Limited Liability Company (LLC) operating agreements (collectively operating agreements) are entered into between the members of the company or between the single member of the company and the LLC itself.

In the state of Missouri,United States, the law requires that each LLC have an operating agreement ready.

What is a Missouri LLC Operating Agreement?

The operating agreement is a comprehensive tailor-made document which stipulates the financial aspects of the company, such as the member contributions, division of profits and losses and the method of dissolution of the company.

The operating agreement also discusses the operational aspects of the company, such as the powers vested between each member, the voting rights held by the member and the meetings that are held to discuss the operations of the LLC.

An operating agreement is no more than fifteen to twenty pages (however that depends on the requirements of the LLC) and need not be filed with the state where the LLC is incorporated. Moreover, it is for the internal reference of the company and does not need to be disclosed to the public as well.

In the state of Missouri, there are default rules that govern the operation of an LLC. However, the LLC members can choose to override the provisions with a written operating agreement with provisions and conditions of their choice.

The state of Missouri does not require notarization of the operating agreement for it to be valid and enforcing between the parties.

When Do I Need a Missouri LLC Operating Agreement?

A Missouri LLC operating agreement must be signed electronically or on paper immediately after the incorporation of your LLC in the state of Missouri . An operating agreement is different from the Articles of Organization, which provides a greater description of the constitution of the company and its purposes.

Unlike an Article of Organization of the company which is filed with other documents upon the incorporation of the LLC, the operating agreement does not need to be filed as per the laws of the state of Missouri . The operating agreement is an internal document for the company to ascertain whether the members deserve operational and managerial control over the day to day operations of the LLC due to their financial contributions to the company.

The primary purpose of the Missouri LLC operating agreement is to record the financial contributions of the members to the company. Since that is an internal matter to be decided amongst the members of the LLC, the document is not required to be disclosed.

Furthermore, when entering into such an operating agreement, its negotiations must begin prior to the incorporation of the LLC to ensure that there are no conflicts once the LLC is incorporated.

What Is Included in a Missouri LLC Operating Agreement?

An operating agreement will include terms such as:

Structure of the Company:

The initial clauses of the operating agreement will reflect the purpose of the company, its constitution and details of its incorporation in the state of Missouri as found in the Articles of Organization. However, such clauses are merely ancillary provisions of the agreement.

Percentage of Ownership:

The crucial portion of the operating agreement lies in the clauses which determine the (i) financial contribution of the members and their (ii) rights to the percentage of profits and losses in the company.

Additionally, the drafters of operating agreements must take adequate care to ensure that the personal assets of the members of the company are not linked to the LLC’s assets. The primary reason for creating an LLC (other than tax reasons) is to ensure that the assets of the members are not affected by the circumstances of the LLC.

Voting rights:

Occasionally, members of LLCs are solely interested in the financial benefits of the LLC and not in its managerial and organisational positions. Therefore, voting rights are not proportionate to financial contributions of the company and they are decided amongst the members on a case to case basis.

Meetings have to be held by the members to discuss operations of the company. Rules pertaining to holding a meeting, notices and attendance for such a meeting are also provided within the agreement.

Dissolution of the Company:

The winding up of the company and the distribution of assets and profits thereof are mentioned at the end of the agreement.

Key Considerations

The following points must be kept in mind:

What is the consequence of not entering into an operating agreement?

First, the state laws of Missouri will apply in the event of a legal conflict governing the LLC if there is no LLC agreement between the parties. The state laws always aim for an equal treatment of members of an LLC despite the contribution of the members, financially or operationally.

Second, it ensures that any future mismanagement or conflict between the members is resolved by the provisions in the agreement. It also saves expensive legal costs of clarifying such an issue in court.

Is it necessary for me to enlist a lawyer for an operating agreement?

Modifications to an agreement where a new member is added to the LLC and the financial and operational contributions are altered, would require assistance from a commercial lawyer familiar with the laws of Missouri . Minor modifications for correcting errors, changing address and other ancillary provisions can be modified by the parties themselves.

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It is important to sign a Missouri LLC operating agreement which defines the legal relationship between the members of the LLC incorporated in Missouri or between the members and the LLC itself. The operating agreement can always be modified to draft appropriate clauses which appropriately encapsulate the changing nature of its business.

If you are looking to enter into an operating agreement for your LLC in Missouri , CocoSign has templates for different Missouri LLC Operating Agreements along with templates for different LLC Operating Agreements as well.

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