A limited liability company’s operating agreement or company agreement is similar to a corporation’s shareholder agreement, and provides for the management of the LLC, and the rights and duties of the owners of the LLC (members) and the managers of the LLC, if any.
Specifically, the LLC operating agreement should address the company’s finances, capital contributions, percentages of ownership, voting rights, meetings, notices, buyouts, distribution of profits and losses, officers, and other matters. Limited liability companies generally may be managed by the members or by appointed or elected managers.
In Texas, a limited liability company (LLC) is governed by its operating agreement, also known as a company agreement. This document is crucial as it outlines the internal operations and structure of the LLC, similar to how a shareholder agreement functions for a corporation. The operating agreement should detail the financial aspects of the LLC, including capital contributions, ownership percentages, and the distribution of profits and losses. It should also specify voting rights, the procedures for meetings and notices, and the protocols for buyouts. Additionally, the agreement delineates the rights and responsibilities of the LLC's members and, if applicable, the managers. Texas law allows LLCs to be member-managed or manager-managed, and the operating agreement should clearly state the management structure chosen. While Texas does not require an LLC to have an operating agreement, it is highly recommended to have one to ensure smooth management and operation of the LLC, and to protect the members' interests.
