Vertalis Business Law Glossary
Ownership & Governance
Member-Managed vs. Manager-Managed LLC
By Tim Nichols
Modern Counsel for Growing Companies
In plain English
Two ways to allocate an LLC’s governing authority. In a member-managed LLC, the members govern; in a manager-managed LLC, designated managers govern and may or may not be owners. The governing documents determine delegated responsibilities and which decisions still require owner approval.
Types and key distinctions
Member-Managed LLC
An LLC whose governing authority consists of its members under its organizational structure. The company agreement can allocate duties, votes, and delegated authority among them. Member management does not necessarily mean unanimous approval is required for every action or that every member can sign every contract.
Manager-Managed LLC
An LLC whose governing authority is assigned to one or more managers under its organizational structure. Managers may or may not be owners. Members can retain approval rights over specified matters while managers direct operations, so owning an interest does not automatically confer day-to-day management authority.