How to Change Ownership of a California LLC

By Salvatore Jackson

The ownership of an LLC may change either through the outright sale of the company, or through the addition or withdrawal of its owners, also called members. While California law provides default voting procedures for ownership changes in an LLC, the operating agreement or articles of organization may provide voting procedures that override California law. Changes in the ownership of an LLC must be reported to the California State Board of Equalization.

The ownership of an LLC may change either through the outright sale of the company, or through the addition or withdrawal of its owners, also called members. While California law provides default voting procedures for ownership changes in an LLC, the operating agreement or articles of organization may provide voting procedures that override California law. Changes in the ownership of an LLC must be reported to the California State Board of Equalization.

Step 1

Determine if the LLC’s operating agreement or articles of organization provide a procedure for changes in the LLC's ownership. The LLC’s articles of organization and operating agreement typically contain voting provisions for adding and withdrawing members, including when to conduct a vote and the percentage of votes required to add a member.

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Step 2

Conduct a vote among LLC members if adding a member. If there are no provisions pertaining to adding a member in the operating agreement or articles of organization, California law supplies a default procedure which requires approval by a majority of current LLC members in order to add a new member.

Step 3

Arrange to have the withdrawing member submit written notice to the other LLC members. Under the default provisions supplied by California law, the members of an LLC may not vote to remove other members.

Step 4

Download and fill out Form 100B (see Resources). Indicate whether the change in ownership has resulted in more than 50 percent ownership by a new business or person, and whether any California real property interests have been excluded from filing. Complete Schedule A if a legal entity or person has acquired a controlling stake in the LLC. Complete Schedule B if any property has been excluded from filing. Provide your name and address in the Certification section, and sign the form. The filing address is California Board of Equalization County-Assessed Properties Division, P.O. Box 942879, Sacramento, CA 94279-0064.

Step 5

Amend your articles of organization or operating agreement, if necessary. You must amend your LLC’s articles of organization or operating agreement if either provides a list of all LLC owners. Because the California Secretary of State does not require an LLC to file an operating agreement, amending an operating agreement simply requires changing the list of owners, having all owners sign the new operating agreement and keeping a copy of the new operating agreement on file at the LLC's registered office. If amending the articles of organization, you must use the California Secretary of State’s Certificate of Amendment form (see Resources), where you provide the new list of LLC members under Section 1C. As of 2010, the filing fee for a Certificate of Amendment is $30. The filing address is Secretary of State, Document Filing Support Unit, P.O. Box 944228, Sacramento, CA 94244-2280.

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References

Resources

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