LLC Operating Agreement Requirements in Alabama

At a glance

Requirements one by one

Alabama requires an agreement but does not require a signed paper document

Alabama Code § 10A-5A-2.01(d) says a limited liability company agreement “shall be entered into.” The same sentence allows it before, at, or after filing the certificate of formation. The Act states no separate deadline, invalidity consequence, or dissolution penalty for failing to document one by a particular date.

The agreement may be written, oral, or implied under § 10A-5A-1.02(l). Chapter 10A-5A imposes no general signature, witness, acknowledgment, or notary condition. A separate transaction may still need a signed or recorded writing under other law. Changes to duties or liability under § 1.08(b) must be in a written agreement.

Preformation and sole-member terms take effect on formation

Section 10A-5A-1.09 permits prospective members to agree that their terms will become the LLC agreement when the company forms. One prospective member may do the same. The LLC is then bound without separately manifesting assent, and a person admitted later becomes a party and assents.

The agreement may state an effective time as of the certificate filing or another time. It cannot make the LLC a legal entity before the certificate itself becomes effective under § 2.01(b).

Members direct the company unless the agreement chooses another structure

Section 10A-5A-4.07 lets the agreement place direction and oversight with members, one or more managers, or another governance structure. If it says nothing, the members direct and oversee. Ordinary-course matters default to a majority of members, while an agreement amendment and an act outside the ordinary course require every member's consent.

Alabama does not give every member or manager automatic agency power merely from the title. Section 10A-5A-3.02 requires authority under the agreement, the listed statutory governance or winding-up provisions, or other law before a person can bind the LLC.

Equal distributions and economic-only transfers are the defaults

Before dissolution, § 10A-5A-4.05 defaults distributions to equal shares. After formation, a new member is admitted as the agreement provides or, if it supplies no route, with all members' consent. A sole member may be admitted without making a contribution or acquiring a transferable interest.

Section 10A-5A-5.02 separates economics from governance. A transferee receives the transferred distribution right but does not thereby receive direction, oversight, or records access. Since August 1, 2025, an agreement may also create a transfer-at-death mechanism subject to charging orders and creditor rights.

Written terms can alter duties, but the contract has statutory floors

People with direction and oversight owe loyalty and a care duty measured by gross negligence, recklessness, intentional misconduct, or knowing law violations under § 10A-5A-4.08. A member without that authority principally owes the good-faith covenant and a duty not to misuse company information merely by being a member.

A written agreement may expand, restrict, or eliminate duties and liability. It cannot eliminate the implied contractual covenant of good faith and fair dealing or liability for a bad-faith violation. It also cannot impair statutory rights of outsiders or remove the court's specified judicial-dissolution power and the statutory winding-up requirement.

The records-demand procedure changes on August 1, 2026

Through July 31, § 10A-5A-4.09 requires the LLC to maintain its member list, formation filings, three years of tax returns and financial statements, and the effective agreement and amendments. A member may inspect the listed records and other books and records on 10 days' written notice for a proper purpose, subject to reasonable restrictions and confidentiality protections.

Starting August 1, 2026, enacted HB 248 keeps 10 days for the required subsection (a) records but uses 30 days for other books and records. It also requires written authority when an agent or attorney will inspect, permits purpose-based redaction and a two-year improper-use denial, narrows “proper purpose” for specified adversarial proceedings, and creates expedited court enforcement with expense-shifting rules.

Amendment of the private agreement is distinct from a public filing

If the agreement states an amendment method, § 10A-5A-1.10 requires that method. Otherwise, § 10A-5A-4.07 defaults amendment to every member's consent. The agreement itself is not the public formation filing.

If an effective filed writing conflicts with the agreement, the agreement controls members, dissociated members, and transferees. The filed writing controls other people to the extent they reasonably rely on it. The current effective agreement and its amendments must remain in the LLC's records.

Practical effects

• Do not read “written, oral or implied” as “optional.” Alabama separately says the agreement “shall be entered into.”
• State the governance structure and authority chain expressly; a management title alone does not automatically bind the LLC.
• Replace equal distributions, per-capita ordinary voting, unanimous major-action approvals, and economic-only transfer defaults deliberately rather than assuming percentage ownership does so.
• Use a written agreement for any duty or liability modification and preserve the good-faith floor.
• Update records-demand language for the August 1, 2026 transition instead of carrying forward a single 10-day period for every category of records.

Statutes and sources

• Ala. Code § 10A-5A-1.01, § 10A-5A-1.02(l), §§ 10A-5A-1.09 to -1.10. Act name, agreement definition and form, sole-member validity, preformation effect, assent, amendment, and filed-writing conflicts. Official 2014 HB 2 enactment and official 2025 HB 200 amendment (accessed July 26, 2026).
• Ala. Code § 10A-5A-1.08(a)–(c), §§ 10A-5A-2.01(b), (d)–(e), and 10A-5A-3.02. Agreement scope and limits, required timing, formation, filing, and authority. Official 2024 SB 112 amendment (accessed July 26, 2026).
• Ala. Code §§ 10A-5A-4.01, -4.05, § 10A-5A-4.07(a)–(c), and § 10A-5A-4.08(a), (d)–(g). Admission, equal distributions, governance, voting, and duties. Official 2014 HB 2 enactment (accessed July 26, 2026).
• Ala. Code § 10A-5A-5.02(a)–(b), (g), §§ 10A-5A-7.01 and -9.01. Transfer effects, transfer at death, dissolution, and direct actions. Official 2014 HB 2 enactment and official 2025 HB 200 amendment (accessed July 26, 2026).
• Ala. Code § 10A-5A-4.09(a)–(g); 2026 HB 248. Records retained and the inspection procedures through July 31 and beginning August 1, 2026. Retired official ALISON section via Internet Archive and official enrolled HB 248 (accessed July 26, 2026).