A membership interest is a type of security that represents ownership (or equity) in a limited liability company (LLC). On a company’s cap table, membership interests are typically shown either as percentages or units. LLCs use different terms than corporations — for example, members instead of shareholders, operating agreement instead of bylaws, and membership interests instead of stock or shares. An LLC can also create different classes of membership interests, giving members varying levels of voting power and economic rights. If you’re looking up what is a membership interest or how LLC ownership works, understanding these distinctions is key when structuring or investing in an LLC.
Building Blocks: Types of Securities
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