Define how an LLC in North Carolina will be run: North Carolina LLC Operating Agreement
Other Names:
North Carolina Operating Agreement
North Carolina LLC Company Agreement
What we’ll cover
What is a North Carolina LLC Operating Agreement?
A North Carolina LLC Operating Agreement is a legal document that outlines how a North Carolina LLC will be run. North Carolina LLC Operating Agreements list all LLC owners (known as “Members”), their contribution amounts, and their ownership interest percentages. They also establish the general operating rules of your LLC, including how voting will work, buy-out provisions, and the management structure.
When can you use a North Carolina LLC Operating Agreement?
- You are starting or managing an LLC and need to open a business bank or credit account, buy property, or secure funding.
- You run or manage an LLC with one or more partners and want to outline how much they each contributed and how the business will protect their interests.
- You want to run your LLC or distribute profits and losses differently than the state's default method.
- You want to establish a clear distinction between yourself and your LLC by further defining and documenting it as a separate legal entity.
Is an LLC Operating Agreement required in the state of North Carolina?
The state of North Carolina does not require an LLC Operating Agreement, but it may still be recommended for many LLCs. Without an Operating Agreement, disputes are governed by the default LLC operating rules outlined in North Carolina law (NC Gen Stat § 57D). These state rules may work fine for simple business arrangements, but they might not be the best fit when members' contributions and ownership percentages differ significantly. They may also fall short of expectations when what you want is more flexibility in defining operating rules and roles beyond the state's standard provisions. LLC Operating Agreements also can help maintain a clear separation between personal and business affairs, which is particularly valuable for protecting the limited liability status of single-member LLCs.
Additionally, even though the state may not require LLC Operating Agreements, they could still be necessary when dealing with business partners, investors, or financial institutions. These outside entities often expect to see a formal agreement in place to understand how the LLC operates and how potential disputes are resolved.
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Sample North Carolina LLC Operating Agreement
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Limited Liability Company Agreement of
A Limited Liability Company
| THIS OPERATING AGREEMENT (this "Agreement") of , (the "Company"), is executed and agreed to, for good and valuable consideration, by the undersigned members (the "Members"). |
| . | Formation. |
| A. | State of Formation. This is a Limited Liability Company Operating Agreement (the "Agreement") for , a limited liability company (the "Company") formed under and pursuant to law. |
| B. | Operating Agreement Controls. To the extent that the rights or obligations of the Members or the Company under provisions of this Operating Agreement differ from what they would be under law absent such a provision, this Agreement, to the extent permitted under law, shall control. |
| C. | Primary Business Address. The location of the primary place of business of the Company is: |
| , , , or such other location as shall be selected from time to time by the Members. |
| The Company's mailing address is: |
| D. | Registered Agent and Office. The Company's initial agent (the "Agent") for service of process is . The Agent's registered office is , , . The Company may change its registered office, its registered agent, or both, upon filing a statement with the Secretary of State. |
| D. | Registered Office. The Company's initial registered office is , , . The Company may change its registered office upon filing a statement with the Department of State. |
| . | Purposes and Powers. |
| A. | Purpose. The Company is created for the following business purpose: |
| B. | Powers. The Company shall have all of the powers of a limited liability company set forth under law. |
| C. | Duration. The Company's term shall commence upon the filing of an Articles of Organization and all other such necessary materials with the state of . The Company will operate until unless: |
| . | Members. |
| A. | Members. The Members of the Company (jointly the "Members") and their Membership Interest at the time of adoption of this Agreement are as follows: |
| , % |
| , % |
| B. | Initial Contribution. Each Member shall make an Initial Contribution to the Company. The Initial Contributions of each shall be as described in Attachment A, Initial Contributions of the Members. |
| No Member shall be entitled to interest on their Initial Contribution. Except as expressly provided by this Agreement, or as required by law, no Member shall have any right to demand or receive the return of their Initial Contribution. Any modifications as to the signatories' respective rights as to the receipt of their initial contributions must be set forth in writing signed by all interested parties. |
| C. | Limited Liability of the Members. Except as otherwise provided for in this Agreement or otherwise required by law, no Member shall be personally liable for any acts, debts, liabilities or obligations of the Company beyond their respective Initial Contribution, including liability arising under a judgment, decree or order of a court. The Members shall look solely to the Company property for the return of their Initial Contribution, or value thereof, and if the Company property remaining after payment or discharge of the debts, liabilities or obligations of the Company is insufficient to return such Initial Contributions, or value thereof, no Member shall have any recourse against any other Member except as is expressly provided for by this Agreement or as otherwise allowed by law. |
