Which of the following statements best describes “limited liquidity” in an LLC?

Limited liquidity in a Limited Liability Company (LLC) primarily refers to the restrictions on transferring membership interests among members and to third parties. The correct statement highlights that the transfer of membership interests requires unanimous consent. This means that members cannot freely sell or transfer their ownership stakes without the approval of all current members, thereby maintaining control over who can become a member of the LLC and ensuring that existing members have a say in the composition of the ownership.

The other statements inaccurately depict the liquidity of interests in an LLC. They suggest scenarios that are not typically applicable to LLCs. Specifically, the notion that members can sell their interests freely or that liquidity is guaranteed does not align with the common operational agreements in LLCs; such agreements usually include restrictions to protect the interests of the existing members. Additionally, the idea that members can withdraw their funds without restrictions contradicts the structure of an LLC, where financial distributions and withdrawals are usually governed by the operating agreement and might be subject to specific conditions or limitations. Thus, the emphasis on the need for unanimous consent correctly captures the essential nature of limited liquidity in this business structure.