Single-Member LLC Operating Agreement — Delaware

Single-Member LLC Operating Agreement (Delaware)

This Single-Member Limited Liability Company Agreement (this "Agreement") is entered into and effective as of [__/__/____] (the "Effective Date") by [____] (the "Sole Member"), being the sole member of [____], a Delaware limited liability company (the "Company").

Quick-Reference Summary

Article I — Formation

1.1 Formation. The Company was formed as a Delaware limited liability company on [__/__/____] by the filing of a Certificate of Formation with the Delaware Secretary of State, Division of Corporations, pursuant to 6 Del. C. § 18-201. The Sole Member adopts and ratifies that filing.

1.2 Name. The name of the Company is "[____]." The name complies with 6 Del. C. § 18-102 and includes "Limited Liability Company," "L.L.C.," or "LLC."

1.3 Principal Office. The principal office of the Company is located at [____].

1.4 Registered Agent and Registered Office. Pursuant to 6 Del. C. § 18-104, the Company's registered agent in Delaware is [____], whose registered office address is [____], Delaware.

1.5 Duration. The Company has perpetual existence under 6 Del. C. § 18-801, unless dissolved as provided in Article VII.

1.6 Limited Liability Company Agreement. This Agreement is the "limited liability company agreement" of the Company within the meaning of 6 Del. C. § 18-101(9) and governs the Company's internal affairs to the maximum extent permitted by the Delaware Limited Liability Company Act. The Sole Member acknowledges that, under § 18-101(9), this Agreement (a) is enforceable notwithstanding that the Company has only one member, and (b) is not subject to any statute of frauds.

Article II — Purpose and Powers

2.1 Purpose. The Company is formed to engage in the following business: [____]. The Company may also engage in any lawful business or activity permitted under 6 Del. C. § 18-106.

2.2 Powers. The Company has all powers granted to a limited liability company under 6 Del. C. § 18-106 and applicable Delaware law.

2.3 No Unlawful Activity. Nothing in this Agreement authorizes any business or activity prohibited by Delaware or federal law.

Article III — Member (Sole Member)

3.1 Identity of Sole Member. The Sole Member is [____], whose address is [____]. The Sole Member owns one hundred percent (100%) of the Company.

3.2 Initial Capital Contribution. The Sole Member has contributed to the Company the following property, cash, services rendered, or obligations, valued at $[____] (6 Del. C. § 18-501):

[____]

3.3 Additional Contributions. Pursuant to 6 Del. C. § 18-502, the Sole Member is not obligated to make additional contributions but may do so at any time. Additional contributions shall be credited to the Sole Member's capital account.

3.4 Limited Liability. Pursuant to 6 Del. C. § 18-303, except as otherwise provided by the Act, the debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, are solely those of the Company; the Sole Member is not obligated personally for them solely by reason of being a member.

3.5 Admission of Additional Members. No additional member may be admitted without (a) the written consent of the Sole Member, and (b) an amendment to this Agreement converting it into a multi-member limited liability company agreement compliant with the Act (6 Del. C. § 18-301).

Article IV — Management

4.1 Management Structure. The Company is (check one):

☐ Member-managed (default under 6 Del. C. § 18-402). The Sole Member manages and conducts the Company's business and affairs.

☐ Manager-managed. Pursuant to 6 Del. C. § 18-402, the Sole Member designates [____] as the initial Manager.

4.2 Authority. Subject to Section 4.1, the Sole Member (or Manager) has the authority to take any action permitted under the Act, including without limitation the authority to:

(a) execute and deliver contracts, deeds, leases, notes, and other instruments;
(b) open, maintain, and close bank, brokerage, and credit accounts;
(c) hire, supervise, and terminate employees, independent contractors, and agents;
(d) acquire, hold, encumber, and dispose of real and personal property;
(e) borrow money and incur indebtedness; and
(f) institute, defend, settle, or compromise legal actions in the name of the Company.

4.3 Officers (Optional). The Sole Member or Manager may appoint officers who shall serve at the pleasure of the appointing authority.

4.4 Standards of Conduct; Modification of Duties. To the maximum extent permitted by 6 Del. C. § 18-1101(c), the Sole Member may expand, restrict, or eliminate fiduciary duties owed to the Company or other persons; provided, however, that the implied contractual covenant of good faith and fair dealing may not be eliminated. Because the Company has only one member, duties owed to other members do not give rise to actionable claims by any other member, but remain relevant to creditor and veil-piercing analyses.

