A North Dakota LLC operating agreement is the internal contract that governs ownership, management, and decision-making inside the company. North Dakota doesn't require you to file it with the state, but Chapter 10-32.1 fills every silence with default rules that may not match how you actually run the business.
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What Counts as an Operating Agreement in North Dakota
North Dakota's Uniform Limited Liability Company Act sits in Chapter 10-32.1 of the Century Code. Section 10-32.1-13 defines the operating agreement's scope. It governs relations among members, rights and duties of managers and governors, activities and affairs of the LLC, and how the agreement itself can be amended.
Operating agreements stay internal to the LLC. They aren't filed with the North Dakota Secretary of State. On the public record, only one formation document appears: the Articles of Organization, filed for $135.
Every North Dakota LLC also needs a registered agent with a North Dakota street address, named in the Articles of Organization. Boost Suite's North Dakota registered agent services review compares commercial and noncommercial options under N.D.C.C. § 10-32.1-16.
This guide covers the operating agreement itself. For the broader formation sequence (name reservation, EIN application with the IRS, first-year compliance), see Boost Suite's walkthrough on how to start a North Dakota LLC.
Oral, Written, Implied, or Combined — § 10-32.1-02(36) Specifics
This is where North Dakota breaks from most states. Under N.D.C.C. § 10-32.1-02(36), an operating agreement is defined as an agreement that may be oral, in a record, implied, or any combination, among all members (including a sole member). Most states require a record. North Dakota doesn't.
That sounds convenient. In practice, it's a trap. An oral or implied agreement is hard to prove in court, and member recollections diverge fast once money is on the line. A written agreement also carries real weight during bank onboarding, investor due diligence, and disputes with dissociated members.
I've reviewed North Dakota LLC records where the only “operating agreement” was an email thread and a handshake between 2 ranchers. When one of them wanted out, there was no clear buyout formula and no written record showing the value of the equipment each person had contributed. We ended up spending 4 months reconstructing facts that a single written agreement would have settled in about 30 minutes.
No clear buyout formula and no reliable record of contributed equipment values.
A member exit turned into a long reconstruction exercise instead of a straightforward buyout discussion.
About 4 months of avoidable work over issues that a written agreement could have clarified in roughly 30 minutes.
My recommendation: even though § 10-32.1-02(36) allows oral and implied operating agreements in North Dakota, I would always reduce the agreement to a written record. It is faster, easier to prove, and far more practical when ownership, buyout rights, or contribution values are questioned later.
The Default Rules That Apply Without One
Without an operating agreement, Chapter 10-32.1 fills in the gaps. For LLCs formed after July 31, 2017, those defaults are not simple equal-share rules. They're tied to contribution value and distribution interest, which surprises most first-time owners who assumed “50/50” or “33/33/33” splits were automatic.
Voting Power and Member Decisions
Section 10-32.1-39 sets the voting default for member-managed LLCs formed after July 31, 2017: voting power runs proportional to each member's distribution interest, not one-vote-per-member. Ordinary-course matters pass by a majority of voting power. For acts outside the ordinary course, and for any amendment to the operating agreement itself, all members must consent.
Worth flagging: the consent-of-all rule for amendments means a single holdout can block changes forever unless the agreement says otherwise. Drafting a lower amendment threshold (two-thirds, or majority by distribution interest) is one of the most common reasons to put an operating agreement in writing.
Profits, Losses, and Distributions
For post-July 31, 2017 LLCs, distributions before dissolution and profit/loss allocations default to proportions based on the value of each member's capital contributions (N.D.C.C. §§ 10-32.1-30 and 10-32.1-30.1). A member who put in $200,000 gets a larger slice than one who put in $20,000, even if both do equal work.
A written operating agreement can override this. You can tie distributions to labor, reserve a guaranteed payment for a founding member, or split profits and losses differently than the contribution-value formula. Without a clause, the statute controls. The state won't honor a verbal side deal.
Fiduciary Duties Still Apply
In North Dakota, members and managers can't draft their way out of every duty. N.D.C.C. § 10-32.1-41 imposes a duty of loyalty, a duty of care consistent with the business judgment rule, and a contractual obligation of good faith and fair dealing. Section 10-32.1-13(3) forbids an operating agreement from eliminating these outright, though specific applications can be adjusted within statutory limits.
