Iowa Code 489.502 – Transfer of transferable interest
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1. For a transfer, in whole or in part, all of the following applies to a transferable interest:
a. It is permissible.
b. It does not by itself cause a member‘s dissociation or a dissolution and winding up of the limited liability company’s activities.
c. Subject to section 489.504, it does not entitle the transferee to do any of the following:
(1) Participate in the management or conduct of the company’s activities.
(2) Except as otherwise provided in subsection 3, have access to records or other information concerning the company’s activities.
Terms Used In Iowa Code 489.502
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Member: means a person that has become a member of a limited liability company under section 489. See Iowa Code 489.102
- Operating agreement: means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in section 489. See Iowa Code 489.102
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Iowa Code 489.102
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Iowa Code 489.102
- Transfer: includes an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift, or transfer by operation of law. See Iowa Code 489.102
- Transferable interest: means the right, as originally associated with a person's capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right. See Iowa Code 489.102
- Transferee: means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a member. See Iowa Code 489.102
2. A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.
3. In a dissolution and winding up of a limited liability company, a transferee is entitled to an account of the company’s transactions only from the date of dissolution.
4. A transferable interest may be evidenced by a certificate of the interest issued by the limited liability company in a record, and, subject to this section, the interest represented by the certificate may be transferred by a transfer of the certificate.
5. A limited liability company need not give effect to a transferee’s rights under this section until the company has notice of the transfer.
6. A transfer of a transferable interest in violation of a restriction on transfer contained in the operating agreement or another agreement to which the transferor is a party is ineffective as to a person having notice of the restriction at the time of transfer.
7. Except as otherwise provided in section 489.602, subsection 4, paragraph “b”, when a member transfers a transferable interest, the transferor retains the rights of a member other than the interest in distributions transferred and retains all duties and obligations of a member.
8. When a member transfers a transferable interest to a person that becomes a member with respect to the transferred interest, the transferee is liable for the member’s obligations under section 489.403 and section 489.406, subsection 3, known to the transferee when the transferee becomes a member.