In the District, Every Default Counts Heads Rather Than Dollars
The District of Columbia does not require an LLC to adopt an operating agreement. D.C. Code § 29-801.02(10) defines one broadly. It is the agreement of all the members of a limited liability company, including a sole member. It may be oral, in a record, implied, or any combination. And it need not be called an operating agreement.
Section 29-801.07(b) then supplies the only consequence of silence. To the extent the operating agreement does not otherwise provide for a matter described in subsection (a), the chapter governs the matter.
What makes the District worth a careful read is what it kept. It left the uniform defaults almost unchanged, and those defaults are aggressively egalitarian. Every distribution is split equally per member. Every member has an equal management vote. Every act outside the ordinary course needs unanimous consent, and so does every amendment. Take a company where one member funded the business and another brought time. That produces the wrong answer on every axis at once.
The agreement itself is never filed. Nothing goes to the Department of Licensing and Consumer Protection. There is no form and no fee for it. Our District of Columbia operating agreement page covers the drafting.
What Chapter 8 does when the agreement is silent
Section 29-804.04(a) requires any distribution made before dissolution and winding up to be in equal shares. That is among members and dissociated members. Not proportionate to capital. Not proportionate to a percentage anyone wrote in a term sheet. Equal.
Governance matches. Section 29-804.07(b)(2) gives each member equal rights in the management and conduct of the company. Section 29-804.07(b)(3) resolves an ordinary course difference by a majority of the members, counted by number. Section 29-804.07(b)(4) allows an act outside the ordinary course only with the consent of all members. And § 29-804.07(b)(5) allows the operating agreement to be amended only with the consent of all members.
The result is a company where the person who put in ninety percent of the money holds one vote. That member takes an equal share of the cash. And anyone can stop that member from selling the business. Three clauses fix it. Without them it stays broken forever.
Why a sole member in the District has the most to lose
The District adopted the uniform single member carve out on charging orders. It is the harshest provision in the chapter. Section 29-805.03(f) covers a court order foreclosing a charging order lien against the sole member of a limited liability company.
The court shall confirm the sale. The purchaser at the sale gets the member's entire interest, rather than only the transferable interest. The purchaser thereby becomes a member. And the person whose interest was foreclosed is dissociated as a member.
A creditor who reaches foreclosure against a District sole member does not simply take the distributions. The creditor takes the company. For a multi member company, § 29-805.03(c) limits the purchaser to the transferable interest and keeps them out of management.
That distinction turns entirely on member count. The agreement cannot rewrite it. But a documented distribution policy makes the foreclosure showing harder, and a real second member changes which subsection applies. Our single-member LLC guide covers the rest.
What Belongs in a District of Columbia Operating Agreement
The District position in one table
| Question | District of Columbia answer |
|---|---|
| Required by statute? | No |
| Must it be written? | No. Oral, in a record or implied all qualify |
| Filed with the District? | No. No form, no filing, no fee |
| Governing act | Uniform Limited Liability Company Act of 2010, Title 29 Chapter 8 |
| Statement of authority filing? | Yes, optional, filed with the Mayor |
| Series | Yes, and each series needs its own filed certificate |
| File.Business custom agreement | $97 flat |
Ten clauses carry the weight. In the District most of them exist to undo an equal treatment default.
1. Members and the size of each stake
Name the members and fix the percentages. Under § 29-804.04(a) distributions go in equal shares. So a percentage that appears only in a cap table or a tax return changes nothing at all.
2. Contributions and what a shortfall costs
Record contributions and their agreed values. Section 29-804.03 makes a contribution obligation enforceable, notwithstanding an inability to perform. So decide in advance what an unfunded call produces. Dilution, a member loan, or a forced sale.
3. Member managed or manager managed
Section 29-804.07(a) makes the company member managed by default. The operating agreement must expressly provide that it is manager managed, managed by managers, or that management is vested in managers. The District puts this in the agreement. So a company without one cannot be manager managed.
4. Voting weights and thresholds
Replace three things: the equal rights rule in § 29-804.07(b)(2), the head count majority in (b)(3), and the unanimity in (b)(4) and (b)(5). Then define what counts as ordinary course. The whole allocation of power turns on that phrase.
5. Allocation and distribution
This clause displaces § 29-804.04(a). Separate the allocation of taxable income from the timing of cash. Then address whether a dissociated member keeps receiving distributions, since § 29-804.04(b) says dissociation alone does not entitle a person to one.
