Limited liability company

A corporate structure whereby the shareholders of the company have a limited liability to the company's actions.

Investopedia Says:
Basically, an LLC is a hybrid between a partnership and a corporation.

Related Links:
CEOs, CFOs, presidents and vice presidents: learn how to tell the difference. The Basics Of Corporate Structure

Company in which shareholders limit their liability exposure to their percentage of ownership or equity interest in the company. Shareholders' personal assets are protected in the event of business-related lawsuits. The tax situation for this type of company is much like that of the partnership in that it acts as a pass-through tax entity. A tax return for a partnership is filed with the IRS for information purposes only. All income and expenses are attributed to the stockholders of the LLC. According to the LLC agreement, the stockholders can allocate income and its resultant tax liability the same way as partners in a partnership.

The LLC has advantages over the subchapter "S" corporation to include the following: (1) LLC has no restriction on number of persons who may be stockholders; "S" corporations are limited to 35 stockholders; (2) LLC may have multiple classes of stock; an "S" corporation can have only one issue of stock; and (3) LLC may own subsidiaries; an "S" corporation cannot own subsidiaries.

Organization form recognized in many states that may be treated as a partnership for federal tax purposes and has Limited Liability protection for the owners at the state level. The entity may be subject to the state Franchise tax as a Corporation. Many states also recognize Limited Partnerships, in which the individual partners are protected from the liabilities of the other partners. These entities are considered Partnerships for both federal and state tax purposes.
Example: A limited liability company may be an excellent way to own real estate because it may provide many of the legal advantages of a Corporation and the tax advantages of a Partnership. States may impose restrictions, for example by limiting the number of owners.

The Limited Liability Company (LLC), a hybrid of the partnership and the corporation, has become a popular legal alternative for business owners. Now available in almost all states, the LLC combines the benefits of limited liability and pass through taxation, much like an S corporation. But the LLC's legal structure is much looser, allowing many companies that find S corporation status too restrictive to take advantage of its benefits. Small business owners are taking advantage of the LLC because it is easier to set up and maintain than a corporation.

Because the LLC is a fairly new option in the United States (it first became available in Wyoming in 1977, but most other states did not follow suit until the 1990s), the laws governing this business form are largely uninterpreted by court cases. In addition, each state has its own statutes concerning LLCs. Therefore, learning and keeping up with the laws that govern LLCs, which are still being fine-tuned, can be a tricky business. When considering the LLC option, consulting knowledgeable and up-to-date legal and tax advisors is a must.

Advantages of Forming an Llc

LIMITED LIABILITY. Like corporations, the LLC provides its members (owners) with protection from being personally responsible for the debt liabilities of the company. Members are only liable to the extent of their investments in the company. If a customer slips and is injured on company property, a law suit may still bankrupt the business, but it cannot touch the personal assets of the LLC's members. This limited liability, then, is a great advantage over partnerships. In general partnerships, all members are liable for the company's debts, and in a limited partnership, at least one member must still be liable.

AVOIDING DOUBLE TAXATION. Like S corporations, LLC's enjoy exemption from the double taxation required of C corporations. In other words, the LLC's profits pass through to the company's members, who report their share of the profits on their personal federal tax returns. The company itself does not pay a federal tax before the money is distributed to the members, as in the case of C corporations. But state and local taxes may still be levied against the LLC.

FLEXIBILITY OF INCOME DISTRIBUTION. One of the biggest benefits that small businesses enjoy when choosing LLC status, according to Fred Steingold, author of The Legal Guide for Starting and Running a Small Business, is that it is "easier to allocate profits and losses for tax purposes." Whereas the amount of profits the S corporation's shareholders report on their federal tax returns must be proportional to their share of stock, an LLC's members can determine amongst themselves how to divide their income as long as they follow the Internal Revenue Service's rules on partnership income distribution.

SIMPLICITY. Another great advantage of LLCs over corporations is the ease of setting up and running one. Whereas incorporation can be an involved and costly process, all that is required to start an LLC is the filing of an Articles of Organization and the drafting of an Operating Agreement defining the company's policies and procedures (a filing fee, though, will still be required of LLCs). And whereas a corporation requires a board of directors, officers, and regular shareholders' and directors' meetings, an LLC is not required to observe such formalities in its operation. An LLC can be run from day to day essentially as if it were a partnership.

NO OWNERSHIP RESTRICTIONS. The biggest drawback of forming an S corporation—the restrictions on the type and number of shareholders the corporation may have—is avoided by forming an LLC. The members of an LLC may be foreign nationals or other companies, both of which are prohibited from owning stock in an S corporation. In addition, there is no limit on the number of members an LLC may have, as there is with an S corporation.

MEMBER INVOLVEMENT IN THE COMPANY. One problem with limited partnerships is that those partners who wish to protect themselves with limited liability (which may be all but one of the members) are prohibited from direct involvement in running the company. These partners may have only a financial investment in the firm. All members of an LLC may be directly involved in the company's management without jeopardizing their limited liability.

ATTRACTIVE TO FOREIGN INVESTORS. Because LLCs have been in existence in Europe and Latin America for over a century, investors from those parts of the world are particularly knowledgeable about this business form. According to The Essential Limited Liability Handbook, "LLCs often prove to be the most familiar and least imposing business structure for foreign entrepreneurs who wish to enter the American market."

Drawbacks of Forming an Llc

NEWNESS. LLCs are still a very new option in most states (only Wyoming and Florida had LLC statutes on the books prior to the 1990s). This means that the statutes governing the establishment of LLCs are still evolving. And there is virtually no case history in the courts to indicate how these laws will be interpreted. The Internal Revenue Service is also still working out its position concerning LLCs, so it will be imperative for small business owners to solicit legal and tax advice on the current laws before making a decision about whether or not to form an LLC. And because the laws may change while the LLC is in existence, it will be important to keep on top of the developments in LLC statutes to determine whether it remains in the company's best interests to operate as an LLC.

INTERSTATE BUSINESS MORE COMPLICATED. Laws governing LLCs can vary widely from state to state, complicating the conduct of business across state lines. There are, as of yet, no uniform laws concerning LLCs, so an even greater knowledge of the state laws will be required of the company that does business in more than one state.

NO PERPETUAL EXISTENCE. Most states require that an LLC's Operating Agreement set a limit to the company's existence (usually 30 years). And in the absence of a clause in the Operating Agreement providing for the continuance of the LLC in the event of the death or withdrawal of a member, the LLC will cease to exist when such events occur. The transfer of ownership is also more restricted for an LLC (like a partnership) than for a corporation.

Creating an Llc

It is important that the organizer(s) of a prospective LLC follow the "enabling statutes" or formation laws of the state in which the company will be formed in order to be designated as an LLC. Without this designation, the company will lack the protection of limited liability and will be treated as a general partnership. Therefore, the first step in creating an LLC is to find out your state's specific enabling statutes.

