Understanding Vermont LLC Laws
The rules for starting and running a Vermont limited liability company (LLC) are laid out by Vermont's LLC laws.
In this guide, we offer simple explanations to Vermont LLC laws about:
- LLC Formation Requirements
- Registered Agent Duties and Appointment
- Operating Agreements
- Annual Report Requirements
To learn more about starting an LLC, visit our form an LLC guide.
LLC Formation Requirements
Vermont LLC laws set out the requirements for forming an LLC. The State of Vermont has created the Division of Corporations online portal and SOS Forms Request portal to simplify the process.
Vermont LLC Formation Statute
The following LLC formation statutes are from Vermont Code Title 11, Chapter 21: Limited Liability Companies:
Section 4023. Articles of organization
(a) Articles of organization of a limited liability company shall set forth:
(1) the name of the company;
(2) the address of the initial designated office;
(3) the name and street address of the initial agent for service of process;
(4) the name and address of each organizer;
(5) if the company has no members at the time of filing, a statement to that effect; and
(6) whether the company is an L3C.
(b) Articles of organization of a limited liability company may set forth:
(1) provisions permitted to be set forth in an operating agreement; and
(2) other matters not inconsistent with law.
(c) Articles of organization of a limited liability company may not vary the nonwaivable provisions of subsection 4003(b) of this title. As to all other matters, if any provision of an operating agreement is inconsistent with the articles of organization:
(1) the operating agreement controls as to managers, members, and members' transferees; and
(2) the articles of organization control as to persons other than managers, members, and their transferees who relied on the articles to their detriment. (Added 2015, No. 17, § 2.)
Start forming your LLC by reading our top LLC services review.
What This Means: Key Takeaways*
The Vermont LLC statute provides the requirements for setting up (or forming) an LLC. The State of Vermont offers online and hard copy LLC filing to meet these requirements.
Required Information for Vermont LLC Formation:
- LLC’s name (Must meet Vermont LLC naming requirements)
- LLC principal office’s street and mailing address
- Registered agent’s name and Vermont designated office address
- Name and address of each organizer
- If there aren’t any LLC members at the time of filing, you must make a note to that effect
- Note whether the company is an L3C
Optional Information for Vermont LLC Formation:
- LLC organizers can add their own provisions as long as the provisions don’t conflict with LLC statute.
Recommended: For help with completing the LLC formation forms, visit our Vermont LLC Articles of Organization guide.
Registered Agent Duties and Appointment
Vermont LLC laws define the duties and appointment of the LLC registered agent for service of process, known as just a registered agent in most states.
Vermont LLC Registered Agent Statute
The following registered agent statutes are from Vermont Code Title 11, Chapter 21: Limited Liability Companies:
Section 4007. Designated office and agent
(a) A limited liability company and a foreign limited liability company authorized to do business in this State shall designate and continuously maintain:
(1) a designated office for notification purposes, which may but need not be a place of its business, and may but need not be located in this State; and
(2) an agent and street address of the agent for service of process on the limited liability company in this State.
(b) An agent for service of process shall be an individual resident of this State, a domestic corporation, another limited liability company, or a foreign corporation or foreign limited liability company authorized to do business in this State. (Added 2015, No. 17, § 2.)
What This Means: Key Takeaways*
A registered agent’s job is to accept service of process (legal summons to a lawsuit).
A Vermont registered agent for service of process must:
- Maintain a designated office in Vermont (i.e., no P.O. boxes)
- Be an individual, a Vermont corporation or LLC, or foreign corporation or LLC with a business address that is the same as the registered office address
Registered agent information is kept on file by the State of Vermont. If you change your registered agent or if your registered agent resigns, you must file a change of registered agent for service of process form.
Operating Agreements
Vermont LLC laws provide guidelines for creating and maintaining an LLC operating agreement.
