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).
Look at the noun. The statute grants a power, not a right. That’s the drafting line between an act that’s legally effective and an act that’s 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 doesn’t 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 run entirely by the people they just left — who are also free to amend the agreement that governs what they owe the person who left.
That’s the opposite of what nearly every departing member expects, and the expectation comes from a respectable place. It’s what happens in a partnership.
Do I get bought out when I leave a Minnesota LLC?
No. There’s no statutory buyout on dissociation, and the contrast with Minnesota partnership law is stark.
Minnesota’s Uniform Partnership Act has 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) sets 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 has none of that. A full-text search of the LLC act turns up exactly one occurrence of “fair value,” and it isn’t a departure remedy. It’s § 322C.0701, subd. 2, the alternative relief a court may order in a proceeding brought by a member alleging illegality, fraud, or oppression.
Instead, the LLC act says the quiet part out loud. 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 between them they’re the departing member’s whole economic position: you’re owed nothing now, and leaving didn’t change that.
What you actually lose the moment you dissociate
Minn. Stat. § 322C.0603, subd. 1 does it 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 |
Here’s subdivision 2, plain: “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.” You shed the rights and keep 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.
One quirk cuts in the departing member’s favor, and it’s 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 isn’t cut out of distributions that actually get made. The catch is that subdivision 2 makes the decision to distribute entirely discretionary, and the people making it are the ones who stayed.
The trap: dissociating destroys the remedy you were about to use
This is the part that turns a bad decision into one you can’t undo, and it’s 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 carry 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’s 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 isn’t a member and doesn’t 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.”
Add it up. A member getting frozen out of a Minnesota LLC holds one real 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 wipe it out. And it’s the act the frozen-out member most wants to take, because staying is miserable and quitting feels like taking control.
And it gets worse: § 322C.0903, subd. 1 reaches backward and forward. It requires membership at commencement and the whole time the action continues. A member who files a derivative claim and then quits in frustration mid-litigation has built their own standing problem.
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 kicks in “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’re out — is, by the terms of subdivision 2(2)(i), a wrongful dissociation. The operating agreement doesn’t have to prohibit it. Nothing has to be breached. The word “only” in the lead-in limits the category. It isn’t a safe harbor for voluntary departure. Voluntary departure is the first item inside the category.
What that costs is a separate question, and that’s where the exposure actually gets 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.
That sentence has two limits built in. 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 can’t dress up the company’s loss as their own.
The exposure is real where the departure actually costs something: a key operator leaving mid-project, a licensed professional whose exit 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 one that’ll govern what they’re 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’re gone, and it binds you. The one carve-out in that sentence isn’t 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’s the one thing that survives the switch 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 in the dark.
Subdivision 3 of the same section saves 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).
Look at 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 when the person was a member. Whatever happens at the company after you resign is, as to you, none of your business.
Same with an 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’re the member who wants out:
- Don’t resign to get leverage. It’s the one move that turns 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’s no statutory price, so the only price is the one you agree to. A signed redemption or purchase agreement gets you paid. A resignation letter doesn’t.
- 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 subd. 3 can’t reach anything after the departure date.
- Check what leaving sets off 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 straight. Under § 322C.0601, subd. 2(2)(i) a voluntary withdrawal before termination falls in the wrongful category on the face of the statute. What matters is whether the company can prove damages caused by it.
If you’re drafting the agreement, before any of this happens:
- Write the buyout the statute doesn’t 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 one fixed at the departure date, the agreement has to 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 rules these provisions sit inside are 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 it’s the company that’s ending rather than the membership, see Dissolving a Minnesota Company Does Not End Its Liabilities.
Where the instinct to get paid comes from
The instinct that a departing owner gets paid comes from partnership law, and in Minnesota that instinct is right — 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, on purpose. It gives you a power to leave and nothing for leaving, on the theory that owners who want an exit price should negotiate one. That’s a defensible split between a statute and a contract. It’s 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 can’t stand to be in the room.
The practical rule is short. In a Minnesota LLC, leaving isn’t a remedy. It’s 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 turning into a forfeiture. If you’re thinking about leaving a company, or a co-owner 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 as of October 1, 2026: 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.