Can I Sell Subscriptions to My LLC to the Public?

Full question:

Can I sell subscriptions to my LLC to the general public?

• Category: LLC
• Date: 04/07/2025
• State: California

Answer:

Yes, it is possible for a LLC to offer units for sale to the public. However, such offerings are subject to regulation by the SEC. Please see the information at the following links for further discussion:

http://www.sec.gov/info/smallbus/qasbsec.htm
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=25001-26000&file=25100-25105

Please see the following CA statute:

25019. "Security" means any note; stock; treasury stock; membership
in an incorporated or unincorporated association; bond; debenture;
evidence of indebtedness; certificate of interest or participation in
any profit-sharing agreement; collateral trust certificate;
preorganization certificate or subscription; transferable share;
investment contract; viatical settlement contract or a fractionalized
or pooled interest therein; life settlement contract or a
fractionalized or pooled interest therein; voting trust certificate;
certificate of deposit for a security; interest in a limited
liability company and any class or series of those interests
(including any fractional or other interest in that interest), except
a membership interest in a limited liability company in which the
person claiming this exception can prove that all of the members are
actively engaged in the management of the limited liability company;
provided that evidence that members vote or have the right to vote,
or the right to information concerning the business and affairs of
the limited liability company, or the right to participate in
management, shall not establish, without more, that all members are
actively engaged in the management of the limited liability company;
certificate of interest or participation in an oil, gas or mining
title or lease or in payments out of production under that title or
lease; put, call, straddle, option, or privilege on any security,
certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof); or any put,
call, straddle, option, or privilege entered into on a national
securities exchange relating to foreign currency; any beneficial
interest or other security issued in connection with a funded
employees' pension, profit sharing, stock bonus, or similar benefit
plan; or, in general, any interest or instrument commonly known as a
"security"; or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of, or
warrant or right to subscribe to or purchase, any of the foregoing.
All of the foregoing are securities whether or not evidenced by a
written document. "Security" does not include: (1) any beneficial
interest in any voluntary inter vivos trust which is not created for
the purpose of carrying on any business or solely for the purpose of
voting, or (2) any beneficial interest in any testamentary trust, or
(3) any insurance or endowment policy or annuity contract under which
an insurance company admitted in this state promises to pay a sum of
money (whether or not based upon the investment performance of a
segregated fund) either in a lump sum or periodically for life or
some other specified period, or (4) any franchise subject to
registration under the Franchise Investment Law (Division 5
(commencing with Section 31000)), or exempted from registration by
Section 31100 or 31101.