The organizer does not have to be one of the company's members. The organizer's function is to file the articles of organization, a task which can be accomplished by a lawyer, a hired agent from a service company specializing in such business, or a manager of the prospective company.

NAMING AN LLC. Before forming an LLC, the company name must be reserved with the secretary of state or its equivalent. Most states require that the words "Limited Liability Company" or the abbreviation "LLC" be included in the name of the company. In some states, "Limited Company" or "LC" is the preferred designation. In all states, though, the name of the LLC must not resemble the name of any other corporation, LLC, partnership, or sole proprietorship that is registered with the state.

THE ARTICLES OF ORGANIZATION. This form, called the articles of organization or certificate of formation, must be obtained from the secretary of state's office or its equivalent, filled out by the organizer(s), and filed with the same office. A filing fee, which varies from state to state, will also be charged. This simple document requires, at minimum, the company name and address, a description of the business to be conducted, the name and address of the registered agent (the contact to whom notices of lawsuit or other official matters can be served), the names of the company's members and managers (usually the members themselves), and the dissolution date. Other information may be required, depending on which state the articles of organization are filed in. It is important that the articles describe the business in a way that will allow the Internal Revenue Service to designate the company a partnership for tax purposes, and not a corporation. In order for the I.R.S. to do so, the articles must show that the company possesses no more than two of the following four characteristics (which describe a corporation):

• Perpetual existence
• Centralized management
• Free transferability of ownership interest
• Limited liability

One of the easiest ways to show that the LLC is not a corporation is to limit its existence. In fact, most states require that a dissolution date be determined in the articles of organization. On this date the LLC's assets will be liquidated and its business will cease (occurrences such as the mutual written agreement of the members or the death or retirement of a member may also terminate the LLC's existence before the dissolution date). If no date is specified, a default period of usually 30 years will be enacted. However, the members may decide to continue the LLC's existence at a later date.

FEES. Filing fees vary from state to state, from $50 to $500. In addition, some states require the LLC to publish an announcement of its creation to the public in a generally circulated newspaper. This latter requirement can be very expensive, ranging from $500 to $2,000.

THE OPERATING AGREEMENT. At the first meeting of the members, called the organizational meeting, an operating agreement should be drafted. Although each state has laws governing how LLC's should be operated, the members should create their own operating agreement to document that all members agree on how the company should be run. It should be carefully constructed with an eye to preventing future disagreements and deadlocks. Most basically, the agreement should address the division of profits, members' voting rights, and company management. A good operating agreement will address the following issues:

• Who the members are and how they will be elected in the future.
• Grounds on which members may be terminated, and procedures to execute such terminations.
• Stipulations regarding allocation of business shares after the death of a member.
• If a member becomes disabled, how will the company provide for him/her (with disability insurance or out of its own funds)?
• How managers will be selected and what their duties, salaries, and grounds for dismissal will be.
• How major decisions will be made. (Which decisions will require unanimous approval of the members and which a simple majority vote? Which decisions can be delegated to the manager in charge of daily affairs?)
• How often meetings will be held and how much notice members must receive.
• Who will keep records and how they will be kept.
• How members will invest in the LLC: will only cash contributions be allowed, or can members contribute services as well? If so, which services will be accepted and how will they be valued?
• How profits and losses will be allocated to members.
• How compensation (salary) for actively participating members will be determined.
• How new capital should be acquired should the company need it.
• What procedures must be followed to transfer interests in the company.
• What banking procedures should be followed.
• Penalties, if any, if members or managers fail to act in accordance with the operating agreement.

Further Reading:

Borofsky, Jeffrey Mark. "Converting a Corporation to an LLC." CPA Journal. March 1998.

Byrd, Stephen, and Brett Richey. "The Choice of Entity for the Small Business Owner." Mid-Atlantic Journal of Business. December 1, 1998.

Damman, Gregory C. How to Form and Operate a Limited Liability Company: A Do-it-Yourself Guide. Self-Counsel Press, 1995.

The Essential Limited Liability Handbook. Oasis Press, 1995.

Friedman, Scott E. How to Profit by Forming Your Own Limited Liability Company. Upstart, 1995.

Handmaker, Stuart A. Choosing a Legal Structure for Your Business. Prentice Hall, 1997.

Mancuso, Anthony. Form Your Own Limited Liability Company. Nolo Press, 1996.

Shenkman, Martin M., Samuel Weiner, and Ivan Taback. Starting a Limited Liability Company. Wiley, 1996.

A noncorporate business whose owners actively participate in the organization's management and are protected against personal liability for the organization's debts and obligations.

The limited liability company (LLC) is a hybrid legal entity that has characteristics of a corporation and a partnership. An LLC provides its owners with corporate-like protection against personal liability. It is, however, usually treated as a noncorporate business organization for tax purposes.

History

The LLC is a relatively new business form in the United States, although it has existed in other countries for some time. In 1977 Wyoming became the first state to enact LLC legislation: it wanted to attract capital and created the statute specifically for a Texas oil company (W.S. 1977 § 17-15-101 et seq., Laws 1977, ch. 158 § 1). Florida followed with its own LLC statute in 1982 (West's F.S.A. § 608.401, Laws 1982, c. 82-177 § 2). At this point states had little incentive to form an LLC because it remained unclear whether the Internal Revenue Service (IRS) would treat an LLC as a partnership or as a corporation for tax purposes. In 1988 the IRS issued a ruling that an LLC in Wyoming would be treated as a partnership for tax purposes. This allowed the taxable profits and losses of an LLC to flow through to the LLC's individual owners; unlike a typical corporation, an LLC would not be taxed as a separate business organization. After the 1988 IRS ruling, nearly every state in the United States enacted an LLC statute, and the LLC is now a widely recognized business form. Many legal issues concerning the LLC are still developing.

Formation

State law governs the creation of an LLC. Persons form an LLC by filing required documents with the appropriate state authority, usually the secretary of state. Most states require the filing of articles of organization. These are considered public documents and are similar to articles of incorporation, which establish a corporation as a legal entity. The LLC usually comes into existence on the same day the articles of organization are filed and a filing fee is paid to the secretary of state.

The minimum information required for the articles of organization varies from state to state. Generally, it includes the name of the LLC, the name of the person organizing the LLC, the duration of the LLC, and the name of the LLC's registered agent. Some states require additional information, such as the LLC's business purpose and details about the LLC's membership and management structure. In all states an LLC's name must include words or phrases that identify it as a limited liability company. These may be the specific words Limited Liability Company or one of various abbreviations of those words, such as LLC or Ltd. Liability Co.

