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Form a Business

GENERAL PROVISIONS.

SDCL tit. 47, ch. 47-34A, art. 47-34A-Article1
in effect

SDCL § 47-34A-101 Definitions.

47-34A-101. Definitions. Terms used in this chapter: (1) "Articles of organization" means initial, amended, and restated articles of organization and articles of merger. In the case of a foreign limited liability company, the term includes all records serving a similar function required to be filed in the Office of the Secretary of State or other official having custody of company records in the state or country under whose law it is organized; (2) "Business" includes every trade, occupation, profession, and other lawful purpose, whether or not carried on for profit; (3) "Contribution" means any benefit provided by a person to a limited liability company: (A) In order to become a member upon formation of the company and in accordance with an agreement between or among the persons that have agreed to become the initial members of the company; (B) In order to become a member after the formation of the company and in accordance with an agreement between the person and the company; or (C) In the person's capacity as a member and in accordance with the operating agreement or an agreement between the member and the company; (4) "Debtor in bankruptcy" means a person who is the subject of an order for relief under Title 11 of the United States Code or a comparable order under a successor statute of general application or a comparable order under federal, state, or foreign law governing insolvency; (5) "Distribution" means a transfer of money, property, or other benefit from a limited liability company to a member in the member's capacity as a member or to a transferee of the member's distributional interest; (6) "Distributional interest" means all of a member's interest in distributions by the limited liability company; (7) "Entity" means a person other than an individual; (8) "Foreign limited liability company" means an unincorporated entity formed under the law of a jurisdiction other than this state and denominated by that law as a limited liability company; (9) "Limited liability company" except in the phrase "foreign limited liability company" means an entity formed under this chapter; (10) "Manager" means a person, whether or not a member of a manager-managed company, who is vested with authority under section 301; (11) "Manager-managed company" means a limited liability company which is so designated in its articles of organization; (12) "Member" means a person that: (A) Prior to formation of the limited liability company, becomes a member as agreed by that person and the organizer of the limited liability company; (B) After formation of the limited liability company, becomes a member: (1) As provided in the operating agreement; (2) As a result of a transaction effective under Article IX; (3) With the consent of all the members; and (C) After having become a member, has not dissociated under Article VI; (13) "Member-managed company" means a limited liability company other than a manager-managed company; (14) "Operating agreement" means any valid agreement, either written or oral, under § 47-34A-103 concerning the relations among the members, managers, and limited liability company; however, an integration clause contained in a written operating agreement may be given effect under other law. The term includes amendments to and restatements of the operating agreement. The operating agreement of a limited liability company having only one member shall not be unenforceable by reason of there being only one person who is a party to the operating agreement; (15) "Person" means an individual, corporation, business trust, cooperative corporation, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity; (16) "Principal office" means the office, whether or not in this state, where the principal executive office of a domestic or foreign limited liability company is located; (17) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form; (18) "Sign" means, with the present intent to authenticate or adopt a record by any means including an electronic signature: (A) To execute or adopt a tangible symbol; or (B) To attach to or logically associate with a record an electronic symbol, sound, or process; (19) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States; (20) "Transfer" includes an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift, and transfer by operation of law; (21) "Transferee" means a person to which all or part of a distributional interest has been transferred, whether or not the transferor is a member. SL 1998, ch 272, § 101; SL 2013, ch 233, § 1.

SDCL § 47-34A-103 Operating agreement--Scope--Limitations.

