Your Partner Took Company Funds? Get Counsel Before You Act

The Short Answer: It Turns on Your Governing Documents

Can my business partner withdraw funds without my consent? The short answer is that it turns on your governing documents. The key question is whether the money left the company under a permitted arrangement or outside one.

A payment may be an agreed distribution, a reimbursement for a real company expense, or an unauthorized taking. Florida law treats each one differently. The governing documents, the type of entity you own, and the partner’s role and signing authority all shape the answer.

Florida’s entity statutes draw the line. An operating agreement governs an LLC’s internal relations, and a partnership agreement governs relations among partners. Where the agreement is silent, the statutes fill the gap. This is general information about Florida law, not advice about your account.

Start With the Operating Agreement or Partnership Agreement

The written agreement is the first document to review. For an LLC, the operating agreement governs relations among the members and between the members and the company. The LLC chapter governs any matter the agreement does not otherwise provide for (Fla. Stat. § 605.0105).

For a partnership, the partnership agreement governs relations among the partners. The partnership statute fills any gaps (Fla. Stat. § 620.8103).

Look for distribution schedules, draw limits, and capital account rules. Check expense reimbursement policies, approval thresholds, and who may sign for the company. Some agreements require written approval before any owner takes money out. Others say nothing about a specific payment at all.

That silence is often the real problem. When the agreement doesn’t address a transfer, the statutes decide the matter. So read the agreement and the statute together.

Who Can Sign and Who Controls the Company Bank Account

The people listed as authorized signers are the first factual check. Find out who the bank has on file. Signing authority often comes from the bank’s account documents and the company’s internal records. Those sources may not match, so compare them.

A bank processes transactions from people it has on file as authorized. A withdrawal can clear even when the other owners never approved it. Whether a particular withdrawal was proper depends on the facts of each situation.

Ask for current records now. Request signature cards, account opening documents, and the full transaction history. Keep copies of everything you receive.

If you are a member of a member-managed LLC, Florida law gives you an inspection right. A member of a member-managed LLC may inspect and copy company records that are material to the member’s rights and duties under the operating agreement or chapter 605, on reasonable notice and at a reasonable location the company specifies (Fla. Stat. § 605.0410). Those records include financial statements for the three most recent years.

Distributions, Draws, and Unauthorized Transfers

A distribution is a payment the governing documents allow. It is usually made on an agreed schedule or formula. A draw is a similar payment the owners agree to in advance. Neither one is a free pass to take cash.

Florida law also limits distributions. An LLC may not make a distribution if, after the distribution, it would be unable to pay its debts as they become due in the ordinary course of the company’s activities and affairs. A distribution is also barred if the company’s total assets would fall below its total liabilities, plus any amount needed to satisfy preferential rights upon dissolution (Fla. Stat. § 605.0405).

Common red flags include these:

• Large or repeated transfers to a partner personally.
• Payments labeled as vendor or consulting fees with no matching work.
• Transfers to accounts a partner or a related party controls.
• Expenses with no clear business purpose.

An unapproved transfer may be money owed back to the company. It may also raise claims based on the partner’s duties. That is why each transaction needs its own review.

Selling or moving company property raises a related question. Whether a partner may do that without you depends on the governing documents and any approval rules they set.

Duties Partners and Managers Owe to Each Other

Florida law gives LLC members and partners duties to the company and to each other. For a member of a member-managed LLC, the duty of loyalty includes accounting to the company for any property or benefit gained from company property or a company opportunity (Fla. Stat. § 605.04091). The duty of care is to avoid grossly negligent or reckless conduct, willful misconduct, and knowing violations of law.

Partners owe similar duties. The only fiduciary duties a partner owes are the duty of loyalty and the duty of care (Fla. Stat. § 620.8404).

In plain terms, a partner should not take company money or opportunities for personal gain at the company’s expense. That idea sits at the center of most withdrawal disputes.

The agreement has limits too. An LLC operating agreement may not eliminate the duty of loyalty or the duty of care, though the statute allows some specific carve-outs (Fla. Stat. § 605.0105). A partnership agreement may not eliminate the duty of loyalty (Fla. Stat. § 620.8103).

The statute also says a member does not violate a duty just because the member’s conduct helps the member. How a court would view one specific transfer is fact-specific.

Legal Options a Co-Owner May Consider

Several options are commonly discussed. The right route follows from the documents and the transaction.

An accounting is often the first step. A written demand can ask the partner to account for company funds and records. When a partnership winds up, each partner is entitled to a settlement of all partnership accounts (Fla. Stat. § 620.8807).

A direct action enforces your own rights. You must prove an injury that is not solely an injury to the company. Florida case law also recognizes a route based on a violation of a separate statutory or contractual duty owed to you.

A derivative action enforces a right that belongs to the company. The statute requires a demand on the other members or managers first. A demand may be excused where it would be futile (Fla. Stat. § 605.0802).

For unlawful distributions, a member of a member-managed LLC can be personally liable for the excess under Fla. Stat. § 605.0406 only if it is established that, in consenting to the distribution, the member failed to comply with Fla. Stat. § 605.04091. A person who receives a distribution knowing it was unlawful can be liable too (Fla. Stat. § 605.0406). That claim is barred unless filed within two years after the distribution.

In specified judicial-dissolution proceedings, a court may issue injunctions and appoint a receiver or custodian pendente lite to protect company assets (Fla. Stat. § 605.0703). Negotiation and mediation are also options. The operating agreement may add removal or buyout terms, so review those too.

Steps to Take Now to Protect the Company and Your Position

Start with the records. Save bank statements, emails, texts, accounting files, tax returns, and the governing documents in their original form. Don’t edit or rename them. Keep a dated log of what you learned and when.

Next, make a written request for an accounting and for the company records the partner controls. Stick to facts. List the transfers, dates, and amounts you saw.

Avoid self-help. Don’t move money yourself, change account access on your own, or take funds to offset what you think you’re owed. Those steps can create exposure of their own.

Check deadlines and notice terms. The two-year limit for certain improper distribution claims matters. Also check whether the agreement has a dispute-resolution clause.

Keep communications calm. Avoid public accusations until the facts are confirmed.

Common Questions

Talk With KEW Legal About Your Partnership Dispute

If you just found a transfer you did not approve, you’re probably trying to understand where you stand. You may also be helping a family member or co-owner who is in that position. Either way, the facts and documents come first.

KEW Legal is a Florida business law firm with offices in Coral Gables and Sunny Isles Beach. The firm acts as outside general counsel for business owners and investors. Its work includes partnership disputes and business contract and vendor disputes across Miami-Dade and South Florida. You can read more on our outside general counsel for businesses page.

Kristina E. Wilson is the responsible lawyer for this page. Our team handles scheduling and office matters.

The first consultation is free, confidential, and comes with no obligation to continue.

To schedule your consultation, call 305-990-2300 or send us a message.