The Company's Management

The authority of a corporation is centralized in a Board of Directors (or Board of Managers for an LLC).

What is a Board of Directors?

The decision-making authority of a corporation is centralized in a Board of Directors. The Board of Directors delegates this authority to the company’s officers, but maintains the power to oversee the operation of the business. Each director is usually appointed for an annual term by a Shareholder vote, and may be re-appointed thereafter.

There is no requirement that directors, shareholders and officers be different people. In small corporations, the directors are usually shareholders or officers as well.

An LLC’s Articles of Organization require a choice between one of two types of management structures. An LLC can either be Manager-managed, or Member-managed. If an LLC is Manager-managed, the power and authority of the company’s management lie within its Board of Managers, which is similar to the Board of Directors of a Corporation. If an LLC is Member-managed, there is no Board of Managers and the LLC is directly managed by its Members (the owners).

Either type of management (Members or Board of Managers) can delegate power and authority to the company’s officers. If the management does delegate authority, it will retain the responsibility to oversee the affairs and activities of the company.

If Manager-managed, the Members elect or approve of each proposed Manager at the organizational meeting. Each Manager may be appointed by the owners for a one year term, expiring at or before the following annual Member meeting.

 Member names and addresses

In an LLC, the “Members” are the owners of the company. In a few states, the Articles of Organization require the names and addresses of all the initial Members. It is not necessary to amend the Articles of Organization if a Member is added to the LLC in the future.

 Manager names and addresses

If the LLC is Manager-managed, the power and authority of the company’s management lies within its Board of Managers, which is similar to the Board of Directors in a C or S-Corporation. In some states, the Articles of Organization require the names and addresses of all Managers to serve on the initial Board of Managers of the company. The Focused Incorporation System™ will alert you during the application process if your state does this.

Most states require that the Board of Mangers, whether listed in the Articles or not, have at least three Managers, unless there are fewer than three Members (owners). Where there are fewer than three Members, the number of Managers in these states must match the number of Members.

There is no requirement that Managers, Members and officers be different people. In a small LLC, the Managers are usually Members or officers as well.

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