Should LLCs issue ownership certificates?
Posted on 03/24/2010 at 11:48 AM by The Newsroom
The answer is generally no. Like the corporate seal, certificates are fast becoming anachronisms whose only purpose is to be lost (See Iowa Code 490.625(1) which implies that corporate stock certificates are no longer necessary). Because of, let's be optimistic for a moment, the completeness of operating agreements, all of the components of ownership should be adequately explained in the agreement. Including certificates in addition to the operating agreement runs the risk of confusion if the operating agreement is subsequently amended, but the certificates are not. The existence of certificates also may lead to transfers contrary to the terms of the operating agreement that may nevertheless raise bona fide purchaser issues.
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Categories: Commercial Litigation
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