There is effectively only four months (effective January 1, 2018) before the Minnesota Revised Limited Liability Company Act is in full force and effect for all existing Minnesota limited liability companies.
The Operating Agreement, which can be written, verbal, implied or a combination of all three, is the centerpiece of a member’s rights under Minnesota Chapter 322C (the “Revised LLC Act”). There are many important “rules” under the Revised LLC Act that can be addressed upfront and agreed upon by the members in an Operating Agreement. Some would argue that without a written Operating Agreement, an LLC with more than a single member is taking unnecessary and undue risk. Thus, it would be well-advised to prepare an Operating Agreement for all existing Minnesota LLCs with more than a single member prior to January 1, 2018.
For example, under the Revised LLC Act, unless the Operating Agreement expressly provides otherwise, newly formed LLCs are considered member-managed. Minn. Stat. § 322C.0407, subd. 1. In a member-managed LLC, the LLC is to be managed by the members equally, again, unless the Operating Agreement provides otherwise. In other words, each member has one vote, regardless of the ownership percentage of that member. “A difference arising among members as to a matter in the ordinary course of the activities of the company may be decided by a majority of the members.” Minn. Stat. § 322C.0407, subd 2(2) and 2(3).
As a second example, the Operating governs the relations among members, and can vary the rights and duties owed greatly, adding additional protections provided by statute or limiting protections provided by statute. Minn. Stat. § 322C.0110, subd. 2 provides that where the Operating Agreement is silent with respect to the relations among the members as members and between the members and the limited liability company (among other matters described in subd. 1), the statute governs.