West Virginia Kept the 1996 Buyout and Then Rewrote Its Veil-Piercing Rule
Chapter 31B of the West Virginia Code is still the 1996 uniform limited liability company act. So it still contains the provision most states deleted when they moved to the revised act. Section 31B-7-701 requires the company to purchase the distributional interest of a member of an at-will company. The price is fair value as of the date of dissociation.
Section 31B-6-602 supplies the other half. Unless the operating agreement says otherwise, a member may dissociate at any time, rightfully or wrongfully, by express will.
West Virginia then added something no uniform act contains. The Legislature reenacted section 31B-3-303 in 2022 with an express statement of intent. It intended to modify the veil-piercing analysis adopted in Kubican v. The Tavern, LLC.
Subsection (d) now applies that analysis only in one case. The company must not be adequately capitalized for the reasonable risks of the undertaking. And it must not carry liability insurance with minimum limits of $100,000.
None of this is filed. The Secretary of State takes articles of organization and a report. It 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 West Virginia operating agreement.
What chapter 31B supplies when nobody wrote anything down
Money splits by head. Section 31B-4-405(a) requires equal shares for distributions made before dissolution and winding up. So a member who funded the business and a member who funded none receive the same amount.
Votes split by head too. Section 31B-4-404(a) gives each member of a member-managed company equal rights in management. A majority of the members decides any matter.
Twelve decisions need every member. Section 31B-4-404(c) fixes the list. Three entries matter most. Making an interim distribution. Admitting a new member. And using company property to redeem an interest subject to a charging order.
The company is at will unless the documents say otherwise. It is a term company only where the operating agreement or articles specify a definite term or a particular undertaking. Silence means at will. That switches on both the buyout and the dissolution rule.
Loyalty cannot be eliminated. Section 31B-1-103(b) stops the agreement eliminating the duty of loyalty. It cannot unreasonably reduce the duty of care. It cannot eliminate the obligation of good faith and fair dealing. And it cannot unreasonably restrict access to records.
It may still identify categories of activity that do not violate loyalty, if those categories are not manifestly unreasonable.
One member, a permissive agent rule, and a creditor section with no exclusivity clause
Two features of the West Virginia act surprise owners arriving from elsewhere. The first is section 31B-1-108. A limited liability company, and a foreign limited liability company authorized to do business in the state, may continuously maintain an office and an agent for service of process.
The word is may. West Virginia does not compel a company to appoint a registered agent. Section 31D-5-501 uses the same permissive language on the corporate side. Most companies appoint one anyway, because service and notice reach them faster.
The second is section 31B-5-504. It creates the charging order and makes it a lien. It lets the court order foreclosure of that lien at any time. And it permits redemption with company property only where the operating agreement allows it.
What it does not contain is any statement that the charging order is the exclusive remedy.
Several neighboring acts carry that sentence. Chapter 31B does not. That puts a West Virginia member's interest at the weaker end of the national range. The single-member LLC guide covers federal and banking treatment. State detail sits on the West Virginia single-member LLC page.
Ten Clauses, Written Against Chapter 31B
Section 31B-1-103(a) lets all members regulate the affairs of the company and govern relations among themselves. Subsection (b) marks the boundary. In West Virginia the drafting has more to do than in most states. Three separate defaults can each end the company or empty its bank account.
West Virginia at a glance
| Question | What W. Va. Code chapter 31B says |
|---|---|
| Governing act | West Virginia Uniform Limited Liability Company Act, W. Va. Code chapter 31B |
| Required by statute? | No. Section 31B-1-103 is permissive |
| Form accepted | Written or otherwise. The statute says it need not be in writing |
| Filed with the state? | Never. No form, no submission, no fee |
| Default voting | Equal rights per member, majority of the members, section 31B-4-404 |
| Default distributions | Equal shares, whatever the contributions were, section 31B-4-405 |
| Quitting | A member may dissociate at any time by express will, section 31B-6-602 |
| What that costs | The company shall purchase the interest at fair value if at will, section 31B-7-701 |
| Charging order | Foreclosure available at any time, and no exclusivity clause in the act |
| State fees you do pay | $100 to form, $25 for the annual report. Nothing for the agreement |
1. Members, percentages, and the distributional interest
List each member with a stated percentage, and use the statute's term. A distributional interest is the interest in distributions alone. It is what a transferee or a foreclosure purchaser ends up holding.
West Virginia publishes no member detail. So this schedule is the only record a bank or a buyer can rely on.
