On March 23, Indiana’s governor signed House Enrolled Act 1336 which adds to the Indiana Business Flexibility Act to provide for series LLCs. In general, I think it’s a good thing that Indiana has joined the dozen or more other states (plus D.C. and Puerto Rico) with series limited liability companies. I expect to post a detailed analysis of the bill, pointing out the good and the bad, before too long. In the meantime, here’s a letter I wrote in support of the bill.
February 16, 2016
VIA email Senator.Zakas@iga.in.gov
The Honorable Joseph Zakas
Indiana State Senate
200 W. Washington Street
Indianapolis, IN 46204
HB 1336 – Series Limited Liability Companies
Dear Senator Zakas:
I respectfully request your consideration of the following comments in support of HB 1336, specifically the proposed statute to create series limited liability companies in Indiana to be codified at Title 23, Article 18.1 of the Indiana Code. I write not on the behalf of any client, but in my own capacity as an Indiana attorney. I have been a member of the Indiana bar for more than 22 years, and my practice focuses largely on business law matters, particularly limited liability companies. I have taught continuing legal education courses for the Indiana State Bar Association and the National Business Institute, and I have served as an adjunct professor at the Indiana University Robert H. McKinney School of Law.
Since the Indiana Business Flexibility Act was first enacted a little over two decades ago, the limited liability company has become accepted as the entity of choice for business enterprises, particularly small businesses, at a rate that is nothing less than phenomenal, and series LLCs are following the same path in the states that have adopted them. Even though it is difficult for me, as a practitioner, to think of purposes that can be accomplished with a series LLC that absolutely cannot be accomplished with multiple ordinary LLCs, the convenience of the series LLC structure for real estate and real estate development purposes is earning them acceptance in those industries even more quickly than ordinary LLCs earned acceptance.
In addition, I suspect that the use of series LLCs will not be restricted to the real estate industries. It took a few years for practitioners to realize the benefits of regular LLCs over corporations, but once that happened the use of LLCs exploded. I believe it likely that the same thing will happen with series LLCs: As practitioners become more familiar with them, they will discover the benefits and expand the use of LLCs well beyond the real estate world.
Perhaps most importantly, a series LLC statute will continue to enhance Indiana’s reputation as a good jurisdiction in which to organize businesses. We already have a solid set of entity choices with the Indiana Business Flexibility Act, the Indiana Business Corporation Law, and the Indiana Nonprofit Corporation Act. Last year the General Assembly added a statute for benefit corporations, and the Indiana Supreme Court is implementing a pilot project for dedicated Commercial Courts. Adding a series LLC statute to Title 23 will continue to build on that foundation.
Thank you for considering these comments.
/s/ Michael Ray Smith
The Honorable Casey Cox, Indiana House of Representatives
Paje Felts, Indiana State Bar Association