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To transfer interest of an LLC from one member to another,

Hello - To transfer interest...
Hello - To transfer interest of an LLC from one member to another, can we simply state that on the back of the certificate or does an attorney need to be involved in the transaction?
JA: Can you tell me what state the LLC is registered in?
Customer: California
JA: Has anything been officially filed? If so, what?
Customer: Yes, the LLC has been in place since 2011 - filed through Legal Zoom I believe
JA: Anything else you want the lawyer to know before I connect you?
Customer: I don't think so - I just want to know the steps needed to transfer interest from one member to another
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Answered in 1 minute by:
9/18/2017
legalg
legalg, Attorney
Category: Business Law
Satisfied Customers: 11,102
Experience: General Practitioner. Research Attorney
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Hello! I will be reviewing your question and posting a response momentarily; if you have any follow up questions please respond here. Thanks!

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The operating agreement of the LLC (Which is required in CA) will set forth the terms of how one partner may withdraw. Generally it provides for a buy out or a winding down. If the parties can't agree on price, either party can petition the court and force the LLC to wind down (dissolve).

Once one partner leaves, if there is only 1 partner left then it becomes a single partnership entity for tax purposes (so the LLC income is reported on the individual partner's 1040).

The operating agreement would need to be amended to reflect the ownership change. Bank accounts, credit cards, etc would need to have the name removed as well.

It is best to hire an attorney to assist with reformulating and to ensure the operating agreement is complied with.

General information here:

https://www.ftb.ca.gov/businesses/Structures/Limited-Liability-Company.shtml

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Customer reply replied 2 months ago
Thank you - The price has already been agreed upon and the LLC would become a single entity LLC, which we have already advised our CPA. We can have the Operating Agreement amended as well. What I want to make sure is that, when we fill out the certificate to transfer the member's interest, are we REQUIRED to fill in the blank that references an attorney. If not, do we simply leave that line blank? Thx again

Per 17700 et seq of the corporate code I could not find any specific requirement to that regard - and presumably the operating agreement is silent on that as well (or it would be controlling).

If an attorney is not used, one can put "n/a" or leave it blank.

legalg
legalg, Attorney
Category: Business Law
Satisfied Customers: 11,102
Experience: General Practitioner. Research Attorney
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Customer reply replied 2 months ago
Excellent - thank you!

Most welcome; thank you and enjoy your evening.

Thank you kindly as well for the positive rating.

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legalg
legalg
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