What legal documents govern the business and affairs of a limited liability company?

Typically, the business and affairs of a limited liability company (LLC) are governed by a written operating agreement executed by the members of the LLC. Sometimes Delaware LLCs will refer to this agreement as a limited liability company agreement; however, a company agreement is functionally the same as an operating agreement. Some LLCs include governing provisions within the Company’s formation documents (Articles of Organization or Certificate of Formation). This is common for LLCs that accept outside investment, including venture capital funds.

Do LLCs have Shareholder Agreements?

No, LLCs do not have shareholder agreements. A shareholder agreement is an agreement executed by the shareholders of a corporation that governs the sale and transfer of the corporation’s stock. LLCs have members, not shareholders, and LLC ownership is represented by membership interest, not shares of stock. A well-written LLC Operating Agreement will contain provisions governing the sale and transfer of LLC membership.

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