The Texas LLC operating agreement, properly called a company agreement.
Texas does not require your LLC to have an operating agreement, and that fact misleads more owners than any other in Texas business law. Skip the document and your company still has rules, the statutory defaults nobody in the room chose. Here is what the agreement decides, what Texas lets it decide that other states don’t, and where templates quietly fail.
If the entity itself is still an open question, start one step earlier at choosing a Texas business entity.
Not required is not the same as optional
The Business Organizations Code calls the document a company agreement, and Chapter 101 is built around it: the statute supplies default rules for governance, transfers, distributions, and exits, and then lets the agreement override nearly all of them. Write no agreement and you have accepted the legislature’s version of your partnership, on voting, on what happens when a member wants out, on what an heir or an ex-spouse receives. The defaults are reasonable for a company no one has ever met. They are rarely what actual co-owners would have chosen on purpose.
And the document’s audience is wider than the owners. The bank asks for it at account opening. A buyer’s diligence team asks for it early, and reads it against the cap table. A court in any owner dispute reads it first, because after Ritchie, the agreement is most of the law that applies.
The clauses that do the work
Ownership and capital. Who owns what, what was contributed, and what happens when the company needs more money and one member won’t pay in.
Management and voting. Member-managed or manager-managed, and which decisions need which majority. The thresholds are where control actually lives.
Distributions, including tax distributions. An LLC’s profits are taxed to members whether or not cash is distributed. An agreement without a tax-distribution clause can leave a minority member paying tax on income they never received, which is not a hypothetical, it is a standard pressure tactic.
Transfers and buy-sell mechanics. Who can own this company, what triggers a buyout, and at what price. The full treatment is in buy-sell agreements in Texas; the drafting point here is that the company agreement and any standalone buy-sell must say the same thing.
Duties. What the members and managers owe each other, which in Texas is a drafting decision, next section.
Deadlock and exit. The 50/50 stalemate clause nobody wants to negotiate while friendly, and everyone wishes existed once they aren’t. Without one, the company’s options narrow toward the disputes mapped in shareholder disputes in Texas.
Amendment. How the rules change, so a majority can’t quietly rewrite the deal, and so a needed fix doesn’t require a holdout’s signature.
The duties section is now the whole ballgame
Texas lets a company agreement do something most owners don’t realize: calibrate, restrict, and now effectively waive fiduciary duties among members and managers. Section 101.401 has long permitted expanding or restricting duties. In 2025 the question stopped being theoretical: in Tall v. Vanderhoef, the Texas Business Court’s Eighth Division, the division sitting in Fort Worth, enforced a broad fiduciary-duty waiver in an LLC agreement as written and dismissed a member’s breach claim. The court’s limits are as instructive as the holding: waivers do not reach fraud, gross negligence, or intentional misconduct; the implied covenant of good faith and fair dealing survives; and the language must be clear, conspicuous, and unequivocal to work.
Read that from both chairs. If you are signing an agreement someone else drafted, the duties section may be quietly deciding claims you assume you would have, the claims described in breach of fiduciary duty in Texas. If you are drafting, the duty calibration is the most consequential clause in the document, and boilerplate in either direction is malpractice-adjacent. The Business Court’s developing case law on these questions, Tall included, is tracked in the decided-opinions tracker.
The court is enforcing these provisions, consistently. Tall held that courts must honor the terms parties use to define the scope of their obligations, including terms restricting fiduciary duties that would otherwise exist. Simpson v. Simpson, 2026 Tex. Bus. 52, applied a company agreement’s fiduciary shield to absolve a managing member of liability for diluting the other member’s interest. And Camino Real Developers v. RivenRock, 2026 Tex. Bus. 28, held that a membership interest is a creature of contract and inseparable from the company agreement, so a dilution mechanism runs with the interest on transfer and a transferee cannot take the benefits while disclaiming the obligations. The through line is that the document governs. How the Fort Worth division reads these agreements now belongs in the drafting calculus.
