Virginia Counts Votes by Capital, Which Almost No Other State Does
Virginia never adopted either uniform limited liability company act. Chapter 12 of Title 13.1 is its own statute, and it makes a choice on the first governance question that separates it from almost every other state in the country. Section 13.1-1022(B) provides that, unless the articles or an operating agreement say otherwise, the members shall vote in proportion to their contributions to the company, as adjusted from time to time, and a majority vote means members holding a majority share of the voting power.
Most acts give each member one vote. Virginia gives each dollar one vote. Published summaries of state default rules routinely describe Virginia as a per-capita state, and the statute says the opposite. Section 13.1-1029 and section 13.1-1030 then allocate profits and distributions on the same basis: the value of the contributions made by each member, as stated in the records the company must keep under section 13.1-1028, and only to the extent those contributions have actually been received.
None of it is filed. The State Corporation Commission takes articles of organization and an annual registration fee and has no channel and no fee for an operating agreement. General patterns are set out in the operating agreement essentials guide; the transactional page for this state is Virginia operating agreement.
What chapter 12 supplies when nobody wrote anything down
Votes follow capital. Section 13.1-1022(B) sets voting in proportion to contributions as adjusted from time to time. A member who funds a later capital call moves the whole balance of control without any document being signed.
Money follows capital too, but only what arrived. Sections 13.1-1029 and 13.1-1030 both measure by the value of contributions made, as stated in the section 13.1-1028 records, to the extent received by the company. A promised contribution that was never paid counts for nothing.
Management is vested in the members. Section 13.1-1022(A) vests management in the members except to the extent the articles or an operating agreement provide in writing for one or more managers. Manager management in Virginia requires writing.
There is no exit. Section 13.1-1032 says a member may resign only to the extent provided for in writing in the articles or an operating agreement. Silence means no resignation, no buyout and no price. A member is in until the company is sold, dissolved, or the others agree to something.
Duties are a business judgment standard, not a loyalty and care pair. Section 13.1-1024.1(A) requires a manager to discharge duties in accordance with the manager's good faith business judgment of the best interests of the company, subsection (C) puts the burden on the person alleging a violation, and subsection (D) treats any member participating in management as a manager.
One member, and the writings the statute sweeps into the agreement
Virginia is one of the few states whose act deals with the sole owner directly. Section 13.1-1023(A)(2) provides that where an LLC has only one member, the operating agreement is deemed to include any writing signed by the member, without regard to whether the writing constitutes an agreement, that relates to the affairs of the company and the conduct of its business.
That cuts both ways. It cures the old objection that a person cannot contract with themselves, and it means loose memoranda, side letters and even signed instructions can be read as governance terms later. The tidy answer is one signed document that says what governs, so that the sweeping-in rule has nothing untidy to sweep. Section 13.1-1041.1(D) then makes the charging order the exclusive remedy against the interest and subsection (E) denies any creditor a route to company property. Federal and banking treatment is in the single-member LLC guide, with state detail on the Virginia single-member LLC page.
Ten Clauses, Written Against the Virginia Act
Section 13.1-1023(A)(1) lets the members enter into any operating agreement to regulate or establish the affairs of the company, and binds the company to it whether or not the company executes it. The limit is only that the provisions are not inconsistent with Virginia law or the articles.
Virginia at a glance
| Question | What Title 13.1 chapter 12 says |
|---|---|
| Governing act | Virginia Limited Liability Company Act, Va. Code sections 13.1-1000 and following |
| Required by statute? | No. Section 13.1-1023 is permissive |
| Form accepted | The act does not require writing generally, but several key overrides must be in writing |
| Filed with the state? | Never. No form, no submission, no fee |
| Default voting | In proportion to contributions as adjusted, section 13.1-1022 |
| Default distributions | By the value of contributions received, section 13.1-1030 |
| Resignation | Only if the articles or an operating agreement provide for it in writing |
| Charging order | Exclusive remedy, lien only, no foreclosure in the statute, section 13.1-1041.1 |
| Protected series | Available under Article 16, sections 13.1-1088 and following |
| State fees you do pay | $100 to form, $50 for the annual registration. Nothing for the agreement |
1. Members, percentages, and the section 13.1-1028 record
List each member with a stated percentage, and then build the record the statute actually reads. Voting, profit allocation and distributions all run off the contribution values stated in the records required by section 13.1-1028. A company with no such record has no default rule that can be applied without argument.
