North Dakota LLC Operating Agreement
The North Dakota LLC Operating Agreement is the core document that is referred to when issues concerning a North Dakota limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your North Dakota LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the state of North Dakota.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the state of North Dakota will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your North Dakota Limited Liability Company
LLC Filing Office
Entity or Franchise Level Tax
Dakota does not require partnerships, LLCs taxable as partnerships,
or disregarded single-member LLCs to pay a general net worth
tax based on net income.
State LLC Act
The North Dakota LLC Act is contained in Title 10-32 of the North Dakota Century Code.
The North Dakota LLC Act
Important Statutory Rules
The North Dakota LLC Act presupposes management by a board of governors. The law specifies that LLCs must have one or more governors elected by the members who serve until re-election at the next regular meeting of members, or for an indefinite term if no such meeting is scheduled in the Operating Agreement.
Section 10-32-69(2) recognizes LLC rights to adopt membership management. Members may act in the place of the governors as long as they make management decisions by unanimous vote.
The Statute also requires the appointment or election of two persons who function as the LLC president and treasurer, but who are called managers.
Admission of Members
There is no statutory requirement for admission of members. The Operating Agreement shall govern how members are admitted to the LLC. Unless otherwise provided in the Operating Agreement, the admission of a transferee as a member must be approved by the unanimous written consent of all non-transferring members.
Amending the Operating Agreement
If membership management is adopted, amendments to the Operating Agreement require the approval of all members.
Unless otherwise specified in the Operating Agreement, approval of a majority of the voting members is required to voluntarily dissolve the LLC.
If the members will be making all management decisions in place of the board of governors, the president’s primary responsibility will be acting as first-in-command in running the LLC, as well as performing various ministerial functions such maintaining the books and records of the LLC and signing and delivering all documents relating to the business of the LLC.
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