Alabama requires an LLC to have a limited liability company agreement, but the agreement may be written, oral, or implied. A written agreement is especially useful because Alabama defaults include equal distributions among members and unanimous approval for amendments and actions outside the ordinary course.
Choose the version that matches your Alabama LLC structure.
Is an Operating Agreement Required in Alabama?
Yes, but it does not have to be written.
Under Alabama’s LLC formation statute, a limited liability company agreement must be entered into before, after, or when the Certificate of Formation is filed. Alabama separately defines the agreement as one that may be written, oral, or implied.
The agreement itself is not the document that forms the LLC with the state. An Alabama domestic LLC is created by filing a Certificate of Formation. The Alabama Secretary of State’s LLC filing page currently lists a $200 state filing fee for a domestic LLC.
Alabama State Definition
“Limited liability company agreement” means any agreement (whether referred to as a limited liability company agreement, operating agreement or otherwise), written, oral or implied, of the member or members as to the activities and affairs of a limited liability company or series thereof. The limited liability company agreement of a limited liability company having only one member shall not be unenforceable by reason of there being only one person who is a party to the limited liability company agreement.
Alabama expressly recognizes all three forms. A written agreement is still useful because it creates a clear record of the terms the members intended to follow.
A one-member Alabama LLC can have its own agreement. It is not unenforceable merely because only one person is a party to it.
Under § 10A-5A-1.08, a written agreement can expand, restrict, or eliminate duties, including fiduciary duties. It cannot eliminate the implied contractual covenant of good faith and fair dealing or liability for a bad-faith violation of that covenant.
Alabama Default Rules
Alabama generally lets the LLC agreement govern relations among the members and between the members and the company. When the agreement does not address a matter, Alabama’s LLC statute supplies the rule.
If the agreement does not choose another structure, the LLC is directed and overseen by its members. Ordinary-course decisions may be made by a majority of the members.
§ 10A-5A-4.07(b)Before dissolution, members share equally in distributions by default rather than automatically according to contribution amounts or ownership percentages.
§ 10A-5A-4.05(a)All members must consent to amend the LLC agreement, place the LLC into bankruptcy, take action outside the ordinary course, and approve other matters for which Chapter 5A requires unanimous consent.
§ 10A-5A-4.07(b)(3)A member’s promise to contribute money or property is not enforceable unless the promise is in writing and signed by that member—even though the LLC agreement itself may be oral or implied.
§ 10A-5A-4.04(c)Alabama does not automatically entitle a member to payment for services performed for the LLC. The statutory exception is reasonable compensation for services rendered in winding up the company.
§ 10A-5A-4.07(d)A member may demand the LLC’s specified core records on 10 days’ written notice. Other books and records generally require 30 days’ written notice and a proper purpose.
§ 10A-5A-4.09The contribution rule is particularly useful to flag in Alabama: the LLC agreement itself may be oral or implied, while a member’s promise to make a contribution must be written and signed to be enforceable.
