Business law
Texas LLC Operating Agreement: What a Texas Company Agreement Covers, What the Law Provides Without One, and What Cannot Be Changed
What a Texas LLC company agreement covers, the default rules when it is silent, amendment and transfer rules, what § 101.054 bars, and how taxes and banks fit in.
Counselado · August 10, 2026 · Texas · Updated October 1, 2026
In Texas, an LLC operating agreement is called a company agreement. Texas Business Organizations Code § 101.001 (opens in a new tab) defines it as any agreement of the members, written, implied or oral, about the company's affairs or the conduct of its business. Under § 101.052 (opens in a new tab), it governs the relations among the members, managers, officers, assignees and the company itself. Where the agreement says nothing, Chapter 101 and the applicable Title 1 provisions supply the rules. The agreement is not filed with the Secretary of State as part of the Certificate of Formation, and that certificate, not the agreement, states whether the LLC initially has managers. Some statutory rules, listed in § 101.054 (opens in a new tab), cannot be waived or changed by agreement.
Key takeaways
- Texas calls an LLC operating agreement a "company agreement," and § 101.001 recognizes written, implied and oral agreements.
- When the agreement is silent on a matter, Texas statutory default rules fill the gap under § 101.052(b).
- Members, managers and assignees are bound by the company agreement whether or not they sign it.
- Amending the agreement requires the consent of each member under § 101.053.
- The agreement can reshape many duties and rights, but § 101.054 lists provisions it cannot waive or modify.
What Texas means by a company agreement
The Texas statute uses "company agreement" where most people say "operating agreement." The definition is broad. A written document counts, but so does an oral understanding among the members, or an agreement implied from how they have run the business. The same section says that a single-member company agreement is not unenforceable merely because only one person is a party, so a one-owner LLC can have a binding agreement too.
Who is bound matters as much as what the document says. Under § 101.052(f), the company agreement can be enforced by or against the LLC even if the company never signed or formally adopted it. Under § 101.052(g), members, managers and assignees are bound whether or not they sign. Section 101.052(d) allows provisions that regulate and manage the company's affairs as long as they are not inconsistent with law.
Does Texas require an LLC to have one?
The Texas provisions that define and govern company agreements do not impose a general rule that every LLC must adopt one, and they do not require it to be written. That makes Texas different from some states. New York's Limited Liability Company Law § 417 (opens in a new tab) says members "shall adopt a written operating agreement," and allows it to be made before, at the time of, or within 90 days after the Articles of Organization are filed. Delaware's definition in title 6, § 18-101(9) (opens in a new tab) is closer to Texas, covering agreements that are "written, oral or implied." Each of those rules applies only in its own state.
A written agreement still has practical uses; a bank or lender, for example, may ask to see one. If you are setting up a new company, our guide on how to start an LLC in Texas covers the Certificate of Formation, the registered agent and franchise tax.
Company agreement or Certificate of Formation?
The two documents do different jobs. The Certificate of Formation is the state filing, made on the Texas Secretary of State's Form 205 (opens in a new tab). Its instructions require the certificate to state whether the LLC initially has managers. If it does, the form lists the initial managers' names and addresses; if not, it lists the initial members. At least one governing person is required. Form 205 does not require a company agreement to be attached.
The company agreement is an internal governance document. It does not replace a state filing. If a change affects information on file with the state, such as the registered agent or registered office, that filing requirement has to be checked and handled separately with the Secretary of State.
What a company agreement usually covers
Official and professional sources describe the subjects these agreements commonly address. The SBA's overview of operating agreements (opens in a new tab) mentions ownership percentages, voting rights, the powers and duties of members and managers, profit and loss distributions, meetings, and buyout or buy-sell rules. The State Bar of Texas article on company and partnership agreements (opens in a new tab) adds company powers, liability limits, transfer restrictions, leader powers and pay, indemnification, written consents, capital contributions, allocations, tax treatment, amendments and dissolution. These lists describe customary subjects, not mandatory terms.
Keep the current agreement with the company's records, including the list of members and managers, ownership records, and each member's contributions and their agreed values.
What Texas law provides when the agreement is silent
Section 101.052(b) applies Chapter 101 and the applicable Title 1 provisions to any matter the agreement does not address. The defaults below come from Chapter 101 of the Business Organizations Code (opens in a new tab).
Management. Under § 101.251, managers are the governing authority if the company agreement provides for manager management, and members are if it provides for member management. If the agreement does not say, the Certificate of Formation controls. Section 101.252 applies the company agreement first and the statute where the agreement is silent.
