Washington Put Veil Piercing in the Statute and Then Left One Lever With You
Washington rebuilt its limited liability company act in 2015. It did something unusual on the way through. RCW 25.15.061 is a statutory veil-piercing section. It makes members personally liable to the extent shareholders of a Washington business corporation would be liable in analogous circumstances. And it directs a court to the factors in established case law.
Then it carves one factor out, conditionally. Failure to hold meetings of members or managers is not a factor tending to establish personal liability. Neither is failure to observe formalities about calling and conducting meetings. That holds if the certificate of formation and the limited liability company agreement do not expressly require meetings. So the protection exists only for companies whose own documents stay quiet about meetings. A boilerplate clause requiring quarterly meetings creates an exposure the statute would otherwise have removed.
None of this is filed. The Corporations and Charities Division takes the certificate of formation and an annual report. It has no channel and no fee for the agreement itself. General patterns are set out in the operating agreement essentials guide. The transactional page for this state is Washington operating agreement.
What RCW 25.15 supplies when nobody wrote anything down
Votes are counted by head. RCW 25.15.121(1) requires the affirmative vote of a majority of the members for actions needing member approval. RCW 25.15.151(1)(b) decides ordinary-course differences the same way. Ownership percentage is irrelevant to the count.
Money is counted by capital. RCW 25.15.206 distributes in proportion to the agreed value of the contributions each member made. It also counts contributions each member is required to make but has not yet made. Washington is one of the few states that credits an unpaid but promised contribution in the default rule.
Thirteen decisions need every member. RCW 25.15.121(2) lists them. The last two are the broad ones. Disposing of substantially all the property outside the ordinary course. And undertaking any other act outside the ordinary course of the company's activities. Amending the agreement itself is also on the list.
Leaving pays nothing. RCW 25.15.216 states that a member has no right to receive a distribution on account of dissociation. There is no buyout anywhere in the act.
Management follows the agreement, not the filing. RCW 25.15.006 defines manager-managed as an arrangement where the limited liability company agreement vests management in one or more managers. Member-managed is anything that is not manager-managed. A company with no agreement is member-managed, whatever its certificate of formation says.
One member, an implied agreement, and a ninety-day clock
Washington defines a limited liability company agreement as the agreement of the member or members concerning the affairs of the company. That can be oral, implied, in a record, or any combination. So a sole owner always has an agreement of some kind. The only question is whether anyone can read it. An implied agreement is not a defense. It is an invitation to reconstruct terms after a dispute has started.
Two provisions make the written version worth having. RCW 25.15.265(4) dissolves the company ninety days after the dissociation of the last remaining member. The exception is where those holding transferee rights vote, as though they were members, to admit one or more members within the window. And RCW 25.15.061 makes the meetings question turn on what the company's own documents require. Federal and banking treatment of the one-owner company is in the single-member LLC guide, with state detail on the Washington single-member LLC page.
Ten Clauses, Written Against RCW 25.15
RCW 25.15.018(1) makes the agreement govern relations among the members and the rights and duties of a manager. Subsection (3) then lists the fifteen things it cannot do. Everything else is open. That is why the drafting choices below carry so much weight here.
Washington at a glance
| Question | What RCW 25.15 says |
|---|---|
| Governing act | Washington Limited Liability Company Act, RCW chapter 25.15 |
| Required by statute? | No. RCW 25.15.018 is permissive |
| Form accepted | Oral, implied, in a record, or any combination, RCW 25.15.006 |
| Filed with the state? | Never. No form, no submission, no fee |
| Default voting | Majority of the members, counted per capita, RCW 25.15.121 |
| Default distributions | In proportion to agreed contribution values, including amounts still owed, RCW 25.15.206 |
| Dissociation | No right to a distribution on leaving, RCW 25.15.216 |
| Charging order | Exclusive remedy, and the court may order foreclosure at any time, RCW 25.15.256 |
| Veil piercing | Codified at RCW 25.15.061, with a conditional carve-out for meeting formalities |
| State fees you do pay | $180 to form, $70 for the annual report. Nothing for the agreement |
1. Members, percentages, and the interest the statute names
List each member with a stated percentage. RCW 25.15.246 treats a limited liability company interest as personal property and allows a certificate of interest. Issue one where members want something tangible. A bank opening the account under the beneficial ownership rule will ask for this schedule and for the company's UBI number.
