Delaware Series LLC - How is it Useful?

A "Delaware Series LLC" is a special kind of limitedLLC and establish each property as a separate series.
liability company ("LLC") authorized by the DelawareHe would file one certificate of formation and pay one
Limited Liability Company Act. An LLC which isfiling fee. Each year thereafter, he would file only one
organized as a Delaware Series LLC can createannual report and pay one annual fee. On the back
designated series of specified property or operationsend, when he sells one property, he could simply
with separate business purposes or investmenteliminate the series that held that property without the
objectives. Each series is a separate "cell" within theneed to file a certificate of dissolution.
limited liability company. Each cell, or series, hasIn addition to the cost savings, other factors that make
separate members, managers, assets and liabilities, anda Delaware Series LLC a useful entity are speed and
business interests.convenience. For example, when the investor who has
The debts, liabilities and obligations relating to aset up a Delaware Series LLC decides to buy an
particular series are enforceable only against theadditional property, he simply sets up a new series in
assets of that series and not against the assets of thethe same LLC. There is no need to draft a certificate
LLC generally or the assets of any other series. Theof formation or to wait for it to be filed with the
assets of a specific series are protected fromDelaware Secretary of State. The change can be
enforcement action against the assets of the LLCmade in minutes in his own office.
itself or against the assets of any other series ifBecause of the unique aspects of a single legal entity
certain basic rules are met:with multiple distinct cells, there are many other
- The LLC agreement provides for the establishmentpotential uses. For example, suppose that a business
of one or more serieswants to acquire a single license that expressly
- Separate records are maintained for each series andprovides that it cannot be sublicensed to any third
its assets are accounted for separately from the otherparty, even a subsidiary of the licensee. Since the
assets of the LLC or any other series (and the LLCseries are all simply "cells" of one Delaware Series
agreement so requires such separation)LLC and not separate legal entities, the company
- Notice of such limitation of liability is set forth in theshould be able to share the license among its various
LLC's certificate of formationseries without violating the terms of the license. Each
How Can a Delaware Series LLC be Used?individual business would be able to use the license but
A hallmark of the LLC is its flexibility. A Delawarestill keep its liabilities separate.
Series LLC greatly extends that flexibility to allow theWhile real estate ownership has been one of the most
creation of separate cells within the LLC to accomplishfrequent applications for a Delaware Series LLC, it is
diverse business objectives. Each of the series in aeasy to see potential uses for an entity with its special
Delaware Series LLC can operate independently offeatures:
the LLC itself in general and any other series.- An owner of a fleet of taxicabs could set up each
The primary advantage of a Delaware Series LLC iscab and its driver as a separate series
that it saves the cost of forming multiple limited liability- An owner of a chain of drycleaners could set up
companies to achieve the same goals. For example, ifeach store as a separate series
a real estate investor owns 20 separate properties- A touring theater company could set up each
and wants to insulate each property from the liabilitiesengagement as a separate series
of each other property, he could set up 20 differentAs long as the separate accounting and other
limited liability companies, paying a separate filing feerequirements are met, the potential uses of the series
for each LLC, or he can set up one Delaware Seriesare virtually endless.