A Series LLC Operating Agreement Sample: A Comprehensive Guide
If you are planning to form a Series LLC, then crafting an operating agreement is necessary. An operating agreement is a document that outlines the management, financial, and legal aspects of your Series LLC. It also serves as a contract between the members (owners) of your company and helps prevent misunderstandings and conflicts.
An operating agreement must be customized based on your business`s needs and requirements. However, you can use a series LLC operating agreement sample as a starting point. This article provides a comprehensive guide on what to include in your operating agreement using a sample.
1. Introduction: The first section of your operating agreement should include the legal name of your Series LLC, the date it was formed, the state in which it was created, and the primary business purpose of your company.
2. Definitions: Define key terms used throughout the document, especially those that may not be familiar to all members. Examples of terms to define include “Series LLC,” “Series,” “Member,” “Manager,” and “Capital Account.”
3. Members: Outline the number and names of members in your company. Specify whether members are individuals or entities. Indicate the percentage of ownership vested in each member. You can also include information on how new members can be added to the LLC and how current members can withdraw from the LLC.
4. Management: Specify how the LLC will be managed. You can choose between member-managed or manager-managed LLC. A member-managed LLC means all members have a say in the management of the company. A manager-managed LLC means only selected managers have the authority to make decisions on behalf of the company. In this section, you can also indicate the powers and duties of the managers, how the managers are selected, their term limits, and how to remove them.
5. Capital Contributions: Specify the amount and nature of the contributions each member must contribute to start and run the LLC. Indicate the due date of all capital contributions. You can also include information on how to make additional contributions.
6. Profits and Losses: Specify how the profits and losses of the LLC will be shared among members. You can choose between per capita (equal sharing) or per stirpes (sharing based on the percentage of ownership) methods.
7. Distributions: Outline the frequency and procedure of distributing the profits of the LLC to members. You can also include information on how to make additional distributions.
8. Voting: Specify the rules for voting on company decisions. Define the voting rights of each member and if special voting rights exist for any member. You can also indicate the quorum required for a meeting to take place and how to validate a decision.
9. Transfer of Interest: Specify how a member can transfer their interest in the LLC to a third party. Outline the procedure for a member`s withdrawal or expulsion from the LLC.
10. Dissolution: Specify the steps required to dissolve the LLC, including the approval of members and the process to distribute the assets of the company.
Conclusion:
In conclusion, creating a comprehensive operating agreement is essential for your Series LLC. It provides clarity and direction for the management, financial, and legal aspects of your company. You can use a series LLC operating agreement sample as a starting point but tailor it to meet your business`s unique needs and requirements. Remember always to consult a legal advisor before finalizing your operating agreement.