The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Commerce and Tourism
BILL: SB 1346
INTRODUCER: Senator Berman
SUBJECT: Limited Liability Companies
DATE: January 29, 2024 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Renner McKay CM Favorable
2. JU
3. FP
I. Summary:
SB 1346 amends the Florida Revised Limited Liability Company Act in ch. 605, F.S., to provide
for the formation of a protected series limited liability company (LLC) under Florida law. The
bill specifies definitions, operations and governance, powers and duties, liability limitations, and
requirements related to service and notice, reporting, management, merger, and dissolution.
The bill also changes an internal reference in s. 605.0103, F.S., related to knowledge and notice.
The bill takes effect January 1, 2025.
II. Present Situation:
Limited Liability Companies
A limited liability company (LLC) is a type of business entity recognized by and regulated under
ch. 605, F.S., the Florida Revised Limited Liability Company Act (LLC Act). Benefits to
forming a business as an LLC include a flexible tax structure1 and a “vertical liability shield,”
1
Depending on elections made by an LLC’s members, the IRS will treat an LLC as either a corporation, a partnership, or a
disregarded entity. This last option allows for what is known as “pass-through taxation,” in which the LLC’s members claim
the LLC’s profits or losses as part of their personal taxes, alleviating the LLC of needing to file its own tax return and
preventing the profits and losses from being taxed twice. IRS, Limited Liability Company (LLC),
https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc (last visited Jan. 29, 2024).
BILL: SB 1346 Page 2
which limits the personal liability of the LLC’s members2 and managers3 for company
obligations.4
Forming a Florida LCC
To form an LLC in Florida, the authorized representatives5 must first choose a name, which
name must be distinguishable from the names of all other business entity names in the records of
the Department of State (DOS) and include the words “limited liability company” or the
abbreviation “LLC” or “L.L.C.”6 The authorized representatives must also designate a registered
agent to accept legal notices and service of process on behalf of the LLC at a registered office
located in Florida.7
Once these steps are completed, the authorized representatives must sign and deliver to the DOS
for filing articles of organization stating the LLC’s name; the street and mailing addresses of the
LLC’s principal office; and the name, street address in Florida, and written acceptance of the
LLC’s registered agent.8 An LLC is formed when the LLC’s articles of organization become
effective9 and when at least one person becomes a member at the time the articles of organization
become effective.10
Once formed, the members of the LLC may establish an operating agreement to lay the
groundwork for the company, which agreement governs the:
Relations among the members as members and between the members and the LLC;
Rights and duties of a person serving in the capacity of manager;
LLC’s activities and affairs; and
Means and conditions for amending the operating agreement.11
2
“Member” means a person who: (a) is a member of an LLC under s. 605.0401, F.S., or was a member in a company when
the company became subject to the Act; and (b) has not dissociated from the LLC under s. 605.0602, F.S. Section
605.0102(40), F.S.
3
“Manager” means a person who, under the operating agreement of a manager-managed LLC, is responsible, alone or in
concert with others, for performing the management functions stated in ss. 605.0407(3) and 605.04073(2), F.S. Section
605.0102(38), F.S.
4
Exceptions to the liability shield include a member’s or manager’s written consent to be liable for an obligation; a statutory
claw-back provision for improper distributions; provisions in agreements signed before the LLC’s organization; a member’s
or manager’s tortious conduct; a member’s or manager’s action or inaction that results in a violation of criminal law or
improper personal gain; liability arising under federal tax laws of the Florida sales and use tax laws; and a violation of
fiduciary duties to creditors. Section 605.0304, F.S. Daniel S. Kleinberger, Limited Liability Limited (Aug. 28, 2019),
https://www.americanbar.org/groups/business_law/publications/blt/2019/09/limited-liability/ (last visited Jan. 29, 2024).
5
One or more persons may act as authorized representatives to form an LLC. Section 605.0201, F.S.
6
Section 605.0112, F.S.
7
The registered agent must be an individual who resides in Florida and whose business address is identical to the address of
the registered office; another domestic entity that is an authorized entity and whose business address is identical to the
address of the registered office; or a foreign entity authorized to transact business in Florida that is an authorized entity and
whose business address is identical to the address of the registered office. Section 605.0113, F.S.
8
The articles of organization may contain statements on additional matters as specified in statute. Section 605.0201, F.S.