2. Contributions, and the enforceable promise
Record the form, date and agreed value of every contribution. Then note that section 31B-4-405 ignores the record when it splits the money. Section 31B-4-402(b) also makes a contribution obligation enforceable notwithstanding death or disability. So document promised contributions as carefully as delivered ones.
3. Management, and the agency rule behind it
A company is member-managed unless the operating agreement provides otherwise. Section 31B-3-301 then governs when a member's or manager's signature binds the company. Define who may sign, for what categories, up to what amount and with what approval. Set the manager's term, compensation and removal procedure.
4. Weighting the vote, and pruning the twelve-item list
Tie votes to ownership if that is the intention, since section 31B-4-404(a) counts heads. Then work through subsection (c). Interim distributions sit on the unanimity list. So in a four-member company one holdout stops everyone being paid. So does the redemption of an interest under a charging order.
5. Allocations, distributions and a tax draw
Separate the allocation of taxable income from the distribution of cash. Displace the equal-shares rule. Add a mandatory tax distribution.
Section 31B-4-405(c) gives a member entitled to a distribution the standing of a creditor of the company for that amount. That is worth knowing before you declare a distribution and then defer it.
6. Transfers, and the redemption the statute conditions
Sections 31B-5-501 through 31B-5-503 make a distributional interest transferable and limit what the transferee receives. Add consent requirements, a right of first refusal, permitted estate transfers, and a mandatory purchase on death, divorce or bankruptcy.
Then address section 31B-5-504(c)(3) expressly. Company property may redeem a charged interest only if the operating agreement permits it.
7. The buyout clause, and whether to become a term company
This is the West Virginia clause. Section 31B-6-602 gives a power to dissociate at any time, unless the agreement says otherwise. Section 31B-7-701 then obliges an at-will company to purchase the interest at fair value.
Three routes exist. Restrict the power to dissociate. Specify a definite term or particular undertaking, so the company is a term company. Or keep the buyout and define the valuation method, discounts, installments and interest rate.
8. Dissolution, and the ninety-day continuation vote
Section 31B-8-801(b)(3) is the provision most often missed. Dissociation of a member of an at-will company dissolves the company. There are two escapes. Within ninety days the remaining members entitled to most distributions and most future distributions agree to continue. Or the operating agreement states a right to continue.
One sentence in the agreement removes the risk entirely. The filing sits on the West Virginia dissolution page, and an administratively dissolved company works through reinstatement.
9. Tax classification, and the reporting cycle
Record the federal classification and test the allocations against it. An S corporation election cannot carry preferred returns or special allocations.
Section 31B-1-108 carries the report fee. As amended in 2026, it also lets an entity elect biennial reporting instead of annual reporting. The West Virginia annual report page covers the deadline and the consequence of missing it.
10. Amendments, insurance, and the record that answers section 31B-3-303
Set the amendment vote, since section 31B-4-404(c)(1) otherwise requires every member. Then record the two things subsection 31B-3-303(d) now measures. Capitalization adequate for the reasonable risks of the business. And liability insurance with minimum limits of at least $100,000.
Keep the certificates with the agreement, the articles and any West Virginia articles of amendment.
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How the Buyout and the Dissolution Rule Interact
Read sections 31B-6-602, 31B-7-701 and 31B-8-801 together. In an at-will company one notice sets all three running. A member gives notice of withdrawal. Section 31B-8-801(b)(3) starts a ninety-day clock.
The company is dissolved and must be wound up, unless one of two things happens. The remaining members holding most current distributions and most future distributions agree to continue the business. Or the operating agreement already states a right to continue.
If the business is continued, section 31B-7-701 takes over. The company must deliver a purchase offer within thirty days of the dissociation date. With it go a statement of assets and liabilities as of that date, the latest available balance sheet and income statement, and an explanation of how it calculated the estimated payment.
If price and terms are fixed by the operating agreement, those govern, unless the purchaser defaults.
If no agreement is reached within one hundred twenty days, the dissociated member gets a further one hundred twenty days. In that window the member may bring a proceeding to enforce the purchase, and the court's jurisdiction is plenary and exclusive.
Section 31B-7-702 then tells the court what to weigh. That includes any agreement among members fixing the price or specifying a formula. It also allows installments, security, subordination and a covenant not to compete.
The drafting lesson is that a formula written today is not merely convenient. Section 31B-7-702 directs the court to consider it. So a clause drafted at formation shapes the outcome even in contested litigation years later.
