Running an LLC, owner exits and dissolution in Michigan

A Michigan LLC files an annual statement of its resident agent and registered office by February 15 each year. An LLC formed after September 30 does not file on the next February 15. The statute sets the fee at $25 through September 30, 2027, and $15 if paid after that date.

The statement lists the name of the resident agent and the address of the registered office (MCL 450.4207(3)). The deadline is February 15 of each year, with one exception: a company formed, or a foreign company authorized, after September 30 skips the February 15 that immediately follows. The fee schedule says the annual statement fee is $25 through September 30, 2027, and $15 if paid after September 30, 2027 (MCL 450.5101(1)(g)). A professional LLC has an extra annual report and fee, covered in a separate question. Missing the filing does not end the company right away, but it can cost you good standing, which affects certificates of good standing and the filings the state will accept. Put the date on a calendar and confirm the amount on LARA's site before you file, because the fees are set by statute and can change.

Authority: MCL 450.4207(3); MCL 450.5101(1)(g). Reviewed Oct. 2026.

After two consecutive missed annual statements, LARA sends a notice. If the missing statements and fees are not filed within 60 days of that notice, the LLC is not in good standing. It still exists and may keep doing business. To fix it, file a certificate of restoration of good standing with the back statements and fees. The fee for that certificate is $50.

Under MCL 450.4207a, a company that is not in good standing cannot get a certificate of good standing, its name becomes available for use by another entity filing with the state, and the administrator will accept no document from it except the certificate of restoration. The statute says the company remains in existence and may continue to transact business. The certificate of restoration must state the name the company had when it lost good standing (or a compliant new name if that one is taken), its current resident agent and registered office, and that the back annual statements and fees accompany it. The fee statute lists $50 for the certificate (MCL 450.5101(1)(h)). Because the name can be taken in the meantime, waiting is risky. Lenders and counterparties can ask for a good standing certificate, so a lapse can slow a deal even if the company never stopped operating.

Authority: MCL 450.4207a; MCL 450.5101(1)(h). Reviewed Oct. 2026.

A Michigan court may pierce the veil if the LLC was a mere instrumentality of its owner, it was used to commit a fraud or wrong, and the plaintiff suffered an unjust loss or injury as a result. Courts apply the same rules to LLCs as to corporations. All three parts are required.

The Court of Appeals stated this three-part test in Florence Cement Co v Vettraino, 292 Mich App 461, 469 (2011), and said the rules for piercing a corporate veil apply to an LLC (292 Mich App at 468). In that case the court found the members did not treat the LLC as separate from themselves: they moved property into it without formal transfers, had it reimburse their personal expenses, borrowed in their own names or as guarantors and treated those loans as the company's, and one member signed a false sworn statement to the lender. The company was also undercapitalized, with large debt and only $2,000 in capital contributions (292 Mich App at 470-471). Those facts do not set a checklist for every case. Veil piercing is an equitable remedy decided on its own facts. The facts that mattered in that case were how the entity was funded, who signed what, and whether money moved in ways the paperwork could not explain.

Authority: Florence Cement Co v Vettraino, 292 Mich App 461 (2011). Reviewed Oct. 2026.

Not directly. For a judgment against a member, a Michigan court may enter a charging order that reaches only the distributions the member would receive. The creditor cannot foreclose on the interest, does not become a member unless the operating agreement provides otherwise or the creditor is admitted as a member, and the statute makes the charging order the exclusive remedy against the membership interest.

MCL 450.4507 provides that a court may charge a member's interest with payment of the judgment with interest. Once the LLC is served with the charging order and notified of its terms, the creditor is entitled to receive only the distributions it describes. The member keeps all rights of membership except the right to receive distributions to the extent charged, and the creditor does not become a member unless admitted under the Act or an operating agreement. The charging order is a lien on the interest, but a person may not foreclose on that lien or on the interest. Subsection (6) calls the section the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the membership interest. Exemption laws still apply. A member's creditor also cannot treat LLC property as the member's own, because a member has no interest in specific company property (MCL 450.4504(2)). This protection is for the member's interest, not the member's other property, and it does not stop claims based on the member's own conduct. Read the operating agreement and the specific facts before relying on it.

