Limited Liability Companies (LLCs) are organized by partners when they are newly formed. For many reasons, they also accept new partners once they’ve been established. Partners retire, and some die in office. Others cash out their equity shares in the LLC for financial reasons, and some are ousted through a Declaration of Incompetence. Regardless of the reasons why an LLC requires a new partner, the mechanics of adding one are defined by state law.
Draft an “Operating Agreement” which defines the organizational specifics of the business, including all of the partners’ identities. When properly drafted, it will specify how new partners can be added to the LLC. When it fails to address this matter, however, the LLC must follow your state’s applicable default instructions.
Define your rewards from the LLC’s operations in exchange for your contributions in the Operating Agreement. You will be expected to contribute something that will benefit the organization, be it a special talent, an organizational skill or financing. In return for your contribution, you can expect financial rewards, power or a combination of both. Whatever your rewards are to be, they must be defined in the LLC’s Operational Agreement.
Submit your written request to be a non-founding partner to an existing LLC if you were invited to do so. Successful LLCs often outlive their founding partners and must necessarily be watchful for replacement leaders. You will be evaluated for your “fit” in the organization. Your contribution can be business-related, fellowship-specific or often just financially lucrative to the LLC. If the Operational Agreement specifies equity-share voting, your “buy-in” will determine the strength of your vote. The buy-in will also determine your part in any profit sharing that the LLC may engage in.
Confirm that your new position as partner in the LLC is documented in the Operational Agreement. This can be accomplished either by superseding the original agreement with a new one or by adding an amendment to the original agreement that documents your position as partner in the LLC.
File the new Operational Agreement or the amendment to the original agreement with your state’s appropriate agency. Any non-voting investors of the LLC must also be notified of your partner status, as per the LLC’s Operating Agreement’s stipulation or as per the state’s default provisions.
Your state’s business entity registration agency can be found on your state’s website. It can be called a State Corporation Commission, the Business Programs Division or some other relevant name. Regardless of how it is identified, you’ll also be able to link to it by conducting a search on your favorite internet search engine.