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An interesting niche problem that sometimes arises in the formation of LLC series and individual series is whether a member of a particular series should also be a member of the maternal LLC. This is required in some states, including Alabama, and should be a requirement of the Limited Liability Company Protected Series Act. This issue is not directly addressed in the Texas Code of Business Organizations. I am of the opinion that a member of a single series can necessarily be considered a member of the parent (even if my client does not prefer this) and writes the documents accordingly. This is a safe approach because the answer to this problem is not clear. If you take the position that a series item is not a member of the parent and that position turns out to be incorrect, you may find yourself in a situation where the members of the series have control over the parent through simple numbers. There are ways to get around this topic from the beginning and avoid the risk completely. The concept of separation is also part of the operations of each series. Del.

Code Ann. Tit. 6, § 18-215 (and the corresponding provision of most other state laws on serial LLCs) expressly provides that liability is limited to a particular series only if “the records kept for such a series take into account the assets associated with that series separately from the other assets of the limited liability company”. (c) Each Member`s shares in units are demonstrated by this Agreement and may further be a certificate in the form approved by the administrator. If you form a serial LLC that does business in states other than the one where you organize it (another word for form), including one of the many states that do not recognize serial limited liability companies at all, there is a risk that a court in that other state will see through (invalid) the distinct nature of the series. Remember that a common use of serial SALs for real estate assets is often a very localized business where serial SAL owners only hold properties in a single state. (i) by a majority of the written consent of all members; Or Let`s take a closer look at Delaware law, which allows the LLC series: From 2010 to 2013, I was chief legal counsel to a publicly traded oil services company with 42 subsidiaries around the world. Maintaining the entity diagram alone was a challenge, not to mention managing all these people and companies! Some of the companies were created to separate our assets from other subsidiaries (to protect liability). Others were created for tax, legal or operational purposes because we operated in China, Brazil, Singapore, Norway, the Netherlands – many different countries that required us to establish separate entities in each country, or there were compelling tax or other reasons to create all these separate entities. Under the laws of these states, the assets of one series are distinct (again, there are requirements to ensure that the distinct nature of each series is recognized – establishment and maintenance must be done properly) and cannot be used to satisfy debts in another series. Each series may hold its own assets, have its own members, conduct its own operations, and pursue different business objectives, but each series remains isolated from the claims of members, creditors, or litigants who pursue or assert claims those on the assets of another series.

Illinois has limited the rights granted to members of an LLC series to create new series because Illinois requires public filing. This eliminated some of the cost savings of a serial LLC. Illinois law specifically states that a series of an LLC “shall be treated as a separate entity to the extent provided for in the articles of incorporation” and also provides that each series “may, in its own name, contract, hold ownership of assets, grant security rights, sue and be sued, and otherwise conduct business and exercise the powers of a limited liability company … The other five states that have adopted serial laws do not treat series as separate entities and do not allow series to enter into contracts, sue or be sued. .

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