You should always highlight all parties who have an ownership stake in an LLC in the operating agreement. However, as an LLC owner with controlling interests, you can issue an LLC Membership Certificate LLC Membership Certificate to each individual who owns a portion of the business.
If you’ve ever traded on the stock market, you’re probably familiar with stock certificates. These certificates outline ownership percentages, detailing the percentage of a company you acquired when you bought said stock.
An LLC membership certificate essentially outlines the same but is reserved solely for members (LLC owner title) of a limited liability company. In the past few years, most corporations ceased to issue paper stock certificates, opting to keep digital spreadsheets instead.
In the case of a limited liability company, the certificate of membership isn’t mandatory. Legally, the creation documents and operating agreement outline the legalities of business owners. However, creating these certificates is a good way for members to track their ownership share.
Even though they’re not mandatory by law, an LLC member certificate must have specific items included. It’s also important these items are accurate.
Only a few states legally require limited liability companies to create operating agreements to prove ownership. It’s possible that, in some cases, Certificates of Membership serve as the primary documentation of owned membership units or the ownership percentage for each member. Certificates of Membership serve as the primary documentation of owned membership units or ownership percentage for each member.That said, membership certificates must include the following:
Again, issuing physical ownership certificates to all current or future investors is not mandatory. However, considering using them to back your official business records (assuming you have an operating agreement) is never a bad idea.
It’s a given that certain types of LLCs stand to benefit more from these certificates than others, for example:
It’s vital that you fill out the original certificate properly and have concise, accurate certificate wording. You can find a certificate template in dozens of places online, but that doesn’t mean it’s right for your business.
Use the following list as a general certificate template with standard wording:
On some certificates, there’s space for a witness signature. Many owners choose to have the certificate notarized. Selecting either of these actions gives the certificate more credibility — and a much better chance of holding up in court if a dispute arises.
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Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Membership certificates are used to identify ownership portions of an LLC. Usually, they’re created as a benefit for the individual they’re issued to.
Creating a certificate of issuance, otherwise known as a membership certificate for owners of your LLC, is at the discretion of the interest holders. It’s not mandatory to create a certificate for members of your LLC. That said, it’s a good idea to have them created to act as a secondary document to back up your operating agreement.
The registration of membership certificate is the initial filing notifying the Secretary of State or equivalent entity of an addition to the members, or owners, of your LLC. Either the majority owner will issue the registration or someone they nominate to do this and other tasks for the business. This person is known as an authorized member and has an interest in the organization.
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