An LLC membership certificate is proof of your LLC ownership.
A membership certificate is a document showing official proof of the percent of ownership, or membership interest, you have in a limited liability company, or LLC. Certificates come in many different styles, some fancier than others. Each state has its requirements for what must appear on membership certificates, if the LLC chooses to issue them.
Evidence of Membership
States do not require physical membership certificates to be distributed to members of LLCs, since the ownership a certificate represents exists with or without the physical certificate. State laws, though, do allow for such certificates to be issued. For example, according to New York State law, a member's interest may be evidenced by a certificate issued by an LLC. The LLC's operating agreement will outline whether or not membership certificates are issued, as well as the members' rights and responsibilities regarding the company.
Certificated Security
A membership certificate makes the member's interest in the LLC a certificated security, according to the Uniform Commercial Code. Such a certificated security would be considered in registered form, since the membership certificate will have the member's name on it. A certificated security can be legally sold or otherwise transferred to another person or corporation, as if it were the membership interest itself. It can also be transferred back to the issuer, which would be the LLC.
Certificate Details
Certain details are standard on membership certificates to make them legal and official. It's necessary to include the name of the LLC, the name of the member, the percentage of ownership or number of shares represented by the certificate and a signature by one or more managers of the LLC, depending on state law. Membership certificates can be plain or fancy; elaborate borders, fancy fonts or other such design features are optional.
Transfer Restrictions
Transfer restrictions let members of a LLC control who owns part of their LLC. State laws require that any restrictions on the sale or transfer of a membership interest, as outlined in the LLC's operating agreement or as dictated by state law, must be mentioned in writing on the front or back of the certificate. Some restrictions might include requiring majority approval from other LLC members before transferring membership to any new party, or limiting what happens to a member's interest in the event of that member's death.
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