The following operating agreement statutes are from Vermont Code Title 11, Chapter 21: Limited Liability Companies:
Section 4003. Effect of operating agreement; nonwaivable provisions
(a) Except as otherwise provided in subsection (b) of this section, an operating agreement regulates the affairs of the company and the conduct of its business and governs relations among the members, among the managers, and among the members, managers, and the limited liability company. To the extent the operating agreement does not otherwise provide, this chapter regulates the affairs of the company, the conduct of its business, and governs relations among the members, among the managers, and among members, managers, and the limited liability company.
(b) An operating agreement may not:
(1) vary a limited liability company's capacity under subsection 4011(e) of this title to sue and be sued in its own name;
(2) except as provided in subchapter 8 of this chapter, vary the law applicable under subsection 4011(g) of this title;
(3) vary the power of the court under section 4030 of this title;
(4) subject to subsections (c) through (f) of this section, eliminate or restrict the duty of loyalty, the duty of care, or any other fiduciary duty;
(5) subject to subsections (c) through (f) of this section, eliminate or restrict the contractual obligation of good faith and fair dealing under subsection 4059(d) of this title;
(6) unreasonably restrict the duties and rights with respect to books, records, and other information stated in section 4058 of this title, but the operating agreement may impose reasonable restrictions on the availability and use of information obtained under that section and may define appropriate remedies, including liquidated damages, for a breach of any reasonable restriction on use;
(7) vary the power of a court to decree dissolution in the circumstances specified in subdivision 4101(a)(4) of this title;
(8) vary the requirement to wind up a limited liability company's business as specified in section 4101 of this title;
(9) unreasonably restrict the right of a member to maintain an action under subchapter 9 of this chapter;
(10) restrict the right to approve a merger, conversion, or domestication under section 4152 of this title to a member that will have personal liability with respect to a surviving, converted, or domesticated organization; or
(11) restrict the rights under this title of a person other than a member, manager, or transferee of any interest in a limited liability company.
(c) Unless unreasonable, the operating agreement may:
(1) restrict the duty:
(A) as required in subdivision 4059(b)(1) and subsection 4059(h) of this title, to account to the limited liability company and to hold as trustee for it any property, profit, or benefit derived by the member in the conduct or winding up of the company's business, from a use by the member of the company's property, or from the appropriation of a limited liability company opportunity;
(B) as required in subdivision 4059(b)(2) and subsection 4059(h) of this title, to refrain from dealing with the company in the conduct or winding up of the company's business as or on behalf of a party having an interest adverse to the company; and
(C) as required in subdivision 4059(b)(3) and subsection 4059(h) of this title, to refrain from competing with the company in the conduct of the company's business before the dissolution of the company;
(2) identify the specific types or categories of activities that do not violate the duty of loyalty;
(3) alter the duty of care, except to authorize intentional misconduct or knowing violation of law;
(4) alter any other fiduciary duty, including eliminating particular aspects of that duty; and
(5) prescribe the standards by which to measure the performance of the contractual obligation of good faith and fair dealing under subsection 4059(d) of this title.
(d) The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.
(e) To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of a responsibility that the member would otherwise have under this chapter and imposes the responsibility on one or more other members, the operating agreement may, to the benefit of the member that the operating agreement relieves of the responsibility, also eliminate or limit any fiduciary duty that would have pertained to the responsibility.
(f) The operating agreement may alter or eliminate the indemnification for a member or manager provided by section 4060 of this title and may eliminate or limit a member or manager's liability to the limited liability company and members for money damages, except for:
(1) breach of the duty of loyalty;
(2) a financial benefit received by the member or manager to which the member or manager is not entitled;
(3) a breach of a duty under subsection 4059(d) of this title;
(4) intentional infliction of harm on the company or a member; or
(5) an intentional violation of criminal law.
(g)(1) The court shall decide any claim under subsection (c) of this section that a term of an operating agreement is manifestly unreasonable.
(2) The court:
(A) shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time; and
(B) may invalidate the term only if, in light of the purposes and activities of the limited liability company, it is readily apparent that:
(i) the objective of the term is unreasonable; or
(ii) the term is an unreasonable means to achieve the provision's objective.
(h) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.
