Sunday, June 27, 2010

LLC Management Law

The first and most important management issue regarding LLCs is whether they are to have centralized management (corporation) or decentralized management (partnership).

MEMBER MANAGEMENT IS DEFAULT RULE. Similar to partnership, all extraordinary matters and amendments to the operating agreement require the consent of all members. RULLCA 407(b)

Members in manager-managed LLCs have limited powers. The managers have exclusive management rights and decide all ordinary business matters by a majority of the managers. RULLCA 407(c)

  1. Ordinary business matters decided by a majority of members. 
  2. There are arguments over if unamity is good enough or the majority should suffice. Like Closely Held Corporation
Members who are not managers, like shareholders in a corporation, have no inherent right to bind the LLC. RULLCA 301(a) EXPAND WITH CONTRACTS

Managers have exclusive rights to bind the LLC but not liable for LLC. Broad Grant of Authority. RESTRICT WITH CONTRACTS

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