Friday, July 17, 2015
A Few Observations on the Reading of the Current Draft of the Series Act Before the Uniform Laws Commission
A Few Observations on the Reading of the Current Draft of the
Series Act Before the Uniform Laws Commission
On Tuesday and Wednesday of this week, I was at the annual meeting of Uniform Laws Commission where we read the working draft of the series act and took comments thereon.
Speaking entirely for myself, and setting aside for now remarks dealing with either the technical wording of the act or its scope (i.e., should it be restricted to LLCs or apply to a broader range of unincorporated business), my take on the comments divided them into three inter-related questions:
Initially, why series? Essentially, this question comes down to one of function, namely what is achieved by this organizational form that cannot be achieved with already existing forms?
Second, assuming a valid place for the series in the range of available business organizational forms that should be available, does the statute successfully describe the functions and limitations of the form.
Third, even as the statute describes the series, does it preclude the misuse of the form (i.e., the “shell game” of assets, public disclosure of the existence of the series)?
Implicit in the third question is the degree to which the broader public recognition of series embodied in a uniform act will serve as a “imprimatur” of the organizational form even when jurisdictions such as Delaware that do not and it must be anticipated will not provide by statute for similar protections. As to the same point but reversing the point of perspective, to what degree should the uniform act in the states adopting it condition recognition on the series organized in a foreign jurisdiction upon compliance with the domestic state’s rules as to, for example, public filing of the existence of the series, public recordation of the association of titled assets with the series, etc.
Much work remains to be done, and it is a fascinating project.