Maine LLC Operating Agreement Template

In Maine, your limited liability company (LLC) is required to have a limited liability company agreement in place. Even though a limited liability company agreement isn’t filed with the state of Maine, the document persists to be an effective way to help avoid disputes and lawsuits that could threaten the stability of your business. 

What is a Limited Liability Company Agreement?

A Maine LLC operating agreement is an important legal document that details who owns the business and provides essential information pertaining to member duties. A limited liability company agreement establishes the financial relationship between members and the basics of the working relationships between those members and the managers who oversee daily operations. 

Again, the limited liability company agreement is not filed with the state. Instead, it remains a private internal company document. It’s advisable to hire an attorney to ensure your LLC’s agreement is thorough and legally binding. 

What Should Your Limited Liability Company Agreement Include?

Here are some important elements to include in a Maine LLC Company Agreement:

1. Company Name and Principal Office: Clearly state the name of the LLC, ensuring it complies with Maine’s LLC naming requirements, and provide the address of the principal office.
2. Formation and Purpose: Outline when the LLC was formed, the purpose of the business, and the duration of the LLC, if it is not perpetual.
3. Member Information: Include the names and contact information of all LLC members, as well as their initial capital contributions and ownership percentages. If the LLC has a board of directors, the company agreement will also include the role and responsibilities of the board members and how they are compensated. 
4. Management Structure: Specify whether the LLC will be managed by its members or by designated managers. If managed by designated managers, include their names, responsibilities, and decision-making authority.
5. Voting Rights and Procedures: Describe the voting rights of members (typically based on their ownership percentage) and the procedures for voting on company decisions, including any required notice and meeting procedures.
6. Capital Contributions and Distributions: Outline the initial capital contributions of each member, any additional contributions required, and the process for making distributions to members (typically in proportion to their ownership percentages).
7. Allocation of Profits and Losses: Define how the LLC’s profits and losses will be allocated among members, usually in proportion to their ownership percentages.
8. Tax Treatment: Specify the tax classification of the LLC, such as a partnership or an S corporation, and the related tax responsibilities of members.
9. Record Keeping: Establish the requirements for maintaining financial records, annual reports, and any other necessary documentation.
10. Buy-Sell Provisions: Include provisions outlining the process for transferring membership interests, such as rights of first refusal, buyout provisions, or restrictions on transfers.
11. Dissolution and Winding Up: Describe the circumstances under which the LLC may be dissolved and the procedures for winding up the company’s affairs and distributing its assets. Also, what happens when a member sells their interest, becomes disabled, or dies.
12. Amendments: Establish the process for amending the operating agreement, including the required vote or consent of members.
13. Dispute Resolution: Specify the process for resolving disputes between members, such as mediation or arbitration.
14. Governing Law: State that the operating agreement is governed by the laws of Maine.
15. Signatures: The operating agreement should be signed by all members, acknowledging their consent to the terms and conditions.

A limited liability company agreement provides legal and financial recourse for a number of situations. If conflicts arise between LLC owners pertaining to any of the above issues, the company agreement will provide clarity. The specific language of the limited liability company agreement lays out exactly how such conflicts will be resolved, how the business is structured, the dynamics of operations, and more. 

Though Maine does have default rules on the books that address some of the issues that might arise between LLC members, your limited liability company agreement would override these default laws and give you greater control. 

You should consult with an attorney or a legal expert to ensure that your Maine LLC Operating Agreement is tailored to your specific business needs and compliant with Maine state law.

How Much Does a Limited Liability Company Agreement Cost? 

Creating a limited liability company agreement is free if you just draw it up yourself. Alternatively, you can pay for guidance from an online business advisory like ZenBusiness.

This is an extremely important document, so it’s recommended that you hire a professional service or law firm. If you choose to use an attorney to help you create this document, the price will be around $500 for a single-member LLC and $2,500 for a multi-member LLC. 

Who Needs my Limited Liability Company Agreement?

One of the key reasons to have a company agreement in place is that it makes your LLC more appealing to financial backers. Banks are likely to request to see your limited liability company agreement when you apply for a loan. If you seek funding from investors, they will also want to see your limited liability company agreement. 

Conclusion 

Maine legally requires LLCs to create a limited liability company agreement. Even if the state did not require the company agreement, it’s a crucial document that ensures your company is able to access adequate financing and settle any disputes. Remember, you do not file your limited liability company agreement with any state body. You simply need to take certain steps to ensure it’s legally binding and keep it in your records. 

Comments