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 ora foreign limited liability company admitted to transact business inIndiana 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 amember in a limited liability company:
(1) in the case of a person acquiring an interest directly from thelimited liability company, upon compliance with the operatingagreement or if the operating agreement does not provide inwriting, upon the written consent of all members; and
(2) in the case of an assignee of an interest, as provided insection 4 or 4.1 of this chapter.
(b) The effective time of admission of a member to a limitedliability 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 timeis provided, when the person's admission is reflected in therecords 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 ispersonal 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 operatingagreement, a limited liability company existing under this article onor 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 extentassigned, only the distributions to which the assignor would beentitled;
(3) an assignment of an interest does not of itself dissolve thelimited liability company or entitle the assignee to participatein the management and affairs of the limited liability companyor to become or exercise any rights of a member; (4) until the assignee of an interest becomes a member, theassignor continues to be a member and to have the power toexercise any rights of a member, subject to the other members'right to remove the assignor under section 5(a)(3)(B) of thischapter;
(5) until an assignee of an interest becomes a member, theassignee has no liability as a member solely as a result of theassignment; and
(6) the assignor of an interest is not released from liability as amember solely as a result of the assignment.
(c) Unless otherwise provided in an operating agreement, thepledge of or granting of a security interest, lien, or otherencumbrance in or against any or all of the interest of a member isnot an assignment and does not cause the member to cease to be amember or to cease to have the power to exercise any rights orpowers 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 articleafter 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 extentassigned, only the distributions to which the assignor would beentitled;
(3) an assignment of an interest does not of itself dissolve thelimited liability company or entitle the assignee to participatein the management and affairs of the limited liability companyor to become or exercise any rights of a member;
(4) until an assignee of an interest becomes a member, theassignee has no liability as a member solely as a result of theassignment; and
(5) the assignor of an interest is not released from liability as amember solely as a result of the assignment.
(c) Unless otherwise provided in an operating agreement, thepledge of or granting of a security interest, lien, or otherencumbrance in or against any or all of the interest of a member isnot an assignment and does not cause the member to cease to be amember or to cease to have the power to exercise any rights orpowers 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 onor before June 30, 1999, is governed by this section.
(b) Except as otherwise provided in a written operatingagreement, an assignee of an interest may become a member only ifthe other members unanimously consent. The consent of a membermay be evidenced in any manner specified in writing in an operatingagreement, but in the absence of a specification, consent must beevidenced 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 issubject to the restrictions and liabilities of a member under thearticles of organization, any operating agreement, and thisarticle; and
(2) is liable for any obligations of the member's assignor forunpaid contributions under IC 23-18-5-1 or for any wrongfuldistributions under IC 23-18-5-7.
However, the assignee is not obligated for liabilities of which theassignee had no knowledge at the time the assignee became amember and that could not be ascertained from a written operatingagreement.
(d) Whether or not an assignee of an interest becomes a member,the assignor is not released from the assignor's liability to the limitedliability company for unpaid contributions under IC 23-18-5-1 or forany wrongful distributions under IC 23-18-5-7 that are solely a resultof the assignment.
(e) Unless otherwise provided in a written operating agreement,a member who assigns the member's entire interest in the limitedliability company ceases to be a member or to have the power toexercise any rights of a member when an assignee of the member'sinterest 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 articleafter June 30, 1999, is governed by this section.
(b) Except as otherwise provided in a written operatingagreement, if a limited liability company has at least two (2)members, an assignee of an interest may become a member only ifthe other members unanimously consent. The consent of a membermay be evidenced in any manner specified in writing in an operatingagreement, but in the absence of a specification, consent must beevidenced by a written instrument, dated and signed by the member.If a limited liability company has one (1) member, an assignee of aninterest may become a member in accordance with the terms of anagreement between the assignor and the assignee.
(c) An assignee who becomes a member:
(1) has, to the extent assigned, the rights and powers and issubject to the restrictions and liabilities of a member under the
articles of organization, any operating agreement, and thisarticle; and
(2) is liable for any obligations of the member's assignor forunpaid contributions under IC 23-18-5-1 or for any wrongfuldistributions under IC 23-18-5-7.
However, the assignee is not obligated for liabilities of which theassignee had no knowledge at the time the assignee became amember and that could not be ascertained from a written operatingagreement.
(d) Whether or not an assignee of an interest becomes a member,the assignor is not released from the assignor's liability to the limitedliability company for unpaid contributions under IC 23-18-5-1 or forany wrongful distributions under IC 23-18-5-7 that are solely a resultof the assignment.
(e) Unless otherwise provided in a written operating agreement,a member who assigns the member's entire interest in the limitedliability company ceases to be a member or to have the power toexercise 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 liabilitycompany upon the occurrence of any of the following events:
(1) The person withdraws from the limited liability company asprovided in section 6 of this chapter.
(2) The person ceases to be a member as provided in section4(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 operatingagreement, by the affirmative vote, approval, or consent ofa majority in interest of the members after the member hasassigned the member's entire interest in the limited liabilitycompany.
(4) Unless otherwise provided in a written operating agreementor with the written consent of all other members, in the case ofa member who is an individual, the individual's death.
(5) Unless otherwise provided in a written operating agreementor with the written consent of all other members, in the case ofa member who is acting as a member by virtue of being atrustee of a trust, the termination of the trust, but not merely thesubstitution of a new trustee.
(6) Unless otherwise provided in a written operating agreementor with the written consent of all other members, in the case ofa member that is a partnership, limited partnership, or anotherlimited liability company, the dissolution and commencementof winding up of the partnership, limited partnership, or limitedliability company.
(7) Unless otherwise provided in a written operating agreement
or with the written consent of all other members, in the case ofa member that is a corporation, the dissolution of thecorporation.
(8) Unless otherwise provided in a written operating agreementor with the written consent of all other members, in the case ofa member that is an estate, the distribution by the fiduciary ofthe estate's entire interest in the limited liability company.
(b) A written operating agreement may provide for other eventsthat result in a person ceasing to be a member of the limited liabilitycompany, including insolvency, bankruptcy, and adjudicatedincompetency.
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 operatingagreement, a limited liability company existing under this article onor before June 30, 1999, is governed by this section.
(b) Unless a written operating agreement provides that a memberdoes not have the power to withdraw by voluntary act from a limitedliability company, the member may do so at any time by giving thirty(30) days written notice to the other members or other noticerequired under the operating agreement. If the member has the powerto withdraw but the withdrawal is a breach of the operatingagreement, or the withdrawal occurs as a result of otherwisewrongful conduct of the member, the limited liability company mayrecover from the withdrawing member damages for breach of theoperating agreement, including the reasonable cost of obtaining thereplacement of services that the withdrawn member was obligated toperform. The limited liability company may offset the damagesagainst amounts otherwise distributable to the withdrawn member,in addition to pursuing any remedies provided for in the operatingagreement 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 orparticular undertaking, a withdrawal by a member before theexpiration 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 articleafter 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 beforethe dissolution and winding up of the limited liability company. Amember may withdraw from a limited liability company only at the
time or upon the occurrence of events specified in the operatingagreement 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 ajudgment creditor of a member, the court may charge the interest ofthe member in the limited liability company with the payment of theunsatisfied amount of the judgment with interest.
(b) To the extent the court charges under subsection (a), thejudgment creditor has only the rights of an assignee of the member'sinterest in the limited liability company.
(c) This article does not deprive a member of the benefit of anyexemption laws applicable to the member's interest in the limitedliability company.
As added by P.L.8-1993, SEC.301.