The template question, answered honestly
The searches say it plainly: most people looking for a Texas operating agreement are looking for a template. So, honestly: a good template beats an empty drawer, and for a single-member LLC holding one asset, it may be all you need. Where templates fail is precise and predictable. They do not calibrate duties, so you get whatever the form’s home state assumed. They do not build real buy-sell mechanics, so exits default to statute. They rarely include tax-distribution clauses, deadlock provisions, or capital-call consequences. None of those gaps hurts at signing. Each of them decides a fight later. The pattern across every dispute page on this site is one document that either answered the question or didn’t.
One call, at the drafting stage for once
Most of this site’s dispute guides describe what happens when the company agreement failed. This is the page where that gets prevented. I draft Texas company agreements built for the current era, calibrated duties, working buy-sell mechanics, tax distributions, deadlock provisions, and I review the agreements founders are asked to sign. Formation questions travel with it; start with the legal checklist most founders skip. One relationship, one number: (682) 529-7177. Or start with How can I help?
Common questions
No. Texas does not require one, and nothing gets filed with the state. But the choice is not between rules and no rules; it is between rules you wrote and the Business Organizations Code's defaults, which govern any question your agreement doesn't answer. Banks ask for the agreement at account opening, buyers ask for it in diligence, and courts read it first in any owner dispute. The businesses that skip it are borrowing against their most expensive future week.
Nothing but vocabulary. The Texas statute calls the document a company agreement; the rest of the country, and most search bars, call it an operating agreement. Texas practitioners use both. What matters is that the document exists, that it actually answers the questions Chapter 101's defaults would otherwise answer, and that it doesn't contradict any standalone buy-sell or side agreement the owners also signed.
Yes, for reasons that have little to do with disputes. The agreement is evidence the LLC is a real, separate entity, which matters when someone attacks the liability shield; it is the document your bank, landlord, and eventual buyer will ask for; it controls what happens to the company if you die or divorce, which in a community property state is not hypothetical; and it takes an hour to do properly at formation against days of cleanup later.
Largely, yes, and this is where Texas now stands apart. Section 101.401 lets the company agreement expand or restrict duties, including fiduciary duties, and in 2025 the Business Court's Eighth Division enforced a broad fiduciary waiver as written in Tall v. Vanderhoef, dismissing a member's claim. The limits the court recognized: waivers do not reach fraud, gross negligence, or intentional misconduct; the implied covenant of good faith and fair dealing survives; and the waiver language must be clear, conspicuous, and unequivocal. Read your agreement's duties section before you sign it, because it may be deciding claims you assume you would have.
Better than nothing, worse than it looks. Templates reliably cover the parts that rarely matter and default the parts that decide disputes: how duties are calibrated, what happens on deadlock, how an owner exits and at what price, whether the company must distribute enough for members to pay tax on income they never received. A single-member holding company can live on a good template. Co-owned operating businesses meet the template's gaps at the worst possible time, in the middle of the fight the missing clause was supposed to prevent.
On events, not a calendar: a new member or investor, a manager change, a shift in distribution policy, a member's marriage or divorce, and any year the legislature rewrites the ground rules, which in Texas has been happening steadily since 2024. Agreements drafted before the current era predate the codified business judgment rule, the Business Court, and the fiduciary-waiver case law, and many predate the buy-sell funding questions raised by Connelly. If nobody has read yours since formation, it is due.
Every dispute on this site traces back to a document. Write yours on purpose.
The words you'll hear
If this goes further, these are the terms that will come up, from us or from the other side. Each one links to a fuller explanation.
- Company Agreement
- The principal governance document of a Texas LLC, the contract among members (and managers, if applicable) that establishes the LLC's internal rules.
- Membership Interest
- The ownership interest of a member in a Texas LLC, comprised of two analytically separate components: economic rights (rights to distributions and allocations) and governance rights....
- Fiduciary Duty
- The obligation of one party (the fiduciary) to act in the best interests of another (the beneficiary) when entrusted with property, authority, or confidence.
- Derivative Action
- A lawsuit filed by a shareholder, member, or other equity holder on behalf of the entity itself, asserting a claim that belongs to the entity but....
- Charging Order
- A court order entitling a judgment creditor to receive any distributions that would otherwise be paid to a debtor-member of an LLC, partner of a limited....
- Judicial Dissolution
- A court-ordered termination of a Texas business entity's existence.
- Certificate of Formation
- The public document filed with the Texas Secretary of State to bring a domestic filing entity into legal existence under Texas law.