Simple Operating Agreement for the United Kingdom

Simple Operating Agreement Template for England and Wales

A Simple Operating Agreement under English and Welsh law is a foundational document that establishes the basic framework for running a business entity. It outlines the rights and responsibilities of members, management structure, profit-sharing arrangements, and decision-making processes. This document complies with the Companies Act 2006 and related legislation in England and Wales, providing a legally robust structure while maintaining flexibility for business operations.

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What is a Simple Operating Agreement?

The Simple Operating Agreement serves as the primary governing document for businesses operating in England and Wales. It is particularly useful for small to medium-sized enterprises seeking to establish clear operational guidelines while maintaining operational flexibility. This document outlines essential aspects such as ownership structure, management responsibilities, capital contributions, and profit distribution. The Simple Operating Agreement is designed to comply with English and Welsh company law while being accessible and practical for everyday business use.

What sections should be included in a Simple Operating Agreement?

1. Parties: Identifies all members/parties to the operating agreement

2. Background: Sets out the context and purpose of the operating agreement

3. Definitions: Defines key terms used throughout the agreement

4. Company Formation: Details of the company structure, name, and registered office

5. Members' Rights and Obligations: Core rights and duties of all members

6. Management Structure: Governance framework and management roles

7. Capital Contributions: Rules regarding initial and additional capital contributions

8. Profit and Loss Distribution: Method of allocating profits and losses

9. Voting Rights: Decision-making processes and voting thresholds

10. Transfer of Interests: Rules for transferring membership interests

What sections are optional to include in a Simple Operating Agreement?

1. Intellectual Property Rights: IP ownership and licensing provisions - include when the business involves significant IP assets

2. Non-Compete Provisions: Restrictions on competitive activities - include when protecting business interests from member competition

3. Tag-Along Rights: Minority member protection in sale scenarios - include when dealing with multiple shareholders of different sizes

4. Drag-Along Rights: Majority member rights in sale scenarios - include when dealing with multiple shareholders of different sizes

What schedules should be included in a Simple Operating Agreement?

1. Schedule 1 - Initial Members and Capital Contributions: Details of founding members and their initial investments

2. Schedule 2 - Business Plan: Initial business plan and strategic objectives

3. Schedule 3 - Deed of Adherence: Template for new members joining the company

4. Schedule 4 - Reserved Matters: List of decisions requiring special approval

5. Appendix A - Company Information: Formal company details and registration information

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Operating Agreement

Sector

Sales

Cost

Free to use
Industries

Companies Act 2006: Primary legislation governing company operations, management, and administration in the UK. Fundamental for any operating agreement structure.

Limited Liability Partnerships Act 2000: Key legislation for LLP structures, defining the framework for limited liability partnerships if the operating agreement is for an LLP.

Partnership Act 1890: Historic legislation still relevant for partnership principles and general partnership provisions in operating agreements.

Companies (Model Articles) Regulations 2008: Provides default articles of association and standard governance provisions that can inform operating agreement structure.

Small Business, Enterprise and Employment Act 2015: Contains provisions affecting small business operations and transparency requirements.

Corporate Insolvency and Governance Act 2020: Recent legislation affecting corporate governance and insolvency provisions that should be considered in operating agreements.

Financial Services and Markets Act 2000: Relevant if the business involves regulated financial activities or services.

Data Protection Act 2018: UK implementation of GDPR, crucial for data handling provisions in the operating agreement.

Employment Rights Act 1996: Essential consideration if the business will have employees, affecting employment-related provisions.

Equality Act 2010: Important for ensuring non-discrimination and equality provisions in company operations.

Modern Slavery Act 2015: Relevant for compliance requirements and ethical business practices, particularly for larger organizations.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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