Does the transfer of 51% of the ownership interest of an LLC by the sole owner to another party constitute a change in control of that LLC?

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Does the transfer of 51% of the ownership interest of an LLC by the sole owner to another party constitute a change in control of that LLC?

Party A is the 100% owner of an LLC. If A conveys a 51% interest in the LLC to Party B, under NY law does that constitute a transfer of ownership of the LLC?

Asked on December 19, 2011 under Business Law, Arizona

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, the transfer of an amount of membership certificates in the limited liability company that you are writing about from one person who has 100% of all certificates where another person received more than 50% ownership in this entity constitutes a change in control of the entity.

The only exception would be is if the person receiving more than 50% gave a proxy to the person formerly having the 100% interest to make all decisions concerning this entity. From what you have written, I suggest that you consult with a business attorney before any transfer of interests is made.


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