At least nine states now permit the formation of a Series Limited Liability Company, which is a creature of corporate law that allows the formation of a “master” or “core” Series LLC, filed with the secretary of state, and an unlimited number of “Series.”
The Series needn’t be registered with the secretary of state, but nevertheless they are treated as separate LLCs for state corporate law purposes. When combined with captive insurance law, in particular protected cell or segregated portfolio law, captives can be formed as Series LLCs and take advantage of this unique and developing aspect LLCs arguably are simply the next logical step in the evolution from “rent-a-captive” to protected cell captives, and then to incorporated protected cell captives.
In Tennessee, the Series LLC based largely on Delaware law revised its captive insurance law in captive was born. The Series LLC option has a “corporate” shell like any other corporation or LLC, but with significantly greater flexibility to add related entities—or “cells” in the captive context. Thus, Series LLC captives can give their owners substantial flexibility and allow them to save time and money with greater regulatory privacy.
Outside of the insurance context, Series LLCs also have been used as single purpose, liabilitysheltered entities for separate parcels of real property held by real estate developers. They can also be used in a potentially unlimited variety of contexts. While the principal rationale for Series LLCs originally was to create a liability shield between two or more entities and their principals, privacy has also emerged as an important aspect of their structure.
As vehicles of wholesale insur ance, captives already enjoy limited privacy under insurance law from the public (although not from the regulators). Series LLCs simply take this one step further by shielding the formation of the individual Series from the public once the general authority has been granted in the Series LLC charter.
Like any filed LLC, the Series
LLC provides a limited liability
shield for its owners and their
piercing of the corporate veil also
apply to Series LLCs. However,
because an annual report and fee
are not required for each of the
Series in the structure, the Series
LLC has the important advantage
of keeping the identity of its own-
theless, the Series LLC generally
must follow and conform to other
statutory provisions that apply to
Because the Series LLC law provides
such a large degree of flexibility,
it is important to draft the
formation documents carefully. The
first step is the formation and filing
of the “master” Series LLC with the
secretary of state.
In Tennessee, a Series LLC captive
must be manager-managed, and
adopt Series treatment and specifically
provide notice of the limitation
of liability of each Series. The
Series LLC then must explain the
procedure for the formation of the