Structure

The owners of an LLC are called members and are similar in some respects to shareholders of a corporation. A member can be a natural person, a corporation, a partnership, or another legal association or entity. Unlike corporations, which may be formed by only one shareholder, LLCs in most states must be formed and managed by two or more members. LLCs are therefore unavailable to sole proprietors. In addition, unlike some closely held, or S, corporations, which are allowed a limited number of shareholders, LLCs may have any number of members beyond one.

Generally, state law outlines the required governing structure of an LLC. In most states members may manage an LLC directly or delegate management responsibility to one or more managers. Managers of an LLC are usually elected or appointed by the members. Some LLCs may have one, two, or more managers. Like a general partner in a limited partnership or an officer in a corporation, an LLC's manager is responsible for the day-to-day management of the business.

A manager owes a duty of loyalty and care to the LLC. Unless the members consent, a manager may not use LLC property for personal benefit and may not compete with the LLC's business. In addition, a manager may not engage in self-dealing or usurp an LLC's business opportunities, unless the members consent to a transaction involving such activity after being fully informed of the manager's interest.

Operating Agreement

Nearly every LLC maintains a separate written or oral operating agreement, which is generally defined as the agreement between the members that governs the affairs of the LLC. Some states call an operating agreement regulations or a member control agreement. Although some states do not require an operating agreement, nearly all LLCs create and maintain a written document that details their management structure.

The operating agreement typically provides the procedures for admitting new members, outlines the status of the LLC upon a member's withdrawal, and outlines the procedures for dissolution of the LLC. Unless state law restricts the contents of an operating agreement, members of an LLC are free to structure the agreement as they see fit. An LLC can usually amend or repeal provisions of its operating agreement by a vote of its members.

Membership Interests

A member of an LLC possesses a membership interest, which usually includes only an economic interest. A membership interest is considered personal property and may be freely transferred to nonmembers or to other members. The membership interest usually does not include any right to participate in the management of the LLC. Accordingly, if a member assigns or sells a membership interest to another person, that other person typically receives only the right to the assigning member's share of profits in the LLC. Persons who receive a membership interest are not able to participate as voting members or managers unless they are admitted as new members.

State law and an LLC's operating agreement or articles of organization provide the circumstances under which a person may be admitted as a new member. These circumstances vary. Usually the admission of a new member requires the consent of existing members, and in most cases the consent must be unanimous. In some cases the articles of organization do not allow for admission of new members. In others the recipient of a membership interest may be automatically admitted as a new member.

Member Contributions

Members of an LLC contribute capital to the LLC in exchange for a membership interest. There is no minimum amount of capital contribution, and members usually can contribute cash, property, or services. By default, the total amount of a member's capital contribution to an LLC determines the member's voting and financial rights in the LLC. In other words, unless an LLC's operating agreement provides for a different arrangement, the profits and losses of the LLC are shared proportionally in relation to the members' contributions to the LLC. For example, if a member's capital contributions constitute 40 percent of an LLC's capital, that member typically has a 40 percent stake in the LLC and has more voting power than a member with a 20 percent interest.

A member may promise a future contribution to an LLC in exchange for a membership interest. If the member later fails to make the contribution, the LLC generally may enforce the promise as a contract or sell the member's existing interest to remedy the failure.

Distributions of profits or assets to members are usually governed by an LLC's operating agreement. Most state LLC laws do not require distributions to members other than when a member withdraws or terminates membership. Members vote to determine all aspects of distributions to members, including amount and timing. Because a member's share of any distribution or loss depends on the member's share of all capital contributions to an LLC, the LLC maintains records of each member's capital contribution.

Liability

State LLC statutes specifically provide that members of an LLC are not personally liable for the LLC's debts and obligations. This limited liability is similar to the liability protection for corporate shareholders, partners in a limited partnership, and partners in a limited liability partnership. Under certain circumstances, however, a member may become personally liable for an LLC's debts.

An individual member is generally personally liable for her own torts and for any contractual obligations entered into on behalf of the member and not on behalf of an LLC. In addition, a member is personally liable to a third person if the member personally guarantees a debt or obligation to the third person. A person who incurs debts and obligations on behalf of the LLC prior to the LLC's formation is jointly and severally liable with the LLC for those debts and obligations.

Members may also become personally liable for an LLC's debts or obligations under the "piercing-the-corporate-veil" theory. This doctrine imposes personal liability upon corporate shareholders and applies primarily if a corporation is undercapitalized, fails to follow corporate formalities, or engages in fraud. Although the law of LLCs is still developing, piercing the corporate veil is likely applicable to an LLC that fails to follow the legal formalities required to manage the LLC. LLC statutes in Colorado, Illinois, and Minnesota specifically apply the corporate veil-piercing theory to LLCs.

A member is generally considered an agent of an LLC and thus may bind the LLC for the debts and obligations of the business. When a member has apparent or actual authority and acts on behalf of an LLC while carrying on the usual business of the LLC, the member binds the LLC. If a third person knows that the member is not authorized to act on behalf of the LLC, the LLC is generally not liable for the member's unauthorized acts. Some states also limit a member's authority to act as an agent of an LLC.

Records and Books

Many LLC statutes require an LLC to maintain sufficient books and records of its business and management affairs. This requirement varies from state to state. The books and records generally detail the members' contributions to the LLC, the LLC's financial and tax data, and other financial and management information. Like a partnership's books, an LLC's books generally must be kept at the LLC's principal place of business, and each member must have access to and must be allowed to inspect and copy the books upon reasonable demand.

Taxation

The IRS generally treats an LLC as a partnership for federal income tax purposes. The LLC's members are taxed only on their share of LLC profits. Any gains, losses, credits, and deductions flow through the LLC to the members, who report them as income and losses on their personal tax return. The LLC is not taxed as a separate entity unless it fails to qualify as a partnership for tax purposes.

The IRS will examine a state's LLC statute and an LLC's operation to determine whether the LLC qualifies as a partnership for tax purposes. Essentially, if the IRS determines that the LLC resembles a corporation more than a partnership, the LLC may not qualify as a partnership for tax purposes. Under IRS regulations, an LLC must lack two of four recognized corporate characteristics before it will be treated as a partnership for tax purposes. These characteristics are limited liability, centralized management, free transferability of interests, and continuity of life. Because every LLC protects its members' liability, an LLC almost always possesses the characteristic of limited liability. Therefore, the IRS's analysis usually focuses on the last three characteristics.

Centralized Management

A business organization has centralized management when one or more persons have exclusive authority to manage its day-to-day conduct. Most LLCs lack the corporate characteristic of centralized management because most state LLC statutes provide that members manage the LLC directly, and LLCs that do not have separate managers lack the corporate characteristic of centralized management. However, some states require LLCs to have one or more managers to manage the LLC. If an LLC's operating agreement or articles of organization require each and every member to be a manager, the LLC likely lacks the corporate characteristic of centralized management. If, on the other hand, the members designate nonmembers to manage the LLC or designate member-managers who do not own a substantial portion of the LLC's membership interests, the LLC may possess the corporate characteristic of centralized management.

