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Most entrepreneurs who form an LLC treat the 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 RULLCA Requires
Under California’s 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 of the LLC’s property outside the ordinary course of business; merging the LLC with another entity; converting the LLC 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 a 99% member, unless your operating agreement explicitly provides otherwise. In a two-person LLC where co-founders disagree about whether to sell the company, accept an investor, or bring in a new partner, the minority member can block every one of those actions indefinitely.
Real Scenarios Where This Becomes a Crisis
The investor offer scenario: Your LLC receives an acquisition offer all but one member finds attractive. The dissenting member — a co-founder granted 5% for early contributions — refuses to approve the sale. Under RULLCA’s default rules, the sale cannot proceed. Your operating agreement doesn’t address this because you used a generic template. The deal dies.
The pivot scenario: Your LLC needs to sell its primary asset to fund a new business model. One investor-member representing 8% objects. Absent an operating agreement provision allowing majority approval for asset sales, the 8% holder blocks the transaction indefinitely.
The admission scenario: You want to bring in a new member — a strategic partner, a key employee, an angel investor — quickly to capitalize on a time-sensitive opportunity. Any existing member can object, and their objection is dispositive under the default rules.
The Fix Requires a Good Attorney
California’s RULLCA is largely a default statute — its rules apply “unless otherwise provided” in the operating agreement. A well-drafted agreement can override the unanimous consent requirements, substituting majority vote, supermajority vote, or manager approval. Common provisions include: manager-managed structures where major decisions are delegated to a designated manager; majority vote requirements for asset dispositions below a defined threshold; supermajority requirements for fundamental transactions; and explicit member admission provisions.
The critical phrase is “well-drafted.” Generic templates frequently don’t address RULLCA’s specific requirements, use language from other states’ statutes that doesn’t map to California law, or fail to anticipate the scenarios most likely to create conflict. A proper California operating agreement from an experienced business attorney typically costs $1,500 to $3,000 — trivial compared to a blocked acquisition or a deadlocked LLC years later.
If you have an existing California LLC with a generic operating agreement, get it reviewed now — before you need it to work under pressure. Amending an operating agreement requires unanimous consent under RULLCA’s defaults. That means all members must agree while they still agree on everything. Wait until a disagreement surfaces and you may not be able to fix it.
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