The Uniform Limited Liability Company Act is a model statute drafted by the Uniform Law Commission that gives state legislatures a ready-made framework for governing LLCs. First published in 1994 and substantially rewritten in 2006 as the Revised Uniform Limited Liability Company Act (RULLCA), with further amendments in 2013, it covers formation paperwork, operating agreements, fiduciary duties, liability protection, transfers of ownership, and what happens when the business shuts down.1Uniform Law Commission. Limited Liability Company (2006) (Last Amended 2013) It is a recommendation to the states, not federal law, so the version in force where your LLC is organized may differ from the model text.
What the Act Is and Where It Came From
The Uniform Law Commission released the original ULLCA in 1994, when state LLC laws varied widely. By the mid-2000s, enough had changed in practice to warrant a full rewrite, which became the 2006 revision commonly called RULLCA. The 2013 amendments refined it further. The core goal has stayed consistent: give LLCs predictable rules so a company formed in one state operates under principles broadly similar to those in another, while leaving members substantial freedom to structure their own deal subject to a handful of protections they cannot sign away.
Which States Have Adopted It
As of 2025, roughly half the states and the District of Columbia have enacted some version of RULLCA, and several of those made significant modifications during adoption.2Uniform Law Commission. Limited Liability Company Act, Revised The remaining states keep their own LLC statutes, some of them decades older than the model act.
The most prominent holdout is Delaware, which runs on its own Limited Liability Company Act built around maximum contractual freedom. Delaware’s statute allows an operating agreement to expand, restrict, or eliminate fiduciary duties entirely, with the sole exception of the implied covenant of good faith and fair dealing. That goes further than RULLCA permits. Because so many LLCs are organized in Delaware, its approach shapes LLC practice nationally even though the state doesn’t follow the uniform act. The practical point: “based on RULLCA” is not the same as “identical to RULLCA,” so you still have to read the specific statute in your state.
Forming the LLC
Under Section 201, forming an LLC means filing a certificate of organization with the Secretary of State. Many states call this document articles of organization, but the model act uses certificate. The required contents are deliberately minimal:3Uniform Law Commission. Uniform Limited Liability Company Act (2006) – Section 201
- The company name, which must follow the act’s naming rules
- The street and mailing addresses of the principal office
- The name and address of a registered agent in the state of formation
That is all the public filing requires. The real governance details live in the operating agreement, which stays private. This is a notable departure from corporate practice, where the public charter carries more weight.
Filing fees typically run from about $50 to $500 depending on the state, and most states require a periodic report (annual or biennial) with its own fee to keep the LLC in good standing. Missing that filing can cost the LLC its active status, which creates problems ranging from an inability to enforce contracts to loss of liability protection.
The Operating Agreement
If the certificate is the birth certificate, the operating agreement is the rulebook. Section 110 establishes it as the primary document governing the company’s internal affairs: who manages the business, how profits are split, what happens when a member leaves, and essentially every other operational question.4Uniform Law Commission. Uniform Limited Liability Company Act (2006) – Section 110 Where the agreement is silent, the act’s defaults fill the gap, so a thin agreement doesn’t leave members unprotected but may leave them subject to rules they never consciously chose.
One feature that catches people off guard: RULLCA recognizes operating agreements that are oral or implied from the members’ conduct. The official commentary says an agreement qualifies “no matter how informal or rudimentary.” That’s broader than some state laws. New York, for example, requires a written operating agreement. Under the model act, an informal understanding about profit splits could technically be enforceable, though proving its terms in court is far harder than producing a signed document. Put it in writing.
What the Agreement Cannot Change
Freedom of contract has a floor. Section 110(c) lists provisions the operating agreement cannot override:
- Fiduciary duties cannot be eliminated outright. The agreement can modify the duty of loyalty and the duty of care, but only if the modification is not “manifestly unreasonable.”
- The obligation of good faith and fair dealing cannot be waived.
- Members’ information rights cannot be unreasonably restricted.
- The right to seek judicial dissolution cannot be stripped away.
These guardrails exist to protect minority members from being overridden by a majority that controls the drafting.
Personal Liability Protection
The liability shield is the main reason to form an LLC in the first place, and Section 304 states the rule directly: a debt or obligation of the company belongs to the company alone, and a member or manager is not personally liable for company debts simply by virtue of that status.5Uniform Law Commission. Uniform Limited Liability Company Act (2006) – Section 304 The protection survives even after the company dissolves.
RULLCA goes further than many older LLC statutes by stating explicitly that failure to observe formalities is not, on its own, a basis for personal liability. Corporations have long faced veil-piercing claims based on things like skipped annual meetings or sloppy minutes, and the act tries to insulate LLCs from that theory. Courts can still pierce the veil when members commit fraud, treat the LLC as a personal piggy bank with no financial separation, or strip assets out of the company to dodge creditors. The shield protects honest owners from business risk; it was never designed to protect dishonest ones.
