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AOTSPV_Webimages_Administration Outline-38The Registered Agent serves as the required liaison between your company and the state in which you set up your capital-raising SPV.

This is not an optional step. When you set up your capital-raising SPV (or any other business entity), regardless of the state you select you are required by law to hire a registered agent.  Until you have put your registered agent in place, that state will not recognize or set up your entity. If your registered agent later resigns and you fail to replace them, the state will void your entity. Hiring the Registered Agent mostly requires Administration, with some Accounting expertise.

A registered agent serves as the liaison between your company and the state in which you set up your capital-raising SPV. For example, your registered agent is responsible for making sure you receive your tax forms, notices from the Secretary of State, and any service of process you may receive if someone files a lawsuit against your company.

It generally takes between one and 14 days to set up an entity and hire a registered agent. Once you have set it up, the fund entity becomes operational. It can now enter into agreements, such as opening a bank account, hiring team members, renting space, purchasing and owning equipment and every other action your business requires to function in an effective manner. Ultimately, for a capital-raising SPV, our focus is on a few essentials…namely, the ability to enter into agreements, form and develop partnerships, and hold assets.

For Assure capital-raising SPVs, we manage every aspect of selecting, hiring and managing a registered agent on behalf of our clients. We are committed to choosing reliable, competent, cost-effective, and technologically savvy individuals to serve this function on your behalf.

Now that your capital-raising SPV is up and running, your next step is performing the legal DOCUMENTATION that will determine how the entity functions.

The first formal step in setting up your capital-raising SPV is to create the SPV entity, which falls squarely within the LEGAL administrative category. Your first and primary decision will be what legal structure to choose for the SPV. Although other structures are available, in almost all cases informed investors will opt to set up their SPV either as an LLC (limited liability company) or as an LP (limited partnership) entity. 

This is a result of the legal protections LLCs and LPs afford for shareholders. Specifically, they protect members (LLCs) or partners (LPs) from personal liability in the event the entity is sued.

The LLC is currently the most popular choice among SPV investment organizers. This is because in addition to its personal liability protections, it is the simplest, most flexible and cost-effective way to structure an SPV. 

Though an LP structure offers the same legal protection from personal liability as an LLC, it is also slightly less flexible and more expensive than its LLC counterpoint. 

Whether investors choose the LLC or LP structure, both entities are state-specific--i.e. each U.S. state has its own requirements and features for SPVs (and other business and investment entities, from venture funds to corporations). Most SPV organizers choose to become a Delaware-registered entity because this is widely considered the world’s most flexible and business-friendly type of business/investment entity. Though many states have--not surprisingly--mirrored Delaware’s flexibility and other advantages, Delaware has maintained its reputation and standing as the most advantageous place to register an entity. 

In most cases, Assure recommends using a Master Series LLC structure. This is an LLC without a predetermined shape or structure. The Delaware Master LLC can act as an umbrella for as many divisions (i.e. “series”) as you choose to add. There are currently no limits to the number of subsidiary units investors can add under the banner of their SPV’s Delaware Master LLC. Each subsidiary enjoys its own limited liability protection, can open its own bank account and enter into its own contracts, including separate tax provisions.   

If you have any questions about this step, feel free to reach out to the Assure team. As part of our comprehensive and affordable SPV service, Assure manages this and every other step throughout the entity’s lifecycle.

AOTSPV_Webimages_Step2 MoleculeNow that the SPV entity has been created, your next step will be DOCUMENTATION