Legal Alert

Texas Recognizes New Entity: Series Limited Liability Company
by Stephen Johnson
October 30, 2009

As of September 1, 2009, Texas recognizes a new entity called a "series limited liability company." This is a special form of limited liability company (LLC), originally permitted in Delaware, that allows owners to compartmentalize or isolate certain assets and related liabilities within the same limited liability company.

Here's how it works: Instead of forming a parent limited liability company as a holding company with subsidiary LLC's, or forming several sister LLC's, one can now form a limited liability company with designated series or cells. Each series or cell would own distinct assets and incur liabilities separate from other series within the LLC. As long as certain formalities are followed, the assets of each series are protected from the liabilities of any other series within the series LLC. In other words, the liabilities of a series are enforceable only against assets within that series and not against the LLC generally. This reduces the costs and administrative burdens of maintaining several separate LLC entities.

 

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