Issuing membership interests in a California limited liability company may or may not involve the offer and sale of a security.  Securities are regulated by federal and state securities laws.  If you are forming a California LLC or if you have an existing LLC that intends to add one or more new members you must know if your LLC will be issuing a security so the LLC can take steps to comply with applicable securities laws.  Read our article called “California LLCs & Securities Laws” to learn when a California LLC issues a security and must comply with federal and California securities laws.

If your California LLC issues a membership interest that is a security and the transaction is exempt from registration with the SEC, the LLC must file a Notice of Transaction with the California Department of Business Oversight’s DOCQNET online filing system within 15 days of the transaction.  Unless the LLC qualifies for a hardship filing exemption (unreasonable burden or expense), the Notice of Transaction must be filed using the Department of Business Oversight’s online filing system.

This notice must be filed no more than 15 days after the LLC has their first sale of a security in a transaction in California.  A sale occurs when the LLC issues a membership interest for consideration or it enters into a contract to issue a membership interest for consideration.

The fee to file the Notice of Transaction based on the value of the securities that are to be sold.  The value of securities and their corresponding fee is shown below.

  • $0-$25,000 (fee of $25)
  • $25,001- $100,000 (fee of $35)
  • $100,001-$500,000 (fee of $50)
  • $500,001- $1,000,000 (fee of $150)
  • $1,000,001+ (fee of $300)