Authority: MCL 450.4507; MCL 450.4504(2). Reviewed Oct. 2026.

Yes. A distribution cannot be made if afterward the LLC could not pay its debts as they come due in the usual course, or if its total assets would be less than its total liabilities plus certain preferential amounts. A member or manager who approves a violating distribution can be personally liable to the company.

MCL 450.4307(1) states those two tests. An LLC may rely on financial statements prepared on reasonable accounting principles, on a fair valuation, or on another reasonable method (MCL 450.4307(2)). Under MCL 450.4308, a member or manager who votes for or assents to a distribution that violates the operating agreement or section 307 is personally liable, jointly and severally, to the company for the excess, if it is established that the person did not comply with the manager standard of conduct in section 404. A manager or member entitled to participate in the decision is presumed to have assented unless that person votes against it or files a written dissent within a reasonable time after learning of the decision. A member who accepts a distribution knowing it violates the statute is liable for the excess, a person held liable can seek contribution, and a proceeding must start within 2 years after the effect of the distribution is measured. Before large payouts, run a solvency check against both tests.

Authority: MCL 450.4307(1); MCL 450.4308. Reviewed Oct. 2026.

On written request, a member is entitled to the LLC's most recent annual financial statement and its tax returns. A member may also inspect and copy the records the LLC must keep, during business hours, at the member's expense. Other information and books may be available as is just and reasonable.

MCL 450.4503 sets these rights. Subsection (1) requires the company to send, on written request, its most recent annual financial statement and its federal, state, and local income tax returns and other governmental tax filings. Under subsection (2), a member may obtain true and full information about the company's current financial condition on reasonable request. Subsection (3) allows a member or the member's designated representative to inspect and copy the records the LLC is required to keep under MCL 450.4213, on reasonable written request during ordinary business hours at the location where they are kept. Subsection (4) allows other information or books and records "as is just and reasonable," and subsection (5) allows a formal accounting as provided in an operating agreement or when circumstances make it just and reasonable. Because the request must be in writing, it should identify the records wanted, and the member should keep proof of delivery.

Authority: MCL 450.4503; MCL 450.4213. Reviewed Oct. 2026.

An LLC must keep at its registered office or principal place of business a current list of members and managers with addresses, its articles and amendments, tax returns and financial statements for the 3 most recent years, its operating agreements, and records showing each member's share of distributions and voting rights.

MCL 450.4213 lists the required records. They are: the full name and last known address of each member and manager; the articles or restated articles and any amendments; copies of federal, state, and local tax returns and reports, if any, for the 3 most recent years; copies of financial statements for the 3 most recent years; copies of the operating agreements; and records that would enable a member to determine the members' relative shares of distributions and relative voting rights. These are also the records a member can inspect and copy under MCL 450.4503(3). Missing or messy records make disputes harder to resolve, especially in a company where ownership percentages changed without paperwork. In a business dispute, these are the first documents to request. A periodic check of this list is simple.

Authority: MCL 450.4213; MCL 450.4503(3). Reviewed Oct. 2026.

A manager must act in good faith, with the care an ordinarily prudent person in a like position would use, and in a manner the manager reasonably believes most benefits the company. A manager may rely on reports from qualified people, and must account to the LLC for profits from company transactions unless the agreement or a member vote says otherwise.

MCL 450.4404(1) sets the standard: good faith, the care an ordinarily prudent person in a like position would exercise under similar circumstances, and a manner the manager reasonably believes most benefits the company. A manager may rely on information, opinions, reports, or statements prepared by other managers, members, or employees the manager reasonably believes are reliable and competent, by lawyers, accountants, or other professionals on matters within their competence, or by a committee the manager reasonably believes merits confidence. Reliance is not allowed when the manager knows something that makes it unwarranted. A manager who performs the duties in compliance with the section is not liable for an action taken or not taken. Unless an operating agreement or a member vote under MCL 450.4502 provides otherwise, a manager must account to the company and hold as trustee for it any profit or benefit from a transaction connected with the company or from personal use of its property. A claim for failure to perform these duties must be filed within 3 years after it accrued or 2 years after discovery, whichever is earlier. In a member-managed LLC the members carry these duties.

