2020 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 11 - Limited Liability Companies
Article 3 - Agency; Management; Duties; Liability
§ 14-11-304. Management

1. Unless the articles of organization or a written operating agreement vests management of the limited liability company in a manager or managers, management of the business and affairs of the limited liability company shall be vested in the members, and, subject to any provisions in the articles of organization or a written operating agreement, the members shall have the right and authority to manage the affairs of the limited liability company and to make all decisions with respect thereto.The articles of organization or a written operating agreement may contain any provision relating to any phase of managing the business or regulating the affairs of the limited liability company.
2. If the articles of organization or a written operating agreement vests management of the limited liability company in one or more managers, then such persons shall have such right and authority to manage the business and affairs of the limited liability company as is provided in the articles of organization or a written operating agreement.Unless otherwise provided in the articles of organization or a written operating agreement, such persons:
   1. Shall be designated, appointed, elected, removed, or replaced by the approval of more than one half by number of the members;
   2. Need not be members of the limited liability company or natural persons; and
   3. Unless they have been earlier removed or have earlier resigned, shall hold office until their successors shall have been elected and qualified.
3. A written operating agreement may provide that (1) a member or manager who fails to perform in accordance with, or to comply with the terms and conditions of, the written operating agreement shall be subject to specified penalties or specified consequences, and (2) at the time or upon the happening of events specified in a written operating agreement, a member or manager shall be subject to specified penalties or specified consequences.
4. A person who is both a manager and member has the rights and powers, and is subject to the restrictions and liabilities, of a manager and, except as provided in the articles of organization or a written operating agreement, also has the rights and powers, and is subject to the restrictions and liabilities, of a member to the extent of his or her participation in the limited liability company as a member.

(Code 1981, §14-11-304, enacted by Ga. L. 1993, p. 123, § 1.)

- For article, "The Georgia LLC Act Comes of Age," see 16 (No. 1) Ga. St. B. J. 20 (2010). For article, "2015 Georgia Corporation and Business Organization Case Law Developments," see 21 Ga. St. B. J. 30 (Apr. 2016).

JUDICIAL DECISIONS

Evidence supported finding of breach of fiduciary duty.

- In a direct action brought by a medical practice limited liability company member against another, sufficient evidence supported the trial court's finding that the member who remained in possession of the business failed to act in the best interest of the business and failed to exercise ordinary care when that member made the decision not to take any steps to have the exiting member's super bills processed and collected after the exiting member's departure. Given the high level of hostility and the bad blood between the parties over the operation of business, the trial court was authorized to find that the possessing member's decision was made in bad faith in an effort to negatively impact the exiting member's ownership interest in the business; therefore, the trial court was authorized to find that the possessing member breached the fiduciary duty owed to the business and the exiting member. Internal Med. Alliance, LLC v. Budell, 290 Ga. App. 231, 659 S.E.2d 668 (2008).

- In an insurance dispute, a purported owner of an athletic supplement company was a "manager" and therefore covered under the policy; the purported owner was designated by the sole member of the LLC as an individual entitled to handle all business matters, there was no evidence of removal from the position, and there was no statutory requirement that a manager also receive a salary. Evanston Ins. Co. v. Mellors, F. Supp. 2d (S.D. Ga. Sept. 28, 2015).

- The trial court did not abuse the court's discretion in denying a motion to set aside a consent judgment entered against a debtor, a limited liability company, as the fact that the company's sole member did not receive notice of the complaint or approve the consent judgment was insufficient to warrant that relief as the member was considered a separate legal entity from the company. Subsection (b) of O.C.G.A. § 14-11-304 expressly recognizes that managers designated in written operating agreement "shall have such right and authority to manage the business and affairs of the limited liability company as is provided in ... a written operating agreement." Old Nat'l Villages, LLC v. Lenox Pines, LLC, 290 Ga. App. 517, 659 S.E.2d 891 (2008).

- In spite of O.C.G.A. § 14-11-304(b)(1), a defendant's ability to appoint four managers gave the defendant de facto control of a manufacturer's eight-member board of managers, which created a genuine fact dispute as to whether the defendant was a managing member of the manufacturer and therefore owed fiduciary duties to another member. Denim N. Am. Holdings, LLC v. Swift Textiles, LLC, 816 F. Supp. 2d 1308 (M.D. Ga. 2011).

- Under the operating agreement and Georgia law, only the manager, with the approval of a majority in interest of the members, could have signed and filed a bankruptcy petition on behalf of the debtor. Debtor's bankruptcy petition was not properly signed by the manager of the debtor as required; thus, the case was dismissed. In re H & W Food Mart, LLC, 461 Bankr. 904 (Bankr. N.D. Ga. 2011).