Legal Question in Business Law in California

How can you have a shareholder meeting when you are an LLC? LLC's have members not shareholders. Majority of votes of whom if not the members? No operating agreement? Then chances are you have an LLC in name only and any court of law will call you a statutory general partnership. You want to issue LLC stock? LLC's don't HAVE stock. Do you know ANYTHING about securities laws? Whatever you have been doing yourselves regarding your LLC and your business in general, you need to stop doing it yourself, before you get in some real trouble, and go see a lawyer in person right away.

You really should have an operating agreement in place, but in the absence of one the LLC act would govern and I believe that a majority vote by members governs. The Act also governs how you make decisions. You should consult an attorney because the specific answer to your question depends on more facts than you have provided.

"Operating agreement" is a rather broad term, and can include oral agreements and understandings, including the members' agreement to form an LLC, or some combination thereof. Corporations Code section 17001(ab). So, more likely than having no operating agreement, your operating agreement is vague and insufficient for your needs. Have an attorney prepare one meeting your current needs and the members' wishes.

As to the overall concept of an LLC issuing "stock" to a nonmember:

(1) Traditional wisdom is that LLCs don't issue stock or have shareholders or stockholders. Whether this is always and necessarily true as a matter of law is questionable. For example, Corporations Code section 17003(n) allows LLCs to issue ".....bonds, debentures and other securities." I have seen relatively few instances in other states where LLCs have issued securities denoted as "stock."

(2) More commonly, LLCs may issue membership interests and/or economic interests, the latter being non-voting and non-participating. Corporations Code sections 17001(n) and (z).

(3) The resemblance between stock in a corporation and an economic interest in an LLC is quite close; perhaps closest when the stock is a nonvoting preferred issue.

(4) An LLC may have different classes or series of membership interests, each with different rights and priorities. Corporations Code sections 17102, 17103(a).

(5) An LLC may issue "certificates of interest" that resemble stock certificates in appearance and function. The interests represented thereby can be transferable (or not), just as corporate stock can be transferable (or not).

For a rather detailed reference on California's law regarding issuance and transfer of membership and economic interests in California LLCs, I suggest Chaper 12, "Issuing and Transferring Membership Interests" of the Continuing Education of the Bar (CEB) treatise "Forming and Operating California Limited Liability Companies" This and other texts on forming and operating LLCs can be found in each county at the Law Library, which may be, but isn't always, in the courthouse.

In sum, LLCs may or may not be able to issue securities denoted as "stock," but in any case it is rather clear that LLCs can issue securities denoted as "economic interests" which resemble "stock" very closely in all respects, including regulation, transferability, rights of holders, and otherwise.