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A New Formation Solution – is the SSLC Right for Your Business?

Client Alert

In early January 2021, Ohio adopted Senate Bill 276 which established a Revised Limited Liability Company Act (“ORLLCA”) as Ohio Revised Code Chapter 1706, which effectively replaces the current Ohio Limited Liability Company Act (Ohio Revised Code Chapter 1706). The ORLLCA will become effective on January 1, 2022.

One of the principal changes within the ORLLCA is the ability to establish “series LLCs”. Ohio becomes the 15th state to adopt a “series LLC” (“SLLC”). The below FAQs will help you better understand the mechanics and nuances of a series LLC.

Is forming a Series LLC right for you?

SLLCs provide unique benefits for individuals and entities. If you own multiple businesses, the SLLC structure can assist with minimizing risk and limiting exposure to liabilities with respect to certain assets held by SLLC.

  1. What is a Series LLC?

The formation of the SLLC was introduced in Delaware in 1996 by top business lawyers in the state. This was prompted by business owners who wanted to form a unique entity that consisted of separate, individual interests but had the same asset and liability protection as the traditional limited liability company (“LLC”). Due to the rising popularity of SLLCs in Delaware, many states have adopted similar statutes. Synonymous with Delaware law, a SLLC in Ohio can establish, through its operating agreement, multiple divisions or “series” with separate assets, purposes, business objectives, members, and ownership interests. Each series is legally separate from one another and is only liable for its own debts and obligations. In short, each series operates similar to an independent subsidiary under the master limited liability company.

    2. How is it different from a traditional LLC?

The traditional LLC protects the owners from liability – but, in an effort to diversify risk within an entity structure – many entities form an “umbrella” of LLCs. The umbrella generally consists of a parent LLC and several subsidiary LLCs under the parent LLC’s control.

The SLLC is a variation of the traditional LLC and offers additional simplicity and flexibility to a business owner. The SLLC offers reduced setup and maintenance costs because only one Secretary of State filing is needed, regardless of how many series are a part of it. The most significant difference between these two types of entities is the enhanced liability and asset protection offered by the SLLC. With an SLLC, an owner no longer has to form the “umbrella” structure of several LLCs. So long as the entities with the SLLC adhere to the rules of the ORLLCA, the liabilities of the master LLC are not enforceable against any series that is a part of it and the liabilities of each series are not enforceable against another series.

    3. What types of businesses would benefit from the SLLC?

The SLLC structure can be beneficial for many different types of business owners. Specifically, real estate investors who own investment properties can utilize the SLLC structure to diversify risk within a portfolio. This structure is extremely valuable for business owners who have capital and other assets invested in multiple segments of an LLC and wish to have those assets protected.

    4. What are the drawbacks?

Since the SLLC structure is relatively new and only 14 other states permit their formation, there is little guidance by the IRS and state tax departments on the tax treatment of the SLLC. As such, there are tax risks associated with the formation of a SLLC and individuals and entities should consult their tax advisors regarding such risks.

To explore if utilizing and/or forming a SLLC will be advantageous for you or your business(es), please contact BMD Corporate and Mergers & Acquisitions Attorney Michael D. De Matteis, Esq. at mddematteis@bmdllc.com.


Community Banks: Collaboration, not isolation, is the key to protecting/ enhancing the cannabis business you pioneered

As we prepare for the plenary session of the informal institutional cannabis lenders community announced in my previous article, I am pleased to advise that participants now include 5 of the best-known dedicated loan funds; a select group of commercial banks ranging in size from single state community banks to mid-size regionals making cannabis loans into the mid-8 figures; and, a syndicator of credit union cannabis loans.

Inflation Reduction Act: Healthcare Provisions

On August 16, 2022, President Joe Biden signed into law the Inflation Reduction Act (the “Act”), a landmark climate, healthcare, and tax bill. Though the Act’s climate provisions have received most of the media attention, the healthcare aspects of the Act present some of the most significant changes to the American healthcare system since the passage of the Affordable Care Act.

The Current State of Assignment of Benefits Litigation in Florida

On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney’s fees, with respect to assignment of benefits (“AOB”) property insurance litigation. One-way attorney’s fees are a longstanding problem in Florida and the reforms come at a time when AOB litigation increasingly affects homeowners in a negative way.

Proposed Community Revitalization Grants for Ohio Projects

Jason A. Butterworth client alert ohio tax credits historic preservation tax credits community revitalization grants

Ohio Senate Bill 225 Paves the Way for Greater Investment in Opportunity Zones and Historic Districts

Ohio Senate Bill 225 is poised to make dramatic enhancements to certain tax credit programs in Ohio, specifically those surrounding investments in “Opportunity Funds” and historic buildings. Signed into law by Governor Mike DeWine in June 2022, the Bill is positive news for real estate developers working to revitalize Ohio communities with investment and rehabilitation projects.