A Texas LLC operating agreement (called a “company agreement” under state law) is the internal contract that governs ownership, voting, and distributions. Texas doesn't require it, but skipping the document leaves the LLC governed by default rules in the Texas Business Organizations Code that rarely match real owner intent.
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Why Texas Calls It a “Company Agreement”
Texas Business Organizations Code § 101.001(1) defines the document as a company agreement, not an “operating agreement.” Most banks, lawyers, and Texas Secretary of State filing clerks accept either label, but the statutory term controls if a dispute reaches a Texas court. Under Title 3, Chapter 101 of the laws of state Texas, judges interpret member disputes accordingly, and they expect the document to track that vocabulary.
The distinction isn't cosmetic. Section 101.052 makes the company agreement the primary source of governance for a Texas limited liability company. TBOC default rules fill only the gaps the agreement leaves silent. That's why Aaron Kra, JD, Boost Suite's legal editor, recommends using “Company Agreement (Operating Agreement)” in the document title, then using either term throughout the body.
For a complete view of how this fits the broader formation process, see our best LLC services in Texas comparison, which covers registered agents, formation kits, and ongoing compliance support.
After my UT Law training and years working with Texas filings, I can tell you one thing: Texas judges read company agreements word for word. That is why I usually title the document “Company Agreement” and then add “(also called Operating Agreement)” in the opening paragraph.
It costs nothing, but it helps the document line up with TBOC § 101.001. If a member ever sues over how the agreement should be interpreted, that terminology can matter more than most owners expect.
Is a Texas LLC Operating Agreement Required by Law?
No. Texas doesn't require an LLC to file or even sign a written company agreement to form a limited liability company. The only state-required filing is the Certificate of Formation (Form 205), filed with the Texas Secretary of State for $300. Section 101.052 permits but doesn't mandate the agreement, and § 101.001 even allows it to be written, oral, or implied.
That flexibility cuts both ways. A first-time owner can launch a Texas LLC without paperwork, but every default rule in TBOC Chapter 101 then governs internal affairs by operation of law. For step-by-step filing details, our step-by-step Texas LLC formation guide walks through Form 205, the registered agent requirement, and what comes next.
What Happens Without a Company Agreement
If the agreement is silent or absent, TBOC defaults govern voting, distributions, member admission, and dissolution. The defaults are concise and statutory. They don't bend to handshake deals or shared understanding among members.
When Texas Courts Will Demand It
Texas judges reach for the company agreement first in member disputes, fiduciary claims, and dissolution petitions. Without one, the court applies TBOC § 101.052, § 101.107, and § 101.401 as the substitute contract. That's a procedural posture no member wants.
Texas Default Rules: What the State Decides for You
The TBOC fills every gap a company agreement leaves open. What surprises most owners is how strict those defaults actually are. The table below maps the default rules Texas applies when an LLC has no written agreement, with current statute citations.
| Topic | Texas Default Rule (No Agreement) | Statute |
|---|---|---|
| Member voting | One member, one equal vote (per-capita) | § 101.354 |
| Decision threshold | Majority of those present at a quorum meeting | § 101.355 |
| Member withdrawal | Not permitted | § 101.107 |
| Member expulsion | Not permitted | § 101.107 |
| Profit and loss allocation | Conflicting authority; courts examine contributions and books and records | § 101.201 |
| Management structure | Follows the certificate of formation | § 101.251 |
| Voluntary winding up | Majority vote of all members | § 101.552 |
| Fiduciary duties | Standard statutory duties unless waived | § 101.401 (amended May 2025) |
The biggest surprise is per-capita voting. Under § 101.354, every member gets one equal vote regardless of ownership percentage. A 90% owner has the same single vote as a 10% owner unless the company agreement re-weights votes by interest. It's stricter than what most owners assume and stricter than the law in many other states.
The second trap is the frozen-partner problem. Section 101.107 says members can't withdraw and can't be expelled by default. Without a buy-out clause in the company agreement, a difficult co-owner stays in the LLC indefinitely. That adds up fast in legal fees if the relationship sours.
I have watched Texas multi-member LLCs deadlock because of § 101.354. One case that still sticks with me involved two members where one contributed 92% of the capital and the other contributed 8%. Even so, both members ended up with one vote each on every decision.
A single sentence in the company agreement tying voting power to ownership percentage would have prevented the entire mess. This is one of the clearest examples of why I never assume Texas voting rights should be left to default law.
