Maryland LLC governance: a statute silent on fiduciary duties, and a default that hands the biggest funder both the money and the votes

Maryland’s LLC Act is notable for what it does not contain: a statement of fiduciary duties. Most states’ acts spell out at least a duty of care and often a duty of loyalty, along with what an operating agreement may do to them. Maryland’s does neither. What a Maryland manager or member owes comes from common law, and the framework was only settled in 2020, when the state’s highest court in Plank v. Cherneski recognized breach of fiduciary duty as an independent cause of action and laid out its elements. So the duties exist, but they are judge-made, recent, and reshapeable by the operating agreement rather than fixed by the statute.

Paired with that silence is a set of defaults that are not neutral. If a Maryland operating agreement does not say otherwise, the statute allocates both the money and the control by capital: distributions follow contribution, and voting follows profit interest. The result is that the member who wrote the biggest check gets the largest share and the most votes, automatically, and the member who never signed an agreement has no ground to stand on. This page leads with that combination rather than re-teaching the general mechanics on the site’s default rules and freedom of contract guides. In Maryland, silence favors the funder, and the statute will not supply the fairness the members forgot to write down.

The duties the statute leaves to the courts

Start with the gap, because it changes where a Maryland manager’s obligations come from.

Maryland’s LLC Act sets no fiduciary duties, so what a member or manager owes comes from common law under Plank v. Cherneski, not from the statute.

Unlike states that codify a duty of care and a duty of loyalty, Maryland’s Title 4A is silent on the point. In Plank v. Cherneski, decided in 2020, the Maryland high court confirmed that a breach of fiduciary duty is an independent claim and set out how it is proven, which is now the reference point for what an LLC’s managers and controlling members owe. Because the source is common law rather than a statute, the duties are shaped by case development and by the operating agreement, which under Corps. & Ass’ns 4A-402 is enforceable and can expand or restrict them. The practical consequence is that a Maryland operating agreement carries more weight than in a state with a statutory duty floor: there is no code section to fall back on that fixes the baseline, so what the agreement says, within the bounds Plank and the freedom-of-contract policy allow, is close to the whole of it.

The default that pays the funder

Here is the first half of the seam, and it is where silence starts to favor capital.

When a Maryland operating agreement is silent, profits and distributions are split by the value each member contributed, not equally by headcount.

Under Corps. & Ass’ns 4A-503, if the agreement does not provide otherwise, profits and losses are allocated among the members in proportion to their respective capital contribution values, and distributions follow the same proportion. So a Maryland LLC where one member funded the venture and another contributed labor or expertise will, by default, pay out in proportion to the recorded capital, and the member who put in effort rather than cash gets nothing for it unless the agreement assigns a value to the contribution. This is the same contribution-weighted default that Indiana and Virginia use, and it is a reasonable rule, but only if the members actually intended to reward capital. Where they intended an equal split, or a split that credits sweat equity, silence produces the opposite. The distributions guide covers why the split should be set deliberately.

The default that gives the funder control

The second half is what makes Maryland’s silence unusually consequential.

Voting power in a Maryland LLC follows profit interest by default, so the largest capital contributor also controls the company unless the agreement says otherwise.

Under Corps. & Ass’ns 4A-403, a member’s vote is measured by that member’s interest in profits, which under 4A-503 is set by capital contribution. So the default does not just pay the biggest funder more; it gives that funder more votes. A member holding a majority of the profit interest can carry ordinary decisions, and major actions like disposing of substantially all the property or approving a merger require two-thirds of the profit interest, again measured by capital. The effect is that a Maryland LLC with a silent operating agreement concentrates both economics and control in whoever contributed the most money, and the equal partners who assumed they had equal say discover they do not. Combined with the absence of a statutory fiduciary floor, a minority member without a written agreement is exposed on two fronts at once, out-voted by default and protected only by common-law duties whose contours are still developing. Management otherwise defaults to the members under 4A-401, where each member is an agent who can bind the company in the usual course, and amendments require unanimous consent under 4A-402. The through-line is that in Maryland the operating agreement is not a formality; it is the only thing standing between a minority member and a default that favors capital in both money and votes.

The bottom line

Maryland’s LLC Act sets no fiduciary duties; they come from common law under Plank v. Cherneski (2020) and can be shaped by the operating agreement under Corps. & Ass’ns 4A-402.

The distribution default under 4A-503 splits profits and distributions by capital contribution, not per capita, so silence rewards the funder over the member who contributed effort.

The voting default under 4A-403 ties voting power to profit interest, so the largest funder also controls the company by default.

Together those defaults concentrate both money and control in the biggest contributor, leaving a minority member without a written agreement exposed on both.

Management defaults to the members under 4A-401 and amendments require unanimous consent under 4A-402, so in Maryland the operating agreement, not the statute, is what protects a member’s expectations.

What this page does not cover

This page is about the rules that run your company from the inside. How outside creditors reach a member’s interest, the foreclosable charging order, and the strong veil are on the protection page. Maryland’s high income and capital-gains taxes, the transfer taxes on moving property, and the absence of a series LLC are on the structure and cost page. The $100 formation fee and the $300 annual report every LLC owes are on the filing page.

Last verified August 2026.