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An Operating Agreement sets out the rules, responsibilities, and structure for running a private company in South Africa. Think of it as your company's internal rulebook - it covers how decisions get made, who owns what percentage, and how profits are shared among members.

While not legally required under the Companies Act, having this agreement helps prevent disputes between business partners and protects everyone's interests. It typically includes key details about management roles, voting rights, capital contributions, and what happens if someone wants to leave the business or sell their shares. Most South African business advisors strongly recommend putting one in place when starting a company.

Create an Operating Agreement when starting a new private company in South Africa, especially if you have multiple owners or investors. It's crucial to put this in place before your business starts generating significant revenue or taking on major obligations.

This agreement becomes particularly important during key business moments: bringing in new partners, expanding operations, seeking external funding, or planning leadership transitions. Having clear rules about decision-making, profit sharing, and ownership transfers helps prevent costly disputes later. Many South African banks and investors also require an Operating Agreement before doing business with your company.

• Business Operating Agreement: Standard version covering core business operations, suitable for most companies
• Sole Member Operating Agreement: Simplified version for single-owner businesses, focusing on asset protection and succession planning
• Multi Member Operating Agreement: Detailed framework for businesses with multiple owners, addressing voting rights and profit sharing
• Manager Managed LLC Operating Agreement: Separates ownership from management control, ideal for passive investors
• Real Estate LLC Operating Agreement: Specialized version for property investment companies, including specific provisions for asset management

• Company Owners/Members: Primary parties who sign and are bound by the Operating Agreement, setting out their rights, responsibilities, and ownership stakes
• Company Directors: Use the agreement to understand their management powers, decision-making authority, and duties to the company
• Legal Advisors: Draft and review the agreement to ensure compliance with South African company law and protect client interests
• Business Accountants: Reference the agreement for profit distribution formulas and financial management protocols
• Potential Investors: Review the agreement to understand company structure and governance before committing capital

• Company Details: Gather registration documents, tax numbers, and registered address information
• Ownership Structure: List all members with their contribution amounts and ownership percentages
• Management Rules: Define voting rights, decision-making processes, and meeting procedures
• Financial Arrangements: Document profit-sharing formulas, capital contribution requirements, and distribution policies
• Exit Strategies: Plan procedures for member withdrawals, transfers, or company dissolution
• Template Selection: Use our platform to generate a legally-sound Operating Agreement that fits your specific business structure
• Review Process: Have all members read and confirm understanding before signing

• Company Information: Full legal name, registration number, registered address, and business purpose
• Membership Details: Names, contact details, and ownership percentages of all members
• Capital Structure: Initial contributions, additional funding requirements, and profit distribution formulas
• Management Provisions: Decision-making processes, voting rights, and meeting procedures
• Transfer Restrictions: Rules for selling or transferring ownership interests
• Dispute Resolution: Procedures for handling conflicts and mediation processes
• Dissolution Terms: Conditions and procedures for winding up the business
• Governing Law: Explicit statement of South African jurisdiction and applicable regulations

The Operating Agreement is often confused with a Business Acquisition Agreement, but they serve distinctly different purposes in South African business law. While both are crucial business documents, their scope and timing differ significantly.

• Purpose and Timing: Operating Agreements govern ongoing business operations and relationships between owners, while Business Acquisition Agreements handle one-time business purchases or mergers
• Duration: Operating Agreements remain active throughout a company's life, but Business Acquisition Agreements typically conclude once the sale is complete
• Content Focus: Operating Agreements detail management structure, profit sharing, and daily operations, whereas Business Acquisition Agreements concentrate on purchase terms, asset transfers, and warranties
• Party Involvement: Operating Agreements bind internal company members, while Business Acquisition Agreements involve separate buying and selling entities