The company limited company series , commonly known as series LLC and sometimes abbreviated SLLC , is a form of limited liability company that provides protection obligations in some " series "each of which is theoretically protected from obligations arising from other series. Overall structure, the LLC series has been described as a LLC master who has a separate division, which is similar to an S company with Q-subs.
Video Series LLC
Histori
The concept of the LLC series was first introduced to help the mutual fund industry avoid submitting multiple SEC sequencing to different classes of funds. Instead the idea is to use one entity for all funds so that the SEC's submission will be under one umbrella, but still allow the activities of individual funds to be done separately. This concept is similar to a separate portfolio company or a protected cell company, a concept that existed before the invention of the LLC series. Separate portfolio companies exist in countries such as Guernsey, British Virgin Islands, Bermuda, Cayman Islands, Mauritius, and Belize.
This method of segregating responsibility was first called "Delaware Series LLC" because the first country to enforce this law was Delaware (in 1996). Wisconsin issued a stripped-down version of the legislation LLC series in 2001. In April 2005, Iowa and Oklahoma had already passed similar measures. Then in 2005, Illinois and Nevada followed suit. Tennessee and Utah passed an effective law in 2006. Texas passed a non-entity law LLC series in 2009. Montana passed the LLC Series law in 2011, since becoming a popular organizational structure for prisoner insurance companies.
Maps Series LLC
Overview
The LLC Series utility can be explained by comparison to alternatives. Many make up LLC to protect personal assets from legal claims related to real estate investments or their business obligations. Additional liability protection may be obtained by establishing and maintaining separate LLC separately to hold any property or business entity. By establishing a separate LLC to own and hold each property or business property separately legally, the theoretically only assets owned by a particular LLC shall be subject to any claims or litigation arising against the LLC. However, there are administrative costs and expenses associated with establishing, qualifying, and maintaining each separate LLC. Another option may be to form some series or "cells" if permitted under applicable law. Although each LLC Series cell may have different assets, incur separate obligations, and have different managers and members, LLC Series may be able to pay a set of state annual fees and may be able to file one income tax refund annually.. In addition to streamlining the administration, the key value is the liability incurred by one unit not crossing and endangering the assets entitled or allocated to another subsidiary unit of the same LLC Series.
In some jurisdictions, the procedure for adding and removing the series is not complicated. Additional series may be established or dissolved without public submission only by amending the "limited liability company" agreement (equivalent to the operating agreement for other LLCs). Under the law of Delaware, any particular series may be dissolved by 2/3 approval of ownership interest, or a simple majority if provided in an operating agreement. Some jurisdictions, notably Illinois, have mechanisms for public publication of the series. In addition Illinois states that each series is a separate entity, while Delaware is silent on whether each series is a separate entity. Most states with the LLC series have followed the Delaware model, rather than models in Illinois that require each series to be designated with the Secretary of State.
Status
To date, Delaware does not clearly state that any series may sue, enter into contracts, etc. Alone, without all the companies mentioned in the lawsuit. Delaware clarified its law that a series can now enter into contracts, hold property rights to assets, grant liens and security interests and sue or sue. In some cases, the series is not treated by Delaware as a separate entity. For example, the series is not listed separately and they can not merge or consolidate with other entities, convert to other entity types or tame into other jurisdictions. The Corporate Delaware Division will not provide separate certificates of good standing for each series, but will provide a certificate that states that the whole company is an LLC series (and not just a traditional LLC).
Illinois has restricted the rights granted to members of the LLC series to create new series because Illinois requires public submission. This has eliminated some of the cost savings of the LLC series. Illinois law specifically states that a series of LLC "will be treated as a separate entity to the extent specified in the articles of the organization," and subsequently also stipulates that each series may "in its own name, contract, hold the rights to the asset, provide security interests, sue and sue, and if not, do business and exercise limited corporate power... "The other five countries that have enacted series legislation do not treat the series as a separate entity and do not allow the series to enter into contracts or prosecute or be sued. Delaware further states that in order to achieve segregation of responsibilities that the series is capable of ("internal shield"), LLC must retain a separate series of notes for each series, and have a series of possible statements in its Certificate of Establishment.
There is uncertainty as to whether the shield of responsibilities between LLC series is fully effective in countries that do not have LLC series laws. In the case of 2013 Alphonse v. Arch Bay Holdings, LLC , the United States Court of Appeals for the Fifth Circuit interpreted the application of the Louisiana Fair Trade Practice Act on alleged violations by the Delaware LLC series. The Court is of the opinion that Louisiana law (which does not recognize the concept of the LLC series) will apply to determine whether a particular series of LLC or all LLC will be the appropriate party for litigation.
Tax treatment
The LLC series is becoming more widely used as a technique of separation of responsibility as its tax treatment becomes more pronounced and its use spreads. To date, the effectiveness of inter-jurisdictional segregation of the portfolio has not been extensively tested and the lack of precedent in federal bankruptcy courts in particular is a significant source of uncertainty. At the same time, the tax treatment becomes clearer. On January 18, 2008, the Internal Revenue Service issued Private Letter Ruling 200803004, which decided that the Federal tax classification (ie, neglected entities or partnerships or tax associations) was determined for each series independently. So, for example, if there is only one owner of series A, then series A can be a neglected entity (assuming it is not selected to be taxed as an association). And if series B has two owners, then that would be considered a partnership. The proposed Treasury Rule Ã,§ 301.7701-1 (a) (5) issued in September 2010 will become effective in 2012. The regulation is expected to provide that each series will be treated, for tax purposes, as a separate entity < i> regardless whether the series is considered an entity that is legally different under local law. This clarity is welcomed by the legal and tax community. California has taken the position that it will only bring in tax revenues from the series that do business in California but each series will owe an annual franchise fee.
Although the structure of LLCs varies in important ways, commentators have an advanced opinion of how to minimize the possibility of a series that is responsible for the entity's overall obligations or from other series. But they are just opinions and have not been arrested in court:
- A separate bank account must be retained for each series.
- All contracts, deeds, records, etc. must be signed with a series name. Again, use something like "Abracadabra LLC, Blackacre Series only".
- Each loan between series must be well documented.
- Any transaction between the series must be done in an arms'-length manner at a fair market price using an assessment.
- Have each series submit a fictitious business name statement in each region where the property belongs. Each series must have its own name and archiving should emphasize ownership of the series, for example, "Abracadabra LLC, Blackacre Series only". This is to place the creditor on notice.
- Save the assets and operations of each series apart from other series. Each asset must be owned by only one series. In other words, two or more series may not be joint owners of the same property.
- Make sure each series is capitalized enough.
The states and territories where LLC Series can be established
- Alabama
- Delaware (Limited Liability Company Law)
- District of Columbia
- Illinois
- Indiana (http://www.in.gov/sos/business/2426.htm)
- Iowa
- Kansas
- Minnesota
- Missouri [(http://www.moga.mo.gov/mostatutes/stathtml/34700001861.html])
- Montana (Montana Limited Liability Act)
- Nevada (Static Revision Nevada)
- North Dakota
- Oklahoma
- Tennessee
- Texas
- Utah
- Wisconsin
- Puerto Rico
References
Source of the article : Wikipedia
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