The Ohio LLC operating agreement under Chapter 1706

What is an Ohio LLC operating agreement?

Ohio's LLC law is the Revised Limited Liability Company Act, Chapter 1706 of the Revised Code. It defines an operating agreement as any valid agreement of the members, written or oral, or any written declaration of the sole member, about the company's affairs and activities, including amendments (ORC 1706.01(R)).

Two things follow from that definition. First, an operating agreement does not have to be a signed document called "Operating Agreement." A handshake deal among members counts, as does a set of emails if the members agreed to it. Second, every Ohio LLC with members has some operating agreement, even if nobody wrote one, because the law treats whatever the members agreed as the agreement.

The operating agreement governs relations among the members and between the members and the company. Where it does not address a matter, Chapter 1706 does (ORC 1706.08(A)). The LLC itself is bound by the agreement and can enforce it, even though the company never signed it (ORC 1706.081(A)), and anyone admitted as a member becomes a party to it (ORC 1706.081(B)).

Ohio also tells courts to read the act to give maximum effect to freedom of contract and to the enforceability of operating agreements (ORC 1706.06(A)). In plain terms, owners get wide latitude to set their own rules, and the statute steps in only where they have not.

Is the operating agreement filed with the Ohio Secretary of State?

No. The public filing that creates an Ohio LLC is the Articles of Organization, Form 610. It asks for the company name, the statutory agent and the agent's acceptance, an optional purpose, optional effective date, and any additional provisions you attach. It has no field for members, ownership percentages, or management structure.

The operating agreement stays in the company's own records. Nobody at the state reviews it, approves it, or keeps a copy. That has two effects:

• Ownership and internal terms stay private. A stranger searching the business record will not see who owns the LLC or how profits are split.
• Proof is on you. When a bank, lender, title company, or court needs to know who can sign for the company, you produce the agreement. A written, signed version settles questions an oral deal cannot.

If you want a term to be public, such as the series statement a series LLC needs, it goes in the articles as an additional provision. Changing the articles later is an amendment with a $50 state fee. Our amendment to articles service prepares and files that.

What Ohio's default rules say when the operating agreement is silent

These are the Chapter 1706 rules that apply when the agreement does not say otherwise. They are the reason a written agreement matters: if your deal differs from these, the agreement has to say so.

The equal-split default catches people

Suppose one member puts in $90,000 and another puts in $10,000 and nobody writes anything down. Under ORC 1706.29(A)(1), distributions before dissolution are shared equally. If the partners meant 90/10, only an agreement saying so gets them there.

Members cannot simply quit

Ohio's default is strict about exits. Under ORC 1706.41(A), a member may not voluntarily dissociate. Members still leave by death, expulsion, bankruptcy, or the other events listed in ORC 1706.411, but a member who wants to leave and be paid for the interest has to find that right in the operating agreement or negotiate it with the others.

Selling an interest does not make the buyer a member

A member may assign all or part of a membership interest, but the buyer receives only the right to the distributions the seller would have received. The buyer has no say in management and no right to the company's records (ORC 1706.341(A), (B)). Becoming a member takes admission, which by default needs every member's consent. A member who assigns the entire interest is dissociated (ORC 1706.411(J)). The steps for bringing in or buying out an owner are in our guide to Ohio LLC member changes.

What an Ohio operating agreement cannot change

Freedom of contract has limits. ORC 1706.08(C) lists the things an operating agreement may not do. It may not:

• Vary the LLC's nature as a separate legal entity.
• Restrict the rights under Chapter 1706 of someone who is not a member, dissociated member, or assignee, subject to the exception in ORC 1706.082(B).
• Vary a court's power under ORC 1706.171.
• Eliminate the implied covenant of good faith and fair dealing.
• Eliminate or limit liability for an act or omission that is a bad faith violation of that covenant.
• Waive the requirements of ORC 1706.281(A).
• Waive the ban on membership certificates in bearer form.
• Waive the record-keeping and other conditions a series needs under ORC 1706.761(B).

Inside those limits the room is wide. ORC 1706.08(B) lets an agreement expand, restrict, or eliminate duties, including fiduciary duties, and limit liability for breach, except for bad faith violations of the good faith covenant. It also lets the agreement set consequences for a member who defaults, such as reducing or forfeiting the interest, forcing a sale, or fixing the interest's value by appraisal or formula. Narrowing a fiduciary duty is a serious step, and each member should have their own attorney read that language.

