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Category: Business Law
Satisfied Customers: 4634
Experience:  23 Years business & securities law, NY and FL bars. SEC all states.
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Can an LLC distribute shares, and do the shareholders have

Customer Question

Can an LLC distribute shares, and do the shareholders have voting rights? We are in the State of CA
Submitted: 7 years ago via ExpertLaw.
Category: Business Law
Expert:  FLCORPLAWYER replied 7 years ago.
The members of an LLC own "interests" in the LLC depending upon (1) their contributions to the LLC and/or (2) the agreement between the parties. (That is the beauty of an LLC, a person who contributes 10% of the money can own 50% of the LLC if that is what the members want). There are no shares in an LLC. However, for the sake of giving people something tangible to hold, some LLC's have "certificates" printed (which look a lot like stock certs) that delineate the ownership interest of the member holding the certificate.
Customer: replied 7 years ago.

Since an LLC does not hold shares, what will the new (shareholders) be named members? and will they have voting rights or that will be up to the LLC members to give new members voting rights or not.

Expert:  FLCORPLAWYER replied 7 years ago.
LLc's have members. They have managing members who actually conduct the business, and regular members who do not. When a new member is added, there must be an agreement among everybody as to what that new member is putting in and what he gets out. Every member has a voting right unless it is agreed otherwise.