Connecticut General Statutes Section 34-243e. Operating Agreement
Connecticut General Statutes Section 34-243e Operating Agreement, governs the formation and signing of the limited liability company agreement providing the rights, duties, roles, and responsibilities of its members and mangers.
Who Signs the Operating Agreement of the LLC?
Each member of the LLC and the manager or managers need to sign the operating agreement. Each signatory should sign a separate signature page. Be sure to sign the document in the proper way to best protect your corporate veil. An operating agreement is a key document used by LLCs because it outlines the business' financial and functional decisions including rules, regulations and provisions. The purpose of the document is to govern the internal operations of the business in a way that suits the specific needs of the business owners. Once signed by the members of the limited liability company, the operating agreement acts as an official contract binding them to its terms.
Is the Limited Liability Company required to Sign the Operating Agreement?
An Operating Agreement for a limited liability company is a contract between the owners of the organization. It is a user’s guide that defines their various rights of ownership, management, decision participation, and under what circumstances they may transfer their ownership interest in the organization. Each member of the LLC and the manager or managers need to sign the operating agreement. Be sure to sign the document in the proper way to best protect your corporate veil. Additionally a member should also sign the operating agreement on behalf of the company to bind the company to the agreement with the other members and managers that sign in their personal capacities.
Do New Members Need to Sign the Operating Agreement
Following any major company events, such as adding or losing a member, it is a good idea to review and consider updating the operating agreement. If new members do not sign, they are not technically bound to its terms. However, even if they don’t sign, there are certain duties and obligations set forth in Connecticut’s Uniform Limited Liability Act that that they must comply with and certain rights to which they are entitled as a member or manager. An operating agreement can always be amended with the consent of all current members.
Should You use an Attorney to Draft an Operating Agreement
It is not required to have a lawyer draft your LLC operating agreement, although, it is recommended that you consult with an attorney to ensure that your agreement is legally binding. Lawyers can also help ensure that the LLC operating agreement matches the needs of your business. There are many different provisions and clauses in an LLC operating agreement, and knowing which ones to exclude or include may be difficult for someone who has never drafted an LLC. It is always a good practice to have a qualified attorney review any legal documents, like LLC operating agreements, that you or someone else drafted, before finalizing and signing them.
Why it is not a good idea to use an online Service like Legal Zoom to Draft Your Operating Agreement
Hiring a lawyer, you not only get for your LLC documents, you’re paying for the lawyer’s warranty that the work is done correct. If you draft and purchase a form document from LegalZoom or find one off the internet, there’s no one standing by those documents. If a document is incorrect in any way, if necessary terms are omitted that your business requires to operate, you have no recourse for the errors in your document. Your local city government can shut your business down. LegalZoom’s disclaimer removes any right you may otherwise have to sue LegalZoom for providing you with improperly drafted documents.
Sec. 34-243e. Operating agreement: Effect on limited liability company and person becoming member. Formation of agreement that becomes operating agreement. (a) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.
(b) A person that becomes a member of a limited liability company is deemed to assent to the operating agreement.
(c) Two or more persons intending to become the initial members of a limited liability company may make an agreement providing that upon the formation of the company the agreement will become the operating agreement. One person intending to become the initial member of a limited liability company may assent to terms providing that upon the formation of the company the terms will become the operating agreement.
(P.A. 16-97, S. 6.)
History: P.A. 16-97 effective July 1, 2017.