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.

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.

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.

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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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References

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Illinois LLC Operating Agreement

Illinois state statutes 805 ILCS 180 Limited Liability Company Act Sec. 15-5 defines the operating agreement as the agreement concerning the relations among the members, managers, and limited liability company. Illinois statute permits, but does not require, the members of an Illinois limited liability company to enter into an operating agreement. If created, the operating agreement can generally contain any terms and conditions that do not conflict with the Illinois Limited Liability Company Act.

How to Add a Member to an LLC Company

A limited liability company, or LLC, is managed like a partnership rather than through a regulatory framework. It requires the consent of the partners, known as members, to accomplish anything. Members can execute an operating agreement to govern the procedure for making most decisions, but an operating agreement is optional in most states. Some states have default provisions in their Limited Liability Company Acts that dictate how certain situation are to be handled if an LLC hasn't formally adopted an operating agreement. The addition of new members falls under these default provisions.

How to Make Myself 51% Owner of an LLC

A limited liability company, or LLC, is an independent legal entity. This means that an LLC is separate from the people who own the company, and the owners are not personally liable for the debts of the business. Unlike in a corporation, owners are not stockholders who own shares of stock as evidence of their ownership interest. LLC owners are referred to as members, and ownership is reflected by keeping an account of their percentage ownership of the company in relation to other members.

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