Unit

A unit is a record and indication of ownership in a limited liability company (LLC). In that sense, it’s like the more familiar terms “stock” or “shares” (the two terms are synonymous), each of which indicate ownership in a corporation. Units give their owners certain rights in LLCs. One of the principal rights is the voting right — that is, to vote the Units in the LLC when decisions requiring a vote are necessary. Those who hold units in an LLC are referred to as “members,” which is substantially the same as the more familiar terms “stockholder” or “shareholder” (again, synonymous), each of which are the titles for owners in a corporation. Units are also a form of personal property, just like stock is personal property. That is, it is something that can be owned, bought, sold, and so on. A strange fact about the term unit is that, at least here in Oregon, there’s no mention of the term anywhere in the Oregon Limited Liability Company Act. It doesn’t show up once. But, lawyers and owners of LLCs continue to use it, not only here in Oregon, but in other states as well. Some LLC owners prefer to use the term “membership interest” instead of unit to define what is owned by the LLC owners. Using either unit or membership interest is correct. It’s mostly a matter of personal preference. Membership interests are typically defined by percentages. For example, if there are two owners in an LLC, and each owns half, then each owner would have a 50% membership interest in the LLC. When an LLC is raising capital, units are preferable, as the exact amount of ownership in the company is more easily defined, particularly when determining what the purchase price will be. Stated differently, identifying the value of an LLC unit can be more accurate than identifying the value a percentage interest in an LLC.