Under Delaware law, a limited liability company (LLC) may be composed of an individual series of membership interests. This type of entity is referred to as the Delaware series LLC. Each series is effectively 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.
Few business entities have attracted as much interest from people as the Delaware series LLC.What Is a Delaware Series LLC?
The first series LLC was devised by some of Delaware's top lawyers and was formally introduced in the state of Delaware in 1996. The purpose of the Delaware series LLC was to form a unique entity that consists of separate, individual interests. Under Delaware law, each series can hold its own assets, have its own members, conduct its own operations and pursue different business objectives, yet remain insulated from claims of members, creditors or litigants pursuing the assets of, or asserting claims against, another series.
The Delaware series LLC is a collection of individual series—this notion has been likened to a honeycomb. It can be illustrated as follows:
Since a Delaware series LLC is treated as a single entity, it only has to pay one annual Franchise Tax of $300 to the state of Delaware, instead of paying $300 for each individual Delaware LLC.What Is a Delaware Series LLC Used For?
It serves many purposes, but it is typically utilized by real estate investors who own several properties and companies that own multiple brands.What Are the Pros and Cons of Forming a Delaware Series LLC?
While it is a flexible entity that offers several benefits, there are some drawbacks associated with it.
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