The Delaware LLC Act was amended in 1996 to permit multiple, separate series of members, managers, interests, or assets. The LLC’s formation document merely needed to include specific language to identify it as a Series LLC – the names and records of the Series were contained in internal documents, not filed with the Secretary of State’s office. This created a challenge in perfecting security interests in the assets of a specific series, since the Series did not meet the UCC Article 9 definition of a “registered organization”. Delaware seeks to resolve this with Amendments passed effective August 1, 2019 which allow Delaware LLCs to form Registered Series.
I. The LLC Agreement must provide for the establishment or formation of 1 or more series.
II. Notice of the limitation on liabilities of a series must be set forth in the LLC’s Certificate of Formation.
III. A Registered Series may then be created by filing a Certificate of Registered Series.
Note: If a series is not registered as a Registered Series, it automatically has the status of a Protected Series.
When thus created, Registered Series must pay an annual tax, and may obtain their own certificates of status and copies of their own charter documents. A Certificate of Registered Series may be Amended, Cancelled, Revived, Corrected, Merged or Consolidated with other Registered Series of the same LLC, or Converted to a Protected Series of the same LLC.
Note: A Protected Series may also convert to a Registered Series
The actions of the LLC (i.e. the “Parent”) control the actions of the Registered Series (i.e. the “Child”), but not necessarily vice-versa.
I. If the Parent is not a Series LLC, it cannot have series, including Registered Series.
II. The name of the Child must begin with the full name of the Parent.
III. The registered agent of a Parent is automatically the registered agent of the Child.
IV. If the Parent changes its name, the Child must also change its name.
V. If the Parent is not in good standing, the Child is not in good standing.
VI. If the Child is not in good standing, the Parent (and any other Children) may still be in good standing.
Similar Provisions were made in the Delaware Revised Uniform Limited Partnership Act, with a few distinctions:
I. At least one General Partner must be associated with each Child.
II. Limited and General Partners of a Parent may also be Limited and General Partners of a Child.
III. If the Partnership Agreement does not designate a General Partner of a Child, then each General Partner of the Parent is deemed to be a General Partner associated with the Child.
IV. A General Partner of a Child who ceases to be associated with the Child does not automatically cease to be associated with the Parent or any other Children.
This publication is not intended to provide legal, accounting, or other professional advice and should not be relied upon as such.