The Operating Agreement
In most cases, the members of a limited liability company (LLC) sign an "operating agreement." An operating agreement is nothing more than a contract between the members.
It spells out how the members will deal with each other, the rights of any manager, the activities and affairs of the LLC, and the means of amending the operating agreement. I.C. § 30-25-105(a)(1)-(4).
If something is not addressed by the operating agreement or there is no operating agreement at all, Idaho Code will "fill in the gap". I.C. § 30-25-105(b).
The LLC members have a great deal of control over the terms of the operating agreement. In short, the operating agreement can be customized to meet the needs and desires of the members. But an operating agreement may NOT:
- Change the applicable law from Idaho law to some other state's law.
- Limit an LLCs ability to sue or be sued.
- Change Idaho law on registered agents.
- Change the reports that must be filed with the Idaho Secretary of State.
- Vary the liability for an inaccurate record filed with the Idaho Secretary of State.
- Alter or eliminate the duty of loyalty or care except as expressly allowed by Idaho Code.
- Eliminate the contractual duty of good faith and fair dealing entirely.
- Relieve or exonerate a person from liability for bad faith, willful or intentional misconduct, or knowing violation of the law.
- Unreasonably restrict members access to LLC records and information.
- Vary the causes of dissolution stated in Idaho Code.
- Vary the requirement that an LLC be wound up after dissolution.
- Unreasonably restrict a members ability to sue the LLC.
- Restrict the power of a special litigation committee (if such a committee is not eliminated by the operating agreement).
- Vary the rights of a member to approve a merger, interest exchange, conversion or domestication provided by Idaho law.
- Vary the required contents of a plan of merger, interest exchange, conversion or domestication under Idaho law.
- Restrict the rights of nonmembers or nonmanagers except as allowed by Idaho Code §§ 30-25-106 and 30-25-107(b).
A limited liability company is bound by and may enforce the operating agreement even if it did not sign it. I.C. § 30-25-106(a).
If a person becomes a member of an LLC, he or she is deemed to have accepted the written operating agreement. I.C. § 30-25-106(b).
An operating agreement may require approval of a nonparty for an amendment to be effective. I.C. § 30-25-107(a). For example, if a parent passes an LLC business to her children, she can state that the children can not amend the operating agreement without her approval even though she is not a member. Id.
If a filing with the Idaho Secretary of State conflicts with operating agreement, the operating agreement controls as to the members. I.C. § 30-25-107(d)(1). But, third-parties may rely on the filed record if it is reasonable to do so. I.C. § 30-25-107(d)(2).