Does an LLC Have a Board of Directors?

By Joe Stone

All state laws require a corporation to have a board of directors that is elected by the shareholders. This is a form of centralized management. Although an LLC, or limited liability company, shares some characteristics with a corporation, the requirement for a board of directors is not one of them. However, most state laws regarding an LLC's management structure are flexible enough that an LLC could have a board of directors if LLC members so choose.

All state laws require a corporation to have a board of directors that is elected by the shareholders. This is a form of centralized management. Although an LLC, or limited liability company, shares some characteristics with a corporation, the requirement for a board of directors is not one of them. However, most state laws regarding an LLC's management structure are flexible enough that an LLC could have a board of directors if LLC members so choose.

Manager Members

State LLC laws refer to the owners of an LLC as members. An LLC can generally be formed with only a single member or have an unlimited number of members. Unless otherwise specified, the default provisions of state LLC laws typically vest management authority in all members in a percentage equal to the members' capital contributions to the LLC.

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Designated Managers

If LLC members choose not accept the default management provisions of the state's LLC law, the members can designate one or more managers with the authority to act on behalf of the LLC and run its day-to-day operations. In most states, the document filed to create the LLC, typically called the certificate of organization or articles of organization, requires that the LLC organizer specify whether the LLC will be managed by all members or by a designated manager. A manager does not have to be an LLC member.

Delegation of Authority

The flexibility provided in state LLC laws gives the designated manager or member-managers the authority to delegate responsibility, whether it is for day-to-day operations or a special project. In these situations, an LLC's management structure may begin to resemble that of a corporation by using titles such as vice-president or treasurer. If a group of company personnel are formed for a special project, this may be designated as a board or committee.

Operating Agreement

Although as of December 2010 only two states -- Missouri and New York -- require an LLC to have a written operating agreement, an LLC with multiple members that designates a manager or managers should consider having an operating agreement that clearly specifies the LLC's management structure. This can be important for several reasons. For example, a lender or government agency may require proof of authority to act on the LLC's behalf. Also, the operating agreement can be used to specify a plan of succession in the event that the manager is unable to carry out his duties.

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LLC Terms

A limited liability company, or LLC, is a popular type of legal entity because it combines the best characteristics of a partnership and corporation. As a result, the terms used to describe the characteristics of an LLC are often taken from both partnership and corporation law. Because each state has enacted its own LLC laws, some terms used for LLCs differ from state to state.

How to Sign on Behalf of an LLC

A limited liability company is a legal entity you can create to operate your business. Every state has its own LLC laws that specify how to create an LLC and establish its management structure. An LLC is a unique type of legal entity because it protects your personal assets from the debts and liabilities of the business, while giving you considerable flexibility regarding how to manage the business, including designating who is authorized to sign on behalf of the LLC.

Does an LLC Have to Have a President or CEO?

A limited liability company, or LLC, is a form of business organization popular among individuals looking to start a small business. Unlike a corporation, which requires the appointment of a board of directors, an LLC does not require managers, such as a president or CEO. The owners of an LLC are free to determine whether they will hire a president or CEO to run the LLC.

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