Caution State Law Variances!
SECTION 105. GOVERNING LAW.
The law of this state governs:
(1) the internal affairs of a protected series of a series limited liability company, including:
(A) relations among any associated members of the protected series;
(B) relations among the protected series and:
(i) any associated member;
(ii) the protected-series manager; or
(iii) any protected-series transferee;
(C) relations between any associated member and:
(i) the protected-series manager: or
(ii) any protected-series transferee;
(D) the rights and duties of a protected-series manager;
(E) governance decisions affecting the activities and affairs of the protected series and the conduct of those activities and affairs; and
(F) procedures and conditions for becoming an associated member or protected-series transferee;
Reporter's Comment to Paragraph (1) – The concept of "internal affairs" presupposes an organization that is a legal person and thus applies to a protected series under this act. See Section 103 (stating that "[a] protected series … is a person"). Because the protected series is a novel construct, this paragraph details some aspects of a protected series' internal affairs. For a detailed discussion of "internal affairs," see Uniform Limited Liability Company Act (2006) (Last Amended 2013), Section 104, Paragraph (1), cmt.
JayNote: The "internal affairs" is a legal term of art, and denotes the legal affairs between the members, the managers, the series organization, and the protected series. However, the term does not include other third-persons to the arrangement, such as a creditor, even if their actions with the foregoing relationships, e.g., that a creditor may foreclose on a member's interest in a protected series is not considered an "internal affair" even though that may dramatically impact not only the debtor member but the protected series and even the series organization.
(2) the relations between a protected series of a series limited liability company and each of the following:
(A) the company;
(B) another protected series of the company;
(C) a member of the company which is not an associated member of the protected series;
(D) a protected-series manager that is not a protected-series manager of the protected series; and
(E) a protected-series transferee that is not a protected-series transferee of the protected series;
Reporter's Comment to Paragraph (2) – Although the relationships listed in this provision are not within the internal affairs of a protected series, they are part of the internal affairs of a series limited liability company and therefore subject to the operating agreement. See Uniform Limited Liability Company Act (2006) (Last Amended 2013), Section 105(a), cmt. The concept of a protected series being so novel, Paragraph (2) is included for the avoidance of doubt.
JayNote: The effect of § 105(2) is to enlarge the internal affairs doctrine to include relationships between not only the directly-affected members and managers of a protected series, but also to distant other members an managers of the same series organization even if not involved in a particular protected series.
(3) the liability of a person for a debt, obligation, or other liability of a protected series of a series limited liability company if the debt, obligation, or liability is asserted solely by reason of the person being or acting as:
(A) an associated member, protected-series transferee, or protected-series manager of the protected series;
(B) a member of the company which is not an associated member of the protected series;
(C) a protected-series manager that is not a protected-series manager of the protected series;
(D) a protected-series transferee that is not a protected-series transferee of the protected series;
(E) a manager of the company; or
(F) a transferee of a transferable interest of the company;
Reporter's Comment to Paragraph (3) – This provision chooses the law of the enacting state to govern matters pertaining to the vertical shields provided by this act. For an explanation of vertical shields, see Prefatory Note, Part 7-A and Section 401, comment.
JayNote: The effect of § 105(3) is to choose local law for liability issues that arise from the management, ownership or transfer of a protected series.
(4) the liability of a series limited liability company for a debt, obligation, or other liability of a protected series of the company if the debt, obligation, or liability is asserted solely by reason of the company:
(A) having delivered to the [Secretary of State] for filing under Section 201(b) a protected series designation pertaining to the protected series or under Section 201(d) or 202(c) a statement of designation change pertaining to the protected series;
(B) being or acting as a protected-series manager of the protected series;
(C) having the protected series be or act as a manager of the company; or
(D) owning a protected-series transferable interest of the protected series; and
JayNote: The effect of § 105(4) is to choose local law as to the question of whether a series organization may shield itself from the liabilities that are encapsulated and contained in a particular series organization.
