Minnesota Single-Member LLC Operating Agreement

An operating agreement may not eliminate the duty of loyalty, the duty of care, or any other fiduciary duty, except as expressly permitted by Section 322C.0110, subdivisions 4 to 7; may not eliminate the contractual obligation of good faith and fair dealing; may not unreasonably restrict a member's information rights under Section 322C.0410; and may not vary the LLC's capacity to sue and be sued, the governing-law rule, or a court's power to decree dissolution or order winding up.

A Minnesota LLC is member-managed by default unless the Operating Agreement expressly elects "manager-managed" or "board-managed" status (Minnesota Statutes § 322C.0407, subd. 1). Minnesota is unusual in offering a third statutory option beyond the member-managed/manager-managed choice found in most states: a board-managed structure, in which a board of governors elected by a majority of the members runs the company similarly to a corporate board. In a member-managed LLC, each member has equal management rights and ordinary-course matters are decided by majority vote of the members.

A member's contribution to a Minnesota LLC may consist of tangible or intangible property or any other benefit to the company, including money, services already performed, promissory notes, other agreements to contribute money or property, and contracts for services to be performed in the future (Minnesota Statutes § 322C.0402). The Operating Agreement should state each member's initial contribution and the agreed value of any non-cash contribution.

Minnesota's default rule is equal shares, not contribution-proportional: absent a contrary provision in the Operating Agreement, any distribution the LLC makes before dissolution must be split in equal shares among the members, regardless of the size of each member's capital contribution (Minnesota Statutes § 322C.0404, subd. 1). The Operating Agreement can set a different, contribution-based or other split, which becomes essential the moment a single-member LLC admits a second member without ever having defined its own allocation rule.

A Minnesota 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 ordinary course of its activities, or the LLC's total assets would be less than its total liabilities plus the amount needed to satisfy any members' superior preferential rights upon a hypothetical dissolution at that time (Minnesota Statutes § 322C.0405, subd. 1).

In a member-managed Minnesota LLC, each member has equal voting rights, and an ordinary-course matter may be decided by a majority of the members, but an act outside the ordinary course, and any amendment to the Operating Agreement, requires the consent of all members (Minnesota Statutes § 322C.0407, subd. 2). In a manager-managed LLC, ordinary matters are decided by a majority of the managers, but selling substantially all company property, approving a merger or conversion, or amending the Operating Agreement still requires the consent of all members (§ 322C.0407, subd. 3).

Members in a member-managed Minnesota LLC owe duties of loyalty and care to the company and other members (Minnesota Statutes § 322C.0409). If a modification is not "manifestly unreasonable," the Operating Agreement may go further than the general rule suggests: it may restrict or eliminate specific duty-of-loyalty components, identify activities that do not violate the duty of loyalty, alter the duty of care except to authorize intentional misconduct or a knowing violation of law, and eliminate particular aspects of other fiduciary duties, all without needing to be in writing to do so (§ 322C.0110, subds. 3-8).

Unless the Operating Agreement provides otherwise, a person who receives a transferred Minnesota LLC interest does not gain the right to participate in management or, except in a dissolution and winding up, to access company records, and does not become a member (Minnesota Statutes § 322C.0502). The transferee is entitled only to the distributions the transferor would otherwise have received.

A member may dissociate from a Minnesota LLC at any time, an unconditional statutory right (§ 322C.0601), and dissociation also occurs on events such as expulsion by unanimous consent of the other members or judicial order, or death of an individual member (§ 322C.0602). On dissociation, the person's right to participate in management ends, and any transferable interest the person held as a member converts to a transferee-only interest entitled to distributions but not management or information rights (§ 322C.0603). Minnesota sets no automatic buyout right or valuation formula on dissociation; the Operating Agreement must supply one if the members want a payout to occur.

A Minnesota LLC dissolves upon the first to occur of: an event the Operating Agreement states causes dissolution, the consent of all members, 90 consecutive days during which the company has no members, or a qualifying judicial or attorney-general dissolution order (Minnesota Statutes § 322C.0701). This 90-day rule matters most for a single-member LLC: naming a successor member in the Operating Agreement, or admitting one within the 90-day window, can prevent an unintended forced dissolution. Once dissolved, the LLC must wind up by discharging its debts and distributing its remaining assets (§ 322C.0702).

In a member-managed Minnesota LLC, a member may inspect and copy, on reasonable notice, any company record material to the member's rights and duties, and the company must furnish material information to each member without demand and other information on reasonable demand (Minnesota Statutes § 322C.0410, subd. 1). In a manager-managed LLC, these rights belong to the managers rather than the members by default, though a member may still obtain information for a proper purpose on a written demand (§ 322C.0410, subd. 2).

The Operating Agreement itself sets the means and conditions for its own amendment (Minnesota Statutes § 322C.0110, subd. 1). Absent a different threshold in the Operating Agreement, Minnesota's default rule requires the consent of all members to amend the Operating Agreement, whether the LLC is member-managed or manager-managed (§ 322C.0407, subds. 2 and 3).

A Minnesota LLC must indemnify a member, manager, or governor made a party to a proceeding by reason of that role, subject to statutory limits (Minnesota Statutes § 322C.0408). The Operating Agreement may alter or eliminate that indemnification, and may eliminate or limit a member's, manager's, or governor's liability for money damages, except for: a breach of the duty of loyalty, an improper financial benefit received, a breach relating to improper distributions, intentional infliction of harm on the company or a member, or an intentional violation of criminal law (§ 322C.0110, subd. 7).

Minnesota law gives full legal effect to electronic records and signatures for purposes of Chapter 322C: a record or contract may not be denied enforceability solely because it is electronic, and where a provision requires a record to be in writing or requires a signature, an electronic record or electronic signature satisfies that requirement (Minnesota Statutes § 322C.0117). Separately, a member may waive notice of a meeting in a record, orally, or by attendance (§ 322C.0407, subd. 5).