Indiana Single-Member LLC Operating Agreement

A member-managed structure is the Indiana default: management of the LLC's business is vested in the members unless the Articles of Organization provide for a manager or managers (Indiana Code Section 23-18-4-1(a)). If the Articles elect manager-managed status, a manager must be designated or removed by a vote of a majority in interest of the members, unless a written Operating Agreement provides otherwise, and a manager need not be a member.

A member's promise to contribute cash, property, or services to the Company is not enforceable unless the promise is in writing and signed by the member (Indiana Code Section 23-18-5-1(a)). Absent a contrary written Operating Agreement provision, a member remains obligated to perform an enforceable contribution promise even if later unable to, including because of death or disability.

Absent a contrary Operating Agreement provision, Indiana law allocates profits and losses on the basis of the agreed value, as stated in the Company's records, of each member's contributions, not split evenly among members. The Operating Agreement can set a different split (Indiana Code Section 23-18-5-3).

Unless the Articles of Organization provide for a manager or managers, and except as a written Operating Agreement provides otherwise, ordinary business matters are decided by the affirmative vote of a majority in interest of the members. Amending the Operating Agreement, or authorizing an act that contravenes it, requires the consent of all members unless the Agreement lowers that threshold (Indiana Code Section 23-18-4-3).

Absent a written Operating Agreement, a member or manager is not liable to the Company for an action taken, or a failure to act, on the Company's behalf unless the conduct constitutes willful misconduct or recklessness, and each member or manager must account to the Company for any profit or benefit obtained without the consent of a majority of the disinterested members or managers (Indiana Code Section 23-18-4-2). A written Operating Agreement may modify, increase, decrease, limit, or eliminate these duties, including fiduciary duties (Indiana Code Section 23-18-4-4(a)(1)).

For an LLC formed after June 30, 1999, and unless the Operating Agreement provides otherwise, an assignee of a member's interest receives only the distributions the assignor would have received, and does not thereby gain management rights or become a member. Assigning an interest does not, by itself, release the assignor from liability as a member (Indiana Code Section 23-18-6-3.1).

A person acquiring an interest directly from the Company becomes a member upon complying with the Operating Agreement or, if the Agreement does not address admission in writing, upon the written consent of all members (Indiana Code Section 23-18-6-1(a)(1)). Admission is effective no earlier than the later of the Company's organization date or the time the Agreement, or the Company's records, provide.

Indiana law lists specific statutory events that end a person's membership, including voluntary withdrawal, removal by the Operating Agreement or a majority vote, a member's death, and dissolution of an entity member, among others (Indiana Code Section 23-18-6-5(a)). The Operating Agreement may add further triggering events, such as a member's insolvency, bankruptcy, or adjudicated incompetency (Section 23-18-6-5(b)).

For an LLC formed after June 30, 1999, dissolution occurs on the first of several events: those stated in writing in the Articles of Organization or Operating Agreement, judicial dissolution, or member consent. For an LLC formed after June 30, 2013, that consent must be unanimous unless the Operating Agreement lowers the threshold; for one formed between June 30, 1999 and July 1, 2013 with a single class of members, two-thirds in interest suffices (Indiana Code Section 23-18-9-1.1).

The Company must keep, at its principal office, a list of members and managers, its Articles of Organization and amendments, three years of tax returns and financial statements, and copies of any written Operating Agreements. A member may inspect and copy these records at the member's own expense during business hours after giving five business days' written notice (Indiana Code Section 23-18-4-8).

A written Operating Agreement may provide for indemnification of a member, manager, or other person against judgments, settlements, penalties, fines, or expenses incurred in a proceeding because of that person's status as a member or manager (Indiana Code Section 23-18-4-4(a)(2)). The Operating Agreement itself sets the standards and any limits on this indemnification.

Unless the Operating Agreement provides otherwise, amending the Operating Agreement requires the affirmative vote, approval, or consent of all members (Indiana Code Section 23-18-4-3(c)(1)). The Operating Agreement can lower this threshold for some or all amendments.

Indiana authorizes series LLCs under a separate article, Indiana Code Article 23-18.1, not the general Business Flexibility Act (Article 18) that governs this Agreement. A "series limited liability company" is a master LLC that has designated one or more series, each of which can hold its own assets and incur its own liabilities apart from the rest of the LLC. If establishing a series LLC, review Article 23-18.1's separate requirements in addition to this Agreement.