Key Takeaways

  • An LLC membership certificate is a non-mandatory but useful document that formally acknowledges a member's ownership interest in the company.
  • When completing an LLC membership certificate, you must include essential details like the LLC name, state of formation, member’s name, ownership percentage, and issue date.
  • Certificates should reflect any transfer restrictions based on the operating agreement and may include legal disclaimers.
  • Signing by an LLC manager, agent, or member helps validate the document, though signatures are not legally required.
  • Maintaining accurate records of issued certificates helps with internal record-keeping and resolving ownership disputes.

LLC membership certificate how to fill out? Filling out your membership certificates is one of the most important parts of forming your limited liability company (LLC). While these certificates aren't a legal requirement, they can be a very useful tool, particularly if you're looking for a convenient solution for informing company members of their rights.

Filling Out Membership Certificates

When you're ready to form a limited liability company, you'll need to draft a variety of documents. For instance, to legally form your company, you must file Articles of Organization with your state. You also may want to write an operating agreement, which will define how your business will operate and the ownership percentage of each LLC member.

In addition to these documents, you may want to provide the members of your company with a membership certificate. There are several different reasons that you may want to write membership certificates:

  • Your LLC has inactive members.
  • LLC members wish to transfer their company interests.
  • LLC members cannot easily access company records.

When filling out your certificates, there is a variety of information that you should include:

  1. The company name and state of incorporation.
  2. How many members the LLC has.
  3. The name of the member who will receive the certificate.

It's also crucial that every LLC membership certificate include the specific member's ownership percentage. Certificates should also describe the rights of members as detailed in your operating agreement and formation documents.

Providing your LLC members with membership certificates is not required by law. This means there is no legal requirement for who must sign the certificate. In most cases, an LLC manager will sign the certificate. If you want the certificate to be a little more formal, you can include several signatures:

  1. A witness's signature.
  2. A signature from the member receiving the certificate.
  3. A signature from an LLC agent.

Details to Include on an LLC Membership Certificate

When completing an LLC membership certificate, it is important to ensure that key details are filled out accurately to prevent disputes and maintain proper records. The following information is typically included on the certificate:

  • LLC Name and State of Formation: Ensure the full legal name of the LLC is listed, along with the state where the company was formed.
  • Date of Issuance: Clearly specify the date the certificate is being issued.
  • Member’s Full Name: Write the complete legal name of the member receiving the certificate.
  • Ownership Percentage or Membership Interest: Specify the exact percentage or unit amount of ownership interest granted to the member.
  • Certificate Number: Assign a unique certificate number for tracking purposes.
  • Transfer Restrictions: Include a statement or legend about any limitations on transferability, referencing the LLC’s operating agreement or applicable securities laws.
  • Signature Line(s): Although not legally required, signatures from the LLC manager, an authorized agent, or the member receiving the certificate may be included for formality and authenticity.

Optional sections that may also appear:

  • Company Seal (if applicable)
  • Witness Signature Line
  • Member Rights Description: A brief mention of member rights as outlined in the operating agreement.

Transfers and Other Considerations

If your company does decide to provide membership certificates, you should make sure that the document describes the member's rights to transfer their ownership interests. Usually, this information will be included in a legend on the front of the certificate, although it can go on the back if there isn't adequate space.

The reason to include such a legend is to make sure that if an ownership interest is transferred, the third party that receives the interest understands that restrictions apply to the transfer. For instance, most legends will state that company shares have been registered under securities laws at the federal or state level. Your legend can also state that sales and transfers are restricted based on the company's operating agreement.

An important thing to understand about membership certificates is that there aren't any laws backing them up. A certificate does not guarantee member rights. Instead, their rights are established when the sign a contract with the company. When issuing membership certificates, you should make sure that your LLC members understand that they aren't the same thing as a stock certificate.

Best Practices for Issuing and Managing Membership Certificates

While LLC membership certificates are not legally mandated, following best practices in their issuance can help ensure clarity and reduce the risk of disputes. Consider the following recommendations:

  1. Maintain an Internal Membership Ledger: Keep a secure, up-to-date log of all certificates issued, including certificate numbers, member names, ownership percentages, and dates of issuance or transfer.
  2. Reference the Operating Agreement: Confirm that the details on the certificate align with the provisions stated in the LLC’s operating agreement, particularly regarding ownership interest and transfer rules.
  3. Use Clear Transfer Legends: Clearly state any transfer restrictions directly on the certificate, especially if member approval is required for a transfer.
  4. Replace Lost Certificates Cautiously: Require a written affidavit from the member and possibly an indemnification agreement before reissuing a lost or destroyed certificate.
  5. Use Professional Templates: Utilize standard LLC membership certificate templates to maintain consistency across all issued certificates. Customizing these templates to reflect your company’s specific ownership structure is advisable.

After Formation Requirements

Issuing LLC membership certificates is not a requirement, but there are some things that you are legally required to do after forming your company. Failing to meet these requirements may mean that your LLC may not be legally able to transact business.

For instance, in some states, you may have to submit a Statement of Information after filing your formation documents. The Statement of Information will generally include much of the same information that you listed in your Articles of Organization:

  1. Your LLC's mailing and business addresses.
  2. LLC member information.
  3. An address for your registered agent.
  4. A description of your company.

Your LLC will also need a federal tax identification number. Also known as an Employer Identification Number (EIN), your business needs a tax ID in order to pay its taxes. The Internal Revenue Service (IRS) issues these numbers free of charge, and if you apply for this number online, it will be immediately issued.

If you want to successfully form your LLC, you may want to get help from an attorney in your state. An LLC lawyer should be familiar with the process of forming an LLC, as well as the tasks that should be completed after you form your company. An LLC checklist can make the process easier if you want to form your company yourself.

When to Use LLC Membership Certificates

Even though LLC membership certificates are optional, there are several common scenarios where they can provide significant value:

  • Opening a Business Bank Account: Some banks may request membership certificates as proof of ownership.
  • Onboarding New Members: Provide certificates to new members as part of their welcome packet to formalize their membership interest.
  • Capital Contribution Tracking: Issue certificates when a member contributes funds, property, or services to the LLC in exchange for an ownership stake.
  • Resolving Disputes: Use certificates as supporting documentation during disputes about ownership percentages or rights.
  • Selling Membership Interests: Offer certificates as part of the documentation package when facilitating the sale or transfer of membership interests.

If you’re unsure about whether your LLC should issue membership certificates, or how to properly complete one, consulting an attorney can help ensure compliance with your operating agreement and relevant state laws. You can find experienced attorneys on UpCounsel who can assist with LLC formation and documentation.

Frequently Asked Questions

  1. Is an LLC membership certificate required by law?
    No, LLC membership certificates are not legally required, but they can be helpful for internal record-keeping and providing proof of ownership.
  2. Who should sign an LLC membership certificate?
    Typically, an LLC manager, authorized agent, or the member themselves may sign the certificate. However, there is no legal requirement for a signature unless specified by the operating agreement.
  3. What happens if a membership certificate is lost?
    If a certificate is lost, the LLC may issue a replacement after receiving a written affidavit from the member and possibly an indemnification agreement to prevent liability.
  4. Can LLC membership certificates be transferred to someone else?
    Yes, but transferability often depends on the terms of the LLC’s operating agreement. Certificates should include a legend noting any transfer restrictions.
  5. Does an LLC membership certificate guarantee ownership rights?
    No, ownership rights are established through the operating agreement and state laws, not solely by the certificate. The certificate serves as evidence but does not create legal rights independently. 

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