Voting. Sections 101.354 through 101.359 set rules for member and governing-authority action, meetings, written consent and voting. The State Bar's discussion of Texas LLC voting, transfer and withdrawal rules (opens in a new tab) describes a default of equal, member-by-member voting for certain actions, which the company agreement can change. Ownership percentage and voting power are therefore not always the same thing.
Profits and losses. Under § 101.201, profits and losses are allocated based on the agreed value of contributions stated in the company's records, unless the governing documents or a statute provide otherwise.
Distributions. Under § 101.204, a member cannot demand an interim distribution until the governing authority declares one.
Dissolution. Section 101.552 (opens in a new tab) requires a majority vote of all members for a voluntary winding up, or a majority of managers if the LLC has no members. Chapter 11 (opens in a new tab) supplies the winding-up process. Our guide on how to dissolve an LLC walks through those steps.
Transfers, new members and withdrawal
A member may assign a membership interest under § 101.108, but the assignment does not by itself give the buyer management rights. Under § 101.109(b) (opens in a new tab), the assignee becomes a member only with the approval of all members.
Leaving is also restricted. Section 101.107 says a member may not withdraw or be expelled unless the company agreement grants that right. When the agreement does authorize a withdrawal, § 101.205 (opens in a new tab) provides for payment of fair value within a reasonable time. A company agreement can address a new partner, a sale, or a death, disability or divorce directly; where it does not, these statutory defaults apply.
What the agreement cannot change
Section 101.052(c) lets a company agreement waive or modify many provisions of Title 3 and Title 1, except where § 101.054 applies. Section 101.054 lists the provisions that generally cannot be waived or modified, including § 101.054 itself, certain provisions named in subsection (a)(2), applicable interpretive provisions in Chapter 1, specified provisions in Chapters 2 and 3, and Chapters 4, 5, 10, 11 and 12, subject to stated exceptions.
Other statutory limits apply as well. Section 101.206 prohibits a distribution that would leave the company's total liabilities greater than the fair value of its total assets, subject to the statute's details. Before relying on a clause that waives a statutory rule, check it against § 101.054.
Duties, indemnification and liability
Texas gives company agreements wide room on duties. Section 101.401 (opens in a new tab) says the company agreement "may expand, restrict, or eliminate any duties, including fiduciary duties, and related liabilities" owed by a member, manager, officer or other person to the company or to a member or manager. Section 101.402 (opens in a new tab) allows the LLC to indemnify a person, advance or reimburse expenses, and buy insurance or another indemnity arrangement. Those powers are read together with § 101.054. Recent Texas Business Court opinions (opens in a new tab) discuss contractual limits on fiduciary duties, and the outcomes depend on the facts of each case.
Protection from company debts comes from the statute, not from the agreement alone. Under § 101.114 (opens in a new tab), unless the company agreement specifically provides otherwise, a member or manager is not liable for the LLC's debts, obligations or liabilities, including a judgment or court order. That protection covers company obligations. It is different from liability for a person's own conduct: in Spicer v. Maxus Healthcare Partners, LLC (opens in a new tab), a Texas court of appeals held that the statute limiting recovery based on company obligations does not preempt direct liability for an individual's own tortious acts.
How a Texas company agreement is amended
Section 101.053 (opens in a new tab) states that the company agreement "may be amended only if each member of the company consents to the amendment." For a single-member LLC, that is the sole member. For a multi-member LLC, the statute requires every member's consent and contains no general majority rule for amendments. A member can be bound by the agreement without signing it, but the amendment rule still calls for each member's consent.
An internal amendment is not the same as amending the Certificate of Formation or another state filing. When a change touches information on file with the Secretary of State, the filing has to be updated on its own.
Amending a Texas company agreement
- Draft the changeWrite out the amendment to the company agreement.
- Get every member's consentSection 101.053 allows an amendment only if each member consents; for a single-member LLC, that is the sole member.
- Check section 101.054Confirm the amendment does not try to waive or modify a provision the statute protects.
- Keep it with the recordsStore the amended agreement with the member and manager list, ownership records and contribution records.
- Update state filings separatelyIf the change affects information on file, such as the registered agent or registered office, handle that filing with the Secretary of State.
