veil of secrecy
llc owners, called members, don't have to be disclosed under Georgia law.
Tax advantages of LLC for owners
Susan Pace Hamill, University of Alabama law school: First domestic llc authorized in Wyoming in 1977. Give owners limited liability and favorable tax treatment of partnerships
IRS ruling 88-76. Colorado and Kansas authorized in 1990. 1992-1996, LLC legislation swept the country..
IRS Revenue Procedure 95-10 allowed LLCs to have same flexible standards as limited partnerships
LLCs effectively reduce federal corporate tax rates.
Number of LLC filings skyrocket since.
Georgia's legislation signed into law 1993. Took effect 1995. Title 14, chaper 11 of the Official Code of Georgia Annotated.
Rep. thurbert E. Baker introduced the bill fist in 1991-92 session.
Filed with SOS. Name of LLC. Articles of organization can be signed by anyone, but must have registered office and agent. But Articles of Organization can be only a skeletal document.
Do LLCs create incentive for corporations to engage in risky behavior because benefits accrue to members but failure of injury doesn't fall just on them.
Georgia LLCs are operated by members.unless articles or agreement establishes manager
Now the predominant form of business entity in Georgia and throughout US.
If someone owns a series of properties, putting each in a separate LLC means that someone can't force them to use the assets of one to pay the debts of another.
Members generally not liable for debts of LLC.
House Bill 308, enacted effective July 1, 2009.
Brennan Center for Justice : criticism that people circumvent campaign contribution limits and disclosure requirements by donating money through LLCs. LLCs need not disclsoe identities of their members or officers. Also, members of LLC may themselves by an LLC. Multiple layers.
Issue of piercing the LLC veil to impose liability on a member. Courts treat LLC as separate entity from its members. Owner Liability Protectiong
Courts can hold members responsible for LLC's wrongful or fraudulent actions
Courts will piece if there is no real separation between an LLC and its owners. If owner pays personal bills from the business checking account, court could find LLC is really a sham (owner's alter ego); company's actions wrongful or fraudulent; if one person or small group of closely related people was in complete control
In Georgia, can pierce veil if members have sufficiently disregarded LLCs separate existence and there is some degree of injustice, fraud or wrongdoing, wrote attorney Doug Batey. "Bonner" decision by Georgia Court of Appeals set a "defeat justice or perpetrate fraud" standard.
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