|
In recent years, it has been revealed that Aubrey "Drake" Graham is associated with a bunch of corporate entities, many of which appear to be shell companies used to protect his estimated net worth of $250M. Public records have connected him to at least 52 incorporated companies, including 38 limited liability companies (LLCs).
Now, why would anyone need so many entities? Using multiple shell corporations is considered a legitimate business practice and can assist with multiple goals:
Liability protection: Setting up separate LLCs for each business venture attempts to legally separate Drake's personal assets from his business dealings. This ensures that any legal or financial issue with one project does not threaten his entire business empire.
Confidentiality: Shell companies may be used to maintain a degree of privacy around business expenses and ownership.
Tax purposes: Companies are sometimes incorporated in a state like Delaware for tax-friendly policies.
Investment vehicles: In some cases, a shell company may be created for a startup to raise funds or go public.
So, what can we learn from Drake’s (started from the bottom, now we’re) shell companies?
We can talk all about Senate Bill 316, allowing the formation of domestic Protected Series Limited Liability Companies (“Series LLCs”), as well as recognizing out-of-state "foreign" series LLCs seeking to operate within Florida. The new law, which goes into effect on July 1, 2026, will allow layers to limited liability companies. LLCs will soon be able to add several smaller “Protected Series” under their umbrella. Florida is one of a handful of other states with these options.
Delaware started these Series LLC in 1996, and only a fraction of states have since enacted Series LLC laws, and now Florida is jumping in! In general, Series LLCs operate under an umbrella-style structure, where one Series LLC (sometimes referred to as the "parent" LLC), creates one or more internal entities (each known as "series" or "protected series"). Each series may independently hold assets, conduct operations, enter into contracts, and assume liabilities. This structure allows business owners to form an unlimited number of series within a single parent LLC (without having to form separate legal entities on Sunbiz), offering significant administrative and cost efficiencies. Most importantly, each series benefits from liability segregation, meaning that the debts, obligations, or liabilities of one series generally cannot be enforced against the parent LLC or any other series created by the parent LLC.
Side Note - Now, readers of this newsletter all know that a single member LLC offers no liability protection, and therefore, a single member Series LLC would also not have any liability protection
The idea is that instead of opening multiple LLCs under a parent LLC, the new rules will allow for a Series LLC to create one or more series by filing a "protected series designation" on Sunbiz. The name of each series is required to begin with the name of the Series LLC and include the phrase "protected series," or the abbreviation "P.S." or "PS." Each series may have different members, managers, purposes, assets, and liabilities different from the Series LLC under which the series is formed and the other series. The legislation provides various regulations for Series LLCs, including operations and governance, liability limitations, requirements related to service and notice, merger, and dissolution. Interestingly, Series LLCs are required to maintain clear recordkeeping to properly identify and describe the "associated assets" and "associated liabilities" of each specific series, such that a reasonable person could recognize the asset and understand the related transaction through which it was acquired or incurred. Failure to comply with these recordkeeping requirements may allow creditors of one series to pierce the protective veil of a Series LLC and hold the other series, and the parent LLC itself, liable for the specific series' debts (yikes!)
So, there you have it! We learn that “shell company” is not a dirty word and that Florida is a trendsetter when it comes to corporate structures. We also learn that very soon, shell companies in Florida will be easier to set up and navigate. Good times!
| 
