Member Or Manager Managed


Member Or Manager Managed
In Arizona, Limited Liability Companies (“LLC’s”) are either “member managed” or “manager managed.”  If the LLC is “member managed,” then all of the LLC members are responsible for the management of the company.  Generally, in a “member managed” LLC, no one member can bind the company, rather all members are responsible for managing the LLC in accordance with the company operating agreement.  If the LLC is “manager managed,” then only the designated manager or managers have the authority to manage the LLC.  The manager is not required to be a member of the LLC.  The members of the LLC can designate one or multiple managers to manage the LLC.  The title “manager” is a bit misleading since most people think of a manager as someone responsible for certain duties within a business, such as an officer manager or a marketing manager.  However, the manager role in an LLC is equivalent to a President or high level officer in a corporation since the manager or managers are directly responsible for the management and control of the entire company. 

When deciding if the LLC should be “member managed” or “manager managed,” consider the following factors.  If all members want to be responsible for the management and control of the company, then member managed may be an appropriate choice.  A “manager managed” structure is better suited if some of the members are passive and not actively involved in the daily operations, or if new members may be added to the LLC and the company wants a continuity of management and control, or if the LLC wants to designate management authority among multiple individuals.