Member-Managed vs. Manager-Managed Under TBOC
Section 101.251 defines the governing authority of a Texas LLC as either the members or the managers. On Form 205, the filer must declare whether the LLC has managers when filing certificate paperwork with the Texas Secretary of State. The choice shapes who can sign contracts, bind the company business, and run day-to-day operations.
A 2024 amendment to § 3.010 and § 101.251 clarified that the company agreement (not the certificate alone) controls the management structure pursuant to whichever document was last updated. A Texas LLC can shift from member-managed to manager-managed by amending the company agreement, without amending the public Certificate of Formation. The flip side: if the agreement is silent, the certificate's original disclosure controls.
A registered agent receives service of process for the LLC under either structure. If you haven't chosen one yet, our list of the best Texas registered agents compares pricing, compliance support, and document forwarding.
Member-Managed: The Default Choice
In a member-managed Texas limited liability company, every member is an agent of the LLC under § 101.254 and can bind the company in the ordinary course. This works for small, owner-operated LLCs where every member is active. The catch: any member can sign a contract that legally binds everyone.
Manager-Managed: When This Structure Makes Sense
Manager-managed LLCs centralize authority in named managers. Non-manager members lose default agency authority and can't bind the company business by themselves. This structure suits passive investors, real-estate holding companies, and any business with one operating partner among silent capital partners.
What to Include in a Texas Operating Agreement
Every Texas LLC operating agreement should override or confirm the TBOC defaults that matter most. The list below isn't sorted alphabetically; it's ordered by the disputes Aaron Kra sees most often in Texas business cases.
- Company identification: Exact LLC name matching the Certificate of Formation, principal place of business, registered agent, registered office, and date of filing certificate. Even small punctuation differences (LLC vs. L.L.C.) can delay bank account openings, so confirm the legal name with our Texas LLC name search guide before drafting.
- Member information and capital contributions: Names, addresses, contribution amounts, and percentage interests. TBOC § 101.151 requires any binding promise to contribute capital to be in a writing signed by the member.
- Management structure: Member-managed or manager-managed designation, and identities of any initial managers or person officer director, as provided in § 101.251.
- Distribution and allocation rules: Override the conflicting default in § 101.201 by specifying how profits and losses are allocated and when distributions are made.
- Voting rights: Override the per-capita default in § 101.354 by tying votes to ownership interest, supermajority thresholds, or class voting.
- Transfer and admission of members: Address what happens to a membership interest on death, divorce, or sale. Include rights of first refusal and buy-sell triggers.
- Fiduciary duties and indemnification: As of May 14, 2025, § 101.401 lets the company agreement expand, restrict, or eliminate fiduciary duties owed by members and managers. Section 101.402 covers permissive indemnification of any person officer director.
- Books, records, and fiscal year: Define the fiscal year, inspection rights pursuant to § 101.501, and bookkeeping responsibility for income tax returns filed under the Internal Revenue Code.
- Dissolution and winding up: Custom triggers beat the § 101.552 majority-vote default. Cover events like death, bankruptcy, or buy-out.
- Boilerplate clauses: Choice of law (Texas), venue, severability, and the standard “agreement binding upon and inure to the benefit of” successors clause.
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A Texas operating agreement works best when it matches the Certificate of Formation. Northwest can help file your Texas LLC with the correct name, registered agent, registered office, and management structure before you lock those details into your agreement.
Texas-Specific Clauses Worth Adding
Three items deserve their own attention because Texas treats them differently from other states.
Series LLC designation belongs here if the entity is registered as a Series LLC under TBOC § 101.601. Each series needs separately defined assets, liabilities, and members within the master agreement.
Franchise tax responsibility matters because Texas levies an annual franchise tax with a May 15 due date and a $2,650,000 no-tax-due threshold for 2026 reports. The company agreement should name who files the report and any required information reports with the Texas Comptroller. The same clause can address combined-group reporting for entities controlling, controlled by, or under common control with the LLC.
Section 101.054 carve-outs can't be waived in any Texas company agreement. The list includes the requirement of at least one member, the writing requirement for capital contributions, and a handful of other non-overridable rules.
