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Legislative Year: 2020 Change
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Bill Detail: HB20-1096

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Title Authorize Protected Series Of Limited Liability Company
Status House Committee on Judiciary Postpone Indefinitely (02/27/2020)
Bill Subjects
  • Business & Economic Development
House Sponsors M. Baisley (R)
Senate Sponsors J. Sonnenberg (R)
R. Woodward (R)
House Committee Judiciary
Senate Committee
Date Introduced 01/13/2020
Description

In response to the growing popularity of series limited liability
companies (series LLCs) in the United States, in 2017 the Uniform Law
Commission promulgated the Uniform Protected Series Act (UPSA or

Act). The bill enacts the UPSA, effective January 1, 2021.
Subpart 1 contains general provisions. The UPSA uses the term
protected series to highlight the internal liability shields that are a
defining characteristic of the Act, and to avoid confusion with the term
series, which is often used to refer to classes of interests in business
entities that do not affect liabilities to third parties. If the requirements of
the UPSA are satisfied, then assets of one protected series (referred to as
associated assets) are not available to satisfy claims of creditors of the
LLC or of other protected series of the series LLC.
Subpart 2 explains how to establish a protected series. Subpart 3
includes the record-keeping requirements that must be satisfied for an
asset to qualify as an associated asset under the Act. Subpart 3 also
provides rules for associating members with a protected series and
addresses series transferable interests, management, and nonassociated
members' rights to information.
Subpart 4 covers limitations on liability and enforcement of
claims. The Act provides 2 types of liability shields: Vertical and
horizontal. The traditional vertical shield protects equity holders and
managers from status-based liability for an organization's obligations. The
horizontal shield protects a protected series of a series LLC and its
associated assets from liability for the debts, obligations, and other
liabilities of the company or of another protected series of the company.
A creditor may enforce a judgment against another protected series of a
series LLC by pursuing assets owned by the company or by another
protected series of the company if the UPSA's requirements are not
satisfied for these other assets (or nonassociated assets).
Subpart 5 addresses grounds for dissolution and provisions for
winding up. Subpart 6 includes restrictions on mergers and other entity
transactions involving series LLCs and protected series. Subpart 7
addresses foreign protected series. Subpart 8 addresses transitional issues.

Committee Reports
with Amendments
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Fiscal Notes Fiscal Notes (02/18/2020) (most recent)  
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