| D. | Death, Incompetency, Resignation or Termination of a Member. Should a Member die, be declared incompetent, or withdraw from the Company voluntarily or involuntarily, the remaining Members will have the option to buy out that Member's Membership Interest in the Company. If a Member is removed involuntarily, it must be by vote recorded in the official minutes. If a Member resigns, they should submit a notarized resignation letter to the Registered Agent. Should the Members agree to buy out the Membership Interest of the withdrawing Member, that Interest shall be paid for by the remaining Members, according to their existing Membership Interest(a "dissociated member")
Except to the extent otherwise provided herein, each Member shall have a fiduciary duty of loyalty and care similar to that of members of limited liability companies organized under the laws of . The Members shall have only the fiduciary duties of loyalty and care required under Florida Revised Limited Liability Company Act. The Members shall have only the fiduciary duties of loyalty and care required under the Washington Limited Liability Company Act.
Except to the extent otherwise provided herein, the Member shall have a fiduciary duty of loyalty and care similar to that of members of limited liability companies organized under the laws of . The Member shall have only the fiduciary duties of loyalty and care required under Florida Revised Limited Liability Company Act. The Member shall have only the fiduciary duties of loyalty and care required under the Washington Limited Liability Company Act.
-Corporation. |
| A. | Creation of a Board of Managers. The Member shall create a board of Managers (the "Board") consisting of Managers appointed at the sole discretion of the Member and headed by the Chairman of the Board. The Member may install itself as a Manager and as the Chairman. The Member may determine at any time in its sole and absolute discretion the number of Managers to constitute the Board, subject in all cases to any requirements imposed by law. The authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, subject to law. Each Manager elected, designated or appointed shall hold office until a successor Manager is elected and qualified or until such Manager's earlier death, resignation or removal. |
| A. | Creation of a Board of Managers. The Member shall create a board of Managers (the "Board") consisting of one or more Managers appointed at the sole discretion of the Member and headed by the Chairman of the Board, as set forth in the Articles of Organization of the Company, which provide specifically that the Company is to be a manager-managed limited liability company. The Member may serve as Managers and may appoint a Member to serve as the Chairman. The Member may determine at any time in its sole and absolute discretion the number of Managers to constitute the Board, subject in all cases to any requirements imposed by law. The authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, subject to law. Each Manager elected, designated or appointed shall hold office until a successor Manager is elected and qualified or until such Manager's earlier death, resignation or removal.resignation or removal. |
| E. | Managers as Agents. To the extent of their powers set forth in this Agreement, the Managers are agents of the Company for the purpose of the Company's business, and the actions of the Managers taken in accordance with such powers set forth in this Agreement shall bind the Company. Except as provided in this Agreement, no Manager may bind the Company. |
| 4. | Secretary and Assistant Secretary. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Members and record all the proceedings of the meetings of the Company and of the Members in a book to be kept for that purpose. The Secretary shall give, or cause to be given, notice of all meetings of the Members, as required in this Agreement or by law, and shall perform such other duties as may be prescribed by the Board or the Chairman, under whose supervision the Secretary shall serve. The Secretary shall cause to be prepared such reports and/or information as the Company is required to prepare by applicable law, other than financial reports. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Members (or if there be no such determination, then in order of their election), shall, in the absence of the Secretary or in the event of the Secretary's inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe. |
| 5. | Treasurer and Assistant Treasurer. The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company according to generally accepted accounting practices, using a fiscal year ending on the last day of the month of . The Treasurer shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board. The Treasurer shall distribute the Company's profits to the Member. The Treasurer shall disburse the funds of the Company as may be ordered by the Board and shall render to the Chairman and to the Board, at its regular meetings or when the Board Members so require, an account of all of the Treasurer's transactions and of the financial condition of the Company. As soon as practicable after the end of each fiscal year of the Company, the Treasurer shall prepare a statement of financial condition as of the last day of the Company's fiscal year, and a statement of income and expenses for the fiscal year then ended, together with supporting schedules. Each of said annual statements shall be prepared on an income tax basis and delivered to the Member forthwith upon its preparation. In addition, the Treasurer shall keep all financial records required to be kept pursuant to law. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer's inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board may from time to time prescribe. |
