Being a business owner is exciting, but it can also be stressful. Many people start a Massachusetts LLC with friends, family, or trusted partners. At the beginning, everyone works well together. But over time, things can change.
Maybe you and your co-owner no longer agree on how to run the business. Maybe the workload is unfair. Or maybe you simply want to move on to something new. When that happens, many Massachusetts LLC owners feel trapped. They think they can only leave if the other owners agree to buy them out.
But here is the good news: Massachusetts law may give you a way out, even if your co-owner says “no.”
This article explains how Chapter 156C, Section 32 of the Massachusetts LLC laws works, and why it can give you a path to get paid for your share of the business.
What Is a Massachusetts LLC?
A Limited Liability Company, or LLC, is a type of business that protects its owners from personal liability. The owners of an LLC are called members. An LLC can have one member, or it can have many. Most LLCs also have an operating agreement, which is like a rule book for how the business runs.
The operating agreement explains things like:
- How decisions are made
- What each member’s role is
- How profits are shared
- What happens if a member wants to leave
But here’s the important part: not every LLC has a detailed operating agreement, and some agreements leave out major issues—like member resignations and buyouts.
The Problem Many Owners Face
When a member wants to leave an LLC, the other members usually have to agree on a buyout. But sometimes the other owners:
- Refuse to buy the person out
- Offer much less than fair value
- Block any discussion about an exit
This can leave the member feeling stuck and powerless. But Massachusetts law includes a special rule that many people don’t know about.
What Chapter 156C, Section 32 Says
Massachusetts General Laws Chapter 156C, Section 32 says that if an operating agreement does not give rules about resignation, then a member may resign from the LLC and may be entitled to receive the fair market value of their membership interest.
This means:
- You may be able to leave the LLC even without permission
- You may have the right to be paid for your share
- The value must usually be based on fair market value, not a random number the other members choose
This law is important for anyone who feels stuck in a business partnership that is no longer working.
What Is “Fair Market Value”?
Fair market value means the amount a willing buyer would pay a willing seller for the membership interest in the LLC. It is based on:
- The business’s income
- Its assets
- Its debts
- Its growth potential
- What similar businesses are worth
Sometimes an accountant or business appraiser helps determine this number. The key is that it should be a real, fair value—not a lowball offer.
When the Operating Agreement Matters
The law only helps you if your operating agreement does not say something different. Many operating agreements:
- Block resignations
- Set special rules for buyouts
- Limit how much a member gets
- Require unanimous approval
If your operating agreement has clear rules, those rules may control. But many small Massachusetts LLCs either:
- Never made an operating agreement, or
- Used a basic template that does not cover resignations
In those cases, state law may step in and protect you.
Why This Law Helps Business Owners
This rule gives power back to the member who wants to leave. You are not trapped forever in a bad business relationship. You may be able to:
- Leave on your own terms
- Protect your investment
- Avoid long fights with co-owners
- Move on with your life or start a new business
For many people, this law becomes the key to ending a difficult situation.
What To Do If You Want to Leave Your LLC
If you think this law may apply to you, here are the next steps:
- Review your operating agreement.
Look for any sections about resigning or buying out members. - Check your LLC’s formation documents.
These may include rules that affect your rights. - Get legal advice.
An attorney can explain whether Section 32 gives you the right to resign and receive payment. - Make a plan.
Leaving an LLC should be done carefully and with the right paperwork.
You should never resign without understanding your legal rights and the financial impact.
You Don’t Have to Stay Stuck
If you are a member of a Massachusetts LLC and you want out, you may have more options than you think. Chapter 156C, Section 32 can give you a legal path to resign and be paid fair market value for your share—even if your co-owner refuses to buy you out.
If you want help reviewing your operating agreement, understanding the statute, or getting a clear picture of your options, reach out anytime. I help Massachusetts business owners every day with these issues.
Legal Disclaimer:
This article is for general information only and is not a substitute for legal advice. Every situation is different. To get advice for your specific facts, please contact an attorney at our firm.