California’s Secretary of State says an operating agreement is required for a California LLC, but the agreement stays with the company and is not filed with the state. California law recognizes oral, written, implied, or combined operating agreements, while certain changes, including modifications to fiduciary duties, must be made in writing.

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Page 1 of the California Single-Member Operating Agreement

Single-Member Operating Agreement

For an LLC with one owner.

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Multi-Member Operating Agreement

For an LLC with two or more owners who manage the business together.

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Manager-Managed Operating Agreement

For an LLC where one or more managers handle the business’s management.

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Is an Operating Agreement Required for a California LLC?

Yes. The California Secretary of State states that an operating agreement is required, but it is maintained by the LLC rather than filed with the Secretary of State.

California does not impose a general notarization requirement for the agreement. In fact, the statute recognizes an operating agreement that is oral, in a record, implied, or a combination of those forms. Some provisions still require a written agreement.

Required

Yes

Filed with the state

Notarization

Not required by statute

For the state’s formation process and filing information, see the California Secretary of State LLC formation guidance.

California Operating Agreement Definition

Cal. Corp. Code § 17701.02(s) California Revised Uniform Limited Liability Company Act

Read the statute ↗

“Operating agreement” means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in subdivision (a) of Section 17701.10. The term “operating agreement” may include, without more, an agreement of all members to organize a limited liability company pursuant to this title. An operating 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 operating agreement. The term includes the agreement as amended or restated.

Oral, written, or implied

California does not require the operating agreement to exist as one signed paper document. The statutory definition recognizes oral terms, terms in a record, implied terms, or a combination.

Sole-member agreements count

A California LLC with one member can have an operating agreement. The statute expressly provides that it is not unenforceable merely because only one person is a party to it.

Some changes must be written

Under Cal. Corp. Code § 17701.10, the operating agreement generally governs member relations, management rights, company activities, and amendment procedures. Certain statutory variations require a written agreement, and fiduciary-duty modifications require a written agreement plus the informed consent of the members.

California LLC Default Rules to Address in Your Operating Agreement

These are California rules worth addressing expressly in the operating agreement.

Management and voting

An LLC is member-managed unless its Articles say otherwise. In a member-managed LLC, each member has equal rights in management and voting.

§ 17704.07(a), (b)(2)

Distributions

If the operating agreement does not provide otherwise, distributions are based on the value of each member’s contributions as stated in the LLC’s required records.

§ 17704.04(a)

Big decisions

Acts outside the LLC’s ordinary course generally require the consent of all members.

§ 17704.07(b)(4), (c)(4)

Member compensation

A member of a member-managed LLC has no default right to payment for services, except reasonable compensation for winding up the LLC.

§ 17704.07(e)

Calling member meetings

Any manager, or members representing more than 10% of the interests in current profits, may call a member meeting.

§ 17704.07(g)

Leaving the LLC

Dissociation does not automatically create a right to a payout. Unless the Articles or written agreement provide otherwise, the former member generally retains only transferee rights to distributions.

§ 17704.04(b)

Inspection rights

Members, managers, and transferees have statutory rights to inspect specified LLC records for purposes related to their interest, and these rights cannot be waived.

§ 17704.10(b), (h)

For ongoing state compliance, the California Secretary of State Statement of Information filing tips explain the separate reporting process. California tax filing requirements are covered by the Franchise Tax Board’s LLC filing information.