Nevada LLC governance: the state that turns off the duty of loyalty unless you write it back in

Put money into someone else’s Nevada LLC as a passive investor, sign the operating agreement they hand you, and read it later. If it says nothing about fiduciary duties, the person running the company owes you none. Not a reduced duty of loyalty. None, except a bare covenant of good faith. Nevada took the duties out of the default and left it to you to put them back.

That single fact tells you what kind of state Nevada is. Its LLC statute, NRS Chapter 86, is homegrown and among the most contractarian in the country, closer to Delaware than to the uniform act that governs a state like Wyoming. Nevada trusts the agreement and supplies thin defaults. That is a gift to whoever drafts the document and a warning to whoever signs it.

Nevada trusts the document, which is a gift to the drafter and a warning to the signer.

What the statute decides when you say nothing

Distributions and votes follow the money

Nevada’s default is the intuitive one, and the opposite of Wyoming’s. Under NRS 86.341, if the operating agreement is silent, profits and losses are allocated in proportion to the value of each member’s contributions.

Nevada splits distributions by contribution, so the member who put in more gets more, unless the agreement says otherwise.

A member who contributed $90,000 and one who contributed $10,000 split roughly 90 and 10, which is what most people expect. Voting tracks the same proportional logic, so control follows capital by default. This is worth stating precisely because the other strong western state does the reverse: Wyoming’s silence hands every member an equal share and an equal vote regardless of contribution. Nevada’s default will not ambush a majority investor the way Wyoming’s does. It has a different trap.

The duty of loyalty is off until you switch it on

Here is Nevada’s real default surprise. Under NRS 86.298, a manager or managing member owes only the implied contractual covenant of good faith and fair dealing. The traditional fiduciary duties of loyalty and care do not apply unless the articles or the operating agreement expressly impose them.

In Nevada a manager owes you no duty of loyalty by default; you get it only if the operating agreement writes it in.

Read that against who is usually in the room. The person organizing the company and drafting the agreement is the one who would be constrained by a duty of loyalty, and Nevada’s default removes it for them unless someone asks for it back. The passive investor, the one who most needs the manager bound, is the one least likely to notice it is missing. This is the freedom of contract point in its sharpest form, and it is the exact opposite failure mode from Wyoming. In Wyoming the trap is the equal-split default a controlling member must fix. In Nevada the trap is the missing duty of loyalty a passive member must demand.

The one thing you cannot waive

Nevada lets you contract away nearly everything, with a single floor. Under NRS 86.286, the implied covenant of good faith and fair dealing cannot be eliminated.

Nevada lets you waive almost everything except the implied covenant of good faith and fair dealing.

That covenant is thin. It stops a manager from using a gap in the agreement to destroy the deal the agreement obviously was, and no more. It is the same lonely floor Delaware keeps, and like Delaware’s it is a basement floor, not a safety net. If the document permits the conduct, the covenant is silent.

How far you can contract around it

The answer in Nevada is: almost all the way. You can set the distribution split, the voting rules, the management structure, and the transfer restrictions, and you can and should write the fiduciary duties back in if you are protecting anyone other than the drafter.

Nevada expects an operating agreement you can point to, adopted by the members’ unanimous consent.

Two formalities matter. Under NRS 86.286, an operating agreement is adopted only by unanimous vote or unanimous written consent, in tangible or electronic form, and amendments default to unanimous consent unless the agreement provides otherwise. That “tangible or electronic” language points away from the purely oral agreements Wyoming will enforce, so in Nevada the safer assumption is that your agreement needs to exist in a form you can produce. And under NRS 86.351, a transferee of an interest gets economic rights only and becomes a member only if a majority in interest of the remaining members consents, which is the ordinary protection against an unwanted new partner.

The bottom line

Nevada’s LLC act is homegrown and contractarian, closer to Delaware than to the uniform floor, so it supplies thin defaults and trusts the agreement.

Distributions and votes default to proportion by contribution under NRS 86.341, the opposite of Wyoming’s equal-shares default.

Fiduciary duties of loyalty and care are off by default under NRS 86.298; a manager owes only the good-faith covenant unless the agreement adds more.

The one thing you cannot waive is the implied covenant of good faith and fair dealing, and that covenant is a floor, not a safety net.

The passive investor is the party Nevada’s defaults leave most exposed, so the duties have to be written in before the money goes in.

Nevada expects a recorded agreement adopted by unanimous consent, so do not rely on a handshake the way you might in Wyoming.

What this page does not cover

This page is about what Nevada’s law lets your operating agreement do. How creditors reach you, including charging orders and the asset protection trust, is on the protection page. Privacy, series LLCs, the real property transfer tax, and the annual cost of the entity are on the structure and cost page. Fees, forms, and deadlines are on the filing page.

Last verified July 2026.