What are Some Risks of Series LLCs v. Stand-alone LLCs? πŸ€”
Currently, Ricardian is experimental and suited for transient associations like DAO membership contracts. Users should carefully review the Disclaimers in Schedule B of the Ricardian LLC Agreement.
To highlight some uncertainties in the Ricardian legal framework: Certain states, such as California, don't support the formation of Series LLCs in their corporate statutes. Therefore, in the interim of more widespread Series LLC adoption, there is a risk that a judge could not or would not provide limited liability protection to the extent that the state doesn't have a Series LLC code and jurisdiction is established. This risk is especially poignant for grey market activities where the state may simply decide to pierce the corporate veil and not respect limited liability protection. Further, unscrupulous commingling of funds among series could compel Delaware to revoke the Ricardian Master LLC franchise. For these reasons, LexDAO maintains certain administrative controls over Ricardian LLC NFTs, as discussed above, "How does Ricardian NFT contract work?"
Finally, there is a risk under the federal bankruptcy code that series among a Series LLC may be "substantively consolidated". For more on the emergent risks and benefits of joining a Series LLC network, see the following article.
Last modified 6mo ago
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