New York: LLC Membership-Interest Transfer and Member-Admission Requirements
The short answer
New York lets the operating agreement control transferability and admission. By default, an assignment moves distributions and profit-and-loss allocations but not management or membership rights. An assignee needs the vote or written consent of a majority in interest of the members other than the assigning member to become a member. Unlike many states, assignment of the entire membership interest ends the assignor's membership automatically unless the operating agreement changes the rule.
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This is the general rule in New York. Ask about your specific facts and see which parts of current New York law apply, with citations to the statutes.
| Governing law and transaction scope | New York Limited Liability Company Law; ordinary voluntary assignment of a membership interest, not merger, death/divorce succession, creditor remedy, securities, tax, or professional eligibility (§§ 102(r), 603-.604) |
|---|---|
| Operating agreement and restrictions | Written operating agreement controls assignment and admission. It may prohibit assignment before dissolution; a transfer violating statutory or agreement restrictions is void (§§ 417, 603(b), 606(a)) |
| Transferable interest and assignment effect | Default whole or partial assignment transfers only assigned distributions and profit/loss allocations, not management or member rights; assignment does not dissolve the LLC (§ 603(a)(1)-(3)) |
| Transferee rights | Assignee receives assigned economics but no management, member powers, or statutory member inspection right before admission (§§ 603(a), 1102(b)) |
| Member admission and consent | Agreement may give assignor admission power or set another rule; otherwise assignee needs majority-in-interest vote or written consent of nonassigning members. Admission carries specified member restrictions and liabilities (§§ 602(b)(2), 604) |
| Transferor status and duties | Unless agreement provides otherwise, assignment of entire membership interest automatically ends assignor's membership and member powers; a security pledge does not (§ 603(a)(4)) |
| Company notice, certificates, and timing | No separate statutory company-notice trigger. Agreement may use certificates; restriction notice must appear conspicuously and a violating transfer is void (§ 603(b)) |
| Company records and public filings | Maintain current member list with contributions and profit/loss shares; biennial statement reports service-of-process address, not ownership. Ordinary assignment creates no immediate ownership filing (§§ 1102(a)(2), 301(e)) |
| Special routes and scope boundaries | Withdrawal restrictions, death/divorce succession, mergers, charging orders, securities, tax, professional eligibility, and disputed ownership are outside this ordinary assignment survey (§§ 602(b)(3), 606) |
Compare this rule across all 50 states + DC →
Requirements one by one
New York's written operating agreement controls the first move
New York requires a written operating agreement under § 417. It may restrict or prohibit assignment
and may give the assigning member power to admit an assignee under § 602(b)(2). If it does not change
the defaults, §§ 603 and 604 control assignment and admission separately.
Assignment transfers economics, not governance
Section 603(a) says a whole or partial assignment does not dissolve the LLC and does not give the
assignee management, membership, or member powers. It transfers the assigned distributions and
profit-and-loss allocations. Section 1102's inspection right belongs to a member, so the ordinary
nonmember assignee has no parallel statutory inspection right before admission.
Default admission excludes the assigning member from the vote
Unless the operating agreement provides otherwise, § 604(a) requires the vote or written consent of
a majority in interest of the members other than the assigning member. “Majority in interest” means
more than half of current-profit shares under § 102(o), not a headcount. Admission can also bring known
contribution obligations and other member restrictions under § 604(b).
A complete assignment ends the seller's membership by default
New York differs sharply from California, Florida, and Texas. Section 603(a)(4) says the assignor
ceases to be a member and loses member powers upon assignment of the entire membership interest unless
the operating agreement provides otherwise. A pledge or security interest does not have that effect.
The live New York CTA is left unlinked because it omits this automatic status change and does not state
that the default admission vote excludes the assigning member. Both affect the packet's consent and
company-record steps.
Certificates can make restrictions visible and violations void
If the operating agreement uses certificates, § 603(b) requires transfer restrictions to be noted
conspicuously on the certificate and declares a violating sale or transfer void. Confirm whether the
interest is certificated and whether the certificate reflects the current restriction before closing.
Internal records change; the biennial statement is not an ownership report
Section 1102 requires a current member list with contribution and profit-and-loss share information.
After a full assignment and any separate admission, update that list and the operating agreement's
schedules to match the actual member transition.
The § 301 biennial statement reports the service-of-process mailing address, not LLC ownership.
The ordinary transfer statutes impose no immediate ownership filing with the Department of State.
What trips people up
New York's terminology can hide two opposite consequences in the same closing: assignment alone does
not make the buyer a member, but assignment of the entire interest can automatically stop the seller
from being a member. Calendar the admission approval and the assignor's status separately.
Common questions
Can the seller vote on the buyer's default admission?
No. Section 604(a) excludes the member who assigned or proposes to assign the interest from the
majority-in-interest approval calculation unless the operating agreement supplies a different rule.
Does a partial assignment end the seller's membership?
No under the statutory default. Section 603(a)(4) applies when all of the membership interest is assigned.
Is a Department of State filing required for the ownership transfer?
Not under the ordinary assignment provisions. The biennial statement concerns the process mailing address.
Statutes and sources
- N.Y. Ltd. Liab. Co. Law § 102 — member, membership-interest, majority, and operating-agreement definitions.
- N.Y. Ltd. Liab. Co. Law § 417 — mandatory written operating agreement.
- N.Y. Ltd. Liab. Co. Law §§ 602-604 — admission, assignment effects, and assignee liabilities.
- N.Y. Ltd. Liab. Co. Law § 606 — agreement-based withdrawal and assignment prohibition.
- N.Y. Ltd. Liab. Co. Law § 1102 — member records and inspection.
- N.Y. Ltd. Liab. Co. Law § 301 — biennial service-address statement.
All quotations came from the official New York Senate Open Legislation
pages, accessed August 12, 2026.
Source links
Every statute quoted above, linked, with the date we checked it.
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