Legal Question in Securities Law in California

Re: how to transfer target membership shares in llc

I'm uncertain what you mean by "target membership shares" in an LLC. Searches using both WestLaw and Google failed to return any relevant uses of the phrase.

It's possible that this LLC has an open-ended membership and has authorized but unissued membership interests which it's trying to sell, and that this is what's meant by the phrase you used. If so, here's my opinion:

If the membership interests are authorized, but unissued (or unsold) and never have been issued or sold, I believe they can be disclosed, then largely disregarded. These never-issued interests would be like authorized but unissued stock in the case of a corporation. It's sort of like a couple that has two children and plans to have three more. The planned-but-unborn ones don't exist so they aren't tax exemptions yet, but the intent to have them should be disclosed in certain situations (e.g. to their agent when buying a house).

As to your other questions, and because my answer to the target membership question is based on a guess, I strongly suggest retaining a business attorney to draw up your documents and review the securities law and bulk transfer implications. This is especially true if the value of the transaction is in the $400,000 area, as you suggest, and if a formal escrow is being used to transfer ownership. More likely than not, the other party to the transaction is represented by counsel or at least obtaining advice from an attorney familiar with the deal.

I think your attorney will find relatively few problems or complications arising out of the matters you mention in your question. There will be need to file a form or two with the California Secretary of State. Your attorney should also review all the contracts and other deal documents between buyer and seller, and go over the LLC's organizational and operational records to make sure there are no errors or omissions that the new owners (or governmental investigators) could stumble across later on and bring suit against the sellers.