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South Dakota LLC Agreement Template – Download & Customise Online
Any entrepreneur in South Dakota ought to incorporate an LLC. After you have accepted your formation paperwork, the next thing that you need to do is to make an internal agreement, which will set out the way your team will operate. This is the document describing roles, decision-making processes, financial agreements and other regulations that keep your organisation going straight and in line that comprises the operational framework of your business.
Governance Structure Recognised Under South Dakota Law
Members can create internal regulations that best fit their activities according to the state's LLC architecture, which gives a great deal of freedom. These terms may be expressed verbally, in writing, or by behaviour.
SDCL Chapter 47-34A automatically offers the default standards in the event that your agreement does not indicate how something should be handled.
The easiest method to ensure consistency and avoid depending on state defaults that could not align with your business objectives is to create a bespoke document.
How Members and Managers Work Together?
Your internal agreement should clearly outline how responsibilities are divided. Typical items included are:
Ownership and capital structure
Day-to-day operational roles
Allocation of financial gains and losses
Meeting rules and voting procedures
Approval thresholds for major decisions
Procedures for adding or removing members
South Dakota companies rely on these provisions to keep operations smooth and reduce internal friction as they expand.
Choosing the Right Management Setup
You may structure your company in one of two ways under state rules:
Member-Managed Format
All members share control. Each member has equal authority in daily operations. Routine decisions pass by majority approval.
Manager-Managed Format
Daily activities are controlled by managers. Only important issues are voted on by members. Managers have the duty of being loyal, careful, and acting in good faith.
Establish your desired structure- this will remove the gray-area and help in good long-term governance.
Core Areas Your Agreement Should Address
Such document must consist of a detailed description of all the operational factors that influence the stability of the company, such as:
Voting thresholds for ordinary and major matters
Profit-sharing arrangements
Rules for contributions and distributions
Member departure or admission processes
Decision-making thresholds on major decisions.
Members addition and withdrawal procedures.
This will make your team and team have a road map towards the decisions and avoid uncertainty.x
Decision-Making and Voting Requirements
South Dakota has the default rules that become effective in case of the lack of clear voting rules.
In a member-managed organisation, all members are equal, and day-to-day matters should be supported by the majority.
When managers are operating day to day, rules change and voting takes place.
Some acts of the agreement, like a change in contribution responsibilities and amendments to the internal agreement or certain conflict-of-interest transactions and others, all need unanimous approval by the members.
Standards of Conduct and Fiduciary Duties
The state imposes clear expectations on anyone managing the LLC:
The duty of loyalty
The duty of care (avoiding gross negligence, reckless acts, intentional acts, or knowledge of the violation of law)
The good faith and fair dealing obligation.
Your agreement may customise these duties within statutory boundaries, but it cannot eliminate them entirely or introduce terms considered “manifestly unreasonable”.
Access to Information and Recordkeeping
The internal agreement can offer proper procedures for handling the request by the members to access the corporate records. This makes everything clear and does not interfere with the company operations.
Planning for Changes Within the LLC
Your LLC agreement should be revisited whenever your company undergoes meaningful adjustments, such as:
Revisions to ownership structure
Changes in leadership or management format
Major financial shifts
Expansion into new markets
Plans for dissolution or restructuring
Updating your agreement ensures it continues to reflect how your company truly operates.
Why Every South Dakota LLC Should Maintain a Written Agreement?
In case no written contract is necessary by law, it is better to have one that enhances internal organisation, protects the expectations of the members, and offers you a professional structure when your company is evaluated by lenders or partners.
It is specifically important that those who follow best practices should make sure that they come up with operational agreements that meet the standards of governance in South Dakota.
Frequently Asked Questions
1. Is it necessary that I register this agreement with the state?
No. It is kept with your business records.
2. Can a single member adopt an agreement?
Yes. A sole member may adopt and amend it.
3. What happens if we never create one?
Your LLC will operate under statutory defaults, which may not reflect your intended structure.
4. Can the agreement be updated later?
Yes. Members may revise it as long as amendment rules are followed.
5. Is a manager-managed setup allowed?
Yes. You can opt for member or manager management and define the framework in writing.
Download Your South Dakota LLC Agreement
This flexible document gives your firm an outline that it needs to operate successfully in the long term, has sound governance and knows what is expected.
Download from forms.legal, revise and complete your South Dakota LLC operational agreement immediately so that you can establish a solid operating basis for your company.
