A California multi-member LLC operating agreement is essential for establishing internal operating procedures governing the business functions of an entity with multiple owners. This legal document outlines each member’s financial investment, ownership percentage, responsibilities, and managerial rights, clarifying asset allocation and debt distribution in case of a company sale or dissolution.
While state law mandates the creation of an operating agreement for LLCs, it can be either oral or written. However, a written contract is highly recommended to ensure legal validity and enforceability, offering protection to members by separating personal assets from business liabilities.
