Authority to act for an Ohio LLC changes hands at formation. The person who can authorize an Ohio limited liability company into existence is the organizer, who signs and files the articles of organization with the Secretary of State. Once the company exists, authority shifts to its members by default, or to managers if the operating agreement puts them in charge. Ohio’s Revised Limited Liability Company Act, Chapter 1706 of the Revised Code, controls at every stage.
Who Can Act as Organizer
An organizer is any “person” who executes the initial articles of organization.1Ohio Legislative Service Commission. Ohio Revised Code 1706.01 – Limited Liability Company Definitions Chapter 1706 reads “person” broadly: individuals, corporations, other LLCs, partnerships, and trusts all qualify. A business entity can be the organizer just as an individual can.
There is no residency rule. The organizer does not have to live in Ohio and does not have to become a member or manager of the company. Attorneys and formation services routinely sign articles on behalf of the people who will own the business. The authority is narrow and short-lived: once the Secretary of State accepts the filing, the organizer’s role ends. No ownership interest or ongoing management power comes with it.
What the Organizer Files
The LLC comes into legal existence when the Secretary of State files the articles of organization under ORC 1706.16, unless the articles name a later effective date.2Ohio Legislative Service Commission. Ohio Revised Code 1706.16 – Articles of Organization The articles must include the company name (with “limited liability company” or an accepted abbreviation such as LLC, L.L.C., limited, or ltd.)3Ohio Legislative Service Commission. Ohio Revised Code Chapter 1706 – Section 1706.07 and the name, Ohio street address, and signed written acceptance of a statutory agent. Everything else in the articles is optional.
Who Authorizes Decisions After Formation
Once the company exists, authority moves to the members. Ohio’s default rule puts the LLC’s activities and affairs under the direction and oversight of its members, which is what other states call a member-managed structure.4Ohio Legislative Service Commission. Ohio Revised Code Chapter 1706 – Section 1706.30 This applies automatically unless the operating agreement says something different.
Voting runs on two tiers. Routine business decisions pass by majority vote of the members. A smaller set of major actions requires unanimous consent of every member:
- Amending the operating agreement
- Filing for bankruptcy on behalf of the LLC
- Any action outside the ordinary course of business
- Any other matter where Chapter 1706 specifically requires unanimity
Members do not have to meet in person to vote. The statute lets them act without a meeting and allows a member to appoint a proxy to consent on their behalf.4Ohio Legislative Service Commission. Ohio Revised Code Chapter 1706 – Section 1706.30
When Managers Hold the Authority
The members can hand day-to-day authority to one or more managers through the operating agreement. Ohio defines a manager as any person the LLC or its members designate to manage all or part of the company’s activities, whatever title that person actually carries.1Ohio Legislative Service Commission. Ohio Revised Code 1706.01 – Limited Liability Company Definitions A manager does not have to be a member.
The operating agreement is the document that reassigns authority. It governs the relationships among members and between the members and the LLC, and Chapter 1706 fills in only where the agreement is silent.5Ohio Legislative Service Commission. Ohio Revised Code Chapter 1706 – Section 1706.08 It can be put in place before, during, or after the articles are filed, and it can be made effective retroactively to the formation date.2Ohio Legislative Service Commission. Ohio Revised Code 1706.16 – Articles of Organization Without an operating agreement, the member-oversight default governs and no manager has authority at all.
Who Can Bind the LLC to Outsiders
Internal authority is one question. The power to make commitments that bind the LLC to third parties is a separate one, and ORC 1706.18 is strict about it. No person can bind the company except through one of four channels:6Ohio Legislative Service Commission. Ohio Revised Code Chapter 1706 – Section 1706.18
- Authorization as an agent under the operating agreement
- Authority under the member-oversight provisions of ORC 1706.30
- A statement of authority filed under ORC 1706.19
- Authority granted by some other law
The practical result: in a member-managed LLC without an operating agreement, every member can bind the company in ordinary-course transactions, because ORC 1706.30 gives all members oversight of the company’s activities. To narrow that down so only one person can sign contracts or open bank accounts, the operating agreement has to say so. Lenders, landlords, and vendors frequently ask to see the operating agreement, or a members’ resolution, for exactly this reason.
In a manager-managed LLC, binding authority usually flows through the operating agreement’s grant of agency to the managers. A manager who has no operating-agreement authorization, or who acts outside its scope, cannot bind the LLC. Settling these questions in writing at the start avoids later disputes about whether a given contract was properly authorized.