Managing Ownership Changes for Your Delaware LLC
Change of ownership for an LLC can be complicated and requires costly amendments in most U.S. states.
However, not in the state of Delaware. The only document required to be filed in Delaware to create an LLC is the Certificate of Formation.
Unlike other states, Delaware requires very little information to be made public in order to form an LLC. Furthermore, adding and removing member from an LLC is comparatively easy in Delaware.
The Certificate of Formation filed with the Delaware Secretary of State is required to contain only three items:
- the name of the Delaware LLC
- the name and address of the Delaware LLC's registered office
- the name of the LLC's Registered Agent in Delaware
Information such as the member(s) name, address and the percentage of the business owned is not required to be provided to the state of Delaware and therefore is not part of the public record. This information is kept on file internally within the LLC's Operating Agreement.
Adding or Removing an LLC Member (and Other LLC Changes)
Throughout the life of your business, your company my need to add members (owners) to your LLC or remove members (owners) from your LLC to grow in a way that aligns with your goals. When that time comes, a Delaware LLC change in ownership will happen through the Operating Agreement. The LLC's Operating Agreement can be altered as needed by the members, without filing the changes with the state of Delaware. Some of the typical changes people make are the removal or addition of a member or the change in percentage of a member's ownership.
The LLC's Operating Agreement must be amended to reflect that a new member is now part of the LLC, or to reflect the removal of a member, and all current members must sign the newly amended Operating Agreement, but you are not required to file the amended Operating Agreement with the state of Delaware.
Free Amendment Templates for LLC Operating Agreement
Here are some sample LLC Operating Agreement amendments you can use for your own company. Please remember that these should be customized and thoroughly reviewed to make sure they meet the specific needs of your business.
- LLC Amendment - Resignation of a Member
- LLC Amendment - Adding a New Member
- LLC Amendment - Transfer of Interest
Since there is minimal information on the Certificate of Formation filed with the state of Delaware, these amendments do not need to be filed or recorded with the state.
Your Delaware Registered Agent does not need to be informed of the LLC's change of ownership either; we only need to know if there is a change to the company's communications contact, address or phone number. So, unlike many other states, adding and removing members from an LLC can be done quickly, easily and without incurring any fees.
If you're creating your initial Operating Agreement (not amending one), we have additional free templates and additional information available here.
Lastly, FinCEN, a bureau of the U.S. Department of the Treasury, now requires LLCs to report changes in beneficial ownership to comply with the Corporate Transparency Act.
Should there be any change in the information regarding the LLC's beneficial owners reported in the LLC’s initial beneficial ownership information report, it is imperative that the LLC submits an updated report within 30 days following the date of the change.
Staying ahead of FinCEN requirements ensures that your LLC remains compliant with federal regulations.
Although we don't offer a service for Fincen filings, we recommend www.FincenReport.com for assistance. They offer a platform for companies to submit beneficial ownership information (BOI), in compliance with the Corporate Transparency Act (CTA), making the process straightforward and efficient.
Alternatively, reports can be submitted directly to Fincen as well.
If you'd like to learn more about adding or removing members to an LLC, you can contact us as your Registered Agent at Harvard Business Services, Inc.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
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There are 19 comments left for Managing Ownership Changes for Your Delaware LLC
Peter said: Monday, March 30, 2020I have a single-member LLC in Delaware, I want to transfer 100% of the company to another person, what do I need to do?
HBS Staff replied: Thursday, April 2, 2020Many of our clients find the templates in this article helpful for changing LLC ownership. If you need additional support, feel free to call us. Or for legal advice, please contact your attorney.
HEM SENTHIL RAJ said: Wednesday, February 19, 2020We wish to know the procedure for change of directors, i.e. we wish to induct one new director and remove an existing director. Also we wish to have an engagement with your firm for corporate secretarial services for our company named "Plintron Technologies USA LLC" [Reg No. 5247968 on a reatinership basis which shall include the following: a Mandatory Board Minutes and Resolutions for a year, b named company secretary, c other regulatory/statutory Compliances. Let us know for a one on one discussion to take it forward. My contact no is +971-585637153.
HBS Staff replied: Thursday, February 20, 2020For changing a Director, you can review this article about changing corporate officers, as the process is similar. You may wish to review the terms for your specific company with an attorney if you are unsure how to proceed. Unfortunately, we do not provide services for taking miuntes or providing officers for your corporation.
abdul said: Tuesday, December 24, 2019if i want to open a new bank account for the llc through the new member they required the article form the state shows the new member for the LLC
HBS Staff replied: Friday, December 27, 2019Each bank will have its own requirements for opening a new account. It is best to check with the specific bank you're working with to understand what they will need. We can help you obtain any documents you need from the state of Delaware.
Stephanie said: Monday, July 29, 2019How do I transfer my DBA registration to another LLC?
HBS Staff replied: Tuesday, July 30, 2019Stephanie, unfortunately we don't offer a DBA service. We recommend contacting the state office where your DBA was registered and asking them about the best process for accomplishing what you need.
S Poon said: Thursday, March 7, 2019When transferring shares, do we need to amend the Articles of Organization? Is there such a thing in Delaware or there is just the operating agreement.
HBS Staff replied: Thursday, March 7, 2019For a Delaware LLC, ownership information and changes are typically not provided to state, just maintained in the internal operating agreement. Feel free to call or chat with us if you have additional quesitons.