Now that we’ve discussed the formal public filings necessary to set up a master LLC and series, we’ll turn out attention to the content of operating agreements.
As mentioned in the last post, every master LLC must have an operating agreement, and prudence dictates that it be in writing, even though the statute does not, at least not expressly. As a starting point, the operating agreement for a master LLC should have all the same elements as an operating agreement for a traditional LLC.
The operating agreement for a series LLC should also contain:
- Provision for one or more series or the possibility of the future creation of one or more series.
- If the series LLC is to have internal limited liability, a provision to that effect similar to the notice of internal limited liability set forth in the articles of organization (see Part IV). (Note that the operating agreement should provide for internal limited liability even though it may seem redundant to the articles of organization.)
- If the series are to be treated as separate entities, a provision to that effect similar to the notice set forth in the articles of organization (see Part IV). Technically, the series will be treated as separate entities unless the operating agreement provides otherwise, but including an affirmative provision is a good precaution against unintentionally implying the contrary with other operating agreement provisions.
- A provision for series to be managed by either members or managers (regardless of whether the master LLC is managed by members or managers). If the operating agreement is silent, the series will be member-managed.
In addition, the operating agreement may provide for:
- Classes or groups of members or managers with various rights, powers, or duties with respect to a series.
- The future creation of other classes or groups of members or managers associated with a series, including classes or groups that have rights that are senior to existing classes or groups.
- Future actions without a vote of members or managers, including the amendment of the operating agreement or the creation of additional series of interest.
- A business purpose for a series that is different from that of the master LLC or other series.
- If a series is to be managed by managers, the reservation of certain authorities to the members of the series.
- The admission and dissociation of members and the appointment and removal of managers associated with the series.
- Provisions granting voting rights to members or managers of series, including voting rights to some groups of members or managers that are not granted to others.
- Provisions for certain members or classes of members to have no voting rights.