Document background
The Operating Agreement For Member Managed Limited Liability Company is essential when establishing a closely-held business entity in Canada where the owners intend to actively participate in business management. While the LLC structure doesn't exist in Canadian law, this agreement adapts LLC principles to align with Canadian legal requirements, drawing from both corporate and partnership law. It's particularly useful for small to medium-sized businesses where owners want direct control over operations while maintaining liability protection. The document covers crucial aspects including ownership structure, capital contributions, profit sharing, management rights, decision-making processes, transfer restrictions, and exit strategies. It should be customized based on provincial jurisdiction and specific business needs, while ensuring compliance with relevant Canadian federal and provincial legislation. This agreement is fundamental for businesses transitioning from informal arrangements to formal structures, or for new ventures seeking to establish clear governance frameworks from the outset.