2. Contributions, and the promise that already counts
Record the form, date and agreed value of every contribution. Record promised contributions with equal care. RCW 25.15.206 counts contributions required to be made but not yet made when it splits distributions. RCW 25.15.196 makes the obligation enforceable, and compromising it is one of the thirteen unanimous decisions.
3. Management, and the definition that lives in the agreement
Manager management exists in Washington only because the agreement creates it. Say so expressly. Then set the manager's term, compensation and removal. Remember that RCW 25.15.154(1)(b)(i) lets a majority of the members remove a manager. And RCW 25.15.018(3)(h) forbids varying a manager's power to resign. Define who may sign, and up to what amount.
4. Voting, thresholds, and the ordinary-course line
Weight the vote to ownership if that is the intention, because RCW 25.15.121(1) counts heads. Then deal with subsection (2)(m). It requires every member to consent to any act outside the ordinary course of the company's activities. That phrase is undefined. A schedule of decisions and thresholds is what stops it from becoming a general veto.
5. Allocations, distributions and a tax draw
Separate the allocation of taxable income from the distribution of cash, and add a mandatory tax distribution. RCW 25.15.211 gives a member no right to any distribution before dissolution, unless the company decides to make one. So without a clause nobody is entitled to anything. RCW 25.15.231 sets the solvency limits that apply when the company does pay.
6. Transfers, and the charged interest
RCW 25.15.251 already limits a transferee. Add consent requirements, a right of first refusal, permitted estate transfers, and a mandatory purchase on death, divorce, bankruptcy or expulsion. Then look at RCW 25.15.256(3)(c). The company may redeem a charged interest with company property only with the consent of all members whose interests are not charged. That is worth addressing in advance.
7. Dissociation, admission, and the buyout the act omits
RCW 25.15.131 lists the dissociation events. RCW 25.15.216 confirms that none of them produces a payment. Write the buyout: trigger events, valuation method, discounts, installment terms, interest rate and subordination to lender covenants. Also fix the admission route, since RCW 25.15.121(2)(d) and (e) both require unanimous consent by default.
8. Dissolution, succession, and the ninety-day window
RCW 25.15.265(4) dissolves the company ninety days after the last member's dissociation, unless the transferees admit someone in time. RCW 25.15.274 lets a court dissolve where it is not reasonably practicable to carry on, or where other circumstances render dissolution equitable. Name a successor rather than rely on a vote among transferees. The filing sits on the Washington dissolution page, and an administratively dissolved company works through reinstatement.
9. Tax classification, and the two Washington agencies
Record the federal classification and test the allocations against it. Then keep the agencies straight. The Secretary of State holds the entity record and takes the annual report. The Department of Revenue Business Licensing Service issues the UBI number and administers the business and occupation tax. Washington has no personal income tax, so the business and occupation tax is the recurring state cost. It is charged on gross receipts rather than profit.
10. Meetings, amendments, and the clause that changes the veil analysis
This is the Washington clause. Decide deliberately whether the agreement requires meetings. RCW 25.15.061 removes missed meetings from the veil analysis only where neither the certificate of formation nor the agreement requires them. Then set the amendment vote, since RCW 25.15.121(2)(b) otherwise requires every member. Store the file with the certificate and any Washington amendment.
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The Meetings Clause, and Why It Changes the Veil Analysis
RCW 25.15.061 is one paragraph, and it does three things. It imports corporate veil-piercing law by analogy. It tells the court to consider the factors and policies in established case law. And it then removes one of those factors on a condition.
The condition is drafted around the company's own documents. Failure to hold meetings of members or managers is not a factor tending to establish personal liability. Nor is failure to observe formalities about calling or conducting meetings. That holds if the certificate of formation and the limited liability company agreement do not expressly require the holding of meetings.
Stay silent and the factor disappears. Require quarterly meetings in a template nobody reads, hold none of them, and the factor is back in play with a written standard attached.
That does not make silence the right answer for every company. Multi-member companies often need a meeting rhythm to function. And a well-run board of managers is evidence of separateness rather than against it. The point is that this decision carries a legal consequence. Most agreements make it by accident.
Everything else the case law weighs survives either way. Capitalization at formation. Commingled funds. Undocumented transfers between related entities. And distributions taken rather than declared. A contribution ledger, a separate account and written consents answer those. So does keeping a current certificate of existence for each entity in a group.
