Kentucky Single-Member LLC Operating Agreement

A Kentucky LLC is member-managed by default unless the Articles of Organization vest management in one or more managers (Kentucky Revised Statutes § 275.165(1)). If manager-managed, the manager or managers have exclusive power to manage the business and affairs, though a specific list of major decisions, including amending the Operating Agreement or articles, admitting or removing a member, and approving a merger or asset sale outside the ordinary course, still requires member consent regardless of manager-managed status (§ 275.175(2)).

A member's contribution to a Kentucky LLC may be cash, property, services already rendered, or a promissory note or other obligation to contribute cash, property, or services (Kentucky Revised Statutes § 275.195). An obligation to make a contribution is not enforceable unless set forth in a writing signed by the member, and if a member fails to make a promised property or services contribution, the LLC may require the member to contribute cash equal to the unmet value instead (§ 275.200).

Absent a contrary written Operating Agreement, Kentucky law allocates profits and losses based on the agreed value of each member's contribution to the LLC, not split evenly among members (Kentucky Revised Statutes § 275.205). The Operating Agreement can set a different split.

A Kentucky LLC may not make a distribution if, after giving effect to it, the LLC would be unable to pay its debts as they become due in the usual course of business, or the LLC's assets would be less than its liabilities plus the amount needed to satisfy other members' superior preferential rights upon a hypothetical dissolution at that time (Kentucky Revised Statutes § 275.225). A member who knowingly receives an unlawful distribution may be liable to repay it (§ 275.230).

Kentucky's default voting rule ties voting weight to each member's contribution value, not to a one-member-one-vote rule: absent a contrary agreement, members vote, approve, or consent in proportion to their agreed contribution value, and ordinary matters require a majority-in-interest of the members (Kentucky Revised Statutes § 275.175(1), (3)). A defined list of major actions, including amending the Operating Agreement, admitting or removing a member, and approving a merger, requires member consent regardless of whether the LLC is manager-managed (§ 275.175(2)).

Unless the Operating Agreement provides otherwise, a Kentucky LLC interest is freely assignable, but an assignment alone does not make the assignee a member or give the assignee any right to participate in management; the assignee is entitled only to the distributions the assignor would have received (Kentucky Revised Statutes § 275.255). An assignee becomes a member only with the consent of a majority-in-interest of the remaining members (§ 275.265).

A person becomes a member of a Kentucky LLC either by acquiring an interest directly from the company, which requires the written consent of all members if the Operating Agreement does not otherwise provide, or by becoming an assignee who is then admitted as a member (Kentucky Revised Statutes §§ 275.255, 275.265, and 275.275).

Unless the Operating Agreement provides otherwise, a member of a member-managed Kentucky LLC may resign on 30 days' prior written notice; in a manager-managed LLC, a member may not resign without the consent of all other members (Kentucky Revised Statutes § 275.280(3)). A resigning or dissociated member becomes an assignee with respect to their interest and is not entitled to any distribution on account of the dissociation except as the Operating Agreement provides (§ 275.280(4), (6)).

A Kentucky LLC dissolves upon the first to occur of several events, including the written consent of all members or the point when there are no remaining members (Kentucky Revised Statutes § 275.285(1)). This last trigger matters most for a single-member LLC: dissolution is avoided only if a new member is admitted, or if the departed member's successor-in-interest agrees in writing to continue the company, within 90 days (§ 275.285(4)). Once dissolved, the LLC winds up by collecting assets, discharging liabilities, and distributing remaining property (§ 275.300); asset-distribution priorities on winding up are set by § 275.310.

Kentucky's default duty of care already sets a narrow bar (no liability absent wanton or reckless misconduct), and the duty of loyalty requires accounting for profit or benefit taken without the required consent (Kentucky Revised Statutes § 275.170). A written Operating Agreement may go further and eliminate, not just limit, personal liability for monetary damages for breach of either duty (§ 275.180). The one duty that cannot be eliminated is the obligation of good faith and fair dealing, though the Agreement may set the standard for measuring it if that standard is not manifestly unreasonable (§ 275.003(7)).

A written Operating Agreement may provide for indemnification of a member or manager for judgments, settlements, penalties, fines, or expenses incurred in a proceeding to which the person is a party because the person is or was a member or manager of the Kentucky LLC (Kentucky Revised Statutes § 275.180(2)).

Kentucky LLCs must maintain certain required records, including a current list of members and their contributions, the articles of organization and any amendments, and copies of the LLC's federal, state, and local tax returns (Kentucky Revised Statutes § 275.185). A member has the right to inspect and copy these records for a purpose reasonably related to the member's interest, subject to reasonable limitations the Operating Agreement may impose.

Amending a Kentucky LLC's Operating Agreement always requires member consent, even in a manager-managed LLC (Kentucky Revised Statutes § 275.175(2)). Absent a different threshold in the Operating Agreement, the required vote is a majority-in-interest of the members, weighted by each member's agreed contribution value, not a one-member-one-vote count (§ 275.175(1), (3)).

Kentucky's LLC Act defines a limited liability company as an entity with "one (1) or more members" (Kentucky Revised Statutes § 275.015(12)), so a single-member LLC needs no special statutory election. One default worth overriding in a single-member Operating Agreement: if the sole member assigns their entire interest, Kentucky law automatically ends that person's membership "upon the effective time and date of the assignment," because no other member remains to withhold consent (§ 275.280(1)(c)3), which can hand the assignee effective control of the company.

Kentucky does not authorize series LLCs. Chapter 275 contains no series LLC provisions. A business seeking a series structure would need to form in a state that authorizes them, such as Delaware or Texas, rather than rely on any Kentucky statute.