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HB 2355

Modifying provisions related to series limited liability companies.

2025-2026 Regular Session

Kansas HB2355 clarifies formation, separate assets for each series LLC, allows consolidated tax/qualification elections, and voids fraudulent inter-series transfers.

Died in Committee
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Bill Summary · HB 2355

Summary — HB 2355 (2025): Modifying provisions related to series limited liability companies (Kansas)

Status
- Introduced: February 3, 2025
- Referred to: House Committee on Judiciary
- Legal target: amends K.S.A. 17-76,143 (Kansas Revised Limited Liability Company Act) and repeals existing section
- Fiscal note issued: March 11, 2025

Purpose and intent
- To clarify and expand the statutory treatment of “series” within Kansas limited liability companies (LLCs), by (1) confirming formation and separate asset/accounting rules for series, (2) allowing consolidated tax and qualification elections, (3) expanding what operating agreements may provide about member/manager rights and duties, and (4) declaring certain fraudulent inter‑series transfers void.

Key substantive provisions
- Formation and separate treatment
- A “series” may be formed by filing a certificate of designation with the Secretary of State.
- If (a) an operating agreement provides for a series, (b) articles contain required notice, (c) a certificate of designation is filed, and (d) records for the series account for its assets separately, then debts/liabilities of a series are enforceable only against that series’ assets (and not against other series or the company generally), except as provided in the operating agreement.
- “Separate accounting” is defined broadly — records that objectively identify assets (lists, categories, formulas, percentages, etc.) qualify.
- Assets associated with a series may be held in the name of the series, the LLC, a nominee, or otherwise.
- Series may conduct any lawful business or activity except issuing insurance policies, assuming insurance risks, or engaging in banking as defined by K.S.A. 9-702.

  • Tax and qualification elections

    • A limited liability company and any of its series may elect to consolidate operations as a single taxpayer for purposes of filing consolidated tax returns as permitted under applicable law, and may elect to be treated as a single business for qualification/authorization purposes in Kansas or other states.
    • Such elections do not alter the limitation on liability between series and the company unless the series has contractually accepted joint liability.

  • Operating agreements and member/manager rights

    • Operating agreements may provide that a member, class, or group associated with a series has no management or governance rights while still being an owner.
    • The bill expressly permits operating agreements to impose restrictions, duties, and obligations on members or classes of members.

  • Fraudulent transfers

    • Any wrongful transfer of property from a series to another series or the company (or vice versa) with intent to hinder, delay, or defraud creditors (or otherwise to defraud) is declared void and of no effect under K.S.A. 33-102 (Statute of Frauds reference in bill).

Who is affected
- Kansas LLCs using or considering a series structure (and their members, managers, and creditors).
- Corporate counsel and service providers advising on entity structure and inter‑series transactions.
- Creditors and litigants who may seek to reach assets across series.
- State agencies: Secretary of State (procedural filings) and Department of Revenue (tax administration).

Fiscal and procedural impacts
- Secretary of State: no fiscal effect reported.
- Department of Revenue: bill itself produces no State General Fund revenue impact, but DOR estimates $56,000 from the State General Fund in FY 2026 to modify its automated tax systems to implement the consolidated‑filing/qualification elections. Programming would be done by existing staff; if combined workloads exceed resources or timelines are tight, outside contract programming could be required.
- Fiscal note date: March 11, 2025.

Practical effect
- The bill formalizes and expands statutory certainty for series LLCs in Kansas: it clarifies how series can be formed and accounted for, enables consolidated tax/qualification elections, defines permissible operating agreement terms (including limiting management rights), and provides a statutory remedy to void fraudulent inter‑series transfers. This should reduce ambiguity about asset separation and liability among series while preserving contractual flexibility.

Compiled from official sources — confirm details with the bill’s official record.

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