In a member-managed LLC, those duties fall on members. In a manager-managed or board-managed LLC, they shift to managers or governors, and members are not fiduciaries solely by being members. A well-drafted agreement clarifies exactly which duties apply to whom, which reduces ambiguity if a dispute lands in a North Dakota district court.
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Management Structures: Member-Managed, Manager-Managed, and Board-Managed
North Dakota's LLC Act recognizes three management structures, not two. Most competitor templates cover only member-managed and manager-managed formats, which leaves out one of the state's most useful governance options. The default structure, unless the operating agreement expressly says otherwise, is member-managed (N.D.C.C. § 10-32.1-39).
Member-Managed LLCs
In a member-managed LLC, every member has authority to bind the company in the ordinary course of business. That's efficient for small operations with two or three aligned members. It's a poor fit if one owner is a passive investor or if you want to route all decisions through one operator.
Single-member North Dakota LLCs are member-managed by default. The structure works, but the sole member should still document their authority in writing. Section 10-32.1-23 confirms that member status alone doesn't make someone the LLC's agent for every contract, so banks and counterparties will ask for proof.
Manager-Managed LLCs
In a manager-managed LLC, authority sits with one or more managers named in the operating agreement. A manager doesn't have to be a member. By majority consent, members choose managers and can remove them without cause or notice under § 10-32.1-39.
Manager-managed structures suit businesses with passive investors. Members still approve major actions (mergers, conversions, sales of substantially all property, and operating agreement amendments), but day-to-day decisions sit with managers. Among managers, ordinary-course disputes are decided by a majority.
Board-Managed LLCs and Governors
Here's the catch with most out-of-the-box templates: they skip North Dakota's board-managed option entirely. N.D.C.C. § 10-32.1-39 explicitly recognizes LLCs managed by a board of governors. Governors play a role similar to corporate directors, and a governor must be a natural person without needing to be a member.
Board-managed structures work well for multi-generation family businesses, farming or ranching operations with outside advisors, and LLCs that plan to raise outside capital without converting to a corporation. Drafting one requires custom language; stock template marketplaces rarely include it.
Board-managed LLCs are one of North Dakota's most underused structures. In my experience working with filing clerks and LLC formations across 25+ states, only a handful of jurisdictions, including North Dakota, Minnesota, and a few others, fully codify the governor role.
I've used a board-managed setup for 2 multi-generational farm LLCs where the family wanted to bring in a retired accountant for oversight and guidance without giving that person membership rights. It solved a real governance problem: the family kept ownership where it belonged, while still adding outside judgment and accountability at the board level.
My recommendation: if a board-managed structure fits your situation, skip the stock template and use custom language tied directly to § 10-32.1-39. This is not a section I would leave to generic fill-in-the-blank wording, because the whole value of the structure is in defining the governor role clearly from the start.
Clauses Every North Dakota Operating Agreement Should Cover
The clauses below map directly to North Dakota default rules and case-law risks. Boost Suite's review of 50-state operating agreement requirements shows that generic templates often miss these state-specific hooks. That leaves owners with defaults they never read.
| Clause | What ND Default Says (if silent) | What the Operating Agreement Should Say |
|---|---|---|
| LLC name and principal office | Must match Articles of Organization exactly | State exact LLC name; identify principal executive office |
| Management structure | Member-managed by default | Expressly declare member-, manager-, or board-managed |
| Capital contributions | Obligation enforceable under § 10-32.1-29 | List each member, amount, form, and valuation date |
| Voting | Proportional to distribution interest (post-7/31/2017) | Specify voting power, quorum, and amendment threshold |
| Profit, loss, distributions | Proportional to contribution value | Set allocation formula, timing, and reserves |
| Transfer of interest | Transferee gets no management rights (§ 10-32.1-44) | Add right of first refusal and buy-sell triggers |
| Dissociation | Wrongful if it breaches an express OA term (§ 10-32.1-47) | Define wrongful dissociation events and damages |
| Dissolution and winding up | Triggered by member consent or 90 days without members (§§ 10-32.1-50, -51) | Specify dissolution events and winding-up procedure |
| Dispute resolution | No default; courts hear disputes | Arbitration clause with North Dakota venue and defined scope |
| Indemnification | Permissive, subject to statutory floors | Scope, advancement, insurance, and carve-outs |
Amending the operating agreement itself costs nothing at the state level, since it isn't filed with the Secretary of State. Amendments to the Articles of Organization, dissolutions, and registered-agent changes each carry their own fees. Boost Suite's North Dakota LLC cost breakdown covers the full fee schedule.
