Who are the managers of Limited Liability Companies?

A Limited Liability Company can be managed by designated managers, who do not necessarily have to be members. In a manager-managed Limited Liability Company, the managers are specifically identified in documents which are public records, and only the managers have the power to bind the Limited Liability Company contractually. Consequently, a contract signed by a member who is not a manager would not be binding on the Limited Liability Company. This is similar to a corporation, where usually only officers (managers) have the power to bind the corporation, and a contract signed by a stockholder who is not an officer would not be enforceable against the corporation. Alternatively, a Limited Liability Company can be member-managed, with all members having the power to act for the entity. This is comparable to a partnership, where any partner can bind the partnership contractually. A Limited Liability Company's registration (which is a public document) must indicate whether it is manager-managed or member-managed.

How long does a Limited Liability Company it last?

A Limited Liability Company can be established for a fixed period of time (after which it is dissolved), or it can have an at-will existence, whereby any member has the power to dissolve it at any time, with or without the consent of the other members. In most cases, an at-will Limited Liability Company is not desirable, since it puts the existence of the entity at the mercy of any member who may be temporarily troubled. However, an at-will Limited Liability Company might be useful if the members want to make sure that they each have an absolute right to get out at any time.

What are the Articles of Organization?

A Limited Liability Company's Articles of Organization are similar to a corporation's Articles of Incorporation. The Articles identify the initial members, the initial managers (if any), the address of the Limited Liability Company's principal office or place of business, and other basic information. The Articles do not have to state the formula or method of sharing income among the members, nor do they have to state the terms (or even the existence) of buy-sell agreements. Accordingly, the real economic terms of the deal among the members do not have to be publicly disclosed.

What is an Operating Agreement?

An Operating Agreement is a written agreement among the Limited Liability Company's members which sets forth the deal regarding governance and money. By statute, an operating agreement (if it exists) must be in writing. Therefore, by definition, there is no such thing as an oral operating agreement. An Operating is not public unless the parties choose to make it public. A Limited Liability Company is not required to have an Operating Agreement. In the absence of an Operating Agreement, various statutory default provisions will apply.

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