Florida Passes New Protected Series LLC Legislation

The Florida Legislature passed new legislation – CS/SB 316, sponsored by Sen. Lori Berman (D-Boynton Beach), and CS/HB 403, sponsored by Rep. Jenna Persons-Mulicka (R-Fort Myers) – to add new "Protected Series" LLC provisions to the Florida Revised Limited Liability Company Act (Chapter 605 Fla. Stat.), which are reflected in new Sections 605.2101 through 605.2802 (the Florida Protected Series LLC Legislation or new legislation). Gov. Ron DeSantis signed the legislation into law on June 20, 2025.

The Florida Protected Series LLC Legislation further enhances the flexibility of using Florida limited liability companies (LLCs) as the entity of choice for most privately held businesses and moves Florida into the small group of states with reliable and well-thought-out uniform protected series legislation for series LLCs. The new legislation provides rules for allowing both existing LLCs and newly formed LLCs to form protected series and also provides rules for all foreign (i.e., non-Florida-formed) series LLCs doing business in Florida.

The new legislation has an effective date of July 1, 2026. The delayed effective date was requested by the Florida Department of State (the Department) to allow time for new forms and filings to be built into the Department's software and procedures to address Florida and non-Florida series LLCs registering to do business in Florida under the new legislation.

After extensive study of the series LLC legislation passed in Delaware (1996), Illinois (2005), Nevada (2005), Texas (2009), District of Columbia (2011), Tennessee (2018), Alabama (2019) and Virginia (2020), as well as the Uniform Protected Series LLC Legislation (UPSA) adopted by the Uniform Law Commission in 2021, The Florida Bar's Drafting Committee based the new Florida Protected Series Legislation on UPSA. The Drafting Committee made several "non-uniform" changes and additions to the new legislation in order to better integrate it into the Florida Revised Limited Liability Company Act.

A Closer Look at Florida's New Law

The construct for a Protected Series in Florida is based on the premise that any series created by a Florida LLC will be treated "as if" it were a separate LLC, even though a series is not a separate legal entity. Moreover, all of the rules of the existing Florida LLC Act apply to a series created by the LLC via the concept of "extrapolation." A series can sue or be sued in its own name and generally has the same powers and purposes as an LLC (unless limited or described otherwise in the operating agreement), including having its own associated members and managers, and may have different purposes than the LLC or any other series created by the LLC.

In fact, a significant number of notable national businesses have formed a series LLC, with each series operating completely different assets and businesses. For example, an investment fund could establish a dozen series, each with a different focus for its investments (e.g., a real estate developer could have a series for residential housing, another for mixed-use and others for retail, commercial, office, golf courses, restaurants, healthcare, etc.). The list is endless, since there is no limit in the statute as to how many series may be established by one LLC.

A Florida LLC may create one or more "series" by a filing a protected series "designation" with the Department with the affirmative vote or consent of all members of the LLC, unless the LLC operating agreement provides for less than unanimous vote to designate one or more series. Each series may have different members, managers, purposes, assets and liabilities distinct from the series LLC under which a series is formed. Tens of thousands of series LLCs have been formed in other states, including Delaware, Illinois and Nevada, which have been very popular jurisdictions for formation of series LLCs. The principal use for any series LLC is the ability to form one legal entity that may then create one or more separate series, with each series being deemed a separate "Person" for Uniform Commercial Code (UCC) purposes, with separate insulation from liability for the debts and obligations of the LLC, as well as from every other series created by the LLC.

This insulation from joint liability and recourse is accomplished by the statutory creation of new "internal" liability shields, also known as "horizontal" shields, which allow for the segregation of assets and liabilities, whereby the "associated assets" and "associated liabilities" of any one series are only available to the creditors of that specific series. UPSA-based laws (such as the Florida series legislation) were very concerned with bad actors utilizing series to defraud creditors, so the new legislation is much more rigorous in protecting creditors and third parties from fraudulent conveyances or illegal transfers of assets to defraud creditors.  

To maintain the new horizontal shields, a Florida series LLC must adhere to strict and clear recordkeeping for the LLC and for each series created by the LLC, whereby the "associated assets" and "associated liabilities" of the LLC, and each series, are maintained contemporaneously and clearly in records and "… only if  the protected series creates and maintains records that state the name of the protected series and describe the asset with sufficient specificity to permit a disinterested, reasonable individual to:

(i) identify the asset and distinguish it from any other asset of the protected series, any asset of the series limited liability company, and any asset of any other protected series;

(ii) determine when and from what person the protected series acquired the asset or how the asset otherwise became an asset of the protected series; and

(iii) if the protected series acquired the asset from the series limited liability company or another protected series of the limited liability company, determine any consideration paid, the payor, and the payee. See Section 605.2301(2)(a)." (emphasis added)

Failure to satisfy the contemporaneous record-keeping requirements for "associated assets" and "associated liabilities" may allow creditors to pierce both the vertical and horizontal, liability and non-recourse shields.

The new "horizontal" shields for series are in addition to the traditional "vertical" shield, which protects members of an LLC from being liable for the debts and obligations of the LLC, just as shareholders are insulated from the debts and obligations of a corporation. Both liability shields have two aspects: 1) non-liability for the debts and 2) non-recourse to the assets, unless the assets have been properly encumbered by a creditor – in which case the traditional recourse rules apply.

Considerations in Other States

In the new Florida series construct, and under all states that have similarly adopted the UPSA, creditors may overcome the vertical and horizontal shields under the "Piercing the Veil" doctrine if they satisfy the state law piercing requirements, which may happen if the recordkeeping requirements of the series LLC statute are not satisfied.

A number of states where Holland & Knight has offices (e.g., Pennsylvania, Colorado, Massachusetts, New York, North Carolina and South Carolina, Oregon and Washington state) do not permit the formation of series LLCs; however, some of those states do have rules similar to Florida's current rules, which permit a foreign series LLC, or a series of a foreign series LLC (i.e., formed in another state) to register and qualify to do business in their states. Unfortunately, such states have limited or nonexistent laws or regulations governing their operation and no assurance that the liability shields of a series LLC or any series of the foreign series LLC will be respected by state courts.

The author served as chair of The Florida Bar Drafting Committee that proposed the new Florida Protected Series Legislation. Prior to that, he served on the Uniform Law Commission Drafting Committee that promulgated the Uniform Protected Series Act.

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