The dispute-resolution clause deserves close attention. In Kramlich v. Hale, 2017 ND 203, the North Dakota Supreme Court enforced an arbitration clause in the operating agreement of Somerset-Minot, LLC. The arbitration applied to claims relating to that LLC, but not to separate partnership claims. The lesson: scope arbitration language to cover every claim “arising out of or relating to” the operating agreement, and name the specific LLC. Sloppy drafting leaves gaps.
For liability protection clauses, West Dakota Oil, Inc. v. Kathrein Trucking, LLC, 2022 ND 111 is the leading modern case. The North Dakota Supreme Court reversed a veil-piercing judgment and emphasized that failure to observe internal formalities alone isn't enough to pierce. Good records and a signed operating agreement matter, but the court's fact-specific analysis also weighed undercapitalization, commingled funds, and whether the LLC was a sham. A well-drafted OA works alongside real bookkeeping, not in place of it.
One limit to watch. Section 10-32.1-13(3) lists provisions an operating agreement cannot override: duty of loyalty, good faith and fair dealing, member information rights, court-ordered dissolution power, and the winding-up procedure in § 10-32.1-51. Drafting around these doesn't just fail quietly; it can invalidate the clause that tried.
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Single-Member, Multi-Member, and North Dakota's Special LLC Types
The right operating agreement depends on who owns the LLC and what kind of North Dakota entity you formed. The Secretary of State recognizes four distinct LLC categories, each with its own rules and annual report calendar.
Single-Member LLCs
A single-member North Dakota LLC needs an operating agreement more than most owners realize. Under § 10-32.1-02(36), the statutory definition expressly includes “the agreement of a sole member,” so a one-person operating agreement is fully recognized. Section 10-32.1-45 also extends charging-order exclusivity to single-member LLCs: a personal judgment creditor can reach distributions, but can't force the sale of the membership interest itself.
Here's a North Dakota trap most first-time owners miss. Forming the LLC does not automatically make the organizer a member. N.D.C.C. § 10-32.1-20 explicitly states that formation by itself doesn't cause any person to become a member. A sole owner who files the Articles without separately documenting initial membership may create an LLC with no members. That starts the 90-day dissolution clock under § 10-32.1-50.
I had a North Dakota single-member client try to open a business bank account 6 months after filing Articles of Organization. The bank asked for proof of ownership, but his only document was the Articles, which listed him as the organizer, not the member.
Under § 10-32.1-20, organizer status is not membership. The filing showed who submitted the LLC paperwork, but it did not clearly prove who owned the company.
We prepared a retroactive single-member operating agreement and a member-admission resolution before the bank would move forward.
My recommendation: sign the operating agreement the same day you file the Articles of Organization, and name yourself as the initial member in writing. That one record can prevent a bank delay later.
Multi-Member LLCs
Multi-member North Dakota LLCs carry more drafting weight than single-member LLCs. Under the post-July 31, 2017 defaults, voting, distributions, and profit/loss allocation are all contribution-based. That creates friction when members contribute unequally in cash but equally in sweat. A written agreement lets the group decide what “fair” looks like before money is involved.
Buyout triggers, deadlock provisions, and dissociation remedies also sit in the operating agreement. Without them, one member's unexpected exit can stall the business while the rest scramble under generic statutory rules. Multi-member LLCs should also run a North Dakota business entity search before finalizing the LLC name. A conflict with an existing registered entity will force a rewrite.
