How to Transfer LLC Ownership in North Dakota: 2025 Updates

If you have an LLC in North Dakota and you wish to discontinue it, you don’t always have to dissolve it. You can transfer the ownership, and it will keep running the way it was. Transferring ownership of a Limited Liability Company (LLC) in North Dakota is a relatively simple and straightforward process involving minimal paperwork. It can be partially or fully transferred to another owner.

LLCBuddy editors shared a step-by-step guide on how to transfer ownership of an LLC in North Dakota. The steps might seem easy and doable. However, these are general steps and might need special attention for specific cities or regions in North Dakota. Hence, it is recommended to consult an attorney or legal expert before taking the steps.

How an LLC Ownership Structure Works in North Dakota

By now, you must know that a limited liability company is one of the simplest forms of business structure. The ownership and transferring it to others is even simpler. For an LLC in North Dakota or any other state in the United States, the company is considered an independent entity that is separated from its owners, which means the owners are not personally liable for the company’s debts or legal obligations.

The ownership structure of an LLC in North Dakota is determined by the percentage of ownership interests held by each member. These ownership interests can be distributed however the members see fit and are typically outlined in the Operating Agreement drafted in North Dakota.

There is no maximum limit on the number of members an LLC in North Dakota can have, and the members can be individuals, other LLCs, corporations, or even foreign entities. This flexibility allows for a wide range of business structures, from single-member LLCs in North Dakota to large, multi-member LLCs with complex ownership arrangements.

What is North Dakota LLC Buy-Sell Agreement in Ownership Transfer?

In North Dakota, the buy-sell agreement is a part of your operating agreement. It explains the instructions for buying and selling the LLC ownership. For example, who can be the member of North Dakota LLC, how will buy out and sell of the LLC be determined, whether the members of the LLC in North Dakota will buy the shares of the leaving owner, and how – these are the points you have in the buy-sell agreement.

Buy Out North Dakota LLC or Partial Transfer: In this case, the members of the LLC generally buy the shares of the owner who is leaving. As the LLC buys the owner’s interests, the shares get divided equally among the remaining North Dakota LLC members. LLC members must approve the transfer, and then the Operating Agreement (OA) will be updated to exclude the departed owner.

If your LLC operating agreement does not specify these terms beforehand, you must follow North Dakota state LLC law. In some states, ownership transfer does not simply take place. Instead, they have to dissolve the LLC to continue with the process. So, while you’re forming an North Dakota LLC, make sure to create a buy-sell agreement beforehand.

Sell a North Dakota LLC Or Fully Transfer: Selling an LLC or Fully Transferring the ownership is a bit more complicated than the buy-out process. In this condition, owners have the independent legal right to sell the interest to any third party. They do not need other members’ approval for this. The negotiation between the buyer and the seller involves complexities if there is no operating agreement in the first place. As an owner, you must find a buyer, write the change of ownership letter, set out other formalities, and voila! Your ownership transfer is done. The parties will settle the sale contract, including the LLC price, following North Dakota state laws.

How to Transfer North Dakota LLC Ownership

When an LLC member decides to step down from the owner’s position, they must transfer the ownership to someone else. It can be other existing members of the LLC or a third party. Transferring LLC ownership in North Dakota is a common yet complex deed. LLC owners who want to transfer their ownership must follow some steps to do the task. Here are the following steps-

Step 1: Review Your North Dakota LLC Operating Agreement

An operating agreement is a kind of non-mandatory document in many states. In North Dakota, it is not mandatory to draft one. If you have one at the time of LLC formation in North Dakota, then it would be easier for the owners to transfer the name. If not, then it should be filed at the time of transferring ownership. The operating agreement for the LLC in North Dakota must be reviewed for the ownership transfer conditions and other legal requirements regarding the buy-out and sale of the LLC.

Step 2: Amend the North Dakota Articles of Organization

Changing/transferring ownership might lead to structural change at the managerial level. In that case, the LLCs must comply with the North Dakota Secretary of State. To do so, one must file the North Dakota Articles of Organization amendment. Specifically in Texas, LLCs must submit a Public Information Report annually to the Texas Comptroller of Public Accounts. The managerial changes will be explained there.

As soon as the ownership transfer negotiation is done and the agreement is made with the updated change of ownership, file it with the Secretary of State. For that, you must amend the Articles of Organization and get the Amended Certificate of Authority. Make the changes to the existing Articles of Organization, get the amendment form, and submit it to the North Dakota SOS along with other documents and the filing fee. Read how to amend North Dakota Articles of Organization in a simple way.

Step 3: Spread the News

Once the legal formalities are done, and the ownership of your LLC is transferred officially in North Dakota, you must spread the word to the clients, partners, and other concerned people. Also, banks and other financial institutions should be notified about the ownership change. Business entities, vendors, and other officials you work with should also be notified.

