What Is a North Dakota LLC Operating Agreement?
A North Dakota LLC operating agreement is a legal document that outlines rules for how a limited liability company will operate. It helps members reach agreement on important business matters and serves as a reference point when questions or disagreements arise. This document commonly addresses:
- Each member’s ownership percentage
- Whether the LLC is managed by members or an appointed manager
- Voting rights and threshold before approving major business decisions
- How the LLC allocates profits and losses between members
- The process for adding or removing members from the LLC
- Steps for dissolving or winding up the LLC
In North Dakota, operating agreements are governed under ND Cent. Code § 10-32.1-13. Note that an operating agreement is an internal document. Unlike the articles of organization, you do not need to file the agreement with the North Dakota Secretary of State. You can keep it with your company records.
Is an Operating Agreement Required for an LLC in North Dakota?
No. LLCs in North Dakota are not required by law to have an operating agreement. However, creating one is still strongly recommended for both single-member and multi-member LLCs. If you do not create this document for your LLC, North Dakota’s default rules will apply to your business. These rules may not align with how you and other members may want to run your company.
Another reason why a written agreement is useful is that it shows that your LLC is separate from you. This distinction can be important for liability protection. Additionally, many banks and lenders may ask to review your agreement before allowing you to open a bank account or approve financing. Having a separate written agreement readily available can help you in that case.
You can use Legal Templates’s free North Dakota LLC operating agreement to create yours. Our guided form helps you enter your details quickly and ensures your agreement aligns with your business needs and state laws.
Legal Considerations for North Dakota LLCs
There are certain state requirements that you keep in mind when creating your document. Understanding these requirements can help ensure your document accurately reflects your business needs while complying with state law.
Management Structure
In North Dakota, you can choose how your LLC will be managed. Under ND Cent. Code 10-32.1-39, your LLC will be member-managed unless you specify that it will be manager-managed or board-managed. State law allows flexibility with the wording, as you can say that your LLC:
- Will be “manager-managed” or “board-managed.”
- Will be “managed by managers” or “managed by a board.”
- Will have its management be “vested in managers” or “vested in a board.”
Amendment Procedures
As your company evolves, you may need to update your operating agreement to reflect those changes. According to ND Cent. Code § 10-32.1-13(1)(d), an operating agreement may establish the method for making amendments. It’s a good idea to include the procedure members must follow to make changes to your operating agreement. If you need to revise an existing agreement, you can use an amendment to an LLC operating agreement template.
Access to Company Information
Under ND Cent. Code § 10-32.1-42, members have the right to obtain the company’s financial and business records. In your agreement, you can outline the steps for maintaining these records and the process for sharing information.
Dissolution and Wind-Up
According to ND Cent. Code §§ 10-32.1-50 and 10-32.1-51, an LLC may be dissolved under certain circumstances. Your operating agreement should include a dissolution provision that outlines the steps members can take to dissolve and wind up the business. This may include things like:
- Paying outstanding debts
- Settling company obligations
- Distributing remaining assets
Sample North Dakota LLC Operating Agreement
Review a sample North Dakota LLC operating agreement template below to understand how to put your company rules in writing. When you’re ready, use our guided questionnaire to create your personalized agreement and download it in PDF or Word format.
