Legal Question in Investment Law in Delaware

Re: Limited Liability Company Structures

I can't answer for Delaware specifically, since I'm trained, licensed and experienced only in California; however, I would say that as a general proposition LLCs can own other businesses including corporations, other LLCs, and can be partners in partnerships. This would not be a peculiarity of Delaware LLC law, it would be a general principle more likely than not to be the law in any given state.

Generally speaking, just about any kind of business entity can have an ownership interest in just about any other kind of business entity. The main exceptions that I can think of are that corporations that have elected to be taxed under former Subchapter S of the Internal Revenue Code cannot ordinarily have or be subsidiaries, and professional corporations are also somewhat restricted. Special rules apply to real estate investment trusts.

I do not see a particular advantage for a California-based small business to use an out-of-state entity to conduct its business. There may be exceptions, but for the vast majority there is no advantage to going out-of-state to incorporate or organize the LLC or limited partnership.