South Dakota LLC governance: the equal-shares default that ignores who funded the company

Put $90,000 into a South Dakota LLC. Take on a partner who puts in $10,000. Skip the operating agreement. South Dakota law now gives you each the same distributions. Not ninety and ten. Fifty and fifty. That is the default the statute writes when you say nothing.

South Dakota’s LLC statute is the older Uniform Limited Liability Company Act, SDCL 47-34A, and its distribution default carries the classic surprise of that model: equality over contribution. It is the same trap Wyoming has, and the opposite of what Nevada and Alaska do.

South Dakota’s silence splits your company equally, no matter who put in the money.

What the statute decides when you say nothing

Distributions are equal, not proportional

SDCL 47-34A-405 is blunt: distributions made before dissolution and winding up must be in equal shares.

South Dakota splits distributions in equal shares among members, regardless of contribution.

Return to the $90,000 and $10,000 members. Without a written agreement, the $10,000 member collects half of every distribution. There is no default that ties money out to money in. The single clause that fixes it, distributions in proportion to capital or ownership, is the most important line in a multi-member South Dakota agreement, and no statute supplies it. This is the same equal-shares default that bites in Wyoming, and it is worth knowing that the two strongest trust states on the map both default against the larger investor.

Management, information, and duties

South Dakota defaults to member management unless the articles or agreement provide otherwise. Members have a statutory right to the company’s information and records under SDCL 47-34A-408, and the standards of conduct members and managers owe come from SDCL 47-34A-409. Because South Dakota uses the older uniform model, those duties are shaped by the agreement but not erased down to the studs the way Delaware allows.

A written agreement is not required, but silence is expensive

South Dakota permits an LLC to operate without a written operating agreement. That is not a convenience so much as a warning, because operating without one leaves the equal-shares default and the rest of the statute in force.

South Dakota does not require a written agreement, which means silence leaves the equal-shares default running.

How far you can contract around it

Far enough to fix all of it. The operating agreement can change the distribution split, the voting rules, the management structure, and the transfer restrictions, and it can tailor the duties within the limits the uniform act keeps. The freedom of contract and default rules pages explain the model. The practical point for South Dakota is narrow and firm: the equal-shares default is the statute’s, not a mistake, so the agreement has to say otherwise in writing before the first dollar moves.

The bottom line

South Dakota’s LLC act is the older uniform model, so it keeps a floor of duties a Delaware agreement could waive away.

Distributions default to equal shares under SDCL 47-34A-405, regardless of who contributed, the same trap Wyoming has.

Members have a statutory right to the company’s books under SDCL 47-34A-408.

South Dakota does not require a written operating agreement, so silence leaves the equal-shares default in force.

Fixing the split takes one clause tying distributions to capital, and it belongs in the agreement before the money goes in.

What this page does not cover

This page is about what South Dakota’s law lets your operating agreement do. How creditors reach you, including the charging order and the asset protection trust, is on the protection page. The trust privacy, series LLCs, and the transfer fee are on the structure and cost page. Fees, forms, and deadlines are on the filing page.

Last verified July 2026.