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.
Here are some sample LLC Operating Agreement amendments you can use for your own company. Please remember that these should be customized and thoroughly reviewed to make sure they meet the specific needs of your business.
Since there is minimal information on the Certificate of Formation filed with the state of Delaware, these amendments do 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.
Lastly, if you're creating your initial Operating Agreement (not amending one), we have additional free templates and additional information available here.
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There are 19 comments left for Change of Ownership For an LLC Is Easy in DelawareOFR said: Tuesday, April 10, 2018
How do you change EIN numbers if you remove that members that holds it.HBS Staff replied: Wednesday, April 11, 2018
If you’re changing the name of the member/responsible party on the account with the IRS, you will need to complete Form 8822-B and send it directly to the IRS. Also, you do not need to change the EIN number, only the name of the responsible party/member.Daniel Duval said: Thursday, March 29, 2018
I have a Delaware LLC and Í am the sole member. Can I change the ownwership of my LLC for my irrevocable trust and what should I need to do it?HBS Staff replied: Thursday, March 29, 2018
Traditionally, LLCs are filed in Delaware without listing the names of the members with the state. This means changes in ownership can generally just be handled internally. The operations and management of the LLC are governed by a written agreement among its owners that is not required to be publicly filed or disclosed to the Delaware Division of Corporations. As a result, an LLC allows the ability to create a customized management structure, which prescribes the economic relationship among owners. The agreement can be written in any language and is not required to be translated into English.
The Delaware LLC statute allows parties to define their business relationship in a written agreement as they so desire. This is called "freedom of contract". Delaware law provides rules only for those matters on which the parties have failed to agree. The stated policy of the Delaware LLC law is to give maximum effect to the principle of "freedom of contract" and to the enforceability of LLC agreements. The contractual flexibility offered by the Delaware Act is unmatched by any other LLC statute.
HI I WANT TO OWN 100% SHARE OF MY COMPANYRobert Miller said: Sunday, October 16, 2016
In 2008, an individual claimed on Wikipedia that he bought all interest in an Delaware LLC. He has used this claim to make demands to vendors. Can anyone just claim to transfer / take ownership of a Delaware LLC and not file the transfer with the State? I paid for the history of this LLC.Please explain. In other states, a change off ownership must at least be filed within a time limit. Best RegardsHBS Staff replied: Wednesday, October 19, 2016
Since the members are not listed or on file with the State of Delaware the changes are made internally in the LLC agreement. The LLC agreement amendments are recorded and kept on file internally in the LLC. When it comes to making an ownership claim or transfer, clients typically work with an attorney.