Can an LLC issue stock?

• A. Yes, it can issue stock to attract investors
• B. No, an LLC cannot issue stock
• C. Only preferred stock can be issued by an LLC
• D. Yes, but only private stock

Answer: (B)

An LLC, or Limited Liability Company, is a distinct legal structure that combines elements of both corporations and partnerships. One fundamental characteristic of LLCs is that they do not have stock in the same way that corporations do. Instead of issuing shares of stock, an LLC has members who own a membership interest. This structure allows for greater flexibility in management and taxation but lacks the capability to issue stock.

The inability to issue stock limits an LLC's straightforward access to raising capital through the sale of equity, which is a primary way corporations attract investors. LLC ownership is usually reflected through member units or percentage interests rather than stock shares, which is a defining feature of corporations. Therefore, the correct understanding is that an LLC cannot issue stock in any form, which makes the option that states "No, an LLC cannot issue stock" accurate.