Last Updated on August 18, 2020
What is an LLC Organizer?
The LLC Organizer is the individual or entity that files the Articles of Organization (referred to as a Certificate of Formation in some states) on behalf of a Limited Liability Company. This party is named on the LLC formation documents as the initiating party.
An organizer is distinct from an LLC member. A member is defined as an owner of the LLC, and an organizer merely facilitates the technical formation of the LLC.
What are the Responsibilities of an LLC Organizer?
Limited Liability Companies 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 ensure that they are compliant with the state law. The Organizer’s name and necessary contact information will be included in the documents. They may also 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 LLC organizer owes no other responsibility or duties to the legal entity other than the filing the LLC formation documents. A party operating solely as an organizer will not be named in the LLC’s Operating Agreement. The Operating Agreement is different from the LLC formation documents and essentially describes the LLC’s internal affairs and management structure, responsibilities of members, voting structure, and profit division. Since the Organizer’s role 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 LLC organizers to serve as the initial registered agent for the new LLC and receive legal process on behalf of the business entity.
Although traditionally, an LLC organizer’s potential liabilities 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 organizers’ liabilities over time.
Who Can Serve as an LLC Organizer?
Although the Organizer can be a member of the LLC, this is not required. The LLC organizer may be an attorney, friend, family member, registered agent, business formation company, or other third parties that help you complete and file the LLC formation documents. There are generally no legal requirements for an organizer to perform any other duty past completing and submitting accurate LLC documents. However, since the Organizer is tasked with accurately completing the Articles of Organization and ensuring the filing fees are paid, a basic understanding of the document and state requirements 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 of age or older.
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