LLC Operating Agreement Requirements in South Dakota

At a glance

Requirements one by one

Governing law and document name

SDCL Chapter 47-34A is the Uniform Limited Liability Company Act. SDCL § 47-34A-101(14) calls the members' governance arrangement an operating agreement.

Required or optional

The agreement is optional. Section 47-34A-103(a) says all members “may enter into” one and makes Chapter 47-34A the fallback for anything the agreement does not address. SDCL § 47-34A-114 states the state's policy of giving maximum effect to freedom of contract and enforceable operating agreements.

Permitted form and signatures

The agreement may be written or oral. The Act imposes no general agreement-level signature, witness, acknowledgment, or notarization condition. If the parties use a record, § 47-34A-101(17)-(18) recognizes electronic records and electronic signatures.

Adoption timing and effect

The Act sets no general agreement-adoption deadline and no separate rule making an agreement effective before the company exists. Sections 47-34A-401(a) and (b) contemplate the initial owners' agreement before formation, while § 47-34A-202.1(b) starts the LLC's existence when the articles are filed unless they specify a delayed effective date.

Single member and assent

Section 47-34A-101(14) expressly makes a one-member agreement enforceable. Under § 47-34A-103(a), anyone who becomes a member is deemed to assent. An admitted transferee takes the agreement's rights, restrictions, and liabilities under § 47-34A-503(b).

Management and authority defaults

A South Dakota LLC is member-managed unless its articles designate manager management. Section 47-34A-404.1 gives members equal management rights and a headcount majority for ordinary matters. Managers likewise have equal rights, with one manager or a manager majority deciding ordinary matters.

The listed structural acts require all-member consent by default, including agreement and article amendments, interim distributions, new-member admission, dissolution consent, merger, and a substantially-all-property disposition.

Agency follows the public management form under § 47-34A-301(a). Each member is the ordinary-course agent in a member-managed LLC. In a manager-managed LLC, membership alone creates no agency and each manager has ordinary-course power.

Voting, economic, and transfer defaults

Management voting defaults to equal rights and headcount decisions. Interim distributions require unanimous approval under § 47-34A-404.1(c)(6), while § 47-34A-405(a) says distributions that are made before dissolution are in equal shares.

After formation, § 47-34A-401(c) follows the agreement's admission rule or, absent one, all-member consent. Sections § 47-34A-502 and § 47-34A-503(a) separate economics from membership: a transfer carries distributions only unless the agreement authorizes admission or all other members consent.

Nonwaivable rules and duties

South Dakota favors contract freedom, but § 47-34A-103 draws a detailed floor. The agreement cannot eliminate loyalty or good faith, vary specified judicial expulsion and mandatory winding-up rules, or restrict protected outsider rights. Loyalty safe harbors and good-faith standards must satisfy the statute's manifest-unreasonableness test.

Information rights may be restricted, care may be reduced, and other fiduciary duties may be altered only if the result is not manifestly unreasonable. SDCL § 47-34A-409 defines loyalty, care, and good faith. Sections § 47-34A-406(a) and § 47-34A-407(a) retain distribution-solvency and improper-distribution liability, and § 47-34A-801(a)(4) preserves the listed judicial-dissolution grounds.

Amendment, filing, and records

Section 47-34A-404.1(c)(1) defaults an agreement amendment to all-member consent. The articles, not the agreement, are filed publicly. Manager management must appear in the articles under § 47-34A-203(a)(6).

If a filed record conflicts with the agreement, § 47-34A-103.1 makes the agreement control among members, dissociated members, transferees, and managers; the record controls for outsiders to the extent of reasonable reliance.

SDCL § 47-34A-408 requires proper-purpose access to company records, if any, at the principal office or another reasonable agreement-designated location. A member may demand a company-paid copy of any written operating agreement. The section does not state a fixed general retention period.

What trips people up

Oral terms can govern, but the public management form still matters. The articles determine whether member or manager agency rules apply to outsiders.

Voting and distributions use different default moments. Ordinary management is majority by headcount, but making an interim distribution is unanimous and the distribution shares themselves are equal.

Contract freedom has a manifest-unreasonableness check. Several information and duty changes are valid only within that standard, while loyalty and good faith cannot simply be eliminated.

Common questions

Can a South Dakota LLC have an oral operating agreement? Yes. The Act recognizes written or oral agreements.

Does a new member have to sign it? Not under the Act's general assent rule. A person who becomes a member is deemed to assent, though the agreement may set its own admission or signature conditions.

Does a transferee automatically get voting rights? No. A transfer normally carries only distributions; member admission requires agreement authority or all other members' consent.

Statutes and sources

• SDCL §§ 47-34A-101, 47-34A-103, 47-34A-103.1, and 47-34A-114 — agreement definition, form, assent, contract scope, nonwaivable rules, and conflicts. https://sdlegislature.gov/api/Statutes/47-34A-101.html, https://sdlegislature.gov/api/Statutes/47-34A-103.html, https://sdlegislature.gov/api/Statutes/47-34A-103.1.html, and https://sdlegislature.gov/api/Statutes/47-34A-114.html (accessed 2026-07-27)
• SDCL §§ 47-34A-202.1, 47-34A-203, and 47-34A-301 — formation, public management form, and statutory agency. https://sdlegislature.gov/api/Statutes/47-34A-202.1.html, https://sdlegislature.gov/api/Statutes/47-34A-203.html, and https://sdlegislature.gov/api/Statutes/47-34A-301.html (accessed 2026-07-27)
• SDCL §§ 47-34A-401 and 47-34A-404.1 to 47-34A-409 — membership, management, voting, economics, distributions, records, and duties. https://sdlegislature.gov/api/Statutes/47-34A-401.html, https://sdlegislature.gov/api/Statutes/47-34A-404.1.html, https://sdlegislature.gov/api/Statutes/47-34A-405.html, https://sdlegislature.gov/api/Statutes/47-34A-406.html, https://sdlegislature.gov/api/Statutes/47-34A-407.html, https://sdlegislature.gov/api/Statutes/47-34A-408.html, and https://sdlegislature.gov/api/Statutes/47-34A-409.html (accessed 2026-07-27)
• SDCL §§ 47-34A-502, 47-34A-503, and 47-34A-801 — transfer, transferee admission, and dissolution. https://sdlegislature.gov/api/Statutes/47-34A-502.html, https://sdlegislature.gov/api/Statutes/47-34A-503.html, and https://sdlegislature.gov/api/Statutes/47-34A-801.html (accessed 2026-07-27)