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Change of ownership for an LLC can be complicated and requires costly amendments in most U.S. states.
However, not in the state of Delaware. The only document required to be filed in Delaware to create an LLC is the Certificate of Formation.
Unlike other states, Delaware requires very little information to be made public in order to form an LLC.
The Certificate of Formation filed with the Delaware Secretary of State is required to contain only three items:
Information such as the member(s) name, address and the percentage of the business owned is not required to be provided to the state of Delaware and therefore is not part of the public record. This information is kept on file internally within the LLC's Operating Agreement.
The LLC's Operating Agreement can be altered as needed by the members, without filing the changes with the state of Delaware. Some of the typical changes people make are the removal or addition of a member or the change in percentage of a member's ownership.
The LLC's Operating Agreement must be amended to reflect that a new member is now part of the LLC, or to reflect the removal of a member, and all current members must sign the newly amended Operating Agreement, but you are not required to file the amended Operating Agreement with the state of Delaware.
Since there is minimal information on the Certificate of Formation filed with the state of Delaware, this information does not need to be filed or recorded with the state.
Your Delaware Registered Agent does not need to be informed of the change either; we only need to know if there is a change to the company's communications contact, address or phone number. So, unlike many other states, change of ownership for an LLC can be done quickly, easily and without incurring any fees.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There are 10 comments left for Change of Ownership For an LLC Is Easy in DelawareS Poon said: Thursday, March 7, 2019
When transferring shares, do we need to amend the Articles of Organization? Is there such a thing in Delaware or there is just the operating agreement.HBS Staff replied: Thursday, March 7, 2019
For a Delaware LLC, ownership information and changes are typically not provided to state, just maintained in the internal operating agreement. Feel free to call or chat with us if you have additional quesitons.Linda Brooks said: Monday, March 4, 2019
Hello i have a partnership LLC i would like to be removed from however i am the responsible party how do i remove myself with the state of secretary and the irs theres 2 persons myself an another we have 50/50 ownership i just want out the LLC have been in existence for 9months still pretty new..please give me info on what an how to proceed...the partnership LLC is filed with state of delaware an irs..thank you..i need help i don't know where to beginHBS Staff replied: Tuesday, March 5, 2019
Linda - The LLC's Operating Agreement can be altered as needed by the members, without filing the changes with the state of Delaware. Some of the typical changes people make are the removal or addition of a member or the change in percentage of a member's ownership. The LLC's Operating Agreement must be amended to reflect the removal of a member, and all current members must sign the newly amended Operating Agreement.
We will need to know if our communications contact person changes, please email our team at firstname.lastname@example.org any updates or changes. They can be reached at 800 345 2677 ext 6903 a live person will answer immediately.
To change the responsible party of the LLC, you must inform the IRS. The form to change information on the LLC’s responsible party is IRS form 8822B. Instructions on how to file the change can be found on the form as well.Carlos said: Tuesday, January 15, 2019
I just formed an LLC in Delaware and I want to sell it to a friend. I can read here it's not complicated, but I'm not sure on how to proceed. What are the appropiate steps to do it, including sites to visit, forms to fill out and documents to submit? Thank youHBS Staff replied: Thursday, January 17, 2019
Hi Carlos - Since the name of the LLC members is not filed with the state, the change of ownership can typically be handled internally and should be noted on the LLC Operating Agreement (free templates above). You generally only have to file documents with the state if there is a change in the company name, company address, or Registered Agent. Please feel free to call or chat with us for specific questions.Fernando Battaglia said: Monday, January 7, 2019
How can I transfer the complete company in another people name? I need the procedures step by step. Thank you.HBS Staff replied: Tuesday, January 8, 2019
Fernando - If you have a Delaware LLC, information such as the member(s) name, address and the percentage of the business owned is generally not required to be provided to the state of Delaware and therefore is not part of the public record. This information is kept on file internally within the LLC's Operating Agreement. Just use one of the templates linked at the end of the post above and file the new information internally with your LLC.Robert Muehr said: Friday, October 5, 2018
This is interesting. If there is no record at the State of who the members are, then how can anybody prove ownership? As an example, the LLC owns a residence. The sole member decides to sell the residence, with the LLC acting as the seller. How can a buyer verify that the LLC is authorized to sell the residence without having the State verify who is in charge?HBS Staff replied: Monday, October 8, 2018
Great question, Robert. Typically, when selling an asset, such as real estate, there are supporting documents from the LLC that need to be provided to the attorney that is handling the real estate transaction. Traditionally, it is the LLC agreement; however, the process can be different depending on the attorney handling the transaction.
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