Operating Agreement Manager Managed Llc

Operating Agreement Manager Managed Llc

If you`re planning on setting up a limited liability company (LLC), one of the first things you`ll need to consider is the operating agreement. This is a document that outlines the rules and regulations of the company, including how it will be managed and how decisions will be made.

One type of LLC is the manager-managed LLC. This means that the owners (also known as members) appoint a manager to run the day-to-day operations of the company. The manager is typically a member themselves, but it could also be a third-party individual or company.

So what does an operating agreement for a manager-managed LLC include? Here are some key elements:

1. Management structure: This section outlines who will be managing the company. It should specify whether it will be a single manager or a group of managers, and how they will be appointed or removed.

2. Voting rights: Since the manager is primarily responsible for making decisions, the operating agreement should detail how and when the members will have the right to vote on major decisions. It should also specify the level of agreement necessary for decisions to be made (e.g., a simple majority or unanimous consent).

3. Duties and responsibilities: The operating agreement should clearly define the responsibilities of the manager, including their authority to enter into contracts or make other decisions on behalf of the company. It may also outline the duties of the members, such as providing capital contributions or participating in meetings.

4. Compensation: If the manager is receiving compensation for their services, this should be clearly outlined in the operating agreement. It should specify how much they will be paid, how often, and what expenses will be reimbursed.

5. Transfer of ownership: In the event that a member wants to sell their ownership interest in the LLC, the operating agreement should specify the process for doing so. It may also include provisions for buyouts or the right of first refusal.

Having a comprehensive operating agreement is crucial for a manager-managed LLC. It can help prevent disputes and provide clarity on how the company will be run. As such, it`s important to work with a knowledgeable attorney or accountant to draft an agreement that meets your specific needs.