Small Business Reading Room

Friday, July 22, 2005

The Delaware Series LLC- new identification available from the Division of Corporations

The Delaware series LLC is a variation of a traditional LLC that under The Delaware Limited Liability Company Act § 18-215, can provide for the establishment of 1 or more designated series of members, managers or limited liability company interests having separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and any such series may have a separate business purpose or investment objective.

In plain English, the series LLC allows for multiple assets to be owned by one LLC, but permits those assets to be separated into different "series" within that LLC. It allows for the convenience and flexibility of maintaining only one LLC, and at the same time when properly structured, can hold many separate assets under one umbrella.

There are things you need to make sure you do in order to maximize your chances of keeping all of your assets and any liabilities associated with those assets separate from one another, so it is a good idea to talk to an attorney about making sure you structure things properly if you are not confident in your own research abilities. Remember, you can always contact us for a referral if you need one.

This past week, something significant has occurred at the Delaware Division of Corporations. Specifically, they have announced that data is now being used to identify and distinguish a series LLC from a regular LLC filing.

For any series LLC that has been filed with the Division of Corporations starting on 7/19/05, there is a new data entry field to indicate that the LLC is in fact a series LLC. Because of this, it is possible to obtain a certificate of good standing (long or short form, a certified copy of a conversion to a series LLC, or a certified copy of the filing history for a series LLC that will identify the LLC as a series LLC!

Here is what the actual language on the above certificates will look like:

“AND I DO HEREBY FURHTER CERTIFY THAT THE AFORE SAID “ Name of LLC in question “ IS A SERIES LIMITED LIABILITY COMPANY”

This is big news.

Before, although the series LLC had to be identified as such per § 18-215 of The Delaware Limited Liability Company Act on it's certificate of formation, there was no other indication in any other location that the LLC was in fact a series LLC.

At this time, regular certified copies will not be able to include this language.
Also, there is no indication of what is available (if anything) for a series LLC that was filed prior to 7/19/05.

We'll keep you posted on any new developments!

posted by Unknown at 5:40 PM - permalink 2 comments

2 Comments:

Russell:
What happens to the Series LLCs that were filed prior to this change? Will they be able to get Certificates that include the new SLLC language?

By Anonymous, at 9:20 AM

Good question!

The series LLC has been allowed by statute here in Delaware since 1996. There are many LLC's that have already filed their certificates of formation indicating they are a series LLC per § 18-215 of The Delaware LLC Act prior to this new change in procedure.

Those companies that did file prior to 7/19/05, and would like to have the fact that they are a series LLC be designated on the certificates mentioned in this post can have their status updated in the Division of Corporations database.

The update can be done only by the Division of Corporations staff, and is only done for those cases per request on an individual basis.

If you have a series LLC that was filed prior to this change, and you would like to have the fact that it is a series LLC designated in the State records, contact us and we can help you both hassle and cost free!

By Unknown, at 10:56 AM