Minnesota’s LLC act is a permission slip with a short list of exceptions. Minn. Stat. § 322C.0110, subd. 1 hands the operating agreement authority over relations among members, the duties of managers and governors, the company’s activities, and the means of amending itself. Subdivision 2 fills every remaining space with the chapter’s defaults. Subdivision 3 then lists eleven things the agreement may not do.
Two of those eleven get all the attention — clauses (4) and (5), on fiduciary duty and good faith. That attention is understandable and, from a litigation standpoint, largely misplaced.
Because clauses (4) and (5) are the only two on the list that are not absolute. Both open with “subject to subdivisions 4 to 7,” and subdivisions 4 through 7 then supply a broad license to restrict, alter, and partially eliminate the very duties clause (4) appears to protect. That machinery, and the adjudication rule in subdivision 8 that governs it, is treated at length in Your Minnesota Operating Agreement Will Be Judged on the Day You Signed It. This page is about the other nine.
Seven of those nine admit no exception, no balancing, and no reasonableness inquiry. A term that reaches one of them is simply ineffective, and — under a provision almost nobody reads — it is ineffective even if you move it out of the operating agreement and into a document filed with the Secretary of State.
The list has three grammars, and the grammar decides your case
Read subdivision 3 as a lawyer reads a statute — by verb.
| Clause | Restriction | Grammar | What it takes to void the term |
|---|---|---|---|
| (1) | May not vary the company’s capacity under § 322C.0105 to sue and be sued in its own name | Flat | Nothing. The term is ineffective |
| (2) | May not vary the law applicable under § 322C.0106 | Flat | Nothing |
| (3) | May not vary the power of the court under § 322C.0204 | Flat | Nothing |
| (4) | “[S]ubject to subdivisions 4 to 7,” may not eliminate the duty of loyalty, the duty of care, or any other fiduciary duty | Gate-qualified | Show the term is “manifestly unreasonable” under subd. 4, decided by the court under subd. 8 |
| (5) | “[S]ubject to subdivisions 4 to 7,” may not eliminate good faith and fair dealing under § 322C.0409, subd. 4 | Gate-qualified | Same |
| (6) | May not unreasonably restrict the duties and rights stated in § 322C.0410 | Standard | Show the restriction is unreasonable |
| (7) | May not vary the power of a court to decree dissolution under § 322C.0701, subd. 1, clauses (4) and (5) | Flat | Nothing |
| (8) | May not vary the requirement to wind up as specified in § 322C.0702, subds. 1 and 2, clause (1) | Flat | Nothing |
| (9) | May not unreasonably restrict the right of a member to maintain an action under §§ 322C.0901 to 322C.0906 | Standard | Show the restriction is unreasonable |
| (10) | May not restrict the right to approve a merger, conversion, or domestication under § 322C.1015 to a member who will have personal liability | Flat | Nothing |
| (11) | Except as provided in § 322C.0112, subd. 2, may not restrict the rights under this chapter of a person other than a member, manager, or governor | Flat | Nothing |
Seven flat. Two standard-governed. Two gate-qualified. One subdivision, three burdens of proof.
The practical consequence is unglamorous and important. A member challenging a duty term under clause (4) has to prove manifest unreasonableness on a closed record, measured as of the day the term entered the agreement, under a threshold that requires the defect to be “readily apparent.” A member challenging a term that varies § 322C.0106 has to prove that the term varies § 322C.0106.
The seven you cannot touch on any terms
(2) You cannot choose another state’s law for a Minnesota LLC’s internal affairs
This is the most consequential of the seven and the least discussed. Minn. Stat. § 322C.0106, in its entirety:
The law of this state governs:
(1) the internal affairs of a limited liability company; and
(2) the liability of a member as member, a manager as manager, and a governor as governor, for the debts, obligations, or other liabilities of a limited liability company.
And § 322C.0110, subd. 3(2) makes it non-negotiable: an operating agreement “may not … vary the law applicable under section 322C.0106.”
Read clause (2) slowly, because it does more than the internal-affairs doctrine usually does. It is not merely a governance rule. It fixes Minnesota law as the source of the standard for whether an owner is personally liable for the company’s debts — which is to say, the veil-piercing standard and the statutory carve-outs in § 322C.0304. A Minnesota LLC cannot import a friendlier out-of-state piercing standard by writing a Delaware choice-of-law clause into its operating agreement.
Minnesota has a broader habit of refusing to let parties export its law, surveyed in Minnesota Has Been Quietly Making Contract Terms Non-Exportable Since 1973. Section 322C.0106 is a cleaner example than most, because it requires a court to weigh nothing. One limit, so nobody over-reads it: § 322C.0106 governs internal affairs and member liability. It does not purport to govern the law applicable to an ordinary commercial contract the company signs with a third party, and § 322C.0110, subd. 3(2) reaches only what § 322C.0106 covers.
