We have a three-member LLC (I'm one of them). Our operating agreement is pretty basic and was drafted years ago. A big opportunity came up that requires a decision that isn't mentioned anywhere in the OA, something that would change the scope of the business significantly. One member is for it, one is against, and I'm on the fence. What happens legally when the OA is silent on a major decision like this? Do we default to some state rule? I'm worried we're stuck.
LLC governance
What happens when the operating agreement doesn't address a major decision?
Most states default to majority vote for ordinary business decisions, but something that changes the scope might be considered outside the ordinary course. You should check your state's LLC act.
What rusty said. But allso, what does your OA say about amendments? If it's silent, you might need unanimous consent to even change the OA to address it.
This is why OAs should have a catch-all provision. Too late now though. You could be looking at deadlock if it's a fundamental change.
Not a lawyer, but I Went through something similar. Our OA was silent on bringing in a new investor. We ended up in mediation because two of us wanted it and one didn't. Cost a lot. Get a lawyer now before you make any moves.
Does the decision require a capital contribution? If so, that might trigger different rules.
No new capital needed. It's more about a new service line that would require one member to take on a lot more work. The one against it is worried about liability exposure.
If it's a new service line, that could be seen as a change change to the purpose clause. In many states, a change to the purpose requires unanimous vote unless the OA says otherwise. I'd look up your state's statute on that.
Also check if your OA has a provision about voting. If it says 'majority of memebrs' for all decisions, then that might cover it. But if it lists specific decisions, silence might mean you need unanimity.
The default rules vary a lot by state. Some states have adopted the Revised Uniform LLC Act, which has specific default rules for things like this. Others haven't. You really need to know which state you're in.
And if it's a deadlock, you might be looking at dissolution. That's the worst-case scenario. Hopefully you can negotiate something.
One more thing: if the member who is against it is also a manager, their vote might carry different weight depending on how the OA is set up. Is it member-managued or manager-managed?
Member-managed. And thanks for the points about the purpose clause and state statutes. I'll start there.
Let us know what you find out. I'm curious how this plays out.