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In Delaware the operating agreement has its own name, the limited liability company agreement. The Delaware Code defines it in 6 Del. C. 18-101 as any agreement, "whether referred to as a limited liability company agreement, operating agreement or otherwise", written, oral or implied, of the member or members. The Division of Corporations does not take it as part of the filing. Our Delaware LLC guide covers the filing that does create the company.
Is an operating agreement required in Delaware?
Nothing we read from the Delaware Code or the Division says you must have a written one or file it. The statute is built around the idea that the members decide. In 6 Del. C. 18-1101, the policy is to give "maximum effect to the principle of freedom of contract and to the enforceability" of these agreements.
Four points from 18-101 help a small owner:
- The agreement can be oral or implied. It is not subject to any statute of frauds.
- A one-member LLC's agreement is not unenforceable just because one person is a party.
- The company does not have to sign its own agreement, and it is bound whether or not it signs.
- A member or manager is bound by the agreement even if they never sign it.
That is wide freedom. It is also the reason to write things down. An oral deal is hard to prove when two owners disagree about who owns what.
Do you file it with the state?
No. The Division's formation form is a Certificate of Formation, and 6 Del. C. 18-201 says what it must set out: the LLC name, the registered office and the registered agent, plus anything else the members choose to add. The forms list for LLCs also has amendment, change of agent, revival, cancellation and name reservation forms. It does not list the operating agreement as something to send in. The same section says the agreement may be entered into, or already exist, before, after or at the time the certificate is filed, and it can be made effective as of the filing time. So you can sign it first, or sign it the week after. Keep it with your company records and give each member a copy.
What should a Delaware agreement cover?
Start with the basics from our operating agreement guide, then add the Delaware points.
- Management. Say whether members run the company or named managers do. The statute lets the agreement designate managers.
- Duties. Under 18-1101 the agreement can expand, restrict or eliminate duties, including fiduciary duties. It cannot eliminate the implied covenant of good faith and fair dealing. Be exact here, because this is where Delaware agreements differ most from a template.
- The annual tax. Delaware charges every LLC an annual tax of $400, due on or before June 1. Say who pays it, from which account and by when.
- The registered agent. Name the agent and say who can change it. See our Delaware registered agent page.
- Gaps. If you leave a point out, the statute's rules apply where it covers the point. Where it does not, 18-1104 says the rules of law and equity govern.
One member or several?
A single owner can use a short agreement that records ownership, the right to manage and what happens on death or sale. Several owners need more: capital, voting, transfers and exits. We have separate pages for the single member operating agreement and the multi member operating agreement.
Can you use a free template?
Yes, as a start. Our free template guide is generic and is not legal advice. Delaware's freedom of contract cuts both ways: a clause copied without thought can bind you. Have a Delaware lawyer review it if the stakes are high.
After the agreement is signed, get your EIN with the EIN guide and check the cost table in the Delaware LLC cost guide.
Ready to form? Use the start an LLC form.