PLLC, Farming/Ranching, and ALF LLCs
North Dakota recognizes three specialized LLC types beyond the standard Business LLC, each with its own compliance calendar:
- Professional LLC (PLLC): Must provide licensing-board certification for every member providing the professional service when filing Articles of Organization. Annual report due November 15, $50 fee. A copy of the filed report also goes to the North Dakota regulatory board that licenses the profession.
- Farming or Ranching LLC: Subject to the ownership restrictions in N.D.C.C. ch. 10-06.1. Annual report due April 15 (not November 15), $50 fee.
- Authorized Livestock Farm LLC (ALF LLC): Same April 15 deadline, $50 fee. The annual report form isn't available through the FirstStop Portal; ALF LLCs must contact the Secretary of State's office directly to request it.
Each category needs an operating agreement shaped around its industry rules. For a farm LLC, the agreement should reference the § 10-06.1 ownership restrictions. A PLLC agreement should track which members hold the required license and how admission works when a new member must first qualify with the licensing board.
Choose the version that fits your North Dakota LLC structure.
North Dakota LLC Operating Agreement FAQ
These answers address the questions North Dakota LLC owners ask most often during formation, bank onboarding, and disputes. Every answer ties back to Chapter 10-32.1 or the ND Secretary of State, so you can verify each one at the source.
Is an operating agreement required by law in North Dakota?
No. North Dakota's Uniform Limited Liability Company Act (N.D.C.C. ch. 10-32.1) doesn't require every LLC to adopt an operating agreement. Without one, statutory defaults fill every gap, and those defaults rarely match custom ownership arrangements.
Does a North Dakota LLC operating agreement have to be in writing?
No. Section 10-32.1-02(36) defines an operating agreement as oral, in a record, implied, or any combination. Boost Suite recommends a written agreement anyway, because oral and implied agreements are hard to prove in court and rarely satisfy banks, lenders, or investors.
Do I file my operating agreement with the North Dakota Secretary of State?
No. Operating agreements are internal LLC documents. The only formation document filed with the Secretary of State is the Articles of Organization (filing fee: $135).
Can a single-member North Dakota LLC have an operating agreement?
Yes. The statutory definition of operating agreement expressly includes a sole member. A single-member OA supports bank onboarding, documents the member-LLC separation, and reinforces charging-order protection under § 10-32.1-45.
What happens to my North Dakota LLC if I don't have an operating agreement?
Chapter 10-32.1 fills every silence with default rules. For LLCs formed after July 31, 2017, those defaults tie voting power, distributions, and profit/loss allocation to distribution interest or contribution value. If the defaults don't match what the members intended, the statute wins.
Does a North Dakota operating agreement need to be notarized?
No. North Dakota law doesn't require notarization for an operating agreement to be valid. Some banks or lenders may request notarized signatures for their own records, but it isn't a statutory requirement.
Can I update my North Dakota LLC operating agreement later?
Yes. The amendment procedure is set by the agreement itself. If the agreement is silent, § 10-32.1-39 requires consent of all members to amend. A written agreement can, and usually should, set a lower amendment threshold such as a majority by distribution interest.
How much does it cost to create a North Dakota LLC operating agreement?
Nothing beyond your time if you use a free template. The state charges no fee for the operating agreement itself, since it isn't filed with the Secretary of State. Formation services bundle operating agreement drafts into their paid packages; Boost Suite's North Dakota LLC services review compares pricing across popular providers.
How long does it take to set up a North Dakota LLC operating agreement?
Drafting the agreement itself takes as little as an hour using a fillable template. Once all members sign, the document takes effect. The underlying LLC formation is a separate step; current North Dakota LLC processing times for Articles of Organization depend on filing channel and Secretary of State workload.
- West Dakota Oil, Inc. v. Kathrein Trucking, LLC, 2022 ND 111
- North Dakota Century Code Chapter 10-32.1, Uniform Limited Liability Company Act
- North Dakota Secretary of State, Limited Liability Company page
- North Dakota Secretary of State, Maintain Registration page
- North Dakota Office of State Tax Commissioner, New Businesses and Contractors
- Kramlich v. Hale, 2017 ND 203
Looking for an overview? See North Dakota LLC Services
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