Is it Possible to Change an LLC Operating Agreement?
Not all states require a limited liability company to have an operating agreement, though you could be asking for trouble if you don't. The operating agreement is primarily an internal document that sets the legally binding standards and practices to be followed in running the LLC. The LLC members, as owners are called, must approve the operating agreement, and it is also up to them to approve any amendment to the agreement
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Purpose of Agreement
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An operating agreement can protect the LLC's limited liability status by solidly establishing the company's operations as an entity separate from its owners. The agreement also allows the members to avoid state default rules and to decide for themselves how the LLC should be run, including how profits should be divided. It is also with the agreement that the members define the company's management structure, the rules for decision making, and the voting and ownership rights of each member.
Voting to Change
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The LLC's initial operating agreement should decide what issues can be handled by a member manager, and those that must be decided by the full membership. One of the issues the agreement should address is how the agreement itself can be amended. You can decide to allow changes to the agreement by a simple majority vote, or by a higher percentage. The agreement will also specify if each member has an equal vote, or if their voting power is based on their percentage of ownership.
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Ownership Changes
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The operating agreement should detail the procedures to follow when a member leaves the LLC, or when a new member buys into the company. A change in ownership itself may require a change in the agreement on the division of ownership and voting rights. Any change due to the loss or addition of a member will need to be approved by the new slate of members.
Filing Agreement Amendments
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Amendments to an operating agreement will need to be filed with official company records and available for inspection at the company's place of business as specified in the LLC's articles of organization. If the LLC is required to file its operating agreement with the state, then any amendment to the agreement may also need to be sent to the state.
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