Removing a business partner in Florida depends primarily on how the business is structured, what the governing documents say, and whether the partner agrees to leave. Florida law provides default rules, but a well-drafted agreement usually controls.
Here are the most common situations:
1. Review the Governing Documents First
The first step is to review:
- Partnership Agreement (general or limited partnership)
- Operating Agreement (LLC)
- Shareholders' Agreement (corporation)
- Buy-Sell Agreement
- Employment Agreement (if applicable)
These documents often specify:
- Grounds for removal
- Voting requirements
- Buyout procedures
- Valuation method
- Payment terms
- Non-compete and confidentiality obligations
If these agreements exist, Florida courts generally enforce them unless they violate the law.
2. Voluntary Buyout
The simplest solution is a negotiated buyout where the departing partner:
- Sells their ownership interest
- Signs a Release of Claims
- Transfers management rights
- Resigns from all positions
- Receives payment according to the agreement
A comprehensive buyout agreement should address tax treatment, indemnification, and future liabilities.
3. Removal Under the Agreement
Many Florida LLC operating agreements permit removal for reasons such as:
- Fraud
- Theft
- Gross misconduct
- Breach of fiduciary duty
- Failure to contribute capital
- Criminal conduct
- Bankruptcy
- Loss of professional license
The agreement usually specifies the voting percentage needed to remove the member or manager.
4. Judicial Removal
If there is no agreement, or the partner refuses to leave, you may need court intervention.
Depending on the circumstances, available claims may include:
- Breach of fiduciary duty
- Breach of contract
- Fraud
- Conversion
- Accounting
- Judicial dissolution
- Appointment of a receiver
- Expulsion under applicable Florida business statutes (where authorized)
5. Buyout Litigation
Florida courts can order equitable remedies in some disputes, particularly when:
- A partner has oppressed minority owners
- Company assets have been misappropriated
- Deadlock prevents the business from operating
- Fiduciary duties have been breached
The court may order a buyout, dissolution, or other equitable relief depending on the facts.
6. Dissolution as a Last Resort
If the owners cannot work together and there is no practical means of removal, dissolving the business may be necessary. The company's assets are liquidated or distributed, creditors are paid, and any remaining proceeds are distributed to the owners according to their ownership interests.
Florida Business Structures Matter
The removal process differs depending on the entity:
- LLC: Governed primarily by the operating agreement and Florida's LLC statutes.
- General Partnership: Governed by the partnership agreement and Florida partnership law.
- Corporation: Shareholders generally cannot simply be "removed" as owners; however, officers and directors may be removed according to the bylaws and applicable statutes. Ownership interests usually require a stock purchase or redemption.
Common Legal Claims That May Justify Removal or a Buyout
Examples include:
- Misappropriation of company funds
- Self-dealing
- Embezzlement
- Failure to perform agreed duties
- Violation of fiduciary duties
- Unauthorized competition
- Diversion of business opportunities
- Concealment of financial records
- Fraudulent accounting
Practical Steps
- Review all governing agreements.
- Gather financial records and evidence of any misconduct.
- Determine the value of the ownership interest.
- Attempt a negotiated buyout if feasible.
- Follow all required notice and voting procedures.
- If necessary, file suit seeking the appropriate legal or equitable relief.
Because removal disputes often involve fiduciary duties, valuation issues, and potential litigation, they should be handled carefully to avoid creating additional claims. Contact the Violette Law Firm to address your business dispute concerns.