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A series limited liability company, commonly known as a series LLC, protected cell company, segregated account company, or segregated portfolio company, and sometimes abbreviated as SLLC, is a form of a limited liability company that provides liability protection across multiple "series" each of which is theoretically protected from liabilities arising from the other series. In overall structure, the series LLC has been described as a master LLC that has separate divisions, which is similar to an S corporation with Q-subs.
The utility of a Series LLC may be explained by a comparison to the alternative. Many form an LLC in order to protect personal assets from a legal claim relating to their real estate investment or business liabilities. Additional liability protection may be gained by properly forming and maintaining a separate LLC to hold each property or business entity. By forming a separate LLC to own and hold each legally titled separate property or business entity, theoretically only the assets owned by a specific LLC would be subject to claims or lawsuits arising against that LLC. However, there are costs and administrative burdens associated with properly forming, qualifying and maintaining each separate LLC. Another option may be to form multiple series or "cells" if permitted under applicable laws. Although each cell of a Series LLC can own distinct assets, incur separate liabilities, and have different managers and members, a Series LLC may be able to pay a single set of annual state fees and may be able to file one income tax return each year. In addition to the administrative streamlining, the key value is that liability incurred by one unit does not cross over and jeopardize assets titled in or allocated to other subsidiary units of the same Series LLC.[citation needed]
In several jurisdictions, the procedure for adding and deleting series is uncomplicated. Additional series can be formed or dissolved without any public filing by simply amending the Series' "limited liability company agreement" (equivalent to an operating agreement for other LLCs). Under Delaware law, any particular series may be dissolved by 2/3 approval of the ownership interests, or a simple majority if provided for in the operating agreement. Some jurisdictions, notably Illinois,[1] do have a mechanism for public publication of series. Additionally Illinois states that each series is a separate entity, whereas Delaware is silent on whether each series is a separate entity. Most states with the series LLC have followed the Delaware model, rather than the model in Illinois which requires each series to be designated with the Secretary of State.[citation needed]