Vermont LLC Operating Agreement

Vermont LLC Laws and Definition

Vermont's LLC law is in Title 11, Chapter 25 of the Vermont Statutes. Section 4003 covers the operating agreement. It is the agreement that sets how the company runs and how the members, the managers and the company deal with each other. Section 4003 also says what that agreement can change and what it cannot.^[1]

Except as otherwise provided in subsection (b) of this section, an operating agreement regulates the affairs of the company and the conduct of its business and governs relations among the members, among the managers, and among the members, managers, and the limited liability company.

In plain terms, the agreement is the company's own rulebook. Where it says nothing, the statute fills the gap. To the extent the operating agreement does not otherwise provide, the Vermont LLC chapter regulates the affairs of the company and the conduct of its business. It also governs relations among the members, among the managers, and among the members, managers and the company.^[1]

Notarizing the agreement is optional. The chapter's definitions are in 11 V.S.A. § 4001, which defines an operating agreement as any description of the members' rights and obligations, kept on paper or electronically, that the members agree to.^[1]

Vermont law, not the operating agreement, shields the owners. The debts, obligations and other liabilities of an LLC do not become those of a member or manager solely because the member acts as a member or the manager acts as a manager (11 V.S.A. § 4042).^[1]

People the agreement binds

Section 4003 ties several people and the company itself to the operating agreement.

• A person who becomes a member is deemed to assent to (is treated as agreeing to) the operating agreement.^[1]
• The company is bound by the operating agreement and may enforce it. This is true whether or not the company has itself manifested assent, which means shown that it agrees.^[1]
• A transferee (a person who has received a member's interest) or a dissociated member (a member who has left the company) is covered too. The obligations of the company and its members to that person in that role are governed by the operating agreement.^[1]

An amendment made after a person becomes a transferee or dissociated member still counts. It is effective for any debt, obligation or other liability of the company or its members to that person in that role. The only exception is a court order issued to carry out a charging order, which is a court order that lets a creditor reach a member's share of the company.^[1]

One member or several

One person who intends to become the initial member of an LLC may assent to terms that will become the operating agreement when the company is formed. Two or more people who intend to become the initial members may make an agreement that works the same way.^[1] The FormsPal template on this page is written for a single member. It names one member and has one signature block.

Terms the agreement can change

Section 4003 gives the members room to set their own terms. For example, the operating agreement may do the following.

• Alter or eliminate the indemnification (the company covering a member's or manager's costs) that the statute gives a member or manager.^[1]
• Eliminate or limit a member's or manager's liability to the company and its members for money damages, subject to five exceptions listed below.^[1]
• Specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons, after full disclosure of all material facts.^[1]
• Require that an amendment be approved by a person who is not a party to the agreement, or that a condition be met. An amendment is ineffective if its adoption does not include the required approval or meet the condition.^[1]

The limit on liability does not reach five things. These are a breach of the duty of loyalty, a financial benefit the member or manager was not entitled to, and a breach of the good faith duty in Section 4059(d). The other two are intentional harm to the company or a member, and an intentional violation of criminal law.^[1]

The agreement may also restrict a member's duty of loyalty in specific ways, unless the restriction is unreasonable. It may restrict the duty to account to the company for any property, profit or benefit the member gets from the business, company property or a company opportunity.

It may also restrict the duty not to deal with the company for a party with an adverse interest. And it may restrict the duty not to compete with the company before the company dissolves.^[1]

In the same way, the agreement may identify types of activities that do not violate the duty of loyalty and may prescribe standards for measuring good faith and fair dealing. It may alter the duty of care, except to authorize intentional misconduct or a knowing violation of law. It may alter any other fiduciary duty, including by eliminating particular aspects of it.^[1]

Terms the agreement cannot change

Some parts of Vermont LLC law cannot be overridden. Under Section 4003, an operating agreement may not do any of the following.^[1]

• Vary the company's capacity under subsection 4011(e) to sue and be sued in its own name.
• Vary the law that applies under subsection 4011(g), except as subchapter 8 provides.
• Vary the power of the court under Section 4030.
• Eliminate or restrict the duty of loyalty, the duty of care or any other fiduciary duty, other than in the ways the statute itself allows.
• Eliminate or restrict the contractual obligation of good faith and fair dealing under Section 4059(d).
• Unreasonably restrict the duties and rights about books, records and other information in Section 4058. The agreement may impose reasonable restrictions on the availability and use of that information and may define appropriate remedies, including liquidated damages, for breaking a reasonable restriction on use.
• Vary the power of a court to decree dissolution in the circumstances in Section 4101(a)(4).
• Vary the requirement to wind up the company's business as Section 4101 specifies.
• Unreasonably restrict the right of a member to bring an action under subchapter 9.
• Restrict the right to approve a merger, conversion or domestication under Section 4152 to a member that will have personal liability in the surviving, converted or domesticated organization.
• Restrict the rights under Title 11 of a person other than a member, manager or transferee of an interest in the company.

