If I’m a member of an LLC in which one member has a 40% interest and the other 3 have 20%, do the 3 members with 20% each collectively have more power than the member with 40%?

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If I’m a member of an LLC in which one member has a 40% interest and the other 3 have 20%, do the 3 members with 20% each collectively have more power than the member with 40%?

Asked on October 11, 2013 under Business Law, Massachusetts

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Yes, with one caveat (see below): in LLCs and corporations, as a general matter, some combination of owners or members which has more than 50% (i.e. even 50.1%) of the ownership interest can determine what to do and override the minority member(s), subject to their fiduciary duties to the minority members (don't cheat, don't oppress, etc.). So a total of 60% of ownership trumps 40%.

The caveat: management and/or voting power can be divorced from ownership. If the operating agreement(s) or other documents governing the entity give the 40% owner the final say (or anything similar to that), then those documents will govern and he/she will be in charge.


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