Montana Single-Member LLC Operating Agreement

This Operating Agreement governs the relations among members, managers, and the LLC. To the extent this Agreement does not provide for a matter, the Montana LLC Act governs. Members acknowledge that this Agreement supersedes default statutory provisions that would otherwise apply.

The LLC has been or will be formed by filing Articles of Organization with the Montana Secretary of State in accordance with state law. The Articles of Organization are incorporated by reference into this Operating Agreement.

The Articles of Organization must state whether the LLC is member-managed or manager-managed (Montana Code Annotated Section 35-8-202(1)(e)); Montana has no silent default if this is left unstated. In a member-managed LLC, each member has equal management rights and ordinary business matters are decided by a majority of members. In a manager-managed LLC, each manager has equal rights and ordinary matters are decided by the manager or a majority of managers, who are appointed and removed by majority vote of the members.

Members in a member-managed LLC, or managers in a manager-managed LLC, owe a duty of loyalty, a duty of care, and an obligation of good faith and fair dealing. The Operating Agreement may not eliminate the duty of loyalty, though it may identify specific activities that do not violate it. The duty of care may not be unreasonably reduced, and good faith and fair dealing may not be eliminated, though its performance standard may be defined if not manifestly unreasonable.

A member's interest may be issued in exchange for cash, property, promissory notes, services performed, or an agreement to contribute cash, property, or services in the future (Montana Code Annotated Section 35-8-501). The statute does not itself mandate a specific documentation format; the Operating Agreement should record the amount, form, and timing of each member's contribution to avoid later disputes.

Unless otherwise provided in writing in the articles of organization or Operating Agreement, each member is first repaid that member's capital contributions, and any remaining profits, losses, and surplus, as well as any cash or asset distributions, are then shared EQUALLY among members, not in proportion to each member's capital contribution. The Operating Agreement can set a different split.

Section 35-8-403 was repealed in 1999; voting rights are governed today by Section 35-8-307. Unless the Operating Agreement provides otherwise, each member of a member-managed LLC has EQUAL voting rights, not rights proportional to profit interest, and ordinary business matters are decided by a majority of members. A specific list of major matters, including amending the Operating Agreement or Articles, admitting a new member, and dissolving the company, requires the consent of all members.

Section 35-8-704 was repealed in 1999. A member's distributional interest, a form of personal property rather than an ownership stake in LLC property, may be transferred in whole or in part under Section 35-8-703. Under Section 35-8-707, a transferee who is not admitted as a member receives only the economic right to distributions, not management or voting rights, unless the Operating Agreement or the other members provide otherwise.

A member is dissociated from the LLC upon events including express notice of withdrawal, an event the Operating Agreement designates as causing dissociation, transfer of all of the member's distributional interest, or expulsion under the Operating Agreement or by unanimous vote or judicial determination in specified circumstances (Montana Code Annotated Section 35-8-803).

A Montana LLC dissolves and must wind up its affairs upon an event stated in writing in the articles or Operating Agreement, member consent in the percentage the Operating Agreement specifies, an event making the business illegal to continue (subject to a 90-day cure), expiration of a stated term, or judicial dissolution (Montana Code Annotated Section 35-8-901). Members may unanimously waive winding up and continue the business before it is completed.

Unless the Operating Agreement provides otherwise, the LLC must keep at its principal office a current and past list of members and managers, a copy of the articles of organization and amendments, copies of the LLC's tax returns and financial statements for the 3 most recent years, and copies of any written Operating Agreements, as required by Montana Code Annotated Section 35-8-405.

The Company may indemnify and hold harmless a member, agent, or employee from claims arising out of action or inaction taken on the Company's behalf, except where the action or failure to act constitutes willful misconduct or recklessness, and subject to any further standards or restrictions set out in the articles of organization or Operating Agreement (Montana Code Annotated Section 35-8-107(1)(l)).

Unless the articles of organization or Operating Agreement provide otherwise, amending the Operating Agreement is one of a specific list of major matters that requires the consent of all members, not just a majority (Montana Code Annotated Section 35-8-307(3)(a), cross-referencing Section 35-8-109).