(5) the liability of a protected series of a series limited liability company for a debt, obligation, or other liability of the company or of another protected series of the company if the debt, obligation, or liability is asserted solely by reason of:
(A) the protected series:
(i) being a protected series of the company or having as a protected-series manager the company or another protected series of the company; or
(ii) being or acting as a protected-series manager of another protected series of the company or a manager of the company; or
(B) the company owning a protected-series transferable interest of the protected series.
Reporter's Comment to Paragraphs (4)-(5) – These provisions choose the law of the enacting state to govern matters pertaining to the horizontal shields provided by this act. For an explanation of horizontal shields, see Prefatory Note, Part 7 and Section 401, comment.
JayNote: The effect of § 105(5) is to choose local law as to the so-called "internal shields" that encapsulate and contain liability within particular protected series, or the series organization, and thus shield the others from the effects of that liability.
UPSA AND WEBSITE CONTENTS
ARTICLE 1. GENERAL PROVISIONS
SECTION 101. SHORT TITLE. SECTION 102. DEFINITIONS. SECTION 103. NATURE OF PROTECTED SERIES. SECTION 104. POWERS AND DURATION OF PROTECTED SERIES. SECTION 105. GOVERNING LAW. SECTION 106. RELATION OF OPERATING AGREEMENT, THIS ACT, AND LIMITED LIABILITY COMPANY ACT. SECTION 107. ADDITIONAL LIMITATIONS ON OPERATING AGREEMENT. SECTION 108. RULES FOR APPLYING LIMITED LIABILITY COMPANY ACT TO SPECIFIED PROVISIONS OF ACT.
ARTICLE 2. ESTABLISHING PROTECTED SERIES
SECTION 201. PROTECTED SERIES DESIGNATION; AMENDMENT. SECTION 202. NAME. SECTION 203. REGISTERED AGENT. SECTION 204. SERVICE OF PROCESS, NOTICE, DEMAND, OR OTHER RECORD. SECTION 205. CERTIFICATE OF GOOD STANDING FOR PROTECTED SERIES. SECTION 206. INFORMATION REQUIRED IN ANNUAL BIENNIAL REPORT; EFFECT OF FAILURE TO PROVIDE.
ARTICLE 3. ASSOCIATED ASSET; ASSOCIATED MEMBER; PROTECTED-SERIES TRANSFERABLE INTEREST; MANAGEMENT; RIGHT OF INFORMATION
SECTION 301. ASSOCIATED ASSET. SECTION 302. ASSOCIATED MEMBER. SECTION 303. PROTECTED-SERIES TRANSFERABLE INTEREST. SECTION 304. MANAGEMENT. SECTION 305. RIGHT OF PERSON NOT ASSOCIATED MEMBER OF PROTECTED SERIES TO INFORMATION CONCERNING PROTECTED SERIES.
ARTICLE 4. LIMITATION ON LIABILITY AND ENFORCEMENT OF CLAIMS
SECTION 401. LIMITATIONS ON LIABILITY. SECTION 402. CLAIM SEEKING TO DISREGARD LIMITATION OF LIABILITY. SECTION 403. REMEDIES OF JUDGMENT CREDITOR OF ASSOCIATED MEMBER OR PROTECTED-SERIES TRANSFEREE. SECTION 404. ENFORCEMENT AGAINST NON-ASSOCIATED ASSET.
ARTICLE 5. DISSOLUTION AND WINDING UP OF PROTECTED SERIES
SECTION 501. EVENTS CAUSING DISSOLUTION OF PROTECTED SERIES. SECTION 502. WINDING UP DISSOLVED PROTECTED SERIES. SECTION 503. EFFECT OF REINSTATEMENT OF SERIES LIMITED LIABILITY COMPANY OR REVOCATION OF VOLUNTARY DISSOLUTION.
