Principal Attorney
The text from your business partner is short and final: “We need her out by the end of the month.” But “her” is a manager and a member of your Dallas LLC, and Texas law treats those two roles very differently. Removing a manager from a Texas LLC is generally allowed by majority vote of the members, with or without cause. Removing a member is off-limits by default unless the company agreement says otherwise. A Dallas business law attorney at Sul Lee Law Firm can help you navigate both situations.
What Is the Difference Between a Manager and a Member in a Texas LLC?
A member is an owner of the LLC, holding a membership interest, a share of profits and losses, and usually voting rights. A manager runs the LLC’s day-to-day business. Managers may or may not be members, and an LLC may be either member-managed or manager-managed. When a relationship sours, the question is which role you are trying to end: the management role, the ownership role, or both. Each is governed by a different part of the Texas Business Organizations Code and by your company agreement.
How Do You Remove a Manager From a Texas LLC?
Texas law gives members significant power to remove managers. Under the Texas Business Organizations Code, a manager of a Texas LLC may be removed, with or without cause, at a meeting of the members called for that purpose. That is the default rule under Section 101.304 of the code. There is no requirement that the manager have done anything wrong.
One detail worth noting. Under Texas’s default rules, each member gets one equal vote regardless of their ownership percentage. A 10% member has the same vote as a 90% member unless the company agreement says otherwise. This is another reason reviewing your company agreement before calling a vote is critical.
There are a few important caveats:
- If a class or group of members is entitled by the company agreement to elect a particular manager, only that class or group may remove that manager.
- Notice, meeting, and voting requirements in the company agreement and the code must be followed.
- Removing a manager does not, by itself, terminate that person’s membership interest, employment contract, or indemnification rights.
While not all of these steps are required by statute in every case, a clean manager removal as a matter of good practice usually involves: a written notice of meeting, a properly noticed members’ vote, signed minutes or written consent, and a plan for filling the resulting vacancy.
Can You Remove a Member From a Texas LLC?
Removing a member is much harder. The default rule under Section 101.107 of the Texas Business Organizations Code is that a member of a Texas LLC may not withdraw or be expelled from the company. Without something more, a member who is making your life difficult cannot simply be voted out.
There are limited paths to remove a member from an LLC in Texas:
- Company agreement provisions allowing expulsion on specific triggers, such as a felony conviction, breach of fiduciary duty, or material breach.
- Buy-sell or buyout provisions that force an exit on death, disability, divorce, bankruptcy, or breach.
- A negotiated voluntary buyout or redemption, often with a release.
- Judicial dissolution or receivership in extreme cases of deadlock or misconduct, under Texas Business Organizations Code Sections 11.314 or 11.404. Note that Section 11.404 provides only the appointment of a rehabilitative receiver as a remedy, not dissolution or a forced buyout.
If your operating agreement is silent on member removal, which is common in older Texas LLCs, your practical options narrow quickly. Many disputes that look like “member removal” become negotiations over price.
Why Your Company Agreement Almost Always Controls
Texas is a freedom-of-contract state for LLCs. The default rules in the Texas Business Organizations Code apply only when the company agreement does not say otherwise. That makes the operating agreement the single most important document in any removal dispute.
Strong agreements typically address all of the following:
- Voting thresholds for manager removal
- Whether members can be expelled and on what grounds
- Mandatory buyout triggers and pricing formulas
- Transfer restrictions
- A clear dispute resolution path
Putting these terms in place when relationships are good is far cheaper than litigating them when they are not.
Practical Considerations Before You Try to Remove Anyone
Before initiating a removal in a Texas LLC, business owners should think through several practical issues:
- Fiduciary duties: Under Texas default rules, managers and, in some cases, controlling members owe fiduciary duties to the company and its members. A removal motivated by personal animus or self-dealing can trigger breach claims even if the procedural steps are followed. Note, however, that as of May 2025, Texas law now allows company agreements to fully eliminate fiduciary duties, so whether duties apply at all in your LLC depends on what your agreement says
- Employment vs. ownership: A manager who is also an employee may have separate employment-law claims if termination is tied to the removal.
- Tax effects: Buyouts and redemptions of partnership interests under federal tax law have specific tax consequences that should be modeled before any documents are signed.
- Bank, lender, and contract consents: Loan covenants and key contracts sometimes require consent before a change in management or ownership.
Careful planning on the front end can prevent disputes that are far more costly than the removal itself. In many cases, the legal risk lies less in whether removal is permitted and more in how and why it is carried out.
What Happens When LLC Members Cannot Agree?
When members or managers cannot agree on whether or how to remove someone, disputes often escalate into formal claims for breach of fiduciary duty, breach of the company agreement, or judicial intervention. In closely held Texas LLCs, courts may consider winding-up under Section 11.314 if it is no longer reasonably practicable to carry on the business in conformity with the governing documents.
Most disputes do not have to reach that point. Mediation, structured buyouts, and amendments to the company agreement may resolve the majority of LLC removal disputes before a court gets involved.
Talk to a Dallas Business Attorney Before You Move to Remove a Manager or Member
Manager and member removal disputes in Texas LLCs are decided as much by the company agreement and Texas Business Organizations Code as by who is right or wrong. Before you call a vote, send a notice, or accept a buyout, get the language reviewed. Contact Sul Lee Law Firm to discuss your Dallas LLC and how Texas law applies to your situation.