Operating Agreement
The internal governance document of a Limited Liability Company (LLC), defining ownership, management, member rights, and operational rules of the LLC.
What it means
An operating agreement is to an LLC what bylaws are to a corporation and a partnership agreement is to a partnership. It defines member ownership percentages, capital accounts, distributions, voting rights, manager-vs-member-managed structure, transfer restrictions, buy-sell provisions, and dissolution. Most states allow LLCs to operate without one, but defaulting to the state's LLC statute usually does not match the members' commercial intent.
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