Authority: MCL 450.4404; MCL 450.4401; MCL 450.4502. Reviewed Oct. 2026.

Yes, in part. The articles or operating agreement may eliminate or limit a manager's monetary liability to the company or its members for breaching the standard of conduct. It cannot cover receiving a financial benefit the manager was not entitled to, unlawful distributions, a knowing violation of law, or acts before the provision took effect.

MCL 450.4407 allows a provision in the articles or an operating agreement to eliminate or limit the monetary liability of a manager for breach of the duties in MCL 450.4404, with four exceptions: receipt of a financial benefit to which the manager is not entitled; liability under MCL 450.4308 for unlawful distributions; a knowing violation of law; and an act or omission before the provision became effective. The section addresses monetary liability, so it does not by itself remove other remedies such as an injunction or removal under the operating agreement. A broad exculpation clause can look harmless when signed at formation and matter a great deal later in a dispute between members. These clauses should be read together with any indemnification provision and the manager provisions, because together they can shift significant risk from a manager to the company or its members.

Authority: MCL 450.4407; MCL 450.4404; MCL 450.4308. Reviewed Oct. 2026.

Yes, unless the operating agreement says otherwise. An LLC may indemnify, hold harmless, and defend a member, manager, or other person against losses, expenses, claims, and demands. It cannot indemnify conduct described in MCL 450.4407(a), (b), or (c). It may also buy insurance for them.

MCL 450.4216 gives an LLC that power, except as otherwise provided in an operating agreement. The limit is that the company may not indemnify a person for conduct described in section 407(a), (b), or (c): receiving a financial benefit to which the person is not entitled, liability for an unlawful distribution under section 308, or a knowing violation of law. The company may also purchase and maintain insurance on behalf of a member, manager, or other person against liability or expense, whether or not it could indemnify that person. Note that the statute says the company "may" do this. Whether the LLC must pay in a particular case turns on what the operating agreement requires and whether the company has the money. Because the statute yields to the operating agreement, read the operating agreement, any separate indemnity agreement, and the insurance policy together.

Authority: MCL 450.4216; MCL 450.4407. Reviewed Oct. 2026.

A Michigan LLC member can sue in circuit court under MCL 450.4515, claiming that those in control acted illegally, fraudulently, or in a willfully unfair and oppressive way. If grounds are shown, the court can order relief, including a buyout of the member's interest at fair value, an order changing or stopping an act, damages, or dissolution.

The statute defines willfully unfair and oppressive conduct as a continuing course of conduct or a significant action or series of actions that substantially interferes with the member's interests as a member. It may include ending employment or cutting employment benefits to the extent that doing so interferes with distributions or other member interests disproportionately for that member. It does not include conduct permitted by the articles, an operating agreement, another agreement the member signed, or a consistently applied written company policy (MCL 450.4515(2)). The action is filed in the circuit court for the county of the principal place of business or registered office. A damages claim must be filed within 3 years after it accrued or 2 years after the member discovered or should have discovered it, whichever is earlier. Because the operating agreement can define what counts, the agreement, the financial records, and a timeline of events are the first things to assemble.

Authority: MCL 450.4515. Reviewed Oct. 2026.

Usually, unless the operating agreement says otherwise. An interest is assignable in whole or in part. But an assignment alone gives the buyer only the distributions the seller would have received. In an LLC with more than one member, the buyer becomes a member only by unanimous vote of the members entitled to vote, unless the operating agreement provides a different rule.