Free Transferability of Interests

A business form possesses free transferability of interests when one of its owners essentially has the power to substitute another person as a new owner of the business. Most corporate shareholders, for example, may sell their shares freely and thereby transfer their ownership interest to another person, without the consent of other shareholders. A member in an LLC, however, generally may not substitute another person as a new member unless the existing members agree to the substitution. A member typically has the power only to assign his economic rights in an LLC. Thus, members of an LLC lack the ability to freely transfer substantially all of their interest in the LLC.

Continuity of Life

Continuity of life essentially means perpetual continuation without regard to the withdrawal, expulsion, or death of any member. Most state LLC statutes provide for the dissolution of an LLC upon the death, disability, bankruptcy, or withdrawal of a member. Accordingly, most LLCs lack the corporate characteristic of continuity of life, unless their operating agreement substantially changes the effect of a member's withdrawal upon the continued existence of the LLC. Many state LLC statutes also limit the duration of an LLC to thirty years, but this limitation does not affect the IRS's determination of whether an LLC lacks continuity of life.

Member Withdrawal

Members may withdraw from an LLC unless the operating agreement or articles of organization limit their ability to do so. A member must usually provide to the LLC written notice that she intends to withdraw. If a withdrawal violates the operating agreement, the withdrawing member may be liable to the other members or the LLC for damages associated with it. State law frequently sets forth the circumstances under which a member may withdraw from an LLC. In many states a member may withdraw only if she or he provides six months' written notice of the intent to withdraw. In a few states, an LLC cannot prevent a member's withdrawal.

A member who withdraws is usually entitled to a return of his capital contribution to an LLC, unless the withdrawal is unauthorized. Some LLCs instead pay a withdrawing member the fair market value of his or her membership interest. The operating agreement typically provides for the method and manner of payment of a withdrawing member's interest. State law also governs those issues.

Dissolution

Dissolution means the legal end of an LLC's existence. In most states an LLC legally dissolves upon the death, disability, withdrawal, bankruptcy, or expulsion of a member. These occurrences are generally called disassociations. Other circumstances that bring about dissolution include bankruptcy of the LLC, a court order, or the fulfillment of the LLC's stated period of duration.

Most states provide for the continuation of an LLC after the disassociation or withdrawal of a member. Continuation after a member's disassociation usually requires the remaining members' unanimous consent. Some states require that the articles of organization or operating agreement allow for the continuation of the business after a member's disassociation. Some states allow an LLC's articles of organization or operating agreement to require the continuation of the business after a member's dissociation even if the remaining members do not provide unanimous consent.

If an LLC dissolves, state law and the LLC's operating agreement usually outline the process for winding up the LLC's business. In this process the LLC pays off its remaining creditors and distributes any remaining assets to its members. The LLC's creditors receive priority. Although members may be creditors, they are not creditors in determining the members' distributive shares of any remaining assets. After the LLC pays off its creditors, and only then, it distributes the remaining assets to its members, either in proportion to the members' shares of profits or under some other arrangement outlined in the operating agreement. After an LLC winds up its business, most states require it to file articles of dissolution.

This article is about a U.S.-specific business entity form. For limited liability companies in the United Kingdom, see Limited company. For a general discussion of entities with limited liability, see Corporation.

Companies law

Company · Business Sole proprietorship Partnership (General · Limited · LLP) Corporation Cooperative

United States

S corporation · C corporation LLC · LLLP · Series LLC Delaware corporation Nevada corporation Massachusetts business trust

UK / Ireland / Commonwealth

Limited company (by shares · by guarantee Public · Proprietary) Unlimited company Community interest company

European Union / EEA

SE · SCE · SPE · EEIG

Related areas

Contract · Civil procedure

v • d • e

A limited liability company or A company with limited liability (abbreviated L.L.C. or LLC or W.L.L) in the law of the vast majority of United States jurisdictions is a legal form of business company that provides limited liability to its owners. Often incorrectly called a "limited liability corporation" (instead of company), it is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation and it is well-suited for companies with a single owner.

It is important to understand that limited liability does not imply owners are always fully protected from personal liabilities. Courts can and do pierce the corporate veil of LLCs when some type of fraud or misrepresentation is involved, or under certain situations where the owner uses the company as an "alter ego."^[1]

Contents 1 Terminology 2 Flexibility and default rules 3 Management 4 Income taxation 5 Advantages 6 Disadvantages 7 Variations 8 History by country 8.1 United States 8.2 United Kingdom 8.3 Belgium 8.4 Bosnia and Herzegovina 8.5 Brazil 8.6 Bulgaria 8.7 Chile 8.8 Colombia 8.9 Croatia 8.10 Czech Republic 8.11 Denmark 8.12 Egypt 8.13 Estonia 8.14 Finland 8.15 Germany 8.16 Hungary 8.17 Italy 8.18 Japan 8.19 Latvia 8.20 Lithuania 8.21 Macedonia 8.22 Mexico 8.23 Moldova 8.24 Poland 8.25 Romania 8.26 Russia 8.27 Serbia 8.28 Slovakia 8.29 Slovenia 8.30 Sweden 8.31 Switzerland 8.32 Ukraine 8.33 U.A.E. 9 Names and abbreviations 10 See also 11 References

Terminology

Member

LLC members are the owners of the LLC as much as shareholders are the owners of a corporation or the partners of a partnership. Like shareholders, a member's liability to repay the LLC's obligations is limited to his or her capital contribution. Members may be natural persons, corporations, partnerships, or other LLCs.

Membership Interest

A member's ownership interest in an LLC is often called a membership interest. Membership interests are often divided into standardized units which, in turn, are often called shares or units. Unless otherwise provided for in the operating agreement, a member's right to receive distributions or exercise member rights over the LLC is proportionate to their membership interest. Membership interests and member rights are regulated by state law.

Manager

In most states, LLCs may be managed by their members in proportion to their membership interests. In some states such as Georgia, however, each member has an equal right to participate in the management of the LLC unless there is a specific provision in the articles of organization or operating agreement to the contrary. Many LLC operating agreements, however, provide for a manager or board of managers to oversee or run the day-to-day operations of the LLC. The managers are elected or appointed by members and may also be, if so provided in the operating agreement, removed by members. A member may also be a manager. There is some confusion as to how to treat someone who is identified as the "managing member" of an LLC. Although suggestions have been made on earlier versions of this entry that a "managing member" should be treated as a manager, the better treatment is consider a "managing member" as being a member.

Articles of Organization

All LLCs must file evidence of their existence with the secretary of state (or some governmental office) of the state where they choose to be organized. The Articles of Organization serve this purpose.

