As I mentioned in an earlier post, Missouri Revised Statute (“RSMo”) 347.081(1) requires that members of a Missouri LLC adopt an operating agreement. The operating agreement is essentially an agreement, written or oral, between all members concerning the conduct of the business, the affairs of the limited liability company and the rights, duties and obligations of all members and managers.
LLC operating agreements are required in Missouri. What is unclear, however, is precisely when the operating agreement must be drafted or agreed upon. As such, though there is no specific legal requirement in Missouri as to timing, it is probably best to execute the operating agreement simultaneously with the Articles of Organization (or soon thereafter).
The Missouri LLC laws afford great flexibility, declaring that one of the chief purposes of the LLC is to fully embrace the “freedom of contract.” In other words, the members and managers of a LLC have broad leeway in assigning rights and duties and can easily make the structure and operation of the LLC as complex or simple as they want. Few limitations exist. Given this freedom, there are a few things that need/should be addressed in the LLC operating agreement, including the role of the Members, Capital Contributions, alienability of a member’s interests, annual meetings, the principal place of business, and the manner in which losses and profits are to be allocated. In many cases, if some of these issues are not addressed, Missouri Law has a default provision which is inserted.
While there is almost unfettered discretion in drafting a LLC operating agreement in Missouri, it is still important to cover all the bases. Be aware of what the default LLC provisions are in Missouri and discuss whether or not this is something you and your business partners want to adopt. The last thing in the world you want is a LLC operating agreement which is either missing key provisions or is poorly drafted. Adverse tax consequences or personal liability could arise from simple errors.