Corporate Law / 2 min read
An early and consequential decision when organizing a limited liability company is its management structure. LLCs can either be member-managed or manager-managed. There is no distinction between the owners (members) and management of a member-managed LLC. Members appoint managers—who may, but do not have to be members—to govern a manager-managed LLC.
The appropriate choice typically turns on the expected size of the company, ownership goals, operational style, and cost considerations. In Texas, it also meaningfully involves privacy considerations, because management structure affects what personal information is publicly disclosed.
States differ with respect to what pieces of information must be included in documents filed to form and maintain limited liability companies, and they differ in how easily the public can access that information. Some jurisdictions do not require disclosure. Texas, by contrast, links its management-structure election to specific identification requirements that become part of the public record.
In Texas, the certificate of formation for an LLC requires a statement as to whether the company will have managers or be managed by its members. If the LLC is manager-managed, the names and addresses of initial managers must be included. If it is member-managed, the names and addresses for the company’s members must be included. The title “managing member” generally refers to an owner of a member-managed company, rather than a manager who also happens to be a member.
This is not a one-time disclosure. Each year, the company is required to file a Public Information Report with the Texas Comptroller of Public Accounts, updating this information to reflect current management –by managers or managing members, as applicable. In practice, this means that a manager-managed structure can shield member identities from routine, ongoing public filings, if non-member managers are appointed, whereas a member-managed structure will generally place the members’ names and addresses in the public domain, as well as changes in ownership and addresses.
Public access is broad. The information in the certificate of formation and the annual Public Information Report is publicly accessible on the website of the Texas Comptroller of Public Accounts. It can also be accessed for a nominal search fee on the Texas Secretary of State’s website, which requires users to set up an account.
For business owners concerned with unwanted solicitations, competitive intelligence, or personal privacy, this accessibility is a material factor in selecting a management structure and determining who will serve in disclosed roles.
Texas LLC organizers should align governance choices with both operational needs and potential privacy considerations. Smaller, closely held ventures may favor member management, understanding that member names and addresses will be public. Growth-oriented or privacy-sensitive ventures may prefer manager management, potentially appointing managers whose identities can be appropriately disclosed without revealing the member roster. Either way, careful planning at formation—paired with consistent annual reporting—can balance efficiency, control, and privacy, while avoiding inadvertent public exposure of ownership information.