Demystifying Governance in a Complex Legal Landscape

Series LLCs represent one of the most versatile and forward-thinking tools available for business structuring, especially for those managing multiple subsidiaries or lines of business. Yet, with their innovative design come unique challenges, particularly in the realm of governance. As laws and regulations continue to evolve, and as courts in various jurisdictions wrestle with the finer points of liability and asset protection, it becomes increasingly clear: consistency in your approach to governance is not optional—it’s essential.

Whether you’re an attorney, accountant, or the manager of a series LLC, understanding the nuances of subsidiary governance—and implementing repeatable, well-documented processes—can make all the difference. This article explores what a series LLC is, why best practices are crucial, and how you can smartly design annual reviews, accounting protocols, digital records, and decision documentation to safeguard your organization’s future.

What Is a Series LLC?

A series LLC is a type of limited liability company permitted in select jurisdictions, including Delaware, Texas, and Illinois, among others. Unlike traditional LLCs, a series LLC is structured so that a single “parent” or “primary” entity can establish multiple “series” beneath it. Each series functions as a quasi-independent subsidiary, able to own property, enter contracts, incur obligations, and even have distinct membership and governance.

Critically, each series within the LLC can hold separate assets and pursue different business objectives, with its own liability shield—presuming governance and recordkeeping are handled correctly. This means that the debts or liabilities of one series do not automatically impact another, nor the parent LLC itself. This organizational structure offers significant efficiencies for real estate investors with multiple properties, franchise operators, venture capitalists, and other entrepreneurs seeking to separate risks and resources with minimal administrative overhead.

However, because the series LLC is a relative newcomer in the business law world, there are important questions still unresolved by courts and legislatures. For example, not all states recognize the series LLC structure, and not all are clear on how liability protections will play out in litigation. This uncertainty amplifies the need for rigorous, uniform governance—making sure each series is managed as a separate entity, with its own records, procedures, and resolutions.

The Importance of Establishing and Following Best Practices

Why are governance best practices so critical with series LLCs? In short, because the legal landscape is still shifting. Courts may scrutinize whether a series truly operates independently, especially if a creditor or plaintiff seeks to “pierce the veil” and reach assets held by the parent or other series. Inconsistent or incomplete documentation, accounting, or decision-making can undermine the separateness that gives the series LLC its chief advantage.

By implementing and rigorously following best practices, you build a defensible record of your operations, demonstrating to third parties—and courts—that your series LLC is more than just a clever paperwork exercise. Consistency in governance is the cornerstone of liability protection and operational success. When in doubt, treat each series as if it were its own standalone LLC, with all the attendant responsibilities and records.

Conducting Annual Reviews: The Foundation of Subsidiary Governance

Annual reviews are a hallmark of sound governance for any business entity, and they take on even greater importance for series LLCs. Each year, both the parent LLC and every individual series should conduct a comprehensive review of their activities, finances, risks, and plans. The objective is to reinforce the independence of each entity, ensure compliance with legal and tax obligations, and make strategic decisions for the year ahead.

• Parent Entity Review: The parent LLC serves as the anchor for the entire series structure. Its annual review should cover major company-wide decisions, regulatory filings, tax compliance, and the coordination of subsidiary operations. Documentation is vital—every meeting, discussion, and resolution should be formally recorded.
• Series-Level Reviews: Each series must conduct its own annual review, focusing on its specific assets, activities, financial status, and governance. This is especially crucial when a series operates in a distinct line of business or has a different ownership group than the parent or other series.

All reviews should be captured in formal resolution forms. These typically include the date, attendees, agenda, decisions made, and signatures of members or managers. For temporary series—those created for a limited purpose or short-term transaction—these reviews can be streamlined. A simple resolution form or checklist, addressing core issues such as asset status and closure procedures, may suffice.

For permanent or long-term series, particularly those with distinct ownership structures, annual reviews must be robust and independent. This not only preserves liability protections but also establishes best practices for transparency and planning.

Expert Tip: Consider developing a template for annual reviews and resolutions that can be adapted for each series. Standardization improves efficiency, but make sure each review is tailored to the unique circumstances of the series in question.

Accounting Review: Financial Clarity and Separation

Financial integrity is central to the success of a series LLC. Courts and regulators will often start with the books when assessing whether series are truly separate. For this reason, a rigorous accounting review process is vital—both at the level of the parent entity and within each series.

• Parent Entity Accounting Review: The parent LLC should conduct a comprehensive review of company-wide finances, including overall assets, liabilities, revenue, expenses, and tax filings. Make sure all inter-series transactions are documented and reconciled.
• Series-Level Accounting Review: Each series should undertake its own accounting review, whether it maintains separate books or is tracked as a line item on the company’s primary ledger. Key areas to assess include revenue, expenses, outstanding liabilities, transfers, and capital contributions.

