How is a Limited Liability Company Governed?

Hopefully you have read our prior blog discussing how a corporation is governed. This blog will discuss the governance of a limited liability company (LLC).


An LLC is made-up of owners that are called members. A member’s portion of ownership in the LLC measures membership units in a percentage interest, which is similar to a corporation’s share of stock. An LLC can be governed directly by its members or it can be manager-managed.

If the LLC is managed by its member, the major decisions are made by holding a vote. In this type of structure, any member typically has the authority to act on behalf of the LLC, including the ability to sign contracts and legally bind the entity.

If the LLC is managed by a manager, the members generally do not have governing authority over the company, but they do have the power to elect one or more managers. The manager is afforded the authority to make decisions for the LLC. In some jurisdictions, an LLC can be managed by a board of governors (elected by the members), which resembles the governance structure of a corporation.

Governing Documents

A certificate of formation, also referred to as articles of organization, and an operating agreement are the two primary documents that govern an LLC. The operating agreement is a comprehensive contract between the members of the LLC, which covers a wide variety of matters. To learn more, please read our blog titled “LLC Articles of Organization & Operating Agreement.”

The LLC structure can provide your business with flexibility in how your entity will be managed and run. To learn more about whether the LLC is the best legal structure for your business, call one of our business lawyers today.

Contact a knowledgeable business attorney at Nielsen Law Group for advice on starting a new business, including business formation matters. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.