 1999, has, pursuant to § 48-245-101(c)(1), eliminated as events of dissolution all of the events enumerated in § 48-245-101(a)(5)(A)-(J), unless otherwise provided by the articles or operating agreement, no member shall have the power or right to perform an event enumerated in § 48-245-101(a)(5)(B), (a)(5)(C), or (a)(5)(J) or the right to perform an event enumerated in § 48-245-101(a)(5)(G) or (a)(5)(H). Except as provided above, a member always has the power, though not necessarily the right, to terminate membership by withdrawing at any time. Unless otherwise provided in chapters 201-248 of this title, the articles, operating agreement, or the events enumerated in § 48-245-101(a)(5)(A), (D), (E) and (I), any other withdrawal or termination shall be deemed wrongful. When Expulsion Permitted. Unless otherwise provided in the articles, a member may not be expelled. Effect of Termination of Membership on the Governance Rights of the Terminated Member. If, for any reason, the continued membership of a member is terminated: If the existence and business of the LLC is continued, then the member whose membership has terminated loses all governance rights and will be considered merely an assignee of the financial rights owned before the termination of membership; and Unless the articles or operating agreement provide otherwise, if the existence and business of the LLC is not continued, the member whose continued membership has terminated, except through wrongful withdrawal or wrongful termination, retains all governance rights owned before the termination of the membership and may exercise those rights through the winding up and termination of the LLC. Additional Effects If Termination of Membership Is Wrongful. If a member withdraws in contravention of the articles or an operating agreement then: The member who has wrongfully withdrawn forfeits governance rights in the winding up and termination process or in the continued business; and The member who has wrongfully withdrawn is liable to all the other members and to the LLC to the extent damaged, including the loss of foregone profits, by the wrongful withdrawal. Such damages may be offset against any amount to be paid to the wrongfully withdrawing or terminating member by the LLC. Value If LLC Is Continued. If the business and existence of the LLC are continued, any withdrawing or terminating member, whether such withdrawal or termination was wrongful or otherwise, is entitled to receive, subject to subsection (d), the lesser of the fair market value of the withdrawing or terminating member's interest determined on a going concern basis or the fair market value of the withdrawing member's interest determined on a liquidation basis. Value If LLC Terminates. Except as provided in subsection (d), if the business and existence of the LLC are not continued, then any withdrawing or terminating member, whether such withdrawal or termination was wrongful or otherwise, is entitled to receive that member's distribution under § 48-245-1101. Terms of Payment. Except as provided in the articles or operating agreement, any amount to which a withdrawing or terminating member is entitled under subsection (e) or (f) shall be paid to such withdrawing or terminating member within six (6) months of the determination of such amount. Modification by Articles or Operating Agreement. Notwithstanding other provisions in this section, the articles or operating agreement may establish the amount to be paid a withdrawing or terminating member or a method for establishing such amount and may also establish the terms of payment of such amount. Such established amount, or the method of determining such amount, and such established terms of payment shall control. Acts 1994, ch. 868, § 1; 1995, ch. 403, §§ 16-21; 1999, ch. 455, §§ 8-12.