Step 4: Obtain a New EIN (optional)

You might need to apply for a new EIN based on the LLC ownership transfer. After officially transferring ownership, you must check with the IRS whether you need a new EIN. There is a formal form to notify the IRS about the LLC ownership transfer. Get the form from their website, enter the details, and submit it. You will get notified whether you need to apply for a new EIN.

Why Transfer LLC Ownership in North Dakota

There can be several reasons why the transfer of LLC ownership in North Dakota takes place in any organization. Some of the most common reasons include the following-

Death of the LLC owner
Separation or Divorce of the LLC Owners
LLC owners do not wish to continue their association with the organization
LLC owners want to appoint a new member (owner)
LLC owners want to sell the business off to someone else

These are some of the common reasons why an LLC ownership gets transferred in North Dakota. Transferring LLC ownership requires a comprehensive LLC operating agreement in North Dakota. This is an internal document every LLC should have at the time of formation.

The Role of North Dakota Operating Agreement in LLC Ownership Transfer

Creating an Operating Agreement in North Dakota is one of the major steps in forming a limited liability company (LLC). However, many states do not require an Operating Agreement. California, New York, Delaware, Maine, Nebraska, and Missouri are the states where an LLC operating agreement is mandatory.

Even when your state does not necessarily need you to file the operating agreement, it is recommended that you should have it to avoid any internal disagreements or issues in the future.
LLCBuddy Editorial Team

An operating agreement is an internal document explaining all the procedures, including ownership transfer, dissolution, LLC operation, members, and other LLC-related processes. Operations, such as dissolution and ownership transfer, occur based on those written regulations.

If there is no North Dakota Operating Agreement or it does not have clear ownership transfer or buy-sell agreement provisions, the transfer takes place based on North Dakota state law.

What to Include in North Dakota Operating Agreement

This official document outlines the company’s structure, the members’ details, the dissolution process, and a lot more. Hence, it is always wise to have one to avoid any confusion in the future, whether your state needs it or not. The LLC operating agreement should have the following points-

Whether LLC members are related to each other and what type of relationships they share
Managers’ rights and responsibilities
Operating Agreement Amendment conditions
Members’ profit and loss shares
North Dakota LLC Tax structures
Transfer of ownership rules and procedure
Dissolution of North Dakota LLC

If your operating agreement explains all the above points, you must follow it for the ownership transfer.

Reasons to Transfer North Dakota LLC Ownership

There can be many issues that lead to ownership transfer. One of the most common issues is the death of the owner. There can be other issues where transfer of ownership occurs. Here are some issues to consider,

Divorce Or End of Marriage: In some cases, according to the divorce decree, the ownership transfers to the spouse. If the LLC in North Dakota has an operating agreement and the ownership transfer condition is specified, then the LLC must follow the North Dakota operating agreement to proceed.

Death of a Member: This is the most common issue in LLCs. In North Dakota, if a member dies, the ownership, by default, transfers to the legal heirs of the deceased person. However, in this case, the legal heirs (wife/husband/kids) do not get any managerial power or authority. They continue enjoying the benefits, such as a share of the profit and others. But they won’t get any other power in the company. In such situations, other members of the North Dakota LLC often buy out the deceased’s interests.

Dissolution of North Dakota LLC: If any member/owner plans to leave the company, the LLC gets dissolved and reformed with the new policy and operating agreement. The members and managers make this sort of decision at the time of the creation of the operating agreement.

FAQs

How do I transfer ownership of my North Dakota LLC?

To transfer ownership of your North Dakota LLC, you would typically need to execute a written agreement that outlines the details of the transfer.

Are there any specific requirements for transferring ownership of a North Dakota LLC?

North Dakota does not have any specific requirements for transferring ownership of an LLC, but it is recommended to consult with legal professionals to ensure that the transfer is valid and legally binding.

Do I need to file any documents with the state when transferring ownership of my North Dakota LLC?

While North Dakota does not require LLC ownership transfers to be reported or filed with the state, it is a good practice to update the LLC’s operating agreement and membership records.

Can I transfer ownership of my North Dakota LLC to a non-resident?

Yes, you can transfer ownership of your North Dakota LLC to a non-resident, as there are no residency requirements for LLC ownership in North Dakota.

Can I sell my North Dakota LLC to another individual or business?

Yes, you can sell your North Dakota LLC to another individual or business, as long as the terms of the sale are clearly outlined in a written agreement.

What steps should I take to transfer ownership of my North Dakota LLC?

The first step in transferring ownership of your North Dakota LLC is to review the LLC’s operating agreement and any existing contracts to understand any restrictions on transferring ownership.

Is it important to update the operating agreement when transferring ownership of a North Dakota LLC?

Yes, it is important to update the operating agreement of your North Dakota LLC when transferring ownership to reflect the changes in ownership and the new members of the LLC.

How do I add a new member to my North Dakota LLC?