| 1. | Loyalty and Care. Except to the extent otherwise provided herein, each Officer shall have a fiduciary duty of loyalty and care similar to that of officers of limited liability companies organized under the laws of . |
| 1. | Loyalty and Care. The Officers shall have only the fiduciary duties of loyalty and care required under Florida Revised Limited Liability Company Act. |
| i. | Loyalty. The duty of loyalty shall be limited to: |
| a. | Not usurping or otherwise appropriating an opportunity of the Company without disclosure to and authorization from the Members; |
| b. | Refraining from competing against the company in the conduct of the Company's activities without disclosure to and authorization from the Members; |
| c. | Accounting to Members any property, profit or benefit derived by the Officer in the conduct or winding up of the Company's affairs, or by the use of the Company's property. |
| ii. | Care. The duty of care shall be limited to refraining from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law. |
| 1. | Loyalty and Care. The Officers shall have only the fiduciary duties of loyalty and care required under the Washington Limited Liability Company Act. |
| i. | Loyalty. The duty of loyalty shall be limited to: |
| a. | Accounting to the LLC for, and holding in trust for the LLC, any benefits derived: |
| (i) | in conducting or winding up the LLC's activities; |
| (ii) | from the use of LLC property, or |
| (iii) | by appropriating an LLC's company opportunity; |
| b. | Not competing with the LLC; and |
| c. | Not engaging in conflict-of-interest dealings with the LLC. |
| ii. | Care. The duty of care, which is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or knowing violation of the law while conducting or winding up the LLC's activities. Additionally, a manager may rely in good faith on, and does not violate the duty of care by relying on opinions, reports, or statements by any member, manager, officer, employee, or outside professional if such opinions, reports, or statements are within such person's professional or expert competence. |
| E. | Other Considerations. In discharging the Officer's duties, the Officer may consider factors that the Officer deems relevant, including the long-term prospects and interests of the Company and its Members, and the social, economic, legal, or other effects of any action on the employees, suppliers, and customers of the Company, the communities and society in which the Company operates, and the economy of Florida and the nation. |
| 1. | Loyalty and Care. Except to the extent otherwise provided herein, each Officer shall have a fiduciary duty of loyalty and care similar to that of officers of limited liability companies organized under the laws of . |
| 1. | Loyalty and Care. The Officers shall have only the fiduciary duties of loyalty and care required under Florida Revised Limited Liability Company Act. |
| i. | Loyalty. The duty of loyalty shall be limited to: |
| a. | Not usurping or otherwise appropriating an opportunity of the Company without disclosure to and authorization from the Members; |
| b. | Refraining from competing against the company in the conduct of the Company's activities without disclosure to and authorization from the Members; |
| c. | Accounting to Members any property, profit or benefit derived by the Officer in the conduct or winding up of the Company's affairs, or by the use of the Company's property. |
| ii. | Care. The duty of care shall be limited to refraining from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law. |
| A. | Loyalty and Care. Except to the extent otherwise provided herein, each Manager shall have a fiduciary duty of loyalty and care similar to that of managers of business corporations organized under the laws of . |
| A. | Loyalty and Care. Except to the extent otherwise provided herein, each Manager shall discharge the duties of manager in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the manager reasonably believes to be in the best interests of the limited liability company. |
| A. | Loyalty and Care. The Managers shall have only the fiduciary duties of loyalty and care required under Florida Revised Limited Liability Company Act. |
| A. | Loyalty and Care. The Managers shall have only the fiduciary duties of loyalty and care required under the Washington Limited Liability Company Act. |
| E. | Other Considerations. In discharging the Manager's duties, the Manager may consider factors that the Manager deems relevant, including the long-term prospects and interests of the Company and its Members, and the social, economic, legal, or other effects of any action on the employees, suppliers, and customers of the Company, the communities and society in which the Company operates, and the economy of Florida and the nation. |
| A. | Loyalty and Care. Except to the extent otherwise provided herein, each Manager and Officer shall have a fiduciary duty of loyalty and care similar to that of managers of business corporations organized under the laws of . |
| A. | Loyalty and Care. Except to the extent otherwise provided herein, each Manager and Officer shall discharge the duties of manager in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the manager reasonably believes to be in the best interests of the limited liability company. |
| A. | Loyalty and Care. The Managers and Officers shall have only the fiduciary duties of loyalty and care required under Florida Revised Limited Liability Company Act. |
| A. | Loyalty and Care. The Managers and Officers shall have only the fiduciary duties of loyalty and care required under the Washington Limited Liability Company Act. |
