Last updated: September 16, 2022

Starting an LLC necessitates knowing the company's principal officers and stakeholders' rights to avoid potential conflicts of interest and maintain good faith. This article will clarify the distinctions between an LLC Governor, LLC Member, and LLC Manager.

Who Are LLC Members?

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LLC Members are the people who own the company. All the members have a right to vote on important decisions, such as whether to sell the company or how to spend its profits.

LLC Members usually appoint Governors, and they can remove Governors at any time.

Responsibilities of Member Managed LLC:

  • Appointing and removing Governors
  • Approving major decisions, such as selling the company or changing the company's direction
  • Voting on changes to the company's Operating Agreements

Who Are LLC Governors?

LLC Governors refer to the people who manage the LLC on behalf of its members. LLC Governors have a fiduciary duty to the company and its members, meaning they must act in the best interests of the business and its members, especially when picking a registered agent.

Governors are typically appointed by the members, and they can be removed by the members at any time.

Governors have a lot of responsibilities, including:

  • Making decisions on behalf of the business
  • Managing the company's day-to-day operations
  • Preparing and filing an annual report with the state (such as the Washington Secretary of State)
  • Assign financial rights
  • Enforcing the company's Operating Agreements

In some states, such as Washington state, Governors may be held personally liable for any damage caused by their actions or inaction while in office. For example, they will be liable if inaccuracies appear in the Washington Secretary of State annual report. It applies to foreign limited liability company.

Who Are LLC Managers?

LLC Managers are appointed by the Governors to help run the day-to-day operations of the company.

Managers do not have a fiduciary duty to the Limited Liability Company or its members, meaning they are not required to act in the best interests of the company. However, they must still follow the company's Operating Agreement.

Managers can be held personally liable for any damage caused by their actions while in office.

Responsibilities of Manager Managed LLC:

  • Running the company's day-to-day operations
  • Preparing and filing annual reports with the state
  • Enforcing the company's Operating Agreements

In some states, such as Washington state, Managers in a manager managed LLC may be required to hold a license. It applies to a nonprofit corporation as well.

Conflict of interest is a common issue among Managers. Knowing who does what in your company can help avoid any issues. For more information on LLCs, please contact an attorney.

Board of Board of Governor's

The Board of Governors typically consists of more than one governor of an LLC and is responsible for making decisions on behalf of the company when the Governors cannot reach a consensus.

A Limited Liability Company that elects to be governed by a board of governors is referred to as a "board-managed" company under § 48-205-101(5).

How Is an LLC Governed?

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A limited liability company (LLC) operates under the LLC act. Under the LLC Act, membership interests are classified into either financial or governance rights.

The right to vote to elect/appoint governors is one of the governance rights, as well as all of the members' other rights as a member in the LLC except for financial rights.

All of the members' rights as a member in an LLC other than financial rights and the ability to assign financial rights, as well as the right to vote to elect/appoint governors and undertake other tasks that are not connected with profit-sharing or loss-sharing.

A Limited Liability business is governed by a certificate of formation, also known as the articles of organization document, and an operating agreement.

The operating agreement is a legally enforceable contract that specifies membership interests, such as economic, governance rights, and member-to-member rights (restricting ownership transfer).

FAQs

What Does a Governing Person Mean in LLC?

The governing person has specific responsibilities, such as making decisions on behalf of the company and following the company's operating agreements and certificate of formation.

What Are the Owners of an LLC Called?

The owners of an LLC are called members. In some states, the members might choose to appoint a non-member as a manager.

What Is the LLC ACT?

The LLC act is the law that governs LLCs. This law outlines the rules and regulations that LLCs must follow, especially when starting an LLC and other matters.

What Is an LLC Governor...

An LLC is typically governed by its LLC members, although in some states the governors may appoint a board of governors as per legal documents.

It is important to understand the difference between an LLC member and a governor of an LLC, as well as the responsibilities of each position. This will help avoid potential conflicts of interest within the company.

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