Manager Managed LLC Operating Agreement Template for the United States

A Manager Managed LLC Operating Agreement is essential when you want to establish a Limited Liability Company where professional managers, rather than all members, control daily operations and strategic decisions. This document creates a clear separation between ownership and management, allowing members to function as passive investors while designated managers handle the company's business affairs.

When do you need this document?

You need this agreement when forming an LLC with multiple members who prefer not to participate in daily management, when bringing in professional managers with specialized expertise, or when structuring investment-focused LLCs where members want limited involvement. It's particularly valuable for real estate investment companies, private equity funds, family offices, and businesses where members contribute capital but lack operational experience. You also need this agreement when converting from a member-managed LLC to a manager-managed structure, or when adding new investors who prefer passive ownership roles.

Key legal considerations

The agreement must clearly define manager authority, limitations, and fiduciary duties to both the LLC and its members. You should specify whether managers have broad authority or limited powers, how managers are appointed and removed, and what decisions require member approval. Include provisions for manager compensation, indemnification, and liability protection. Address capital contribution requirements, profit and loss allocations, distribution policies, and member withdrawal procedures. Consider transfer restrictions on membership interests, buy-sell provisions, and dissolution procedures. The agreement should also address potential conflicts of interest, voting rights for major decisions, and record-keeping requirements to maintain limited liability protection.

Legal requirements in United States

Under United States law, your Manager Managed LLC Operating Agreement must comply with the LLC statute of your formation state, typically following the Delaware Limited Liability Company Act framework adopted by most states. The agreement must designate at least one manager and specify their authority limits to avoid ultra vires issues. Federal tax compliance requires adherence to Internal Revenue Code provisions for partnership taxation, including proper allocation of income, gains, losses, and deductions among members. If membership interests might be considered securities, you must ensure compliance with Securities Act of 1933 registration requirements or available exemptions. The agreement should address employment law considerations if managers are also employees, and include provisions for annual tax reporting and member K-1 distribution requirements.