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Author: Alena Dunaeva
Attorney, Family Office
Series LLC (Series Limited Liability Companies) are an efficient tool for structuring investments and business operations in the U.S. market. It is the most cost-effective and fastest way to establish a legal structure for a fund or one-off investment, with the possibility to commence operations in one day if the full documentation is available.
About the Company
Structure
Series companies constitute a hierarchical structure as an umbrella fund, consisting of a Master LLC and the autonomous sub-entity cells (Series) that it creates.
For example, in the state of Delaware, the creation of series companies is governed by Delaware Code §18-215.
The master company establishes and administers the individual Series. It may conduct any activity, but in its relationship with the Series its main functions are payment of taxes and ensuring compliance.
Series are independent legal entities established under the “umbrella” of the master company. Each series has a unique name, management team, its own investors (Subscribers), and separate assets. A significant advantage—the obligations of one Series do not run against other Series or the master company, which ensures robust asset protection.
Management
Each Series has the right to appoint its own managers and employ staff—just like a normal company, but without the need for compliance and interaction with government authorities. This makes Series an ideal instrument for entering the U.S. market for those lacking local residency or SSN.
Use Cases
Series LLCs are widely used to streamline management of multiple assets or projects under one legal entity. This model is particularly valuable in sectors requiring risk isolation and reduced administrative cost.
Use Case Type | Advantages |
Real estate investments | Each property is allocated to its own Series, enabling separation of cash flows and transferring control via sale of the Series. |
Venture investments | A separate Series is created for each target company, simplifying deal structuring and portfolio management. |
Asset management | Enables accepting third-party capital and managing it without licensing and compliance overhead. |
Series are especially popular in capital markets, as they allow the acceptance and management of third-party funds without licensing and compliance costs. Investment funds often use Series as SPVs, each with its own investors and strategy.
Taxation
Each Series can independently elect its tax regime—partnership or corporation—based on investor goals and operational specifics.
Regardless of the Series' tax regime, the master company must still pay the franchise tax, which is $300 per Delaware Code § 18‑1107.
Additionally, each registered Series requires an annual $75 fee, payable by June 1. Late payment incurs a $200 penalty plus monthly interest.
Finally, non-U.S. investors must pay U.S. tax on income from a Series (e.g., asset sale) at a rate of 30%, or as specified under tax treaties.
Compliance
Conditions for SEC Registration Exemption
Series may operate as investment funds without requiring licensing or filing an investment prospectus with the U.S. SEC provided they meet one of the following exemptions:
Debt financing constraint: total debt of the Series must not exceed 15% of its aggregate assets.
Minimum Compliance Requirements
Even when exempt from SEC registration, each Series must:
- Annually update beneficial ownership information in FinCEN under the Corporate Transparency Act
- Submit timely tax filings (as per tax regime chosen)
- Pay the master company’s franchise tax
Additional requirements:
- For Series classified as corporations: separate tax filings
- If managing third-party capital: update Form ADV annually
- Conduct regular internal compliance audits
Servicing
Registration
Series LLC registration is completed remotely, with no physical presence required. Necessary documents include:
- Passport of the beneficial owner
- Proof of address (bank statement or utility bill not older than 3 months)
- Information describing the company’s planned activities
Annual Maintenance
To keep the company operational, it is necessary to:
- Timely pay franchise tax ($300 for master company; $75 per Series per year)
- File annual reports with the relevant authorities
- Update beneficial ownership information in FinCEN
Q&A
Contact Information
If you have any questions or require a consultation, our experts will be happy to assist you.
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