(3) You cannot contract away the court’s power to compel a filing
Under § 322C.0204, subd. 1, if a person required by the chapter to sign or file a record does not do so, “any other person that is aggrieved may petition the appropriate court to order” that person to sign it, to file it — or, clause (3), “the secretary of state to file the record unsigned.”
That is the remedy for the co-owner who simply will not sign an amendment, a statement of dissolution, or a correction. Clause (3) is what makes it work: the court can route around the holdout entirely. Subdivision 2 requires the petitioner to join the company if the petitioner is not the company. An operating agreement cannot narrow the power, condition it, or send it elsewhere.
(7) You cannot vary the court’s dissolution power — but only as to two of six grounds
Clause (7) protects “the power of a court to decree dissolution in the circumstances specified in section 322C.0701, subdivision 1, clauses (4) and (5)” — the two judicial grounds. Clause (4) covers unlawful activities and the case where “it is not reasonably practicable to carry on the company’s activities in conformity with the articles of organization and the operating agreement.” Clause (5) is the illegality, fraud, and oppression ground that produces the fair-value buyout under subdivision 2, covered in Your LLC Partner Is Freezing You Out.
Notice what is not protected. Section 322C.0701, subd. 1 has six clauses. Clause (1) (an event the operating agreement states causes dissolution), clause (2) (consent of all the members), clause (3) (the passage of 90 consecutive days during which the company has no members), and clause (6) (an attorney general action under § 322C.0708) are not named in subd. 3(7). Clause (1) is itself an invitation to the agreement. Clause (3) — the trigger that governs what happens when a sole owner dies — is not on the protected list, which is one reason a succession provision belongs in the agreement rather than a hope that the default will bend.
(8) You cannot excuse the company from paying its creditors before its owners
Clause (8) protects the winding-up requirement “as specified in section 322C.0702, subdivisions 1 and 2, clause (1).” Subdivision 1: “A dissolved limited liability company shall wind up its activities, and the company continues after dissolution only for the purpose of winding up.” Subdivision 2, clause (1): the company “shall discharge the company’s debts, obligations, or other liabilities, settle and close the company’s activities, and marshal and distribute the assets of the company.”
Subdivision 2, clause (2)’s permissive list is not protected, and the difference is the point. The mandatory obligation to discharge liabilities and marshal assets cannot be varied by agreement. The optional powers — preserving the business as a going concern, prosecuting and defending actions, transferring property, settling by mediation or arbitration, filing statements of dissolution and termination — can be. See Dissolving a Minnesota Company Does Not End Its Liabilities.
(11) You cannot cut down the chapter rights of anyone who is not a member, manager, or governor
Clause (11) is the third-party clause, and it says something structural: an operating agreement is a contract among owners, and chapter 322C will not let it operate as legislation against strangers.
The chapter grants rights to several categories of non-owners — a creditor who extends credit in reliance on a member’s contribution obligation (§ 322C.0403, subd. 2), a judgment creditor seeking a charging order (§ 322C.0503), a transferee (§ 322C.0502), the attorney general (§ 322C.0708). None of those can be restricted by the operating agreement, because none of those persons is a member, manager, or governor.
The exception in the lead-in — “except as otherwise provided in section 322C.0112, subdivision 2” — is narrow and pointed. That subdivision permits obligations to a person in the capacity of transferee or dissociated member to be governed by the operating agreement, including by an amendment adopted after the person acquired that status. Departing owners are the one class of non-members the drafters left exposed; see Quitting a Minnesota LLC Is Always Permitted and Almost Never Advisable.
(1) and (10), briefly
Clause (1) preserves the company’s capacity under § 322C.0105, subd. 1 “to sue and be sued in its own name.” Clause (10) preserves the individual approval right of a member who will have personal liability in a surviving, converted, or domesticated organization — the § 322C.1015 protection, including its anti-bootstrapping rule, discussed in Converting a Minnesota LLC to a Corporation Moves Nothing.
The two “unreasonably restrict” clauses, and the question the statute leaves open
Clauses (6) and (9) are not prohibitions. They are ceilings.
An operating agreement may restrict the § 322C.0410 information rights and the §§ 322C.0901–322C.0906 right to bring an action. What it may not do is restrict them unreasonably. That is a materially different posture from the seven flat clauses: a restriction is presumptively permissible and becomes ineffective only on a showing about its degree.
