The Section reference below has been updated to reflect California’s new LLC law that took effect on January 1, 2014 (see RULLCA Brings New LLC Laws to California in 2014).
Here are the points that I made in my response.
- A California limited liability company may, but is not required to, issue LLC membership certificates (Corporations Code Section 17705.02(c)).
- However, if the operating agreement includes membership transfer restrictions, buy-sell provisions, reverse vesting, or the like – features that should be included in any multi-member LLC that is seeking investors – then LLC membership certificates with applicable legends should be issued. The reason: If there are no LLC membership certificates, then a transferee who receives a former member’s interest without knowledge of such provisions may successfully claim that s/he is not bound by them.
- Should My Corporation Provide Stock Certificates to Shareholders?
- Printing Legends on Share Certificates ? Why and How
- Can I form an LLC without a lawyer?
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
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