Minnesota LLC Transferable Interest
Minnesota LLC Transferable Interest
Minnesota LLC Transferable Interest – Defined
M.S. § 322C.0102, Subd. 28 defines the term transferable interest with respect to a Minnesota limited liability company, in the following manner:
Subd. 28. Transferable interest.
“Transferable interest” means the right,
- as originally associated with a person’s capacity as a member,
- to receive distributions from a limited liability company in accordance with the operating agreement
- whether or not the person remains a member or continues to own any part of the right.
Minnesota LLC Transferable Interest – Nature
M.S. § 322C.0501 identifies the nature of a Minnesota LLC transferable interest – by providing as follows:
A transferable interest is personal property.
Minnesota LLC Transferable Interest – Transfer
M.S. § 322C.0102, Subd. 27 defines the term transfer, with respect to a Minnesota LLC transferable interest, in the following manner:
Subd. 27. Transfer
“Transfer” includes an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift, and transfer by operation of law.
Minnesota LLC Transferable Interest -Transfers
M.S. § 322C.0502, Subd. 1 addresses issues relating to the transfer of a Minnesota LLC transferable interest – by providing as follows:
A transfer, in whole or in part, of a transferable interest:
(1) is permissible;
(2) does not by itself cause a member’s dissociation or a dissolution and winding up of the limited liability company’s activities; and
(3) subject to section 322C.0504, does not entitle the transferee to:
(i) participate in the management or conduct of the company’s activities; or
(ii) except as otherwise provided in subdivision 3, have access to records or other information concerning the company’s activities.
Minnesota LLC Transferable Interest – Transferee
M.S. § 322C.0102, Subd. 29 defines the term transferee – with respect to a Minnesota LLC transferable interest – in the following manner:
Subd. 29. Transferee.
“Transferee” means a person
- to which all or part of a transferable interest has been transferred,
- whether or not the transferor is a member.
Minnesota LLC Transferable Interest – Right to Distributions
M.S. § 322C.0502, Subd. 2 identifies that a transferee of a Minnesota LLC transferable interest has certain rights to receive distributions – by providing as follows:
Subd. 2. Transferee right to distributions.
A transferee has the right to receive,
- in accordance with the transfer,
- distributions to which the transferor would otherwise be entitled.
Minnesota LLC Distribution – Defined
M.S. § 322C.0102, Subd. 7 defines a Minnesota LLC distribution in the following manner:
Subd. 7. Distribution.
“Distribution,”
except as otherwise provided in section 322C.0405, subdivision 7,
means a transfer of money or other property
- from a limited liability company
- to another person
- on account of a transferable interest.
Minnesota LLC Transferable Interest – Accounting Rights
M.S. § 322C.0502, Subd. 3 identifies that a transferee of a Minnesota LLC transferable interest has certain limited rights to receive an accounting from the Company – by providing as follows:
Subd. 3. Transferee right to an account.
In a dissolution and winding up of a limited liability company,
a transferee is entitled to an account of the company’s transactions only from the date of dissolution.
Minnesota LLC Transferable Interest – Membership Certificates
M.S. § 322C.0502, Subd. 4 identifies that a Minnesota LLC transferable interest may be evidenced by a membership certificate – by providing as follows:
Subd. 4. Evidence of interest.
A transferable interest may be evidenced by a certificate of the interest issued by the limited liability company in a record,
and, subject to this section,
the interest represented by the certificate
may be transferred by a transfer of the certificate.
Such an interest is not a security,
as that term is defined in section 336.8-102, paragraph (a), clause (15),
unless the conditions specified in section 336.8-103, paragraph (c), are satisfied.
Minnesota LLC Transferable Interest – Notice of Transfer
M.S. § 322C.0502, Subd. 5 identifies that a Minnesota LLC must be provided with notice of any transfer of a Minnesota limited liability company transferable interest – by providing as follows:
Subd. 5. Company notice required.
A limited liability company need not give effect to a transferee’s rights under this section until the company has notice of the transfer.
Minnesota LLC Transferable Interest – Improper Transfers
M.S. § 322C.0502, Subd. 6 identifies that any improper transfer of a Minnesota LLC transferable interest – in violation of the terms of an operating agreement – will be ineffective with respect to certain persons, by providing as follows:
Subd. 6. Violative transfers ineffective.
A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement is ineffective as to a person having notice of the restriction at the time of transfer.
Minnesota LLC Transferable Interest – Effect of Transfer on Membership Rights
M.S. § 322C.0502, Subd. 7 identifies the effect of any transfer of a Minnesota LLC transferable interest on the membership rights of the transferor – by providing as follows:
Subd. 7. Rights retained.
Except as otherwise provided in section 322C.0602, clause (4), item (ii),
when a member transfers a transferable interest,
the transferor
- retains the rights of a member other than the interest in distributions transferred and
- retains all duties and obligations of a member.
Minnesota LLC Transferable Interest – Liability of the Transferee
M.S. § 322C.0502, Subd. 8 identifies the liability of a transferee who becomes a member with respect to any transfer of a Minnesota LLC transferable interest – by providing as follows:
Subd. 8. Transferee liability.
When a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest,
the transferee is liable for
- the member’s obligations under sections 322C.0403 and 322C.0406, subdivision 3,
- known to the transferee when the transferee becomes a member.
Conclusion;
Minnesota LLC Transferable Interest
If you desire legal assistance with issues related to any Minnesota LLC transferable interest, please contact Minnesota Attorney Gary C. Dahle.
Legal fees will be applicable for services rendered – and advance payment may be required.
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Gary C. Dahle – Attorney at Law
2704 Mounds View Blvd., Mounds View, MN 55112
Phone: 763-780-8390 Fax: 763-780-1735
Gary@dahlelaw.com
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