Licensing Requirements For Limited Liability Companies Organized Under Delaware Law On A Series Basis - Q3 1999

By the Division of Banks

The Delaware Limited Liability Company Act permits companies organized under the statute to operate on the basis of multiple series or divisions much like divisions in a corporate structure. Each series is typically created to operate as a separate line of business of the company and separate accounting records are maintained. Also, a limited liability company organized on a series basis usually has multiple members each with a membership interest limited to a particular series. The question presented to the Division is whether a separate mortgage lender/broker license would be required for each series. Mass. Gen. Laws chapter 255E, section 3 provides, in pertinent part, that an application to engage in the business of mortgage broker or mortgage lender shall contain the name and address or addresses where the business of the applicant is located and if the applicant is a partnership, association, or corporation or other form of business organization, the names and addresses of each member, director and principal officer thereof. The members of additional series would not be identified. Moreover, the financial condition of a mortgage lender must be provided in an application pursuant to 209 CMR 42.03 and for a mortgage broker at 209 CMR 42.08A. As the financial condition of each series would be independent from other series, the Division would not know the condition of any additional series. For these and other reasons, the Division concludes that each series would be required to be separately licensed in order to comply with existing law and regulations.