An operating agreement is an agreement among limited liability company ("LLC") Members governing the LLC's business, and Member's financial and managerial rights and duties.
Operating Agreement
Agreement, usually a written document, that sets out the rules by which a LIMITED LIABILITY COMPANY (LLC) is to be operated. It is the LLC equivalent of corporate BYLAWS or a PARTNERSHIP agreement.
The first stage sets up the fund and management company entities, as well as pertinent operating agreements and resolutions. This is enough to allow the hedge fund to begin trading, usually with the manager's own funds.
A limited liability company has members, rather than partners, and is governed by an operating agreement, rather than a partnership agreement.
A form of ownership is similar to both the corporation and the partnership, but the operating agreement determines how the L.L.C. functions and is taxed. As with the corporation, the L.L.C. existence is separate from the owners.
Like a partnership, an LLC has the ability to make disproportionate distributions to its owners (for example, a LLC member may have a 50 percent ownership interest in LLC assets but be entitled to 60 percent of the income, if the operating agreement ...
Similarly, an LLC does not exist until the articles of organization have been filed with the secretary of state, and most state statutes require a limited liability company to have a written operating agreement to govern its conduct.
A limited liability company does not have shareholders and does not require meetings. Similarly, a limited liability company does not need to create a set of bylaws, though some states require an operating agreement in order to recognize the company.
 See also: LLC, Bylaws, Partnership agreement, Proprietorship, Sole proprietor
  
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