Missouri LLC Member Basics
A Missouri LLC member is simply an owner of a Missouri LLC. Any “person” can be a Missouri LLC member. Persons include individuals, partnerships, other LLCs, corporations, trusts, and estates. A person becomes a Missouri LLC member by signing the LLC operating agreement and by complying with the requirements of that agreement. A member is entitled to the profits, losses, gains, credits, and other economic benefits earned by the LLC as provided in the operating agreement. The economic interests that the member is entitled to receive from a multimember LLC is usually in proportion to the capital contributions made by the member, the value of the assets that the member transfers to the LLC, or the services that the member provides to the LLC.
Assignment of Membership Interest
A membership interest is personal property. As such, unless restricted by the operating agreement, it can be assigned to another person. However, an assignment alone does not make the assignee a member. It only entitles the assignee to receive the assignor’s share of profits. The assignee can become a member if the assigning member has the power under the operating agreement to assign the member’s membership interest or if all the members consent in writing. As with any other personal property, a member can, unless provided otherwise by the operating agreement, pledge the member’s membership interest to secure an obligation of the member. For example, a member can pledge their membership interest to secure a loan.
Withdrawal of a Missouri LLC Member
A Missouri LLC member may withdraw from an LLC upon 90 days written notice. However, if the withdrawal violates the operating agreement, then the LLC may recover from the member damages for breaching the operating agreement. While a withdrawn member typically owes no further duty to the LLC and forfeits all rights to manage the LLC, a withdrawn member still maintains their economic interest in the LLC, at least until that interest is assigned to another person. In addition to a voluntarily withdrawal, a Missouri LLC member may be involuntarily withdrawn under Missouri law when the member assigns their membership interest, is expelled as a member as provided in the operating agreement, is the subject of a bankruptcy or insolvency proceeding, dies or is deemed by a court to be incompetent, or is dissolved – in the case of a member that is not an individual. However, such automatic withdrawals can usually be overridden by the operating agreement, or by the unanimous written consent of the members.
The operating agreement is the heart of a Missouri LLC. This article provides just a few things that members should discuss and plan for in the operating agreement. Taking the time to do that upfront may save a lot of heartache and turmoil if and when the unexpected occurs.
This article is for general informational purposes only. It is not intended as legal advice.
Sewell Law, LC has formed hundreds of Missouri LLCs. Let us form yours. We also provide representation on LLC, business, and real estate matters, and in civil litigation. Please contact Michael Sewell at (314) 942-3232 or at michael@sewelllaw.net to discuss your legal matters.
Michael Sewell is also President of Registered Agent Lawyers, Inc. (RALI), which provides registered agent services to LLCs, corporations, limited partnerships, and other business entities. Contact Michael at (314) 942-3232 with questions or to appoint RALI as your registered agent.
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