When should I amend my LLC Operating Agreement?
Typically, the limited liability company (“LLC”) Operating Agreement itself will stipulate how the Operating Agreement will be amended, modified, or revoked. As with any provision of the Operating Agreement, the drafters of the document have broad discretion in determining the procedures for amending, modifying, or revoking the Operating Agreement. For example, the Operating Agreement can provide that the unanimous consent of all members is required, that the consent of the majority-in-interest (over 662/3%) of the members is required, or that the consent of the majority (over 50%) of the members is required.
It is very important that you amend your LLC Operating Agreement when making a change to your business arrangement, such as, adding a member, changing the manager, making additional capital contributions to the LLC, or changing any other provision in the agreement.
When you amend your current Operating Agreement, the new Operating Agreement will effectively amend and restate the previous Operating Agreement of the entity. In other words, the new LLC Operating Agreement will supersede any previous LLC Operating Agreements of the entity (the previous agreements will be considered cancelled) and the LLC and its members will be governed by the new amended and restated Operating Agreement.
