The post is about the definition of the term ” managing member “. I am writing this because of a Quora question that I answered a short while ago. Please seeÂ What is the difference between a managing member and a member in an LLC?
I have not confirmed whether all of the following background information applies equally to all states. However, I know that it applies to enough states that I will present the following as applying throughout the U.S., generally.
A limited liability company (LLC) has two types of essential participants:
- One or moreÂ membersÂ are the equity holders (comparable to shareholders in a corporation).
- One or moreÂ managersÂ are responsible for running the LLC (comparable to a combination of directors and officers in a corporation).
When an LLC is formed, the formation document (Articles of Organization, etc.) filed with the Secretary of State specifies whether the LLC is member-managed or manager-managed.
- In aÂ member-managedÂ LLC, all of the members also are the managers.
- In aÂ manager-managedÂ LLC, managers may be members, but they do not need to be members.
Meaning of Managing Member
So, to answer this question directly:
- A managing member is a member who also is a manager.
- In a member-managed LLC, all members are managing members.
- In a manager-managed LLC, some, or all, or none of the members may be managing members.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
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