Key Takeaways

  • The governor of an LLC is a person or entity authorized to manage and oversee the company’s operations, particularly in states that use this term.
  • "Governor" is a legal term commonly used in certain jurisdictions (like Minnesota), while other states may use "manager" or "member" for similar roles.
  • The role and authority of an LLC governor depend on the LLC's management structure and state laws.
  • Governors may serve on a board of governors, which operates similarly to a board of directors in a corporation.
  • Members, managers, and governors each have distinct roles, responsibilities, and decision-making powers within an LLC.
  • Proper documentation of roles in the operating agreement helps prevent internal disputes.
  • Choosing the right management structure and understanding each role are critical for effective governance and legal compliance.
  • For state-specific or complex LLC management questions, consult a qualified attorney.

What is the governor of an LLC? When starting an LLC, business owners need to know the principal officers that will be involved in running the company and the rights of stakeholders to avoid conflicts of interest.

Who Are LLC Members?

LLC members are the equivalent of a corporation's shareholders. Membership interests may be distributed to members according to the LLC's member control agreement. The properties of the LLC are separate from that of its members, but the members receive their share of the LLC's profits and losses according to the value of their contributions except where the articles of organization of the LLC states otherwise.

The LLC Act provides that membership interests can either be financial or governance rights.

Governance rights include the following:

  • The rights of all LLC members which are not economic rights.
  • The right of members to assign financial rights.
  • The right to vote during the election or appointment of governors and other matters which does not involve distributions or profits and losses sharing.

Financial rights give members the power to share profits and losses as well as distributions. Financial rights can be transferred freely, but all the members have to consent to the transfer.

It is not necessary for the members to manage the LLC but the approval of members is needed in certain situations such as an amendment to the LLC's articles of organization, selling of the company's assets, or dissolution and so on.

Who are LLC Governors?

The governor of an LLC is responsible for the management of the company's business and affairs. In an LLC administered by a member, the governor is a member, while he is a manager in an LLC managed by a manager.

An LLC must have a minimum of one governor or more. The members appoint an LLC governor, and the appointment is renewed every year. LLC governors can serve a maximum of five years, except if an agreement states otherwise.

Defining the Governor Role in LLCs

The term "governor" in an LLC context is most frequently used in certain states—such as Minnesota—to refer to the person or group with authority to manage and control the LLC. The governor can be an individual member, a non-member, or even an entity, depending on what is specified in the articles of organization or operating agreement. In states that do not use the term "governor," similar authority is often held by "managers" or by the members directly.

Governors are typically responsible for high-level oversight and policy-making, similar to a corporation’s board of directors. Their authority can include:

  • Setting overall company strategy and policies
  • Overseeing significant company actions such as mergers or dissolutions
  • Approving major business transactions
  • Hiring and supervising executive management (if applicable)
  • Ensuring compliance with the law and the LLC's governing documents

Not all LLCs have governors; the need for one depends on the LLC’s structure and state law. When an LLC is “member-managed,” the members usually fulfill all governance functions. In “manager-managed” LLCs, the managers (who may also be called governors in some states) take on these responsibilities. In “board-managed” LLCs, the board of governors acts collectively to guide the company.

Who are LLC Managers?

LLC managers carry out the daily task of running the business and implement the board of governors' directives. An LLC requires at least one or more individuals running the business.

A manager is expected to discharge his or her duties in good faith and the best interests of the LLC, with the dedication and diligence any forthright person will exhibit in similar situations.

Governor vs. Manager vs. Member: Key Differences

Understanding the distinctions between governors, managers, and members is crucial for clarifying who holds authority and how decisions are made:

  • Governors: Usually provide strategic direction and high-level oversight; may serve as part of a board that votes on important matters.
  • Managers: Handle day-to-day operations and implement the governors’ or members’ policies and directives.
  • Members: Are the owners of the LLC and may have management rights (in member-managed structures) or primarily exercise voting and profit-sharing rights.

