The South Dakota LLC operating agreement is the internal contract that governs ownership, management, and money inside a company formed under SDCL Title 47, Chapter 34A. The state doesn’t require one, and the Secretary of State won’t accept it. Skip it anyway, and statutory defaults take over.
Choose the version that matches your South Dakota LLC structure.
Does a South Dakota LLC Need an Operating Agreement?
No. South Dakota allows members to enter into an operating agreement, but Chapter 47-34A does not make one a condition of forming the LLC. The agreement can even be oral; the LLC itself is formed through Articles of Organization, and domestic filing currently costs $150 online or $165 on paper.
The operating agreement stays inside the company rather than being filed with the state. The Secretary of State specifically treats it as an internal document, while its South Dakota LLC filing forms cover the records that actually go to the state.
Because South Dakota recognizes an oral operating agreement, Chapter 47-34A does not impose notarization as a general validity requirement.
What South Dakota Law Means by an Operating Agreement
“Operating agreement” means any valid agreement, either written or oral, under § 47-34A-103 concerning the relations among the members, managers, and limited liability company; however, an integration clause contained in a written operating agreement may be given effect under other law. The term includes amendments to and restatements of the operating agreement. The 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;
South Dakota recognizes both written and oral operating agreements. The statutory definition also includes later amendments and restatements and expressly protects the enforceability of an agreement involving only one member.
South Dakota recognizes both. A written version is still much easier to prove, follow, and provide to banks, advisers, buyers, or future members. The statute also notes that an integration clause in a written agreement may be given effect under other law.
A single-member agreement is not unenforceable merely because the LLC has only one member. South Dakota puts that protection directly in its statutory definition.
South Dakota makes its policy unusually explicit in § 47-34A-114: the Act is intended to give maximum effect to freedom of contract and the enforceability of operating agreements. That flexibility remains subject to the nonwaivable and reasonableness limits in § 47-34A-103.
South Dakota LLC Default Rules That Fill the Gaps
These are the South Dakota defaults worth drafting around. Under § 47-34A-103, the statute fills the gaps only to the extent the operating agreement does not provide another valid rule.
Unless the Articles of Organization designate manager management, the LLC is member-managed. Each member has equal management rights, and ordinary business decisions are made by a majority of the members rather than according to ownership percentage.
§§ 47-34A-101, 404.1(a)Making an interim distribution requires consent of all members by default. When a distribution is made before dissolution, members receive equal shares unless the operating agreement validly changes that result.
§§ 47-34A-404.1(c)(6), 405(a)If the operating agreement does not establish another valid amendment procedure, changing it requires the consent of every member.
§ 47-34A-404.1(c)(1)Unless the agreement removes the power, a member may dissociate at any time by expressing an intent to withdraw. A wrongful dissociation can make the departing member liable for resulting damages.
§ 47-34A-602A member is not automatically entitled to compensation for work performed for the LLC. The statutory exception is reasonable compensation for services during winding up.
§ 47-34A-403(d)Members and managers receive statutory access to company information for proper purposes. An operating agreement may restrict those rights only if the restriction is not manifestly unreasonable.
§§ 47-34A-408, 103(c)(1)