Certificate of Formation and the Role of the Organizer

Business RoleIf you are considering starting a new LLC, Delaware is the right place. Delaware is renowned for its sophisticated business entity law, specialized Chancery Court and its jurists, all experts in business entity issues, as well as its deep body of case law, giving certainty to business owners in structuring their business and operations. These factors, among others, have made Delaware the preeminent jurisdiction for business formation. Delaware seeks to make business entity formation easy and streamlined. To establish a Delaware LLC, you will need to submit a Certificate of Formation to the State – once the State approves and returns an accepted copy of the Certificate, your LLC is legally established.

Certificate of Formation Requirements

The Certificate is only required to contain minimal information, including the name of the LLC, the name and address of its registered agent and the signature of the authorized person (also known as the organizer) given authority to form the entity. The Certificate can include any additional information the persons forming the company decide to include; however, the Certificate is publicly available, and, for privacy purposes, many choose not to disclose additional information. The names, addresses and other information regarding the members or management does not need to be disclosed in the Certificate, as the information is held internally in the LLC’s operating agreement.

In addition to giving up your right to privacy, there are additional disadvantages to listing the business address, members’ or managers’ names, and other unrequired information on the Certificate of Formation. Among these is the administrative nuisance, as such information then must be updated every time the members, managers, or the company’s business address changes. If listed, the information must be kept accurate, and it is easy to forget that such extra information was listed on the Certificate during an office move or a change in the members or managers. Some filing and business formation companies use this tactic to acquire additional money from their clients, as they can then typically charge between $350 to $500 each time the address or such other unrequired information needs to be updated. When using our filing service, unless you request otherwise, we do not list the members’ names, manager’s name or the company’s business address on your Delaware Certificate of Formation, nor any other information not mandated.

Certain other laws, including the upcoming federal Corporate Transparency Act, require disclosure of the names and addresses of the members, managers, and control persons to the U.S. Department of Treasury, but this information is held as nonpublic by the agency, subject to certain government investigative use.

Who is the “Authorized Person” who signs the Certificate?

You, or another person you name, will serve as the “Authorized Person” who handles the review and signing of the Certificate. Your Delaware LLC’s Authorized Person does not need to be a member or manager of the LLC. For example, the Authorized Person could be an attorney, tax adviser, or anyone else the company’s founders designate. Only the Authorized Person’s name will be listed on the Certificate of Formation. The State of Delaware does not require the address of the Authorized Person to create the LLC.

What is the role of the “Authorized Person”?

In addition to signing the Certificate, once the LLC is formed, the Authorized Person will name the initial members or manager of the LLC, who will then issue the equity interests and address other matters relating to the initial launch. The power of the Authorized Person terminates after naming the initial members or manager, and the Authorized Person is no longer considered a part of the company unless they will serve as a member or manager.

The main responsibility of the LLC Organizer is reviewing the Certificate of Formation, signing it, and directing the filing with the State of Delaware. Once these tasks are completed, the Authorized Person does not have any further role. Once the filing is completed by the State of Delaware, the name of the Authorized Person cannot be changed by filing a correction or amendment; it merely serves as a record of the person handling the initial organization of the LLC.

To form your new LLC now visit www.delawareinc.com/order or, for additional information on forming a Delaware LLC, contact Harvard Business Services, Inc. at 1-800-345-2677.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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