Operating Agreement LLC Montana

A Montana Limited Liability Company (LLC) Operating Agreement is an internal document that outlines how the business will operate. It identifies ownership interests, describes management responsibilities, and establishes the procedures members will follow when making business decisions. Some refer to it as a Montana Operating Agreement or Montana LLC Company Agreement. Regardless of the name used, it serves as the LLC’s primary internal governance record.

Many Montana LLCs adopt an Operating Agreement during business formation, while others create one later as the company grows. The document is not filed with the state and remains within the LLC’s private records.

Is a Montana Operating Agreement Required?

Montana does not require LLCs to maintain an Operating Agreement. Under the Montana Limited Liability Company Act, the agreement may be written, oral, or implied. Although optional, a written Operating Agreement is strongly recommended. Without one, the LLC defaults to Montana statutory rules, which may not reflect how members prefer to structure or manage the company.

Why a Montana Operating Agreement Matters

Helps support limited liability protection

A written Operating Agreement shows that the LLC is a separate legal entity from its members. Courts may review internal records when determining whether to uphold limited liability protections, especially for single member LLCs.

Provides customized governance rules

Montana statutes apply only when the Operating Agreement is silent. A written agreement lets members establish their own policies for voting, distributions, dispute resolution, and internal responsibilities.

Necessary for banks and advisers

Banks, lenders, attorneys, and accountants often request an Operating Agreement to confirm ownership or authority to act on behalf of the company.

Supports compliance with Montana’s Annual Report requirement

Montana requires all LLCs to file an Annual Report. Assigning responsibility for this filing inside the Operating Agreement helps avoid lapses in good standing.

Key Provisions to Include in a Montana Operating Agreement

Basic Company Details

• LLC name
• Business purpose
• Principal office address
• Duration of the LLC
• Federal tax classification

Montana requires LLC names to contain Limited Liability Company, LLC, or an accepted abbreviation.

Registered Agent and Office

• Name and Montana street address of the registered agent
• Procedures for changing registered agent information
• Filing updates with the Montana Secretary of State

Member Information

• Names and addresses of all members
• Ownership percentages
• Initial capital contributions

Capital Contributions

• Description of what each member contributes
• Rules for future contributions
• Statement that contributions do not earn interest unless agreed

Management Structure

• Whether the LLC is member managed or manager managed
• Duties and responsibilities of managers or members
• Procedures for appointing or removing managers

Profit and Loss Allocation

• Method for allocating profits and losses
• Timing and conditions for distributions
• Confirmation that distributions may not be made if the LLC cannot satisfy its debts

Tax Election

• Federal tax classification selected by the LLC
• Note that some tax elections require additional IRS filings

Voting Procedures

• Voting rights of members
• Required quorum for voting
• Vote thresholds for approving decisions

Montana LLCs often use ownership-based voting unless modified in the agreement.

Transfers of Interest

• Rules for voluntary and involuntary transfers
• Admission procedures for new members
• Treatment of membership interests if a member withdraws, dies, or is expelled

Records and Bookkeeping

• Procedures for maintaining company and financial records
• Responsibility for filing Montana’s Annual Report
• Statement that failure to file may result in administrative dissolution

Compensation

• Guidelines for compensating members, managers, or officers
• Reimbursement rules for business expenses

Dissolution

• Events that may trigger dissolution
• Required winding-up steps
• Filing Articles of Termination with the Montana Secretary of State

Amendments

• How amendments to the Operating Agreement will be made
• Requirement that amendments be written unless otherwise stated

Management Options for Montana LLCs

Member Managed

Members handle daily operations and may bind the LLC in business decisions. This structure is common for smaller companies. Voting typically follows ownership percentages unless the agreement specifies otherwise.

Manager Managed

Members appoint one or more managers to oversee daily operations. Managers may be members or individuals outside the LLC. Members retain authority over major matters while delegating routine tasks to the manager.

Creating and Maintaining the Montana Operating Agreement

Drafting and Signing

The Operating Agreement becomes effective when members adopt it. Although Montana recognizes written, oral, and implied agreements, a written version provides clarity and reduces internal disputes.

Recordkeeping

The agreement should be stored with the LLC’s permanent records. Montana requires Annual Reports, so accurate and consistent recordkeeping is essential.

Amending the Agreement

Members may modify the Operating Agreement following the amendment procedures within the document. If amendments affect information on file with the Secretary of State, the LLC must submit updated filings.