The Revised Uniform Limited Liability Company Act, known as RULLCA, is a model law drafted by the Uniform Law Commission that gives states a ready-made framework for forming and governing limited liability companies. As of early 2025, roughly 20 states and the District of Columbia have adopted some version of it.1Uniform Law Commission. Limited Liability Company Act, Revised The act matters most when an LLC’s operating agreement is silent on an issue, because its default rules then step in to govern everything from who can sign contracts to how profits are divided if the business shuts down.
If you own or are forming an LLC in a RULLCA state, the act shapes your company whether or not you ever read it. The sections below walk through the pieces that most often change how an LLC actually operates.
Which States Have Adopted RULLCA
RULLCA is not federal law. It applies only in states that have formally enacted it. The original version was published in 2006, and a substantially revised version — sometimes labeled ULLCA (2013) — followed with changes to fiduciary duty standards, indemnification rights, and information access rules. States that adopted the 2006 version may have a business judgment rule built into the duty of care; states that adopted the 2013 version generally do not.
Each state can also modify the model text before enacting it, so section numbers and specific rules in your state may not match the model exactly. Jurisdictions that have adopted a RULLCA-based statute include Pennsylvania, Connecticut, New Jersey, Florida, California, and Nebraska, among others. States that have not adopted RULLCA still have their own LLC statutes, and while many follow similar principles, the defaults and procedures discussed here will not carry over cleanly. Check which version, if any, your state enacted before relying on the specifics.
Forming an LLC Under RULLCA
To create an LLC under the act, one or more organizers sign and file a certificate of organization with the state’s Secretary of State. The certificate is intentionally minimal. It must include the LLC’s name, the street and mailing addresses of its designated office, and the name and address of its registered agent for service of process. It does not need to list members, state a business purpose, or attach the operating agreement.
The LLC exists as a legal entity once the Secretary of State files the certificate. Most states then require periodic reports, typically annual or biennial, that keep the company’s basic information current. Missing those deadlines can trigger administrative dissolution, which is an involuntary shutdown by the state.
The Operating Agreement and Its Limits
The operating agreement is the private contract among members that controls how the LLC actually runs. Under RULLCA, it does not have to be in writing. Oral and even implied agreements count, though proving the terms of an unwritten agreement in court is as difficult as it sounds. Where the agreement is silent, RULLCA’s default rules fill the gap, so an LLC with no operating agreement at all still has a complete set of governance rules. They are just the ones the legislature picked.
Within that structure, members have wide latitude to customize their arrangement — profit splits, voting procedures, exit rights, management authority — but certain protections are off-limits. The operating agreement cannot:
- Eliminate fiduciary duties entirely. Members can narrow the duty of loyalty or adjust the duty of care, but only within limits the act considers “not manifestly unreasonable.” The agreement can identify specific activities that do not violate the duty of loyalty, but it cannot authorize a blanket pass to act against the company’s interests.
- Waive the obligation of good faith and fair dealing. The agreement can define how good faith is measured, but it cannot eliminate the obligation. A provision that tries is unenforceable.
- Unreasonably restrict access to company records. Members can agree to reasonable conditions on inspection, but they cannot block a member’s ability to monitor the company’s finances.
- Strip a court’s power to dissolve the company. If the LLC is engaged in illegal or fraudulent activity, or if those in control are acting in a way that is oppressive and directly harmful to a member, a court retains the authority to order dissolution.
- Authorize intentional misconduct. The duty of care can be adjusted, but the agreement cannot permit intentional wrongdoing or knowing violations of law.
Member-Managed vs. Manager-Managed LLCs
Under RULLCA, the default management structure is member-managed, meaning every member has equal authority to participate in running the business. If the members want a manager-managed structure, where designated managers handle operations while other members remain passive investors, the operating agreement must say so explicitly.
This choice has consequences beyond internal governance. It determines who owes fiduciary duties, who can access company records and under what conditions, and how third parties should verify authority before signing contracts. In a member-managed LLC, every member owes fiduciary duties to the company and the other members. In a manager-managed LLC, those duties fall on the managers, while ordinary members function more like limited partners with financial rights but limited operational obligations.
Fiduciary Duties
RULLCA imposes three categories of duty on the people who run an LLC: loyalty, care, and good faith. These apply to every member in a member-managed company and to every manager in a manager-managed company.
Duty of Loyalty
The duty of loyalty keeps insiders from putting personal interests ahead of the company. A member or manager cannot divert a business opportunity that belongs to the LLC, use company property for private benefit, or deal with the company as an adverse party without proper disclosure and consent. Someone who breaches this duty can be held liable for whatever profit they made from the breach or whatever profit the company lost, whichever is larger. Courts can also order restitution or remove the offending person from management.
Duty of Care
The duty of care requires members and managers to act with the attention and diligence a reasonable person in the same position would use. This is an ordinary care standard, not the more lenient “gross negligence” threshold used in some older LLC statutes. The 2006 version of RULLCA made this standard expressly subject to the business judgment rule, meaning courts defer to informed decisions made in good faith even when the outcome is bad. The 2013 version removed the explicit reference, though some states kept it in their enacted versions.
In practice, a manager who investigates an opportunity, weighs the risks, and makes a losing bet is generally protected. A manager who rubber-stamps a decision without doing basic homework is not.
Good Faith and Fair Dealing
Every member and manager has a non-waivable obligation to act honestly when exercising rights under the operating agreement. This duty prevents someone from using technically permitted actions in ways that undermine the agreement’s purpose. A manager whose agreement gives discretion over the timing of distributions, for example, cannot withhold payments deliberately to pressure a member into selling at a discount.