9
Except as otherwise provided, any document delivered to the DOS for filing under the LLC Act may specify an effective
time and a delayed effective date. In the case of initial articles of organization, a prior effective date may be specified in the
articles of organization if such date is within five business days before the date of filing. If the record does not specify an
effective time or a prior or delayed effective date, the record is effective on the date and at the time the record is accepted, as
evidenced by the DOS’s endorsement of the date and time on the filing. Section 605.0207, F.S.
10
Section 605.0201, F.S.
11
Section 605.0105, F.S.
BILL: SB 1346 Page 3
An LLC must also deliver to the DOS for filing an annual report stating:
The LLC’s name;
The LLC’s principal office and mailing addresses;
The date of the LLC’s organization;
The LLC’s federal employer identification number12 or, if none exists, whether one has been
applied for;
The name, title or capacity, and address of at least one person with the authority to manage
the LLC; and
Any additional information that is necessary or appropriate to enable the DOS to carry out
the LCC Act.13
Foreign LLCs Doing Business in Florida
An entity organized as an LLC under the laws of another jurisdiction (a foreign LLC) that wishes
to do business in Florida must, through an authorized representative, first apply for a certificate
of authority to transact business in Florida by delivering an application for such a certificate to
the DOS, which application must contain:
The foreign LLC’s name;
The name of the foreign LLC’s jurisdiction of formation;
The foreign LLC’s principal office and mailing addresses;
The name and street address in Florida of, and the written acceptance by, the foreign LLC’s
initial registered agent in Florida;
The name, title or capacity, and address of at least one person with the authority to manage
the foreign LLC; and
Additional information as may be necessary or appropriate in order to enable the DOS to
determine whether the foreign LLC is entitled to file an application for a certificate of
authority and to determine and assess applicable fees.14
Unless the DOS determines that such an application does not comply with the LLC Act’s filing
requirements, the DOS must, upon the payment of all filing fees, file the certificate of authority
application.15 The filing of the application means the foreign LLC has obtained a certificate of
authority and is authorized to do business in Florida.16 Such an LLC must file annual reports as
required of a domestic LLC, which reports must include additional information pertinent to a
foreign LLC as specified in the LLC Act.17
12
The federal employer identification number, also known as a federal tax identification number, is issued by the IRS and
used to identify a business for federal tax purposes. IRS, Employer ID Numbers, https://www.irs.gov/businesses/small-
businesses-self-employed/employer-id-numbers (last visited Jan. 29, 2024)
13
Section 605.0212, F.S.
14
Section 605.0902, F.S.
15
Section 605.0903, F.S.
16
Id.
17
Section 605.0212, F.S.
BILL: SB 1346 Page 4
Protected Series Limited Liability Companies
In 1996, Delaware enacted legislation providing for the formation of a “protected series limited
liability company” (protected series LLC), which offers both the traditional, vertical liability
shield of an LLC and a new, horizontal liability shield for any protected series of the LLC; in
other words, the assets of any one protected series of an LLC are not available to satisfy the
claims of creditors of the LLC or of any other protected series of the LLC.18 Since then, 20 other
states and the District of Columbia have enacted legislation providing for the formation of some
type of protected series LLC.19
In response to the growing popularity of this type of business entity, the Uniform Law
Commission promulgated the Uniform Protected Series Act (UPSA) in 2017, intended as a
model law that could be inserted into a state’s existing LLC statutes.20 The UPSA contains
definitions; a description of the nature and purpose of a protected series LLC, as well as its
powers, purpose, and duration; a description of how a protected series is governed by the LLC’s
operating agreement; and rules for applying certain provisions of a state’s existing LLC act to a
protected series.21
Florida
A protected series LLC formed in another state (a foreign series LLC) is currently authorized to
do business in Florida if it meets all applicable statutory requirements for a foreign LLC and
registers with the DOS.22 However, Florida law does not currently recognize the protected series
LLC model; thus, each series in a foreign series LLC must qualify to do business in Florida as if
each series were a separate legal entity. Moreover, there is no guidance for lawyers and judges
being asked to address a foreign series LLC with respect to contracts, claims, and disputes.23
In 2020, the Business Law Section of the Florida Bar formed the Protected Series LLC Task
Force (Task Force) to analyze the USPA and consider its adoption in Florida.24 The Task Force
ultimately proposed that new sections be added to the LLC Act to authorize the formation of a
protected series LLC under Florida law, using model language borrowed from the UPSA and
language which deviates from the UPSA to address unique aspects of Florida law.25
18
Protected Series LLC Task Force of the Florida Bar Business Law Section, White Paper: Analysis of Proposed Additions to
Chapter 605 (Jan. 14, 2024).