47-34A-103. Operating agreement--Scope--Limitations. (a) Except as otherwise provided in subsection (b), all members of a limited liability company may enter into an operating agreement, which need not be in writing, to regulate the affairs of the company and the conduct of its business, and to govern relations among the members, managers, and company. A person that becomes a member of a limited liability company is deemed to assent to the operating agreement. To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members, managers, and company. (b) The operating agreement may not: (1) Eliminate the duty of loyalty under § 47-34A-409(b) or § 47-34A-603(b)(3), but the agreement may, if not manifestly unreasonable: (i) Identify specific types or categories of activities that do not violate the duty of loyalty; and (ii) Specify the number or percentage of members or disinterested managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty; (2) Eliminate the obligation of good faith and fair dealing under § 47-34A-409(d), but the operating agreement may determine the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable; (3) Vary the right to expel a member in an event specified in § 47-34A-601(6); (4) Vary the requirement to wind up the limited liability company's business in a case specified in § 47-34A-801(a)(3) or (4); or (5) Restrict rights of a person, other than a manager, member, and transferee of a member's distributional interest, under this chapter. (c) If not manifestly unreasonable, the operating agreement may: (1) Restrict a right to information or access to records under § 47-34A-408; (2) Reduce the duty of care under § 47-34A-409(c) or § 47-34A-603(b)(3); (3) Alter any other fiduciary duty, including eliminating particular aspects of that duty. (d) The court shall decide any claim under this section that a term of an operating agreement is manifestly unreasonable. The court: (1) Shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time; and (2) May invalidate the term only if, in light of the purposes and activities of the limited liability company, it is readily apparent that: (i) The objective of the term is unreasonable; or (ii) The term is an unreasonable means to achieve the provision's objective. SL 1998, ch 272, § 103; SL 2013, ch 233, § 2.

SDCL § 47-34A-103.1 Effect of records that conflict with § 47-34A-103 or operating agreement.

47-34A-103.1. Effect of records that conflict with § 47-34A-103 or operating agreement. (a) If a record that has been delivered by a limited liability company to the Office of the Secretary of State for filing and has become effective under this chapter, contains a provision that would be ineffective under § 47-34A-103 if contained in the operating agreement, the provision is likewise ineffective in the record. (b) Subject to subsection (a) of this section, if a record that has been delivered by a limited liability company to the Office of the Secretary of State for filing, and which has become effective under this chapter, conflicts with a provision of the operating agreement: (1) The operating agreement prevails as to members, dissociated members, transferees, and managers; and (2) The record prevails as to other persons to the extent they reasonably rely on the record. SL 2013, ch 233, § 3.

SDCL § 47-34A-104 Supplemental principles of law.

47-34A-104. Supplemental principles of law. (a) Unless displaced by particular provisions of this chapter the principles of law and equity supplement this chapter. (b) If an obligation to pay interest arises under this chapter and the rate is not specified, the rate is that specified in subdivision 54-3-16(1). SL 1998, ch 272, § 104.

SDCL § 47-34A-105 Name.

47-34A-105. Name. (a) The name of a limited liability company must contain, limited liability company, or limited company, or the abbreviation, L.L.C., LLC, L.C., or LC. Limited may be abbreviated as Ltd. and company may be abbreviated as Co. (b) Except as authorized by subsections (c) and (d), the name of a limited liability company must be distinguishable upon the records of the secretary of state from: (1) The name of any corporation, limited partnership, or company incorporated, organized or authorized to transact business, in this state; (2) A name reserved or registered under § 47-34A-106 or 47-34A-107; (3) A fictitious name approved under § 47-34A-1005 for a foreign company authorized to transact business in this state because its real name is unavailable. (c) A limited liability company may apply to the secretary of state for authorization to use a name that is not distinguishable upon the records of the secretary of state from one or more of the names described in subsection (b). The secretary of state shall authorize use of the name applied for if: (1) The present user, registrant, or owner of a reserved name consents to the use in a record and submits an undertaking in form satisfactory to the secretary of state to change the name to a name that is distinguishable upon the records of the secretary of state from the name applied for; or (2) The applicant delivers to the secretary of state a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state. (d) A limited liability company may use the name, including a fictitious name, of another domestic or foreign company which is used in this state if the other company is organized or authorized to transact business in this state and the company proposing to use the name has: (1) Merged with the other company; (2) Been formed by reorganization with the other company; or (3) Acquired substantially all of the assets, including the name, of the other company. SL 1998, ch 272, § 105.

SDCL § 47-34A-106 Reserved name.

47-34A-106. Reserved name. The exclusive right to the use of a name may be reserved by: (1) Any person intending to organize a limited liability company under this chapter and to adopt that name; (2) Any domestic limited liability company or any foreign limited liability company registered in this state which, in either case, intends to adopt that name; (3) Any foreign limited liability company intending to register in this state and adopt that name; and (4) Any person intending to organize a foreign limited liability company and intending to have it registered in this state and adopt that name. The reservation shall be made by filing with the secretary of state an application, executed by the applicant, to reserve a specified name. If the secretary of state finds that the name is available for use by a domestic or foreign limited liability company, the secretary of state shall reserve the name for the exclusive use of the applicant for a period of one hundred twenty days. Once having so reserved a name, the same applicant may not again reserve the same name until more than sixty days after the expiration of the last one hundred twenty-day period for which that applicant reserved that name. The right to the exclusive use of a reserved name may be transferred to any other person by filing in the Office of the Secretary of State a notice of the transfer, executed by the applicant for whom the name was reserved and specifying the name and address of the transferee. SL 1998, ch 272, § 106.

