What Is a Delaware LLC Operating Agreement?
A Delaware LLC operating agreement is a legal document that is used by LLCs to outline how they will operate. It helps establish guidelines for how the company will function. For example, it outlines aspects like:
- Ownership interests
- Member responsibilities
- Profit and loss distributions
- Rules for adding or removing a partner
Delaware is known for its flexible LLC laws. Under 6 DE Code § 18-106(c), the state gives LLC members broad freedom to decide how their business will function. This essentially means that members can customize their operating agreements and set their own rules.
Delaware recognizes written, oral, or implied operating agreements (6 DE Code § 18-101(9)). Legal Templates’s free Delaware LLC operating agreement template makes it easy to put these rules in writing and keep everyone on the same page. Having a written agreement is preferable because it establishes clear company guidelines and can help avoid disputes about the LLC’s operating rules.
Even if your LLC has only one member, a written operating agreement can help organize important business rules and create a clear record of ownership. Delaware recognizes operating agreements for single-member LLCs (6 DE Code § 18-101(9)). If your LLC has multiple owners, consider using a multi-member LLC operating agreement.
Does Delaware Require an Operating Agreement for an LLC?
No, Delaware does not require LLCs to create a written operating agreement. Unlike articles of organization, you do not need to file an operating agreement with the state. Having a written agreement is still highly recommended as it helps establish clear rules for all members and avoids misunderstandings.
It also allows members to create rules that meet their business needs rather than relying on Delaware’s default LLC laws. For example, an operating agreement can:
- Help protect members’ personal assets
- Establish a process for adding or removing members
- Explain how ownership changes will be handled
Delaware LLC Operating Agreement Legal Considerations
While Delaware LLCs offer significant flexibility, several state laws may affect how your operating agreement is structured.
Management Structure
In Delaware, LLCs are member-managed by default. All members have the authority to participate in managing the business. You can choose to create a manager-managed structure. If you choose this structure, your agreement should clearly identify the manager and their responsibilities (6 DE Code § 18-402).
Amendment Procedures
The agreement should explain how future changes will be handled and approved. With clear amendment procedures, members can avoid disputes and ensure that everyone understands how decisions will be made.
Delaware law also allows LLC members to customize voting and approval requirements (6 DE Code § 18-302). You can choose to require:
- Unanimous approval
- Majority approval
Or perhaps set another voting threshold that better meets the business’s needs. To update your agreement, you can use our amendment to an LLC operating agreement template.
Member Access to Company Information
An operating agreement can outline what company records members may access. Under 6 DE Code § 18-305, members have the right to request information about the LLC. Allowing members to access these records creates transparency.
Dissolution
A Delaware LLC operating agreement may include rules for dissolving the business. You can include events that trigger dissolution so there is a clear understanding of what may cause the business to end (6 DE Code § 18-801). You can further outline, for example, how assets will be distributed and the steps required to properly wind up the business (6 DE Code § 18-803).
Sample Delaware LLC Operating Agreement
View a sample Delaware LLC operating agreement template below to see how you can customize ownership, management, and voting rules for your business. Use our step-by-step questionnaire to customize and download yours in PDF or Word.