19
These states are: Wisconsin, Oklahoma, Illinois, Nevada, Tennessee, Iowa, Texas, Kansas, Missouri, Montana, Utah,
Alabama, Indiana, Arkansas, Nebraska, North Dakota, South Dakota, Virginia, Wyoming, and Ohio. Puerto Rico also
recognizes a protected series LLC. Id.
20
Uniform Law Commission, The Uniform Protected Series Act,
https://www.uniformlaws.org/search?executeSearch=true&SearchTerm=uniform+protected+series+act&l=1 (last visited Jan.
29, 2024).
21
Id.
22
See Business Law Section, supra note 18.
23
Id.; See s. 605.0902, F.S., authorizing the DOS to require each individual series of a foreign series LLC to make a separate
application for a certificate of authority, and to make such other filings as may be required for purposes of complying with
the requirements of the LLC Act as if such series was a separate foreign LLC.
24
See Business Law Section, supra note 18.
25
Id.
BILL: SB 1346 Page 5
III. Effect of Proposed Changes:
The bill adopts the Business Law Section Task Force’s recommendations, creating The Uniform
Protected Series Provisions in ss. 605.2101-605.2802, F.S., within the LLC Act to allow for the
formation of a protected series LLC under Florida law. The bill refers to a protected series LLC
as a “series LLC” and defines the term to mean a domestic LLC with at least one protected series
established under s. 605.2201, F.S.
Practically speaking, this may encourage a business wishing to organize as a protected series
LLC to organize under Florida law. The bill also recognizes the structure of existing foreign
series LLCs wishing to do business in Florida, and provides clarity for lawyers and judges
engaging with a business organized as a series LLC.
Series LLC Formation
The bill specifies that the provisions of the LLC Act applicable to the formation of an LLC
generally also apply to the formation of a series LLC or protected series, except as otherwise
provided. The bill also establishes provisions specific to the formation of a series LLC or
protected series.
Section 5 specifies a short title for sections 605.2101 through 605.2802 – the “Uniform
Protected Series Provisions.”
Section 6 specifies definitions for use in the provisions.
Designation of Protected Series
Section 13 creates s. 605.2201, F.S., to provide that, with the affirmative vote or consent of all
members of an LLC, the LLC may establish a protected series. To establish a protected series
after such a vote, the bill requires an LLC to deliver to the DOS for filing a protected series
designation, signed by the LLC, stating the names of the LLC and of the protected series to be
established, and any other information the DOS requires for filing.
Under the bill, a protected series is established when the protected series designation takes effect.
To amend such a designation, a series LLC must deliver to the DOS for filing a statement of
designation change, signed by the company, that sets forth:
The names of the series LLC and of the protected series to which the designation applies;
Each change to the protected series designation; and
A statement that the change was approved by the affirmative vote or consent of the members
of the series LLC required to make the designated change.
The amendment takes effect when the statement of designation change takes effect.
Protected Series Name
Section 14 creates s. 605.2202, F.S., to specify that a protected series’ name generally must meet
the statutory requirements for LLC names. However, under the bill, a protected series’ name
must also:
BILL: SB 1346 Page 6
Begin with the series LLC’s name, including any word or abbreviation required by the LLC
Act; and
Contain the phrase “protected series” or the abbreviation “P.S.” or “PS.”
If a series LLC changes its name, the LLC must deliver to the DOS for filing a statement of
designation change for each of the LLC’s protected series, changing the name of each such series
to comply with this section.
Nature of a Protected Series
Section 7 creates s. 605.2103, F.S. to provide that a protected series is a person26 distinct from
all of the following:
The series LLC, generally.
Another protected series of the series LLC.
A member of the series LLC, regardless of whether the member is an associated member27 of
the protected series.
A protected-series transferee28 of a protected series of the series LLC.
A transferee of a transferrable interest29 of the series LLC.
Powers and Duties of a Protected Series
Section 8 creates s. 605.2104, F.S., to provide that a protected series:
Can sue and be sued in its own name.
Generally has the same powers and purposes as the series LLC.
Ceases to exist not later than when the series LLC completes its winding up.
May not:
o Be a member of the series LLC;
o Establish a protected series; or
o Except as otherwise authorized by Florida law, have a purpose or power, or take an
action, that Florida law prohibits an LLC from having or taking.
Liability Limitations
The bill recognizes both the traditional, vertical liability shield of an LLC and the new,