And the chapter allocates the burden for one kind of restriction while saying nothing about the other. Section 322C.0410, subd. 7 provides that “[i]n addition to any restriction or condition stated in its operating agreement,” a company may, as a matter within the ordinary course of its activities, impose reasonable restrictions on access to and use of information — and that “[i]n a dispute concerning the reasonableness of a restriction under this subdivision, the company has the burden of proving reasonableness.”
Read the prepositional phrases. The burden attaches to a restriction “under this subdivision” — one the company imposes in the ordinary course. Restrictions “stated in its operating agreement” are expressly distinguished in the same sentence, and no comparable allocation appears for them. So the statute tells you who must prove reasonableness when management restricts access, and does not tell you who must prove it when the agreement does.
The same silence attends the standard. Section 322C.0110, subd. 8 assigns to the court “any claim under subdivision 4” that a term is manifestly unreasonable, fixes the measuring date, closes the record to circumstances existing at that time, and requires the defect to be “readily apparent.” By its terms it governs subdivision 4 claims. A claim that a term unreasonably restricts information rights or the right to sue arises under subdivision 3 — and subdivision 8’s timing rule, closed record, and heightened threshold do not obviously travel with it.
That gap is real, and this page does not resolve it. Practically, it means a challenge under clause (6) or (9) may be a more hospitable posture for a minority member than a challenge under clause (4) — worth considering before pleading a freeze-out case exclusively as a fiduciary-duty problem.
You cannot launder a void term by filing it
This is the provision that surprises even experienced drafters. Minn. Stat. § 322C.0112, subd. 3:
If a record that has been delivered by a limited liability company to the secretary of state for filing and has become effective under this chapter contains a provision that would be ineffective under section 322C.0110, subdivision 3, if contained in the operating agreement, the provision is likewise ineffective in the record.
Subdivision 3 follows the term. A choice-of-law provision in the articles of organization purporting to apply Delaware law to internal affairs is ineffective for the same reason it would be ineffective in the operating agreement. So is an articles provision purporting to waive judicial dissolution, cut down a transferee’s rights, or eliminate the company’s capacity to be sued.
Subdivision 4 then resolves the ordinary conflict: where a filed record conflicts with the operating agreement, “the operating agreement prevails as to members, dissociated members, transferees, managers, and governors,” and “the record prevails as to other persons to the extent they reasonably rely on the record” — all “[s]ubject to subdivision 3,” so a void term prevails against nobody.
And the instrument all of this polices may never have been written down. Section 322C.0102, subd. 17 defines an operating agreement as the members’ agreement “whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof.” Section 322C.0111, subd. 1: the company “is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.” Subdivision 2: “A person that becomes a member … is deemed to assent to the operating agreement.” Unwritten, partly implied from conduct, binding on an entity that never agreed to it and on every incoming member automatically.
What to do
- Run the eleven clauses as a checklist, by grammar. The seven flat ones are pass/fail and take ten minutes. The two standard-governed ones require judgment about degree. The two gate-qualified ones require the drafting discipline described in the fiduciary-duty article.
- Delete any choice-of-law clause purporting to govern internal affairs or member liability. Subdivision 3(2) is flat, and the clause signals that the form was not reviewed for Minnesota.
- Check the articles of organization too. Under § 322C.0112, subd. 3 the audit is not complete until the filed record has been read against subdivision 3.
- Restrict information rights in proportion to a stated reason, and never bar members from bringing actions. Clauses (6) and (9) permit reasonable restriction; a blanket denial or an outright waiver is not a restriction. Use the confidentiality and safeguarding terms § 322C.0410, subd. 7 expressly authorizes.
- If you want to change a dissolution trigger, know which one you may change. Clauses (4) and (5) of § 322C.0701, subd. 1 are protected. The others are not.
- If a provision is being enforced against you, identify the grammar before building the argument. A clause reaching one of the seven flat restrictions needs no record about reasonableness, timing, or expectations. It needs the text. And check whether the term sits in the articles rather than the agreement — it makes no difference to enforceability, and the other side may not know that.
The cross-chapter pattern these limits fit into — Minnesota’s tendency to leave the bargain alone while refusing to let anyone close off information, forum, and access to a court — is developed in Minnesota Will Let You Contract Away Almost Anything.
The observation
There is a reason clauses (4) and (5) dominate the commentary. They are the interesting ones — a prohibition that announces itself and then dissolves into a license, adjudicated on a closed record under a demanding standard. They generate law-review articles, and eventually they will generate Minnesota appellate decisions.
But a litigator’s value in a member dispute is usually not in winning the interesting question. It is in noticing that the clause on page eleven varies § 322C.0106, or restricts a transferee, or waives the § 322C.0204 petition — and that none of those requires an argument at all.
