Legal Question in Business Law in California

I am starting a news media website, and I am thinking of forming it as an LLC. (Thank you for answering my question on what type of company I should form in an earlier post). I will be maintaining 100% owner ship of the company, but I plan on giving either a percentage of the company to a few others who will be helping with the creation process or stocks in the company. This is the form of compensation I am giving to help create this since it will take a team to do so.

Can I give out percentages of ownership or stocks if company is filed as an LLC?

If the company does great and positions such as CEO, Vice President, or Treasurer, can be created can I incorporate it later?


Asked on 6/23/11, 12:12 pm

3 Answers from Attorneys

Richard Jefferson M.E.T.A.L. LAW GROUP, LLP

Yes to both questions. You can actually have officers for your LLC (those are just titles).

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Answered on 6/23/11, 12:37 pm
Shawn Jackson The Jackson Law Firm, P.C.

Well, on the assumption that you initially want 100% and then want to transfer interest (stocks in a corporation and "memberships" in an LLC) then the answer would depend upon how well you play with others. If you are a "team person" who is willing to share on a pro-rated level, the corporation would be fine; if on the other hand, you want to retain full and absolute control the LLC may be the option. As I noted in my previous email, there are seven considerations for you to resolve before we can recommend any one option...perhaps a phone call to an attorney of your choice may be the next best step.

By Grace...

Shawn Jackson ESQ. (707) 584-4529

Business Development Attorney

No communication resulting herein shall create an attorney-client relationship unless a separate retainer agreement is signed by attorney and client. The information provided neither is not legal advice nor is it conveyed in the course of an attorney-client relationship, but is intended merely as a general overview with regard to the subject matter covered. You should not act upon this information without seeking professional counsel such as any attorney in this office in a subsequent email communication (agreement) and the formation of an attorney client relationship.

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Answered on 6/23/11, 12:44 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Several years ago, I researched the question as to whether the ownership interests in an LLC, which are usually denoted as "memberships" rather than as stock, can be denoted as stock, as are the shares of a corporation. I did not find any law or practice stating that an LLC cannot issue stock. However, I do believe it would be sufficiently unusual to confuse the heck out of the holders and the general public. Therefore, if you elect to set up your business as an LLC, you should call the ownership interests "memberships" not "stock" or "shares" or "shares of stock," even if you could.

Your questions show a degree of naivete about how businesses are formed and capitalized, and I suggest obtaining and studying some self-help or do-it-yourself paperback books on "how to form and operate your own small business" (of which there are many) before taking major (and expensive) steps such as hiring lawyers, accountants, etc. or taking on co-promoters.

An LLC can be converted into a corporation, or a separate corporation can be set up and the LLC or its assets sold to the corporation. The choice may depend upon tax considerations existing at the time of conversion or sale.

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Answered on 6/26/11, 2:04 pm


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