Operating Agreement
(Multiple Classes of Members) (DE LLC)

Summary

This template is an Operating Agreement for a member-managed limited liability company with multiple classes of members in Delaware. This template includes practical guidance, optional clauses, and drafting notes. Every limited liability company (LLC) should be governed by an operating agreement, which serves as bylaws, a shareholder agreement, and an equity purchase agreement combined into one. Although most states' LLC statutes refer to such governing document as an "operating agreement," the Delaware Limited Liability Company Act refers to it as a "limited liability company agreement." A limited liability company agreement is entered into among the members of an LLC upon the filing of the LLC's certificate of formation, or even immediately beforehand in contemplation of the filing. This agreement leans toward giving the voting members almost unrestricted control of the LLC. Users should determine if this is either practical or desirable and, if not, modify provisions accordingly. Many of these issues may be the subject of negotiations among the prospective members. Agreements of this type need to be customized for each transaction or situation. Thus, this agreement should be viewed only as a partial template. This template has been updated as needed to reflect the revised Internal Revenue Code provisions governing IRS tax audits of partnerships and other entities taxed as partnerships. These rules were passed in the Bipartisan Budget Act of 2015 and took effect on January 1, 2018. For further information, see Partnership Tax Audit Rules. See also Partnership and Other Pass-Through Entities Taxation and Partnership Tax Audit Clauses (Bipartisan Budget Act of 2015). For a full listing of key content covering Delaware Limited Liability Company formation, organization, maintenance, ownership, management, and dissolution, see Limited Liability Company Resource Kit (DE).