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Can a LLP have a CEO versus a managing director.
Anonymous2 views2 answers
I am a partner in a medical partnership (e.g., XYZ LLP). For the past 30 years the business has been run by our "CEO" with virtually unchallenged authority. He is given control by an executive board which is elected annually by the partners/owners.
I was speaking with a friend who is an accomplished attorney in tax law, particularly medical practices. He told me that as a LLP, that there technically should be no officers (e.g. C.E.O., C.F.O., etc) but rather they are managing directors. He said you can call them what you'd like but they aren't really officers. This came up when I commented to him I had read that under Oregon law all officers are to be elected annually by the partnership. Lastly, is there any difference between an L.L.P. and an L L. C. In these issues
Nicholas Patrick MerrillContracts / Agreements LawyerPortland, OR ·
Your friend is about half right. It's true that in LLPs there are, technically, only partners -- no officers -- and it's also true that you may call each other whatever you want for purposes of internal management (but not necessarily without legal consequence).
As noted, there are only partners in a partnership. Managers are more accurately referred to as "managing partner(s)." This is a technicality, though. Many LLPs organize themselves in the hierarchical corporate form, appointing officers and the like.
Whether a court will recognize a corporate officer title in an LLP case depends on whether the judge is a stickler for business entity formation and operation. Someone suing you might prefer you to be a Corporation rather than an LLP. Your partnership appears to be operating internally as a hybrid LLP/Corporation, at least with respect to organization, while holding itself out to the public as a limited liability partnership. This could feasibly lead to questions about the entity status that make determining liability more complex than it would be if you referred to each other only as partners.
I expect that your company was formed as an LLP to reduce the personal liability of each partner. That is the main reason that LLPs are formed in Oregon, especially for medical services.
The idea is that each partner will be solely responsible for his or her own actions and that partners will not be liable for each other. In order words, there is very little shared responsibility or liability. Often the only shared responsibility is for office expenses and possibly for some shared employees.
The CEO is an exception to this policy. He is an agent of the partners to act on their behalf. You can have shared responsibility or liability for his actions on your behalf.
You are right to be concerned since it is important to manage your liabilities. However, most likely he only does a few things on behalf of the partnership and these are carefully delineated in the resolutions and other documents for the LLP. You may wish to review with the other partners the stated and expressed authority of the CEO and make sure it is not significantly increasing your liability as well.
