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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’s operations 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 LLC 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.
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 agreements may be operating under rules they don’t know have changed. Entrepreneurs who used a generic template from LegalZoom or a law firm website may have an agreement that doesn’t address RULLCA’s specific requirements — and the default rules fill every gap in favor of the blocking minority member.
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 to a new business model. One 8% investor-member objects. Absent an operating agreement override allowing supermajority approval, the 8% holder blocks the transaction indefinitely. These scenarios are not hypothetical — they happen regularly in California LLCs with inadequate operating agreements.
The Fix — But Only While Everyone Still Agrees
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. Manager-managed structures, supermajority thresholds for fundamental transactions, and explicit member admission procedures are all available overrides — if you put them in the agreement. A proper California business attorney costs $1,500 to $3,000 for a solid operating agreement — trivial compared to a blocked acquisition or permanently deadlocked LLC years later.
The window to fix this is while everyone agrees. Amending an operating agreement requires — under RULLCA defaults — unanimous consent. If a disagreement has already surfaced, you may not be able to pass the amendment needed to resolve it. Fix the agreement now, before you need it to work under pressure.
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