Member-Managed LLC
Essentially, a member-managed LLC functions similar to a
partnership and the management and conduct of the LLC is vested in its members.
An important consideration is that each member is an agent of the LLC for the
purpose of its activities and affairs. For
example, a member’s act, including signing documents in the ordinary course of
the LLC’s business, binds the LLC (unless the member did not have authority to
act and it would be best to explain this in an operating agreement).
Manager-Managed LLC
A manager-managed LLC is similar to a traditional corporate
model (i.e. president running a corporation). The management and conduct of the
Company are vested in only its managers.
Each manager has equal rights in the management and conduct of the LLC’s
activities and affairs. As such, only the
managers can bind the LLC. To avoid
confusion, you may want to consider giving appropriate titles to clarify the
division of responsibility.
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