How the Washington Charging Order Behaves
RCW 25.15.256(1) lets a court charge the transferable interest of a judgment debtor. It limits the creditor to the rights of a transferee. And it allows a receiver of the distributions. Subsection (5) then states that the section provides the exclusive remedy by which a judgment creditor may satisfy a judgment out of the debtor's transferable interest.
Subsection (2) is the qualification that matters. A charging order constitutes a lien. The court may order a foreclosure upon the transferable interest subject to the charging order at any time. The purchaser at the foreclosure sale takes the rights of a transferee. Washington sets no reasonable-time threshold before foreclosure becomes available. That puts it at the weaker end of the range for a member's creditor.
Subsection (3) supplies the escape routes. Redemption by the judgment debtor. Redemption by other members using property other than the company's. Or redemption with company property. That last route requires the consent of all members whose interests are not charged. In a two-member company, the other member holds a veto over the rescue.
The drafting answer is the usual pair. Make distributions discretionary rather than mandatory, so a charging order collects only what the company chooses to pay. Then settle in advance who authorizes a redemption and where the money comes from. Do not negotiate it after a judgment has been entered.
Five Mistakes Washington Owners Keep Making
Two of these come from clauses that look harmless. Three come from assuming Washington's defaults match the neighboring states.
Mistake 1: Signing a template that requires meetings nobody will hold
This is the most expensive boilerplate clause in Washington. RCW 25.15.061 protects a company from having missed meetings counted against it. But it does so only where neither the certificate of formation nor the agreement requires meetings. Take a downloaded template that mandates an annual members meeting, in a company that has never held one. It has volunteered a veil-piercing factor the statute had removed.
Mistake 2: Relying on the implied agreement a sole owner already has
RCW 25.15.006 recognizes an oral or implied agreement. That sounds convenient and is not. It means whoever is arguing about a sole owner's terms will reconstruct them from conduct, invoices and emails. It also means the company is member-managed by definition, whatever the certificate of formation might suggest.
Mistake 3: Ignoring the ordinary-course veto
RCW 25.15.121(2)(m) requires the consent of all members to undertake any other act outside the ordinary course of the company's activities. The phrase is undefined. So a lease renewal, an equipment purchase or a new product line can each be argued into it. In a five-member company with no thresholds written down, that is five vetoes over anything unusual.
Mistake 4: Looking for the filing or the fee
There is neither. The agreement is never delivered to the Secretary of State. It appears in no fee schedule and is not part of the formation packet. What Washington charges is $180 to form the company and $70 for the annual report. The Department of Revenue separately issues the UBI number a bank will ask for.
Mistake 5: Assuming votes follow the money
They do not. RCW 25.15.206 splits distributions by contribution value. But RCW 25.15.121(1) counts votes by head. So a member who funded seventy percent of the business receives seventy percent of the cash and one vote out of four. That vote decides whether any cash is distributed at all. It is exactly the arrangement that produces deadlock.
Three Washington Companies and the Clause That Decided It
Composite cases built from the patterns that recur under RCW 25.15.
Example 1: A Tacoma contractor undone by its own template
Two members ran a mechanical contracting business. Their agreement, downloaded in 2019, required quarterly members meetings and annual manager elections. None had ever been held. Then a $480,000 subcontractor claim arrived. The claimant argued alter ego and pointed at RCW 25.15.061. The statutory carve-out for meeting formalities applies only where the documents do not require meetings. The clause the founders never read supplied the factor.
Example 2: A Spokane medical billing company where the funder had one vote
Four members formed a billing service. One contributed $560,000 and the others contributed time. Distributions tracked contributions under RCW 25.15.206, so the funder was entitled to most of the money. But whether any distribution happened at all needed a majority of the members under RCW 25.15.121(1). The three non-funding members voted to reinvest for three consecutive years.
Example 3: A Bellingham brewery and a foreclosure with no waiting period
A member held a third of a brewing company, with a $290,000 personal judgment against him. The creditor obtained a charging order and applied to foreclose. RCW 25.15.256(2) allows foreclosure at any time. It sets no threshold about whether distributions would clear the debt first. The other two members wanted to redeem the interest with company cash. Subsection (3)(c) permits that only with the consent of all members whose interests are not charged. They disagreed with each other.
The Financial Consequence of Relying on the Statute
Washington imposes no penalty for having no limited liability company agreement. There is no fine and no filing. These are the amounts the defaults move.