Who Can Bind the LLC
One of RULLCA’s most significant departures from older LLC statutes is its treatment of agency authority. Under the act, being a member does not automatically make someone an agent of the company.1Uniform Law Commission. Limited Liability Company Act, Revised Under many earlier statutes, any member of a member-managed LLC could walk into a bank and sign a loan on the company’s behalf simply by virtue of being a member. RULLCA eliminates that statutory apparent authority. Questions about who can bind the LLC are governed by the common law of agency, which means actual authority has to come from the operating agreement, a resolution, or a course of dealing.
For third parties doing business with an LLC, this change matters. You cannot assume that the person across the table has authority to sign just because they are a member. You need to see documentation.
Statement of Authority
To address this practical headache, RULLCA lets an LLC file a statement of authority with the Secretary of State.2Bureau of Indian Affairs. Harmonized Revised Uniform Limited Liability Company Act The statement identifies specific people or positions, such as “managing member” or “CEO,” and describes what they are authorized to do, including signing contracts, transferring real property, and opening bank accounts. The LLC can then prove authority to outsiders without disclosing the full operating agreement.
For transactions involving real property, a certified copy of the statement of authority can be recorded in the local land records office. Once recorded, it is treated as conclusive proof of authority for anyone who relies on it in good faith. A statement of authority automatically expires five years after filing or after its most recent amendment, so renewal is on the company. Limitations on authority written into the statement do not, by themselves, put outsiders on notice unless the limitation involves real property and is properly recorded.
Member Access to Records
RULLCA gives members the right to inspect and copy company records, but the scope depends on the management structure.
In a member-managed LLC, any member can examine records about the company’s activities, finances, and operations during regular business hours, provided the request is reasonable and the information is relevant to the member’s rights and duties. The bar is relatively low.
In a manager-managed LLC, the standard is tighter. A member who wants records must submit a written demand that describes what they want and why, with reasonable specificity. The request must relate to the member’s interest as a member, and the information must be directly connected to that stated purpose. The company then has 10 days to either produce the records or explain in writing why the request is being denied.
The operating agreement can place reasonable conditions on how members use the information they obtain, but it cannot make the right to inspect illusory.
Charging Orders and Personal Creditors
When a member owes a personal debt and a creditor obtains a court judgment, RULLCA limits what the creditor can take from the member’s LLC interest. The creditor’s main tool is a charging order, which is essentially a lien on the member’s right to receive distributions.2Bureau of Indian Affairs. Harmonized Revised Uniform Limited Liability Company Act Once a charging order is in place, any distribution the LLC would have paid to that member goes to the creditor instead, until the judgment is satisfied.
What the creditor does not get is any voice in how the company is run. A charging order carries no voting rights, no management authority, and no ability to force the LLC to make distributions. The creditor cannot seize company assets like equipment, real estate, or inventory. The company keeps operating; only the debtor-member’s share of profits is redirected.
RULLCA designates the charging order as the exclusive remedy by which a judgment creditor can reach a member’s transferable interest. If distributions alone will not satisfy the judgment, some states allow a court to order foreclosure of the member’s interest as a last resort, but even then the buyer at a foreclosure sale typically acquires only the right to receive distributions, not membership or voting rights, unless the remaining members consent to admit the buyer as a full member. A handful of states have prohibited foreclosure altogether.
When a Member Leaves
Dissociation happens when a member exits the LLC: voluntarily, by expulsion, by death, or because of any event the operating agreement names as a trigger. The simplest case is a member who notifies the company of an intent to withdraw. Dissociation can also be involuntary. The remaining members can expel someone by unanimous consent if, for example, it becomes illegal to continue the business with that person as a member, and a court can order expulsion if a member’s conduct is materially harmful to the company.
Once dissociated, the former member loses all management and voting rights but keeps the right to receive the financial value of their interest. In effect, they become a transferee of their own former membership interest, still entitled to distributions but no longer able to participate in decisions. The remaining members can continue the business without interruption.
Dissociation that violates the operating agreement, such as withdrawing before an agreed-upon date, can make the departing member liable for damages caused by the early exit. The power to leave always exists; the right to leave without consequences depends on what the agreement says.
Dissolution and Winding Up
Dissolution shuts the LLC down entirely. Under RULLCA, it is triggered by any of the following:
- An event specified in the operating agreement, such as an expiration date or a particular milestone.
- Consent of all members. Every member must agree; this is not a majority vote.
- Ninety consecutive days with no members. If the last member leaves and no new member is admitted within 90 days, the company dissolves automatically. Transferees holding a majority of distribution rights can prevent this by consenting to admit at least one new member before the deadline.
- A court order. A court can dissolve the company if its operations are unlawful, if it is no longer practicable to carry on business under the operating agreement, or if those in control have acted in an illegal, fraudulent, or oppressive manner that directly harms a member.
- Administrative dissolution. The Secretary of State can dissolve the LLC if it fails to pay required fees, misses report filing deadlines by more than six months, or goes without a registered agent for an extended period.
Once dissolution is triggered, the company enters winding up. During winding up, the LLC stops taking on new business and settles its affairs. The order of priority for distributing what is left matters:
- Creditors first. All debts and obligations must be paid, including amounts owed to members who are also creditors (for example, a member who loaned money to the LLC).
- Unreturned capital contributions. After creditors are paid, each person who contributed capital and has not been repaid receives the value of those contributions. If there is not enough to cover everyone, the shortfall is shared proportionally.
- Remaining surplus. Whatever is left is divided equally among members and dissociated members, unless the operating agreement provides otherwise.
All distributions during winding up must be paid in money. Managers who skip the winding-up process or distribute assets to members before creditors are fully paid can be personally liable for the company’s unpaid obligations. Administrative dissolution can often be reversed by curing the deficiency and applying for reinstatement, but the window to do so is limited, and waiting too long can make the dissolution permanent.