(a)Transfer of Membership Interests Restricted. A member may assign the member’s full membership interest only by assigning all of the member’s governance rights coupled with an assignment to the same assignee of all the member’s financial rights. A member’s governance rights are assignable only as provided in this section. A member or holder of a financial right has no power to assign all or any part of the member’s membership interest or financial rights, except as provided in § 48-218-101 and this section.
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Terms Used In Tennessee Code 48-218-102

  • Dissolution: means that the LLC has incurred an event under §. See Tennessee Code 48-202-101
  • Financial rights: means a member's rights to:
    (A) Share in profits and losses as provided in §. See Tennessee Code 48-202-101
  • Governance rights: means a right to vote on one (1) or more matters and all a member's rights as a member in the LLC other than financial rights and the right to assign financial rights. See Tennessee Code 48-202-101
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-11-201
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • LLC: means a limited liability company, organized under chapters 201-248 of this title. See Tennessee Code 48-202-101
  • Majority vote: means with respect to a vote of the members, if voting on a per capita basis, a majority in number of the members entitled to vote on a specific matter, or if the voting is determined otherwise, a majority of the voting interest (which may be expressed as a percentage) entitled to vote on a specific matter, and with respect to a vote of the governors, a majority in number of the governors entitled to vote on a specific matter. See Tennessee Code 48-202-101
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Membership: means the rights and obligations a member has pursuant to a corporation's charter, bylaws and chapters 51-68 of this title. See Tennessee Code 48-51-201
  • Membership interest: means a member's interest in an LLC consisting of a member's financial rights, a member's right to assign financial rights as provided in §. See Tennessee Code 48-202-101
  • Operating agreement: means a written agreement described in §. See Tennessee Code 48-202-101
  • Person: includes individual and entity. See Tennessee Code 48-202-101
  • signed: includes a mark, the name being written near the mark and witnessed, or any other symbol or methodology executed or adopted by a party with intention to authenticate a writing or record, regardless of being witnessed. See Tennessee Code 1-3-105
  • written: means any information in the form of a document. See Tennessee Code 48-11-201
(b)Consents Required.

(1) Except as otherwise provided in the articles or the operating agreement, a member may, without the consent of any other member, assign governance rights to another member.
(2)

(A) Except as provided in subdivisions (b)(2)(B) and (C), any other assignment of any governance rights is effective only if all the members, other than the member seeking to make the assignment, approve the assignment by unanimous consent or if the articles or operating agreement so permit, if the assignment is approved in accordance with § 48-232-102. The consent of a member may be evidenced in any manner specified in the articles or operating agreement, but in the absence of such specification, consent shall be evidenced by a written instrument, dated and signed by such person. The giving of consent is at the discretion of the consenting party and may be unreasonably withheld.
(B) If the articles or operating agreement so provide, the governors who are members may approve, by a majority or greater in number of the nonassigning governors who are members, the assignment of governance rights to a nonmember. In the event there are no nonassigning governors who are members, the assignment must be approved by unanimous consent of the governors or, if the articles or operating agreement so permit, the assignment shall be approved by at least a majority vote of the members exclusive of the member seeking to make the assignment.
(C) Pursuant to § 48-232-102(a), if permitted in the articles or operating agreement, the governance rights associated with membership interests or classes of membership interests may be assigned without the consent of the members or the governors who are members.
(c)Effect on Membership. When an assignment of governance rights is effective under subsection (b):

(1) The assignee becomes a member, if not already a member;
(2) If the assignor does not retain any governance rights, the assignor ceases to be a member, and the consent required under subsection (b), shall, if applicable, also constitute the consent to avoid dissolution that would otherwise result under § 48-245-101(a)(5); and
(3) 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 articles, any operating agreement and chapters 201-248 of this title.
(d)Effect on Liability for Contributions and Illegal Distributions. When an assignment is effective under subsection (a):

(1) The assignee is liable for any obligations of the assignor under § 48-232-101 existing at the time of transfer, except to the extent that, at the time the assignee became a member, the liability was unknown to the assignee, and could not be ascertained from the required records of the LLC;
(2) Notwithstanding subdivision (d)(1), the assignee shall not be liable for the obligations of the assignor under § 48-237-101; and
(3) The assignor is not released from liability to the LLC for obligations of the assignor existing at the time of transfer under §§ 48-232-101 and 48-237-101.
(e)Pledge of Membership Interest. Unless otherwise provided in the articles or an operating agreement, the pledge of, or granting of a security interest, lien or other encumbrance in or against, any or all of the membership interest of a member is not an assignment and shall not cause the member to cease to be a member or to cease to have the power to exercise any rights or powers of a member.
(f)Consequences of Ineffective Assignment. If any purported or attempted assignment of governance rights is ineffective for failure to obtain the consent required in subsection (b):

(1) The purported or attempted assignment is ineffective in its entirety; and
(2) Any assignment of financial rights that accompanied the purported or attempted assignment of governance rights is void.
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