6. Transfers, consent and first refusal
A transferee under § 29-805.02 takes distributions and nothing else. Add a consent gate and a right of first refusal. Then treat divorce, death and judgment transfers separately from voluntary sales, with a stated price.
7. Admission, dissociation and buyout
Set the admission mechanic and the departure price. Without a buyout clause a departing District member simply stops receiving distributions and keeps the interest. That is rarely what either side wanted.
8. Dissolution triggers and the payout order
Section 29-801.07(c)(7) prevents the agreement varying the judicial dissolution grounds. But the consensual triggers are yours. Write them, and write the waterfall. Then read our District of Columbia dissolution guide for the filings.
9. Federal election and District filings
Say who signs Form 2553 or Form 8832, and who may revoke. District entities also face the unincorporated business franchise tax, which reaches many LLCs. So the agreement should name who prepares the returns, and whether the company funds member level tax.
10. Disputes, forum and amendment
Section 29-801.07(c)(9) stops the agreement unreasonably restricting a member's right to sue, and § 29-801.07(c)(14) limits how far you may vary the special litigation committee rules. Within that, set a forum and an amendment threshold, in place of the unanimity in § 29-804.07(b)(5). Changing the public record is separate, covered in amending a District of Columbia certificate of organization.
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Charging Orders and the District Sole Member Rule
Section 29-805.03(h) makes the charging order the exclusive remedy. That is how a judgment creditor may satisfy a judgment from a member's transferable interest. The protection is thinner than it sounds.
Subsection (b) allows the Superior Court to appoint a receiver of the distributions, with power to make all the inquiries the debtor might have made. Subsection (c) allows the court to foreclose the lien and order a sale. The showing needed is that distributions under the charging order will not pay the judgment debt within a reasonable time.
For a company with several members, the buyer takes the transferable interest. The buyer does not become a member, and remains subject to § 29-805.02. For a company with one member, subsection (f) hands over the entire interest and membership. So the District protects a multi member LLC reasonably well and a sole member LLC very little. Arkansas and Florida take the same position. Delaware and Connecticut take the opposite.
The response is structural rather than clever. Adopt and follow a genuine distribution policy, so the reasonable time showing is harder to make. Keep the entity demonstrably separate, so no one needs to argue about it. And where a District owner holds real property or a substantial book of business in a one member entity, reconsider the member count itself with counsel.
How Far the District Lets You Modify Duties
The District took the uniform middle path. Section 29-801.07(c)(4) says an operating agreement may not eliminate the duty of loyalty, the duty of care, or any other fiduciary duty. That is subject to the carve outs in subsection (d).
Section 29-801.07(c)(5) preserves the contractual obligation of good faith and fair dealing under § 29-804.09(d), allowing only prescribed standards that are not manifestly unreasonable. Section 29-801.07(c)(13) bars relieving anyone from liability for conduct involving bad faith, willful or intentional misconduct, or a knowing violation of the law.
Subsection (d) then opens the permitted routes. Section 29-801.07(d)(1) lets the agreement specify how a conflicted act is authorized or ratified. Disinterested and independent persons do it, after full disclosure of all material facts.
Section 29-801.07(d)(3) applies where the term is not manifestly unreasonable. It lets the agreement restrict or eliminate the aspects of the duty of loyalty stated in § 29-804.09, and identify categories of activity that do not violate loyalty. It lets you alter the duty of care, short of authorizing willful or intentional misconduct. And it lets you alter or eliminate any other fiduciary duty.
Section 29-801.07(h) sets the standard of review. The Superior Court decides as a matter of law whether a term is manifestly unreasonable. It judges as of the time the term became part of the agreement, and considers only circumstances existing then.
It may invalidate a term only if one thing is readily apparent. Either the objective is unreasonable, or the term is an unreasonable means of achieving it. The drafting lesson is to state the purpose of a hard clause inside the clause. The court then has the objective in front of it.
The District Series, Which Is Filed and Named in Public
The District permits series, and its version is unusually visible. Section 29-802.06(b) makes the liability separation effective only if four conditions hold. Separate and distinct records are maintained for the company and each series. The assets are held and accounted for separately in those records.
The certificate of organization states that the debts of the series are limited as provided in that subsection. And the company has delivered to the Mayor for filing, and paid the requisite fee for, a certificate of series designation for each series.
That fourth condition is the difference from Delaware, where a protected series never appears on the public record. Section 29-802.06(d) requires each certificate of series designation to state a different name for each series. That name contains the entire name of the limited liability company. It also states a principal office and registered agent, if either differs.
