Membermanaged

Member-managed, sometimes written as member managed, is a governance model used by many limited liability companies (LLCs) in which the members themselves participate in the day-to-day management and operation of the business. It is often the default structure in many jurisdictions and contrasts with a manager-managed LLC, where managers handle operations and members act more as investors.

In a member-managed LLC, each member generally has authority to bind the company in ordinary business matters, unless the operating agreement or a statute provides otherwise. Major decisions, such as taking on debt beyond a threshold, selling substantial assets, or amending the operating agreement, may require a voting threshold or unanimous consent, as specified in the operating agreement.

The specific rules are typically outlined in the LLC’s operating agreement and applicable state laws. Fiduciary duties of loyalty and care apply to members who manage the company; these duties govern conflicts of interest and the obligation to act in the LLC’s best interests.

Advantages of a member-managed structure include direct control by owners, simplicity, and transparency in decision making. Disadvantages can include potential deadlock among members, slower procedures, and higher risk if a member’s judgment is poor or the LLC lacks clear operating rules.

Compared with manager-managed LLCs, member-managed entities avoid appointing external managers; however they place day-to-day authority in members, which can affect continuity if membership changes.

Member-managed LLCs are common for small businesses, family ventures, or professional practices where members seek active participation. They require a clear operating agreement to define voting rules, authority limits, and procedures for adding or removing members.