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A member of an LLC, by definition, is an owner of an LLC with a vested interest in the company. Members can be people or entities from anywhere in the world.
Typically, the rights and responsibilities of members are listed and explained in the LLC’s Operating Agreement. It is not required that all members possess the same rights. The Operating Agreement may spell out different rights for specific members.
In addition, there may be different classes of members with specific rights for each class, as long as these classes are clearly delineated in the LLC's Operating Agreement.
Remember, once the Operating Agreement is finalized and ratified by all members, it cannot be changed without the unanimous vote of the members; if all members choose to amend, the amended Operating Agreement must then be signed by all the members of the LLC.
A member of an LLC may also function as a manager, but an LLC does not need to have a manager; members can run the company on their own. As for managing-member vs member classifications, it is simple: when a member is also a manager, he or she is usually referred to as a "managing-member."
A manager is an individual or entity chosen by the members of an LLC to manage the daily operations of the LLC. A manager can be, but does not have to be, a member. Typically, managers are in charge of overseeing day-to-day activities but don’t possess ownership interest in the company.
In some cases, when the LLC is 100% manager-managed, the manager is in charge of everything. The member-managed LLC Operating Agreement would state these responsibilities. We are happy to share this template of a member-managed LLC Operating Agreement with you.
Members of a Delaware LLC don’t own stock, like corporate shareholders do. Members usually split the company into percentages of ownership, or membership units.
Members are typically issued membership certificates rather than stock certificates, which indicate the percentage owned or the number of membership units they own.
If you are considering forming a Delaware LLC and have further questions about the role and responsibilities of members, or how to structure an LLC, you can call us at 800-345-2677, live chat with us or email us to speak with a specialist on these matters.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There is 1 comment left for Business Structure: LLCTanmay Kelkar said: Friday, November 24, 2017
Hi. I want to set up a Delaware LLC as a subsidiary of a Canadian Provincial Corporation. The LLC must be able to obtain an H1B transfer of employees who are already on an H1B visa with another employer in the USA. Is that possible? Thanks!HBS Staff replied: Monday, November 27, 2017
Traditionally, clients consult with an immigration attorney for something this specific, just to be on the safe side. We can certainly help you set up the LLC but it's best if you check with an immigration lawyer regarding the H1V visa issues.