Manager election disputes, member consent violations, voting deadlocks, and operating agreement enforcement under Delaware Limited Liability Company Act.
Delaware LLC members' voting rights are defined by the operating agreement with default rules under DLLCA Section 18-401. Disputes arise when managers violate member voting rights, act without required consent, or when members deadlock on critical decisions.
Consider a demand letter when:
Delaware law gives LLCs broad freedom to structure voting rights:
The operating agreement controls - courts enforce terms as written unless unconscionable.
I draft Delaware LLC voting rights demand letters addressing manager election disputes, consent violations, and governance conflicts. $450 flat fee.
Contact: owner@terms.law"Unless otherwise provided in a limited liability company agreement, the management of a limited liability company shall be vested in its members in proportion to the then current percentage or other interest of members in the profits of the limited liability company owned by all of the members..."
Unless the operating agreement provides otherwise, Delaware LLCs are member-managed with votes allocated in proportion to profit interests. This means:
Most operating agreements designate manager(s) to run day-to-day operations:
Operating agreements commonly reserve these for member vote:
Operating agreements specify what vote is required:
Delaware allows members to act by written consent without a meeting (unless agreement prohibits):
"A limited liability company agreement may provide for classes or groups of members having such relative rights, powers and duties as the limited liability company agreement may provide..."
"Unless otherwise provided in the limited liability company agreement, a manager shall be chosen by the members... and may be removed by a majority in interest of the members."
Scenarios:
Demand letter objective: Assert that election was invalid, demand new election per operating agreement, or demand recognition of properly elected manager.
Scenarios:
Demand letter objective: Demand manager step down after valid removal vote, or challenge invalid removal attempt.
Scenarios:
Demand letter objective: Propose replacement procedure, demand member vote, or seek court intervention.
Operating agreements may specify removal standards:
Operating agreements typically specify:
"On [date], members holding [X]% of the LLC's voting interests voted to remove [Manager Name] as manager of [LLC Name] pursuant to Section [X] of the Operating Agreement, which allows removal by [majority/supermajority] vote. The removal vote was properly noticed, achieved the required quorum, and met the voting threshold specified in the Operating Agreement. Despite the valid removal vote, [Manager] has refused to step down and continues to purport to act as manager. I hereby demand that [Manager] immediately: (1) cease acting as manager of the LLC; (2) deliver all LLC property, records, and assets in [his/her] possession to [successor manager/members]; and (3) execute all documents necessary to effectuate the transfer of management authority."
If demand letter fails, options include:
I draft manager election and removal demand letters backed by Delaware law and operating agreement analysis. $450 flat fee.
Contact: owner@terms.lawWhen operating agreements require member consent for major actions, managers who act without consent breach the agreement and potentially violate fiduciary duties.
Example provision: "The sale of substantially all LLC assets or acquisition of another business requires approval by members holding 66.67% of voting interests."
Example provision: "Manager may not incur debt exceeding $500,000 or guarantee third-party obligations without majority member consent."
Example provision: "Any transaction between the LLC and a manager-affiliated entity requires unanimous member consent after full disclosure."
Example provision: "Amendment of this Agreement requires consent of members holding 75% of interests."
To establish manager acted without required consent, you must prove:
Managers may argue:
When manager violates consent requirements:
"Section [X] of the Operating Agreement provides: '[Quote exact language requiring member consent].' On or about [date], [Manager Name] entered into [describe transaction] without obtaining the required member consent. Specifically, [Manager] [signed contract with / borrowed from / sold asset to] [counterparty] for [amount/terms] without presenting the matter to members for a vote. This action violated the Operating Agreement and exceeded [Manager]'s authority. I hereby demand that [LLC Name] immediately: (1) provide all members with complete details of the unauthorized transaction, including all contracts, correspondence, and financial terms; (2) hold a member vote within [15] days to determine whether to ratify or rescind the transaction; and (3) if members vote against ratification, take all steps necessary to unwind the transaction and restore the LLC to its pre-transaction position."
When manager lacks authority to bind LLC:
Voting deadlocks occur when members cannot reach required thresholds for decisions necessary to operate the business. Most common in 50-50 LLCs or when supermajority votes are required.
Two equal members disagree on fundamental business direction:
Operating agreement requires 66.67% or 75% but members can't achieve threshold:
Well-drafted operating agreements include deadlock resolution provisions:
Options for resolving deadlock:
"On application by or for a member... the Court of Chancery may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with a limited liability company agreement."
Delaware courts will dissolve an LLC when:
Effect of dissolution: LLC winds up, assets sold, debts paid, remainder distributed to members.
