Without an operating agreement, relationships between managers and members within an LLC are governed by the Illinois Limited Liability Company Act. 805 ILCS 180/15-5(a). Operating agreements are defined as “any valid agreement, written or oral, of the members as to the affairs of a limited liability company and the conduct of its business.” 805 ILCS 180/1-5. Operating agreements allow businesses to tailor some of the principles that govern internal relationships to best suit the LLC’s interests.
Specifically, operating agreements may tailor certain fiduciary duties and rights to payment or reimbursement, such as:
- Restricting or eliminating fiduciary duties, so long as any changes are explicit and reasonable;
- Articulating specific activities that do not constitute a breach of fiduciary duty;
- Modifying the duty of care (except for authorizing intentional misconduct or knowing violations of the law).
- Rights to information or access under specific provisions
- Rights to expel a member under a specific provision
- Requirement to terminate the LLCs business in the procedure articulated
- Rights of anyone other than a manager, member, or transferee of a member’s distributional interests
- Rights of a member to dissociate