What to put in an Ohio operating agreement

Use the default table as a checklist. For each row, decide whether the default fits you. Where it does not, the agreement should say what you want. Owners commonly address:

• Members and contributions: who the members are, what each put in, and whether anyone must contribute more later.
• Economic split: percentages for profits, losses, and distributions, and whether distributions are mandatory, such as enough to cover each member's taxes.
• Voting: one vote per member, votes by percentage, or a mix, and which decisions need a supermajority or unanimous vote.
• Managers: Chapter 1706 does not require an LLC to label itself member-managed or manager-managed. A manager is any person the company or its members designate who agrees to serve, under any title (ORC 1706.01(O)). If you want one, name the role and its limits.
• Transfers: whether members may sell to outsiders, rights of first refusal, and what happens on divorce.
• Exits and buyouts: when a member may leave, how the interest is valued, and the payment schedule.
• Death and disability: what happens to the interest, and who can vote it in the meantime.
• Deadlock: tie-breaking, mediation, or a buy-sell mechanism for two equal owners.
• Dissolution: events that end the company, beyond the statutory ones in ORC 1706.47.

If you are still choosing between an LLC and something else, compare the types of Ohio business entities first. The operating agreement is one of the features that makes an LLC flexible. How profits are taxed is a separate question from how they are split; our guide to Ohio LLC taxes covers the tax side.

Single-member vs. multi-member operating agreements in Ohio

The two documents solve different problems.

For one owner, succession is the core issue. When an individual member dies or a guardian is appointed, that person is dissociated (ORC 1706.411(E)). If the last member dissociates, the LLC dissolves after 90 consecutive days unless a substitute member is admitted as the statute allows (ORC 1706.47(D)). A declaration that names who steps in is the cleanest way to keep the business running. Our guide to the Ohio single-member LLC covers that owner's other questions.

Members who sign before the company exists are covered too. People who intend to be the initial members can agree that their agreement becomes the operating agreement on formation, and a single intended member can do the same (ORC 1706.081(C)).

How to amend an Ohio LLC operating agreement

By default, amending the agreement takes the consent of all members (ORC 1706.082(A); 1706.30(C)(1)(a)). The agreement can set a different method, such as a two-thirds vote. If it does, amendments must follow that method or another one the law allows. A person whose approval is required can waive it.

Consent does not need a meeting. Members can consent without one, and a member can appoint a proxy or agent to act by signing a record (ORC 1706.30(D)). A practical routine:

• Write the amendment out. State exactly which section changes and the new text.
• Collect the consents the agreement requires, with dates. Electronic signatures and stored records are fine, because Ohio defines a record to include information stored electronically and retrievable in paper form (ORC 1706.01(W)).
• Keep the signed amendment with the original agreement, and give each member a copy.
• Check whether anything public also needs to change. A new legal name requires amending the articles. Adding or removing a member does not, because members are not on Form 610.

Amending the operating agreement never requires a state filing by itself. Only changes to the articles or the statutory agent do.

Older Ohio LLC agreements written under Chapter 1705

Ohio's earlier LLC statute, Chapter 1705, was repealed effective February 11, 2022. On and after that date, Chapter 1706 governs all limited liability companies (ORC 1706.83), including ones formed years earlier.

Many agreements still in use were drafted under the old law. They may cite Chapter 1705 sections, rely on old defaults, or use member-managed and manager-managed labels in ways that no longer track the statute. The agreement's own terms generally still control the matters it covers. The risk is in what it leaves out, because the gaps are now filled by Chapter 1706's defaults, not the old ones.

If your LLC was formed before 2022 and the agreement has not been reviewed since, it is worth having your attorney read it against the default table above, particularly the rules on distributions, exits, and amendments.

How the operating agreement and your Ohio statutory agent fit together

Your statutory agent is named in the articles, not the operating agreement, and it accepts lawsuits and official notices for the company. What the agent cannot know is who inside the LLC has authority to respond. The operating agreement is where that belongs: who receives legal papers, who may hire a lawyer, and who decides whether to settle.

With our Ohio statutory agent service, documents are scanned to your portal the same business day, and you can give access to owners, employees, and your attorney, each limited to specific entities and document categories. Matching those portal roles to the authority your agreement sets keeps the right people informed. The service is $49 per business per year. We do not draft operating agreements or give legal advice; your attorney does that part.