Operational excellence for owners of small or closely-held businesses may involve certain challenges that are less applicable in larger entities. For example, the temptation may exist to operate less formally, with less accountability and oversight due to pre-existing or familial relationships. Agreements, if written, may be sparsely worded. Documentation of key business decisions and transactions may be lacking. We saw this type of sloppy governance earlier this year in Robl Construction vs. Homoly, No. 13-3607 (8th Cir. 2015). Robl involved a two-member LLC with poorly drafted governing documents and inadequately maintained records that have cost the parties a significant amount of time and money in court.

In Part I, I reviewed some of the history and issues surrounding series LLCs and their application. In Part II, I’ll address more recent developments, including a look at the status of the Uniform Protected Series Act, currently under consideration by the National Conference of Commissioners on Uniform State Laws (“NCCUSL").

While series LLCs have gained in popularity and use among states that have authorized them, the lack of state uniformity in the treatment and acceptance of series LLCs has led more conservative attorneys, advisors and clients to avoid them, believing that the uncertainties and potential risks outweigh the perceived benefits.