Iowa Code 489.407 – Management of limited liability company
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1. A limited liability company is a member-managed limited liability company unless the operating agreement does any of the following:
a. Expressly provides that any of the following apply:
(1) The company is or will be “manager-managed”.
(2) The company is or will be “managed by managers”.
(3) Management of the company is or will be “vested in managers”.
b. Includes words of similar import.
Terms Used In Iowa Code 489.407
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Manager: means a person that under the operating agreement of a manager-managed limited liability company is responsible, alone or in concert with others, for performing the management functions stated in section 489. See Iowa Code 489.102
- Manager-managed limited liability company: means a limited liability company that qualifies under section 489. See Iowa Code 489.102
- Member: means a person that has become a member of a limited liability company under section 489. See Iowa Code 489.102
- Member-managed limited liability company: means a limited liability company that is not a manager-managed limited liability company. See Iowa Code 489.102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Operating agreement: means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in section 489. See Iowa Code 489.102
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Iowa Code 489.102
- property: includes personal and real property. See Iowa Code 4.1
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Iowa Code 489.102
2. In a member-managed limited liability company, all of the following rules apply:
a. The management and conduct of the company are vested in the members.
b. Each member has equal rights in the management and conduct of the company’s activities.
c. A difference arising among members as to a matter in the ordinary course of the activities of the company may be decided by a majority of the members.
d. An act outside the ordinary course of the activities of the company, including selling, leasing, exchanging, or otherwise disposing of all, or substantially all, of the company’s property, with or without the goodwill, may be undertaken only with the consent of all members.
e. The operating agreement may be amended only with the consent of all members.
3. In a manager-managed limited liability company, all of the following rules apply:
a. Except as otherwise expressly provided in this chapter, any matter relating to the activities of the company is decided exclusively by the managers.
b. Each manager has equal rights in the management and conduct of the activities of the company.
c. A difference arising among managers as to a matter in the ordinary course of the activities of the company may be decided by a majority of the managers.
d. The consent of all members is required to do any of the following:
(1) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of the company’s property, with or without the goodwill, outside the ordinary course of the company’s activities.
(2) Approve a merger, conversion, or domestication under article 10.
(3) Undertake any other act outside the ordinary course of the company’s activities.
(4) Amend the operating agreement.
e. A manager may be chosen at any time by the consent of a majority of the members and remains a manager until a successor has been chosen, unless the manager at an earlier time resigns, is removed, or dies, or, in the case of a manager that is not an individual, terminates. A manager may be removed at any time by the consent of a majority of the members without notice or cause.
f. A person need not be a member to be a manager, but the dissociation of a member that is also a manager removes the person as a manager. If a person that is both a manager and a member ceases to be a manager, that cessation does not by itself dissociate the person as a member.
g. A person’s ceasing to be a manager does not discharge any debt, obligation, or other liability to the limited liability company or members which the person incurred while a manager.
4. An action requiring the consent of members under this chapter may be taken without a meeting, and a member may appoint a proxy or other agent to consent or otherwise act for the member by signing an appointing record, personally or by the member’s agent.
5. The dissolution of a limited liability company does not affect the applicability of this section. However, a person that wrongfully causes dissolution of the company loses the right to participate in management as a member and a manager.
6. This chapter does not entitle a member to remuneration for services performed for a member-managed limited liability company, except for reasonable compensation for services rendered in winding up the activities of the company.