Disputes or differences in vision between business partners can create significant challenges that threaten the stability of a company. When reconciliation is not possible, removing a partner may be the best way to protect the business. Colorado law provides specific procedures for legally removing a business partner, and understanding them can help minimize risk and conflict.

1. Review the Partnership Agreement

The first step is to review your partnership or operating agreement. Most agreements contain provisions that address partner removal, buyouts, or procedures for resolving disputes. These terms are legally binding and may dictate how and when a partner can be removed, including valuation methods and notice requirements.

2. Negotiate a Voluntary Withdrawal

If possible, attempt to reach a mutual agreement. Negotiating a voluntary withdrawal or buyout can save time, money, and stress. Draft a formal withdrawal or buyout agreement that clearly outlines the terms, compensation, and responsibilities of the departing partner.

3. Follow Statutory Procedures if No Agreement Exists

If no partnership agreement exists, Colorado’s Uniform Partnership Act (C.R.S. § 7-64-601) governs the process. Under this law, a partner may be expelled by a unanimous vote if:

• Their conduct harms the business,
• They breach the partnership agreement, or
• Continuing with them makes it unreasonable to operate effectively.

In some cases, it may be necessary to dissolve and reform the partnership without the problematic partner.

4. Update Business Records and Legal Filings

After the partner’s removal, update all relevant documents with the Colorado Secretary of State, IRS, and any licensing agencies. Notify financial institutions, vendors, and clients to avoid confusion and protect business operations.

5. Seek Legal Counsel

Partner removals can trigger disputes involving contracts, finances, or fiduciary duties. Working with an attorney ensures compliance with Colorado business laws and protects your interests throughout the process.

At Denver Business Lawyers, we can provide legal assistance to the Denver public. Our team helps business owners navigate complex partnership matters, ensuring that all steps are handled efficiently and lawfully.