Limited Liability Corporation (LLC) Member Agreement(s):

A well authored operating agreement is so important but very often overlooked when forming an LLC in New Jersey. Often times entrepreneurs register their businesses and don’t follow up with and operating agreement. Getting the Business Certificate of Registration does not automatically form how your business will operated nor does it provide for contingencies. Under what circumstances can a member may assign his or her interest in the LLC? Some issues to consider include, without limitation: 1) whether a member can assign his or her interest prior to the dissolution and winding up of the LLC; 2) whether an assignment requires member and/or manager approval; 3) whether the assigning member must sell his or her interest to the remaining members and/or the LLC or offer them a right of first refusal; 4) regardless of the restrictions placed on assignment, whether a member can assign his or her interest to relatives during life and/or upon death; and 5) the rights of an assignee including, without limitation, whether an assignment of a member’s interest entitles the assignee to any rights of a member, other than economic rights. Under the default rules of the act, a member may assign his or her interest in the LLC, in whole or in part. However, upon assignment, an assignee only receives the economic benefits of membership, such as the right to receive distributions and share in the profits and losses of the LLC. The assignee does not, for instance, receive any voting rights previously held by the assigning member. These are all considerations that can be discussed with one our attorneys today.

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