Manager-managed LLC
An LLC where designated managers run operations on behalf of members. Common for passive-investor structures.
Definition
In a manager-managed LLC, the Operating Agreement designates one or more managers to operate the business. Members retain ownership and major-decision rights but do not have day-to-day authority. The Certificate of Formation may indicate manager-managed status; the Operating Agreement governs the specifics.
Context
Manager-managed structure is common in real estate joint ventures, family-office holding entities, and any LLC where some members are passive.
Example
A real estate LLC with five investor-members appoints one manager to handle property operations. The four passive members vote only on major decisions like sale of the property.
Common pitfalls
- Manager-managed designation must be made at formation or via Operating Agreement amendment.
- Manager fiduciary duties can be extensively modified under 6 Del. C. § 18-1101.