When facing deadlock:
"The LLC is currently deadlocked on the following critical business decisions: [list specific decisions]. This deadlock has prevented the LLC from [describe business impact: securing financing, executing contracts, appointing manager, making distributions]. I propose the following resolution: [describe buyout offer OR mediation OR dissolution]. If we cannot reach an agreement on deadlock resolution within [30] days, I will have no choice but to file a petition in the Delaware Court of Chancery under 6 Del. C. § 18-802 seeking judicial dissolution on the grounds that it is not reasonably practicable to carry on the business in conformity with the Operating Agreement due to this deadlock. I would prefer to avoid the expense and disruption of litigation and hope we can reach a mutually acceptable resolution."
I draft deadlock resolution demands and Section 18-802 dissolution petitions for Delaware LLCs. Strategy consultation $240/hr, demand letters $450 flat fee.
Contact: owner@terms.lawUse this template structure for Delaware LLC voting rights disputes:
[Your Name]
[Address]
[Email / Phone]
[Date]
[LLC Name]
[Manager/Registered Agent]
[Address]
Re: Demand for Compliance with Member Voting Rights Under DLLCA and Operating Agreement
Dear [Manager/Members]:
I am a member of [LLC Name], a Delaware limited liability company, holding a [X]% membership interest. This letter addresses [Manager's / the LLC's] violation of member voting rights under the LLC's Operating Agreement and Delaware law.
OPERATING AGREEMENT REQUIREMENTS:
Section [X] of the Operating Agreement provides: "[Quote exact language of voting provision]." This provision clearly requires [member consent / supermajority vote / unanimous approval] for [type of action].
VIOLATION:
On or about [date], [Manager Name / Members] [took action / failed to act] in violation of this provision. Specifically, [describe what happened]. This action was taken without [obtaining the required member vote / achieving the required voting threshold / providing proper notice to members].
LEGAL BASIS:
Under 6 Del. C. § 18-401, members possess voting rights as set forth in the operating agreement. Delaware courts strictly enforce operating agreement voting provisions. [Manager's / Members'] failure to comply with Section [X] constitutes a breach of the Operating Agreement and [for managers: a breach of fiduciary duty].
DEMAND:
I hereby demand that [LLC Name] immediately:
1. [Rescind the unauthorized action / Hold a member vote on the disputed matter / Provide all members with proper notice and opportunity to vote];
2. Provide all members with complete information regarding [the transaction / decision / election], including all relevant documents and financial information necessary for informed voting;
3. Schedule a member meeting or circulate written consent within [15] days to properly address this matter;
4. Confirm in writing within [7] days that the LLC will comply with this demand and provide a timeline for member action.
CONSEQUENCES OF NON-COMPLIANCE:
If the LLC fails to comply with this demand, I will file a petition in the Delaware Court of Chancery seeking: (1) declaratory judgment that [the action was unauthorized / the vote was invalid]; (2) injunctive relief [rescinding the transaction / requiring proper member vote]; (3) damages; and (4) attorney's fees and costs. Delaware courts routinely grant such relief when members' voting rights are violated.
Please confirm receipt of this demand and your plan for compliance.
Sincerely,
[Your Name]
Re: Demand for Manager to Step Down Following Valid Removal Vote
On [date], members of [LLC Name] holding [X]% of the voting interests voted to remove [Manager Name] as manager pursuant to Section [X] of the Operating Agreement. The removal vote was conducted in compliance with all requirements:
• Notice: [Describe notice provided to all members per agreement]
• Quorum: Members holding [X]% participated (exceeds [required %] quorum)
• Vote: [X]% voted for removal (exceeds [required %] threshold)
• Cause [if applicable]: [Describe cause for removal]
Despite this valid removal vote, [Manager] has refused to step down and continues to purport to act as manager, including [describe ongoing actions].
I hereby demand that [Manager Name] immediately:
1. Cease all actions as manager of [LLC Name];
2. Deliver all LLC property, records, passwords, and assets in [his/her] possession to [successor manager / members];
3. Execute all documents necessary to effectuate the transition of management authority, including [bank signature cards, vendor authorizations, etc.];
4. Provide a complete accounting of all LLC financial transactions during [his/her] tenure.
If [Manager] fails to comply within [7] days, I will file an emergency petition in the Court of Chancery seeking immediate injunctive relief and will request that [Manager] be held personally liable for any damages to the LLC resulting from [his/her] refusal to honor the valid removal vote.
I draft Delaware LLC voting rights demand letters addressing manager disputes, consent violations, and deadlocks. $450 flat fee includes demand letter and strategy consultation.
Contact: owner@terms.law