Sale and Assignment of a Percentage Ownership Interest in a Limited Liability Company
What this document covers
The Sale and Assignment of a Percentage Ownership Interest in a Limited Liability Company form is a legal document that facilitates the transfer of ownership interests, or units, in an LLC from one member to another. This form is distinct from other agreements as it specifically addresses the rights and responsibilities associated with membership in an LLC, ensuring that the transfer adheres to the operating agreement of the company. It enables the seller (Assignor) to sell a specified percentage of their ownership to the buyer (Assignee), updating the company's records accordingly.
Key parts of this document
- Date of the agreement
- Names and addresses of the Assignor and Assignee
- Name and purpose of the LLC
- Details about the units being sold and the membership interest
- Mutual covenants and guarantees regarding the sale
- Signature lines for both Assignor and Assignee
When to use this form
This form is necessary when an existing member of an LLC wishes to sell or assign their ownership interest to another party. It is commonly used during business transitions, exit strategies, or when an owner wants to bring in new members to the LLC. Additionally, it may be needed when members decide to restructure ownership due to financial considerations or personal circumstances.
Who can use this document
- Current members of an LLC looking to sell their ownership interest
- Individuals or entities interested in purchasing ownership in an LLC
- LLC members wanting to formalize the transfer of membership interests
- Business partners involved in restructuring ownership within an LLC
How to complete this form
- Identify and enter the date of the agreement.
- Fill in the names and addresses of both the Assignor and Assignee.
- Specify the name and purpose of the LLC, as well as the number of units being sold.
- Detail the membership interest being transferred.
- Ensure all parties sign and date the agreement.
- Attach relevant exhibits, such as the operating agreement and member resolution, if required.
Notarization guidance
Notarization is not commonly needed for this form. However, certain documents or local rules may make it necessary. Our notarization service, powered by Notarize, allows you to finalize it securely online anytime, day or night.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Typical mistakes to avoid
- Failing to obtain the necessary consent from other members of the LLC.
- Not clearly specifying the number of units being transferred.
- Neglecting to attach the operating agreement or member resolution as required.
- Omitting signatures or dates from the document.
Why complete this form online
- Convenient access to professionally drafted legal documents.
- Editable templates that can be customized to fit specific needs.
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- Reliable resources for ensuring legal compliance and accuracy.
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FAQ
Look to the operating agreement. An LLC is a business entity that offers the liability protections of a corporation without the complexity of a corporate structure. Follow the operating agreement's requirements. Determine the value of your interest. Complete the remaining documentation.
Review your Operating Agreement and Articles of Organization. Establish What Your Buyer Wants to Buy. Draw Up a Buy-Sell Agreement with the New Buyer. Record the Sale with the State Business Registration Agency.
1. Divide ownership of the LLC by calculating total cash investment by the members. Give each member an ownership stake equal to his cash investment. Four members contributing $25,000 apiece would each receive a 25 percent stake in the company.
In strictly technical terms, no LLC can sell shares. Ownership in an LLC, or limited liability company, is based on a percentage of the company not by the number of shares owned.However, in practical terms an LLC can operate very similarly to a corporation that can sell shares.
The sale of a single-member LLC is typically handled as an asset sale. The proceeds are passed through to the owner to be taxed on the owner's personal income tax return. Multi-member LLCs and LLCs that choose to be taxed as an S-Corp or C-Corp can be sold under an entity sale or an asset sale.
You must appraise the total value for the company first, and then multiply it by your ownership percentage to find the value of your share. The two most commonly used valuation methods are the market value method and the income method. The LLC's operating agreement may specify the valuation method to be used.
An LLC member can usually assign some or all of their interest in the LLC. If the member assigns their entire membership interest, the person taking the interest, called the assignee, steps into the shoes of the LLC member who is transferring the interest, called the assignor.
Review the Operating Agreement. Understand State Requirements. Determine New Member Rights. Make an Offer and Draft a Purchase Agreement. Update the Operating Agreement and Capital Accounts Ledger. Update State-Required Forms.
Unlike most business organizations, absent an agreement by all of the members of the LLC, ownership percentage has no real effect in terms of the governance and financial benefits. To increase the traditional benefits associated with ownership, control and financial return, you need to amend the operating agreement.