2. Contributions, and the words made and received
Sections 13.1-1029 and 13.1-1030 measure by contributions made and only to the extent received by the company. Record the form, date and value of every contribution, and treat a promised contribution as what it is: a receivable that counts for nothing until it lands. Set the consequence of a missed capital call expressly.
3. Management, and the writing manager management needs
Section 13.1-1022(A) vests management in the members unless the articles or an operating agreement provide in writing for a manager. Name the manager, set the term, compensation and removal procedure, and define who may sign for the company and up to what amount. Section 13.1-1022(D) also permits delegation, which is worth using deliberately rather than by accident.
4. Voting, and deciding whether capital really should control
This is the Virginia clause most often left alone by mistake. The default gives control to whoever has contributed most, adjusted over time, so a later capital call can move control without anyone intending it. Decide expressly: capital-weighted, per capita, or by units, and set thresholds for the decisions that matter, including admission of a new member under section 13.1-1038.1.
5. Allocations, distributions and a tax draw
Separate the allocation of taxable income from the distribution of cash and add a mandatory tax distribution. If the members want a split that does not track contributions, sections 13.1-1029 and 13.1-1030 both have to be displaced in writing, because both point at the same contribution record.
6. Transfers, and what an assignee receives
Section 13.1-1039 makes a membership interest assignable in whole or in part and limits the assignee to the distributions assigned. Add consent requirements, a right of first refusal, permitted estate transfers, and a mandatory purchase on death, divorce, bankruptcy or expulsion, and state expressly whether the company may redeem an interest subject to a charging order.
7. Resignation, admission, and the exit the act withholds
Section 13.1-1032 is one sentence and it is decisive: a member may resign only to the extent provided for in writing. Without a clause there is no way out at any price. Decide deliberately between no resignation, resignation with notice and a formula, or a put exercisable on defined events, and set the valuation method and payment terms.
8. Dissolution, succession, and the last remaining member
Section 13.1-1046 lists the dissolution events and section 13.1-1047 covers judicial dissolution. Section 13.1-1038.1(A)(4) then handles the case where the last remaining member dissociates, allowing a writing executed by that member's successor in interest to admit the successor or a nominee as a member. That is a succession clause the statute invites you to write. The filing itself sits on the Virginia dissolution page, and a cancelled entity works through reinstatement.
9. Tax classification, and the annual registration
Record the federal classification and test the allocations against it, since an S corporation election cannot carry preferred returns or special allocations. Virginia does not require an annual report of information from a limited liability company; it charges an annual registration fee instead, and the Virginia annual registration page explains the deadline and the consequence of missing it.
10. Amendments, remedies, and the forum
Set the amendment vote and the signature requirement. Then use section 13.1-1023.1, which is more useful than it looks: an operating agreement may specify penalties or consequences for a member or manager who fails to perform, and a member may consent in writing to the jurisdiction of a named court or to arbitration in a specified forum. Store the file with the articles and any Virginia articles of amendment.
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What the Virginia Charging Order Does, and What It Leaves Out
Section 13.1-1041.1 is short, and the shortness is the point. Subsection A lets a court charge the transferable interest of a judgment debtor, and limits the creditor to receiving any distribution the debtor would otherwise have received. Subsection B makes the charging order a lien on that interest.
Subsection D provides that the entry of a charging order is the exclusive remedy by which a judgment creditor of a member or of a member's assignee may satisfy a judgment out of the debtor's transferable interest. Subsection E adds that no creditor of a member or assignee has any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the company.
What the section does not contain is any authority to foreclose the lien and sell the interest. Several states put that authority in expressly; Virginia did not, and subsection D closes the route to other remedies. The statute is also silent about single-member companies, which means the sole owner is relying on the general language rather than an express extension of it.
Two drafting responses follow. Make distributions discretionary rather than mandatory, since a charging order collects only what the company chooses to pay. And write the redemption question, because nothing in section 13.1-1041.1 authorises the company to buy out a charged interest and the members will want that option to exist before they need it.