4.5 Separate Existence; Recordkeeping. To preserve the Company's limited liability shield, the Sole Member shall:

(a) maintain the Company's books and records separately from personal records;
(b) maintain a bank account in the Company's name;
(c) avoid commingling Company assets with personal assets;
(d) sign contracts in the Company's name (e.g., "[Company Name], LLC, by [Member Name], Sole Member"); and
(e) maintain the records reasonably necessary to the Company's business.

Article V — Capital Accounts and Distributions

5.1 Capital Account. The Company shall maintain a capital account for the Sole Member in accordance with U.S. Treasury Regulations § 1.704-1(b)(2)(iv) to the extent applicable.

5.2 Distributions. The Sole Member may cause the Company to distribute cash or other property at any time, subject to Section 5.3 (6 Del. C. § 18-504).

5.3 Limitations on Distributions. Pursuant to 6 Del. C. § 18-607, no distribution shall be made if, after giving effect to it, all liabilities of the Company (other than liabilities to members on account of their interests and certain nonrecourse liabilities) would exceed the fair value of the Company's assets. The Sole Member acknowledges potential liability for wrongful distributions under § 18-607(b).

5.4 Federal Tax Classification. The Company is treated for federal income tax purposes as (check one):

☐ A disregarded entity (the default under Treas. Reg. § 301.7701-3(b)(1)(ii)).

☐ An association taxable as a corporation, effective [__/__/____], pursuant to IRS Form 8832.

☐ An S corporation, effective [__/__/____], pursuant to IRS Form 2553.

5.5 Delaware Annual LLC Tax. The Company shall pay the $300 annual LLC tax to the Delaware Division of Revenue / Secretary of State on or before June 1 of each year pursuant to 6 Del. C. § 18-1107. Delaware imposes no annual report requirement on LLCs (unlike corporations), but the annual tax is mandatory regardless of activity.

Article VI — Transfer of Interest / Charging Order (6 Del. C. § 18-703)

6.1 Limited Liability Company Interest. Under 6 Del. C. § 18-701, the Sole Member's limited liability company interest is personal property.

6.2 Assignment of Interest. Pursuant to 6 Del. C. § 18-702, the Sole Member may assign all or part of the Sole Member's limited liability company interest. An assignee acquires only the right to receive distributions to which the assignor was entitled, not management or informational rights, unless and until admitted as a member.

6.3 Charging Order Remedy (Exclusive; No Foreclosure). Under 6 Del. C. § 18-703:

(a) on application by a judgment creditor of a member or a member's assignee, a court may charge the limited liability company interest of the judgment debtor with payment of the unsatisfied amount of the judgment, and to the extent so charged the judgment creditor has only the right to receive any distribution to which the judgment debtor would otherwise have been entitled;
(b) the charging order constitutes a lien on the judgment debtor's limited liability company interest;
(c) the entry of a charging order is the EXCLUSIVE remedy by which a judgment creditor of a member or a member's assignee may satisfy a judgment out of the judgment debtor's limited liability company interest; and
(d) attachment, garnishment, foreclosure, or other legal or equitable remedies are NOT available to the judgment creditor, whether the Company has one member or more than one member, and the creditor has no right to interfere with the management of the Company.

6.4 No Management or Informational Rights for Creditor. No charging order or assignment confers upon any creditor or assignee any right to participate in the management of the Company or to inspect Company records.

6.5 Death or Incapacity of Sole Member. Upon the death or adjudicated incapacity of the Sole Member, the Sole Member's interest passes by will, intestate succession, or pursuant to the Sole Member's estate plan. To avoid dissolution under 6 Del. C. § 18-801, the personal representative or successor trustee should promptly admit a successor member or otherwise continue the Company as permitted by the Act.

Article VII — Dissolution

7.1 Events of Dissolution. Pursuant to 6 Del. C. § 18-801, the Company is dissolved upon the first to occur of:

(a) an event specified in this Agreement;
(b) the affirmative written consent of the Sole Member;
(c) at any time there are no members, unless the personal representative or assignee of the last remaining member agrees to continue the Company and admits a successor member as provided in § 18-801(a)(4);
(d) the entry of a decree of judicial dissolution under 6 Del. C. § 18-802; or
(e) the cancellation of the Certificate of Formation.

7.2 Winding Up. Upon dissolution, the Company's affairs shall be wound up in accordance with 6 Del. C. § 18-803, and assets distributed in the order of priority set forth in 6 Del. C. § 18-804.

7.3 Certificate of Cancellation. Upon completion of winding up, the Sole Member shall cause a Certificate of Cancellation to be filed with the Delaware Secretary of State pursuant to 6 Del. C. § 18-203, and shall ensure all annual LLC taxes are paid.

