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Most entrepreneurs treat the LLC operating agreement as paperwork — something to sign and forget. In California, that approach is a trap. The California Revised Uniform Limited Liability Company Act (RULLCA) imposes default rules that govern your LLC unless your operating agreement expressly overrides them. One of those defaults — the unanimous consent requirement — can paralyze your company at exactly the moment you need to move fast.
What the Rule Requires
Under RULLCA, unless the operating agreement says otherwise, the following actions require unanimous consent of all members: selling or disposing of all or substantially all LLC property outside ordinary course of business, merging with another entity, converting to a different entity type, amending the articles of organization, amending the operating agreement itself, admitting new members, and dissolving the LLC.
“Unanimous” means every single member regardless of ownership percentage. A 1% member has equal veto power over these decisions as the 99% member. In a two-person LLC where co-founders disagree about whether to sell the company or admit a strategic investor, the minority member can block every one of those actions indefinitely — with full legal backing.
Why This Is Worse Than It Sounds
Before RULLCA, California’s prior LLC statute required unanimous approval for a narrower set of actions. The new statute expanded the requirement significantly. Entrepreneurs who formed LLCs under the old statute without updating their operating agreements may be operating under rules they don’t know have changed. Entrepreneurs who downloaded a generic template — from LegalZoom, a law firm website, or a Google search — may have an agreement that doesn’t address RULLCA’s specific requirements. The default rules fill every gap, and they fill those gaps in favor of the minority blocking the majority.
Real Scenarios That Become Crises
Your LLC receives an acquisition offer that all but one member finds attractive. The dissenting 5% co-founder refuses to approve. Under RULLCA defaults, the sale cannot proceed. The deal dies. Or: your LLC needs to sell its primary asset to fund a pivot. One 8% investor-member objects. Absent an operating agreement override allowing supermajority approval, the 8% holder blocks the transaction indefinitely. Or: you want to bring in a new member quickly to capitalize on a time-sensitive opportunity. Any existing member can object — and their objection is dispositive.
The Fix — Before You Need It
RULLCA is a default statute. A well-drafted operating agreement can substitute majority vote, supermajority, or manager approval for most decisions RULLCA defaults to unanimous. The critical phrase is “well-drafted” — generic templates frequently use language from other states’ LLC statutes that doesn’t map cleanly to California law.
A proper California business attorney charges $1,500 to $3,000 for a solid operating agreement. That is trivial compared to the cost of a blocked acquisition or a deadlocked LLC years later. The window to fix this problem is while everyone agrees. Amending an operating agreement requires — under RULLCA defaults — unanimous member consent. Once a disagreement surfaces, you may not be able to pass the amendment needed to resolve it. Fix it now.
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