What is the difference between member of an LLC and shareholder?

Answer 1

Generally it is assumed that a person holding the shares of a company is a member of the same. But this perception is not actually correct. A person is called the member of a company if his name is included in the register of a company. A person remains the member of a company up to the time his name is not removed from the register of a company. However a shareholder means a company who is carrying the shares of that particular company. Various times it happens that the person carrying the shares of a company is not getting registered with the membership register of that company. In this particular case he is shareholder of a company but not the member of a company. In Case the share warrants are issued for the shares the holder will become share holders but not the member as his name is removed from the register of a company. A person is also become the member of a company by subscribing the memorandum of Association of the company. In this particular case if he does not obtains the shares of the company, he does not become the shareholder of the company but remains the member of the company. Regards, CA Jai Prakash Agarwal M.COM, LL.B, AICWA, ACA, DISA (ICAI), CS (Executive)

Answer 2

LLC's typically don't have shares of stock, they identify ownership percentages in their original agreements. This is typically referred to as an ownership interest or membership interest. Corporations have and issue stock certificates, which can be transferred. The holder of the stock certificate is the shareholder.

In the end, both methodologies describe ways to measure what percentage of a company someone owns, and, what kinds of rights they have to direct the activities of the company based on the entity type. A number of tax issues also come into play depending on the tax electino of the LLC and whether the corporation is a C corp or an S corp.