Understanding Series LLCs in Ohio: How to Protect Your Business Ventures

A Series LLC is a unique business structure that allows one parent LLC to create multiple entities, or “series” underneath it. Each series is treated as a separate entity, with its own assets, liabilities, and operations. This is beneficial for businesses that want to manage multiple ventures or assets independently without forming separate LLCs for each. However, for the Series LLC to function correctly and provide liability protection, certain requirements must be met according to Ohio law. 

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Ohio law under ORC 1706.76 allows an operating agreement to establish one or more series within the LLC. Each series can have separate rights, duties, and obligations, including distinct purposes or investment goals. Additionally, each series must have at least one member responsible for it. This flexibility enables business owners to tailor each series to its specific needs and objectives, while still being part of the same LLC structure. 

Importantly, the Ohio Revised Code ensures that each series is protected from the liabilities of other series or the parent LLC. The law states that the debts and liabilities of one series can only be enforced against the assets of that series, not the overall LLC or other series.

For example, if one series faces legal trouble or financial debt, only that series’ assets are at risk, and the other series or the parent LLC’s assets are shielded. To maintain this protection, the LLC must meet certain conditions.

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Each series must keep separate records that clearly distinguish its assets from the other series or the LLC’s general assets. Second, the operating agreement must explicitly state these liability protections. Lastly, the LLC’s articles of organization must mention that the LLC can have multiple series, and outline the liability limitations between them. 

Additionally, ORC 1706.762 explains how assets within a series can be held. They can be held directly in the series’ name, or indirectly through the LLC or a nominee. The important part is that the records of the series clearly identify the assets, whether through listing, categorization, or other methods that distinguish the series’ assets from others. 

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By following these rules, a Series LLC can offer business owners the flexibility to manage multiple ventures under one LLC, while also protecting each series from the liabilities of others. Properly setting up and maintaining a Series LLC is key to ensuring these protections remain in place and comply with Ohio law. 

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