Manager
A person designated in a Texas LLC's certificate of formation or company agreement to manage the business and affairs of the LLC. Managers exist only in manager-managed LLCs and need not be members.
A manager is a person designated in a Texas LLC's certificate of formation or company agreement to manage the business and affairs of the LLC. Managers exist only in manager-managed LLCs (LLCs whose certificate of formation states that the LLC will have managers under § 3.010(3)). Managers need not be members; an LLC may designate non-member managers, member managers, or any combination.
Member-managed vs. manager-managed
Texas LLCs are either member-managed or manager-managed. The default under § 101.251, applicable when the certificate of formation does not specify, is that the LLC's affairs are managed by its members. Designation as manager-managed must be made in the certificate of formation under § 3.010(3); absent such designation, the LLC is member-managed regardless of what the company agreement says.
Manager authority
In a manager-managed LLC, the managers have the authority to manage the LLC's business and affairs. Members in such LLCs have only the rights specifically reserved to them by the company agreement and the TBOC, typically including the right to elect and remove managers, to approve fundamental transactions, and to vote on certain enumerated matters. §§ 101.355–101.356.
Manager liability and fiduciary duties
Managers are not personally liable for the LLC's obligations solely by reason of being managers. § 101.114. Managers owe fiduciary duties to the LLC, although the precise scope of those duties is one of the more contested areas of Texas LLC law. The default fiduciary-duty regime can be expanded, restricted, or, effective May 14, 2025, eliminated through the company agreement under § 101.401.
Authority to bind the LLC
In a manager-managed LLC, each manager is an agent of the LLC for the purpose of its business. § 101.254. Acts of a manager (including the execution of any instrument in the LLC's name) bind the LLC if the act apparently carries on in the usual way the business of the LLC, unless (a) the manager has no actual authority for the specific act and (b) the person with whom the manager is dealing has knowledge of the lack of authority.
The choice between member-managed and manager-managed structure is one of the foundational Texas LLC formation decisions. Member-managed LLCs work well for small operating businesses where all members are actively involved in management. Manager-managed LLCs work better for LLCs with passive investor-members (real estate LLCs, family LLCs, investment vehicles), where centralizing management authority in one or more managers simplifies governance. The certificate of formation must affirmatively designate the LLC as manager-managed; this is a frequent drafting oversight, and the consequences of failing to make the designation when intended can be significant for member liability and authority to bind the LLC.
Companion article: Starting a Business in Texas
Practice guide: Texas LLC Operating Agreements