Members of a limited liability company (LLC) obtain an interest in the profits generated by the company. A member may wish to transfer his interest in the LLC for a number of reasons. Each state has a Limited Liability Company Act that prescribes laws for managing an LLC. A member who intends to transfer his interest should consult these laws to determine the lawful way to transfer the interest. Following the applicable laws ensures that the member can effectively make a transfer without legal ramifications.
Consult the LLC operating agreement for interest transfer rules. According to the Revised Uniform Limited Liability Company Act (RULLCA), the operating agreement may place restrictions on the transfer of interests. Ask the members to amend the operating agreement if it restricts the desired transfer. Get the consent of all members to change the operating agreement.
Obtain a certificate that documents the LLC interest of the member. A transfer of the certificate will transfer an LLC interest recorded in the certificate. Ask the managers or members to provide a certificate if it was lost or never issued by the LLC.
Determine which interests to transfer. An interest holder can remain as a member and transfer only her interest described in the certificate. Alternatively, she may wish to resign and also transfer the membership to the transferee. Check the operating agreement to determine if the member can assign membership status to the transferee. Follow the rules in the operating agreement to assign the membership. If the operating agreement does not allow membership transfer, inform the members and conduct a member vote to admit the transferee as a member.
Transfer the certificate to the transferee with a written assignment or transfer agreement (see Resources). Hire a lawyer experienced in LLC laws in the local state to ensure that the agreement abides by state law.
Give notice to the LLC members as soon as possible. This notice applies when the interest holder does not have to get a member vote to make a transfer of his interest in the LLC. The transfer does not take effect until notification to the LLC.