Single-Member vs. Multi-Member: Different Stakes in Texas
A single-member Texas LLC isn't legally required to have a company agreement, and § 101.001 confirms a single-party agreement is enforceable. Here's the reason to draft one anyway: liability protection. Section 101.114 shields members from personal liability for company debts. Courts examining veil-piercing claims look for separation of personal and company business, signed governance documents, and consistent member llc operating practices. A self-signed company agreement is foundational evidence of corporate formality. By default, single-member LLCs are treated as disregarded entities by the Internal Revenue Service unless they elect corporate treatment.
Multi-member Texas LLCs face higher stakes. The combination of per-capita voting (§ 101.354) and the no-withdrawal default (§ 101.107) can lock co-owners into governance arrangements that no longer fit. A written company agreement is the only practical tool to override either default; for any multi-member LLC, it's a no-brainer. For a complete budget picture on what formation costs add up to, our Texas LLC cost breakdown covers the $300 SOS fee, registered agent pricing, and ongoing tax obligations.
How to Sign, Store, and Amend Your Texas Operating Agreement
A company agreement isn't worth much if it sits unsigned in a file. The lifecycle steps below cover execution and ongoing maintenance for any Texas limited liability company.
- Draft using a template or with counsel: Choose single-member, multi-member, or manager-managed. Match the structure declared on Form 205.
- All members sign originals: Notarization isn't required under TBOC, but multi-member agreements benefit from notarized signatures for evidentiary weight in disputes.
- Store with the company books and records: TBOC § 101.501 gives members inspection rights, so the document needs a known location: the registered office, a member portal, or both. After Texas LLC formation, our Texas LLC processing time guide shows the typical timeline between filing and signing.
- Distribute signed copies: Send originals to every member and keep one with the registered agent.
- Amend formally and in writing: Use the agreement's amendment clause. Capture the date, the affected sections, and signatures from all required members. Never amend orally, even though § 101.052 technically permits oral or implied modifications.
TBOC § 101.052 says a Texas company agreement can be oral or implied. On paper, that gives LLC owners flexibility. In real disputes, though, I have seen that flexibility turn into a credibility problem fast.
A Texas company agreement can exist in written, oral, or implied form under § 101.052.
When members start fighting, courts want proof. I have sat through depositions where one side claimed an oral side-deal changed the agreement, and the judge gave that argument almost no weight.
That is why I never rely on handshake amendments in Texas LLCs. If the owners truly changed the deal, the change should show up in a signed document, not in competing recollections months later.
- Every amendment goes in writing.
- Every member signs it.
- The dated version goes into the company books and records the same week.
Choose the version that fits your LLC structure.
FAQ: Common Texas Operating Agreement Questions
These are the questions Aaron Kra fields most often from Texas LLC owners. Each answer points to the controlling statute or filing process so the reader can verify the source directly.
Do I file my Texas operating agreement with the Texas Secretary of State?
No. Only the Certificate of Formation (Form 205) is filed with the Texas Secretary of State. The company agreement is internal and remains with the company books and records. The state never sees it unless a court orders production in litigation.
Does a Texas operating agreement need to be notarized?
No. Texas Business Organizations Code doesn't require notarization for a company agreement. For multi-member LLCs, notarization adds an evidentiary layer that helps in disputes about signature authenticity, but it isn't a legal requirement.
Can a Texas company agreement be verbal under TBOC § 101.052?
Technically yes. Section 101.052 permits oral or implied agreements. In practice, Texas courts strongly disfavor them, and the member trying to enforce an oral term faces an uphill burden of proof. Always put company agreements and amendments in writing.
Did Texas change fiduciary duty rules for LLCs in 2025?
Yes. Effective May 14, 2025, Section 101.401 was amended to allow a company agreement to expand, restrict, or eliminate duties (including fiduciary duties) owed to the company or other members. Operating agreements drafted before 2025 should be reviewed for whether to take advantage of the new flexibility.
Can a Texas Series LLC use one operating agreement for all series?
Yes, but the master agreement must clearly define each series' separate assets, liabilities, and members under TBOC § 101.601 et seq. Treat each series like a sub-LLC inside the master document, with its own management, distributions, and member roster.
What happens if my operating agreement conflicts with my Certificate of Formation?
For third-party matters and public filings, the certificate controls. Internal member affairs are governed by the company agreement under § 101.052. Best practice: align both documents at the time of filing certificate and amend together if either changes.
Looking for an overview? See Texas LLC Services
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Your Texas operating agreement should match the company details filed with the state. Harbor Compliance can help prepare and file your Certificate of Formation so your LLC name, registered agent, and management structure start out consistent.
