I Was Pushed Out of My Own Company. What Are My Rights?

Two different things just happened

When owners say they were 'pushed out,' they usually mean two separate events that feel like one. The first is losing a position: manager, officer, employee, signatory. The second is the attempt to treat them as if they no longer own anything. Texas law handles these very differently. Positions are governed by the agreement and by votes. Ownership is property, and it does not disappear because someone changed the locks.

So the first sorting question is: what did you actually lose? If the answer is a title, a salary and access, you have an employment and management dispute. If they are also refusing to recognize your interest, declaring that you 'forfeited' it, or paying distributions to everyone but you, you have an ownership dispute with much stronger statutory footing.

Your ownership survives unless a document says otherwise

For an LLC, section 101.107 of the Business Organizations Code says a member may not withdraw or be expelled from the company. That default protects you: absent a clause in the company agreement, no vote can cancel your interest. For a corporation, your shares are your property; the corporation can issue new shares in some circumstances, but it cannot vote your existing shares out of existence. For a general partnership, section 152.501 allows expulsion only as the agreement provides, by majority-in-interest vote in a few narrow situations, or by court order for serious misconduct, and even then your interest is redeemed at fair value.

What can change this is a document you signed. Company agreements and shareholders' agreements often contain buy-sell clauses triggered by termination of employment, sometimes at a formula price that is less than fair value when the termination is 'for cause.' Those clauses are generally enforced as written. Read them before you say anything about price, and read the definition of cause closely. Whether a buyout can be forced on you, and at what price, is covered in how a partner buyout is priced and enforced in Texas.

What rights come with the interest you still hold

• Distributions. If the company makes a distribution to members or shareholders, you are entitled to your share. Paying the others and not you is a breach. The company is not obligated to declare distributions at all, which is where many squeeze-outs move next; see the company is profitable but I am not being paid distributions.
• Records. An LLC member may examine records on written demand stating a proper purpose (section 101.502), and the company owes your attorney's fees if it refuses (section 101.503). A shareholder who has held shares six months or holds five percent has a parallel right under section 21.218. Valuing your interest and checking what the others are paying themselves are proper purposes.
• Votes. Your vote on matters reserved to members or shareholders, including amendments to the certificate of formation (unanimous for an LLC under section 101.356(d)) and fundamental transactions, continues. A vote taken without the required approval is challengeable.
• Claims. Breach of the agreement, breach of fiduciary duty by those who control the company, and derivative claims for harm to the company all remain available to you as an owner. The duties the controlling owners owe are described in what fiduciary duties partners and LLC managers owe.

Example

Suppose a software founder holds 35 percent of a Dallas LLC and served as its president. The two other members, with 65 percent between them, vote to remove her as manager, terminate her employment and disable her accounts. The company agreement allows removal of a manager by majority and has no buyout trigger. She is no longer president. She is still a 35 percent member. She sends a written demand for the 2024 and 2025 financials, the member ledger and all compensation approvals, stating that she wants to value her interest and verify related-party payments. If the others raise their salaries to absorb what used to be distributions, that is the fact pattern for a breach-of-duty claim, and the records demand is how she proves it.

What they cannot do

The controlling owners can run the business. They cannot, without exposure: pay themselves the company's profits as 'salary' while declaring no distributions, if the facts show the purpose was to divert your share; refuse a compliant records demand; amend the certificate of formation without the required vote; treat your interest as forfeited without a clause that says so; or deal with the company on the other side of a transaction without the disclosure and approval the agreement and the statute require. For corporations, section 21.418 governs interested-director transactions and requires disclosure plus disinterested approval or proof of fairness.

Is this 'oppression' you can sue for?

Not as a standalone claim. Since Ritchie v. Rupe (Tex. 2014), Texas does not recognize a common-law cause of action for minority shareholder oppression, and the receivership statute (section 11.404) reaches only narrowly defined 'oppressive' conduct with receivership, not a buyout, as the remedy. What remains are the concrete claims above: breach of the agreement, breach of fiduciary duty where a duty exists, fraud, and the records and derivative statutes. The limits and the surviving routes are set out in minority shareholder protection in Texas.

First steps that do not hurt you

1. Collect every governing document: certificate of formation, company agreement or bylaws, shareholders' agreement, your employment agreement, any buy-sell agreement, and any non-compete or confidentiality agreement you signed.
2. Write down the timeline while it is fresh: the vote, who attended, what notice you received, what was said about your interest.
3. Do not take company property, data or customer lists on the way out, even if you built them. Doing so hands the other side a claim and a narrative.
4. Send a written records demand under the statute that applies to your entity, stating a proper purpose.
5. Say nothing about price until you have the records and a litigator's read on your agreement's buyout clauses.

What this costs and what it protects

Owners pushed out of a company face a cash problem (salary gone, distributions uncertain) and a bargaining problem (the other side has the records and the checkbook). The records demand addresses the second. The claims above address the first over time. A litigator's early job is to read the agreements for every clause that affects your exit, calendar the four-year limitations periods that govern fiduciary and fraud claims (Civil Practice and Remedies Code section 16.004), and decide whether a derivative demand should be made now to protect the company's claims as well as yours. For the broader map of options, see shareholder and partnership disputes. Tina Wysk represents owners on both sides of these disputes in Dallas state and federal courts and in arbitration.