| E. | Other Considerations. In discharging the Manager's or Officer's duties, the Manager or Officer may consider factors that the Manager or Officer deems relevant, including the long-term prospects and interests of the Company and its Members, and the social, economic, legal, or other effects of any action on the employees, suppliers, and customers of the Company, the communities and society in which the Company operates, and the economy of Florida and the nation. |
| . | Dissolution. |
| Notwithstanding any other provision of this Agreement, the Bankruptcy of any Member shall not cause such Member to cease to be a Member of the Company and upon the occurrence of such an event, the business of the Company shall continue without dissolution. |
| Each Member waives any right that it may have to agree in writing to dissolve the Company upon the Bankruptcy of any Member or the occurrence of any event that causes any Member to cease to be a Member of the Company. |
| B. | Winding Up. Upon the occurrence of any event specified in Section II(C), the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. One or more Members, selected by the remaining Members, shall be responsible for overseeing the winding up and liquidation of the Company, shall take full account of the liabilities of the Company and its assets, shall either cause its assets to be distributed as provided under this Agreement or sold, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided under this Agreement. |
| C. | Distributions in Kind. Any non-cash asset distributed to one or more Members in liquidation of the Company shall first be valued at its fair market value (net of any liability secured by such asset that such Member assumes or takes subject to) to determine the profits or losses that would have resulted if such asset were sold for such value, such profit or loss shall then be allocated as provided under this Agreement. The fair market value of such asset shall be determined by the Members or, if any Member objects, by an independent appraiser (any such appraiser must be recognized as an expert in valuing the type of asset involved) approved by the Members. |
| D. | Termination. The Company shall terminate when (i) all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the in the manner provided for under this Agreement and (ii) the Company's registration with the shall have been canceled in the manner required by law. |
| E. | Accounting. Within a reasonable time after complete liquidation, the Company shall furnish the Members with a statement which shall set forth the assets and liabilities of the Company as at the date of dissolution and the proceeds and expenses of the disposition thereof. |
| F. | Limitations on Payments Made in Dissolution. Except as otherwise specifically provided in this Agreement, each Member shall only be entitled to look solely to the assets of the Company for the return of its Initial Contribution and shall have no recourse for its Initial Contribution and/or share of profits (upon dissolution or otherwise) against any other Member. |
| G. | Notice to Authorities. Upon the winding up of the Company, the Member with the highest percentage of Membership Interest in the Company shall be responsible for the filing of all appropriate notices of dissolution with and any other appropriate state or federal authorities or agencies as may be required by law. In the event that two or more Members have equally high percentages of Membership Interest in the Company, the Member with the longest continuous tenure as a Member of the Company shall be responsible for the filing of such notices. |
| . | Exculpation and Indemnification. |
| B. | To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement. Expenses, including legal fees, incurred by a Covered Person defending any claim, demand, action, suit or proceeding shall be paid by the Company. The Covered Person shall be liable to repay such amount if it is determined that the Covered Person is not entitled to be indemnified as authorized in this Agreement. No Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of such Covered Person's gross negligence or willful misconduct with respect to such acts or omissions. Any indemnity under this Agreement shall be provided out of and to the extent of Company assets only. |
| C. | A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any person as to matters the Covered Person reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the might properly be paid. |
| D. | To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement. The provisions of the Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the to replace such other duties and liabilities of such Covered Person. |
| E. | The foregoing provisions of this Article shall survive any termination of this Agreement. |
| . | Insurance. |
| The Company shall have the power to purchase and maintain insurance, including insurance on behalf of any Covered Person against any liability asserted against such person and incurred by such Covered Person in any such capacity, or arising out of such Covered Person's status as an agent of the Company, whether or not the Company would have the power to indemnify such person against such liability under the provisions of Article or under applicable law. This is separate and apart from any business insurance that may be required as part of the business in which the Company is engaged. |
| . | Settling Disputes. |
All Members agree to enter into mediation before filing suit against any other Member or the Company for any dispute arising from this Agreement or Company. Members agree to attend one session of mediation before filing suit. If any Member does not attend mediation, or the dispute is not settled after one session of mediation, the Members are free to file suit. Any law suits will be under the jurisdiction of the state of
IN WITNESS WHEREOF, the Members have executed and agreed to this Limited Liability Company Operating Agreement, which shall be effective as of .
