The ownership structure of a limited liability company (LLC) depends on the makeup of its LLC members and membership interests. An LLC may change ownership by adding or removing members over time, or by assigning interests. Texas LLC law provides several rules for determining how to add members (owners) to an LLC. The procedure for adding an owner depends on provisions (or lack of provisions) in a particular LLC's company agreement. LLC members should follow the exact procedures to ensure additions to LLC ownership abide by Texas law.
Items you will need
- Company agreement
- Certificate of formation
Get a copy of the LLC's company agreement. The company agreement consists of an agreement among the members of the LLC. According to Section 101.052 of the Texas Business Organizations Code, the company agreement governs relations among members, managers and officers of the LLC, the assignment of membership interests (ownership interests) in the LLC, the actual company and additional internal affairs of the company. As such, the agreement may contain rules for adding owners to or assignment of ownership interests in the Texas LLC.
Get a copy of the LLC's certificate of formation. This is the document that you file with the Texas Secretary of State when forming your LLC. According to Section 101.051 of the Texas Business Organizations Code, provisions that may go in the company agreement may also go in the certificate of formation. Accordingly, the same rules for adding owners to an LLC may also have been included in the certificate of formation.
Follow the rules for adding an owner or assigning an ownership interest if such rules exist in either the company agreement or certificate of formation. The exact procedure depends entirely on the procedure contained in either of these documents. For example, companies may have a rule stating that adding owners requires a majority vote of all existing members.
Call a meeting of all LLC members. In the event that no company rules exist to add owners to the LLC, you must look to additional rules in the Business Organizations Code. According to Section 101.105, a person may acquire a membership interest in the company if all of the members approve. Additionally, Section 101.103 allows for any person who obtains or is assigned a membership interest to become a member if all members approve or consent to the new member. Get a unanimous vote of all members to add an owner to a Texas LLC through these provisions.
The company agreement may also contain a rule stating that a person is a member but without an actual membership interest. Such a member would have voting rights but no financial ownership in the LLC.
- texas map image by Vladislav Gajic from Fotolia.com