An operating agreement sets the rules for your Illinois LLC before a dispute forces the state to set them for you. Illinois doesn’t require one, and that’s exactly the problem. With no operating agreement required by statute, skipping this document hands full control of your LLC to state default rules.
Choose the version that matches your Illinois LLC structure.
Is an Operating Agreement Required for an Illinois LLC?
No. Illinois forms an LLC through Articles of Organization, not an operating agreement. The Illinois Secretary of State’s LLC formation instructions direct organizers to file Form LLC-5.5, and the Secretary of State currently lists a $150 standard filing fee for that form.
Section 15-5 says members may enter into an operating agreement, while subsection (h) allows the agreement to be made before, after, or at the time the Articles of Organization are filed. Illinois therefore does not make an operating agreement, state filing, or notarization a condition of forming the LLC.
How Illinois Defines an LLC Operating Agreement
“Operating agreement” means the agreement under Section 15-5, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all of the members of a limited liability company, including a sole member, concerning the relations among the members, managers, and limited liability company. The term “operating agreement” includes amendments to the agreement.
Illinois defines the agreement by the relationships it governs rather than by whether the document carries a particular title. It covers relations among the members, managers, and LLC and expressly includes a sole member.
Illinois recognizes all three forms, as well as any combination of them. A document titled “Operating Agreement” is not required for an agreement to fall within the statutory definition.
A one-owner Illinois LLC can have an operating agreement even though only one person is a party to it.
Under 805 ILCS 180/15-5(h), the agreement can be entered into before, after, or when the Articles of Organization are filed, and it can be made effective as of formation or another stated time or date.
Illinois LLC Rules That Apply by Default
Illinois starts with a member-managed LLC unless the operating agreement expressly makes it manager-managed. The state’s management rule in 805 ILCS 180/15-1 puts that choice in the operating agreement itself.
These are five Illinois defaults worth addressing instead of leaving to the statute:
In a member-managed LLC, every member has equal management rights and ordinary business matters are decided by a majority of the members. The default is based on members, not ownership percentages.
§ 15-1(b)All members must consent to specified major actions, including amending the operating agreement, admitting a new member, consenting to dissolution, and selling substantially all company property.
§ 15-1(d)Distributions made before dissolution and winding up are divided in equal shares unless the operating agreement supplies different terms.
§ 25-1(a)A member of a member-managed company can dissociate at any time, rightfully or wrongfully. In a manager-managed company, a member generally cannot dissociate before dissolution unless the written agreement specifies when or on what events dissociation may occur.
§ 35-50A member may demand qualifying company information in a record. Within 10 days, the LLC must provide it, describe when and where it will be provided, or give its reasons for declining.
§ 10-15