A membership interest is personal property, and a member has no interest in specific company property (MCL 450.4504). Under MCL 450.4505, an interest is assignable unless the operating agreement provides otherwise, and an assignment does not by itself entitle the assignee to manage the company or exercise a member's rights. Unless the agreement says otherwise, a member who assigns the entire interest stops being a member, but the assignor is not released from liability to the company under sections 302 and 308. MCL 450.4506(1) says that, unless the operating agreement provides otherwise, an assignee of an interest in an LLC with more than one member becomes a member only upon a unanimous vote of the members entitled to vote. In a single-member LLC, the assignee may become a member under the terms of the agreement between the member and the assignee. Many operating agreements add rights of first refusal, consent requirements, or valuation formulas. Check those terms, and the tax effects with an accountant, before a transfer closes.

Authority: MCL 450.4505; MCL 450.4506; MCL 450.4504. Reviewed Oct. 2026.

Only as the operating agreement allows. MCL 450.4509 says a member may withdraw from a Michigan LLC only as provided in the operating agreement, and a withdrawing member may be entitled to a withdrawal distribution. The agreement may also provide for expulsion or other events that end membership.

The statute does not give members a default right to resign and cash out. Subsection (1) ties withdrawal to the operating agreement and refers to a withdrawal distribution as described in section 305. Subsection (2) allows the agreement to provide for expulsion or other events that end membership. If your operating agreement is silent or never existed in writing, you may not have a clean exit path, and your options may include negotiating a buyout, selling your interest under MCL 450.4505, or, in a serious dispute, asking a court for relief under MCL 450.4515, which includes a purchase of the interest at fair value. Distribution limits in MCL 450.4307 can also restrict what the company can pay out. Start by reading the buy-sell, valuation, and notice provisions, then compare the options before anyone sends a demand.

Authority: MCL 450.4509; MCL 450.4515; MCL 450.4307; MCL 450.4505. Reviewed Oct. 2026.

An LLC dissolves on events like a time stated in the articles, a vote or event specified in the operating agreement, a unanimous vote of the members entitled to vote, or a court decree. When it begins winding up after a member vote or agreement event, it files a certificate of dissolution. The statutory filing fee is $10.

MCL 450.4801 lists the dissolution events: reaching a time stated in the articles, a vote or other event specified in the articles or operating agreement, a unanimous vote of the members entitled to vote, a decree of judicial dissolution, or, for a company that has not begun business, issued interests, or incurred debts, a majority vote of the organizers. Under MCL 450.4804(1), a company that dissolves because of an agreement event or a unanimous vote executes and files a certificate of dissolution stating its name, the reason for dissolution, and any later effective date. Only the members, not the managers, may authorize dissolution by unanimous vote (MCL 450.4502(4)). The fee statute lists $10 for a certificate of dissolution (MCL 450.5101(1)(m)). Winding up is handled by the members or managers under the Act, the articles, and the operating agreement, and a dissolved LLC can still sue and be sued in its name (MCL 450.4805).

Authority: MCL 450.4801; MCL 450.4804; MCL 450.5101(1)(m); MCL 450.4502(4); MCL 450.4805. Reviewed Oct. 2026.

Possibly. On application by or for a member, the circuit court for the county of the LLC's registered office may decree dissolution when the company is unable to carry on business in conformity with its articles or operating agreements. A member may also ask for dissolution as relief for oppression under MCL 450.4515.

MCL 450.4802 is short: the court may decree dissolution whenever the company is unable to carry on business in conformity with the articles or operating agreements. A decree of judicial dissolution is itself a dissolution event under MCL 450.4801(d). Separately, MCL 450.4515(1)(a) lists dissolution and liquidation as one remedy a court may order when it finds illegal, fraudulent, or willfully unfair and oppressive conduct, and the same section lists less drastic options such as a fair-value purchase of the member's interest. Courts have discretion over relief, and an operating agreement with a buy-sell or deadlock mechanism can control what happens first. Dissolution is not the only choice, because MCL 450.4515(1) also lists a fair-value purchase of the member's interest, which can preserve value that a liquidation would not.

Authority: MCL 450.4802; MCL 450.4801; MCL 450.4515. Reviewed Oct. 2026.