A California multi-member LLC operating agreement allows the owners (or “members”) of an LLC to institute operating procedures that will govern how their business functions internally. It specifies each member’s financial investment, percentage of ownership, responsibilities, and managing rights. Should the company be sold or otherwise dissolve, the agreement will dictate how company assets and debts shall be allocated amongst the members.
California is one of the few states that requires LLCs to draw up an operating agreement. While the contract doesn’t need to be in writing, it is highly recommended.