How to Add a Member to an LLC

By Jeff Franco J.D./M.A./M.B.A.

How new members are added to a limited liability company, or LLC, is determined by the LLC's operating agreement provided it has one. However, each state has its own laws for areas where the operating agreement is silent or there is no operating agreement. While the laws vary, most states have adopted the Revised Uniform Limited Liability Company Act in its entirety, or with only minor modifications.

How new members are added to a limited liability company, or LLC, is determined by the LLC's operating agreement provided it has one. However, each state has its own laws for areas where the operating agreement is silent or there is no operating agreement. While the laws vary, most states have adopted the Revised Uniform Limited Liability Company Act in its entirety, or with only minor modifications.

Step 1

Review a copy of the LLC operating agreement to determine the procedures for admitting new members, such as the number of member votes necessary. If the operating agreement provides no instruction,new members cannot be admitted unless all current members consent.

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Step 2

Take a member vote on admitting the member. Only when there are a sufficient number of votes pursuant to the operating agreement, or a unanimous vote in favor when the operating agreement is silent, can a new membership interest be created.

Step 3

Determine the amount of contribution the new member must make. It is not essential that the current LLC members require a contribution from a prospective member, but it’s common to require one. Unless the operating agreement states the amount, a sufficient number of current members must agree on the contribution amount, which can be in cash as well as tangible or intangible assets.

Step 4

Present LLC membership terms to the new member. Since new members must adhere to all terms of the operating agreement that exists at the time of joining the LLC, it’s advisable -- though not a legal requirement -- to provide the new member with a copy of the agreement before finalizing her membership. The operating agreement is the authority on all LLC activities, and, therefore, prospective members considering making an investment in the LLC should be aware of any limitations on their authority to manage business operations.

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How to Add a Member to an Existing LLC

References

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