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What is an Organizer?
The LLC Organizer is the individual or entity that files the Articles of Organization for your Limited Liability Company. This party is named on the formation documents as the initiating party.
An organizer is distinct from an LLC member in that a member is defined as an owner of the LLC and an organizer merely facilitates the technical formation of the LLC.
What Role Does an Organizer Fill?
LLC’s are required to have at least one organizer to set up the business. This party is signing on to take responsibility for the formation process and that documents filed with the state and to ensure that they are compliant with the state law. The organizer’s name and basic contact information will be included in the documents and they may act as a point of contact with the state until the Articles of Organization are approved. This means if any issue arises with the information contained in the document, the state agency, such as the Secretary of State, may call the organizer to clarify or correct the information.
The organizer owes no other responsibility or duties to the LLC entity other than in relation to the filing of the documents. A party operating solely as an organizer will not be named in the LLC’s Operating Agreement. The Operating Agreement is different than the formation documents and essentially describes the management structure of the LLC, responsibilities of members, voting structure, and profit division. Since the role of the organizer ends once the Limited Liability Company is formed, there is no reason for him or her to be mentioned in the Operating Agreement unless one of the LLC members acted as the organizer. However, in some states, organizers may participate in the drafting of the Operating Agreement. Some states also allow organizers to serve as the initial registered agent for the new LLC and receive legal process on behalf of the entity.
Although traditionally, the potential liabilities of an organizer have been limited due to their small role, that may be changing soon in some states. A 2010 appeals court decision suggested that organizers owe a fiduciary responsibility to the members of the LLC. While this opinion was limited to organizers who solicit LLC members, this case may open the door for other courts to reconsider the liabilities of organizers over time.
Who Can Serve as an Organizer?
Although the organizer can be a member of the LLC, this is not required. The Organizer may be an attorney, friend, registered agent, business formation company, or other third parties that help you complete and file the formation documents. There are generally no legal requirements for an organizer to perform any other duty past completing and submitting accurate documents for the LLC. However, since the Organizer is tasked with accurately completing the Articles of Organization for a Limited Liability Company, a basic understanding of the document and compliance standards for your state is necessary. This does not disqualify an individual member of an LLC from acting as the Organizer. Most states also require that individuals serving as organizers be at least 18 years old.
Roni LLC v. Arfa (New York Appellate Court opinion regarding the liability of an LLC Organizer): https://law.justia.com/cases/new-york/appellate-division-first-department/2010/2010-04700.html