LLC Membership Certificate Sample: Everything You Need to Know
An LLC membership certificate sample refers to a sample of a certificate that documents the ownership interests of members of a limited liability company (LLC). 3 min read
An LLC membership certificate sample refers to a sample of a certificate that documents the ownership interests of members of a limited liability company (LLC). While an LLC is not required by law to issue membership certificates, it should do so if it has inactive members or allows its members to assign their membership interests to other people or entities. An LLC membership certificate should include certain information about the LLC, the certificate itself and the ownership interests of members. You can easily find and download a sample of an LLC membership certificate for free on the internet.
What Is an LLC Membership Certificate?
If you hold shares in a corporation, you will receive stock certificates as proof of your investment. In an LLC, ownership is expressed through membership interests instead of stock. An LLC can document the ownership interests of its members by issuing membership certificates. If you wish to issue membership certificates, you need to include descriptions of the process of issuing the certificates and the roles of the certificates in your LLC's operating agreement. Membership certificates can be issued based on percentage ownership interest or membership units.
Content of a Membership Certificate
An LLC membership certificate is a document that provides proof of ownership in an LLC. It can be created from scratch or with a nice template from a company kit. Typically, a membership certificate contains the following information:
- Name of your LLC
- State of LLC formation
- Number of members at the time of certificate issuance
- Name of the certificate holder
- Percentage of ownership the certificate represents
- Date of certificate issuance
- Benefits the certificate holder is entitled to
- Signatures of an authorized member of your LLC and a witness
Some LLC membership certificate templates also have a bill of sale section for documenting the sale of ownership interest. It includes information such as:
- Sale amount
- Date of sale
- Name of new owner
- Signatures to execute the sale
It is important to note that the transfer of ownership interests must comply with the rules and regulations stated in your LLC's operating agreement. In addition, you should maintain a membership roster and a transfer ledger separately so that you can keep track of your company's current membership more easily.
Bear in mind that the purpose of membership certificates is to document the ownership stakes of the members of your LLC and the transfer of membership interests. You will only need to issue membership certificates if your LLC is evidenced by such certificates.
Writing a Membership Certificate
Although you are not legally required to issue membership certificates, it is advisable that you do so if your LLC has members who are inactive, wish to transfer their ownership interests to other parties, or cannot easily access your company's business records.
An LLC membership certificate should include statements such as "NAME OF MEMBER is entitled to XX percent ownership interest in NAME OF COMPANY, a limited liability in NAME OF STATE." In addition, you need to state in the certificate that the rights of the members are described in your LLC's Articles of Organization and operating agreement.
Since membership certificates are not legally required and enforceable, the rules for signing these documents can vary from one LLC to another. While some LLCs just leave the task of signing a membership certificate in the hands of an authorized manager, others have a more formal signing process that requires the signatures of the recipient of the certificate, an authorized agent, and a witness.
If an LLC decides to issue membership certificates, it has to create a legend that provides an accurate description of the transfer rights. If there is not enough space on the certificate, you can add the legend to the reverse side.
When a membership interest is transferred to another person or entity, the legend serves to notify the party that certain restrictions apply. Typically, a legend contains a statement saying that the interests are not registered under federal or state securities law. In addition, it may include information regarding applicable contractual restrictions, such as restrictions imposed on transfers and sales by your LLC's operating agreement.
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