What must an LLC member typically receive upon withdrawal, if allowed by the Operating Agreement?

An LLC member typically receives the return of their capital contribution upon withdrawal if allowed by the Operating Agreement. This is because, in most jurisdictions, an LLC is treated as a pass-through entity where members' capital contributions are considered ownership stakes in the business. When a member withdraws, they often have the right to recoup at least their initial investment, assuming the Operating Agreement permits such a distribution.

The concept of capital contribution reflects the amount of money or property the member initially invested in the LLC. Upon withdrawal, members usually seek to reclaim this amount before any profits or losses are considered, which makes it a foundational right.

In terms of the other options, an automatic dividend distribution is not guaranteed, as dividends typically arise from profits rather than from a member's equity stake. Receiving a full payout of potential profits is contingent upon the LLC being profitable, and even then, distributions usually follow specific guidelines as outlined in the Operating Agreement. Lastly, stating that no financial return is guaranteed overlooks the expectation that members can at least retrieve their original contributions when they exit the company, which the Operating Agreement would typically allow for.