Article VIII — State-Specific Provisions

8.1 Delaware LLC Act Controls. This Agreement is governed by the Delaware Limited Liability Company Act and other applicable Delaware law, consistent with the Act's policy of giving maximum effect to freedom of contract and to the enforceability of limited liability company agreements (6 Del. C. § 18-1101(b)).

8.2 Annual LLC Tax. The Company shall pay the $300 annual LLC tax by June 1 each year under 6 Del. C. § 18-1107, as described in Section 5.5.

8.3 Registered Agent Maintenance. The Sole Member shall cause the Company to continuously maintain a registered agent and registered office in Delaware under 6 Del. C. § 18-104.

8.4 Foreign Qualification. If the Company transacts business outside Delaware, the Sole Member shall qualify the Company as a foreign LLC in each such state. The Sole Member acknowledges that the strong Delaware charging-order protection of § 18-703 may not be applied by courts of other states to enforcement actions arising there.

8.5 Series LLC (Optional). If the Sole Member elects to establish one or more series under 6 Del. C. § 18-215, the Sole Member shall ensure the Certificate of Formation contains the required notice of limitation on liabilities of series and shall maintain separate records accounting for the assets of each series. The inter-series liability shield depends on strict compliance with § 18-215 and may not be recognized outside Delaware.

Article IX — General Provisions

9.1 Amendment. This Agreement may be amended at any time by a writing signed by the Sole Member.

9.2 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions remain in full force and effect.

9.3 Entire Agreement. This Agreement constitutes the entire limited liability company agreement of the Company.

9.4 Governing Law; Venue. This Agreement is governed by the laws of the State of Delaware without regard to its conflict-of-laws principles. The Sole Member consents to the jurisdiction of the Delaware Court of Chancery for disputes arising under the Act or this Agreement, to the extent permitted by law.

9.5 Successors and Assigns. This Agreement binds and inures to the benefit of the Sole Member's heirs, personal representatives, successors, and permitted assigns.

9.6 Counterparts and Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature, each of which is deemed an original.

9.7 Effective Date. This Agreement is effective as of the Effective Date set forth in the preamble.

Signature Block

IN WITNESS WHEREOF, the undersigned has executed this Single-Member Limited Liability Company Agreement as of the Effective Date.

SOLE MEMBER:

Signature: [____]

Printed Name: [____]

Date: [__/__/____]

COMPANY:

[____], a Delaware limited liability company

By: [____]

Name: [____]

Title: ☐ Sole Member ☐ Manager

Date: [__/__/____]

Pre-Execution Checklist

☐ Certificate of Formation has been filed with the Delaware Secretary of State and the Company is in good standing.
☐ The Company has obtained a Federal Employer Identification Number (EIN) from the IRS.
☐ A Delaware registered agent and registered office have been appointed.
☐ A bank account in the Company's name has been opened.
☐ Initial capital contribution has been documented and deposited.
☐ The Sole Member has selected member-managed vs. manager-managed.
☐ If electing C-corp or S-corp taxation, Form 8832 and/or Form 2553 has been timely filed with the IRS.
☐ The $300 annual LLC tax (due June 1) has been calendared (6 Del. C. § 18-1107).
☐ The Sole Member has reviewed 6 Del. C. § 18-703 charging-order protections and § 18-1101 freedom-of-contract provisions.
☐ Foreign qualification has been confirmed for any state outside Delaware where business is transacted.
☐ The Sole Member has consulted with Delaware-licensed counsel and a qualified tax professional.
☐ All [____] fields have been completed and check-the-box selections have been made.

Sources and References

• Delaware Limited Liability Company Act, 6 Del. C. ch. 18: https://delcode.delaware.gov/title6/c018/index.html
• 6 Del. C. § 18-703 (Charging order — exclusive remedy): https://law.justia.com/codes/delaware/title-6/chapter-18/subchapter-vii/section-18-703/
• 6 Del. C. § 18-101 (Definitions; LLC agreement; single-member enforceability): https://delcode.delaware.gov/title6/c018/sc01/index.html
• Delaware Division of Corporations: https://corp.delaware.gov/
• Delaware Annual Taxes (LLC/LP $300): https://corp.delaware.gov/paytaxes/
• IRS Form 8832 (Entity Classification Election): https://www.irs.gov/forms-pubs/about-form-8832
• IRS Form 2553 (Election by a Small Business Corporation): https://www.irs.gov/forms-pubs/about-form-2553