An Arkansas LLC operating agreement defines the ownership structure, profit splits, and management rules for a limited liability company organized under the State of Arkansas’s Uniform Limited Liability Company Act (Arkansas Code § 4-38-101 et seq.). Every person who forms a limited liability company in Arkansas will benefit from putting this document in writing, even when state law doesn’t explicitly require it.
Choose the version that matches your LLC structure and download it in PDF or Word format. Each template is designed to help you document ownership, management, and internal rules more clearly from day one.
I always start by checking whether an Arkansas LLC operating agreement actually follows the current law under Title 4, Chapter 38. Arkansas replaced its prior LLC framework through Act 1041 of 2021, but a surprising number of free templates online still rely on older statutory language.
When I see that, I look more closely at whether the template reflects the current rules on fiduciary duties and operating agreement limits. If it does not, I usually treat the document as outdated before I even review the rest of the clauses.
If a template does not clearly track Arkansas Code Title 4, Chapter 38, I treat it as outdated immediately.
Does Arkansas Law Require an LLC Operating Agreement?
Arkansas law doesn’t require LLC members to create an operating agreement. No statute mandates one, and the Arkansas Secretary of State won’t ask for the document during formation. The state only requires a Certificate of Organization, also known as the Articles of Organization (Form LL-01), filed with the Secretary of State’s Business and Commercial Services division.
Here’s the catch: § 4-38-105 defines the operating agreement broadly. It can be oral, implied by conduct, or written. An oral agreement is technically valid under Arkansas law, but proving its terms in court is a different story. Any company with more than one member that relies on a handshake is gambling on every person’s memory aligning perfectly during a business dispute.
A written LLC operating agreement isn’t filed with the state. It stays with the company’s internal records. No filing fee, no approval process, no public disclosure of its contents.
For entrepreneurs still setting up an LLC in Arkansas, the operating agreement is a separate step from the Articles of Organization. One goes to the state; the other stays in a filing cabinet. Both are required for a properly structured limited liability company.
Arkansas ULLCA Default Rules That Apply Without an Operating Agreement
Skipping the LLC operating agreement doesn’t create a legal vacuum. Arkansas Code Chapter 38 fills every gap with default rules that will govern the company automatically. The problem is that those defaults rarely match how members actually run their business.
Per-Capita Profit and Loss Splits
Under § 4-38-404, profits and losses in an Arkansas LLC are split equally among members. It doesn’t matter how much each person invested. A member who contributed $150,000 receives the same profit distribution as a person who contributed $5,000.
The statute ignores capital contributions unless the operating agreement says otherwise. That adds up fast in a multi-member LLC where investment levels vary. One clause in the company operating agreement specifying pro-rata distributions based on ownership percentages eliminates the risk.
Voting Rights and Day-to-Day Authority
Arkansas law defaults to member-managed governance under § 4-38-407(b). Every member gets equal say in ordinary business decisions, and a majority vote controls. Extraordinary actions, like selling substantially all the company’s assets, will require unanimous consent of every person with membership interest.
Without an operating agreement that assigns authority, a two-member LLC can deadlock on any routine business decision. The ULLCA defaults don’t include a tiebreaker mechanism. An officer or manager designated in the agreement will prevent that kind of paralysis.
Transfer of Membership Interest
A member can transfer their financial rights (distributions, share of profits) without approval from other LLC members. Transferring full membership interest, including voting and management rights, is a different story. Under § 4-38-702, unanimous consent of all other members is required. The transferee becomes an “assignee” with limited economic rights until the company votes to admit that person as a full member.
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What to Include in an Arkansas LLC Operating Agreement
Every Arkansas LLC operating agreement should cover a handful of state-specific provisions beyond generic boilerplate. The sections below reflect what the ULLCA allows, restricts, and leaves open for customization by the company’s members and managers.
Capital Contributions and Ownership Percentages
Spell out each member’s initial capital contribution in dollar amounts or property descriptions. Link ownership percentages directly to those contributions. Arkansas law doesn’t impose a minimum, so even a $100 initial investment is valid for any limited liability company.
Include a clause addressing future contributions: whether they’re mandatory, voluntary, or subject to a member vote. As provided in the operating agreement, the company will enforce these obligations against each person who signed.
