Ohio LLC governance: your operating agreement may be citing a repealed statute

If your Ohio operating agreement was drafted before 2022, open it and look at the citations. Every reference to Chapter 1705 of the Ohio Revised Code points at a statute that was repealed.

Ohio replaced its entire LLC act with the Ohio Revised Limited Liability Company Act, Chapter 1706, effective February 11, 2022. It was Ohio’s first comprehensive overhaul since LLCs were first authorized there in 1994, and the legislature gave it no transition period, no phase-in, and no way to opt in or out. The new chapter governs every Ohio LLC from that date forward, whether the company was formed the week before or twenty years earlier.

Ohio’s 2022 act governs every Ohio LLC regardless of formation date, and the chapter your old agreement cites no longer exists.

What the rewrite changed

Most well-drafted operating agreements survived the change intact, because the act was designed for a smooth transition and because a good agreement displaces most defaults anyway. Three changes are worth knowing.

The management binary is gone

Ohio no longer requires an LLC to declare itself either member-managed or manager-managed.

The old act, like most states’, made you pick one of two structures and supplied defaults for each. The new act removed those default provisions. Ohio now gives drafters room to build governance that does not fit the binary, including officer-style arrangements, tiered approval structures, and hybrids where some decisions sit with members and others with designated managers. That is real flexibility, and it comes with a corresponding obligation: the further your structure moves from the familiar two options, the more the operating agreement has to do the work of describing who decides what.

Operating agreements got clearer force

The act clarified the default nature of the statute and the enforceability of written operating agreements. In practical terms, Ohio moved toward the position that the statute fills gaps and the agreement governs, which is the direction most modern LLC acts have taken. Fiduciary duties were simplified and given more flexibility at the same time. Confirm the specific limits with counsel before drafting anything aggressive, because flexibility in a modern act is rarely unlimited and the non-waivable floor is where the drafting risk lives.

A charged member stays a member

One provision sits on both this page and the protection page.

A member whose interest is subject to a charging order keeps the rights of a member and the duties that come with them.

ORC 1706.342(D) says it outright. Most states leave owners to infer this from the nature of a lien; Ohio wrote it down. For governance that means a creditor’s charging order does not create a hole in the voting structure or hand anyone else a seat. The debtor still votes, still owes the company the duties they owed before, and still counts for whatever the agreement requires.

What to do about an old agreement

The transition was designed to be seamless, and Ohio practitioners generally advised that most LLCs did not need to amend simply because the chapter changed. That remains sensible. But the citation problem is real and it compounds quietly.

An agreement that cites Chapter 1705 still works; it just points at nothing when someone needs to look something up.

The time to fix it is when you are already opening the document: admitting a member, restructuring, financing, or selling. At that point, update the statutory references, confirm the management provisions still describe what you actually do, and check that any fiduciary duty language matches the new chapter’s framework rather than the old one’s. Doing it as a standalone project is rarely worth the fee. Doing it when the document is already on the table costs almost nothing.

What the statute decides when your agreement is silent

Ohio’s defaults sit in the per capita family, and they matter more here than in most states because Chapter 1706 applies to every Ohio LLC regardless of when it was formed. There is no legacy company running on the old rules.

Voting is by head. Under ORC 1706.30(B)(1), a matter in the ordinary course of the company’s activities may be decided by a majority of the members. A majority of the members, counted as people. The member who funded 90 percent of the company and the member who funded 10 percent each cast one vote, and in a two-member company that means each of them holds a veto no matter what the capital accounts say.

Ohio counts heads, not dollars. In a two-member Ohio LLC with no written agreement, the 10 percent member can block the 90 percent member.

Distributions run the same way and the statute is blunt about it. ORC 1706.29(A)(1) provides that all members shall share equally in any distributions made before dissolution and winding up. Equally. Not by contribution, not by percentage interest, not by anything the members may have shaken hands on. A member who contributed $900,000 and a member who contributed $100,000 split every distribution down the middle until a written agreement says otherwise.

Then the part almost nobody writes about. ORC 1706.29(A)(3) permits a distribution of an asset in kind only if each member receives a percentage of the asset in proportion to the member’s share of contributions. Read the two subsections against each other and Ohio splits cash from property. Money leaves the company in equal shares. Property leaves it in contribution shares. The same economic value reaches the members two different ways depending on what form it takes on the way out.

Ohio distributes cash equally and property by contribution. One company, two sharing rules, decided by whether the asset is money.

For an operating company that only ever distributes cash, the split is invisible. For a company holding real estate, it is the whole ballgame: the $900,000 member who accepts equal cash distributions for years can still take 90 percent of the building when it is distributed in kind, and the $100,000 member who assumed the equal-shares rule governed everything finds out at the least convenient moment. If your Ohio LLC holds appreciating property and your agreement is silent, the two members do not agree about what they own, and neither of them knows it.

Amending the agreement takes everyone. ORC 1706.30(C)(1)(a) requires the consent of all members to amend the operating agreement, alongside filing for bankruptcy and undertaking any act outside the ordinary course of business. So the majority that runs the company day to day cannot change the rules the company runs on. That is the opposite of the New Mexico default, where a contribution-weighted majority can rewrite the agreement over an objection, and it means an Ohio LLC that starts without a written agreement needs unanimity to adopt the fix.

One dissociation rule worth knowing

Ohio’s dissociation provisions include a trigger most owners never think about: a member who becomes a debtor in bankruptcy, makes an assignment for the benefit of creditors, or consents to a receiver or trustee over substantially all their property is dissociated as a member. There is an express carve-out, and it matters for the structures this site discusses: that provision does not apply to a person who is the sole remaining member of the company. So a single-member Ohio LLC does not lose its only member to this rule, which would otherwise leave a company with no members at all.

The bottom line

Ohio’s LLC act was replaced in full by Chapter 1706, effective February 11, 2022, and Chapter 1705 was repealed.

The new chapter governs every Ohio LLC regardless of when it was formed, with no transition period and no opt-out.

Ohio removed the requirement that an LLC be either member-managed or manager-managed, which widens what an agreement can build.

The act clarified the enforceability of written operating agreements and simplified fiduciary duties.

A member subject to a charging order keeps member rights and duties under ORC 1706.342(D).

Agreements citing Chapter 1705 still function, and the citations should be updated the next time the document is opened for another reason.

What this page does not cover

This page is about what Ohio law lets your operating agreement do. How creditors reach you, including the charging order that may be the strongest in the country, is on the protection page. Series LLCs and the tax overlay are on the structure and cost page. The filing fees, and the annual report Ohio does not require, are on the filing page.

Last verified July 2026.