How Do You Add or Remove a Member From an Arizona LLC?
Membership changes are one of the most common events in an LLC’s life, and how smoothly they go often depends entirely on decisions made long before the change is actually needed.
By Simon Touma · Updated August 14, 2026
What Governs How Members Are Added or Removed From an Arizona LLC?
Quick answer: Your LLC’s operating agreement is the primary governing document for adding or removing members. If the operating agreement is silent or the LLC never adopted one, Arizona’s default LLC Act provisions apply instead, including the dissociation and judicial expulsion rules under A.R.S. §§ 29-3601 and 29-3602, which are often less favorable and less predictable than a well-drafted custom agreement.
On This Page
- What Governs How Members Are Added or Removed From an Arizona LLC?
- The Operating Agreement Governs This First
- What Happens Without a Clear Operating Agreement
- Adding a New Member
- Voluntary Withdrawal (Dissociation)
- Involuntary Removal (Judicial Expulsion)
- Buyout Terms Deserve Particular Attention
- Fiduciary Duties Remain Relevant Throughout
- Steps to Take When a Membership Change Is Coming
- FAQs
The Operating Agreement Governs This First
An Arizona LLC’s operating agreement is the primary source for how members can be added or removed, including what approval is required, how a departing member’s interest is valued and bought out, and what happens if a member wants to leave voluntarily versus being removed involuntarily.
A well-drafted operating agreement addresses these scenarios proactively, before a specific dispute or departure is actually on the table, which is exactly when parties can agree on fair, workable terms without the pressure of an active disagreement clouding the negotiation.
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What Happens Without a Clear Operating Agreement
If an LLC never adopted an operating agreement, or its agreement does not address membership changes, Arizona’s default LLC Act provisions govern instead, including the member dissociation rules under A.R.S. § 29-3601 and the judicial expulsion process under A.R.S. § 29-3602.
These default statutory provisions are designed to apply broadly across all LLCs, they are not tailored to your specific business, and often produce outcomes the original members would not have chosen for themselves had they addressed the issue directly in a custom agreement.
Adding a New Member
Adding a new member typically requires the consent of existing members as specified in the operating agreement, along with formally documenting the new member’s capital contribution, ownership percentage, and rights. This should be reflected in an updated or amended operating agreement, not handled informally.
Skipping proper documentation when adding a member is a common source of later disputes, particularly around exactly what percentage of the business the new member actually owns, and what rights come with that ownership.
Voluntary Withdrawal (Dissociation)
A member wanting to voluntarily leave the LLC generally does so through the dissociation process, which may be governed by specific terms in the operating agreement, or by the default rules under A.R.S. § 29-3601 if the agreement does not address it. Dissociation does not necessarily dissolve the entire LLC, the business can typically continue with the remaining members.
What happens to the departing member’s ownership interest, whether it is bought out, and at what value, is one of the most important and most frequently disputed aspects of a voluntary withdrawal, which is exactly why this should be addressed clearly in advance.
Involuntary Removal (Judicial Expulsion)
When members cannot agree to remove another member, and the operating agreement does not provide its own removal mechanism, A.R.S. § 29-3602 provides a judicial expulsion process, allowing a court to expel a member under specific circumstances, such as wrongful conduct that makes continuing the business with that member impracticable.
This is a significantly more difficult, expensive, and uncertain path than a removal process the members had already agreed to in advance, reinforcing why proactive planning in the operating agreement matters so much here.
Buyout Terms Deserve Particular Attention
- How the departing member’s interest will be valued, a specific formula avoids future disputes over fair value.
- Payment terms, lump sum versus an installment structure over time.
- Triggering events beyond voluntary departure, such as death, disability, divorce, or bankruptcy of a member.
- Non-compete or confidentiality obligations that survive a member’s departure.
Fiduciary Duties Remain Relevant Throughout
Members and managers owe duties of loyalty and care to the LLC under A.R.S. § 29-3409 throughout this entire process, a member cannot use the transition process itself as an opportunity to divert business opportunities, misuse confidential information, or otherwise act against the LLC’s interests on their way out.
This duty applies regardless of whether the departure is voluntary or involuntary, and regardless of how the operating agreement addresses the specific mechanics of the transition itself.
Steps to Take When a Membership Change Is Coming
- Review the operating agreement first to understand what process and terms already apply.
- Determine the valuation of the departing or incoming member’s interest according to the agreement’s terms.
- Document the change formally, through an amendment or a new operating agreement.
- Address any remaining obligations, non-compete, confidentiality, or ongoing payment terms.
- Involve an attorney, especially for an involuntary removal or a disputed valuation.
Adding or removing a member from your LLC in Arizona? Talk to our litigation team before you respond.
Call 602-932-6010How Do You Add or Remove a Member From an Arizona LLC? FAQs
What happens if my LLC never had a formal operating agreement?
Arizona’s default LLC Act provisions apply instead, including the dissociation and judicial expulsion rules, which are often less favorable than terms the members could have agreed to themselves.
Does a member leaving automatically dissolve the LLC?
Not necessarily, dissociation of one member does not automatically dissolve the LLC, the business can generally continue with the remaining members, depending on the operating agreement and the specific circumstances.
Can members remove another member without going to court?
Yes, if the operating agreement includes its own removal mechanism and process, court involvement (judicial expulsion) is generally only necessary when the agreement is silent or the parties cannot otherwise agree.
How is a departing member’s ownership interest valued?
This should ideally be addressed by a specific valuation method in the operating agreement, without one, valuation can become a significant point of dispute requiring negotiation or, in some cases, litigation.
What duties does a departing member still owe to the LLC?
Duties of loyalty and care under A.R.S. § 29-3409 continue to apply throughout the transition, a member cannot use their departure as an opportunity to act against the LLC’s interests.
Can a new member be added without unanimous consent of existing members?
This depends on what the operating agreement requires, some agreements require unanimous consent, others allow a majority or supermajority to approve new members.
Is judicial expulsion difficult to obtain?
Yes, it generally requires demonstrating specific circumstances, such as wrongful conduct making it impracticable to continue the business with that member, and is a more involved process than a removal already agreed to in an operating agreement.
Key Takeaways
- The operating agreement is the primary governing document for membership changes.
- Without one, Arizona’s default statutory dissociation and judicial expulsion rules apply.
- Buyout valuation and payment terms deserve particular attention in advance.
- Fiduciary duties continue to apply to members throughout a transition.
- Involuntary removal without agreed-upon terms is a significantly harder, court-driven process.
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