The Tennessee Revised Limited Liability Company Act is the state statute, codified at Tennessee Code Title 48, Chapter 249, that governs every LLC formed or operating in Tennessee. It replaced the original 1994 act and took effect on January 1, 2006. The law covers how an LLC comes into existence, who has authority to run it, what duties those people owe, how ownership interests move, what the company must file each year, and how it ends. If you own or manage a Tennessee LLC, this is the rulebook sitting behind your operating agreement.
What the Act Is and When It Applies
Chapter 249 applies to any LLC organized under Tennessee law and, through its registration provisions, to out-of-state LLCs doing business in Tennessee. It sets default rules for internal governance that control whenever the Articles of Organization or operating agreement are silent. Much of the Act is written to let members contract around the defaults, but some provisions, particularly those protecting third parties and establishing minimum fiduciary standards, are mandatory.
Forming an LLC Under the Act
Formation starts with filing Articles of Organization under Section 48-249-202. The Secretary of State’s form is SS-4270.1Tennessee Secretary of State. Articles of Organization – Limited Liability Company (SS-4270) The articles must include:
- A name containing “Limited Liability Company,” “L.L.C.,” or “LLC.” The name cannot include “corporation” or “incorporated” or abbreviations of those words.2FindLaw. Tennessee Code 48-249-106 – Name
- The street address and county of the initial registered office and the name of the registered agent at that address.3Justia. Tennessee Code 48-249-202 – Articles of Organization
- A declared management structure: member-managed, manager-managed, or director-managed.
Duration is perpetual by default. If members want the company to end on a set date or after a term of years, that limit must appear in the articles; otherwise nothing on duration is needed.3Justia. Tennessee Code 48-249-202 – Articles of Organization
Every LLC must continuously maintain a registered agent and registered office in Tennessee. An individual agent must reside in the state, or the role can be filled by a domestic or foreign corporation, nonprofit, LLC, general partnership, limited partnership, or registered limited liability partnership authorized to do business in Tennessee.4Justia. Tennessee Code 48-208-101 – Registered Office and Registered Agent
The base filing fee is $300, with a per-member charge of $50 and a maximum cap of $3,000.5Tennessee Secretary of State. Business Forms and Fees Online filings are usually processed within 24 hours; mailed submissions generally take three to five business days.
Series LLCs
The Act authorizes series LLCs, under which a single company can create internal series, each holding its own assets and liabilities separately. To use this structure, the Articles of Organization must include a notice that the liabilities of any series are limited to the assets of that series. The notice requirement applies even before any series exists. Each series must also keep its own separate records and accounting; failing to do so can let a court disregard the liability separation.6Justia. Tennessee Code 48-249-309 – Series of Members, Holders, Managers, Directors, Membership Interests or Financial Rights
Picking a Management Structure
The Act offers three options, and the choice goes in the articles. Changing it later requires an amendment filed with the Secretary of State.
Member-managed is the default. All members participate in running the business and can bind the company. Decisions are made by majority vote unless the operating agreement says otherwise. This fits smaller operations where every owner wants a hand in daily decisions.
Manager-managed puts one or more designated managers in charge of operations. Managers don’t have to be members, so owners can stay passive while someone else runs things. Members who aren’t managers generally lack authority to bind the company.
Director-managed mirrors corporate governance. A board of directors oversees the LLC and appoints officers for day-to-day management. It’s the least common choice for small LLCs but can suit larger businesses that want formal oversight layers.
Duties the Act Imposes on the People Running the LLC
Section 48-249-403 sets the standards of conduct, and the standard depends on the role.
In a member-managed LLC, each member owes a duty of loyalty and a duty of care. Loyalty bars diverting business opportunities belonging to the LLC, dealing with the company on behalf of someone with competing interests, and competing with the LLC while it’s operating. The duty of care sets a lower bar: members must avoid grossly negligent or reckless behavior, intentional misconduct, and knowing violations of law. Ordinary mistakes or bad judgment, without more, don’t trigger liability.7Justia. Tennessee Code 48-249-403 – General Standards of Conduct for Members, Managers, Directors and Officers
Managers in a manager-managed LLC are held to the same loyalty and care standards. Directors and officers face a different formulation: they must act in good faith, exercise the care of an ordinarily prudent person in a similar position, and reasonably believe their actions serve the LLC’s best interests. The practical difference is that directors and officers are measured against what a reasonable person in the role would do, while members and managers face liability only for conduct that crosses into gross negligence or worse.
Operating Agreements and the Default Rules
The operating agreement is the LLC’s internal rulebook, governing relationships among members, managers, directors, officers, and the company itself. All members may enter into an operating agreement, and the LLC is bound by it even if the company isn’t a signatory.8Justia. Tennessee Code 48-249-203 – Operating Agreement Tennessee doesn’t require operating agreements to be filed with the state, and they don’t even have to be in writing unless the articles or a written provision of the agreement itself requires it.
