CHAPTER 6. MEMBERSHIP
IC 23-18-6
Chapter 6. Membership
IC 23-18-6-0.5
Minimum membership
Sec. 0.5. A limited liability company formed under this article or
a foreign limited liability company admitted to transact business in
Indiana under IC 23-18-11 may have at least one (1) member.
As added by P.L.34-1997, SEC.16.
IC 23-18-6-1
Acquisition of membership
Sec. 1. (a) Subject to subsection (b), a person may become a
member in a limited liability company:
(1) in the case of a person acquiring an interest directly from the
limited liability company, upon compliance with the operating
agreement or if the operating agreement does not provide in
writing, upon the written consent of all members; and
(2) in the case of an assignee of an interest, as provided in
section 4 or 4.1 of this chapter.
(b) The effective time of admission of a member to a limited
liability company is the later of the following:
(1) The date the limited liability company is organized.
(2) The time provided in the operating agreement, or if no time
is provided, when the person's admission is reflected in the
records of the limited liability company.
As added by P.L.8-1993, SEC.301. Amended by P.L.269-1999,
SEC.6.
IC 23-18-6-2
Interest of member; nature
Sec. 2. The interest of a member in a limited liability company is
personal property.
As added by P.L.8-1993, SEC.301.
IC 23-18-6-3
Assignment of interest; companies existing on or before June 30,
1999
Sec. 3. (a) Unless otherwise provided in a written operating
agreement, a limited liability company existing under this article on
or before June 30, 1999, is governed by this section.
(b) Except as provided in a written operating agreement:
(1) an interest is assignable in whole or in part;
(2) an assignment entitles the assignee to receive, to the extent
assigned, only the distributions to which the assignor would be
entitled;
(3) an assignment of an interest does not of itself dissolve the
limited liability company or entitle the assignee to participate
in the management and affairs of the limited liability company
or to become or exercise any rights of a member;
(4) until the assignee of an interest becomes a member, the
assignor continues to be a member and to have the power to
exercise any rights of a member, subject to the other members'
right to remove the assignor under section 5(a)(3)(B) of this
chapter;
(5) until an assignee of an interest becomes a member, the
assignee has no liability as a member solely as a result of the
assignment; and
(6) the assignor of an interest is not released from liability as a
member solely as a result of the assignment.
(c) Unless otherwise provided in an operating agreement, the
pledge of or granting of a security interest, lien, or other
encumbrance in or against any or all of the interest of a member is
not an assignment and does not cause the member to cease to be a
member or to cease to have the power to exercise any rights or
powers of a member.
As added by P.L.8-1993, SEC.301. Amended by P.L.269-1999,
SEC.7.
IC 23-18-6-3.1
Assignment of interest; companies formed after June 30, 1999
Sec. 3.1. (a) A limited liability company formed under this article
after June 30, 1999, is governed by this section.
(b) Except as provided in a written operating agreement:
(1) an interest is assignable in whole or in part;
(2) an assignment entitles the assignee to receive, to the extent
assigned, only the distributions to which the assignor would be
entitled;
(3) an assignment of an interest does not of itself dissolve the
limited liability company or entitle the assignee to participate
in the management and affairs of the limited liability company
or to become or exercise any rights of a member;
(4) until an assignee of an interest becomes a member, the
assignee has no liability as a member solely as a result of the
assignment; and
(5) the assignor of an interest is not released from liability as a
member solely as a result of the assignment.
(c) Unless otherwise provided in an operating agreement, the
pledge of or granting of a security interest, lien, or other
encumbrance in or against any or all of the interest of a member is
not an assignment and does not cause the member to cease to be a
member or to cease to have the power to exercise any rights or
powers of a member.
As added by P.L.269-1999, SEC.8. Amended by P.L.14-2000,
SEC.54.
IC 23-18-6-4
Assignee membership; companies existing on or before June 30,
1999
Sec. 4. (a) Unless otherwise provided in a written operating
agreement, a limited liability company existing under this article on
or before June 30, 1999, is governed by this section.
(b) Except as otherwise provided in a written operating
agreement, an assignee of an interest may become a member only if
the other members unanimously consent. The consent of a member
may be evidenced in any manner specified in writing in an operating
agreement, but in the absence of a specification, consent must be
evidenced by a written instrument, dated and signed by the member.
(c) An assignee who becomes a member:
(1) has, to the extent assigned, the rights and powers and is
subject to the restrictions and liabilities of a member under the
articles of organization, any operating agreement, and this
article; and
(2) is liable for any obligations of the member's assignor for
unpaid contributions under IC 23-18-5-1 or for any wrongful
distributions under IC 23-18-5-7.
However, the assignee is not obligated for liabilities of which the
assignee had no knowledge at the time the assignee became a
member and that could not be ascertained from a written operating
agreement.
(d) Whether or not an assignee of an interest becomes a member,
the assignor is not released from the assignor's liability to the limited
liability company for unpaid contributions under IC 23-18-5-1 or for
any wrongful distributions under IC 23-18-5-7 that are solely a result
of the assignment.
(e) Unless otherwise provided in a written operating agreement,
a member who assigns the member's entire interest in the limited
liability company ceases to be a member or to have the power to
exercise any rights of a member when an assignee of the member's
interest becomes a member with respect to the assigned interest.
As added by P.L.8-1993, SEC.301. Amended by P.L.269-1999,
SEC.9.
IC 23-18-6-4.1
Assignee membership; companies formed after June 30, 1999
Sec. 4.1. (a) A limited liability company formed under this article
after June 30, 1999, is governed by this section.
