Quick answer: An operating agreement is the members’ agreement about how their Oklahoma LLC is run. The state does not file it, but under 18 O.S. § 2012.2 it governs the relationship among the members, the duties of managers, the company’s activities and how the agreement itself can be amended. When the agreement does not cover something, the Oklahoma Limited Liability Company Act supplies the rule, and those default rules may not be what the owners would have chosen.
This is general information, not legal advice for your business.
What is an operating agreement under Oklahoma law?
The Oklahoma Limited Liability Company Act defines it broadly. Under 18 O.S. § 2001, an operating agreement is any agreement of the members, including a sole member, about the affairs of the LLC and the conduct of its business. It counts whether or not it is called an operating agreement, and whether it is oral, in a record, implied, or a combination of those.
That breadth is the first reason to put it in writing. If the owners never sign a document, there may still be an “agreement” made up of conversations, emails and habits, and the owners may remember it differently when something goes wrong.
What does the operating agreement govern?
18 O.S. § 2012.2 says the operating agreement generally governs:
- Relations among the members, and between the members and the company
- The rights and duties of anyone acting as a manager
- The company’s activities and how they are carried out
- How the operating agreement can be amended
The same section adds a few points owners often miss:
- The company is bound by its operating agreement even if the company never signs it.
- Every member, manager and assignee of a capital interest is bound by it even if that person never signs it.
- A one-member LLC’s agreement is not unenforceable just because only one person is a party.
- The agreement cannot change rights and duties the Act imposes specifically.
What happens if the agreement is silent?
The Act fills the gap. Here are some of the defaults that apply unless your articles or operating agreement say otherwise:
| Question | Oklahoma default rule | Where it comes from |
|---|---|---|
| How do members vote? | In proportion to their interests in the company’s profits | 18 O.S. § 2020(A) |
| What needs a majority of members? | Selling or transferring substantially all assets, a merger, and amending the articles or operating agreement | 18 O.S. § 2020(B) |
| What needs a unanimous vote? | Dissolving the company under § 2037(A)(3), and certain amendments, such as shortening the company’s term or letting a member voluntarily withdraw | 18 O.S. § 2020(D) |
| How is the agreement amended if it does not say? | By members holding a majority of the membership interest entitled to vote | 18 O.S. § 2012.2(E) |
| What if there are no designated managers? | The members are treated as managers and carry managers’ duties | 18 O.S. § 2015(A) |
| What records must be kept? | Member and manager lists, the articles, written operating agreements, and recent tax returns and financial statements, at the principal place of business | 18 O.S. § 2021(A) |
Some of these defaults work for many companies. Others can surprise owners. A 51 percent owner, for example, may be able to amend the agreement or approve a sale of the company’s assets over the other members’ objection when the agreement is silent.
What should Oklahoma owners put in writing?
Every business is different, but most operating agreements address:
- Ownership. Who the members are, what each contributed and each member’s percentage.
- Management. Whether the company is member-managed or manager-managed, who can sign contracts and open accounts, and what decisions need a vote.
- Money. How profits and losses are allocated, when distributions are made and whether members must contribute more capital later.
- Leaving and joining. What happens if a member wants out, dies, divorces or stops working in the business, and how new members are admitted. 18 O.S. § 2015 says a member of a member-managed LLC who resigns from management duties becomes an assignee unless the agreement says otherwise.
- Transfers. Whether members can sell their interest to outsiders, and whether the company or other members get the first chance to buy.
- Disputes and dissolution. How deadlocks are broken and how the company winds down.
For cannabis businesses, transfers deserve extra attention. The Oklahoma Medical Marijuana Authority requires its own transfer process when any percentage of a licensed business is sold, so the operating agreement and the license rules need to line up. Our guide to Oklahoma medical marijuana business licenses explains that process.
When should you sign it?
Ideally, right after the articles of organization are filed, before money is spent and before anyone relies on a handshake. The Oklahoma Secretary of State’s startup steps cover filing the company; the operating agreement is the private document that comes next. If you have not formed the LLC yet, start with how to form an LLC in Oklahoma.
An existing company without a written agreement can adopt one later. Because amendments and new agreements need the right member approval, it is worth checking what vote your current arrangement requires first.
Owners also tend to revisit the agreement when they plan for what happens to their interest after death. That ties into wills and trusts and, if no plan is in place, Oklahoma probate.
How can Nation Law Firm help?
Jon Nation prepares and reviews operating agreements and business contracts for Oklahoma companies, including cannabis businesses. Nation Law Firm is in downtown Tulsa at 624 S Denver Ave, Suite 300, and serves Tulsa and the surrounding counties. To talk through your situation, call 918-730-9417 or reach the firm through the contact page.
Attorney Advertising. This article is general information, not legal advice, and does not create an attorney-client relationship.
