Your business partner may be able to remove you from employment, management, or daily operations.
That does not necessarily mean they can take away your ownership.
Under Texas law, a member generally cannot be expelled from an LLC unless the operating agreement creates a valid mechanism for removal, redemption, or a mandatory sale. But a controlling owner may still have enough authority to make remaining in the company difficult.
That is the difference between being legally removed and being practically forced out.
Start With the Operating Agreement
When an owner says, “My partner is trying to force me out,” the first question is not who owns the larger percentage.
The first question is what the operating agreement allows.
The agreement should explain:
- Who controls daily operations
- Whether the company is member-managed or manager-managed
- How managers and officers may be removed
- What decisions require member approval
- Whether a member can be expelled
- What events trigger a mandatory buyout
- How an ownership interest will be valued
- Whether unvested equity can be repurchased
These provisions determine whether your partner is exercising a contractual right or simply applying pressure.
Losing Your Position Does Not Automatically End Your Ownership
Many business owners hold several roles at the same time.
You may be a member, manager, officer, employee, and authorized signer. Those positions carry different rights.
Your partner may have authority to terminate your employment, remove you as an officer, or revoke your access to company accounts. Depending on the operating agreement, they may also be able to remove you from management.
But those actions do not automatically cancel your membership interest.
Texas law treats economic ownership separately from management authority. You can lose your salary, title, and involvement in daily operations while continuing to own part of the LLC.
That may feel like being forced out.
Legally, you may still be an owner.
Texas Does Not Automatically Permit Expulsion
Section 101.107 of the Texas Business Organizations Code provides that a member may not withdraw or be expelled from a Texas LLC.
An operating agreement can modify that default rule.
For example, the agreement may require a member to sell their interest following fraud, competition with the company, failure to make a required contribution, termination of employment, loss of a professional license, or another defined event.
Even then, the entire process matters.
A contractual right to initiate a buyout does not necessarily allow the controlling owner to invent the price, ignore notice requirements, or bypass the agreed valuation procedure.
Authority to begin a buyout is not authority to rewrite its terms.
What Does a Squeeze-Out Look Like?
A partner does not need to formally expel you to make continued ownership painful.
A squeeze-out—or freeze-out—occurs when controlling owners use their authority to isolate or financially pressure another member.
Common tactics include:
- Terminating the member’s employment
- Removing the member from management
- Excluding the member from meetings
- Cutting off access to company systems
- Refusing to provide financial information
- Stopping distributions while increasing controlling-owner compensation
- Transferring business to a related company
- Issuing additional ownership to dilute the member
- Presenting a heavily discounted buyout offer
- Telling others that the member is no longer an owner
Not every action on that list is automatically unlawful.
The operating agreement may give the controlling owner broad discretion over management, compensation, or distributions. The company may also have legitimate reasons to retain cash or change someone’s operational role.
The real question is whether the action was authorized and whether it violated the operating agreement or another legal obligation.
Unfair treatment and unlawful conduct are not always the same thing.
Can the Majority Owner Change the Rules?
A majority owner may assume that owning more than 50% of the company gives them unlimited authority.
It does not.
The operating agreement should identify the approval required for amendments. If it does not establish another rule, Texas law generally requires every member to consent to an amendment.
Your partner may therefore lack authority to add an expulsion provision after the dispute begins and immediately use it against you.
Every version of the operating agreement matters. If a new amendment or ownership schedule suddenly appears, examine who approved it, when it became effective, and whether the required process was followed.
Control of the company’s records does not create authority to change them unilaterally.
A Buyout Offer Is Not Necessarily a Forced Buyout
Your partner can offer to purchase your interest.
That does not mean you must accept.
A sale becomes mandatory only if an enforceable provision or other legal mechanism requires it. Otherwise, the offer is still a proposal—even if it arrives with a short deadline and aggressive language.
Before accepting, examine:
- Whether a valid triggering event occurred
- Whether the buyer can require the sale
- How the price was calculated
- Whether valuation discounts apply
- Whether payment may be made over time
- Whether alleged damages can be deducted
- How member loans will be handled
- Whether personal guarantees will be released
- Whether the documents contain releases or restrictive covenants
The price is only one part of the exit.
An owner who sells but remains liable on a lease, loan, or credit line may surrender the asset while keeping part of the risk.
You May Still Have Information Rights
Squeeze-outs are often built around control of information.
One owner controls the accounting system, tax records, contracts, and bank statements. The excluded owner is then asked to accept a buyout without enough information to determine what the company is worth.
Under Section 101.502 of the Texas Business Organizations Code, a member may make a written demand stating a proper purpose to examine certain records reasonably related to that purpose. A member may also request copies of the certificate of formation, written operating agreement and amendments, and certain tax returns.
The request should be focused.
Information concerning ownership, valuation, distributions, company debt, and related-party transactions may be more useful than a demand for every communication the company has produced.
What If Your Partner Already “Removed” You?
Do not assume that a meeting notice, resolution, tax document, or public filing conclusively ended your ownership.
In Inman v. Loe, an LLC owner voted to remove another individual as both a member and director. The operating agreement addressed management removal and voluntary withdrawal, but it did not clearly authorize the involuntary expulsion attempted in the case.
The court emphasized the distinction between management and ownership.
A resolution cannot create a power that the operating agreement does not provide.
If an attempted removal has occurred, preserve the operating agreement, amendments, tax records, meeting notices, written consents, financial statements, and communications surrounding the decision.
Do not sign a resignation, transfer, release, or buyout document simply to keep the dispute from escalating. The language may surrender rights beyond the role you intended to leave.
Can a Court Protect an Excluded Member?
Depending on the facts, an excluded member may seek enforcement of the operating agreement, access to records, a declaration concerning ownership, damages, or an injunction.
In severe cases, a member may pursue judicial winding up under Section 11.314 of the Texas Business Organizations Code.
But winding up threatens the company itself. It is not an automatic buyout right or a guaranteed exit.
The strength of the member’s position usually returns to the same questions: What does the operating agreement require? What authority was exercised? What conduct can be proven?
Control Is Powerful, but It Is Not Ownership
A majority owner may control management, compensation, banking relationships, and access to company systems. They may have enough leverage to make a negotiated exit the most practical outcome.
But control does not automatically create the right to take another member’s ownership.
If the operating agreement does not authorize an expulsion or forced sale, your partner may be able to pressure you to leave without having the legal authority to make you leave.
When that pressure begins, review the structure before negotiating the exit.