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The South Dakota LLC operating agreement is a legal document that is recommended for those opening a limited liability company. This document allows the director(s) to create a guideline for how the business will work and each member’s rights, responsibilities, and benefits to set legal precedence.

From SD Codified L § 47-34A-101 (2019):

(14) “Operating agreement” means any valid agreement, either written or oral, under § 47-34A-103 concerning the relations among the members, managers, and limited liability company; however, an integration clause contained in a written operating agreement may be given effect under other law. The term includes amendments to and restatements of the operating agreement. The operating agreement of a limited liability company having only one member shall not be unenforceable by reason of there being only one person who is a party to the operating agreement;

South Dakota Operating Agreement Law

Per Sec. 47-34A-103 of the South Dakota Codified Laws:

(a) Except as otherwise provided in subsection (b), all members of a limited liability company may enter into an operating agreement, which need not be in writing, to regulate the affairs of the company and the conduct of its business, and to govern relations among the members, managers, and company. A person that becomes a member of a limited liability company is deemed to assent to the operating agreement. To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members, managers, and company.
(b) The operating agreement may not:
(1) Eliminate the duty of loyalty under § 47-34A-409(b) or § 47-34A-603(b)(3), but the agreement may, if not manifestly unreasonable:
(i) Identify specific types or categories of activities that do not violate the duty of loyalty; and
(ii) Specify the number or percentage of members or disinterested managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty;
(2) Eliminate the obligation of good faith and fair dealing under § 47-34A-409(d), but the operating agreement may determine the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable;
(3) Vary the right to expel a member in an event specified in § 47-34A-601(6);
(4) Vary the requirement to wind up the limited liability company’s business in a case specified in § 47-34A-801(a)(3) or (4); or
(5) Restrict rights of a person, other than a manager, member, and transferee of a member’s distributional interest, under this chapter.
(c) If not manifestly unreasonable, the operating agreement may:
(1) Restrict a right to information or access to records under § 47-34A-408;
(2) Reduce the duty of care under § 47-34A-409(c) or § 47-34A-603(b)(3);
(3) Alter any other fiduciary duty, including eliminating particular aspects of that duty.
(d) The court shall decide any claim under this section that a term of an operating agreement is manifestly unreasonable. The court:
(1) Shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time; and
(2) May invalidate the term only if, in light of the purposes and activities of the limited liability company, it is readily apparent that:
(i) The objective of the term is unreasonable; or
(ii) The term is an unreasonable means to achieve the provision’s objective.

Forming an LLC in South Dakota

  1. Conduct a name search
  2. Choose a registered agent
  3. File formation articles
  4. Draft an operating agreement

All South Dakota LLCs must legally register their business name, which must include “LLC”, or any of the following variations:

  • L.L.C.
  • LC
  • L.C.
  • Limited Liability Company
  • Std. Liability Co.

Only LLC identifiers can be used, “inc” and “corp” are not allowed.

Professional LLC business types like universities, attorneys, and banks may require a licensed practitioner to be a director in the company to use the title in the business name.

The name may not include any government agencies abbreviations or titles, such as FBI, NSA, or CIA.

To conduct the name search, use the South Dakota Secretary of State Business Entity Search website.

Step 2: Choose Your Registered Agent

Every South Dakota LLC must appoint a registered agent for the company. The registered agent is responsible for accepting legal documentation on behalf of the company.

  • The agent may be a member of the LLC or a professional agent service that is authorized to do business in South Dakota
  • Individual agents must be a citizen of South Dakota, have a non-PO box address in the state, and be 18 years of age or older.

Step 3: File Your Formation Articles

Every LLC being formed in South Dakota must file formation articles with the state, even if they are an existing company in another state (foreign).

Both filings may be filed through the mail or online, but online submissions are processed more quickly. All mailed filings must be submitted in duplicate, which may contain a photocopy of the original.

New South Dakota LLCs would file for a Domestic LLC with Articles of Organization.

Online Filing (Domestic):

  • $150 filing fee
  • Turnaround time: Within 1 business day
  • Submit online

Mailed Filing (Domestic):

  • $150 filing fee (plus $15 paper filing fee)
  • Turnaround time: 3-5 business days upon receipt
  • Fill out the form online or after printing and mail to:

SD Secretary of State
500 East Capitol Avenue
Suite 204
Pierre, SD 57501-5070

Foreign formations will file a Certificate of Authority, which must include a Certificate of Existence from the original state where the business was registered.

Online Filing (Foreign):

  • $750 filing fee
  • Turnaround time: Within 1 business day
  • Submit online

Mailed Filing (Foreign):

  • $750 fee plus $15 paper filing fee
  • Turnaround time: 3-5 business days upon receipt
  • Fill out the form online or after printing and mail to:

SD Secretary of State
500 East Capitol Avenue
Suite 204
Pierre, SD 57501-5070

Step 4: Draft a South Dakota Operating Agreement

South Dakota operating agreements are recommended, but not required, to be used in single and multi-member LLCs. They help to institute guidelines for managing the business, including outlining members’ responsibilities to the company as well as their rights as members. This helps to avoid disputes and, if required, solve legal disputes amongst directors.

This document does not need to be filed with the state, but a signed copy should be held by all directors.