Where series represent distinct revenue streams or business lines—such as individual properties or franchises—it is best practice to maintain separate bank accounts for each series. This provides clear evidence of non-commingling of assets, a critical factor in upholding liability shields. Even if your accounting system aggregates all transactions, you should use subaccounts or class codes to track each series independently.

For temporary or inactive series, a streamlined annual accounting summary may be sufficient. For active or complex series, detail is paramount: reconcile bank accounts, review major transactions, perform internal audits, and obtain member or manager approval where appropriate.

Expert Tip: Work with your accountant or bookkeeper to establish protocols for series-specific tracking—even if you’re using a single accounting platform. Regular internal reviews, coupled with external audits when warranted, help ensure the integrity of your records and the independence of each series.

Digital Corporate Records: Organizing for Accessibility and Compliance

In today’s digital-first business environment, maintaining current and accessible corporate records is both a best practice and a regulatory necessity. For series LLCs, the stakes are higher: every operating agreement, resolution, tax filing, and audit note becomes a piece of evidence supporting the independence and integrity of each series.

PDF portfolios offer a practical solution for organizing your digital records. These can be structured to include separate folders for the parent LLC and each series, with subfolders for resolutions, financial documents, membership lists, and compliance filings. The goal is to ensure that any interested party—be it a regulator, auditor, or court—can quickly access the full record of each entity’s activities.

Regular self-audits are strongly advised. Designate a member, manager, or outside professional to review the completeness and accuracy of digital records at least annually. Document the results of these audits, noting corrections or recommendations for improvement. For series that are winding down or have been terminated, make sure final records are archived and marked as closed.

Tip: Invest in secure, cloud-based document management solutions that allow for easy updating, sharing, and backup. Consistency in recordkeeping is your best defense against challenges to the independence of your series.

Capturing Changes in Base Assets and Unusual Decisions

Business rarely stands still. Whether you’re acquiring new property, selling assets, entering into unique contracts, or making other out-of-the-ordinary decisions, it’s critical to document these actions with formal resolutions. This applies to both the parent LLC and each series.

• Asset Transfers: Any movement of assets between series, or between the parent and a series, should be approved by resolution, with documentation outlining the rationale, value, and terms.
• Major Investments or Sales: Purchases or sales of significant assets (real estate, IP, equipment) should be documented with detailed resolutions, including member or manager approval.
• Unusual Business Decisions: If a series enters a new line of business, undertakes a major risk, or makes a strategic shift, capture the details in a resolution, including the reasoning and anticipated impact.

These practices not only support sound management and legal compliance but also provide invaluable records if any decision is later questioned. For series LLCs, where the line between parent and subsidiary can be blurry, documentation is everything.

Tip: Maintain a “decision log” for each series, recording every asset change, major investment, or out-of-the-ordinary action. Connect each entry to a signed resolution and supporting documents.

Putting It Together: Building Repeatable Processes for Governance

If the above sounds complicated, you’re not alone. Many professionals new to series LLCs are daunted by the level of organization and documentation required. But here’s the secret: complexity is tamed by repeatable processes.

• Develop Templates and Checklists: For annual reviews, accounting assessments, resolutions, and digital recordkeeping, standardized templates save time and ensure completeness.
• Schedule Regular Governance Activities: Set annual or quarterly reminders to conduct reviews, update records, and audit your protocols. Consistency is key.
• Engage Professionals: Don’t hesitate to consult with attorneys, accountants, or business advisors experienced with series LLCs. Their expertise can help you avoid pitfalls and design scalable governance systems.
• Train Members and Managers: Make sure everyone involved in the LLC understands the importance of documentation, separation, and process. A well-informed team is your best asset.

By treating governance as a set of repeatable, well-documented routines, you create a structure that not only meets legal requirements but also simplifies management and supports strategic growth.

Conclusion: Consistency, Clarity, and Support—Your Roadmap to Series LLC Success

The world of series LLCs is filled with promise, but also uncertainty. By embracing best practices for governance—annual reviews, financial oversight, diligent recordkeeping, and thorough documentation of decisions—you lay the groundwork for operational excellence and legal protection.

Consistent processes are the linchpin of success, transforming what could be a complex web of entities into a manageable, compliant, and transparent organization. While questions remain in the courts and legislatures, your defense is a clear, unwavering commitment to treating each series as a true subsidiary, with all the care and rigor that entails.

If you’re looking for guidance, support, or help in designing procedures tailored to your series LLC’s needs, reach out today. Whether you need a template, a process audit, or personalized advice, we’re here to help you check every box and ensure your governance is second to none.

Contact us to learn more about series LLC governance, request sample procedures, discuss strategies to simplify your operations and strengthen your protections, or to discuss whether a Series LLC may fit your needs. Your company’s success starts with the right foundation—let’s build it together.