Separateness, and Where a Virginia Court Draws the Line
Virginia sets a high bar for disregarding an entity. The claimant must show that the owner exercised undue domination and control and that the entity was used to disguise a wrong, conceal fraud or work an injustice. Virginia courts have said repeatedly that piercing is an extraordinary measure, and the practical effect is that the record either supports separateness comfortably or it does not exist at all.
The operating agreement is where most of that record starts. A contribution ledger fixes capitalisation, which matters doubly in Virginia because voting and distributions both run off it. Declared distributions show money was paid rather than drawn. A written authority clause explains why a particular person signed a particular contract, and section 13.1-1023.1 lets the agreement attach consequences when someone acts outside it.
For a sole owner there is an extra wrinkle. Section 13.1-1023(A)(2) sweeps any signed writing about the company's affairs into the operating agreement, so a scattered file is legally operative rather than merely untidy. One clean document, signed and dated, is both the governance record and the answer to the alter ego question. A current certificate of good standing is the cheapest evidence that the entity is being maintained.
Five Mistakes Virginia Owners Keep Making
Three of these come from assuming Virginia follows a uniform act. Two come from provisions that only surface when somebody wants out.
Mistake 1: Using a template that assumes one vote per member
Virginia is a capital-weighted voting state by default under section 13.1-1022(B). A template that recites one vote per member is not describing Virginia law, and worse, a template that says nothing at all leaves control with whoever has contributed the most, adjusted over time. Founders who split work and money unevenly should read that sentence carefully before signing anything.
Mistake 2: Letting a sole owner's paperwork accumulate
Section 13.1-1023(A)(2) deems any writing signed by a single member about the company's affairs to be part of the operating agreement. That includes emails to a lender, memoranda to an accountant and instructions to a property manager. One signed governing document is the way to stop a pile of informal writings from becoming the constitution of the company.
Mistake 3: Never writing a resignation clause
Section 13.1-1032 permits resignation only to the extent provided in writing. Founders assume they can walk away from a business that is not working and be paid for their share. In Virginia they cannot do either unless the document says so, and the usual alternative is a petition for judicial dissolution.
Mistake 4: Looking for the filing or the fee
There is neither. The operating agreement is never delivered to the State Corporation Commission, appears in no fee schedule and is not part of the formation packet. What Virginia charges is $100 to form the company and $50 for the annual registration. Filing the agreement publicly would expose the member schedule and contribution values for no benefit.
Mistake 5: Never creating the contribution record the statute reads
Section 13.1-1028 requires the company to keep records, and sections 13.1-1029 and 13.1-1030 measure profit and distributions against the contribution values stated in them. A company that never recorded agreed values has removed the foundation for its own default rules, and the argument that follows is about evidence rather than about law.
Three Virginia Companies and the Clause That Decided It
Composite cases built from the patterns that recur under chapter 12.
Example 1: A Richmond design-build firm where a capital call moved control
Three members founded a construction firm with $150,000, $150,000 and $50,000. A slow winter required an extra $200,000, and only one member could fund it. Under section 13.1-1022(B) voting is in proportion to contributions as adjusted from time to time, so the member who wrote the cheque moved from forty-three percent of the voting power to about sixty-nine percent overnight. Nobody had signed anything, and there was no operating agreement fixing votes at formation.
Example 2: An Arlington consultancy where a founder could not leave
Two members built a federal consulting practice worth roughly $1.8 million. One wanted out after a disagreement about pursuing a larger contract. Section 13.1-1032 allows resignation only to the extent provided in writing, and there was no operating agreement, so there was no resignation right and no price. The exit ran through a petition for judicial dissolution instead, and legal costs on both sides passed $95,000 before a settlement.
Example 3: A Norfolk marine services company and a protected series that was never used
An owner ran vessel maintenance, dock leasing and a parts business through one company, intending to separate them later. Article 16 of chapter 12 provides for protected series, with associated assets and associated members and a designation filed with the Commission. None of that had been done, so when a dockside injury claim arrived, all three businesses stood behind it as one pool of assets.
The Financial Consequence of Relying on the Act
Virginia imposes no penalty for having no operating agreement. There is no fine and no filing. These are the amounts the defaults actually move.
The control shift. Capital-weighted voting means a single funding round can transfer control without a vote. On the Richmond pattern, a $200,000 capital call moved one member from a minority to a supermajority, and the value of that shift is the value of every decision made afterwards.
