Member Managed LLC

A member managed limited liability company (LLC) is one in which the power to make all of the management decisions in the company is vested exclusively in the hands of the members (“members” is the formal LLC term for owners, and the two words are synonymous). In this vein, a member managed LLC is effectively like a general partnership, where the management of the business is flat, and all owners have votes and similar powers in making management decisions and acting on behalf of the company. For founders who prefer to have a simple, flat management structure akin to a general partnership, a member managed LLC is preferable over a manager managed LLC, which is the other type of management structure of an LLC. Whether choosing member managed or manager managed, the choice is made at the founding of the company, and the choice may later be changed upon obtaining the proper consent of the members in the company. There is some case law that indicates that members’ assets may be further protected from adverse judgements against those individual members by creating a manager managed LLC. Therefore, if no better reason can be had to make the opposite decision, then the founders often decide to create a manager managed LLC, as opposed to a member managed LLC.