Connecticut House Bill HB05217

Connecticut 2019 Regular Session

• Introduced: 1/11/19
• Refer: 1/11/19

Caption

An Act Concerning The Adoption Of The Uniform Protected Series Act.

Impact

If enacted, HB 05217 would represent a significant update to Connecticut's commercial law by allowing businesses to create protected series—a form of internal segregation of assets that enhances liability protection. This means that liabilities incurred by one protected series do not generally affect the assets of other series or the parent entity. Such a structure can attract businesses looking for better asset management and risk mitigation strategies, potentially leading to increased economic activity in the state.

Summary

House Bill 05217 is proposed legislation aimed at adopting the Uniform Protected Series Act, which provides a framework for the formation and management of protected series within legal entities. The purpose of this act is to enhance asset protection and facilitate more effective management of assets for various business entities, including limited liability companies and corporations. By incorporating this uniform act, Connecticut seeks to align its statutes with those of other states that have already adopted similar measures, thereby promoting consistency and predictability in business operations across state lines.

Contention

Discussions surrounding the adoption of the Uniform Protected Series Act may center around concerns related to the complexity and potential abuse of series structures. Critics may argue that the expanded use of protected series could lead to challenges in legal accountability and tax compliance. Moreover, existing local businesses may raise concerns about the competitive advantages gained by out-of-state entities that can leverage this asset protection mechanism, potentially risking local market stability. Proponents, however, will contend that the act is necessary for modernizing business laws to reflect current practices and support economic growth.