What is a Series LLC and How Does it Work in New Jersey, USA?

Question from JC, What is a Series LLC and How Does it Work in New Jersey, USA?

Answer from AI:

A Series Limited Liability Company (LLC) is a unique form of LLC that allows for the establishment of separate series or divisions within the LLC. Each series operates like a separate entity with its own members, managers, and business purpose. Importantly, each series can hold its own assets, liabilities, and have different business operations.

Is Series LLC Allowed in New Jersey?

As of the time of writing, New Jersey does not specifically authorize the formation of Series LLCs under its state laws. However, New Jersey does recognize and allow the operation of foreign Series LLCs that have been formed in other states where Series LLCs are permitted, such as Delaware, Illinois, and Texas.

How Does a Series LLC Operate in New Jersey?

Even though New Jersey does not allow the formation of Series LLCs, it does recognize them if they are formed in a state that permits them. This means that a Series LLC formed in another state can register to do business in New Jersey as a foreign LLC.

However, it’s important to note that the legal protections offered to the individual series within a Series LLC may not be fully recognized in New Jersey. This is because the concept of a Series LLC is still relatively new and not all states have laws that specifically address how they should be treated.

What are the Potential Risks?

There are potential risks associated with operating a Series LLC in a state that does not specifically authorize them. One of the main risks is that the courts in New Jersey may not recognize the liability protections between the different series within the LLC. This could potentially expose all assets of the LLC to liability, regardless of which series those assets are associated with.

When Should You Seek Legal Advice?

If you’re considering forming a Series LLC or operating a foreign Series LLC in New Jersey, it’s strongly recommended that you consult with a legal professional. They can provide personalized advice based on your specific circumstances and help you understand the potential risks and benefits.

Useful Resources

• The New Jersey Department of the Treasury provides information on registering a business in New Jersey.
• The Delaware Division of Corporations provides information on forming a Series LLC in Delaware, one of the states that permits them.

Remember, while this information provides a general overview, it does not constitute legal advice. Always consult with a legal professional for advice tailored to your specific circumstances.