Can a Limited Liability Company issue Share Certificates?

Yes, but they would typically be called membership certificates or units.

In my experience, small businesses rarely issue such membership certificates.

Typically, when two or more people form an LLC, they form the entity by filing the necessary paperwork with the Department of State and then enter into an operating agreement between themselves and the entity.  The operating agreement will state something to the effect that A,B and C each contributed x amount of money (or services or property) to the LLC and received membership interests in the percentages expressed on some annex to the operating agreement.  No actual paper certificates will be issued.

However, that doesn’t mean that an LLC cannot issue certificates similar to share certificates of a corporation.  An LLC is very flexible and you can choose to structure your LLC almost like a corporation by including appropriate provisions in the operating agreement. 

While membership certificates would add an extra layer of formalities to an LLC, they could offer some advantages:

It may be easier to create a security interest in a certificated membership interest, and

you can put a "legend" on the certificates that alerts third parties that the certificate is subject to transfer restrictions in the operating agreement.

Related Post:  The LLC Operating Agreement – Keep it Simple

**This post is for informational purposes only and does not constitute legal advice**

About Imke Ratschko


Imke Ratschko is a New York Attorney helping small businesses, business owners and entrepreneurs with all things "Small Business Law," such as litigation, contracts, business owner disputes, shareholder and operating agreements, sale or purchase of a business, investors, and starting a business. You can reach her at 212.253.1027.

3 comments

  1. Thank you for sharing so much technical info about LLC’s. I think that it’s a great thing for an attorney to blog.

  2. Great informative post regarding “Can a Limited Liability Company issue Share Certificates?” I appreciate your time and effort to make your blog a success.

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