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Default Rules for Transfers of Maryland LLC Interests
To understand the Maryland LLC Act's transfer provisions, a distinction must be made between a member's "right to receive distributions," which the Act terms an "Interest" , from a member's right to participate in management. Act Section 4A-603 provides that, absent an agreement to the contrary, a member's "Interest" is freely assignable. The assignment of an Interest, however, does not grant the assignee the right to become a member, to participate in management, or to act as an agent of the LLC. These rights are retained by the assignor.Absent an agreement to the contrary, an assignee may become a member only if the remaining members unanimously consent to the assignee's admission. In effect, the assignee becomes merely an assignee who shares in the economic incidents of ownership but does not exercise control over the management and affairs of the company. However, the Act contemplates that a member's authority to transfer the member's rights (including the member's Interest) in the LLC may be permitted by the operating agreement.