To add a new member to your North Dakota LLC, you would need to amend the LLC’s operating agreement and update the membership records with the new member’s information.

What information should be included in the ownership transfer agreement for a North Dakota LLC?

The ownership transfer agreement for a North Dakota LLC should include details such as the names of the current members, the name and address of the new member, the percentage of ownership being transferred, and the effective date of the transfer.

Can an ownership transfer agreement for a North Dakota LLC be revoked?

Ownership transfer agreements for North Dakota LLCs typically cannot be revoked once they have been executed, unless both parties agree to cancel the agreement in writing.

Can ownership of a North Dakota LLC be transferred without a written agreement?

While it is possible to transfer ownership of a North Dakota LLC without a written agreement, it is not advisable. Having a written agreement protects all parties involved.

What is required to transfer ownership of a North Dakota LLC?

To transfer ownership of a North Dakota LLC, you will need to update the LLC’s operating agreement, update the ownership information with the Secretary of State, and potentially update any tax forms or filings.

How do I update the ownership information with the North Dakota Secretary of State?

You can update the ownership information of your North Dakota LLC with the Secretary of State by filing a Statement of Change form.

Does transferring ownership of a North Dakota LLC require a new EIN?

Transferring ownership of a North Dakota LLC does not require obtaining a new EIN as long as the structure of the LLC remains the same.

Can a North Dakota LLC operating agreement prohibit or restrict the transfer of ownership?

Yes, a North Dakota LLC operating agreement can prohibit or restrict the transfer of ownership as long as it is stated in the agreement.

How are ownership interests in a North Dakota LLC typically transferred?

Ownership interests in a North Dakota LLC are typically transferred through the sale or assignment of membership interests.

Are there any tax implications when transferring ownership of a North Dakota LLC?

There may be tax implications when transferring ownership of a North Dakota LLC, so it is advisable to consult with a tax professional.

Does North Dakota have any specific rules or regulations regarding transferring LLC ownership?

North Dakota does not have any specific rules or regulations regarding transferring LLC ownership beyond the usual requirements of updating the Secretary of State.

How long does it take to transfer ownership of a North Dakota LLC?

The time it takes to transfer ownership of a North Dakota LLC can vary depending on how quickly the necessary paperwork is filed with the Secretary of State.

Can I transfer my North Dakota LLC to another person?

Yes, you can transfer ownership of your North Dakota LLC to another person by following the required steps outlined by the state.

Do I need to notify the North Dakota Secretary of State when transferring ownership of my LLC?

Yes, you are required to notify the North Dakota Secretary of State when transferring ownership of your LLC by filing an amendment to your articles of organization.

What documents do I need to transfer ownership of my North Dakota LLC?

You will need to prepare a written agreement outlining the terms of the transfer, as well as any necessary amendments to the operating agreement.

Can I transfer ownership of my North Dakota LLC to my family member?

Yes, you can transfer ownership of your North Dakota LLC to a family member by following the necessary procedures set forth by the state.

Do I need to gain consent from other members when transferring ownership of my North Dakota LLC?

Depending on your LLC’s operating agreement, you may need to gain consent from other members before transferring ownership.

Can I transfer ownership of my North Dakota LLC online?

In North Dakota, certain paperwork for transferring ownership may be filed online, so it is advisable to check with the Secretary of State’s website for more information.

What happens to the North Dakota LLC’s debts and liabilities when you transfer ownership?

The North Dakota LLC’s debts and liabilities remain with the LLC, regardless of changes in ownership.

Can I transfer ownership of a North Dakota LLC without the consent of other members?

Depending on your LLC’s operating agreement, you may need the consent of other members before transferring ownership.

Are there any fees associated with transferring ownership of a North Dakota LLC?

Yes, there may be fees associated with transferring ownership of a North Dakota LLC, such as filing fees with the Secretary of State.

Do I need to update the North Dakota LLC’s registered agent when transferring ownership?

It is advisable to update the North Dakota LLC’s registered agent when transferring ownership to ensure proper communication and compliance with state regulations.

Can I transfer ownership of my North Dakota LLC without drafting a written agreement?

It is highly recommended to draft a written agreement when transferring ownership of a North Dakota LLC to clearly outline the terms and conditions of the transfer.

In Conclusion

As you all know, forming a limited liability company is much easier than forming a corporation, a partnership, or any other type of business. The ease of transferring ownership from one to another is one of the many reasons for entrepreneurs to start an LLC. In North Dakota, transferring LLC ownership does not need a lot of paperwork or steps. You must update the formation papers with the new ownership information, file the amendment to the formation document, tell people about it, and comply with the state.

Though it seems easy to file documents while transferring ownership, it could be more complex than just these steps. Based on the local regulations, nature of business, or some other administrative rules, transferring ownership in North Dakota might take more than what it looks like. It is recommended to consult a professional or attorney before you take such an important business decision.