Operating Agreement

The Operating Agreement of an LLC is the document most important to the governance of an LLC because it determines, defines, and apportions the rights of the members and the managers if any. The operating agreement generally is not filed with the secretary of state (or other governmental office).

Flexibility and default rules

The phrase "unless otherwise provided for in the operating agreement" (or its equivalent) is found throughout all existing LLC statutes and is responsible for the flexibility of the LLC.

In contrast, the phrase "unless otherwise provided for in the bylaws" is also found in all corporation law statutes but often refers only to relatively minor matters.

Management

LLCs may be either member-managed or manager-managed. A member-managed LLC may be governed by a single class of members (in which case it approximates a partnership) or multiple classes of members (in which case it approximates a limited partnership). Choosing manager management creates a two-tiered management structure that approximates corporate governance with the managers typically holding powers similar to corporate officers and directors. The LLC's operating agreement (the LLC version of a partnership agreement or a corporation's bylaws) determines how the LLC is managed. Corporations, S-corporations, Limited Liability Partnerships, Limited Partnerships, Limited Liability Limited Partnerships, and LLCs lie along a spectrum of flexibility with LLCs being the most flexible, and thus preferable, for many businesses.

Income taxation

LLCs are organized with a document called the "articles of organization," or "certificate of organization," which is filed with the Secretary of State or other state agency responsible for corporate filings^[2]. Additionally, it is common to have an "operating agreement" privately specified by the members. The operating agreement is a contract among the members of an LLC and the LLC governing the membership, management, operation and distribution of income of the company.

For U.S. Federal income tax purposes, LLCs are treated by default as a pass-through entity^[3]. If there is only one member, it is treated as a "disregarded entity" for tax purposes, and the owner reports the LLC's income on his or her own tax return on Schedule D. For LLCs with multiple members, the LLC is treated as a partnership and must file IRS Form 1065. Individual partners would receive a K-1 for their share of income or losses to be reported on that owner's tax return.

As an option, LLCs may also elect to be taxed like a corporation by filing IRS Form 8832^[4]. They can be treated as a regular C-corporation (taxation of the entity's income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members), or an LLC can elect to be treated as an S-corporation. Some commentators have recommended an LLC taxed as a S-corporation as the best possible small business structure. It combines the simplicity and flexibility of an LLC with the tax benefits of an S-corporation (self-employment tax savings)^[5].

Advantages

• Check-the-box taxation. An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation (as long as they would otherwise qualify for such tax treatment), providing much flexibility.
• Limited liability, meaning that the owners of the LLC, called "members," are protected from some or all liability for acts and debts of the LLC depending on state shield laws.
• Much less administrative paperwork and record keeping than a corporation.
• Pass-through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a C corporation.
• Using default tax classification, profits are taxed personally at the member level, not at the LLC level.
• LLCs in most states are treated as entities separate from their members, whereas in other jurisdictions case law has developed deciding LLCs are not considered to have separate legal standing from their members (see recent D.C. decisions).
• LLCs in some states can be set up with just one natural person involved.
• Membership interests of LLCs can be assigned, and the economic benefits of those interests can be separated and assigned, providing the assignee with the economic benefits of distributions of profits/losses (like a partnership), without transferring the title to the membership interest (see, for example, the Virginia and Delaware LLC Acts).
• Unless the LLC has chosen to be taxed as a corporation, income of the LLC generally retains its character, for instance as capital gains or as foreign sourced income, in the hands of the members

Disadvantages

• Although there is no statutory requirement for an operating agreement in most states, members of a multiple member LLC who operate without one may run into problems as, unlike state laws regarding stock corporations, which are very well developed and provide for a variety of governance and protective provisions for the corporation and its shareholders, most states do not dictate the governance and protective provisions for the members of a limited liability company. Thus, in the absence of such statutory provisions, the members of an LLC can only establish governance and protective provisions pursuant to contract, in the form of an operating agreement.^[which?].
• It may be more difficult to raise financial capital for an LLC as investors may be more comfortable investing funds in the better-understood corporate form with a view toward an eventual IPO. One possible solution may be to form a new corporation and merge into it, dissolving the LLC and converting into a corporation.
• Many states, including Alabama, California, Kentucky, New York, Pennsylvania, Tennessee, and Texas, levy a franchise tax or capital values tax on LLCs. (Beginning in 2007, Texas has replaced its franchise tax with a "margin tax".) In essence, this franchise or business privilege tax is the "fee" the LLC pays the state for the benefit of limited liability. The franchise tax can be an amount based on revenue, an amount based on profits, or an amount based on the number of owners or the amount of capital employed in the state, or some combination of those factors, or simply a flat fee, as in Delaware. Effective in Texas for 2007 the franchise tax is replaced with the Texas Business Margin Tax. This is paid as: tax payable = revenues minus some expenses with an apportionment factor. In most states, however, the fee is nominal and only a handful charge a tax comparable to the tax imposed on corporations.
• The District of Columbia considers LLCs to be taxable entities, thus eliminating the benefit of flow-through taxes by subjecting members to double taxation.^[6]
• Renewal fees may also be higher. Maryland, for example, charges a stock or nonstock corporation $120 for the initial charter, and $100 for an LLC. The fee for filing the annual report the following year is $300 for stock corporations and LLC, and zero for non-stock corporations. In addition, certain states, such as New York, impose a publication requirement upon formation of the LLC which requires that the members of the LLC publish a notice in newspapers in the geographic region that the LLC will be located that it is being formed. For LLC's located in major metropolitan areas (i.e. New York City), the cost of publication can be significant.
• Some creditors will require members of up-and-starting LLCs to personally guarantee the LLC's loans, thus making the members personally liable for the debt of the LLC.
• The management structure of an LLC may be unfamiliar to many. Unlike corporations, they are not required to have a board of directors or officers.
• Taxing jurisdictions outside the US are likely to treat a US LLC as a corporation, regardless of its treatment for US tax purposes, for example if a US LLC does business outside the US or a resident of a foreign jurisdiction is a member of a US LLC.
• The LLC form of organization is relatively new, and as such, some states do not fully treat LLCs in the same manner as corporations for liability purposes, instead treating them more as a disregarded entity, meaning an individual operating a business as an LLC may in such a case be treated as operating it as a sole proprietorship, or a group operating as an LLC may be treated as a general partnership, which defeats the purpose of establishing an LLC in the first place, to have limited liability (a sole proprietor has unlimited liability for the business; in the case of a partnership, the partners have joint and several liability, meaning any and all of the partners can be held liable for the business' debts no matter how small their investment or percentage of ownership is).^{[citation needed]}
• The principals of LLCs use many different titles—e.g., member, manager, managing member, managing director, chief executive officer, president, and partner. As such, it can be difficult to determine who actually has the authority to enter into a contract on the LLC's behalf.