Filed record versus the agreement

Sometimes a record that the company delivered to the Secretary of State for filing, and that has become effective, conflicts with a provision of the operating agreement. In that case the operating agreement prevails as to members, dissociated members, transferees and managers. The record prevails as to other persons, to the extent they reasonably rely on it.^[1]

What the Vermont LLC Operating Agreement Template Covers

The FormsPal template is a 31-section operating agreement for an LLC with a single member, followed by three schedules. The table below groups the sections by what they do, so you can see what the agreement covers before you fill it out. Schedules A, B and C hold the definitions, the member, Managers and Officers, and the initial capital contribution.

How to Fill Out the Vermont LLC Operating Agreement

The FormsPal Vermont LLC operating agreement is a single-member agreement, signed by one member as the sole equity member of the LLC. Work through the parts below in the order they appear on the form. Each step names the part of the form and the page where it appears.

1. Preamble (page 1). Enter the company name, the state, the date, the member named as the sole equity member, the filing date of the initial Articles of Organization and the LLC statute the form refers to. The date line ends in a printed year, so check it matches the year you sign.
2. Sections 1 to 3: name, office and registered agent (page 1). Repeat the company name, then enter the principal business office and the name and address of the registered agent. Under 11 V.S.A. § 4005, the name in the articles of organization must contain the words "limited liability company" or "limited company" or the abbreviation L.L.C., LLC, L.C. or LC.^[1]
3. Section 6: Purposes (page 2). Tick one box. Either describe the business in your own words or choose "All matters permitted by applicable law."
4. Section 8: Managers (page 2). Enter the initial number of Managers. Their names go on Schedule B.
5. Section 8(g): Compensation of Managers (pages 3 and 4). Tick one box. Either the Managers may be paid their expenses, or there is no compensation, salary or reimbursement.
6. Section 9: Officers (page 4). Tick whether the company will have no Officers or will have Officers, and state each role if it will.
7. Section 15: Fiscal Year, Books and Records (page 6). Enter the date the fiscal year starts and the date it ends.
8. Section 30: Effectiveness (page 10). Enter the date the initial Articles of Organization were filed.
9. Signature block (page 11). The member signs on the "By" line and prints a name and title. The form has no notary or witness lines.
10. Schedule A: Definitions (page 12). Enter the filing date of the Articles of Organization. The rest of the schedule is fixed text.
11. Schedule B: Member, Managers and Officers (page 14). List the member's name and address, the initial Managers and, if you chose to have them, the initial Officers.
12. Schedule C: Initial capital contribution (page 15). Describe what the member contributed to the company.

You do not need to print the form. Fill out the PDF on screen with our fill-out tool, or open it in the online PDF editor to change anything else.

Frequently Asked Questions

A Vermont LLC operating agreement is the agreement that governs the company's affairs. The answers below stick to what Section 4003 of Title 11 of the Vermont Statutes says about it.^[1]

What happens without an operating agreement?

The Vermont LLC chapter fills the gap. To the extent the operating agreement does not otherwise provide, the chapter regulates the affairs of the company and the conduct of its business. It also governs relations among the members, among the managers, and among the members, managers and the company.^[1]

Can I write my own operating agreement for my LLC?

Yes. Vermont law provides for an operating agreement that regulates the affairs of the company and the conduct of its business.^[1] The limits listed above still apply. You can start from the FormsPal LLC operating agreement template and fill it out online.

Does Vermont recognize a single-member operating agreement as valid and enforceable?

Vermont law provides for a single-member operating agreement. It works in two steps.

• One person intending to become the initial member of an LLC may assent to terms that become the operating agreement when the company is formed.^[1]
• Once that person becomes a member, the person is deemed to assent to the operating agreement. The company is bound by it and may enforce it.^[1]

Other Vermont Forms
Consider our document maker to customize any template found on our site to your needs. Here’s a list of various other fillable Vermont forms we offer.

Vermont Last Will Vermont Bill of Sale Vermont Power of Attorney Vermont Non-compete Agreement Vermont Prenuptial Agreement

General information, not legal or tax advice.

Sources

1. 11 V.S.A. § 4003(a).

Jennifer M. Settles

Author & Attorney

With over 25 years of experience as a business and transactional attorney, Jennifer has mastered the craft of closing highly successful deals for her clients. Through her wide-ranging expertise in commercial contracts, real estate transactions, M&A and corporate law, Jennifer secures results that are second-to-none.