Arkansas LLC governance: a brand-new 2021 uniform act, a fiduciary floor, and very little case law yet

Arkansas replaced its entire LLC act in 2021, adopting the modern uniform act, so its governance now looks like the other floor states: the duties of loyalty and care and the obligation of good faith are a floor the operating agreement can shape but cannot eliminate. The change swept every older Arkansas LLC into the new rules, so an LLC formed under the prior law is now governed by the 2021 act whether or not its agreement was written for it. And because the act is only a few years old, Arkansas has barely begun to build case law under it, which means the outer limits of its rules are untested in a way they are not in a state with decades of decisions. Those are the features to understand, ahead of the general mechanics on the site’s default rules and freedom of contract guides.

The floor the agreement cannot cross

Start with what the 2021 act refuses to let the operating agreement do.

In Arkansas, the operating agreement cannot eliminate the duties of loyalty and care or the obligation of good faith.

Under Ark. Code Section 4-38-409, members of a member-managed LLC, and managers of a manager-managed one, owe the duties of loyalty and care and an obligation of good faith and fair dealing, and Section 4-38-105 limits what the operating agreement can do with them: it may not eliminate the duty of loyalty, may not unreasonably reduce the duty of care, and may not eliminate good faith, though it may identify categories of permitted activities so long as they are not manifestly unreasonable. So an Arkansas operating agreement can define and channel the loyalty duty, fitting it to a real estate operation with affiliated dealings, but it cannot contract it away, and a manager cannot draft himself out of accountability the way a Delaware or Kansas agreement could. That puts Arkansas with Connecticut, Iowa, and the other uniform-act states, and against the freedom-of-contract camp.

The 2021 sweep, and the thin case law

Here is the Arkansas-specific caution.

The 2021 act swept every older Arkansas LLC into the new rules, and because the act is new, Arkansas courts have barely interpreted it.

When Arkansas adopted the uniform act in 2021, it did not grandfather older LLCs; it brought them all under the new statute, so an LLC formed under the prior Arkansas act now lives under the 2021 rules. An operating agreement drafted for the old act may contain provisions that read differently under the new floor, and it should be re-read against the current statute rather than assumed to still operate as written. The newness cuts a second way: with only a few years of the act in force, Arkansas has almost no case law interpreting it, so questions the statute does not answer cleanly, how far the permitted-activities carve-out can narrow the loyalty duty, where the good-faith floor actually sits, do not yet have Arkansas answers. A drafter can look to how other uniform-act states and the official comments treat the same language, but that is guidance, not Arkansas precedent.

The default split

On the economics, Arkansas uses the uniform act’s equal-shares default.

When an Arkansas operating agreement is silent, distributions are shared equally among the members, regardless of who contributed more.

Under Ark. Code Section 4-38-404, distributions are shared equally among the members by default, a per-capita rule rather than one weighted by contribution, so a member who put in most of the capital receives the same share as one who put in little unless the operating agreement provides otherwise. For a real estate venture with unequal contributions, that default does not track the deal, and an explicit distribution provision is essential. Management defaults to the members unless the agreement provides for managers. The through-line for Arkansas is that the 2021 act is modern and protective but young: the duties are a floor, the split needs to be set on purpose, older agreements should be brought current, and the untested edges reward conservative drafting.

The bottom line

Arkansas adopted the modern uniform LLC act in 2021, so the duties of loyalty and care and the obligation of good faith are a floor the operating agreement cannot eliminate.

The 2021 act swept every older Arkansas LLC into the new rules, so a pre-2021 operating agreement should be re-read against the current statute.

Because the act is only a few years old, Arkansas has almost no case law interpreting it, so the outer limits of its rules are untested.

Distributions default to equal shares under Section 4-38-404, so an LLC with unequal contributions must set the split in the agreement.

The safe course is a current, conservatively drafted operating agreement, since the untested edges of the new act do not yet have Arkansas answers.

What this page does not cover

This page is about the rules that run your company from the inside. How creditors reach a member’s interest, the constitutional homestead, and the charging order are on the protection page. Arkansas’s falling income tax, the protected series, and the flat franchise tax are on the structure and cost page. The $45 formation fee and the $150 franchise tax due every May 1 are on the filing page.

Last verified August 2026.