Board Governed LLCs
Is your LLC (limited liability company) still governed by a board? Minnesota has only allowed LLCs since 1992. When LLCs were first allowed in Minnesota, the only option to govern an LLC was through a board. As a result, LLCs were very formal entities that required board minutes and other formal documents.
In 2015, the Minnesota legislature changed the law. The LLC law changed over the course of three years. As of January, 1, 2018, every LLC was automatically subject to Chapter 322C, which is the new LLC law. If your LLC was automatically subject to Chapter 322C, then it is prudent to review your company documents and determine if a different type of governance better suits your LLC. This is especially the case in board-governed LLC as they are often more administratively burdensome than member-managed.
The new LLC law allows for three different types of governance: board-managed, member-managed and manager-managed. Every LLC is automatically considered member-managed unless the LLC has formally adopted a different type of governance. However, if your LLC was subject to the old LLC law and you did not formally request to be subject to the new LLC law, your LLC is still board-managed. If it is board-managed, you have to follow the requirements of being board-managed unless you choose a different governance, such as member-managed.
Spangler and de Stefano, PLLP advises business owners on entity structure and compliance.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.