How Do I Admit a New Member to a LLC in Louisiana?
Full Question:
Answer:
The requirements will depend on the terms of the operating agreement and the facts involved. It may be necessary to amend the articles of organization, a buy-sell agreement is often recommended, and there may be promissory notes or other documents required.
The operating agreement governs the requirements and processes for your particular LLC when it comes to admitting a new member to the LLC. Typically, a vote of the members will be required to admit a new member and so a certain percentage of the current LLC members must approve. All pre-admission requirements set forth in the LLC operating agreement should be met.
After approval, the LLC should make sure that the issuance of Membership Units to the new member is in compliance with any applicable state securities laws. Security laws are beyond the scope of LLC laws, but generally if the member being admitted has a pre-existing relationship with you and the LLC and will be active in the management and operations of the LLC, there should be no state restrictions. However, securities laws may be involved if the member is more like an investor and will be contributing substantial money or other property in exhange for an ownership interest.
Once security related issues are cleared, then, a document, commonly called a Membership Issuance Agreement should be prepared and signed by the LLC and the new member. And, finally, and most important, the new member must sign a written document agreeing to be bound by the LLC Operating Agreement of the limited liability company. The records of the LLC need to be updated to reflect the new member. If the member is required to commit capital or services in exchange for his or her Membership Units, these obligations should be set forth in a writing signed by the member.
Please see the following LA statutes:
12:1313. Election and removal of managers
If management is vested in one or more managers pursuant to R.S. 12:1312,
then, unless otherwise provided in the articles of organization or an
operating agreement:
(1) Election of managers to fill initial positions or vacancies
shall be by plurality vote of the members.
(2) Any or all managers may be removed by a vote of a majority of the
members, with or without cause, at a meeting called expressly for that
purpose.
12:1309. Amendment of articles of organization
A. The articles of organization must be amended when any of the
following occurs:
(1) There is a change in the name of the limited liability company.
(2) There is a false or erroneous statement in the articles of
organization.
(3) The members desire to make a change in any other statement in the
articles of organization in order to accurately represent their
agreement.
B. After an amendment has been adopted as provided by this Chapter,
articles of amendment setting forth the amendment, the date, and manner
of adoption thereof shall be executed in the limited liability company's
name by a manager of the limited liability company, if management of the
limited liability company is vested in one or more managers pursuant to
R.S. 12:1312, or by at least one member of the limited liability
company, if management of the limited liability company is reserved to
the members. The articles of amendment shall be acknowledged by at least
one of the persons who signed them or may be executed by authentic act.
C. The articles of amendment shall be filed with the secretary of
state. Articles of amendment may be delivered to the secretary of state
for filing as of any specified date, and if specified upon such
delivery, as of any given time on such date, within thirty days after the
date of delivery. When all taxes, fees, and charges have been paid as
required by law, the secretary of state shall record the articles of
amendment in his office and endorse thereon the date and, if requested,
the hour of the filing thereof with him. Thereupon, the amendment shall
be effective as of the date and, if endorsed on the articles of
amendment, the hour of filing. However, if the articles of amendment were
so filed within five days, exclusive of legal holidays, after
acknowledgment thereof or execution thereof as an authentic act, the
amendment shall be effective as of the time of the acknowledgment or
execution.
12:1319. Records and information
A. Each limited liability company shall keep at its registered
office the following:
(1) A current list of the full name and last known business address of
each member and manager, if management is vested in one or more managers
pursuant to R.S. 12:1312.
(2) Copies of records which would enable a member to determine
the relative voting rights of the members.
(3) A copy of the articles of organization, together with any
amendments thereto.
(4) Copies of the limited liability company's federal and state
income tax returns and reports, if any, for the three most recent
years.
(5) A copy of any operating agreement which is in writing.
(6) Copies of any financial statements of the limited liability
company for the three most recent years.
B. Unless otherwise provided in the articles of organization or
an operating agreement, a member may do any of the following:
(1) At the member's own expense, inspect and copy any limited liability
company record upon reasonable request during ordinary business hours.
(2) Obtain from time to time upon reasonable demand the following:
(a) True and complete information regarding the state of the business
and financial condition of the limited liability company.
(b) Promptly after becoming available, a copy of the limited liability
company's federal and state income tax returns for each year.
(c) Other information regarding the affairs of the limited liability
company as is just and reasonable.
(3) Demand a formal accounting of the limited liability company's
affairs whenever circumstances render it just and reasonable.
C. Failure of the limited liability company to keep or maintain any of
the records or information required pursuant to this Section shall not be
grounds for imposing liability on any person for the debts and
obligations of the limited liability company.
D. Except as otherwise provided in the articles of organization or an
operating agreement, a limited liability company and its members,
managers, and agents may recognize and treat a person registered on its
records as a member, as such for all purposes, and as the person
exclusively entitled to have and to exercise all rights and privileges
incident to the ownership of such membership interests. Rights under this
Section shall not be affected by any actual or constructive notice which
the limited liability company or any of its managers, members, or agents
may have to the contrary.