Management Structure: Member-Managed vs. Manager-Managed
Arkansas law recognizes both structures. The Articles of Organization (Form LL-01) ask whether the LLC is member-managed or manager-managed, so the operating agreement must match that election. Each manager or officer of the company will have authority as provided in the agreement.
| Feature | Member-Managed | Manager-Managed |
|---|---|---|
| Default under ULLCA | Yes (§ 4-38-407) | Must be elected |
| Who runs daily operations | All members equally | Designated managers |
| Fiduciary duties apply to | All members | Managers (and managing members) |
| Voting on ordinary matters | Majority of members | Managers decide |
| SOS filing distinction | Standard Form LL-01 | Same form; check manager-managed box |
Choosing a manager-managed limited liability company makes sense when some members are passive investors. It consolidates authority and limits which person owes fiduciary duties to the LLC.
Fiduciary Duties of Loyalty and Care
The ULLCA codified fiduciary duties of loyalty and care that Arkansas LLC members and managers owe the company and each other. Under § 4-38-409, the duty of loyalty includes avoiding self-dealing, not competing with the LLC, and refraining from conduct involving intentional misconduct or a knowing violation of law.
For the duty of care, the floor sits at grossly negligent or reckless conduct. Simple negligence won’t trigger liability for any manager or officer of the company. An operating agreement can modify these duties under § 4-38-105(d), but two hard limits apply: members can’t eliminate the duty of loyalty entirely, and they can’t reduce the duty of care below gross negligence.
Before the ULLCA took effect in 2022, Arkansas’s prior LLC law was silent on modifying fiduciary duties. The current framework will give limited liability company owners considerably more flexibility to shape those obligations as provided in the operating agreement.
Dissolution Triggers and Buyout Provisions
Without a dissolution clause, Arkansas defaults apply under § 4-38-701. An LLC dissolves upon consent of all members, a court order, or administrative dissolution by the Arkansas Secretary of State for failing to file the annual franchise tax report.
An operating agreement can add custom triggers: a member’s death, disability, bankruptcy, or a fixed end date. Buyout provisions matter most in multi-member LLCs. The agreement should specify a valuation method (book value, fair market value, appraised value) and a payment timeline so that every person who exits the company receives compensation as provided in the agreement. Arkansas law doesn’t prescribe either, so silence means negotiation or litigation.
I have seen Arkansas’s per-capita profit split catch LLC owners off guard more than once. When the operating agreement stays silent, the default rule under § 4-38-404 can produce a result that feels completely disconnected from what the members thought was fair.
I worked with a 2-member LLC where one member put in $250,000 and the other contributed $20,000 in sweat equity. Both of them assumed the larger cash contribution would naturally justify a bigger share of distributions.
Under Arkansas’s default rule, both members were entitled to 50% of distributions. The problem stayed hidden until a business dispute forced everyone to look at what the statute actually said.
Single-Member vs. Multi-Member LLC Operating Agreements Under Arkansas Law
A single-member LLC in Arkansas faces a unique risk: veil piercing. Arkansas courts have pierced the corporate veil when a sole person commingles personal and business funds, ignores corporate formalities, or undercapitalizes the company. A written LLC operating agreement documents the separation between the owner and the limited liability company, even when there’s no other member to negotiate with.
Multi-member LLCs treat the operating agreement as a contract between co-owners. Arkansas courts interpret a company operating agreement under standard contract principles. Ambiguous terms get construed against the drafter, which is why precision matters more than length.
The structural difference affects management, too. A single-member LLC is member-managed by default, with the sole member serving as the only officer and manager of the company. A multi-member LLC will need explicit rules on decision-making, deadlock resolution, and exit procedures in its operating agreement.
Curious about what it costs to form an Arkansas LLC? The operating agreement itself is free to create. The expense comes from skipping it.
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Protected Series LLCs: Operating Agreement Requirements
Arkansas authorized protected series LLCs through Act 12 of the 2021 Second Extraordinary Session. Under this law, a series LLC can create individual “protected series” within a single limited liability company, each with its own assets, liabilities, and members.
The operating agreement for a series LLC must establish each protected series by name. It should define the assets allocated to each series, the managers or officers responsible for each, and the economic rights within each series. Without these provisions, the liability shield between series won’t hold up.
No competitor page covering the Arkansas LLC operating agreement addresses this company structure. LLC owners weighing a series formation can compare the top-rated LLC formation services in Arkansas for providers that support series filings.
How the LLC Operating Agreement Connects to Arkansas Formation and Compliance
The LLC operating agreement doesn’t exist in isolation. It ties directly to two compliance obligations that every Arkansas limited liability company will face. The Arkansas SOS Doing Business guide (2025) covers both in detail.
