Member
An owner of a Texas LLC, the LLC equivalent of a shareholder of a corporation or partner of a partnership. Members hold "membership interests," which carry the economic rights. A member's governance rights come from the company agreement and the TBOC.
A member is an owner of a Texas LLC, the LLC equivalent of a shareholder of a corporation or a partner of a partnership. Members hold "membership interests," which the TBOC defines to include a member's share of profits and losses and right to distributions but not the right to participate in management. § 1.002(54). Governance rights, such as voting and, in a member-managed LLC, management, belong to the member as a member. The TBOC distinguishes between "members" and "assignees." An assignee receives the economic rights associated with a transferred membership interest but does not have governance rights unless admitted as a member, which by default requires the approval of all members.
Admission
Under § 101.103, a person named as an initial member in the certificate of formation becomes a member when the LLC is formed. Others admitted in connection with formation become members on the latest of the formation date or the date the company's records state or first reflect the admission. After formation, admission requires the approval or consent of all members, unless the company agreement provides otherwise.
No personal liability
Under § 101.114, a member is not liable for the debts, obligations, or liabilities of the LLC, including those arising under judgment, decree, or court order, except to the extent the company agreement specifically provides otherwise. This is the principal feature distinguishing Texas LLC membership from general partnership.
No right to withdraw
The Texas default rule is that a member has no right to withdraw from a Texas LLC. § 101.107. A member who wishes to exit a Texas LLC must rely on (a) a contractual buy-out or withdrawal provision in the company agreement; (b) sale of the membership interest to a third party (subject to transfer restrictions in the company agreement); (c) judicial winding up under § 11.314; (d) derivative or direct claims for breach of fiduciary duty; or (e) negotiated exit with the consent of the LLC and the remaining members.
Assignment of interest
Under § 101.108, a member may assign the member's interest in the LLC unless the company agreement provides otherwise. However, an assignee does not become a member unless admitted in accordance with the procedure required by the company agreement (or, if silent, with the approval of all of the company's members). An assignee is entitled to the economic rights associated with the transferred interest, to receive distributions and allocations, and to the records access in § 101.502, but not to vote or otherwise participate in management.
No vested property right
Under § 101.106, a member or assignee has no interest in any specific property of the LLC. The LLC's property is the LLC's; the member owns the membership interest, not the underlying assets.
Information rights
Under § 101.502, unless the governing documents provide otherwise, a member or assignee may examine and copy LLC records on written demand stating a proper purpose, limited to records reasonably related to that purpose. Emails, texts, and social media content are excluded unless they effect an action of the LLC or the company agreement says otherwise. The company agreement may not unreasonably restrict these rights. § 101.054(e).
The combination of § 101.107 (no right to withdraw), § 101.108 (assignee receives no governance rights), and § 101.112 (charging order is exclusive creditor remedy) can leave a Texas LLC member with few ways out. A Texas LLC member without a buy-sell provision in the company agreement, without a willing third-party buyer, and without grounds for judicial winding up under § 11.314 may have no practical exit at all. For that reason, the exit, transfer, and buy-sell provisions of the company agreement carry unusual weight.
Companion article: Starting a Business in Texas