Limited Liability Companies
A Limited Liability Company (LLC) combines the best traits of a corporation and a partnership. Members in a LLC are not required to participate in the management of the entity; instead, they may designate "managers" (who may or may not be members) to manage the affairs of the LLC. Members may also actively participate in management without losing their limited liability. Flexible management makes a LLC an excellent vehicle for transactions requiring a considerable degree of passive investment such as venture capital projects, investment in real estate, oil or technology, as well as research and development of business.

Like shareholders in a corporation, the members of a LLC are protected from personal liability in excess of their capital investment. Like the partners in a partnership, members of a LLC can flexibly allocate gains and losses. The LLC also allows members to contribute passively as in a limited partnership. Unlike the limited partnership, however, where the general partners remains personally liable in the event of a business loss, the LLC allows all members to contribute without risking personal liability.

The LLC may be conveniently employed in the types of parent-subsidiary arrangements inherent to large corporations because any type of entity may be a LLC member. In addition, the names of members are not disclosed in the Certificate of Formation, thereby preserving confidentiality.

The main documents forming and governing a LLC are the Certificate of Formation and the Operating Agreement. The Certificate of Formation establishes the LLC and the Operating Agreement defines the economic organization, management responsibilities and other arrangement for members (or owners) of the LLC.

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