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Converting an LLC to a Series LLC
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Converting an LLC to a Series LLC


By Brett Melson Wednesday, March 9, 2011

The most popular type of company formation in Delaware is, by far, the LLC. The Delaware Legislature created the LLC business form to give maximum effect to the members’ freedom to contract with one another upon whatever terms they deem best suited to their circumstances and goals. In a corporation, for example, Delaware law requires certain terms be included in the corporation’s constituent documents, mandates certain provisions related to corporate governance, and limits (to some extent) the ability of parties to modify certain terms relating to voting or fiduciary obligations, among other things. In an LLC, however, the members are free to organize the LLC in whatever manner they choose, with near-total freedom to define the relationship among the members and the terms governing the operation of the entity.

The Delaware Legislature also allows for the creation of a Series LLC. The Series LLC garnishes a lot of interest from clients because each series is treated as a separate entity, meaning the debts, liabilities, obligations and expenses of one series cannot be enforced against another series of the LLC, or against the LLC as a whole. Each series can hold its own assets, have its own members, conduct its own operations and pursue different business objectives, but remain insulated from claims of members, creditors or litigants pursuing the assets of or asserting claims against another series. In addition, a Series LLC is treated as one entity for franchise tax and registered agent fee purposes, meaning that it is assessed one $300 annual tax and one registered agent fee, rather than the separate tax and fee that would otherwise be applied individually to separate LLCs. As this structure gains traction and becomes more and more popular, our clients with a traditional LLC have been inquiring about transferring the existing LLC to a Series LLC. This can be achieved by amending the original Certification of Formation filed with the Delaware Division of Corporations, Secretary of State’s office to include an extra article allowing the LLC to establish designated series of members, managers or membership interests.

Should you like to make an amendment changing the existing LLC to a Series LLC, HBS will prepare a Certificate for signature, and forward via fax or email. Once executed by a member, the amendment document will need to be returned by fax or email to Harvard Business Services. Then the Certificate will be filed with the State of Delaware later that day. The State typically takes 3-5 business days to return the receipt of filing. As soon as the approved document is available we will forward it to you for your records; it is just that easy.

For any questions regarding the service please call me at 800 345 2677 ext 6131.

Be sure to view all of our blog articles on the Series LLC.

 

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