question.jpgIn Business Law

What is a manager-managed LLC?

A manager-managed LLC is where the company is run by appointed managers (as opposed to member-managed LLCs, which are run by some or al of the owners/members). While some of these appointed managers may be members, most LLCs typically use outside parties to fill most of their manager slots. Manager-managed LLCs tend to run more like limited partnerships or corporations, and are therefore more complicated - the managers must be appointed, and voting comes into play when the managers are making decisions. While member-management is more commonly used by smaller LLCs, the larger LLCs tend to use this manager-management because it allows the members to focus on the work of the company rather than the larger business concerns and, instead, they can hire experienced managers to address those issues.

When a manager-managed LLC is being set up, the organizer and the initial members will typically determine how many managers there will be (usually at least three so that voting ties can be avoided), and the LLC operating agreement will include provisions about how the management will work (e.g., how the managers are appointed, how they can be removed, how voting works, etc.).