CBO for LLC member w undivided interest

We have a loan in process to an LLC that has a formation agreement that lists the members as "Joe Smith and Mary Smith - 67%" (and 2 others with less than 25% each.) The person signing the CBO form listed "Joe Smith - 67%" on the ownership prong and did not list Mary Smith. Has anyone run into this, where it appears husband and wife have an undivided interest in the LLC? Just not sure to question this, whether we need to also show Mary Smith?

Whether you consider the husband and the wife having divided interests or not, the fact of the matter is they both own more than 25% of the business.

True, I agree both should be listed in the ownership prong. Would it make sense to show percentage of ownership at 33.3% each?

Totally up to you since showing the ownership percentage anywhere would be totally a bank policy/procedural issue.

Side question, random thought in my head UNRELATED generally to the OP's question....

Maybe should be directed towards a corporate lawyer..... Can shares of a Corp be unowned? Imagine a loan taken out by a business to buy out a partner, say...... 33%, 33%. 33% owners but the money is used to buyout an owner.... they complete the BO Form as 33% and 33% with no one owning the other 33%. A corp can have unowned issued shares right? They shouldnt be disbursing that ownership into the remaining two owners to be 50/50.....

Maybe I am not understand your scenario correctly praBSA but if my brother and I buy your ownership shares, then wouldn't my brother an my shares in the company increase in some form?

The company bought the shares back, not the existing owners. There are no owners of the shares yet.

Essentially "unissued stock" or "authorized stock" at this point no for lack of a better term?

It is impossible for a corporation to own itself - so I am not sure where you are gong with this. .

The company took out a loan to buy back its stock, the stock is currently unissued but authorized. It's unowned is my point. In an LLC, member's ownership has to add up to 100%, but in corporations, I do not believe that is the case, which is why I'm asking the BO question. The customer reported ownership of the corporation as 33% and 33% because the other 33% is currently unowned. I guess my question is...... is that normal or should the ownership interest revert to 50/50 and we should be getting a new form because the situation they presented is not possible...??

Are you talking T-shares? If so, those shares are decommissioned (They can, at a later time, be reissued or cancelled).

It is not unusual for a corporation to retain authorized but unissued stock, but that does not mean the corporate owns a part of themselves. The remaining share holders own the company in whatever portion the current outstanding stock is issued.

This discussion helps a bunch. I don't think the bank has enough information to determine this on their own. I just remember a discussion popping up the other day about the bank having information in its loan file that disputed information that ended up in BSA regarding the BO Form. The only language I see is from what I was provided was that the Corp was buying back its shares from party C. Need more information.

Share buybacks are not suspicious when done appropriately. I'm guessing that this isn't a publicly traded company so you definitely need to ask some more questions.

Since you are not require to capture the percentage of ownership, just have the beneficial owner information when they exceed the require percentage of ownership - whether they own 33% each or 50% each really is neither here nor there. However, your employees should know that if two people say they own 33% each, they should ask who owns the other 33% and it can't be the company itself.

@ACB I'm not saying its at all suspicious. I just want to make sure we understand how the company is now structured after the buyback. Simple question that our customer should be able to answer. I saw someone in another thread say examiners noticed a comment about ownership in a loan file not matching the BO form and telling them they needed to correct it because they had information at the time of collecting the BO Form that didn't match the company's documentation. That same day I saw the post, someone mentioned the information in this loan file to me. I will have the loan officer follow up with the customer, get an answer and move on, no need to sweat it I guess.