Taxes and bank requests
The company agreement does not choose the LLC's federal tax treatment. According to the IRS page on limited liability companies (opens in a new tab), a domestic single-member LLC is generally treated as a disregarded entity and a domestic LLC with two or more members as a partnership, unless the LLC elects to be treated as a corporation. The IRS uses Form 8832 for a corporate classification election and Form 2553 for an S corporation election, as IRS Publication 3402 (opens in a new tab) explains. Our comparison of an S corp and an LLC covers how that election changes taxes. For state franchise tax, the Form 205 instructions point owners to the Texas Comptroller.
Banks and lenders set their own document lists. An institution may ask for the company agreement, the Certificate of Formation, EIN documentation, member or manager resolutions, ownership information and the names of people authorized to act. Those requests come from the institution, so confirm what it needs before an appointment.
Hover or tap a row to highlight it.
| Question | Texas rule | Source |
|---|---|---|
| Who must consent to an amendment? | Each member | BOC § 101.053 (opens in a new tab) |
| Does an assignee become a member? | Only with approval of all members | BOC § 101.109 (opens in a new tab) |
| Can a member withdraw? | Only if the company agreement grants the right; then fair value within a reasonable time | BOC § 101.205 (opens in a new tab) |
| What vote starts a voluntary winding up? | Majority of all members | BOC § 101.552 (opens in a new tab) |
| Comparison: New York timing | Written agreement within 90 days after filing the Articles of Organization (New York only) | N.Y. LLC Law § 417 (opens in a new tab) |
Forms and help
The Texas Secretary of State's business forms page (opens in a new tab) provides Form 205 and other filings, which cover state formation rather than the drafting of a company agreement. The SBA's general material and SCORE (opens in a new tab) offer business counseling, and the State Bar of Texas runs a lawyer referral service (opens in a new tab). A Texas business attorney can draft or review an agreement for a specific company, and an accountant or tax professional can address tax elections. Fees for drafting depend on scope, the number of members and the provisions negotiated, so ask the lawyer or service provider for a written scope and fee before you hire them. If you are still deciding on a structure, our comparison of an LLC and a sole proprietorship covers liability, taxes and paperwork.
Check what you know
Frequently asked questions about Texas LLC company agreements
Does a single-member Texas LLC need a company agreement?
The Texas provisions set no general requirement that every LLC adopt one. If a sole owner does adopt one, § 101.001 says it is not unenforceable merely because only one person is a party, and the IRS generally treats a domestic single-member LLC as a disregarded entity unless it elects otherwise.
Can a Texas company agreement change who manages the LLC?
Section 101.251 makes managers the governing authority when the company agreement provides for manager management, and members when it provides for member management. The Certificate of Formation controls only when the agreement does not address it.
Is a Texas company agreement public?
The Certificate of Formation is the document filed with the Texas Secretary of State, and Form 205 does not require the company agreement as an attachment. The agreement is an internal document, although a bank, lender or court may ask to see it.
Does a member automatically get paid when the company makes money?
No. Under § 101.204, a member is not entitled to demand an interim distribution until the governing authority declares one, and § 101.206 bars distributions that would leave liabilities greater than the fair value of the company's assets.
A next step
If you are drafting, reviewing or amending a company agreement in Texas, you can find business and corporate law firms in Counselado's directory by city and practice area, then confirm each lawyer's license with the State Bar of Texas before you reach out.
Terms in this guide
Tap a term to see what it means.
Company agreement. The Texas name for an LLC operating agreement, which can be written, implied or oral.
Certificate of Formation. The document filed with the Texas Secretary of State, on Form 205, that creates the LLC and states whether it initially has managers.
Member. An owner of the LLC.
Manager. A person who runs a manager-managed LLC as part of its governing authority.
Governing authority. The managers in a manager-managed Texas LLC, or the members in a member-managed one.
Assignee. A person who receives a membership interest by assignment but becomes a Texas LLC member only with the approval of all members.
Membership interest. A member's ownership interest in the LLC.
Interim distribution. A payment to members before the company winds up, which a Texas member cannot demand until the governing authority declares it.
Winding up. The process of closing the LLC's affairs before it terminates, governed in Texas by Chapter 11 of the Business Organizations Code.
Fiduciary duties. Duties of loyalty and care owed to the company or its members, which a Texas company agreement may expand, restrict or eliminate.
Indemnification. An arrangement in which the LLC covers a person's expenses or losses connected to their role.
Disregarded entity. The default federal tax treatment of a domestic single-member LLC, which is not taxed separately from its owner.
This guide gives general legal information, not legal advice for your situation. Laws change and differ by state; a lawyer licensed in your state can tell you how they apply to you.