What is Management Agreement?

A management agreement is the contract that governed the relationship between an LLC's real owner and a nominee manager in broader, ongoing nominee structures. It defined what the nominee was and was not authorized to do, how they were compensated, what happened if the arrangement was terminated, and who bore liability if the entity's operations created legal exposure.

That remains useful background for understanding the older nominee-manager model, but it is not the primary document in Default Privacy's current nominee signing workflow.

Historical Context

A well-drafted nominee management agreement addressed:

Scope of authority. What the nominee manager is authorized to do — sign annual reports, appear on bank account applications, execute specific categories of contracts — and what they are explicitly not authorized to do without the real owner's written consent, such as incur debt, transfer assets, or open new bank accounts.

Real owner identification. A private record of the beneficial owner's identity, kept in the agreement or an attached schedule. This is the private counterpart to the public-facing documents that name the nominee. Banks and compliance teams can be directed to this document when legally required.

Compensation and renewal. The annual fee for the nominee's services and the renewal terms. A management agreement with automatic renewal provisions ensures the nominee arrangement doesn't lapse without notice.

Termination conditions. How either party can exit the arrangement — notice periods, the process for appointing a replacement nominee, and what happens to documents and records upon termination.

Hold harmless and indemnification. The clause that protects the nominee from liability arising from the LLC's actual operations. Because the nominee's name appears on the entity without them running it, they carry legal exposure to third-party claims. The management agreement must indemnify them against costs arising from lawsuits, regulatory actions, or disputes related to the LLC's activities.

Succession. What happens if the nominee becomes unavailable — through retirement, loss of license, or death. A succession clause allows a replacement nominee to be appointed without requiring the LLC to be dissolved and re-formed or the client to sign new formation documents.

Why It Mattered

In the older ongoing nominee-manager model, the management agreement was the document that distinguished a legitimate nominee arrangement from an informal one. Consider the difference:

Without Management Agreement	With Management Agreement
Nominee's authority is undefined — they could act outside the scope you intended	Authority is explicitly scoped — nominee cannot exceed defined limits
Liability allocation is unclear — nominee may face exposure with no agreed protection	Indemnification clause clearly allocates liability to the real owner
No formal succession plan — if nominee leaves, the structure may need to be unwound	Succession clause allows seamless replacement of the nominee
Banks and compliance teams have no documentation to review	Compliance teams can be shown the private OA and management agreement on request
Termination is disputed — both parties may disagree on what happens next	Termination procedure is defined — notice periods, handover process, document retention

Current Model

In the current Default Privacy model, nominee signing is handled with transaction-specific authorization records rather than a standing management agreement and parallel operating-agreement stack.

Instead, the current workflow is built around:

• review of the specific document
• a limited authorization for that transaction
• a signing record and certificate after execution

That is a narrower structure than nominee-manager arrangements, but it is also the current source of truth.

Key Takeaway

A management agreement is best understood here as a historical backbone document for the broader nominee-manager model. If you are working from the current Default Privacy nominee signing workflow, the operative documents are transaction-specific authorization and signing records, not a standing management agreement.