A California limited liability company operating agreement must be legally executed by business owners that intend to operate an LLC in this state. California LLC members will use this agreement to formally name their company tax status, the membership roster, the company’s business activity, and the rules that govern it.
This agreement may be oral or written; however, in order to clearly demonstrate its legitimacy, a limited liability company should have a written and signed agreement that has been fully researched and executed by its members.
Is it Required in California?
Yes. The State of California requires that limited liability companies are required to have an operating agreement in place at the time of the entity’s formation.
Laws – § 17701.13(d)(5)
By Type (2)
Single-Member Operating Agreement – For limited liability companies with no more than one (1) member.
Multi-Member LLC Operating Agreement – For limited liability companies with two (2) members or more.
State Definition
“’Operating agreement’ means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in subdivision (a) of Section 17701.10. The term “operating agreement” may include, without more, an agreement of all members to organize a limited liability company pursuant to this title. An operating agreement of a limited liability company having only one member shall not be unenforceable by reason of there being only one person who is a party to the operating agreement. The term includes the agreement as amended or restated.”
Statutes
- CA Corp Code § 17701.02 (A)(2): “Executed to include substantially the following wording preceding the signature: ‘It is hereby declared that I am the person who executed this instrument which execution is my act and deed.'”
- CA Corp Code § 17701.02 (C)(1): “In order to become a member upon formation of the limited liability company and in accordance with an agreement between or among the persons that have agreed to become the initial members of the limited liability company.”
- CA Corp Code § 17701.02 (C)(1): “In order to become a member after formation of the limited liability company and in accordance with an agreement between the person and the limited liability company.”