Management and Fiduciary Duties
RULLCA recognizes two management structures. Member-managed is the default if the operating agreement says nothing, meaning every member has equal authority over day-to-day operations. Manager-managed concentrates authority in one or more designated managers who may or may not be members, which fits companies with passive investors. The operating agreement, not the public certificate, controls which structure applies.6Uniform Law Commission. Revised Uniform Limited Liability Company Act – Section 407 Commentary
Section 409 sets out the fiduciary duties that apply to whoever runs the show: members in a member-managed LLC, managers in a manager-managed one.7Uniform Law Commission. Uniform Limited Liability Company Act (2006) – Section 409 The duty of loyalty requires accounting to the company for any profit or benefit derived from company business or property, avoiding dealing with the company as an adverse party, and refraining from competing with the company before it dissolves.
The duty of care under RULLCA is narrower than many people expect. It prohibits only grossly negligent or reckless conduct, intentional misconduct, and knowing violations of law. An honest business judgment that turns out badly does not breach it. That is a lower bar than the corporate standard, which generally asks whether a reasonably prudent person would have acted the same way. The drafters recognized that LLC members often run small businesses without boards or formal oversight and calibrated the standard accordingly.
Both duties sit alongside a general obligation of good faith and fair dealing that applies to every member and manager. The operating agreement can adjust the contours of loyalty and care, but it cannot eliminate them or the good-faith obligation.
Transferring a Membership Interest
The act draws a sharp line between economic rights and governance rights. A member can freely transfer their “transferable interest,” which is the right to receive distributions. That transfer by itself does not make the buyer a member. The transferee gets the money but not the vote, with no right to participate in management and no access to company records, unless the other members agree to admit them.
Operating agreements often tighten the rules further, with rights of first refusal or consent requirements before any transfer can happen. A transfer that violates a known restriction is ineffective against anyone who knew about it. This structure keeps ownership from quietly changing hands in a business form built on personal relationships.
Charging Orders: What Happens If a Member Has a Personal Creditor
If a member loses a personal lawsuit and a creditor wants to collect, the creditor cannot seize the LLC interest or force the company to liquidate. The exclusive remedy is a charging order, which entitles the creditor to receive whatever distributions the LLC would otherwise pay that member.
Two consequences follow. The creditor cannot force the LLC to make any distributions, so if the company reinvests its profits the creditor gets nothing. And the creditor never becomes a member or gains a say in operations. This feature is part of why LLCs are popular for asset protection, though it works best in multi-member companies. Courts in some states have been less reluctant to go beyond charging orders against single-member LLCs, reasoning that there are no innocent co-members to shield.
Leaving the LLC
Under Section 601, a member always has the power to leave by expressing the will to withdraw. Having the power to leave and having the right to leave are different things. A withdrawal is “wrongful” if it breaches the operating agreement or, in certain cases, if it occurs before the company’s agreed term expires, and a wrongful dissociation can expose the departing member to damages caused by the exit.
Dissociation can also happen involuntarily, through death, bankruptcy, or expulsion by court order for conduct that materially harmed the business. Once dissociated, the person’s management rights end immediately. Their economic interest remains but converts to the rights of a transferee rather than a full member.
Dissolution and Winding Up
Dissolution is the beginning of the end, not the end itself. Under Section 701, the company dissolves on any of these events:
- A trigger specified in the operating agreement
- Unanimous consent of all members
- 90 consecutive days with no members, unless a transferee consents to admit a new member within that window
- A court order on grounds that the business is unlawful or that it is no longer reasonably practicable to carry on
After dissolution the company enters a winding-up period to settle its affairs. Assets go to creditors first, including members who are also creditors, then to members according to the operating agreement or, if silent, in proportion to their interests. Paying members while creditors remain unpaid is the kind of conduct that invites personal liability.
A Note on Taxes
RULLCA itself says nothing about federal taxation. By IRS default, a single-member LLC is a “disregarded entity,” and the owner reports business income on their personal return. A multi-member LLC is taxed as a partnership, filing Form 1065 and issuing Schedule K-1s to each member.8Internal Revenue Service. LLC Filing as a Corporation or Partnership Either type can elect corporate tax treatment by filing Form 8832, and some LLCs further elect S-corporation status for payroll-tax planning. These elections carry financial consequences and deadlines worth running past a tax advisor.
Doing Business in Another State
An LLC organized in one state that operates in another must register as a “foreign” LLC in the second. Section 902 bars an unregistered foreign LLC from filing lawsuits in the state where it has not registered, though it can still defend itself if sued, its contracts remain valid, and the liability shield stays intact.9Uniform Law Commission. Uniform Limited Liability Company Act (2006) – Section 902 Registration brings additional annual reporting and fees. What counts as “doing business” varies, and most state agencies deliberately decline to draw a precise line. Occasional transactions or passive property ownership often fall short; regular operations, employees, or a physical office in the state almost certainly do not.