LLC Membership Certificate Template: Everything You Need to Know
An LLC membership certificate template provides an easy way for owners of a limited liability company (LLC) to create membership certificates. 3 min read
An LLC membership certificate template provides an easy way for owners of a limited liability company (LLC) to create membership certificates. The purpose of a membership certificate is to document the ownership interest of an LLC member. While it is not mandatory by law, issuing membership certificates is something you should consider doing if you allow the members of your LLC to transfer or sell their membership interests. You can create LLC membership certificates by downloading a template online.
What Is an LLC Membership Certificate?
Some LLCs choose to issue membership certificates to their members to document their ownership interests in the company. If you wish to issue membership certificates, you have to include information about the purpose and process of certificate issuance in your operating agreement. In an LLC, membership certificates can be issued based on the ownership percentage or number of membership units each member owns.
What Information You Should Include in a Membership Certificate?
You can either create an LLC membership certificate from scratch or use a template that comes with a company kit. Typically, a membership certificate contains the following information:
- Name of your LLC
- State of LLC formation
- Number of members in your LLC at the time of certificate issuance
- Date of certificate issuance
- Name of certificate holder
- Percentage of ownership the certificate represents
- Benefits that the certificate holder is entitled to
- Signatures of an authorized member and a witness
Some LLC membership certificate templates may 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 executing the sale
Transfer of membership interests is subject to the rules and regulations specified in your LLC's operating document. It is recommended that you create and maintain a separate member list and transfer ledger for keeping track of current membership.
How to Create an LLC Membership Certificate
When creating an LLC membership certificate, you should include statements such as “NAME OF CERTIFICATE HOLDER is entitled to XX percent of ownership interest in NAME OF COMPANY, a limited liability company in STATE OF LLC FORMATION.” In addition, you need to state in the membership certificate that your LLC's Articles of Organization and operating agreement contain descriptions of the rights of the members.
Since issuing membership certificates is not a legal requirement, different LLCs may have different rules regarding the signing of certificates. While some LLCs choose to authorize one of their managers to sign membership certificates, others make the signing process more formal by requiring the signatures of the certificate holder, an authorized agent, and a witness.
If you decide to issue membership certificates, you have to include a legend that specifies the transfer rights. This legend can be added to the back of the certificate if the front side has run out of space.
The main reason for creating a legend is to let the recipient of the membership interest know that the transfer is subject to certain restrictions. A legend will typically state that the membership interests are not registered under the securities laws of the federal and state governments. Additionally, it can specify the contractual restrictions that apply to the transfer, such as the need to comply with the operating agreement.
Before you create membership certificates, you should know that the certificates are not legally enforceable by themselves. A membership interest is issued through the signing of a contract with your LLC, not by giving a membership certificate to a member. Also, you should make sure that the recipient of a membership certificate does not mistake it for a stock certificate, which is legally enforceable. There are legal experts that recommend against issuing membership certificates because it is easy for the certificate holders to confuse them with stock certificates.
There are basically two ways to create membership certificates. You can buy blank certificate paper from an office supply store and then use desktop publishing software to create and print the certificates. Alternatively, you can download a membership certificate template for free from a registered agent.
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