HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1345 Limited Liability Companies
SPONSOR(S): Jacques
TIED BILLS: IDEN./SIM. BILLS: SB 1324
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Civil Justice Subcommittee 15 Y, 2 N Mawn Jones
2) Commerce Committee
3) Judiciary Committee
SUMMARY ANALYSIS
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 structure and a “vertical liability shield,” which limits the personal liability of the LLC’s
members and managers for company obligations.
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. Since then, 18 other states and the District of Columbia have enacted legislation
providing for the formation of some type of protected series LLC.
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. 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.
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 an LLC formed under the laws of another
jurisdiction wishing to do business in Florida. 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. 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. The Task Force ultimately proposed that the LLC Act be modified 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.
HB 1345 adopts the Task Force’s recommendations, creating ss. 605.2101-605.2802, F.S., to allow for the
formation of a protected series LLC under Florida law. Practically speaking, this may encourage a business
wishing to organize as a protected series LLC to organize under Florida law; will recognize the structure of
existing protected series LLCs wishing to do business in Florida; and will provide clarity for lawyers and judges
engaging with a business organized as a protected series LLC.
The bill may have an indeterminate fiscal impact on state government but does not appear to have a fiscal
impact on local governments. The bill provides an effective date of July 1, 2023, except as otherwise provided.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1345a.CJS
DATE: 4/4/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
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,” which limits the personal
liability of the LLC’s members 2 and managers 3 for company obligations.4
Forming a Florida LCC
To form an LLC in Florida, the authorized representatives 5 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 effective 9 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
1 Depending on elections made by an LLC’s members, the IRS will treat an LLC as either a corporation, a partnership, or a disre garded
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 Liab ility Company (LLC), https://www.irs.gov/businesses/small-businesses-self-employed/limited-
liability-company-llc (last visited April 4, 2023).
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. S. 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.
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. S. 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 April 4, 2023).
5
One or more persons may act as authorized representatives to form an LLC. S. 605.0201, F.S.
6 S. 605.0112, F.S.
7 The registered agent must be an individual who resides in Florida and whose business address is identical to th e address of the
registered office; another domestic entity that is an authorized entity and whose business address is identical to the addres s of the
registered office; or a foreign entity authorized to transact business in Florida that is an authorized e ntity and whose business address
is identical to the address of the registered office. S. 605.0113, F.S.
8 The articles of organization may contain statements on additional matters as specified in statute. S. 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 artic les 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 delaye d
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. S. 605.0207, F.S.
10 S. 605.0201, F.S.
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Means and conditions for amending the operating agreement. 11
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 number 12 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
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
11 S. 605.0105, F.S.
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 April 4, 2023)
13 S. 605.0212, F.S.
14 S. 605.0903, F.S.
15 Id.
16 Id.
17 S. 605.0212, F.S.
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any other protected series of the LLC.18 Since then, 18 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
Effect of Proposed Changes
HB 1345 adopts the Business Law Section Task Force’s recommendations, creating 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 an 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 recognizes the structure of existing protected series LLCs wishing
to do business in Florida and provides clarity for lawyers and judges engaging with a business
organized as a protected series LLC.
18 Protected Series LLC Task Force of the Florida Bar Business Law Section, White Paper: Analysis of Proposed Revisions to Chapter
605 (Jan. 13, 2023), https://flabizlaw.org/wp-content/uploads/2023/01/White-Paper-of-Proposed-Revisions-to-Chapter-605-for-
Protected-Series-LLC-1-13-23-1.pdf (last visited April 4, 2023).
19
These states are Wisconsin, Oklahoma, Illinois, Nevada, Tennessee, Iowa, Texas, Kansas, Missouri, Montana, Utah, Alabama,
Indiana, Arkansas, Nebraska, North Dakota, Virginia, and Ohio. Puerto Rico also recognizes a protected series LLC.
20 Uniform Law Commission, The Uniform Protected Series Act, https://higherlogicdownload.s3-external-
1.amazonaws.com/UNIFORMLAWS/36953c44-f8c8-04e4-33b4-
7217f4c94aa1_file.pdf?AWSAccessKeyId=AKIAVRDO7IEREB57R7MT&Expires=1680018971&Signature=sTvqf2axyQzxE016hsFUBH
9KNgc%3D (last visited April 4, 2023).
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.
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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.
Designation of Protected Series
The bill 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