Section 29-802.06(j) gives a series capacity to sue and be sued in its own name. And § 29-802.06(g) ties its good standing to the company's.
The District also has a statement of authority. Section 29-803.02 lets a company file a statement with the Mayor. It names who may execute an instrument transferring real property held in the company name, and who may otherwise bind the company. Does a District LLC own real estate? File one, and record a certified copy alongside the deed. That removes an argument a buyer's counsel will otherwise raise. The operating agreement should say who is authorized to file and amend it.
Three District of Columbia Companies in Practice
Example one: Shaw Corridor Coffee Roasters, Washington
Two members opened a roastery and a cafe. One contributed $295,000 for the roaster, the build out and the lease deposit. The other contributed $12,000 and ran the business. Nothing was written.
The company distributed $180,000 in its third year, and § 29-804.04(a) split it equally: $90,000 each. The funding member also held one vote of two under § 29-804.07(b)(2), and could not sell the business without her partner, because of § 29-804.07(b)(4). One distribution clause would have moved about $78,000 in that year alone.
Example two: Anacostia Gateway Contractors, Washington
Three members ran a fit out contractor. They won a $1.6 million institutional contract, which required a general partner style guarantee from the company. Giving the guarantee was outside the ordinary course, so § 29-804.07(b)(4) required all three. The third member held the smallest economic stake and none of the risk, and wanted a fee to sign. There was no threshold clause and no deadlock mechanism. The contract went to a competitor while the members negotiated with each other.
Example three: Capitol Hill Row Holdings, Washington
A family owned three rowhouses worth roughly $4.1 million in one District LLC, and wanted each insulated. They used § 29-802.06 as follows. They amended the certificate of organization to carry the limitation statement. They amended the operating agreement. They opened separate ledgers and accounts.
And they filed a certificate of series designation for each property, with its own name incorporating the company name. Unlike a Delaware protected series, each District series is on the public record. Their lender preferred that, because it could name the borrowing series directly.
Five Mistakes That Cost District Members Money
Mistake 1: A percentage table with no clause behind it
The most common failure in the District is one document. It recites a seventy thirty ownership split, and never states that it is displacing § 29-804.04(a). Equal shares is the rule until the agreement replaces it in terms. A recital in the preamble is not a distribution clause.
Mistake 2: Skipping it because there is one member
The District sole member has the weakest creditor position in the chapter under § 29-805.03(f), and has nobody to corroborate what the company decided. The agreement supplies the distribution policy, the signing authority and the succession plan the statute does not provide.
Mistake 3: Adding a member and creating a new veto
Every new member adds a head to the § 29-804.07(b)(3) majority. It adds an equal share to the § 29-804.04(a) distribution. And it adds another consent to the unanimity in (b)(4) and (b)(5). Amend before you admit. After admission the amendment needs the new member too.
Mistake 4: Trying to file the agreement with the District
There is no District filing for an operating agreement, no form and no fee. What the District does file is the certificate of organization. Then the optional statement of authority under § 29-803.02, and any certificate of series designation. Your recurring filing is the District of Columbia biennial report, alongside your registered agent record.
Mistake 5: Treating a District series like a Delaware series
Delaware protected series exist purely inside the agreement and the certificate of formation. The District requires more. A certificate of series designation delivered to the Mayor, with the fee paid, for every series, under § 29-802.06(b)(4), plus a distinct name for each under § 29-802.06(d). A District company that copies a Delaware series clause and files nothing has an agreement saying the series are separate, and a statute saying they are not.
What Happens Financially When the District Defaults Decide
The District imposes no penalty for the missing agreement. The cost lands elsewhere. The figures below are arithmetic on the facts stated, not a survey of professional fees.
The distribution default is the largest recurring number. On the Shaw facts, one year of equal shares moved about $78,000 away from the member who funded the business. Across four years at the same distribution level, that is roughly $312,000. The second exposure is the unanimity requirement. On the Anacostia facts a $1.6 million contract was lost, because a minority member could withhold consent to an act outside the ordinary course.
The third is the sole member creditor rule. A foreclosure buyer takes the whole company, rather than a stream of distributions. The fourth is the bank.
District banks ask a multi member company for the operating agreement at account opening. A business that trades through a personal account while governance is sorted has created the commingling record a plaintiff will use later. If the entity has been revoked, deal with reinstatement before the meeting.
