Senate committee approves bill to allow ‘‘protected series'" LLCs in Arkansas

The Arkansas Senate Insurance & Commerce Committee on Thursday approved House Bill 16-11, a measure to authorize "protected series" within a master limited liability company, allowing a single umbrella LLC to contain separately protected series for individual assets or business units.

Representative James Maddox, the bill sponsor, told the committee the structure "allows 1 master LLC" so owners do not need to form dozens of separate entities for each location or property. Attorney Cliff McKinney, testifying for the Arkansas Bar Association and as a Uniform Law Commissioner, said the act "includes a master or umbrella LLC" and that "each LLC within the protected series has liability protection from the other LLC." He said the concept is already accepted in other states and that the draft was coordinated with the Secretary of State.

Supporters told senators the arrangement reduces administrative burden and can aid investors and owners of multiple rental properties or franchise locations. McKinney said the Uniform Law Commission drafted the model act and that it "is a new legal concept" but that bar and Secretary of State staff had reviewed it.

Senators pressed for specifics: Senator Chesterfield asked how service of process and merger rules would work; McKinney replied that service is made the same way as for other LLCs but that a plaintiff would designate which protected series is being sued. Committee members also raised whether adoption could conflict with existing Arkansas LLC law; McKinney acknowledged the risk but said the bill was vetted by multiple stakeholders.

After brief discussion and no registered opposition in the hearing room, a senator moved that the committee pass HB 16-11. The motion carried on voice vote and the bill passed out of committee.

Next steps: The bill will move through the Senate process toward floor consideration pending normal legislative procedure.