Variations

• A Professional Limited Liability Company (PLLC, P.L.L.C., or P.L.) is a limited liability company organized for the purpose of providing professional services. Usually, professions where the state requires a license to provide services, such as a doctor, chiropractor, lawyer, accountant, architect, or engineer, require the formation of a PLLC. Exact requirements of PLLCs vary from state to state. Typically, a PLLC's members must all be professionals practicing the same profession. In addition, the limitation of personal liability of members does not extend to professional malpractice claims.
• A Series LLC is a special form of a Limited liability company that allows a single LLC to segregate its assets into separate series. For example, a series LLC that purchases separate pieces of real estate may put each in a separate series so if the lender forecloses on one piece of property, the others are not affected.

History by country

Companies with limited liability exist in business law worldwide, however the limited liability company is a specific legal structure defined by the laws of states of the United States and with quite distinct characteristics. Several other countries have similar structures.

United States

A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute.^[7] The LLC is chiefly inspired by the GmbH, a type of business organization in Germany, and by limitadas, a type of business organization available in many Latin American countries.^[8]

In the United States, the first limited liability company act appeared in Wyoming in 1977 as special interest^{[clarification needed]} legislation for an oil company.^[9] In 1980, the Internal Revenue Service issued a private letter ruling to an LLC formed under Wyoming LLC Act indicating that the IRS would treat the LLC as a partnership for federal tax purposes.^[10] However, later that year, the IRS proposed regulations that would deny partnership classification to any business entity in which no member bore personal responsibility for the entity’s liabilities. ^[11] In 1982, Florida adopted an LLC act modeled on Wyoming’s LLC Act.^[12] Due to uncertainty over the tax treatment of LLCs, no other states introduced LLC legislation until after 1988.^[13] In 1988, the IRS issued a revenue ruling stating that it would treat a Wyoming-style LLC as a partnership for tax purposes.^[14] By 1996, nearly every state had enacted an LLC statute.^[15] The National Conference of Commissioners on Uniform State Laws adopted the Uniform Limited Liability Company act in 1996 and revised it in 2006.^{[citation needed]}

United Kingdom

The new form of Limited liability partnership (created in 2000) is similar to a U.S. LLC as it is tax neutral: member partners are taxed at the partner level, but the LLP itself pays no tax. It is treated as a body corporate for all other purposes including VAT. Otherwise all companies, including limited companies and US LLCs, are treated as corporate bodies subject to Corporation Tax if the profits of the entity belong to the entity and not to its members.

Belgium

In Belgium there are several different forms of corporations which provide limited liability. The "BVBA" (Besloten Vennootschap met Beperkte Aansprakelijkheid) in Dutch, or "SPRL" (Société Privée à Responsabilité Limitée) in French, is the smallest where the startup capital is required to be 18.500 EURO by law. It is mostly used for smaller business owners who want to protect themselves in case of bankruptcy.

Bosnia and Herzegovina

Bosnian and Herzegovinian legislation contemplates LLCs as društvo s ograničenom odgovornošću. Legislation is very similar to Croatian. Companies working under this structure append the abbreviation d.o.o. to their name.^{[citation needed]}

Brazil

The corporate structure in Brazilian law most similar to the United States LLC is the Sociedade Limitada ("Ltda."), under the new Brazilian Civil Code of 2002. The "sociedade limitada" is the new name of the "sociedade por quotas de responsabilidade limitada", and it can be organized as "empresária" or "simples", under this new code, roughly corresponding to the form types of "commercial" [commercial] and "civil" [non commercial] of the former and now extinct Commercial Code.

Bulgaria

Bulgarian legislation contemplates LLCs as Дружество с ограничена отговорност (Partnership with limited liability). Companies working under this structure appaned the abbreviation ООД to their name. In case of an LLC with individual owner it is contemplated as Еднолично дружество с ограничена отговорност (One-man partnership with limited liability) and abbreviated as ЕООД.^{[citation needed]}

Chile

Chilean legislation contemplates LLCs as Sociedad Comercial de Responsabilidad Limitada (Limited Liability Commercial Association). Companies working under this structure append the abbreviation Ltda. to their name. Therefore, a company which in the United States is called SomeCompany LLC would be called SomeCompany Ltda. in Chile. However, in the case of an LLC with one individual owner, the equivalent in Chile would be an Empresa Individual de Responsabilidad Limitada which uses the EIRL abbreviation.

Colombia

Colombian legislation contemplates a very similar structure as mentioned above in the Chilean case. The Ltda. abbreviation is also used in Colombia. However, in the case of an LLC with one individual owner, the equivalent in Colombia would be an Empresa Unipersonal which uses the EU abbreviation.^{[citation needed]}

Croatia

Croatian legislation contemplates LLCs as društvo s ograničenom odgovornošću. Companies working under this structure append the abbreviation d.o.o. to their name.^{[citation needed]}

Czech Republic

Czech legislation contemplates LLCs as společnost s ručením omezeným, abbreviated as s.r.o. or spol. s r.o.. The s.r.o. is not technically comparable to LLC because the profits are still subject to double taxation. The Czech law does not offer a possibility to start up a limited company without the possibility of avoiding the double taxation. The minimum capital is required by law to be at least CZK 200,000 (approximately US$ 9,900).

Denmark

The Danish form of the LLC is the anpartsselskab (see ApS). The minimum capital is required by law to be at least DKK 125,000 (approximately US$ 26,000)^[16].

Egypt

In Egypt, before 1954, there were restrictions hampering companies taking the form of Joint Stock Company and benefiting from the advantages. Most importantly, restrictions involving identifying the responsibility of each partner owned shares of the capital. Therefore; the Egyptian legislature has introduced - Act No. 26 of 1954 - a kind of companies called limited liability companies, and these companies have been exempted from the restrictions more shareholding companies, while retaining the fundamental advantage, and is to be responsible partners is limited to the amount of shares owned Of the company. And the limited liability companies in accordance with the law 26 of 1954, flanked by two constraints are essential: the first - that may not be less capital thousand pounds and is divided capital shares equal to the value of each of not less than twenty pounds. And the second - that may not increase the number of partners on the fiftieth partner, and at least two, the couple was among the partners must be of at least three partners.

