3 contemporary trends affecting LLC laws in the United States.
Although, LLCs have come a long way, in a very short time frame, in become the dominant legal entity for small businesses in the U.S.A., there is a sharp contrast in the ways that LLC laws are evolving at the state level. Below, is a look at 3 common trends that are taking place.
Delaware Approach.Delaware rushed to develop LLC status laws striving to make them , the most advantageous in the country, in terms of asset protection, tax savings, and flexible corporate governance. Delaware actions had a dual motive: (i) Protect its so called turf on (being the U.S. and by extension world) capital of business formation filings in the event LLCs grew to challenge the status of corporations as dominant entity structure (ii) Make it easy for large businesses to use LLC’s as substitutions, special purpose entities, other purposes. As Delaware uses it corporate governing laws, so lure precious filing fees in its coffers, it wont be an understatement to say, that many states are trying to emulate Delaware, in regards to structuring their own corporate governance laws.
Going their own way.Other states tried to make their own LLC statuses fit into their peculiarities of their other state laws. For example New York had a long standing of historically requiring many of its partnership type of entities, to comply with an expensive costly and potentially complex procedure, known as the publication requirement. Historically this requirement was based on the notions of shedding some light in regards to insights of a partnership’s ownership and/or management structure. Corporations, were largely exempt from the publication requirement, often on the premise that it was easier to discertain the ownership of the very Corporation's ownership, due in large part to the corporation filing separate tax returns at the entity level.
RULLCAA third camp composed of mostly rural, western states trying to come to up with a one style fits all approach. Their answer to keeping their LLC laws evolving and maturing to the point of being a trusted, reliable, legal entity type, which could provide its owner with limited liability protection, has recently seemed to turn to the adaptation of RULLCA. It should be noted that RULLCA differs in many aspects from Delaware LLC laws.