Membership Interest Purchase Agreement
(GA LLC)

Summary

This template membership interest purchase agreement is for use in a transaction where a member of a Georgia limited liability company is selling its membership interest to an arm's length buyer, who becomes a member of the company by assignment. This template contains practical guidance, drafting notes, and alternate clauses. This template is generally applicable without regard to industry; however, the specific nature of the assets of the company in which the membership interests are being acquired should be considered when preparing this template, and additional industry specific representations added as needed. Membership interest purchase agreements are generally prepared by the buyer's counsel, as such, this template is generally pro-buyer, but also includes drafting guidance for the seller. This template contemplates one member selling 100% of its interests in the company while there is still an additional member of the company. If the sale of the membership interests in the company is resulting in the sale of the company and being used as a structure to acquire an operating business or an asset sale, see Membership Interest Purchase Agreement (Long Form) (Pro-Buyer) (DE), which may be adapted for the sale of a Georgia limited liability company. The Georgia Limited Liability Company Act (GA LLCA) provides the default terms of formation, operation, dissolution, and other governance matters for limited liability companies in the absence of an operating agreement or other agreement. See O.C.G.A. § 14-11-101 (18). The GA LLCA does not require that a limited liability company have an operating agreement; however, the GA LLCA allows many of the default terms governing limited liability companies to be altered by an operating agreement. O.C.G.A. § 14-11-101 (18) provides that operating Agreements may be oral or written. Unless otherwise provided in the articles of organization or written operating agreement, membership interests in a Georgia limited liability company are assignable in whole or in part. Such an assignment, unless otherwise provided in the operating agreement, does not entitle the assignee to become a member, or to exercise any rights or powers of a member, but only allows the assignee to share in such profits and losses and to receive such distributions as the assignor would have been entitled to. See O.C.G.A. § 14-11-502. A member ceases to be a member and to have the power to exercise any rights or powers of a member upon assignment of all of the member's limited liability company interest. See O.C.G.A. § 14-11-406. An assignee who has become a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under the operating agreement. It is important for counsel to review the terms of the operating agreement and other governing documents of the company to confirm the necessary internal approvals for this sale of the membership interests contemplated by this agreement have been obtained. For a template consent for a Georgia limited liability company that may be adapted for use in connection with a membership interest sale, see Written Consent of Members in Lieu of Organizational Meeting (Member-Managed) (GA LLC). For more information on membership interests in a Florida LLC, see Ownership Interests (GA LLC).