Kentucky: LLC Operating Agreement Requirements

Requirements one by one

Governing law and document name

Kentucky calls the document an "operating agreement." KRS § 275.015(21) defines it as an
agreement, written or oral, among all members about the LLC's business and affairs. KRS
§ 275.003(8) names the Kentucky Limited Liability Company Act as the gap-filler when the articles
and agreement do not provide another rule.

Required or optional

The Act does not require an ordinary domestic LLC to adopt an operating agreement. Instead, KRS
§ 275.003(8) says the Act governs the relationships among the company, members, managers, and
assignees to the extent the articles and operating agreement do not otherwise provide. That makes
the agreement legally optional while leaving the statutory defaults in place.

Permitted form and signatures

KRS § 275.015(21) expressly permits a written or oral agreement among all members. The LLC Act
does not impose a general agreement-level signature, witness, acknowledgment, or notarization
formality. Particular provisions are different: KRS § 275.200(1) makes a contribution obligation
unenforceable unless it is in a writing signed by the member, and several defaults in Chapter 275
may be changed only through a written operating agreement.

Adoption timing and effect

Chapter 275 states no general deadline for adopting an agreement. Until the articles or agreement
supply a different rule, KRS § 275.003(8) applies the Act. KRS § 275.275(2) separately prevents a
person's admission as a member from becoming effective before the company is formed; after
formation, the agreement may set the admission time, or the company records control if it does not.

Single member and assent

The sole-member rule does not depend on a conventional multi-party contract. Under KRS
§ 275.015(21)(a), a writing executed by the sole member about the LLC's affairs counts even if it
is not an "agreement." For a manager-managed LLC, subsection (b) also recognizes an agreement
between the member and the LLC whether or not it is written.

KRS § 275.003(4) makes the LLC bound by and a party to the operating agreement unless a written
agreement says otherwise. KRS § 275.275(3) likewise makes each person bound by and a party to the
agreement upon becoming a member.

Management and authority defaults

KRS § 275.025(1)(d) requires the public articles to say whether management belongs to members or
managers. Under KRS § 275.165, members manage unless the articles vest management in managers;
when they do, managers have exclusive management subject to the articles, agreement, and Act.

Agency follows that public choice. KRS § 275.135 generally makes every member a usual-course
agent in a member-managed LLC. In a manager-managed LLC, membership alone creates no agency,
while each manager is a usual-course agent. An act outside the usual course binds the LLC only if
authorized under the agreement.

Voting, economic, and transfer defaults

KRS § 275.175(1) uses majority-in-interest approval for ordinary member decisions and a simple
majority of managers, with each manager having one vote. Under subsection (3), member voting power
tracks the agreed value of contributions actually received and not returned unless the articles,
a written agreement, or the Act supplies another rule. Subsection (2) reserves major matters—such
as amendment, admission, merger, substantially-all-assets sales, and voluntary dissolution—for
member approval unless a written agreement changes the rule.

Economics use the same contribution-value baseline. KRS § 275.205 applies it to profits and losses
when a written agreement does not provide otherwise, and KRS § 275.210 applies it to distributions
when the agreement does not provide another written allocation.

Under KRS § 275.255(1), an assignment ordinarily transfers the right to distributions but not
management or membership rights. KRS § 275.265(1) requires majority-in-interest consent to admit
an assignee unless a written agreement provides otherwise. For an interest issued directly by the
LLC, KRS § 275.275(1) defaults to all members' written consent when the agreement does not provide
the admission rule in writing.

Nonwaivable rules and duties

KRS § 275.170 makes its care and loyalty rules defaults that a written operating agreement may
change, and it removes member-status duties from a nonmanager member of a manager-managed LLC.
KRS § 275.180 also permits a written agreement to eliminate or limit monetary liability for a
breach of those duties and to provide indemnification.

The agreement cannot eliminate the obligation of good faith and fair dealing. KRS § 275.003(7)
allows standards for measuring performance only if they are not manifestly unreasonable. KRS
§ 275.150(3) also preserves a person's liability for that person's own negligence, wrongful acts,
or misconduct. KRS § 275.290(1) supplies a judicial-dissolution standard when carrying on the
business in conformity with the agreement is not reasonably practicable.

Amendment, filing, and records

KRS § 275.175(2)(a) requires member approval to amend a written operating agreement unless the
written agreement provides otherwise. If the written agreement says amendments must be written
and adopted under its procedures, KRS § 275.177 makes that clause enforceable and makes a
nonconforming oral change void and unenforceable.

The agreement is kept in company records rather than serving as the public management election.
KRS § 275.025 requires that election in the filed articles. KRS § 275.185(1)(d) requires the LLC
to retain every effective written agreement and amendment plus written agreements no longer in
effect. A member may inspect records on reasonable written request, subject to reasonable limits
under subsection (5).

What trips people up

An oral operating agreement can govern generally without making every oral promise enforceable.
The clearest example is a capital contribution: KRS § 275.200(1) requires the member's signed
writing. Another recurring mismatch is choosing manager-management only in the private agreement;
KRS § 275.025(1)(d) requires the articles themselves to state the management structure.

Common questions

Can a written agreement give rights to a nonmember?

Yes. KRS § 275.003(3) allows a written operating agreement to grant rights to a person who is not
a member and need not otherwise be a party, to the extent stated in the agreement.

Can the agreement specify consequences for a member who defaults?

Yes. KRS § 275.003(2) permits a written agreement to specify penalties or consequences when a
member misses a required contribution or another agreement obligation, including interest
reduction, subordination, forced sale, or forfeiture.

Statutes and sources

• KRS § 275.003(2)–(4), (7)–(8) — contract policy, third-party rights, company assent,
  nonwaivable good faith, and statutory gap-fillers. Official text (accessed 2026-07-26).
• KRS § 275.015(21) — definition and single-member rules. Official text (accessed 2026-07-26).
• KRS § 275.025(1), (4), (7) — articles, management election, and filing notice. Official text (accessed 2026-07-26).
• KRS § 275.135(1)–(3) — member and manager agency. Official text (accessed 2026-07-26).
• KRS § 275.150(3) — liability for one's own acts. Official text (accessed 2026-07-26).
• KRS § 275.165(1)–(2) — management defaults. Official text (accessed 2026-07-26).
• KRS § 275.170(1)–(4) — care, loyalty, conflicts, and nonmanager-member duties. Official text (accessed 2026-07-26).
• KRS § 275.175(1)–(3), (7) — voting, major matters, and written consent. Official text (accessed 2026-07-26).
• KRS § 275.177 — written-only amendment clauses. Official text (accessed 2026-07-26).
• KRS § 275.180 — monetary-liability limits and indemnification. Official text (accessed 2026-07-26).
• KRS § 275.185(1)–(2), (5) — required records and inspection. Official text (accessed 2026-07-26).
• KRS § 275.200(1) — signed contribution promises. Official text (accessed 2026-07-26).
• KRS § 275.205 — profit and loss allocation. Official text (accessed 2026-07-26).
• KRS § 275.210 — distributions. Official text (accessed 2026-07-26).
• KRS § 275.255(1) — assignment effect. Official text (accessed 2026-07-26).
• KRS § 275.265(1) — assignee admission. Official text (accessed 2026-07-26).
• KRS § 275.275(1)–(3) — direct admission, timing, and member assent. Official text (accessed 2026-07-26).
• KRS § 275.290(1) — judicial dissolution. Official text (accessed 2026-07-26).