FLORIDA OFFERS A NEW BUSINESS STRUCTURE: THE SERIES LLC.
HERE IS WHAT BUSINESSES NEED TO KNOW.
The Florida Legislature has enacted new legislation (CS/SB 316 and CS/HB 403) to incorporate Series LLC provisions into the Florida Revised Limited Liability Company Act. This new regulation provides businesses with the opportunity to implement a robust corporate structure to achieve organizational and asset management objectives. By implementing this change, Florida has enhanced its attractiveness for business formation and has aligned itself with a select group of states that have adopted a similar approach to Series LLCs, such as Delaware, Illinois, Nevada, Texas, and a few others. The effective date of this new law will begin on July 1, 2026.
What is a Series LLC?
A Series LLC operates as a single legal entity (referred to as a parent LLC), possessing the ability to establish multiple internal divisions called “Series”. Every Series within the parent LLC’s structure will function as an independent LLC, capable of: (i) holding assets and taking on its own liabilities; (ii) entering into contracts and engaging in business activities; (iii) having distinct members, managers, and business objectives; and (iv) suing and being sued in its own name.
Key Benefits:
- Liability Protection: Each Series will have separate insulation from liability for the debts and obligations of the parent LLC, as well as from every other Series. This protection from joint liability is referred to as horizontal shields, enabling the separation of assets and liabilities of each Series.
- Flexibility: It gives the entrepreneur the ability to customize each Series according to its investment purposes.
- Efficiency: This structure enables various properties or investment strategies to operate under one parent LLC. It eliminates the need to establish and manage a distinct legal entity and consequently minimizes paperwork and decreases fees and administrative costs.
Use in Practice:
Series LLCs can be useful for ventures that operate multiple lines of business or investments and want to insulate each line from risks incurred by the others. Common examples is an investment fund establishing various Series, each with a different focus for its investments; and a real estate investor could hold different properties in separate Series to insulate risk and simplify management.
Caution:
In order to preserve the horizontal shields, a Florida series LLC must maintain stringent and transparent recordkeeping for the parent LLC and each Series it establishes. If the record-keeping requirements are not met, creditors may be able to pierce the horizontal liability shields.
Contact Us to help you:
Luzzi Law Firm assists businesses in establishing their corporate structure and maintaining their operations tailored to their needs and according to the applicable legislation . Contact us today to schedule a consultation (melissaluzzi(at)luzzi-law(dotted)com).
This information is intended to inform firm clients and friends about important matters for businesses. Nothing in this article should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in herein without seeking the advice of legal counsel.