District of Columbia LLC governance: a uniform-act floor, so a duty waiver that works across the river is void here

The District adopted the uniform LLC act, and that choice draws the same line Utah and Oregon draw and the freedom-of-contract states do not: the core fiduciary duties cannot be waived. A District operating agreement can tailor how the duties of loyalty and care apply, and it can carve out specific activities in advance, but it cannot eliminate the duties or waive the obligation of good faith. So a duty-elimination clause that is perfectly enforceable in Indiana, Missouri, or Oklahoma is void in the District, which matters because the District sits in a metro area where entities and their lawyers cross jurisdictional lines constantly, and a form pulled from a contractarian state will not hold here.

Paired with that floor is a distribution default that runs by headcount rather than capital, which is not what an investor who funded most of a venture expects. This page leads with those two points rather than re-teaching the general mechanics on the site’s default rules and freedom of contract guides. In the District, the operating agreement does real work, but within firm limits.

The duties you cannot waive

Start with the floor, because it is the thing that surprises a drafter coming from a contractarian state.

A District operating agreement may not eliminate the duty of loyalty or the duty of care, or waive the obligation of good faith and fair dealing.

Under the District’s uniform act, D.C. Code § 29-804.09 imposes on a member of a member-managed LLC, or a manager of a manager-managed one, the fiduciary duties of loyalty and care, and § 29-801.06 provides that the operating agreement may not eliminate those duties or the contractual obligation of good faith and fair dealing. That is the opposite of the rule in the freedom-of-contract states, where a written agreement can zero out fiduciary duties entirely. A clause in a District operating agreement that purports to eliminate a manager’s duty of loyalty is unenforceable to that extent, and a court will disregard it. So the strategy of contracting the duties away, which works a short drive across the river in Maryland’s neighbor states, fails inside the District.

What the act allows is narrower and more surgical.

The agreement may identify specific activities that do not breach loyalty and may set reasonable standards, so long as they are not manifestly unreasonable.

The same provisions let the operating agreement, if not manifestly unreasonable, alter specific aspects of the duty of loyalty and identify particular categories of activities that do not violate it. That is a real tool: a member who runs a competing venture, or a manager who wants to pursue outside real estate deals, can be permitted to do so by naming those activities in advance. The difference from elimination is the difference between a scalpel and a switch. The District lets you carve out defined conduct, not turn the duty off, so the drafting task is to enumerate the specific permissions the members actually want, rather than reaching for a blanket waiver the act will not honor.

The default that splits equally, not by capital

On distributions, the District’s uniform-act default runs by member, not by money.

When a District operating agreement is silent, distributions are split in equal shares by member, not in proportion to what each contributed.

Under D.C. Code § 29-804.04, distributions before dissolution are made in equal shares among the members, regardless of how much capital each contributed, and no member has a right to demand an interim distribution unless the company decides to make one. So a District LLC where one member funded the venture and another put in little will, by default, split distributions evenly, which is almost never what the funding member intended. That is the same equal-shares default Utah and Oregon use, and the opposite of the contribution-weighted default in Indiana or Maryland. A single clause allocating distributions by capital or by an agreed formula fixes it, but only in writing, so an unequal-capital District LLC has to override the default deliberately. The distributions guide covers why the split should be set on purpose; the District-specific point is that silence favors equal shares.

The defaults that fill the rest

Management follows the ordinary uniform-act pattern.

A District LLC is member-managed unless the agreement provides for managers, and the operating agreement carries the structure.

Under D.C. Code § 29-804.07, a District LLC is member-managed unless the operating agreement provides for managers, in which case the managers run the company and owe the fiduciary duties, generally sparing a passive, non-manager member from owing them. The through-line for District governance is that the operating agreement does real work within firm limits: it can allocate distributions, choose the management structure, and carve specific activities out of the duty of loyalty, but it cannot eliminate the duties or waive good faith, and where it is silent the defaults favor equal shares and member management. Draft to the limits, not past them, and do not import a duty-waiver from a state that allows one.

The bottom line

The District’s operating agreement may not eliminate the duty of loyalty or care or waive good faith under 29-804.09 and 29-801.06, so a duty-waiver clause valid in a contractarian state is void here.

The agreement may instead carve out specific activities that do not breach loyalty and set reasonable standards, so long as they are not manifestly unreasonable.

The distribution default under 29-804.04 is equal shares by member, not by capital, so unequal contributors must override it in writing.

Management defaults to the members under 29-804.07 unless the agreement provides for managers.

The lesson is to draft to the District’s limits and never import a duty-waiver from a freedom-of-contract state, because the act will not enforce it.

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 exclusive-remedy charging order, and the unlimited homestead are on the protection page. The District’s entity-level franchise tax on LLCs, its high income and deed taxes, and the lack of a series LLC are on the structure and cost page. The $99 formation fee, the $300 biennial report, and the basic business license are on the filing page.

Last verified August 2026.