Minnesota LLC governance: the uniform-act state that kept the corporate boardroom

Minnesota adopted the same national uniform LLC act as Pennsylvania and Arizona, and on most governance questions it lands where they do. On one question it does not. Minnesota kept a third way to run an LLC that the uniform act does not require and most states dropped: a board of governors. A Minnesota LLC can be board-managed, run like a corporation with a board making major decisions and officers handling operations, in addition to the member-managed and manager-managed structures every uniform-act state offers. That third option is a holdover from Minnesota’s old corporate-style LLC act, and it is the reason a larger multi-member venture that wants centralized governance can get it inside an LLC here without converting to a corporation.

That structural choice is the thing to understand about Minnesota governance, and this page leads with it rather than re-teaching the fiduciary and default mechanics the site’s default rules and freedom of contract guides already cover, and which Minnesota handles much as Pennsylvania does.

The three ways to run a Minnesota LLC

Start with the structural menu, because it is wider here than almost anywhere.

Minnesota lets an LLC be member-managed, manager-managed, or board-managed by a board of governors, a third option most uniform-act states do not offer.

Under Minn. Stat. § 322C.0407, a Minnesota LLC chooses among three governance structures. Member-managed and manager-managed are the two every uniform-act state provides. The third, board-managed, is Minnesota’s own: the LLC is run by a board of governors, the equivalent of a corporation’s board of directors, with managers acting as officers. That structure came from Minnesota’s prior LLC act, which was built on the corporate model, and Minnesota carried it into the new uniform act as an option rather than discarding it. So a Minnesota LLC can have the flexible, pass-through tax treatment of an LLC and the familiar, centralized governance of a corporation at the same time, with a board that meets, votes, and makes the major decisions while officers run the business day to day.

That option is not the default, and the change matters.

Minnesota’s default flipped in 2018 from a board of governors to member management, so the board structure now has to be chosen in the agreement.

Under Minnesota’s old act, the board of governors was the default, and the state ran on it for years. The uniform act made member management the default, and since 2018 that applies to every Minnesota LLC. So the board structure is now something you opt into through the operating agreement and articles, not something you inherit. For a small LLC that is fine, member management is usually what a two- or three-owner company wants. For a larger venture with passive investors and a need for centralized decision-making, the board option is available and has to be elected deliberately. The choice among the three is made in the documents, which is the general lesson of every governance page, sharpened here because Minnesota gives more to choose from.

The duties, which track the uniform act

On fiduciary duties, Minnesota is where its uniform-act peers are, so this is not where it differs.

A Minnesota operating agreement may restrict fiduciary duties but not below a manifestly-unreasonable floor, and it cannot waive good faith and fair dealing.

Under Minn. Stat. § 322C.0409, a member of a member-managed LLC owes the duties of loyalty, accounting for profits, avoiding adverse dealing, and not competing with the company, and a duty of care measured by the business-judgment rule. A member who is not a manager owes no fiduciary duty just by being a member. The operating agreement may alter and restrict these duties, but not below the point where a restriction becomes manifestly unreasonable, and the implied covenant of good faith and fair dealing survives any drafting. That is the same posture as Pennsylvania, more restrained than Arizona or Washington, which allow near-total elimination. So the fiduciary dial is not where Minnesota stands out; the governance structure is.

The minority protection worth knowing

Minnesota gives a member squeezed by the majority a real remedy, which shapes how the board or managers must behave.

A Minnesota court can dissolve the LLC or order a buyout when those in control act oppressively toward a member.

Under Minn. Stat. § 322C.0701, a member can ask a court to dissolve the company, or grant another remedy such as a buyout, when the managers, governors, or controlling members act illegally, fraudulently, or in a manner that is oppressive or unfairly prejudicial. Minnesota reads oppression broadly, including withholding distributions from a minority member while the majority pays itself through salary. Combined with strong information rights under § 322C.0410, which let a member reach the company’s financials, tax returns, and records, this gives a minority member leverage that a purely contractual reading of the operating agreement would miss. Anyone running a Minnesota LLC, member, manager, or governor, operates under that oppression standard, and drafting the operating agreement to set fair distribution and exit terms is how a majority avoids handing a minority member a dissolution claim.

The bottom line

Minnesota lets an LLC be member-managed, manager-managed, or board-managed by a board of governors under Minn. Stat. § 322C.0407, a third structure most uniform-act states do not offer.

The board-managed option runs an LLC like a corporation, with governors and officers, and suits a larger multi-member venture that wants centralized governance without converting to a corporation.

The default is member management, changed from a board in 2018, so the board structure now has to be elected in the operating agreement and articles.

Fiduciary duties may be restricted but not below a manifestly-unreasonable floor, the same posture as Pennsylvania, so the structure, not the duty dial, is where Minnesota differs.

A court can dissolve the LLC or order a buyout for oppression under § 322C.0701, so the operating agreement should set fair distribution and exit terms.

What this page does not cover

This page is about the rules that run your company from the inside. How outside creditors reach a member’s interest, the foreclosable charging order, and the homestead are on the protection page. The high income tax, the minimum fee on multi-member LLCs, and the missing series LLC are on the structure and cost page. The free annual renewal, the optional registered agent, and the December 31 trap are on the filing page.

Last verified August 2026.