ATTACHMENT A Initial Contributions of the Members
The Initial Contributions of the of are as follows:
Contribution:
Contribution: Cash:
s Washington's Limited Liability Company Act allows for LLCs to have a class of members with no voting rights. Please contact an attorney in the Rocket Lawyer On Call® Network if this is the case with your business.
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North Carolina LLC Operating Agreement FAQs
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Does an Operating Agreement need to be notarized in North Carolina?
No, there is no legal requirement that an Operating Agreement be notarized in North Carolina.
Making your Operating Agreement legally binding is as simple as signing it, which can be done online for free with RocketSign, or you can print it out and sign paper duplicates.
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How do I change an existing Operating Agreement?
There are lots of reasons why you may need to update or change your LLC Operating Agreement, such as:
- Adding new members.
- Buying out or removing members.
- Changing ownership percentages.
- Changing profit distributions.
- Securing additional funding.
- Changing how decisions are made.
To change an existing Operating Agreement, create a new one.
- Make a new North Carolina Operating Agreement with the changes you want. Share it with all the owners for them to review.
- Once all the owners are happy with the changes, they need to sign the new Operating Agreement. The Operating Agreement can be signed online. Use RocketSign to sign electronically without having to print, sign and deliver hard copies. Or, print and sign hard copies of your Agreement in duplicate. Once signed by all parties, this new version will be the official rules for the company.
- Keep both the new and old versions of the rules in the company's records. All members should have copies of the rules.
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Do I need to file my Operating Agreement in North Carolina?
No, you do not need to file your LLC Operating Agreement with the state, but you will need to file your Articles of Organization with the State of North Carolina in order to register a North Carolina LLC.
You should keep this document at the location where the LLC maintains its official records, and all members should have a signed copy in their own personal records as well.
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Does my Operating Agreement need to list my Registered Agent?
While it is common to list the Registered Agent in your Operating Agreement, the exact requirements vary depending on your state and local jurisdiction, as well as the particular needs of your business.
The Registered Agent is the person or entity designated to receive legal and official documents on behalf of the LLC, such as legal notices or tax forms. When the Registered Agent is someone else other than the members or managers, you will typically want to include the Agent in your Operating Agreement.
Again, the specific requirements for Operating Agreements and other legal documentation can vary based on your jurisdiction. To ensure compliance with local laws and to address the particular needs of your business, ask a Legal Pro.
Rocket Lawyer can act as your Registered Agent or specify your Registered Agent when you
What is the difference between an Operating Agreement and Articles of Organization?
Articles of Organization and Operating Agreements are both critical documents that relate to starting an LLC, but there are a few key differences between the two.
Your Articles of Organization (also called Articles of Incorporation, a Certificate of Organization, or a Certificate of Formation) is an LLC formation document filed with the state to register your company as a legal business entity. If you form an LLC with Rocket Lawyer, we file this document on your behalf.
Your LLC Operating Agreement, on the other hand, is an internal document that documents ownership percentages and outlines how your business will be run.
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