LLC Membership Structure and Operations
An LLC member is an individual or entity with ownership rights, including financial and voting rights. Members can manage the LLC or be passive investors. LLC membership units represent a party’s ownership stake and entitle the holder to profits and votes.
Membership Certificates and Buy-Sell Structures
LLCs can issue membership certificates. When an LLC repurchases a member’s units, those units return to the pool of authorized but unissued units. Remaining membership percentages increase to reflect the new total. Buy-sell structures are customizable.
Management and Operations of LLC
LLCs can appoint a CEO but unlike corporations, are not required to. Owners of private companies can transfer stock. LLCs can open brokerage accounts and transfer assets into them. They can then buy and sell securities within the LLC.
Unissued Shares and Investments
The number of unissued shares equals authorized shares minus outstanding shares and treasury stock. Unissued shares don’t hold voting rights or receive dividends but represent potential dilution if the company issues more shares. LLCs can buy stocks like individuals. To invest, open a brokerage account in the LLC’s name. LLC incentive units resemble stock options in purpose and function.
Funding Acquisitions with Preferred Units and Warrants
NGL plans to use the net proceeds from the issuance of these additional Class D Preferred Units and warrants to fund a portion of the purchase price for its acquisition of Hillstone Environmental Partners, LLC. The closing of the sale of the Class D Preferred Units and the warrants is contingent upon (and is expected to occur in connection with) the consummation of the Hillstone acquisition, which is expected to occur in 2019, and is subject to customary closing conditions.