SDCL § 47-34A-107 Registration of name--Procedure.

47-34A-107. Registration of name--Procedure. (a) A foreign limited liability company may register its name subject to the requirements of § 47-34A-1005, if the name is distinguishable upon the records of the secretary of state from names that are not available under § 47-34A-105(b). (b) A foreign limited liability company registers its name, or its name with any addition required by § 47-34A-1005, by delivering to the secretary of state for filing an application: (1) Setting forth its name, or its name with any addition required by § 47-34A-1005, the state or country and date of its organization, and a brief description of the nature of the business in which it is engaged; and (2) Accompanied by a certificate of existence, or a record of similar import, from the state or country of organization. (c) A foreign limited liability company whose registration is effective may renew it for successive years by delivering for filing in the office of the secretary of state a renewal application complying with subsection (b) between October first and December thirty-first of the preceding year. The renewal application renews the registration for the following calendar year. (d) A foreign limited liability company whose registration is effective may qualify as a foreign company under its name or consent in writing to the use of its name by a limited liability company later organized under this chapter or by another foreign company later authorized to transact business in this state. The registered name terminates when the limited liability company is organized or the foreign company qualifies or consents to the qualification of another foreign company under the registered name. SL 1998, ch 272, § 107.

SDCL § 47-34A-112 Nature of business and powers.

47-34A-112. Nature of business and powers. (a) A limited liability company may be organized under this chapter for any lawful purpose, subject to any law of this state governing or regulating business including regulation of professional service firms. Limited liability companies may not engage in activities proscribed by chapter 47-9A unless the ownership restrictions are met by the membership of the limited liability company by substitution of members for shareholders in that chapter. (b) Unless its articles of organization provide otherwise, a limited liability company has the same powers as an individual to do all things necessary or convenient to carry on its business or affairs, including power to: (1) Sue and be sued, and defend in its name; (2) Purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with real or personal property, or any legal or equitable interest in property, wherever located; (3) Sell, convey, mortgage, grant a security interest in, lease, exchange, and otherwise encumber or dispose of all or any part of its property; (4) Purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell, mortgage, lend, grant a security interest in, or otherwise dispose of and deal in and with, shares or other interests in or obligations of any other entity; (5) Make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds, and other obligations, which may be convertible into or include the option to purchase other securities of the limited liability company, and secure any of its obligations by a mortgage on or a security interest in any of its property, franchises, or income; (6) Lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment; (7) Be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other entity including but not limited to limited partnerships and limited liability companies; (8) Conduct its business, locate offices, and exercise the powers granted by this chapter within or without this state; (9) Elect managers and appoint officers, employees, and agents of the limited liability company, define their duties, fix their compensation, and lend them money and credit, or otherwise assist its members; (10) Pay pensions and establish pension plans, pension trusts, profit sharing plans, bonus plans, option plans, and benefit or incentive plans for any or all of its current or former members, managers, officers, employees, and agents; (11) Make donations for the public welfare or for charitable, scientific, or educational purposes; and (12) Make payments or donations, or do any other act, not inconsistent with law, that furthers the business of the limited liability company. SL 1998, ch 272, § 112.

SDCL § 47-34A-113 Governing Law.

47-34A-113. Governing Law. The law of this state governs: (1) The internal affairs of a limited liability company; and (2) The liability of a member as member and a manager as manager for the debts, obligations, or other liabilities of a limited liability company. SL 2013, ch 233, § 4.

SDCL § 47-34A-114 Freedom of contract.

47-34A-114. Freedom of contract. It is the policy of this chapter and this state to give maximum effect to the principles of freedom of contract and to the enforceability of operating agreements. SL 2013, ch 233, § 5.
Source: South Dakota Legislature (sdlegislature.gov)URL: https://sdlegislature.gov/Statutes/47-34A-Article1Fetched: 10/20/2026

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