What is the origin of a limited liability company? (The answer may just surprise you!)

As LLC, or officially known as a limited liability company, it is actually quite new for the United States. Indeed, in 1977 Wyoming became the first country to establish limited liability company law. Some people believe that the first one was Nevada, LLC, or Delaware, LLC. But they are wrong. In this field of law, we thank Wyoming for importing the concept of a limited liability company into this country.

The term "import" in the previous sentence starts the question. When this type of company was imported, where did it come from? The answer may surprise you. The concept of LLC was born in Germany in 1892. If this type of limited liability company was established in Germany, it was basically spread internationally except for the United States.

This does not mean that some states do not work to take responsibility in some way to marry between partnerships and companies. Pennsylvania, Virginia, New Jersey, Michigan, Ohio were experimenting about this. However, Wyoming became the first American state to establish what is called a true limited liability company in Wyoming State in 1977, and is still leading the new form of entities that may be used in business situations . The latest development is Serial LLC that started in Wyoming State and is currently spreading to five states. (The details on Wyoming 's leadership on this point will be covered in a later article). Wyoming LLC, in addition to the German 1892 code, is designed according to the pattern of Panaman and other Latin American limited liability companies.

As a result, the Wyoming State Limited Liability Company Act contains the same four requirements as those required in other countries. 1) The word "limited" must appear somewhere in the company name. 2) Entity fully enjoy the jusristic character. 3) Partner controls whether or not to add a partner. 4) The LLC shall dissolve the transaction of the member and provide inspection or sale of the refused shares. In many states, the parties have been modified to allow the business to continue as desired).

We often speak in that LLC has become fairly new. Perhaps such a statement may be more accurate than a company. However, limited liability companies have been used in better parts for many centuries to support owners' risk management, risk planning and asset protection in many countries.

Future articles will discuss the usage of limited liability companies in the United States and the history of how they have become a very general means for the above purposes.