North Dakota LLC Operating Agreement

Every North Dakota LLC should have an operating agreement in place. 

While not legally required by the state, having a written operating agreement will set clear rules and expectations for the management and operations of your LLC.

Download our free North Dakota operating agreement template below or sign up to create a custom operating agreement using our free tool.

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Free North Dakota LLC Operating Agreement Templates

We offer operating agreement templates for single-member LLCs and multi-member LLCs (including member-managed and manager-managed) as well as a customizable operating agreement tool.

Single-Member LLC Operating Agreement

Our single-member LLC operating agreement template was created for limited liability companies with only one member, where the sole member has full control over all affairs of the LLC and no other individuals have a membership interest in the company.

Multi-Member LLC Operating Agreements

Our multi-member LLC templates are meant for LLCs with more than one member. There are two types available: manager-managed and member-managed.

Create Custom Operating Agreement

Create a custom operating agreement using our free tool. Just answer a few basic questions, and the tool will develop an operating agreement for your new LLC.

To use our tool, you will need to sign in to our Business Center. A Business Center account will also grant you access to many other free tools, special discounts on business services, and much more. 

TRUiC’s Operating Agreement Tool

Use our free tool to create a custom operating agreement for your LLC.

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What Is a North Dakota LLC Operating Agreement?

An operating agreement is a legal document that outlines the ownership structure and operating procedures of an LLC.

Whether you are starting a single-member or multi-member LLC, your operating agreement should address all of the topics below. Some of these stipulations will not have much bearing on the actual operations of a single-member LLC, but are still important to include for the sake of legal formality.

1. Organization: When the LLC was officially formed, who its members are, and how ownership is divided. Multi-member LLCs may utilize an equal ownership structure or assign various members different “units” of ownership.
2. Management & Voting: Whether the LLC will be managed by its members or by an appointed manager, and how members will go about voting on business matters. Typically, each member has one vote, but you may wish to give some members more voting power than others. For more information on managing your LLC, read our Member-Managed vs Manager-Managed guide.
3. Capital Contributions: The amount of money each member has invested in the business. This is also where you should establish an approach to raising additional funds in the future.
4. Distributions: How profits and losses will be divided among the members. The most common option is to distribute profits evenly. If you want them divided a different way, this should be detailed in your operating agreement. For more information on the basics of LLC ownership, read our Contributions and Distributions guide.
5. Changes to Membership Structure: How roles and ownership will be transferred in the event that a member leaves the company. It’s essential to lay out the process for buying out and/or replacing a member in the LLC’s governing document.
6. Dissolution: Dissolution: If at some point all the members of your LLC decide you no longer wish to conduct business, you should officially dissolve it. Outlining the hypothetical process of dissolving your business is an important aspect of your operating agreement. To learn how to dissolve your North Dakota LLC, read our North Dakota LLC Dissolution article.

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Why Should I Have a North Dakota LLC Operating Agreement?

No matter what type of North Dakota LLC you're starting, you'll want to create an operating agreement. Here's why:

1. It’s recommended by the state. According to North Dakota Century Code, Uniform Limited Liability Company Act § 10-32.1-13, all members of a North Dakota LLC may enter into an oral, written or implied operating agreement to regulate the internal affairs of the company.
2. It'll prevent conflict among your business partners. If you're starting a multi-member LLC, having an operating agreement will prevent misunderstandings amongst your team by setting clear expectations about each partner's role and responsibilities.
3. It helps preserve your limited liability status. If you're the sole owner of a single-member LLC in North Dakota, having an operating agreement will help to ensure your limited liability status is upheld by court officials, and add to your business's credibility as a whole.

The full text of the statute can be found below:

1. Except as otherwise provided in subsections 2 and 3, the operating agreement
governs:

a. Relations among the members as members and between the members and the
limited liability company;
b. The rights and duties under this chapter of a person in the capacity of manager or
governor;
c. The activities of the company and the conduct of those activities; and
d. The means and conditions for amending the operating agreement.

2. To the extent the operating agreement does not otherwise provide for a matter
described in subsection 1, this chapter governs the matter.
3. An operating agreement may not:

a. Vary the capacity of a limited liability company under section 10-32.1-08 to sue
and be sued in its own name;
b. Vary the law applicable under section 10-32.1-09;
c. Vary the power of the court under section 10-32.1-22;
d. Subject to subsections 4 through 7, eliminate the duty of loyalty, the duty of care,
or any other fiduciary duty;
e. Subject to subsections 4 through 7, eliminate the contractual obligation of good
faith and fair dealing under subsection 4 of section 10-32.1-41;
f. Unreasonably restrict the duties and rights stated in section 10-32.1-42;
g. Vary the power of a court to decree dissolution in the circumstances specified in
subdivisions d and e of subsection 1 of section 10-32.1-50;
h. Vary the requirement to wind up the business of a limited liability company as
specified in subsection 1 and subdivision a of subsection 2 of section 10-32.1-51;
i. Unreasonably restrict the right of a member to maintain an action under sections
10-32.1-33 through 10-32.1-38;
j. Restrict the right to approve a merger, conversion, or domestication under section
10-32.1-71 to a member that will have personal liability with respect to a
surviving, converted, or domesticated organization; or
k. Except as otherwise provided in subsection 2 of section 10-32.1-15, restrict the
rights under this chapter of a person other than a member, manager, or governor.

4. If not manifestly unreasonable, and without limiting the terms that may be included in
an operating agreement, the operating agreement may:

a. Restrict or eliminate the duty:

(1) As required in subdivision a of subsection 2 and in subsections 7 and 8 of
section 10-32.1-41, 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;
(2) As required in subdivision b of subsection 2 and in subsections 7 and 8 of
section 10-32.1-41, to refrain from dealing with the company in the conduct
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or winding up of the company's business as or on behalf of a party having
an interest adverse to the company; and
(3) As required by subdivision c of subsection 2 and in subsections 7 and 8 of
section 10-32.1-41, to refrain from competing with the company in the
conduct of the business of the company before the dissolution of the
company;

b. Identify specific types or categories of activities that do not violate the duty of
loyalty;
c. Alter the duty of care, except to authorize intentional misconduct or knowing
violation of law;
d. Alter any other fiduciary duty, including eliminating particular aspects of that duty;
and
e. Prescribe the standards by which to measure the performance of the contractual
obligation of good faith and fair dealing under subsection 4 of section 10-32.1-41.

5. 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.
6. 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.
7. The operating agreement may alter or eliminate the indemnification for a member,
manager, or governor provided by subsection 2 of section 10-32.1-40, and may
eliminate or limit the liability of a member, manager, or governor to the limited liability
company and members for money damages, except for:

a. Breach of the duty of loyalty;
b. A financial benefit received by the member or manager to which the member or
manager is not entitled;
c. A breach of a duty under section 10-32.1-32;
d. Intentional infliction of harm on the company or a member; or
e. An intentional violation of criminal law.

8. The court shall decide any claim under subsection 4 that a term of an operating
agreement is manifestly unreasonable. 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:

(1) The objective of the term is unreasonable; or
(2) The term is an unreasonable means to achieve the objective of the
provision.

After Creating Your North Dakota LLC Operating Agreement

Once you have finished your operating agreement, you do not need to file it with your state. Keep it for your records and give copies to the members of your LLC.

Following any major company event, such as adding or losing a member, it is a good idea to review and consider updating the operating agreement. Depending on how your operating agreement is written, it may require some or all of the members to approve an amendment to the document.

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