The 2022 Rewrite of West Virginia Veil Piercing
Section 31B-3-303 now begins with a policy statement. Subsection (a) records the intent of the Legislature to modify the applicability of the veil-piercing analysis. That analysis was adopted in Kubican v. The Tavern, LLC, and the change covers claims arising after the 2022 reenactment.
That is an unusual thing for a statute to say. It changes how a West Virginia claim is argued.
Subsection (b) removes formalities from the analysis outright. Failure to observe the usual company formalities is not a ground for imposing personal liability.
Subsection (c) then lists the routes that remain open. A provision in the articles with the member's written consent. A personal guarantee. Tax liabilities imposed on members by law. And actual or constructive fraud causing injury.
Subsection (d) is the operative restriction. The Kubican analysis applies only if two things are true. The company is not adequately capitalized for the reasonable risks of the undertaking. And it does not carry liability insurance for the primary risks of the business with minimum limits of $100,000, or a higher amount where the law requires one.
Both conditions have to be satisfied before the analysis is even reached.
Two further subsections keep the door open elsewhere. Subsection (e) preserves joint enterprise liability where entity members operate a joint enterprise and a tort claim arises from it. Subsection (f) confirms that a member remains primarily liable for the member's own tortious conduct.
The practical consequence is a compliance point with a number attached. Keep an insurance certificate, a capitalization record and a current certificate of existence in the same file as the agreement.
Five Mistakes West Virginia Owners Keep Making
Three of these come from the 1996 act nobody expects to still be in force. Two come from provisions rewritten recently.
Mistake 1: Using a template written for the revised uniform act
The revised act deleted the mandatory buyout and abolished the dissolution-on-dissociation default. West Virginia kept both. A template drafted against the revised act will say nothing about dissociation, because its drafter assumed the default was harmless. That silence leaves sections 31B-7-701 and 31B-8-801(b)(3) fully operative.
Mistake 2: Assuming an agent is required and the agreement is not
It is the other way round. Section 31B-1-108 says a company may maintain an agent for service of process. Section 31B-3-303 makes the governance and insurance record decisive on personal liability. Appointing an agent is sensible practice. The document is where the legal consequences actually sit.
Mistake 3: Missing the ninety-day continuation window
Section 31B-8-801(b)(3) dissolves an at-will company on a member's dissociation. The escape is a vote within ninety days by the remaining members holding most current and future distributions to continue.
Companies discover this months later. A bank or a buyer asks for evidence that the business was properly continued, and nobody documented the vote.
Mistake 4: Looking for the filing or the fee
There is neither. The operating agreement is never delivered to the Secretary of State. It appears in no fee schedule and is not part of the formation packet.
What West Virginia charges is $100 to form the company and $25 for the annual report. The 2026 amendments added a biennial reporting option.
Mistake 5: Treating liability insurance as purely commercial
Since 2022 it is also a statutory shield. Section 31B-3-303(d) applies the veil-piercing analysis only where two things hold. The company is inadequately capitalized. And it is uninsured for the primary risks of the business below the $100,000 minimum limit.
A company carrying proper cover has taken one of the two conditions off the table entirely.
Three West Virginia Companies and the Clause That Decided It
Composite cases built from the patterns that recur under chapter 31B.
Example 1: A Morgantown restaurant group and a thirty percent put
Four members ran two restaurants and a catering operation with a going concern value near $1.9 million. One member holding thirty percent gave notice of withdrawal. There was no operating agreement, so the company was at will.
Section 31B-8-801(b)(3) put the business ninety days from dissolution. Section 31B-7-701 then required a purchase at fair value. The claim was roughly $570,000 in cash, from a business whose assets were leasehold improvements and goodwill.
Example 2: A Huntington haulage company that let the ninety days run
Three members operated a regional haulage business. One dissociated in March. Nobody documented a continuation vote, and the operating agreement did not state a right to continue.
The company traded on for two years. Then a refinancing lawyer read section 31B-8-801(b)(3) and asked when the business had been continued. The answer needed a retrospective reconstruction, and it delayed the closing by five weeks.
Example 3: A Charleston property services company and a $100,000 policy
A tenant injury claim of $650,000 arrived against a small property maintenance company. Its owner also held two related entities, and counsel pleaded alter ego.
Section 31B-3-303(d) required both inadequate capitalization and the absence of liability cover at minimum limits of $100,000 before the Kubican analysis applied. The company held a policy well above that threshold. So the personal claim failed at the statutory gate rather than on the facts.
