Operating Agreement vs State Law: Determining Precedence under Nevada Revised Statutes
Under Nevada Revised Statutes what has more power in court, an operating agreement or the state laws that govern the operating agreement?
According to Nevada Revised Statutes (NRS), specifically NRS 86.286, the operating agreement of an LLC is significant and generally governs the relations between the members of an LLC and between the LLC and its members. However, certain provisions of an operating agreement may not supersede the NRS.
There are certain areas where the law specifically restricts or prohibits certain provisions in an operating agreement, and the statute will override the operating agreement in these situations.
For instance, the operating agreement may not:
1. Vary the LLC's capacity to sues and be sued in its own name.
2. Unreasonably restrict members' right to access and inspect company records.
3. Eliminate the duty of loyalty or care, although it may identify specific types or categories of activities that do not violate the duty of loyalty.
4. Vary the law applicable to the company, which is the law of the state of Nevada.
5. Restrict the rights of a person who is not a party to the operating agreement without the person's consent.
Accordingly, while the operating agreement has wide-ranging power to set the terms of the company's operations and the members' relationships, it can't overrule state law in these and other respects specified by the NRS.
It's important to consult a lawyer to fully understand how these laws apply to a specific situation, specifically an attorney who is familiar with Nevada LLC law.