Operating Agreement (also known as an LLC Agreement):
10 Commonly Asked Questions and Answers
- Whether an operating agreement or LLC agreement needs to be in writing? No. An operating agreement does not need to be in writing. However, it is strongly suggested that an operating agreement or LLC agreement be in writing.
- Can an LLC have only one member? Yes
- Can a member be an individual or a company? Yes, a member can be a person or company. A member can also be a non-profit organization, partnership or even a trust.
- Can an operating agreement or LLC agreement waive any provisions of the FL Revised Limited Liability Act? An operating agreement can waive or set forth different rules for the company, except for the non-waivable provisions set forth in Fl. Stat. Section 605.0105(3) and (4).
- Can you limit a member’s authority in the company? Yes, members can limit some or all of the member’s authority in the company by expressly stating so in the operating agreement.
- Does a capital contribution in the company have to be in cash? No. A capital contribution can also be in the form of tangible or intangible property, services rendered (employment or sweat equity), promissory notes or through some other form of remuneration unless otherwise prohibited by the operating or LLC agreement.
- Can an operating agreement contain provisions to protect the other members from creditors, heirs or spouses of another member? Yes. An operating agreement can contain provisions to restrict the voting rights and/or management rights of a third party who becomes a member/owner through a separate legal process. The operating agreement can even contain a provision that requires the purchase of that member’s shares.
- Can an operating agreement deal with disputes between the members? Yes. An operating agreement can address what happens in the event of a dispute between the members and how the members will resolve that dispute.
- Can an operating agreement limit the compensation that a member or manager receives? Yes, an operating agreement can restrict the members or the management’s rights to determine compensation for any member or employee.
- Can an operating agreement contain a preferred litigation/dispute resolution method for the company and its members? Yes. An operating agreement can set forth what process the members have to use when to bring legal action against another member of the company.
The legal issues surrounding an operating or LLC agreement can be complex. It is important that you consult with a lawyer who can discuss the unique nature of your business and develop an agreement that sets forth the rights and obligations between the members clearly. For more assistance or consultation, contact The Campbell Law Group, P.A. today.