Can an LLC Invest in the Stock Market?

A limited liability company, or LLC, is a business entity that combines the best features of a partnership and a corporation. The purpose of an LLC is to act as a liability shield and as a separate legal "person" for purposes of conducting business with other companies and persons.

By operating as an LLC, its owners, referred to as "members," are shielded from liability and can divide ownership and management responsibilities according to an operating agreement.

Powers of the LLC

An LLC can do just about anything a regular person can do, including owning property. This makes it possible for an LLC to purchase and own stock just like a private individual can. Indeed, some LLCs are organized for the purpose of buying shares in other companies. These are sometimes referred to as "holding companies."

Buying stock as an LLC starts with a document called an "operating agreement."

Automatic Permission

Under most state regulations, an LLC must function according to its operating agreement. This is a document that outlines the procedures by which an LLC can be organized, how it will be managed and for what purpose it will operate.

Specified in the operating agreement are all the terms and permitted activities. One such activity can be to purchase, sell and control shares of stock in other companies. Naturally the operating agreement will have to describe the process by which shares will be acquired and managed, and by whom.


Unlike a corporation, an LLC can be managed for all intents and purposes by a single individual. This person is most often referred to as the "managing member." They do not necessarily have to own a majority share of the company, but they do have to be authorized in the operating agreement.

If the LLC is meant to manage shares of other companies, the operating agreement will have to specify whether it is the managing member, his or her authorized agent or some other person who will control how stock owned by the LLC is managed.

Shareholder Responsibilities

It occasionally becomes necessary for shareholders in a company, public or otherwise, to vote or to conduct business in their role as owners of the company's assets.

If shares are owned by an LLC, it will be necessary for the limited liability company, through its management, to either appoint a proxy or agent to vote their shares and act as a liason for the organization, or create some mechanism so the LLC can respond to requests for action on behalf of the shares it owns. These are among the various details that have to be covered in an operating agreement.

In some cases, companies like Maverick Trading control both capital and shares which can be allocated and managed by their own members. There is nothing stopping an organization from appointing multiple managers to handle various ownership stakes in other enterprises. In fact, this is the model under which many private investment firms operate.

The key feature of the LLC is its flexibility. It is an entity which gives its owners a wide variety of options and many different business opportunities which are either difficult or impractical with other structures.

About the author

Anthony M. Christensen is a writer, digital marketer, contractor at Webaholics, and owner of Astronautical LLC. He earned a BS in English at Utah Valley University. He loves art and wandering the mountains and deserts of his native state, Utah. Connect with him on LInkedIn.


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