ARTICLE 6. ENTITY TRANSACTIONS RESTRICTED
SECTION 601. DEFINITIONS. SECTION 602. PROTECTED SERIES MAY NOT BE PARTY TO ENTITY TRANSACTION. SECTION 603. RESTRICTION ON ENTITY TRANSACTION INVOLVING PROTECTED SERIES. SECTION 604. MERGER AUTHORIZED; PARTIES RESTRICTED. SECTION 605. PLAN OF MERGER. SECTION 606. STATEMENT OF MERGER. SECTION 607. EFFECT OF MERGER. SECTION 608. APPLICATION OF SECTION 404 AFTER MERGER.
ARTICLE 7. FOREIGN PROTECTED SERIES
SECTION 701. GOVERNING LAW. SECTION 702. NO ATTRIBUTION OF ACTIVITIES CONSTITUTING DOING BUSINESS OR FOR ESTABLISHING JURISDICTION. SECTION 703. REGISTRATION OF FOREIGN PROTECTED SERIES. SECTION 704. DISCLOSURE REQUIRED WHEN FOREIGN SERIES LIMITED LIABILITY COMPANY OR FOREIGN PROTECTED SERIES PARTY TO PROCEEDING.
ARTICLE 8. MISCELLANEOUS PROVISIONS
SECTION 801. UNIFORMITY OF APPLICATION AND CONSTRUCTION. SECTION 802. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT. SECTION 803. TRANSITIONAL PROVISIONS. SECTION 804. SAVINGS CLAUSE. SECTION 805. SEVERABILITY CLAUSE. SECTION 806. REPEALS; CONFORMING AMENDMENTS. SECTION 807. EFFECTIVE DATE.
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Protected Series Agreements and Forms -- A list of the "best practices" agreements and records that all protected series structures should have.
SERIES LLC COURT OPINIONS
UPSA COURT OPINIONS
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NON-UPSA COURT OPINIONS
191212 ... Ohio ... Delaware Act .. MSP Recovery Claims, Series LLC v. Phoenix Ins. Co., 2019 WL 6770981 (N.D. Ohio, 2019).
181019 ... Florida ... Delaware Act ... MRP Recovery Claims, Series LLC v. USAA General Indemnity Co., 2018 WL 5112998 (S.D.Fla., Oct. 19, 2018).
SERIES LLC ARTICLES BY JAY ADKISSON
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2020.02.16 ... Talisman Casualty Denied Diversity Jurisdiction Of Protected Cell Series LLC In National WW II Museum Case
2019.01.28 ... Understanding The Protected Series Act: Article 8 And Final Thoughts
2018.11.24 ... Understanding The Protected Series Act: Treating Out-Of-State Series
2018.11.18 ... Understanding The Protected Series Act: Mergers
2018.10.29 ... Understanding The Protected Series Act: Dissolution And Winding Up Of Protected Series
2018.10.21 ... Understanding The Protected Series Act: Liability Limitations And Claims
2018.08.30 ... Understanding The Protected Series Act: Assets, Members And Management
2018.08.28 ... Understanding The Protected Series Act: Creating A Protected Series And Service Of Process
2018.07.18 ... Understanding The Protected Series Act: The Framework of UPSA - Part 2 of a Series
2018.06.18 ... Understanding The Protected Series Act: What Is A Protected Series?
More articles on Series LLCs by Jay Adkisson click here
THE CHARGING ORDER PRACTICE GUIDE
by Jay Adkisson
The Charging Order Practice Guide: Understanding Judgment Creditor Rights Against LLC Members, by Jay D. Adkisson (2018), published by the LLCs, Partnerships and Unincorporated Entities Committee of the Business Law Section of the American Bar Association
Now available for purchase directly from the ABA at https://goo.gl/faZzY6
Now also available at Amazon at Also available from Amazon at https://www.amazon.com/Charging-Orders-Practice-Guide-Understanding/dp/1641052643
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