Info about the Limited Liability Company & Corporation

LLC Operating Agreement New Member Provision Requirements

Every llc operating agreement should contain a section which outlines what is required before a new member can be admitted to the limited liability company.  These provisions will apply not to the initial members when the business is started, but later on in the event the business wants to bring in a new person as an owner.

The first and most important requirement is to set forth what approvals are required by the existing members. There is no one best answer to this.  Some will want to require that every member approve the new member while others may only require a smaller vote like majority or perhaps something in between (75%).  The right percentage really depends on the circumstances and dynamics of the existing members.  Just make sure every initial member agrees to whatever is finalized for this requirements.

Secondly, the new member section of the LLC operating agreement must require that, as a condition to becoming a member of this LLC, the new member must sign a document, in writing, agreeing to all the terms and conditions of the LLC agreement.  This is very important because one of the biggest areas of dispute and problems with an LLC business is when a member of an LLC is not subject to the same rules and processes as the others.  By having a clear provision making this requirement a condition of any new member admission, you avoid this issue.