Limits on Free Transferability of Interests in Maryland Entities (2005)
Partnerships, LLCs and LLPs in Maryland:
Organization and Operation
VI. FACTOR: FREE TRANSFERABILITY OF INTERESTS
A). LIMITED LIABILITY COMPANY
Permitted, adjusted under default rule
(a) Unless otherwise provided in the operating agreement, an interest in a limited liability company is assignable in whole or in part.
(b) An assignment of an interest in a limited liability company does not:
(1) Dissolve the limited liability company; or
(2) Unless the operating agreement provides otherwise, entitle the assignee to:
(i) Become a member; or
(ii) Exercise any rights of a member.
(c) Unless otherwise provided in the operating agreement, an assignment entitles the assignee to receive, to the extent assigned, only the distributions to which the assignor would be entitled.
§ 4A-402. (a) Except for the requirement set forth in § 4A-404 of this subtitle that certain consents be in writing, members may enter into an operating agreement to regulate or establish any aspect of the affairs of the limited liability company or the relations of its members, including provisions establishing: …
(3) The rights of the members to assign all or a portion of their interests in the limited liability company;
Due to “check the box” IRS rules, “corporate” characteristics are no longer a problem.
Previously, needed to avoid 2 of the 4 checklist items used by the I.R.S. to evaluate whether an entity was a separate “person” for purposes of double taxation.
B) LIMITED LIABILITY PARTNERSHIP
[ARTICLE TRUNCATED FOR SPACE LIMITATIONS]
Statutory material presented in this outline is believed to be current as of January 1, 2001 but is intended only to be illustrative of concepts to be discussed. Citations are only a starting point for research by a competent legal professional who must research the original sources of authority. Certain statutory material will be changed by anticipated upcoming legislation and some statutory material may have changed before this material goes to press. In publishing this material, neither the author nor the publisher is engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the reader or seminar participant should seek the advice of a competent legal professional.
A NOTE ON Copyright ©: The copyright owner of this section, Daniel S. Willard, P.C., makes no claim to copyright to statutes, laws, rules or regulations of any state or federal government or agency.
Legal Articles Additional Disclaimer