HB 898 revises Montana law governing limited liability company (LLC) operating agreements. The bill clarifies how operating agreements are interpreted, specifies that their terms are to be interpreted under Title 28, chapter 3, and updates the list of provisions that an operating agreement may or may not alter. It reinforces core default rules around member rights, management authority, voting, proxies, series LLCs, fiduciary duties, dissolution, and winding up, while allowing operating agreements substantial flexibility so long as they do not unreasonably restrict certain statutory rights or eliminate key duties.
A central feature of the bill is a new rule for ambiguity in an operating agreement when the document could be read either to preserve the LLC or to dissolve it: the agreement must be construed in favor of maintaining the company’s existence. The bill also makes related changes to member- and manager-managed LLC decision-making, including when unanimous consent is required, and it expressly applies retroactively to operating agreements already in existence, as well as prospectively to agreements adopted after the effective date. It includes a small appropriation of $100 from the general fund to the Secretary of State to update the agency website.
The bill’s impact is primarily on LLC owners, managers, members, and legal practitioners who draft or interpret operating agreements. It amends sections 35-8-109 and 35-8-307 of the Montana Code Annotated, affecting default governance rules for LLCs and clarifying the limits of private ordering in operating agreements. By favoring continued existence over dissolution in cases of ambiguity, the bill may reduce unintended dissolutions and provide more certainty in disputes over LLC governance.
The general sentiment around HB 898 appears favorable overall, with the bill passing both chambers and receiving strong majorities on final votes. Committee and floor votes show some opposition, especially in the House, but the Senate actions were overwhelmingly supportive, including unanimous or near-unanimous concurrence votes. The bill ultimately became chaptered law, suggesting broad legislative acceptance of the need for clarification in LLC law.
The main point of contention appears to have been the degree to which the bill changes default LLC rules and how much it constrains or directs interpretation of private operating agreements. Potential concerns likely centered on retroactive application, the new presumption against dissolution in ambiguous agreements, and the balance between contractual freedom and statutory protections. Even so, the recorded votes indicate that these concerns did not prevent passage.
HB 898 amends Montana’s LLC Act by revising statutory rules for interpreting operating agreements and by clarifying default governance provisions for member-managed and manager-managed LLCs. It affects how courts and parties interpret operating agreements, limits certain waivers or modifications of statutory duties and rights, and establishes a default construction favoring continued LLC existence over dissolution when an agreement is ambiguous. The bill applies retroactively to existing operating agreements and prospectively to new ones, and it includes a minor appropriation to the Secretary of State for website updates.
The bill appears to have been generally well received, with strong bipartisan support in both chambers and final passage by wide margins. While there was some opposition in the House and a smaller amount of dissent on earlier votes, the Senate votes were especially favorable, including unanimous committee concurrence and unanimous third reading concurrence. Overall, the legislative record suggests the bill was viewed as a technical but useful clarification of LLC law rather than a controversial policy shift.
The likely areas of contention were the bill’s retroactive application, its effect on the interpretation of private operating agreements, and the new rule that ambiguities must be resolved in favor of preserving the LLC rather than dissolving it. Some legislators may have been concerned about whether the bill narrows contractual flexibility or alters expectations in existing agreements. The vote pattern shows the most resistance in the House, indicating that concerns about statutory interference with LLC governance or the retroactive reach of the bill were present but not decisive.