What District Banks and Counterparties Ask For
Expect a request for several documents. The filed certificate of organization. The EIN letter. Beneficial owner identification. The current basic business license, where the activity requires one. And the operating agreement. Lenders read the agreement for signature authority. They will ask whether a statement of authority under § 29-803.02 has been filed. A recorded grant is conclusive in favor of a person giving value without knowledge to the contrary.
The same file supports the separateness argument. Courts asked to disregard an LLC look for separate accounts and real capital. They look for decisions made by the body the agreement names. And for distributions that were authorized rather than assumed. Trading in Maryland or Virginia means producing the documents again for foreign qualification, typically with a District certificate of good standing attached.
How File.Business Drafts District of Columbia Operating Agreements
We start with the three equal treatment defaults. A District agreement that leaves them in place is not doing its job. The intake covers members and capital. It covers the distribution clause that displaces § 29-804.04(a), the voting weights and thresholds against § 29-804.07(b), and the management election that the District puts in the agreement.
It covers transfer and buyout terms, and any duty modification, drafted with its purpose stated so § 29-801.07(h) has something to weigh. Where separated asset pools are wanted, we set out the four conditions in § 29-802.06(b), and the certificate of series designation each series needs.
Free templates against a drafted District agreement
The characteristic template failure in the District has two halves. A Delaware fiduciary waiver that § 29-801.07(c)(4) does not permit. Next to a Delaware series clause that omits the filing the District requires. A drafted agreement names the sections it displaces, and files what has to be filed. Trading under another name needs a District trade name registration. Changing agents is covered in changing a District registered agent. And the general framework is in operating agreement essentials.
District of Columbia Operating Agreement FAQ
Does the District of Columbia require an LLC to have an operating agreement?
No. The Uniform Limited Liability Company Act of 2010 contains no requirement to adopt one. D.C. Code § 29-801.07(b) provides that the chapter governs any matter the operating agreement does not address. That is the only consequence of going without.
Can a District of Columbia operating agreement be oral?
Yes. D.C. Code § 29-801.02(10) defines it as the agreement of all the members, including a sole member. It may be oral, in a record, implied or in any combination. Putting it in writing is an evidentiary decision rather than a statutory requirement.
Do I file my operating agreement with the District government?
No. There is no filing, no form and no fee for the operating agreement itself. The District accepts the certificate of organization, the optional statement of authority under D.C. Code § 29-803.02, and any certificate of series designation.
How are distributions split in a District LLC with no agreement?
In equal shares. D.C. Code § 29-804.04(a) requires any distribution made before dissolution and winding up to be in equal shares. That is among members and dissociated members, regardless of what each contributed. Only the operating agreement changes it.
Do single-member District LLCs keep charging order protection?
Only partly. D.C. Code § 29-805.03(f) covers a Superior Court foreclosure of a charging order lien against the sole member. The purchaser gets the member's entire interest rather than only the transferable interest. The purchaser becomes a member. And the former owner is dissociated. A multi member District LLC does not face that result.
Can a District agreement waive fiduciary duties?
Not entirely. D.C. Code § 29-801.07(c)(4) bars eliminating the duty of loyalty, the duty of care or any other fiduciary duty. The exception is subsection (d), which permits specified changes only where they are not manifestly unreasonable. Section 29-801.07(h) makes that a question of law for the Superior Court.
How does a District of Columbia series LLC differ from a Delaware one?
The District requires a public filing. D.C. Code § 29-802.06(b)(4) makes the liability separation conditional on two more things. A certificate of series designation delivered to the Mayor, with the fee paid for each series. That is besides separate records and a statement in the certificate of organization. A Delaware protected series never appears on the public record.
Need a custom District of Columbia Operating Agreement?
File.Business drafts District of Columbia-specific Operating Agreements at $97 flat: customized for single-member or multi-member structure, ownership percentages, capital contributions, tax election preferences, and management structure. Includes member-signature template and document-vault storage.
Doing this in the District specifically: our District of Columbia operating agreement page covers the drafting itself, including the clauses that displace equal shares and the series filings the statute makes conditional.
Every statutory reference on this page was read in the Code of the District of Columbia on the D.C. Law Library, the Council's official code site. Sections are amended. Confirm the current text before you rely on it.
Disclosure. File.Business is a private filing service, not a government agency and not a law firm. We prepare and submit filings at your direction, and nothing on this page is legal or tax advice. Filing fees, deadlines, and statutory references are current as of the last-updated date shown above and can change. Confirm current requirements with the relevant state agency before you file.
