How to Amend an LLC Operating Agreement? (5 Steps Guide)

Delina Chantel Yasmeh
Published by Delina Chantel Yasmeh | Author
Last updated: March 19, 2024
Methodology
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It is crucial to keep a written internal document like an operating agreement, as it spells out the rules and regulations for your LLC. However, changes to an LLC's corporate documents should be done carefully and with legal advice from a law firm.

With years of experience in business law and expertise in LLC regulations, I’ve prepared a step-by-step guide to help you through amending an LLC operating agreement.

This guide will provide the necessary knowledge to navigate the amendment process smoothly, whether modifying ownership rights, updating financial provisions, or revising management roles.

Quick Summary

  • To amend an LLC operating agreement, draft a new operating agreement reflecting the changes, obtain signatures from all LLC owners, notarize the agreement, and file it with the state.
  • The process typically requires a majority vote from the LLC members, but this can vary based on the original agreement's terms.
  • According to the National Small Business Association, over 60% of small businesses, including LLCs, report needing to update or amend their operating agreements within the first five years to adapt to new regulations or changes in business structure.
  • I always highlight that amending an LLC Operating Agreement is crucial for maintaining clarity and efficiency in business operations.


Steps To Amend Your Original Agreement

A woman amending her LLC original agreement

The LLC operating agreement amendment is done by amending the agreement itself [1]. According to data from the Business Formation Statistics Report, around 85% of LLCs experience at least one amendment to their operating agreements during their operational lifetime, reflecting the necessity to adapt to changing business circumstances, member contributions, or legal requirements.

The operative clause will state that there can be changes to the document and must be written out in full.

1. List Required Changes to the Initial Operating Agreement

These changes can include a new LLC member, a change in management, ownership interest, or company structure changes.

2. Draft a New Operating Agreement That Reflects These Changes

This document will supersede the old existing operating agreement. Ensure a lawyer reviews it to ensure it is legally sound.

3. Have All Members Sign It

You must get the signatures of all the owners and the member's votes to make changes to the LLC's operating agreement. If someone refuses to sign, you can go to court to get an order forcing them to do so.

"If you're the sole owner of your LLC, an Operating Agreement allows you to clearly outline decision-making processes and other aspects of your business, providing a trusted reference document and enhancing your LLC's credibility."

- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter

4. Get It Notarized

To amend a document, a majority of the members must approve it. It is suggested you have your operating agreement notarized so that there will be a record of the changes.

5. File It With the State

  • If you are amending your articles of organization, you will file the amended document with the state.
  • If you are amending your LLC's agreement, you will file the amended document with the state.

Related Article: How to Change or Amend LLC Members

When Do You Need To Modify Your Operating Agreement?

Two businessmen meeting outdoors

You need to modify your operating agreement for the following reasons:

  • Change in Management or Ownership, whether it was member-managed or manager-managed.
  • To comply with other agencies.
  • To make the provisions more specific.
  • To address new issues that have come up after the formation of your LLC.

Furthermore, adding or removing members, altering profit-sharing arrangements, or updating governance rules may require amendments to operating agreements.

The amendments will ensure your operating agreement remains accurate and aligns with your business's evolving needs.

FAQs

How Long Does the Operating Agreement Amendment Last?

An operating agreement amendment typically lasts indefinitely unless specified otherwise in the amendment itself. They will be effective as soon as all members or managers of the business adopt them.

Who Can Amend the Agreement?

Any member or manager of the LLC can propose an amendment to the operating agreement. Ensure you review the agreement to understand the procedures and requirements for making amendments. This may involve obtaining mutual consent and following any specified protocols.

Can I Amend My Original Operating Agreement If I Am Dissolved?

You cannot amend your original operating agreement if you’re dissolved.  The operating agreement must be reinstated, and the company must be reformed before amendments can be made.

It is advisable to consult with legal professionals familiar with your situation to understand the options and requirements for amendments after dissolution.


References:

  1. https://www.sec.gov/Archives/edgar/data/61398/000119312509209470/dex101.htm

About The Author

Author
Delina Chantel Yasmeh, J.D./Tax LL.M, specializes in Mergers and Acquisitions at Deloitte and PwC, managing billion-dollar transactions. Educated in Accountancy at California State University and holding advanced degrees from Loyola Law School, she is highly skilled in tax law. Delina also dedicates time to pro bono work for women and children.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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