35-8-704. Assignment of membership interest. (1) Except as provided in writing in the articles of organization or an operating agreement:
     (a) a membership interest is assignable in whole or in part;
     (b) an assignment entitles the assignee to receive, to the extent assigned, only the distributions to which the assignor would be entitled;
     (c) an assignment of a membership interest does not of itself dissolve the limited liability company or entitle the assignee to participate in the management and affairs of the limited liability company or to become or to exercise any rights of a member;
     (d) until the assignee of a limited liability company interest becomes a member, the assignor continues to be a member and to have the power to exercise rights of a member, subject to the members' right to remove the assignor pursuant to 35-8-802(1)(c)(ii);
     (e) until an assignee of a membership interest becomes a member, the assignee has no liability as a member solely as a result of the assignment; and
     (f) the assignor of a membership interest is not released from liability as a member solely as a result of the assignment.
     (2) The articles of organization or an operating agreement may provide that a member's interest in a limited liability company may be evidenced by a certificate of membership interest issued by the limited liability company and may also provide for the assignment or transfer of a membership interest represented by a certificate and make other provisions with respect to the certificates.
     (3) Unless otherwise provided in the articles of organization or an operating agreement, the pledge or granting of a security interest, lien, or other encumbrance in or against any of the membership interest of a member is not an assignment and may 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.

     History: En. Sec. 41, Ch. 120, L. 1993.