Understanding Series LLCs

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An on-chain Series LLC on OtoCo has the exact same legal validity as any other LLC!

Understanding Series LLCs 🧩

A Series Limited Liability Company (LLC) is a relatively new variant of the traditional LLC structure. It offers a distinct way to organize your business entities, particularly in Delaware and Wyoming. It's essential to understand that Series LLCs hold no disadvantages compared to standalone LLCs. The term "Series" might be misleading, but it's crucial to clarify that "Master LLCs" are the foundation of this concept.

Master and Individual Series 🏛️

A Series LLC comprises a Master and individual Series. Each Series within the LLC is treated as an independent entity with its own name and Members. Importantly, assets and liabilities between different Series and between the individual Series and the Master are kept separate. This legal separation ensures that each Series operates autonomously and protects against cross-contamination of financial matters.

Legal Validity and Instant Formation ⚖️🚀

Series LLCs formed on-chain hold the same legal validity as any other LLC. The process is designed for speed and efficiency. The Master LLC creates individual Series without requiring additional filing with the State Registry. The initial Member of each Series signs an Operating Agreement, and the Master LLC maintains a record of the Series' chosen name and its first Member.

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Series LLCs are legally recognized and offer a streamlined approach to entity formation. The Master and individual Series structure enhances efficiency while maintaining legal integrity.

Advantages Over Traditional Formation ✨🔄

Series LLCs offer a streamlined formation process. What typically would require multiple steps and interactions can now be achieved through the Series LLC structure. This approach reduces the time needed to create a new entity to the speed at which a Series contracts with its Master. However, traditional methods still involve manual signatures, introducing some delay.

A Key Discovery 🔑🚀

Individual Series need a first Member.

In the analog world, this Member would either be a physical person or an official representing a company who contracts with the Master LLCs by signing the Series Operating Agreement.
Even when digital signing is used, the Master still needs to create a record of the name of the Member of the Series for it to be validly activated.

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Our key discovery in this respect was that the first Member of a Series LLC can be a smart contract address.

As a result, a new Series LLC could be formed by signing a cryptographic transaction on blockchain between the owner of a wallet and a Master smart contract that activates the Series Operating agreement.

In this setup, the first Member of the Series LLC is whomever controls the wallet that sends Ether to the Master LLC smart contract address that spins-up the Series LLC.

Proof of Existence and Ownership 📜💼

When a new Series LLC is formed, a smart contract is created to hold the Series LLC Operating Agreement. This contract serves as proof of the new LLC's existence. Ownership confirmation comes from the public key associated with the address of the first Member who initiated the transaction with the Master smart contract.

Embracing the Legitimate Power of Series LLCs 🏆💼

Series LLCs are not a gimmick; they represent a legitimate and innovative legal structure. By harnessing the power of blockchain technology, Master and Series LLCs offer a practical and efficient way to establish and manage entities while maintaining the highest standards of legal integrity.

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OtoCo's platform ensures that all Series LLCs created are based on a robust and legally sound structure. This structure allows Series LLCs to acquire an EIN, open bank accounts, and carry out business operations independently. Additionally, OtoCo provides a free registered agent and physical address, ensuring a comprehensive package for your business needs.