Greg Reigel's Aero Legal Services

The “Ins” And “Outs” Of LLC Statements In Support Of Aircraft Registration

By Gregory J. Reigel

© December, 2017 All rights reserved.

If you want to own an aircraft using a limited liability company ("LLC"), when you register the aircraft with the Federal Aviation Administration ("FAA") you will need to demonstrate that the LLC qualifies as a citizen of the United States. In order for an LLC to qualify as a U.S. citizen and be eligible to register an aircraft in its name 49 U.S.C. Section 40102(a)(15) requires that (1) 2/3rds of the LLC’s managers or managing members, are U.S. citizens, and (2) at least 75% of the LLC’s voting interest or units is owned or controlled by persons who are “U.S. Citizens” as defined in 14 C.F.R. §47.2.

Sometimes this means you have to “drill down” through an LLC’s organizational structure until you identify members that meet U.S. citizenship requirements (e.g. individuals who are U.S. citizens or a corporation that satisfies U.S. citizenship requirements). For example, this is the case if an LLC is a member of the LLC registering the aircraft.

Similarly, if a partnership is involved in the LLC as a member, manager, or officer, the statement should identify all general partners and each partner must be an individual who is a U.S. citizen as required by 49 U.S.C. 40102(a)(15)(B).

So, to convince the FAA that the LLC satisfies the citizenship requirements for registration of an aircraft, the FAA requires the LLC to submit a written statement at the time of registration that includes the following information and representations:

The full name of the LLC;
The state in which the LLC is lawfully organized;
The date the LLC was legally formed or organized;
The name of each of the members of the LLC and the type of entity of each member (i.e., individual, corporation, partnership, LLC);
Whether the LLC is managed by its member(s) or by manager(s) or officer(s);
The name of the manager(s) or officer(s), if applicable, and type of entity;
Whether the members, manager(s), or officer(s) may act independently; and
A description as to how each legal entity within the LLC structure supports a determination that the LLC is a citizen of the United States as required by 49 U.S.C. Section 40102(a)(15)(C).

The statement must be signed by a knowledgeable party and include the signing party’s title. But the statement does not have to be notarized, and the FAA will accept either an original signed statement or a facsimile copy.

Unfortunately, the FAA is very strict in terms of what title is acceptable for the signing party. For example, if an LLC is managed by a manager, the FAA will accept any title which includes the word “manager” (e.g., managing member, member manager, etc.). But the title of “member” alone would be unacceptable.

And if an LLC is managed by its members, the FAA will accept any title which includes the word “member” (e.g., managing member, member manager, etc.). But in this instance, the title of “manager” alone would be unacceptable.

An exception to the above rules is when the LLC documentation shows it to be managed by a managing member. In that case, “member” alone or “manager” alone is acceptable. Also, corporate type titles (i.e., president, vice-president, etc.) are unacceptable unless the LLC is managed by officers, and the specific officers’ titles are shown (i.e., president, vice-president, secretary-treasurer, etc.) In this case, neither “manager” nor “member” would be acceptable.

The key is to use a title/position that is granted management authority by the LLC in its governing documents. If you don’t use the correct title, the FAA will either reject the LLC statement or follow up requesting additional information/clarification, which will delay the registration.

Sometimes an LLC’s operating agreement will contain all of the information required to register, although typically citizenship is not addressed. But if the members are individuals or corporations, the FAA will accept the operating agreement unless it has some reason to question the LLC’s citizenship.

Finally, if the LLC’s management changes at a later date a written notice of the change must be filed with the FAA. The notice may be submitted in the form of a written statement, a copy of minutes of a meeting, an amended operating agreement, etc. However, the submitted document must explain any changes and provide the effective date of the changes.

LLC statements may not seem like a big deal, but the FAA is serious about them. Understanding why the FAA wants the statement and what information it needs will help you submit the LLC statement in a form that is acceptable to the FAA and complies with the regulations.

If you need help completing or amending an LLC statement, please feel free to contact me.