Learning Center
Everything you need to know about Corporations, LLCs and Trademarks.
Learning center
Everything you need to know about Corporations, LLCs and Trademarks.
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Management of a company
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.
For LLCs: The management type of the LLC
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.
Director information
A few states require the names and addresses of the people who will serve as the first directors of the corporation. The majority of these states permit a Board with only one member. The other states require that at the Board have at least three members, unless there are fewer than three shareholders. Where there are fewer than three shareholders, the number of directors in these states must match the number of shareholders. Our online formation process tracks these requirements for you and describes the particular requirements of your state as you fill out the form.
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.
For LLCs: The management type of the LLC
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.
Director information
A few states require the names and addresses of the people who will serve as the first directors of the corporation. The majority of these states permit a Board with only one member. The other states require that at the Board have at least three members, unless there are fewer than three shareholders. Where there are fewer than three shareholders, the number of directors in these states must match the number of shareholders. Our online formation process tracks these requirements for you and describes the particular requirements of your state as you fill out the form.
