Companies Act 19,550 · Article 91 — Exclusion of members

Exclusion of a member for just cause (LGS art. 91)

Article 91 of the General Companies Law allows a member to be excluded for just cause—typically a serious breach of obligations. The exclusion right lapses ninety (90) days after the fact becomes known, and any agreement prohibiting exclusion is void. It applies to partnerships, SRLs and general partners in partnerships limited by shares; not to shareholders of an S.A.

Source: Act 19,550

What article 91

Article 91 governs the exclusion of a member: compulsory separation when the member’s conduct or personal status justifies removal. It is a ground for partial termination of the company agreement: the company continues without that member.

Official text · Act 19,550, art. 91

Any member of the companies mentioned in the preceding article, any member of a limited liability company, and any general partner of a partnership limited by shares may be excluded for just cause. Any agreement to the contrary is void.

Just cause. Just cause exists where the member seriously breaches his or her obligations. It also exists in cases of incapacity, disqualification, declaration of bankruptcy or civil insolvency, except in limited liability companies.

Extinction of the right. The exclusion right expires if not exercised within ninety (90) days following the date on which the fact justifying separation became known.

Exclusion action. If exclusion is decided by the company, the action shall be brought by its representative or by the person appointed by the remaining members if the exclusion concerns the administrators. In either case, the court may provisionally suspend the rights of the member whose exclusion is sought.

If exclusion is exercised individually by one member, the proceedings shall be conducted with notice to all members.

Source: Law 19,550, art. 91 — InfoLEG (updated official text)

Commentary

Exclusion is a severe remedy because it departs from the rule that no one can be forced to cease being a member against his or her will. The law therefore requires just cause and procedural safeguards. The most litigated ground is serious breach of the member’s obligations: ordinary disagreement is insufficient; there must be misconduct affecting the corporate interest, such as unfair competition, misappropriation of funds, systematic obstruction or failure to make the committed contribution.

The ninety-day period is a forfeiture period, not a limitation period: if the company knew of the fact and allowed the period to pass without acting, the right expires. The date of knowledge should therefore be documented and action taken promptly.

Where exclusion is pursued by the company against a member, court proceedings are required and the provisional suspension of that member’s rights may be requested during the case—a key tool to stop harm while the dispute is decided.

Distinctions often confused

Exclusion of a member is not the same as Removal of an administrator. Exclusion removes the person’s status as a member (art. 91); removal affects only the office of administrator, while the person remains a member. One may occur without the other.

Exclusion is not the same as Partial termination and dissolution. Exclusion is a form of partial termination: the company continues with the remaining members. Dissolution ends the company’s active life and opens liquidation.

Just cause is not the same as Mere dispute between members. Disagreement, loss of confidence or lack of affectio societatis alone are insufficient: a serious and provable breach of obligations is required.

Practical impact

Once a member is excluded, the interest must be liquidated and paid at its value at the time of exclusion (arts. 92 and 13(5)). In practice, valuation often becomes the real focus of the dispute. Before filing, evidence of the breach and of the date it became known should be secured so the 90-day period is not missed.

Frequently asked questions

Can a shareholder of an S.A. be excluded?

Not under article 91. Exclusion does not apply to shareholders of a stock corporation; it applies to members of partnerships and SRLs and to general partners of partnerships limited by shares.

What counts as 'just cause'?

A serious breach of the member’s obligations affecting the corporate interest. Incapacity, disqualification, bankruptcy or civil insolvency also qualify (except in an SRL). Mere disagreement is not enough.

How long is there to exclude a member?

Ninety (90) days from learning of the fact justifying separation. It is a forfeiture period: once it expires, the exclusion right is extinguished.

Is the excluded member paid?

Yes. The member is reimbursed the value of the equity interest calculated at the time of exclusion. Determining that value is often the most disputed issue.

This page is informational and does not constitute legal advice nor replace professional consultation. It quotes the official text of the rule; for its application to a specific case, consult a licensed professional.

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