In some states, the term "governor" and "manager" may be interchangeable, but it is important to check the definitions in the relevant state statutes and the LLC’s operating agreement. Members may serve as governors or managers, or the LLC may appoint external parties to these roles.

Board of Board of Governors

Board or board of governors refer to an LLC's board of governors which elects to be board-managed or its equivalent if it's a foreign limited liability company.

Board-managed refers to an LLC which elects to be governed by a board of governors under § 48-205-101(5).

Governing body refers to

  • A board-managed LLC's board of governors.
  • The members of an LLC that is member-managed.
  • The board of directors of a corporation.

Board of Governors: Structure and Duties

A board of governors, when present, acts much like a board of directors in a corporation. The board is collectively responsible for the direction and control of the LLC, including:

  • Developing and approving major business plans and budgets
  • Authorizing new members or admitting new investors
  • Overseeing compliance with state and federal regulations
  • Delegating authority to officers or managers as needed
  • Safeguarding the interests of all members

The composition, election, and term lengths of governors are usually outlined in the LLC’s operating agreement or articles of organization. Some LLCs require regular board meetings and formal records (minutes) of board decisions, enhancing transparency and legal protection for members and governors alike.

How Is an LLC Governed?

An LLC can be governed by the members, in which major decisions are put to the vote. The members can also designate a non-member as the manager, but this is usually not the case in member-managed LLCs.

An LLC can also be manager-managed. In such circumstances, members can only elect the manager who holds the decision-making powers over the company, but can't exercise governing rights over the LLC. Board-managed LLCs appoint a board of governors which handles the management of the company.

A certificate of formation, or articles of organization, and an operating agreement are used for governing an LLC. The operating agreement is a detailed contract legally binding on the members which spells out members' rights including economic (cash flow, sharing profits and losses), governance rights (such as electing managers and voting process), and rights between members such as limitation of ownership transfer.

Members are free to organize an LLC as they deem necessary. It can use an informal or corporate structure or a mix of both systems.

State Variations and Legal Requirements

The role and even the existence of governors in an LLC depend heavily on state law. For example, Minnesota LLC law uses "governor" as a technical term, while many other states refer to "managers" or "directors." Before choosing a management structure or assigning titles, it is critical to review your state’s statutes and definitions.

When forming an LLC, you will often be required to list your governors, managers, or members in your articles of organization or on annual reports. Failing to properly identify these roles or keep records updated can lead to penalties or affect your LLC’s good standing with the state.

Choosing and Documenting Your LLC’s Management Structure

Selecting the right management structure (member-managed, manager-managed, or board-managed) is essential for smooth operations. Documenting each role—especially the governor, if your state requires or permits the title—in your operating agreement helps prevent internal disputes and clarifies decision-making authority.

Best practices include:

  • Clearly specifying the duties, election process, and term limits for governors, managers, and other officers
  • Keeping detailed minutes of meetings where major decisions are made
  • Regularly updating state filings to reflect current governors or managers
  • Outlining procedures for removing or replacing governors in the operating agreement

Consulting with an attorney familiar with your state’s LLC laws can help ensure compliance and effective governance.

Frequently Asked Questions

1. What is the governor of an LLC?

The governor is an individual or entity authorized to oversee and manage an LLC’s affairs, similar to a board director in a corporation, depending on the state’s terminology and the LLC’s management structure.

2. Do all LLCs need a governor?

No. Whether an LLC has a governor depends on the state’s law and the LLC’s chosen management structure. Some states use "manager" or "member" for similar functions.

3. What is the difference between an LLC governor and manager?

A governor typically has a broader, oversight-focused role, while a manager handles daily business operations. In some states, the titles may overlap.

4. Can LLC members serve as governors?

Yes, members can serve as governors if allowed by the LLC’s operating agreement and state law. Alternatively, governors can be non-members or even entities.

5. How should an LLC document its governors or managers?

LLCs should identify governors or managers in their articles of organization and operating agreement, and keep state filings up to date to avoid legal or compliance issues.

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