USA Law and Practice Contributed by: Matt Hurd, Melissa Sawyer and Scott Crofton, Sullivan & Cromwell LLP
managed by its sole member. A multi-member LLC may be managed by its members or by out - side managers. Freedom of contract is a funda - mental principle of US LLCs, so management authority in a multi-member LLC can generally be tailored in the operating agreement to the contracting parties’ needs. Partnerships In a general partnership, each partner has the authority to undertake transactions, execute contracts and incur liabilities on behalf of the partnership, and is responsible for the day-to- day affairs of the partnership. In a limited part - nership, management authority is delegated to a general partner, and limited partners gener - ally do not have management authority over the business. A limited partner who does participate in the day-to-day management of the partner - ship may lose the protection of limited liability. Similarly to LLCs, limited partnerships follow the freedom of contract principle, so management authority in a limited partnership may also be tailored to the contracting parties’ preferences in the limited partnership agreement. 3.2 Decisions Made by Particular Bodies A board of directors of a corporation in the USA typically makes decisions relating to the follow - ing matters: • mergers and acquisitions; • charter amendments; • issuances of securities or equity awards; • declarations and payments of dividends; • selection, replacement and compensation of key executives; • dissolution of the corporation; and • other material corporate actions in which there is a determination that board action would be desirable.
Certain actions that are approved by the board must also be approved by stockholders under state law or the stock exchange rules, including
the following actions: • charter amendments;
• a merger involving the corporation as a target or a sale of all or substantially all of the cor - poration’s assets; • issuance of more than 20% of the corpora - tion’s outstanding shares of common stock; • conversion of the corporation to another entity form; • domestication of the corporation to a foreign jurisdiction; and • dissolution of the corporation. In an LLC or a partnership, decision-making authority may be tailored to the contracting par - ties’ preferences within certain parameters set forth in the LLC operating agreement or the part - nership agreement. 3.3 Decision-Making Processes A board of directors of a corporation in the USA (including its committees) makes decisions by passing resolutions at a board or committee meeting or by acting through written consent in lieu of holding a meeting. In advance of a board or committee meeting, management or the board’s outside advisers typically provide direc - tors with a meeting agenda and written materials to ensure the directors are properly informed on the topics to be discussed at the meeting. Board meetings often include management presenta - tions on the relevant topics and an executive session in which the board deliberates without the presence of management or any directors that are employed by the corporation.
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