Only a member of an LLC at the time of the alleged wrong to the LLC has standing to bring a derivative claim on behalf of that company. Park operating agreement draw a bright line distinction between members of an LLC and the assignees of membership interests.
The New York Limited Liability Company Law provides, in relevant part, that except as provided in the operating agreement an assignment of a membership interest does not entitle the assignee to participate in the management and affairs of the limited liability company or to become or to exercise any rights or powers of a member. The documentary record submitted demonstrates that [the plaintiff] never obtained the written consent required to become a substituted member [and for that reason] lacks standing to sue on T.
Although laws vary among states, and LLCs' operating agreements vary as well, there are certain procedures commonly involved in selling a percentage of an LLC.
While a limited liability company might share some common characteristics with a corporation, the process of exiting from an LLC is much more difficult than leaving a corporation.
(c) An operating agreement may provide that a member's interest in a limited liability company may be evidenced by a certificate of limited liability company interest issued by the limited liability company.
(d) Unless otherwise provided in the operating agreement and except to the extent assumed by agreement, until an assignee of a limited liability company interest becomes a member, the assignee shall have no liability as a member solely as the result of the assignment.
The transfer of a member's interest is typically governed by the requirements set out in the operating agreement. Find the section that details what circumstances allow you to transfer your interest and what you must do, and the method for calculating your interest value, if any. Read state laws governing LLCs if the operating agreement doesn't address interest transfer. If the operating agreement doesn't provide a method, you must meet with other LLC members to determine what your share is worth.
Prevailing law governs how the transfer is done if the operating agreement fails to address the matter. Gather the LLC's financial records and documentation of all your distributions to help determine your share's worth.
(b) Unless otherwise provided in the operating agreement: (1) an assignment entitles the assignee to share in such profits and losses, to receive such distribution or distributions, and to receive such allocation of income, gain, loss, deduction, or credit or similar items to which the assignor was entitled, to the extent assigned; and (2) a member ceases to be a member and to have the power to exercise any rights or powers of a member upon assignment of all of his limited liability company interest.
Unless otherwise provided in the operating agreement, the pledge of, or granting of a security interest, lien or other encumbrance in or against, any or all of the limited liability company interest of a member shall not cause the member to cease to be a member or to have the power to exercise any rights or powers of a member.