(b) Except as otherwise provided in a written operating
agreement, if a limited liability company has at least two (2)
members, an assignee of an interest may become a member only if
the other members unanimously consent. The consent of a member
may be evidenced in any manner specified in writing in an operating
agreement, but in the absence of a specification, consent must be
evidenced by a written instrument, dated and signed by the member.
If a limited liability company has one (1) member, an assignee of an
interest may become a member in accordance with the terms of an
agreement between the assignor and the assignee.
(c) An assignee who becomes a member:
(1) has, to the extent assigned, the rights and powers and is
subject to the restrictions and liabilities of a member under the
articles of organization, any operating agreement, and this
article; and
(2) is liable for any obligations of the member's assignor for
unpaid contributions under IC 23-18-5-1 or for any wrongful
distributions under IC 23-18-5-7.
However, the assignee is not obligated for liabilities of which the
assignee had no knowledge at the time the assignee became a
member and that could not be ascertained from a written operating
agreement.
(d) Whether or not an assignee of an interest becomes a member,
the assignor is not released from the assignor's liability to the limited
liability company for unpaid contributions under IC 23-18-5-1 or for
any wrongful distributions under IC 23-18-5-7 that are solely a result
of the assignment.
(e) Unless otherwise provided in a written operating agreement,
a member who assigns the member's entire interest in the limited
liability company ceases to be a member or to have the power to
exercise any rights of a member.
As added by P.L.269-1999, SEC.10.
IC 23-18-6-5
Cessation of membership
Sec. 5. (a) A person ceases to be a member of a limited liability
company upon the occurrence of any of the following events:
(1) The person withdraws from the limited liability company as
provided in section 6 of this chapter.
(2) The person ceases to be a member as provided in section
4(e) or 4.1(e) of this chapter.
(3) The person is removed as a member:
(A) in accordance with the operating agreement; or
(B) unless otherwise provided in a written operating
agreement, by the affirmative vote, approval, or consent of
a majority in interest of the members after the member has
assigned the member's entire interest in the limited liability
company.
(4) Unless otherwise provided in a written operating agreement
or with the written consent of all other members, in the case of
a member who is an individual, the individual's death.
(5) Unless otherwise provided in a written operating agreement
or with the written consent of all other members, in the case of
a member who is acting as a member by virtue of being a
trustee of a trust, the termination of the trust, but not merely the
substitution of a new trustee.
(6) Unless otherwise provided in a written operating agreement
or with the written consent of all other members, in the case of
a member that is a partnership, limited partnership, or another
limited liability company, the dissolution and commencement
of winding up of the partnership, limited partnership, or limited
liability company.
(7) Unless otherwise provided in a written operating agreement
or with the written consent of all other members, in the case of
a member that is a corporation, the dissolution of the
corporation.
(8) Unless otherwise provided in a written operating agreement
or with the written consent of all other members, in the case of
a member that is an estate, the distribution by the fiduciary of
the estate's entire interest in the limited liability company.
(b) A written operating agreement may provide for other events
that result in a person ceasing to be a member of the limited liability
company, including insolvency, bankruptcy, and adjudicated
incompetency.
As added by P.L.8-1993, SEC.301. Amended by P.L.269-1999,
SEC.11.
IC 23-18-6-6
Withdrawal of member; companies existing on or before June 30,
1999
Sec. 6. (a) Unless otherwise provided in a written operating
agreement, a limited liability company existing under this article on
or before June 30, 1999, is governed by this section.
(b) Unless a written operating agreement provides that a member
does not have the power to withdraw by voluntary act from a limited
liability company, the member may do so at any time by giving thirty
(30) days written notice to the other members or other notice
required under the operating agreement. If the member has the power
to withdraw but the withdrawal is a breach of the operating
agreement, or the withdrawal occurs as a result of otherwise
wrongful conduct of the member, the limited liability company may
recover from the withdrawing member damages for breach of the
operating agreement, including the reasonable cost of obtaining the
replacement of services that the withdrawn member was obligated to
perform. The limited liability company may offset the damages
against amounts otherwise distributable to the withdrawn member,
in addition to pursuing any remedies provided for in the operating
agreement or available under applicable law.
(c) Unless otherwise provided in a written operating agreement,
in the case of a limited liability company for a definite term or
particular undertaking, a withdrawal by a member before the
expiration of the term is a breach of the operating agreement.
As added by P.L.8-1993, SEC.301. Amended by P.L.269-1999,
SEC.12.
IC 23-18-6-6.1
Withdrawal of member; companies formed after June 30, 1999
Sec. 6.1. (a) A limited liability company formed under this article
after June 30, 1999, is governed by this section.
(b) Unless otherwise provided in a written operating agreement,
a member may not withdraw from a limited liability company before
the dissolution and winding up of the limited liability company. A
member may withdraw from a limited liability company only at the
time or upon the occurrence of events specified in the operating
agreement and in accordance with the operating agreement.
As added by P.L.269-1999, SEC.13.
IC 23-18-6-7
Judgment creditors of members; rights
Sec. 7. (a) On application to a court with jurisdiction by a
judgment creditor of a member, the court may charge the interest of
the member in the limited liability company with the payment of the
unsatisfied amount of the judgment with interest.
(b) To the extent the court charges under subsection (a), the
judgment creditor has only the rights of an assignee of the member's
interest in the limited liability company.
(c) This article does not deprive a member of the benefit of any
exemption laws applicable to the member's interest in the limited
liability company.
As added by P.L.8-1993, SEC.301.