In our view, the perceived usefulness of organizing an LLC with a “executive” management structure is based on familiarity with this format, as it is traditionally used in the company. For example, if three independent partners meet to organize a joint project using a board of directors in which each member can appoint one or more participants, each member is assured that their views will be presented and considered. For example, the specific development of quorum rules that require at least one representative from each participant can further improve this assured protection. The LLC must, however, be created as a LLC manager, not as a member-managed LLC. The manager may or may not be a member of the LLC, but if a non-member is wiretapped for the board of directors, you must be encouraged to participate. Some states require an LLC, managed by a board of directors, to assume many formal formalities of a company`s board of directors. These formalities include holding regular meetings and elections, as well as organizing minutes. In these countries, the fiduciary functions of directors may be greater than those of non-members of the board of directors. Other states allow a member-run LLC to adopt the management system that works best for them, including a board-run structure.
In the latter case, an LLC has greater flexibility in setting up and the board of directors. This distinction in tasks should be established in the LLC`s enterprise contract or in an employment contract. One of the perceived advantages of the LLC form is the flexibility that exists with respect to the internal management structure. Although many statutes provide for skeletal failures in the event that the LLC chooses to be either “member-managed” or “manager-managed,” these are only standard rules that can be changed in a particular LLC in the manner desired by participants. A non-unusual change is the structuring of an LLC managed by a board. As the structures, with the exception of those organized in the three states discussed below, are free, the clarity or ambiguity of the structure depends on the accuracy of the drafting used in the operational agreement. We found that these provisions are often very vague. In addition, a number of decisions, Obeid v. Hogan and Richardson v. Kellar, most importantly, advises before the use of a board of directors, because this may inadvertently (pun) include additional legislation. An LLC, managed by a board of directors, has the formal management structure of a company retaining the desired characteristics of an LLC: corporification puts the head back; the enterprise agreement included the unresolved point of a president`s authority, even though he subjected both members to the standards applicable to the company`s executives. A single-member LLC is not the type of entity that most practitioners would consider adopting a corporate corporate structure in corporate law.
The dispute suggests that at least one of the parties did not consider the inclusion of corporate law. These cases show that the use of labels and business principles can create uncertainty and provide LLC members with a management structure they did not imagine. Richardson v. Richardson Keller, 2016 NCBC 60, 2016 WL 4165887 (Sup.