Articles of Organization and Name Consistency
The LLC name in the operating agreement must match the Articles of Organization, also called the Certificate of Organization (Form LL-01), exactly. One missing period, one “LLC” vs. “L.L.C.” discrepancy, and banks will refuse to open a business account for the company. Before drafting the agreement, check whether your Arkansas LLC name is available to confirm the name is correctly formatted.
The Articles of Organization also declare whether the limited liability company is member-managed or manager-managed. If the management structure changes later, both documents will require updating.
Annual Franchise Tax Report and the May 1 Deadline
Every Arkansas LLC owes an annual franchise tax report, due May 1. The filing goes to the Secretary of State’s Business and Commercial Services division, not the Department of Finance and Administration. The SOS franchise tax report forms page has the current year’s form.
The minimum franchise tax is $150 per year. Miss the deadline and the state will tack on a penalty; ignore it long enough, and the SOS can administratively dissolve the LLC. The company operating agreement should reference this obligation so every member and officer understands the deadline and what’s required.
Choosing a reliable registered agent for your Arkansas LLC ensures franchise tax notices and other state correspondence reach the right person. The operating agreement typically names the registered agent and their registered office address.
I see one Arkansas compliance mistake come up again and again: business owners assume the franchise tax report goes to the Department of Finance and Administration. It does not. For Arkansas LLCs, that filing goes through the Secretary of State.
I have seen owners send payments there by mistake, then assume the filing is handled when it is not.
I always verify that the form routes to the Business and Commercial Services division at the State Capitol, because that is where the Arkansas LLC franchise tax report is handled.
I have seen business owners make the DFA mistake first, then get a delinquency notice from the Secretary of State weeks later because the state still shows the franchise tax report as unpaid or unprocessed.
- The mailing address shown on the franchise tax form
- That the filing is directed to the Secretary of State, not the DFA
- That the destination line references the Business and Commercial Services division at the State Capitol
Choose the version that fits your LLC structure.
What Arkansas LLC Owners Ask About Operating Agreements
These are the 6 most frequently asked questions from our clients and the LLCs we have established.
Can an Arkansas LLC operating agreement be oral, or does it have to be written?
Under § 4-38-105, oral operating agreements are technically valid in Arkansas. State law doesn’t require a written document. But oral terms are nearly impossible to enforce when LLC members disagree on what they actually agreed to. Courts will fill the gaps with ULLCA statutory provisions for any term that isn’t provable.
What happens to an Arkansas LLC if a member dies without a succession clause?
A deceased member’s transferable interest passes to their estate under § 4-38-602. The estate receives economic rights (distributions) but that person doesn’t automatically become a member of the company. Without a succession clause as provided in the operating agreement, remaining members will be required to unanimously consent to admit the heir. That process can freeze LLC business operations for months.
Can you waive fiduciary duties in an Arkansas LLC operating agreement?
Only partially. § 4-38-105(d) allows LLC members to modify fiduciary duties of loyalty and care, but the operating agreement can’t eliminate the duty of loyalty entirely. It also can’t reduce the duty of care below the grossly negligent reckless conduct standard. Any waiver clause that crosses those lines is unenforceable under Arkansas law.
Does a protected series LLC in Arkansas need a separate operating agreement for each series?
No separate agreement is required. The main company operating agreement must contain provisions establishing each protected series by name and specifying the assets, members, and liability boundaries of each. Without those internal provisions as provided in the agreement, the asset separation between series won’t hold up in court.
Is an operating agreement sufficient to open a bank account for an Arkansas LLC?
Most banks will require three documents: the filed Articles of Organization, the LLC operating agreement, and an EIN confirmation letter from the IRS. Some banks also request a resolution authorizing the person opening the account as an officer or manager of the company. A single-member LLC without an operating agreement may face extra scrutiny or outright refusal.
How does amending an Arkansas LLC operating agreement differ from restating it?
An amendment changes specific provisions and attaches to the original document. A restatement replaces the entire operating agreement with a new version. Arkansas law doesn’t prescribe a process for either; the company’s operating agreement itself should define the amendment procedure. If it’s silent, unanimous member consent is required for any change.
- Arkansas Secretary of State: LLC Forms and Fees
- Justia U.S. Law: Arkansas Code § 4-38-105 – Operating Agreement Scope, Function, and Limitations
- Justia U.S. Law: Arkansas Code § 4-38-404 – Sharing of Distributions
- Arkansas Secretary of State: Franchise Tax Report Forms
- Arkansas Secretary of State: Doing Business in Arkansas 2025 (PDF)
- Justia U.S. Law: Arkansas Code Title 4, Chapter 38 – Uniform Limited Liability Company Act
Looking for an overview? See Arkansas LLC Services
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