Series LLC-Companies within a Company!

A series LLC (“SLLC”) is basically multiple entities within one company and each entity has its own identity and existence. So if you are an investor, instead of having multiple entities for multiple properties, you could have a one series LLC and each component within Series LLC could each own a property without having to go through forming multiple entities. Each Series within a company can have its own business purpose, own assets, separate liabilities and need not even have same members for all Series all this comes with the protection of limited liability for each individual Series i.e. each component within a Parent Series, LLC has same advantages of an LLC without having to waste resources on forming separate LLC’s. A series has the power to: (1) sue and be sued, (2) contract, (3) hold title to assets of the series, and (4) grant liens and security interests in assets of the series[1]. Members and Managers also enjoy limited liability of the parent Series LLC and its each individual Series within the parent Series LLC[2]

 In Texas Series LLC’s are relatively new, since September 2009 codified under Bus. Org. Code Subchapter M, §101.601-§101.621. For a Series LLC’s to be enforceable as intended it must strictly adhere to some basic requirements stated in Bus. Org. Code § 101.602[3] namely that Certificate of Formation and the Company Agreement must contain Notice of limitation of liability of Series and there must be separation of accounts of each Series.

Traditional LLC Owns one property		Series LLC
		Series A Owns one property	Series B Owns one property	Series C Owns one property	Series D Owns one property	Series E Owns one property

Not many people know about it and those who do know are skeptical since it is not very much tested. Series LLC’s may be new in Texas but States like Delaware whose model Texas adopted, have had it since 1996.  The skepticism is understandable. There is not much case law on how things will be handled if one series goes bankrupt, how do we handle the taxes, does each series gets its own EIN number, since not all States have provision for Series LLC, how will that Jurisdiction treat Texas LLC?  Most of these issues are resolved if you just consider each component as an entity in itself which concurs with the stand taken by IRS. This will mandate you to have an EIN for each, file separate taxes, maintain separate records etc.  As far as doing business in Jurisdictions which do not have provision for Series LLC, a Series LLC which is well organized and maintained I do not see it as an issue however to avoid undesired consequences if you do business beyond Texas and other States that have provisions for Series LLC[4], you may want to refrain from forming Series LLC and just stick to a traditional LLC.

The popularity of Series LLC is growing.  More recently D.C. has also adopted a provision for Series LLC. Further a Series LLC can wind up individual series without winding up parent LLC or any other Series. A Series LLC is a great tool for having multiple investments under one umbrella without the added cost of forming multiple companies at the same time enjoying benefits of insulation of each investment.

****The information in this column is not intended as legal advice but to provide a general understanding of the law. 

---

[1] Bus. Org. Code § Sec. 101.605.  GENERAL POWERS OF SERIES.  A series established under this subchapter has the power and capacity, in the series' own name, to:

(1)  sue and be sued;

(2)  contract;

(3)  hold title to assets of the series, including real property, personal property, and intangible property; and

(4)  grant liens and security interests in assets of the series.

[2] Bus. Org. Code § Sec. 101.606.  LIABILITY OF MEMBER OR MANAGER FOR OBLIGATIONS; DUTIES.  (a)  Except as and to the extent the company agreement specifically provides otherwise, a member or manager associated with a series or a member or manager of the company is not liable for a debt, obligation, or liability of a series, including a debt, obligation, or liability under a judgment, decree, or court order.

(b)  The company agreement may expand or restrict any duties, including fiduciary duties, and related liabilities that a member, manager, officer, or other person associated with a series has to:

(1)  the series or the company;

(2)  a member or manager associated with the series; or

(3)  a member or manager of the company.

[3] Sec. 101.602.  ENFORCEABILITY OF OBLIGATIONS AND EXPENSES OF SERIES AGAINST ASSETS.  (a) Notwithstanding any other provision of this chapter or any other law, but subject to Subsection (b) and any other provision of this subchapter:

(1)  the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular series shall be enforceable against the assets of that series only, and shall not be enforceable against the assets of the limited liability company generally or any other series; and

(2)  none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the limited liability company generally or any other series shall be enforceable against the assets of a particular series.

(b)  Subsection (a) applies only if:

(1)  the records maintained for that particular series account for the assets associated with that series separately from the other assets of the company or any other series;

(2)  the company agreement contains a statement to the effect of the limitations provided in Subsection (a); and

(3)  the company's certificate of formation contains a notice of the limitations provided in Subsection (a).

[4] Apart from Texas, U.S. States and territories where a Series LLC can be formed:

•    Delaware

•    District of Columbia

•    Illinois

•    Iowa

•    Kansas

•    Minnesota

•    Nevada

•    North Dakota

•    Oklahoma

•    Tennessee

•    Utah

•    Wisconsin

•    Puerto Rico

•    Washington, D.C

Temporary Relief From Removal for Certain Young People

Secretary of Homeland Security Janet Napolitano announced on June 15 2012 that effective immediately, certain young people who were brought to the United States as young children, do not present a risk to national security or public safety, and meet several key criteria will be considered for relief from removal from the country or from entering into removal proceedings. Those who demonstrate that they meet the criteria will be eligible to receive deferred action for a period of two years, subject to renewal, and will be eligible to apply for work authorization.