The veil-piercing factor you volunteered. Take a $480,000 claim. The difference between a factor being available and being statutorily excluded is not the whole judgment. But it is the difference between a defensible position and an expensive one. Deleting a meetings clause the company will never honor costs nothing, and it removes the factor entirely.
The distribution nobody can force. A funder holding seventy percent of the economics and one vote out of four can be outvoted on every distribution. Take a company generating $400,000 of distributable cash a year. That is $280,000 a year of entitlement with no mechanism to collect it. And three years of it before anyone reaches a courtroom.
The foreclosure with no waiting period. RCW 25.15.256(2) allows foreclosure at any time. So a $290,000 judgment against one member can put a third of the company on the market quickly. A discretionary distribution clause and a pre-agreed redemption route are the two provisions that change how that plays out.
The costs the state does charge. Formation is $180 and the annual report is $70. The business and occupation tax runs on gross receipts regardless of profit. A certificate of existence pulled for a closing is often the first governance review in years. Trading elsewhere adds foreign qualification and a second calendar.
How File.Business Drafts a Washington LLC Agreement
The intake starts with a question no other state in this group asks. Will the company hold meetings? RCW 25.15.061 makes that a legal decision rather than an administrative one. So the answer is chosen, written and then either honored or removed. A company that intends to run informally gets a document that says nothing about meetings.
The second pass is the ordinary-course veto in RCW 25.15.121(2)(m), replaced with a schedule of decisions and thresholds. From there the work covers voting weight against the per-capita default. It covers a real buyout to replace the one the act omits. It covers discretionary distributions and a redemption route, given that foreclosure is available at any time. And it covers a successor arrangement, so the ninety-day rule never runs.
Delivery includes a member and contribution schedule formatted for a bank's beneficial ownership file, alongside the UBI number. It also includes signature pages and an adopting consent. Adjacent work runs alongside: registered agent coverage, agent changes and trade name registration. The flat fee is $97 and no state fee attaches, because there is no filing.
Template or drafted document
A single-member Washington company can run on a careful template. The template must not require meetings, and it must make distributions discretionary. Those two clauses are worth more here than anything else a template contains.
The test takes one search. Open the document and look for the word meeting. Does it require one that the company has never held? Then delete the requirement or start holding them. RCW 25.15.061 has already made that choice matter.
Washington LLC Agreement FAQ
Does Washington require an LLC agreement?
No. RCW 25.15.018 sets out what a limited liability company agreement governs and lists what it may not do. But nothing in chapter 25.15 requires one. The Secretary of State never asks to see it, and the statute recognizes an oral or implied agreement.
Do I file the LLC agreement with the Washington Secretary of State?
No. There is no form for it, no filing channel and no fee. It is a private contract among the members. The state fees you do pay are $180 to form the company and $70 for the annual report.
Does Washington have a veil-piercing statute for LLCs?
Yes. RCW 25.15.061 makes members personally liable to the extent shareholders of a Washington business corporation would be liable in analogous circumstances. It directs the court to the factors in established case law on piercing the corporate veil.
Do missed meetings hurt a Washington LLC?
Only if your own documents require them. RCW 25.15.061 provides that failure to hold meetings of members or managers is not a factor tending to establish personal liability. Neither is failure to observe formalities about calling or conducting meetings. That holds if the certificate of formation and the limited liability company agreement do not expressly require meetings.
How are distributions split in a Washington LLC with no agreement?
By contribution. RCW 25.15.206 makes distributions in proportion to the agreed value of the contributions made, and any contributions required to be made but not yet made, by each member. Voting is different. RCW 25.15.121 counts a majority of the members by head.
Can a creditor foreclose on a Washington membership interest?
Yes. RCW 25.15.256(2) provides that a charging order constitutes a lien on the judgment debtor's transferable interest. The court may order a foreclosure upon that interest at any time, with the purchaser taking the rights of a transferee. Subsection (5) still makes the charging order the exclusive route.
What happens to a Washington LLC when its last member leaves or dies?
It dissolves after ninety days unless someone acts. RCW 25.15.265(4) dissolves the company ninety days following the dissociation of the last remaining member. The exception is where those holding transferee rights have voted by the ninetieth day, as though they were members, to admit one or more members.
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Doing this in Washington specifically: Washington operating agreement covers the state detail. There is no state form and no fee, because the document is never filed.
Every statutory statement above was read in the sources below. Confirm the current text with the agency or the legislature before acting 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.