(i) A person that becomes a member of a limited liability company is deemed to assent to the operating agreement.
(j)(1) Two or more persons intending to become the initial members of a limited liability company may make an agreement providing that upon the formation of the company the agreement will become the operating agreement.
(2) One person intending to become the initial member of a limited liability company may assent to terms providing that upon the formation of the company the terms will become the operating agreement.
(k)(1) An operating agreement may specify that its amendment requires the approval of a person that is not a party to the operating agreement or the satisfaction of a condition.
(2) An amendment is ineffective if its adoption does not include the required approval or satisfy the specified condition.
(l)(1) The obligations of a limited liability company and its members to a person in the person's capacity as a transferee or dissociated member are governed by the operating agreement.
(2) Subject only to any court order issued under subdivision 4074(b)(2) of this title to effectuate a charging order, an amendment to the operating agreement made after a person becomes a transferee or dissociated member is effective with regard to any debt, obligation, or other liability of the limited liability company or its members to the person in the person's capacity as a transferee or dissociated member.
(m) If a record that has been delivered by a limited liability company to the Secretary of State for filing and has become effective under this chapter contains a provision that would be ineffective under subsection (b) of this section if contained in the operating agreement, the provision is likewise ineffective in the record.
(n) Subject to subsection (c) of this section, if a record that has been delivered by a limited liability company to the Secretary of State for filing and has become effective under this title conflicts with a provision of the operating agreement:
(1) the operating agreement prevails as to members, dissociated members, transferees, and managers; and
(2) the record prevails as to other persons to the extent they reasonably rely on the record. (Added 2015, No. 17, § 2; amended 2015, No. 97 (Adj. Sess.), § 42; 2015, No. 157 (Adj. Sess.), § E.3.)
What This Means: Key Takeaways*
An LLC operating agreement allows LLC members to create rules for how their unique LLC operates. These rules are often called “terms” or “provisions.”
Operating agreements are limited by state statute. For example, if the statute says LLC members can’t dissolve an LLC without all members agreeing, LLC members can’t change or override the statute with an operating agreement.
When an operating agreement is in place, it’s easier to navigate situations involving the operation of the LLC. And, if a lawsuit or dispute arises, LLC members (or the courts) have something to reference.
If a dispute arises that can’t be resolved by LLC members and there isn’t an operating agreement, the courts will use LLC statute to resolve disputes.
Creating an Operating Agreement
Some LLCs, such as professional LLCs or real estate LLCs, might need unique terms, while others might only need to cover standard provisions:
- Each member’s responsibilities
- How new members will be admitted
- How existing members may transfer or terminate their membership
- How profits and dividends will be distributed
- The process for amending the operating agreement
Use our free operating agreement template or learn more with our What Is an Operating Agreement guide.
Annual Report Requirements
Vermont LLC laws set out the requirements for annual LLC reporting. The State of Vermont has created the annual report filing portal to simplify the process.
Vermont LLC Annual Report Statute
The following annual report statutes are from the Vermont Code Title 11, Chapter 21 Limited Liability Companies:
Section 4033. Annual report for Secretary of State
(a) Each domestic limited liability company and each foreign limited liability company authorized to transact business in this State shall file an annual report with the Secretary of State. The annual report shall set forth the following information:
(1) the name of the company and the state or country under whose law it is organized; and
(2) the address of its designated office and the name of its designated agent at that office in this State.
(b) Information in the annual report shall be current as of the date the annual report is signed on behalf of the company.
(c) The annual report shall be delivered to the Secretary of State within three months after the expiration of the company's fiscal year. (Added 2015, No. 17, § 2.)
What This Means: Key Takeaways*
You can file your Vermont annual report online.
Your Vermont LLC annual report must state the following information (and must be current as of the date of filing):
- The name of the LLC
- Name of registered agent for service of process and designated office address
Annual Report Due Dates:
- Annual reports are due within three months of the end of the LLC’s fiscal year, each year.
*This information is provided for educational and entertainment purposes only. Please consult a lawyer for legal advice.