Category: Choosing between LLC acts

BERMUDA LLCS

By , August 11, 2016 9:24 am

It can sometimes be useful to LLC formation clients to form “off-shore” (i.e., non-U.S.) LLCs.  This may be the case, for example, if a majority of the members are not U.S. citizens or U.S. residents and you want to protect them from U.S. taxes.  As I stated in a post to this group a few months ago, the Cayman Islands enacted a law in late 2015 authorizing the formation of Cayman Islands LLCs, and a few weeks ago, the Cayman Islands adopted implementing regulations for the formation of Cayman Islands LLCs; and a few days ago, I formed a Cayman Islands LLC for a group of numerous clients, most of whom were non-U.S. citizens residing outside the U.S.

Now, as indicated in the link below, Bermuda has also enacted an LLC act.  And both the Cayman Islands and Bermuda LLC acts are closely modeled on the Delaware Limited Liability Company Act.  So, if you’re planning to form a foreign LLC for your LLC formation clients, you’ll have to compare the two acts before you proceed.  If I’m faced with that challenge, I’ll send this group a post as to how I’ve made my comparison between the Cayman Islands and Bermuda LLCs.

Here’s the relevant link:  http://www.mondaq.com/x/514338/Corporate+Commercial+Law/Limited+Liability+Company+Act+passed+In+Bermuda+Senate

CAYMAN ISLANDS LLC ACT

By , June 21, 2016 10:00 am

As I have written previously in this blog, the Cayman Islands recently passed a new LLC act that is essentially identical to the Delaware Limited Liability Company Act.  Under Caymans law, the Caymans courts will probably apply Delaware case law in interpreting the Caymans LLC Act, including the great freedom-of-contract Delaware Supreme Court case called Elf Atochem v. Jaffari.

I have just learned that the Caymans LLC Act will very probably become effective, and Caymans LLCs can be formed,  by the end of this month.  I have good contacts with the Caymans office of Ernst & Young and with a number of Caymans law firms.  The Caymans are not a tax haven; rather, they are a major global financial center.  They are not generally held in suspicion by the IRS or by U.S. courts.  They are respectable.

Thus, if your clients have legitimate reasons for wanting to form an offshore entity, you may want to consider forming it as a Caymans LLC.  If you do so, I’ll be happy to put you in touch with my Caymans contacts.

IF YOUR CLIENT’S NEW LLC WILL OPERATE IN TWO STATES, IN WHICH OF THESE STATES SHOULD YOU FORM IT AND IN WHICH SHOULD YOU REGISTER IT AS A FOREIGN LLC?

By , December 31, 2010 12:05 pm

If your LLC formation practice is like mine, you probably find yourself from time to time having to assist clients in the creation of LLCs that will operate regularly in two different jurisdictions. In this situation, a key threshold question is this: Under which of the two relevant state LLC acts should the LLC be formed; and under which should it be registered as a foreign LLC?

Because I am licensed to practice law both in Massachusetts and in New Hampshire and because my law firm has offices in both states, I regularly address the above question under the Massachusetts and New Hampshire LLC Acts, and I recently published an article in the New Hampshire Bar News comparing the two acts from an LLC formation viewpoint. I realize for many readers of this blog, these two acts won’t be relevant. However, I feel confident that the general guidelines presented in the article may be useful not only to Massachusetts and New Hampshire lawyers but also to readers in other states. You can access the article here.