Operating Agreement LLC Delaware

A Delaware Limited Liability Company (LLC) operates under a governing document called the Limited Liability Company Agreement (LLCA), also referred to as the Operating Agreement. This agreement, whether written, oral, or implied, outlines how the company is owned, managed, and operated.

Is a Limited Liability Company Agreement Required

Yes. Under the Delaware Limited Liability Company Act (6 Del. C. §18-101(7); §18-201(d)), every domestic LLC must have an LLCA that “shall be entered into or otherwise existing” at or before the filing of the Certificate of Formation. This requirement applies to both single-member and multi-member LLCs. Foreign LLCs registered in Delaware must also maintain an LLCA.

Although an oral or implied agreement is legally valid, a written and signed LLCA is strongly recommended. It provides clear evidence of ownership, management rights, and enforceability in court. Without a written document, the Delaware Court of Chancery may determine member intent based on correspondence or business conduct, which can increase the risk of disputes.

Key Provisions

A complete Delaware LLCA typically includes:

• Basic details: LLC name, purpose, duration, and registered agent information.
• Ownership and contributions: Each member’s ownership share, capital contributions, and rules for profit and loss distribution.
• Management structure: Whether the LLC is member-managed or manager-managed, including voting rights and decision-making procedures.
• Dispute resolution: Terms governing withdrawal, transfer of membership interests, indemnification, arbitration, and dissolution.

Legal Importance of a Written Agreement

A written LLCA serves several essential functions:

• Confirms limited liability: Demonstrates that the LLC operates as a separate legal entity, protecting members’ personal assets.
• Defines authority: Establishes ownership percentages and management powers to prevent internal conflict.
• Supports business operations: Many banks, lenders, and financial institutions require a copy of the agreement before approving loans or accounts.

Filing and Recordkeeping

The LLCA is not filed with the Delaware Secretary of State (SOS). Members must keep it with company records as part of their internal documentation. The agreement becomes effective upon execution by the members.