The exit that does not exist. A twenty-five percent member of a business worth $1.8 million holds about $450,000 of value with no mechanism to realise it. The usual route is judicial dissolution, and on the pattern above the two sides spent more than $95,000 in fees to reach a settlement that a resignation clause would have priced in a page.
The distribution nobody can compute. Where contribution values were never recorded, sections 13.1-1029 and 13.1-1030 give a court nothing to apply. On a company distributing $250,000 a year, a disagreement about whether a sweat-equity member holds a quarter or a tenth is a $37,500 annual swing.
The costs the state does charge. Formation is $100 and the annual registration is $50, so the calendar is light and nothing prompts a review of the governance file. A certificate of good standing pulled for a closing is often the first look in years, and trading in another state adds foreign qualification and a second calendar.
How File.Business Drafts a Virginia Operating Agreement
The intake starts with the voting question, because Virginia is the only state in this group where silence hands control to whoever contributed the most and keeps adjusting it. Members decide expressly whether votes are capital-weighted, per capita or unitised, and the answer is fixed rather than left to move with the next capital call.
The second pass is the exit, since section 13.1-1032 supplies none. A resignation right, a valuation method and payment terms are drafted in, or their absence is a conscious decision recorded in writing. From there the work covers the contribution record that sections 13.1-1029 and 13.1-1030 depend on, redemption authority for a charged interest, a successor arrangement under section 13.1-1038.1(A)(4), and the remedies and forum provisions section 13.1-1023.1 allows. Delivery includes a member and contribution schedule formatted for a bank's beneficial ownership file, signature pages and an adopting consent. Adjacent work runs alongside: registered agent coverage, agent changes and fictitious name filings. The flat fee is $99 and no state fee attaches, because there is no filing.
Template or drafted document
A single-member Virginia company should have one signed document rather than a template plus a drawer of writings, because section 13.1-1023(A)(2) treats the drawer as part of the agreement. Every multi-member company earns a drafted document for a simpler reason: the two most important defaults in the act both run in a direction founders do not expect.
The test takes one search. Open the template and look for the word resign. If the document neither grants a resignation right nor refuses one, every member is locked in permanently, and the only exit Virginia offers is a lawsuit.
Virginia Operating Agreement FAQ
Does Virginia require an LLC operating agreement?
No. Section 13.1-1023(A)(1) provides that the members of a limited liability company may enter into any operating agreement to regulate or establish the affairs of the company, the conduct of its business and the relations of its members. Nothing in chapter 12 requires one.
Do I file the operating agreement with the Virginia State Corporation Commission?
No. There is no form for it, no filing channel and no fee, because it is a private contract among the members. The state fees you do pay are $100 to form the company and $50 for the annual registration.
How do members vote in a Virginia LLC with no operating agreement?
By contribution. Section 13.1-1022(B) provides that unless the articles or an operating agreement say otherwise, the members shall vote in proportion to their contributions to the company, as adjusted from time to time, and a majority vote means members holding a majority share of the voting power.
Can a member resign from a Virginia LLC?
Only if the documents allow it. Section 13.1-1032 provides that a member may resign from a limited liability company only to the extent provided for in writing in the articles of organization or an operating agreement. Silence means there is no resignation right and no buyout price.
Can a creditor foreclose on a Virginia LLC membership interest?
The act does not provide for it. Section 13.1-1041.1(D) makes the entry of a charging order the exclusive remedy by which a judgment creditor may satisfy a judgment out of the debtor's transferable interest, and subsection (E) denies any creditor a right to reach the property of the company.
Does a single-member Virginia LLC need a written operating agreement?
It is strongly advisable. Section 13.1-1023(A)(2) provides that where the company has only one member, the operating agreement is deemed to include any writing signed by the member that relates to the affairs of the company, whether or not the writing is itself an agreement. One signed document keeps that rule from producing surprises.
What duty does a Virginia LLC manager owe?
A business judgment duty. Section 13.1-1024.1(A) requires a manager to discharge the manager's duties in accordance with the manager's good faith business judgment of the best interests of the company, subsection (C) puts the burden of proof on the person alleging a violation, and subsection (D) treats a member participating in management as a manager for that purpose.
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Doing this in Virginia specifically: Virginia operating agreement covers the state detail. There is no state form and no fee, because the document is never filed.
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