And has been the abolition of Law No. 26 of 1954 under the Act 159 of 1981 which rose to list the minimum operational capital limited liability company of thousand pounds to fifty thousand pounds, then returned to the thousand pounds in the recent amendment, and law 159 For the year 1981 is no longer required that the minimum partners in the limited liability company of three partners in the case of couples.^{[citation needed]}

Estonia

In Estonia, a limited liability company is referred to as osaühing (OÜ). The type of entity is also required to be identified in the name. The minimum required starting capital for a limited company in Estonia is currently 40,000 EEK (~2556 EUR).^{[citation needed]}

Finland

The Finnish version of the LLC is the Oy (osakeyhtiö) or in Swedish Ab (aktiebolag). The minimum capital required by law is EUR 2,500.^[17]

Germany

Because of its hybrid characteristics it is very difficult to determine the German equivalent. On one hand it is possible to consider it as a kind of Gesellschaft mit beschränkter Haftung (GmbH) because it has aspects of a corporation; on the other hand it could be considered as a kind of Kommanditgesellschaft (KG), which is the German equivalent of a limited partnership. Based on the literal translation of the word "company" an LLC should be considered as a kind of KG without any liable partner. For the purpose of taxation the Bundesfinanzministerium (German Federal Ministry of Finance) gives detailed guidelines of the circumstances under which a LLC is to be considered as a "corporation" or as a "limited partnership"; see: Steuerliche Einordnung der nach dem Recht der Bundesstaaten der USA gegründeten Limited Liability Company.

Hungary

Hungarian legislation contemplates LLCs as Korlátolt felelősségű társaság. Companies working under this structure append the abbreviation Kft. to their name.^{[citation needed]} Hungarian LLCs were previously required to have a 3million HUF (Hungarian Forint) (approx. 16k USD) starting capital. This amount has been recently reduced and currently (in 2009) the minimum starting capital is 500k HUF (approx. 2.7k USD). The time of formation by the new electronic formation option has been reduced from 2 weeks to 2 hours, additional cost of formation is around 100k HUF (approx. 540 USD). Kft.s can be formed by the cooperation of lawyers. The Hungarian Kft. is the most common form of doing business in Hungary. As being part of the European Union (EU), Hungarian Kft.s can now obtain an EU VAT registration number for doing business across the EU. The Hungarian EU-VAT reg.number starts with "HU". This way the existence of the subject company, VAT issues and the cross-check is available on the common EU website for companies.^{[citation needed]}

Italy

The Italian Civil Code approved in 1942, as amended by the Government Act 6/2003, regulates three forms of limited liability company: Società per azioni or SpA. The minimum required starting capital for a SpA is EUR 120,000. Società a responsabilità limitata or Srl. The minimum required starting capital for a Srl is EUR 10,000. Società in accomandita per azioni or Sapa. The minimum required starting capital for a Sapa is EUR 120,000. Sapa have a mixed liability scheme, where standard partners have limited liability while managing partners have full liability. Companies append the correspondent abbreviation to their names.

Japan

Japan passed legislation in 2006 creating a new type of business organization, godo kaisha, a close variant of the American LLC.^{[citation needed]}

Latvia

SIA - Sabiedrība ar Ierobežotu Atbildību

Lithuania

In Lithuania, a limited liability company is referred to as uždaroji akcinė bendrovė. Abbreviation UAB is usually added before the company name. The minimum required starting capital is currently 10,000 LTL (approximately 3000 EUR).^[18] The sum can be immediately invested.

Macedonia

Macedonian legislation contemplates LLCs as друштво со ограничена одговорност. Companies working under this structure append the abbreviation д.о.о. to their name. This is the most spread organizational form of Macedonian companies.^{[citation needed]}

Mexico

Mexican legislation contemplates LLCs as Sociedades de Responsabilidad Limitada, also known for their abbreviation "S. de R.L.". S. de R.L.'s award limited liability to its members up to their contribution in the company (i.e. contribution of capital) and also act as pass-through or flow-through entities whereby profits are "passed-through" to its members, avoiding double taxation. This type of company is widely used by foreign investors in Mexico because of its "pass-through" modality and its "check the box" capability under the IRC (Internal Revenue Code of the U.S.).^{[citation needed]}

Moldova

Moldovan legislation contemplates LLCs as Societate cu Răspundere Limitată, abbreviated "S.R.L.", and are regulated member(s)-founder(s), and other non-founder members, minimum one member-founder and maximum total of 50 members, at least one of them must be the founder of the company, but all of the 50 could be also founders.^{[citation needed]}

Poland

In Poland, a limited liability company is referred to as Spółka z ograniczoną odpowiedzialnością (Sp. z o.o.).

The minimum start capital is 5000 PLN (since 2009; earlier 50.000 PLN).

Romania

This type of entity exists in this country since 1990 (abbreviated in Romanian, it is "SRL"). The owner is liable only with a value equal with the company's start capital, and because of that each SRL must clearly indicate this amount in the business relations, so that the other party knows how much money cover there is. The minimum start capital is less than $100 US.^{[citation needed]}

Russia

In Russia and certain other former Soviet countries, an entity with a somewhat similar structure is known as Общество с ограниченной ответственностью (lit., 'Society with Limited Liability'), usually abbreviated OOO, or in some CIS countries as OcOO.^{[citation needed]}

Although Russian limited liability company shares the same name with a USA LLC, it is different in many ways. Most importantly, Russian LLC is not tax transparent: the company is taxed at the corporate level, and then, upon distribution of dividends, shareholders pay income tax (personal or corporate).^{[citation needed]}

A limited liability company is the most popular form of legal undertaking in Russia for simple shareholding structures. ^[19]

Serbia

Serbian legislation contemplates LLCs as društvo s ograničenom odgovornošću. Companies working under this structure append the abbreviation d.o.o. to their name same as in Croatia.^{[citation needed]}

Slovakia

In Slovakia, the law contemplates spoločnosť s ručením obmedzeným as the rough equivalent of a limited liability company. One to 50 associates can found it through a founding agreement with minimum capital of 5000€, minimum 750€ per person, in money or other property.^{[citation needed]}

Slovenia

Slovenian legislation contemplates LLCs as družba z omejeno odgovornostjo. Companies working under this structure append the abbreviation d.o.o. to their name. The minimum required starting capital for a d.o.o. is 7.500 EUR. Due to high cost and complicated bookkeeping of a real Corporation, this is a more widespread form.^{[citation needed]}

Sweden

The Swedish version of the LLC is the AB (aktiebolag). The minimum capital required by law is at least SEK 100,000.^[20]

Switzerland

The Swiss Code of Obligations^[21] provides for different kinds of companies with limited liability, the two most commonly used are:

Swiss Limited Liability Company:^[22][23] The terms for this kind of company used in the three official languages of the Swiss Confederation are as follows: In German Gesellschaft mit beschränkter Haftung (abbreviation: GmbH), in French Société à responsabilité limitée (abbreviation: S.à r.l. or SARL) and in Italian Società a Garanzia Limitata (abbreviation: SaGL). A Swiss LLC is similar to a LLC with respect to various matters, including the following: Members may also be natural persons, corporations, partnerships or other LLCs,^[24] the liability of a member of a Swiss LLC to pay for the LLC's obligations is limited to its capital contribution,^[25] a Swiss LLC may be either member-managed or manager-managed,^[26] and, unless otherwise provided for in the operating agreement, the members’ right to control or manage a Swiss LLC is proportionate to their individual membership interest.^[27] The membership interests in a Swiss LLC have to be registered^[28] and, thus, they may only be issued in the name of a member but not to the bearer.