The Financial Consequence of Relying on Chapter 31B
West Virginia imposes no penalty for having no operating agreement. There is no fine and no compliance event attached to it. These are the amounts the defaults move.
The fair value put. This is the largest exposure in the act. A thirty percent member of a company worth $1.9 million can require the business to pay roughly $570,000 in cash. The offer is due within thirty days, and interest runs from the dissociation date.
There is no statutory discount for lack of control or marketability. Anything of that kind has to come from an agreed formula.
The dissolution nobody voted on. Say a company traded for two years after a dissociation without documenting a continuation. A buyer's lawyer will question whether it still exists. On a refinancing or a sale, that means weeks of delay and a five-figure legal reconstruction before anything closes.
The $100,000 insurance line. Section 31B-3-303(d) makes liability cover at minimum limits of $100,000 one of the two conditions. Carry it, and the veil-piercing analysis stays out of the case entirely. Against a $650,000 tenant claim, that premium is the cheapest legal argument the owner will ever buy.
The costs the state does charge. Formation is $100 and the annual report is $25. So almost nothing in the calendar prompts a review of the governance file.
A certificate of existence pulled for a closing is often the first look in years. Trading in another state adds foreign qualification and a second calendar.
How File.Business Drafts a West Virginia Operating Agreement
The intake starts with the buyout, because it carries the largest number. The members choose among three routes. Restrict the power to dissociate under section 31B-6-602. Become a term company by specifying a definite term or particular undertaking. Or keep the put and price it with a formula the court will read under section 31B-7-702.
The second pass is the continuation right, so section 31B-8-801(b)(3) can never dissolve the company by inattention.
From there the work covers the equal-shares displacement and the twelve-item unanimity list. It covers the redemption permission section 31B-5-504(c)(3) requires. And it covers the capitalization and insurance record section 31B-3-303(d) now measures.
Delivery includes a member and contribution schedule formatted for a bank's beneficial ownership file. It also includes signature pages and an adopting consent. Adjacent work runs alongside: registered agent coverage, agent changes and trade name filings. The flat fee is $97 and no state fee attaches, because there is no filing.
Template or drafted document
A single-member company has no dissociation counterparty. It can run on a careful template written to chapter 31B, provided that template contains the redemption permission and a discretionary distribution clause. Every multi-member company earns a drafted document.
The test takes one search. Open the template and look for the word dissociate. Suppose the document neither restricts the power nor specifies a definite term. Then the company is at will. Every member holds a fair value put against the business. And a single notice starts a ninety-day dissolution clock.
West Virginia Operating Agreement FAQ
Does West Virginia require an LLC operating agreement?
No. Section 31B-1-103(a) lets all members of a limited liability company enter into an operating agreement to regulate the affairs of the company and the conduct of its business. It need not be in writing. The Secretary of State never asks to see it.
Do I file the operating agreement with the West Virginia 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 $100 to form the company and $25 for the annual report.
Does a West Virginia LLC have to appoint a registered agent?
The statute says may, not must. Section 31B-1-108 provides that a limited liability company, and a foreign limited liability company authorized to do business in this state, may continuously maintain an office and an agent for service of process. Most companies appoint one anyway, so service and notices reach them promptly.
Can a member of a West Virginia LLC quit and be paid?
Yes, by default. Section 31B-6-602 gives a member the power to dissociate at any time by express will, unless the operating agreement provides otherwise. Section 31B-7-701 then requires an at-will company to purchase that member's distributional interest for its fair value as of the dissociation date.
Does a member leaving dissolve a West Virginia LLC?
It can. Section 31B-8-801(b)(3) dissolves an at-will company on the dissociation of a member. There are two escapes. Within ninety days the remaining members entitled to most current and future distributions agree to continue the business. Or the operating agreement states a right to continue.
Can a creditor foreclose on a West Virginia membership interest?
Yes. Section 31B-5-504(b) makes a charging order a lien on the judgment debtor's distributional interest. The court may order a foreclosure of that lien at any time, and the purchaser takes the rights of a transferee. The section contains no exclusive-remedy clause.
How did the 2022 amendment change West Virginia veil piercing?
It narrowed it. Section 31B-3-303 now records the Legislature's intent to modify the analysis adopted in Kubican v. The Tavern, LLC. It removes failure to observe formalities as a ground. And it applies the analysis only where the company is not adequately capitalized and does not carry liability insurance with minimum limits of $100,000.
Need a custom West Virginia Operating Agreement?
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Doing this in West Virginia specifically: West Virginia 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.
