What Are LLC Membership Certificates?

by Steve McDonnell; Updated September 26, 2017
Board of Directors

When you become a shareholder in a corporation, you receive stock certificates in exchange for your investment. Since ownership in a limited liability company is through membership interests rather than stock, some LLCs issue membership certificates to document each member's ownership of the company. If you decide to issue membership certificates, include a section in your operating agreement that describes the role of certificates and the process for issuing them.

LLC Membership Certificate

A membership certificate documents the membership interests that a company member acquires, typically through an investment he makes when he joins the company. When you create the operating agreement for your LLC, include a section that describes the role of the certificate and the procedure for issuing one. Some companies issue certificates based on the percentage of membership interests each member owns. Others create a fixed number of membership units and allocate the units to each member based on membership interests.

Certificate Ledger

Many LLCs purchase blank certificate paper at an office supply store and use desktop publishing or other software to print the certificates. You can also download a free membership certificate template from some registered agents. Some states require you to keep a ledger of every certificate issued in the company records book. Even if your state doesn't require a ledger, it's an important document to maintain, and you might also want to keep a photocopy of each certificate you create.

Contents of a Certificate

Certificates usually contain most or all of the following information:

  • A certificate number.
  • The issue date.
  • The name of the company, the date of formation and state of formation.
  • The name of the member.
  • The member's investment to acquire the membership interests.
  • The member's membership interests, as a percentage or number of units.
  • The number of members as of the issue date.
  • A statement of the rights or benefits the certificate conveys.
  • A disclaimer stating that the membership interests might not be transferable.
  • A signature by one or more members authorized to issue and sign certificates.

Lost Certificates

A membership certificate represents ownership interest in the company. Members should treat the certificate like a stock or other securities certificate. If a member loses his certificate, reissue the certificate only after the member signs a statement declaring that he has not sold or assigned it to anyone else. Have the member sign an indemnity agreement that releases the company from any liability related to issuing the new certificate. The management team or board should then approve the reissue at a company meeting, or by a company resolution.

Assignment Form on Certificate

If state regulations and your operating agreement permit members to assign their membership interests to another person or entity, print a blank assignment form on the reverse side of the certificate. Similar to the title transfer form on an automobile title, the form should enable the certificate holder to assign his interests according to the company's operating agreement, and include signature lines for the member and a notary public.

About the Author

Steve McDonnell's experience running businesses and launching companies complements his technical expertise in information, technology and human resources. He earned a degree in computer science from Dartmouth College, served on the WorldatWork editorial board, blogged for the Spotfire Business Intelligence blog and has published books and book chapters for International Human Resource Information Management and Westlaw.

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