Chapter 322C is a permissive statute with a hard core, and the core is not where people look. It is capacity, applicable law, the court’s power to compel a filing, the court’s power to dissolve, the duty to pay creditors before owners, the merger consent of a member about to acquire personal liability, and the rights of everyone who is not an owner. Seven clauses, no exceptions, and the last place most people read.
Madgett Law, LLC drafts and audits Minnesota LLC operating agreements against the limits in § 322C.0110, subd. 3, and litigates the enforceability of governance terms when they are asserted. If a provision is being enforced against you, the first question is whether Minnesota permits it at all. Send us a message or call 612-470-6529.
Sources: Minn. Stat. § 322C.0110 (operating agreement; scope, function, and limitations) — subd. 1 (matters the operating agreement governs); subd. 2 (chapter governs matters the agreement does not address); subd. 3, all eleven clauses, quoted or paraphrased as set out above, including clause (1) (§ 322C.0105 capacity), clause (2) (§ 322C.0106 applicable law), clause (3) (§ 322C.0204 power of the court), clauses (4) and (5) (“subject to subdivisions 4 to 7”), clause (6) (“unreasonably restrict” the § 322C.0410 duties and rights), clause (7) (§ 322C.0701, subd. 1, clauses (4) and (5) only), clause (8) (§ 322C.0702, subds. 1 and 2, clause (1)), clause (9) (“unreasonably restrict” the right to maintain an action under §§ 322C.0901 to 322C.0906), clause (10) (§ 322C.1015 approval right), and clause (11) (rights of a person other than a member, manager, or governor, “except as otherwise provided in section 322C.0112, subdivision 2”); subd. 4 (provisions particularly but not exclusively authorized “[i]f not manifestly unreasonable”); subd. 8 (the court decides “any claim under subdivision 4”; determination as of the time the term became part of the agreement, considering only circumstances existing at that time; invalidation only if “readily apparent”). Minn. Stat. § 322C.0102, subd. 17 (operating agreement may be oral, in a record, or implied). Minn. Stat. § 322C.0105, subd. 1 (capacity to sue and be sued in its own name). Minn. Stat. § 322C.0106 (governing law — internal affairs and the liability of a member as member, a manager as manager, and a governor as governor). Minn. Stat. § 322C.0111, subds. 1–2 (company bound whether or not it manifested assent; a person that becomes a member is deemed to assent). Minn. Stat. § 322C.0112, subd. 2 (obligations to transferees and dissociated members), subd. 3 (a provision ineffective under § 322C.0110, subd. 3 is likewise ineffective in a filed record), and subd. 4 (conflict between a filed record and the operating agreement). Minn. Stat. § 322C.0204, subds. 1–2 (signing and filing pursuant to judicial order, including the power to order the secretary of state to file the record unsigned). Minn. Stat. § 322C.0304 (liability of members, managers, and governors). Minn. Stat. § 322C.0403, subd. 2 (creditor enforcement of a contribution obligation). Minn. Stat. § 322C.0409, subd. 4 (good faith and fair dealing). Minn. Stat. § 322C.0410, subd. 7 (reasonable restrictions “[i]n addition to any restriction or condition stated in its operating agreement”; the company bears the burden of proving reasonableness “under this subdivision”). Minn. Stat. § 322C.0502 (transferee rights); § 322C.0503 (charging order). Minn. Stat. § 322C.0701, subd. 1, clauses (1)–(6) and subd. 2 (dissolution grounds and alternative remedies). Minn. Stat. § 322C.0702, subds. 1 and 2 (winding up; mandatory clause (1) and permissive clause (2)). Minn. Stat. § 322C.0708 (action by attorney general). Minn. Stat. §§ 322C.0901–322C.0906 (actions by members). Minn. Stat. § 322C.1015 (restrictions on approval of mergers, exchanges, conversions, and domestications). All from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes. Currency: the Revisor’s section history for § 322C.0110 shows 2014 c 157 art 1 s 10; 2015 c 39 s 28, 29, and the histories for §§ 322C.0105, 322C.0106, 322C.0111, 322C.0112, 322C.0204, 322C.0403, 322C.0409, 322C.0410, 322C.0502, 322C.0503, 322C.0701, 322C.0702, and 322C.1015 show no entry later than 2016; there are no 2025 or 2026 session entries for any of them.
This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular operating agreement term is effective depends on the document, the company’s structure, and the circumstances. Several questions identified above — including who bears the burden of proving that an agreement-imposed restriction is not unreasonable under § 322C.0110, subd. 3, clauses (6) and (9) — are not answered by the text of the chapter, and nothing here should be read as predicting how a court would resolve them. No outcome is promised or implied.