Under this directive, individuals who demonstrate that they meet the following criteria will be eligible for an exercise of discretion, specifically deferred action, on a case by case basis:

1. Came to the United States under the age of sixteen;


2. Have continuously resided in the United States for a least five years preceding the date of this memorandum and are present in the United States on the date of this memorandum;


3. Are currently in school, have graduated from high school, have obtained a general education development certificate, or are honorably discharged veterans of the Coast Guard or Armed Forces of the United States;


4. Have not been convicted of a felony offense, a significant misdemeanor offense, multiple misdemeanor offenses, or otherwise pose a threat to national security or public safety;


5. Are not above the age of thirty.

Only those individuals who can prove through verifiable documentation that they meet these criteria will be eligible for deferred action. Individuals will not be eligible if they are not currently in the United States and cannot prove that they have been physically present in the United States for a period of not less than 5 years immediately preceding today’s date. Deferred action requests are decided on a case-by-case basis. DHS cannot provide any assurance that all such requests will be granted. The use of prosecutorial discretion confers no substantive right, immigration status, or pathway to citizenship. Only the Congress, acting through its legislative authority, can confer these rights.

Source: www.dhs.gov

Temporary Protected Status Designated for the Syrian Arab Republic

WASHINGTON— Due to the violent upheaval and deteriorating situation in the Syrian Arab Republic (Syria), U.S. Citizenship and Immigration Services (USCIS) announced today that eligible Syrian nationals (and persons without nationality who last habitually resided in Syria) in the United States may apply for Temporary Protected Status (TPS). Details and procedures for applying for TPS are provided in the Federal Register notice published today and are available at www.uscis.gov/tps.

On March 23, 2012, Secretary of Homeland Security Janet Napolitano announced her intent to designate Syria for TPS for eighteen months. The TPS designation for Syria is effective today and will remain in effect through September 30, 2013. The designation means that eligible Syrian nationals will not be removed from the United States, and may request employment authorization. The 180-day TPS registration period begins today and ends on September 25, 2012. Although the Federal Register notice erroneously states that TPS applications must be filed March 29, 2012 through September 30, 2013, USCIS will only accept applications filed through September 25, 2012. USCIS is working to correct the public information on the registration deadlilne date.

To be eligible for TPS, Syrians must meet all individual requirements for TPS, including demonstrating that they have continually resided and been continually physically present in the United States since March 29, 2012. All individuals who apply for TPS will undergo a thorough security check. Individuals with criminal records or who pose a threat to national security are not eligible for TPS and their applications will be denied.

Syria joins El Salvador, Haiti, Honduras, Nicaragua, Somalia, Sudan, and South Sudan as countries currently designated for TPS.

Source: USCIS -Notice released March 29, 2012

Grandfathering under 245i

A beneficiary of a visa petition or labor certification filed after January 14, 1998, must demonstrate that he or she was physically present in the United States on December 21, 2000.

In a recent case decided on March 8, 2012[1] it was solidified that for an alien to independently qualify for adjustment of status under section 245(i) of the Immigration and Nationality Act, 8 U.S.C. § 1255(i) (2006), as a derivative grandfathered alien, the principal beneficiary of the qualifying visa petition must satisfy the requirements for grandfathering, including the physical presence requirement of section 245(i)(1)(C) of the Act, if applicable.

Under the regulations relating to section 245(i), there are two categories of grandfathered aliens. The first category, principal grandfathered aliens, encompasses beneficiaries of visa petitions or labor certifications that were (1) filed on or before April 30, 2001; (2) properly filed; and (3) approvable when filed. 8 C.F.R. § 1245.10(a)(i); see also Matter of Legaspi, 25 I&N Dec. at 329. If the visa petition or labor certification was filed for the principal grandfathered alien after January 14, 1998, he or she must have been physically present in the United States on December 21, 2000. 8 C.F.R. § 1245.10(a)(ii).

The second category, derivative grandfathered aliens, encompasses spouses and children of principal grandfathered aliens, if eligible to receive a visa under section 203(d) of the Act. The derivatives do not need to establish physical presence even if the qualifying visa petition was filed after January 14, 1998, given that they may be following the principal grandfathered alien to join him or her in the United States. 8 C.F.R. § 1245.10(a)(ii). Derivative beneficiaries are only entitled to the status available to the principal alien under section 203(d) of the Act. See Matter of Naulu, 19 I&N Dec. 351, 353 (BIA 1986) (observing that “the right of a derivative beneficiary to permanent resident status is wholly dependent upon that of the principal alien”).

---

[1]

Matter of Svetislav ILIC, 25 I&N Dec. 717 (BIA 2012) Interim Decision #3743