How to Prove Ownership of a Delaware LLC

By Andrew Millman Tuesday, August 19, 2014

how to show ownership in an LLCThe Delaware limited liability company (LLC) is certainly our most popular entity type. More than two-thirds of all new companies that we form are LLCs! Many clients use the Delaware LLC due to the protection of personal assets and flexibility that it offers.

One of the questions that we are often presented with is, How can I show ownership of a Delaware LLC? When you form a Delaware LLC, you are not required to provide the state of Delaware with any owner / member information.

The minimal information required is great for many business owners, as they are aware this offers another layer of protection on top of Delaware's strong corporate law. However, this often leads to the question of how they will then display ownership.

Different Ways to Show Membership in a Delaware LLC

A member of an LLC, by definition, is an owner of an LLC with a vested interest in the company. Members can be people or entities from anywhere in the world. 

The Delaware LLC is governed by a contract among all the members called the "operating agreement," which all members must sign. As a member, you should have a copy of the agreement, which you can then present to a bank or other official to verify that you are a member of the LLC.

Remember, once the Operating Agreement is finalized and ratified by all members, it cannot be changed without the unanimous vote of the members; if all members choose to amend, the amended Operating Agreement must then be signed by all the members of the LLC.

In addition to the Delaware LLC operating agreement, you are also able to prove ownership by showing LLC membership certificates. Members of a Delaware LLC don’t own stock, like corporate shareholders do. Members usually split the company into percentages of ownership, or membership units. However, like a stock certificate, the LLC membership certificate can be distributed to the members, displaying the percentage of ownership they have in the business.

In many cases, clients also use what is called the "member resolutions," which can also display specific privileges or responsibilities of a member or members within the Delaware LLC. You can find templates of all these documents within our company kit that is included in our Standard and Premium packages.

If you are considering forming a Delaware LLC and have further questions about the role and responsibilities of members, or how to structure an LLC, you can call us at 800-345-2677, live chat with us or email us to speak with a specialist on these matters.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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