Kentucky gives operating agreements unusual flexibility: under KRS § 275.015, an agreement can be written or oral, and a sole member’s own governance writing can qualify. Putting the terms in writing still matters because Kentucky defaults member voting and profit allocations to contribution value, not simply to one vote or an equal share per owner.
Choose the version that matches your Kentucky LLC structure.
Does Kentucky Require an LLC Operating Agreement?
No, not for an ordinary member-owned Kentucky LLC. Under KRS § 275.020, the company comes into existence when its Articles of Organization are filed with the Secretary of State. An operating agreement is not part of that formation filing, and the current filing fee for domestic LLC Articles of Organization is $40.
Kentucky does have a narrow exception that is easy to miss. A nonprofit LLC with no members must put the authority to manage its business and affairs in a written operating agreement.
Because Kentucky expressly recognizes oral operating agreements, Chapter 275 does not impose a general notarization requirement for an operating agreement.
Kentucky Operating Agreement Definition Under State Law
“Operating agreement” means any agreement, written or oral, among all of the members, as to the conduct of the business and affairs of a limited liability company. If a limited liability company has only one (1) member, an operating agreement shall be deemed to include:
(a) A writing executed by the member that relates to the affairs of the limited liability company and the conduct of its business regardless of whether the writing constitutes an agreement; or
(b) If the limited liability company is managed by a manager, any other agreement between the member and the limited liability company as it relates to the limited liability company and the conduct of its business, regardless of whether the agreement is in writing.
Kentucky expressly recognizes written and oral operating agreements. For a one-member LLC, the statute also recognizes governance terms created by the sole member even when there is no second member to make a conventional agreement.
Kentucky expressly recognizes both. A handshake arrangement can therefore have legal significance, which is one reason putting the actual deal in writing matters.
A sole owner’s written rules concerning the LLC can qualify as its operating agreement without needing another member to sign them.
Under KRS § 275.177, if a written operating agreement says amendments must be written and adopted through a specified procedure, Kentucky enforces that restriction. An inconsistent unwritten change is not treated as part of the agreement.
Kentucky also expressly favors contractual freedom. KRS § 275.003 directs courts to give maximum effect to freedom of contract and the enforceability of operating agreements, although the obligation of good faith and fair dealing cannot be eliminated.
Kentucky LLC Defaults Based on Contribution Value
Kentucky’s defaults rely heavily on contribution value, rather than treating every owner identically. These are the rules most worth addressing directly in a written agreement.
Members vote in proportion to the agreed value of contributions actually received and not returned. Ordinary business generally requires a majority-in-interest; managers use a simple majority with one vote per manager.
§ 275.175If the written agreement does not provide another method, profits and losses follow the agreed value of each member’s contributions received by the LLC and not returned.
§ 275.205A member or manager has no automatic right to compensation for services performed for the LLC. Compensation has to be provided for in a written operating agreement.
§ 275.165(4)If the operating agreement does not provide a written admission rule, someone acquiring an interest directly from the LLC needs the written consent of all members to become a member.
§ 275.275A member-managed LLC member may resign on 30 days’ written notice. In a manager-managed LLC, a member cannot resign without all other members’ consent unless the written agreement changes the rule. Dissociation itself does not create a right to a payout.
§ 275.280In a manager-managed LLC, a member who is not also a manager has no duties to the company or the other members solely because that person is a member, unless a written agreement provides otherwise.
§ 275.170(4)