Swiss Corporation^[23][29] (in English common law context usually translated as company limited by shares): The terms for this kind of company used in the three official languages of the Swiss Confederation are as follows: In German Akiengesellschaft (abbreviation: AG), in French Société Anonyme (abbreviation: SA) and in Italian Società Anonima (abbreviation: SA). A Swiss corporation is with respect to various matters different to a LLC (including a Swiss LLC): Most important is that a Swiss corporation may, neither by default nor by exercising any respective option provided by the Swiss law, be member-managed like a LLC, as the respective mandatory provisions of Swiss law provide that the board of directors has certain non-transferable duties.^[30] Furthermore, the shares of a Swiss corporation may also be issued to the bearer (bearer shares)^[31] and, thus, not only in the name of a holder (registered shares), which, however, applies to the membership interests in a Swiss LLC, which may only be registered.

Ukraine

This type of entity exists in this country since 1990-es. In Ukrainian it spells "Товариство з обмеженою відповідальністю" (abbreviated - TОВ, TзОВ), in transliteration "Tovarystvo z Obmezhenoyu Vidpovidalnistyu," that is, "Company of limited liability."^{[citation needed]}

U.A.E.

This type of entity exists in the U.A.E. states as a widely accepted way to do business and is referred as L.L.C..^{[citation needed]}

Names and abbreviations

Most states require that the company name contain one of the following terms, with some variation by state:

• Limited Company, L.C., or LC
• Limited Liability Company, L.L.C., or LLC
• Ltd. Co.

Limited liability companies may not use the following terms on their own:

• Company or Co. — reserved for corporations in most states (the use of the term "company" alone is not valid for a corporation in some states)
• Limited or Ltd. — reserved for corporations in Texas (except in Nevada, which allows the use of Limited or Ltd.)

In some other countries (such as Qatar and Bahrain) the acronym WLL is used for: With Limited Liability.

See also

• GmbH, a European form of the LLC
• Besloten Vennootschap (B.V.), a Dutch private limited company
• Limited liability
• LLP
• Series LLC
• Types of business entity
• Uniform Limited Liability Company Act
• good standing

References

This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. Please improve this article by introducing more precise citations where appropriate. (May 2009)

1. ^ Bernstein Law Firm, Limited Liability Companies: Could your personal assets be at risk?
2. ^ http://legalzoom.com/llc-guide/forming-an-llc.html
3. ^ http://www.irs.gov/pub/irs-pdf/iss4.pdf
4. ^ http://www.irs.gov/pub/irs-pdf/f8832.pdf
5. ^ http://www.legalzoom.com/incorporation-guide/corporate-tax-advantage.html
6. ^ http://www.incfile.com/WashingtonDC-LLC-Corporation/#content
7. ^ Limited Liability Company (LLC)
8. ^ Historical Background of the Limited Liability Company
9. ^ Keatinge et al.,“The Limited Liability Company: A Study of the Emerging Entity,” 47 Business Lawyer 375, 383-384 (Feb. 1992) (citing Act of March 4, 1977, ch. 155, 1977 Wyo.Sess.Laws 512).
10. ^ Priv. Ltr. Rul. 81-06-082, 1980 WL 137231 (Nov. 18, 1980)
11. ^ Prop. Treas. Reg. § 301.7701-2, 45 Fed. Reg. 75,709 (1980)
12. ^ Fla.Stat.Ann. §§ 608.401-471
13. ^ Keatinge et al.,“The Limited Liability Company: A Study of the Emerging Entity,” 47 Bus. Law. 375, 383-384 (Feb. 1992)
14. ^ Rev.Rul. 88-76, 1988-2 C.B. 360.
15. ^ Larry E. Ribstein, A Critique of the Uniform Limited Liability Company Act, 25 Stetson Law Review 312, 322 (1995).
16. ^ Synopsis - Article 1, Paragraph 2
17. ^ Limited Liability Companies Act 2006 (English translation) http://www.finlex.fi/en/laki/kaannokset/2006/en20060624.pdf
18. ^ Republic of Lithuania, Law on Companies
19. ^ Limited Liability Company: Encyclopedia of Russian Law
20. ^ Aktiekapital http://sv.wikipedia.org/wiki/Aktiekapital
21. ^ official German text: http://www.admin.ch/ch/d/sr/220/index3.html, official French text: http://www.admin.ch/ch/f/rs/220/index3.html, official Italian text: http://www.admin.ch/ch/i/rs/220/index3.html
22. ^ Swiss Code of Obligations, articles 772ss
23. ^ ^{a b} Unofficial translation of term pursuant to: Swiss Code of Obligations, Volume II, Company Law, Articles 552 – 964, English Translation of the Official Text, Swiss-American Chamber of Commerce, Zurich 1992
24. ^ Swiss Code of Obligations, article 722 paragraph 1
25. ^ Swiss Code of Obligations, article 802
26. ^ Swiss Code of Obligations, article 811
27. ^ Swiss Code of Obligations, article 808 paragraph 4
28. ^ Swiss Code of Obligations, article 790
29. ^ Swiss Code of Obligations, articles 620ss
30. ^ Swiss Code of Obligations, article 716a
31. ^ Swiss Code of Obligations, article 622 paragraph 1

v • d • e Topics on private equity and venture capital Basic investment types Buyout • Venture • Mezzanine • Growth • Secondaries • Equity co-investment History History of private equity and venture capital • Early history of private equity • Private equity in the 1980s • Private equity in the 1990s • Private equity in the 2000s Terms and concepts Buyout Financial sponsor • Management buyout • Divisional buyout Venture Seed money • Startup company • Angel investor • Venture capital financing • Pre-money valuation • Post-money valuation • Venture round • Venture debt • Bootstrap funding Structure Private equity firms and funds • Limited partnership • Limited liability company • Carried interest  • Management fee • Publicly traded private equity ( Business Development Company, Venture Capital Trust) • Private Investment in Public Equity (PIPE) • Pledge fund Investors Institutional Investors • Pension funds • Insurance companies • Fund of funds • Endowments • Foundations Investment Banks • Commercial Banks • High net worth individuals • Family offices • Sovereign wealth funds Related financial terms Undercapitalization • Initial Public Offering (IPO) • Mergers and acquisitions • Leverage • High-yield debt • Capital structure • EBITDA Private equity and venture capital investors • Private equity firms • Venture capital firms • Portfolio companies

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)