§ 322C.0502 — Transfer of Transferable Interest
Plain-Language Summary
An LLC member may transfer their financial interest in the LLC (the right to receive distributions), but a transfer alone does not give the new holder the right to participate in management or access company records. The transferee only receives the economic rights, not membership rights.
322C.0502 TRANSFER OF TRANSFERABLE INTEREST.
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Subdivision 1.Transfers.
A transfer, in whole or in part, of a transferable interest:
(1) is permissible;
(2) does not by itself cause a member’s dissociation or a dissolution and winding up of the limited liability company’s activities; and
(3) subject to section 322C.0504, does not entitle the transferee to:
(i) participate in the management or conduct of the company’s activities; or
(ii) except as otherwise provided in subdivision 3, have access to records or other information concerning the company’s activities. §
Subd. 2.Transferee right to distributions.
A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled. §
Subd. 3.Transferee right to an account.
In a dissolution and winding up of a limited liability company, a transferee is entitled to an account of the company’s transactions only from the date of dissolution. §
Subd. 4.Evidence of interest.
A transferable interest may be evidenced by a certificate of the interest issued by the limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate. Such an interest is not a security, as that term is defined in section 336.8-102, paragraph (a), clause (15), unless the conditions specified in section 336.8-103, paragraph (c), are satisfied. §
Subd. 5.Company notice required.
A limited liability company need not give effect to a transferee’s rights under this section until the company has notice of the transfer. §
Subd. 6.Violative transfers ineffective.
A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement is ineffective as to a person having notice of the restriction at the time of transfer. §
Subd. 7.Rights retained.
Except as otherwise provided in section 322C.0602, clause (4), item (ii), when a member transfers a transferable interest, the transferor retains the rights of a member other than the interest in distributions transferred and retains all duties and obligations of a member. §
Subd. 8.Transferee liability.
When a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member’s obligations under sections 322C.0403 and 322C.0406, subdivision 3, known to the transferee when the transferee becomes a member.
History:
2014 c 157 art 1 s 41; 2015 c 39 s 37
History: History: 2014 c 157 art 1 s 41; 2015 c 39 s 37