A sort of limited liability company (LLC) structure called a series partnership enables a corporation to establish distinct series or cells inside the organization. Businesses that seek to divide assets and liabilities for various aspects of their operations sometimes use this structure. Despite being controlled by the same parent corporation, each series functions as a separate entity with its own assets, liabilities, and members.
The Revised Limited Liability Company Act of the state of New Hampshire permits series LLCs. As a result, businesses can still benefit from a centralized management structure while establishing independent series with unique assets and obligations. It is crucial to remember that not all states permit series LLCs. For instance, Georgia does not now permit the creation of series LLCs.
It is crucial to have a unique series agreement in place for companies operating in states that do permit series LLCs. The rights and obligations of each series within the LLC are described in this agreement, along with the division of earnings and losses, management responsibilities, and asset distribution in the event of a dissolution.
A series partnership can offer some level of asset protection for each series, which is one of its advantages. This means that the other series within the LLC are protected and are not held accountable for any liabilities or debts incurred by one series. But it’s crucial to make sure each series is legitimately founded and preserved as a separate entity.
A series partnership can also offer flexibility in terms of management and ownership, which is another advantage. Each series may have its own managers and team members, enabling more specialized control of particular business operations. Additionally, ownership interests for each series may be held separately, presenting additional investment and financing opportunities.
Last but not least, it is significant to remember that LLCs might have perpetual existence, which means they can carry on forever unless dissolved by the owners or by a court. As a result, series partnerships can give companies that desire to divide their assets and liabilities among various enterprises a reliable and long-term structure.
In conclusion, a series partnership is a kind of LLC structure that enables the development of distinct series or cells inside the business. Even though they function independently of one another and have their own assets and liabilities, they are all managed by the same parent business. Series LLCs are allowed in New Hampshire but not in Georgia. To specify the rights and obligations of each series within the LLC, a separate series agreement is required. Series partnerships offer advantages like asset protection, ownership and management flexibility, and indefinite existence.
An operating agreement is necessary for an LLC since it spells out each member’s duties, rights, and obligations. It aids in establishing the LLC’s management structure, decision-making procedure, and method of distributing profits and losses among members. Additionally, by demonstrating that the LLC is managed as a separate legal entity from its members, an operating agreement can offer legal protection for the LLC. This can be crucial in the case of legal disputes or liability concerns.