Foreign LLCs and the Internal Affairs Doctrine

Scope of the chapter. Most LLCs of any size carry on business in a state other than the one in which they were formed. A Delaware LLC with an office in New York, a Wyoming LLC that owns rental property in California and a Texas LLC that sells services in Florida are each a foreign LLC in the state where they operate. This chapter examines the law that applies to such an LLC. It addresses two questions that are related but distinct. The first is administrative: when must a foreign LLC register with the host state, what does registration involve, and what follows if it does not register. The second is substantive: which state's law governs the LLC's internal affairs, the liability of its members and managers, and the claims of third parties who deal with it in the host state.

Relation to Chapter 2. Chapter 2 set out the inquiry by which the governing statute is identified for any LLC question, and introduced the internal affairs rule in that setting (see supra ¶ 290). This chapter applies that inquiry to the LLC that operates outside its state of formation. It examines the registration statutes in detail, considers the internal affairs doctrine as courts have applied it to LLCs, identifies the claims the doctrine does not reach, and addresses the remedies of a creditor of a member whose interest is in an LLC formed elsewhere.

Organization. The chapter proceeds in nine parts:

1. the foreign LLC and the sources of law that govern it (¶ 1210);
2. when a foreign LLC must register (¶ 1220);
3. the consequences of failing to register (¶ 1230);
4. the registration process, maintenance of registration and withdrawal (¶ 1240);
5. the internal affairs doctrine applied to LLCs (¶ 1250);
6. the limits of the doctrine (¶ 1260);
7. creditor remedies against interests in foreign LLCs (¶ 1270);
8. series, non-U.S. entities and changes of jurisdiction (¶ 1280); and
9. compliance and planning (¶ 1290).