When an LLC has no operating agreement, or the agreement is silent on an issue, the Act’s defaults fill the gap. Those defaults cover profit and loss allocation, voting procedures, and transfer restrictions, among other things. The defaults keep the LLC functional, but they’re generic. A multi-member LLC operating without a written agreement is effectively letting the state legislature make its governance decisions, and that rarely matches what the members actually intended. Courts can enforce operating agreements through injunctions or other equitable remedies.
Transferring a Membership Interest
The Act draws a sharp line between financial rights (the right to receive distributions) and governance rights (the right to vote and participate in management). A member can transfer financial rights to an outsider without anyone’s permission. Transferring governance rights to a non-member requires the unanimous consent of every other member, and that consent can be withheld for any reason, even an unreasonable one.9Justia. Tennessee Code 48-249-508 – Transfer of a Membership Interest
Transfers between existing members don’t require anyone else’s consent. A sole member of a single-member LLC can freely transfer governance rights or the whole interest at any time. If a member tries to transfer governance rights without the required approvals, the entire transfer fails, and any accompanying financial rights transfer is void as well. Pledging a membership interest as collateral doesn’t count as a transfer and doesn’t affect member status, though foreclosure on the pledge is treated as a transfer of financial rights.
These are default rules. An operating agreement can loosen or tighten them, which is one of the stronger reasons to have a written agreement in place before a transfer situation comes up.
Staying in Good Standing
Every Tennessee LLC must file an annual report with the Secretary of State. The report is due on the first day of the fourth month after the close of the LLC’s fiscal year.10Justia. Tennessee Code 48-249-1017 – Annual Report for Secretary of State For calendar-year companies, that’s April 1. The report confirms or updates the registered agent’s name and address and the principal business office location.
The annual report fee follows the formation fee structure: $300 minimum, $50 per member, $3,000 maximum. Missing the filing or failing to pay leads to administrative dissolution, which strips the LLC of its legal protections and its right to do business under its registered name.
Reinstatement After Administrative Dissolution
An administratively dissolved LLC can apply to the Secretary of State for reinstatement. The application must state that the grounds for dissolution have been eliminated, provide a name that meets statutory requirements, and be accompanied by a confirmation of good standing, which means catching up on all delinquent reports and fees. The reinstatement application itself costs $70.11FindLaw. Tennessee Code 48-249-1007 – Fees If approved, the Secretary cancels the dissolution certificate and issues a certificate of reinstatement that relates back to the dissolution date, so the LLC is treated as if it had never been dissolved.12Justia. Tennessee Code 48-249-606 – Reinstatement Following Administrative Dissolution If the original name was taken during the dissolution period, the application can include a new name, which amends the articles.
Dissolution and Winding Up
When a Tennessee LLC dissolves, voluntarily or by administrative action, the winding-up process follows a specific sequence. Once a notice of dissolution is filed, the people in charge (members in a member-managed company, managers in a manager-managed one, or the board in a director-managed one) must collect outstanding debts owed to the LLC, pay off or make provision for the LLC’s own debts and obligations in statutory priority, and then distribute any remaining assets to the members and holders of financial rights.13Justia. Tennessee Code 48-249-610 – Procedure in Winding Up
In a manager-managed or director-managed LLC, the managers or board can sell all or substantially all of the dissolved company’s assets without a member vote during winding up. That’s a notable departure from normal operations, where selling everything would typically require member approval. The Act also allows dissolution through merger into a surviving entity, which follows a separate set of procedures and skips the standard winding-up steps.
What the Act Does Not Cover
Several obligations that come with running a Tennessee LLC sit outside Chapter 249 and are easy to miss if you treat the Act as a one-stop reference. Tennessee’s franchise tax (0.25% of Tennessee net worth, $100 minimum) and excise tax (6.5% of Tennessee taxable income) are administered by the Department of Revenue under Title 67, not by the Secretary of State under Chapter 249.14Tennessee Department of Revenue. Due Dates and Tax Rates15Justia. Tennessee Code 67-4-2119 – Minimum Franchise Tax Federal tax classification is handled by the IRS, which treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership unless the LLC elects corporate or S corporation treatment.16Internal Revenue Service. Limited Liability Company (LLC) Out-of-state LLCs doing business in Tennessee must register with the Secretary of State by filing an Application for Certificate of Authority (Form SS-4233) for a $300 fee; without it, the foreign LLC cannot maintain a lawsuit in Tennessee courts.5Tennessee Secretary of State. Business Forms and Fees Federal beneficial ownership reporting under the Corporate Transparency Act no longer applies to domestic LLCs after FinCEN’s March 2025 exemption, though foreign LLCs registered in the United States remain subject to it.17Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting