Wisconsin LLC governance: a 2023 rewrite that outlawed the duty waivers it used to allow, and applied the change to LLCs that never asked for it

Most states treat their LLC act as stable furniture. Wisconsin replaced its entire LLC law effective January 1, 2023, and one of the biggest changes was to fiduciary duties. Under the old act, members and managers could waive the duties of loyalty and care and the obligation of good faith outright, the same freedom Indiana and Missouri still allow. The rewritten act does the opposite: it mandates those duties to protect minority owners and permits only limited contracting around them. And it did not apply only to new companies. It swept in every Wisconsin LLC formed before 2023 unless that company affirmatively opted out by the end of 2022, which means an operating agreement drafted years ago to waive fiduciary duties, valid when it was signed, may now be partly unenforceable.

That combination, a reversal of the duty rules plus a retroactive reach, is what to understand about Wisconsin governance, because it means the operating agreement you have may no longer do what it says. This page leads with it rather than re-teaching the general mechanics on the site’s default rules and freedom of contract guides. In Wisconsin, the ground under existing agreements moved in 2023, and a company relying on an old waiver should know it may be standing on nothing.

The duties you can no longer waive

Start with the reversal, because it changed what the operating agreement can accomplish.

Wisconsin’s 2023 act makes the duties of loyalty and care and the obligation of good faith mandatory, where the old act let members waive them entirely.

Under Wis. Stat. 183.0409, a member of a member-managed Wisconsin LLC owes the company and the other members the duties of loyalty and care, and the duty of loyalty includes the duty to account for benefits taken from the company. Under 183.0105, a written operating agreement may not eliminate the duty of loyalty, may not unreasonably reduce the duty of care, and may not eliminate the obligation of good faith and fair dealing. That is the mandatory floor the rewrite introduced, and it is the opposite of the old Wisconsin rule and of the freedom-of-contract states, where a written agreement can zero the duties out. So a duty-elimination clause that would work in Indiana is unenforceable in Wisconsin to the extent it tries to erase the duties.

What the act still permits is narrower and worth using well.

The operating agreement may still refine the duties, altering specific aspects of loyalty, naming permitted activities, and reallocating a responsibility from one member to another.

The same statute lets the operating agreement, within limits, alter specific aspects of the duty of loyalty and identify categories of activities that do not violate loyalty or good faith, so a member who wants to run a competing venture can be permitted to do so by naming it. Wisconsin also allows a particular reallocation: in a member-managed LLC, if the agreement relieves one member of a responsibility and imposes it on other members, it may eliminate or limit the relieved member’s fiduciary duty as to that responsibility. That is a useful tool for a company where one member runs operations and another is passive, because it lets the duties follow the responsibilities. The drafting task in Wisconsin is to refine and allocate the duties deliberately, not to waive them, because the waiver route the old act allowed is closed.

The distribution default, equal and undemandable

On distributions, Wisconsin’s rewritten default runs by member, not by capital, and it withholds a right people assume they have.

When a Wisconsin operating agreement is silent, distributions are shared equally by member, and no member can force the company to make one.

Under Wis. Stat. 183.0404, distributions default to equal shares among the members, not in proportion to capital contributed, which is the opposite of the contribution-weighted default in Indiana, Maryland, and Missouri and matches the uniform-act states. Just as important, a member has no right to a distribution before dissolution unless the company decides to make an interim distribution, so a minority member cannot compel a payout. That second point connects to protection: because the company controls whether distributions happen, a creditor holding only a charging order can be left waiting, though as the protection page explains, Wisconsin’s foreclosure remedy is the creditor’s answer to that. The distributions guide covers why the split should be set deliberately; the Wisconsin-specific point is that silence means equal shares and no enforceable right to a distribution, so a member expecting either a capital-weighted split or a reliable payout has to write it in.

The management default

The last default is the familiar one, set correctly at formation.

A Wisconsin LLC is member-managed by default, so a manager-managed structure has to be chosen in the operating agreement.

Under Wis. Stat. 183.0407, a Wisconsin LLC is member-managed unless the operating agreement provides for managers, and in a member-managed company each member is an agent who can bind the company in the ordinary course. A manager-managed structure shifts the fiduciary duties primarily to the managers, which suits a company with passive investors, but it has to be chosen deliberately. The through-line for Wisconsin governance is that the 2023 act rebuilt the rules, made the duties mandatory, and applied itself to companies that predate it, so the operating agreement is doing different work than it did before, and every Wisconsin LLC, new or old, benefits from being read against the current statute rather than the one it was born under.

The bottom line

Wisconsin’s 2023 act makes the duties of loyalty and care and good faith mandatory under 183.0409 and 183.0105, reversing the old rule that let members waive them.

The act applied to LLCs formed before 2023 unless they opted out by the end of 2022, so an old operating agreement that waived duties may now be partly unenforceable.

The agreement may still refine the duties, altering specific aspects of loyalty, naming permitted activities, and reallocating responsibilities, but it cannot eliminate them.

The distribution default under 183.0404 is equal shares by member, and no member can compel an interim distribution, so both must be set by agreement if the members want otherwise.

Management defaults to the members under 183.0407, and because the statute changed under existing companies, every Wisconsin LLC should be read against the current act.

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 single-member foreclosure remedy, and the marital-property overlay are on the protection page. Wisconsin’s income tax, the 60% capital gains exclusion, the transfer fee on moving property, and the lack of a series LLC are on the structure and cost page. The $130 formation fee and the quarter-based annual report are on the filing page.

Last verified August 2026.