What is an Independent Manager?
Posted by Incserv
September 28, 2017
A Limited Liability Company (LLC) is managed by a board of managers. The board of managers oversees the activities of an LLC. An Independent Manager is a special type of manager appointed to the LLC’s board that has no equity relationship with the entity and thus is considered to be independent of the LLC’s ownership. The role of this unique position is usually outlined in the LLC’s operating agreement.
So…Why would an LLC appoint an Independent Manager? Appointment of Independent Representation may be a lender or third party requirement in a transaction. This special position provides a level of security for the third party. (Think of it as insurance.) As we previously mentioned, the third party will detail the Independent Manager’s duties when drafting the operating agreement. These duties generally require the Independent Manager be a party to and vote in certain major board decisions. Again, the specific types of decisions the Independent Manager must give consent for are also outlined in the operating agreement of the LLC. By requiring this unique position, the third party retains some control over the LLC without actively managing the entity.
These are just the basics. If you want to learn more, have questions about, or need to appoint Independent Representation, feel free to reach out to us. We would be happy to assist you. And don’t forget to keep an eye on our blog for more info to come…