Law:Title 2.5. Limited Liability Companies (California)

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Contents

Chapter 1. General Provisions

Ca Codes (corp:17000-17005) Corporations Code Section 17000-17005



17000. This title shall be known and may be cited as the Beverly-Killea Limited Liability Company Act.


17001. Unless the context otherwise indicates, the following definitions govern the construction of this title: (a) "Acknowledged" means that an instrument is either of the following: (1) Formally acknowledged as provided in Article 3 (commencing with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of the Civil Code. (2) Executed to include substantially the following wording preceding the signature: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed. Any certificate of acknowledgment taken without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated. (b) "Articles of organization" means articles of organization filed under Section 17050, including all amendments thereto or restatements thereof, or, in the case of a foreign limited liability company, all documents that serve a like function under the laws of the jurisdiction in which the foreign limited liability company is organized. (c) "Bankrupt" or "bankruptcy" means, with respect to any person, being the subject of an order for relief under Title 11 of the United States Code, or any successor statute or other statute in any foreign jurisdiction having like import or effect. (d) "Capital account" means, unless otherwise provided in the operating agreement, the amount of the capital interest of a member in the limited liability company consisting of that member's original contribution, as (1) increased by any additional contributions and by that member's share of the limited liability company's profits, and (2) decreased by any distribution to that member and by that member's share of the limited liability company's losses. (e) "Constituent limited liability company" means a limited liability company that is merged with or into one or more other limited liability companies or other business entities and includes a surviving limited liability company. (f) "Constituent other business entity" means any other business entity that is merged with or into one or more limited liability companies and includes a surviving other business entity. (g) "Contribution" means any money, property, or services rendered, or a promissory note or other binding obligation to contribute money or property, or to render services as permitted in this title, which a member contributes to a limited liability company as capital in that member's capacity as a member pursuant to an agreement between the members, including an agreement as to value. (h) "Disappearing limited liability company" means a constituent limited liability company that is not the surviving limited liability company. (i) "Disappearing other business entity" means a constituent other business entity that is not the surviving other business entity. (j) "Distribution" means the transfer of money or property by a limited liability company to its members without consideration. (k) "Domestic" means organized under the laws of this state when used in relation to any limited liability company, other business entity or person (other than a natural person). (l) "Domestic corporation" means a corporation as defined in Section 162. (m) "Domestic limited partnership" means a partnership formed by two or more persons under the laws of this state and having one or more general partners and one or more limited partners. (n) "Economic interest" means a person's right to share in the income, gains, losses, deductions, credit, or similar items of, and to receive distributions from, the limited liability company, but does not include any other rights of a member, including, without limitation, the right to vote or to participate in management, or, except as provided in Section 17106, any right to information concerning the business and affairs of the limited liability company. (o) (1) "Electronic transmission by the limited liability company" means a communication (a) delivered by (1) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, for that recipient on record with the limited liability company, (2) posting on an electronic message board or network that the limited liability company has designated for those communications, together with a separate notice to the recipient of the posting, which transmission shall be validly delivered upon the later of the posting or delivery of the separate notice thereof, or (3) other means of electronic communication, (b) to a recipient who has provided an unrevoked consent to the use of those means of transmission, and (c) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form. However, an electronic transmission by a limited liability company to an individual member is not authorized unless, in addition to satisfying the requirements of this section, the transmission satisfies the requirements applicable to consumer consent to electronic records as set forth in the Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)). (2) "Electronic transmission to the limited liability company" means a communication (a) delivered by (1) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, which the limited liability company has provided from time to time to members or managers for sending communications to the limited liability company, (2) posting on an electronic message board or network that the limited liability company has designated for those communications, and which transmission shall be validly delivered upon the posting, or (3) other means of electronic communication, (b) as to which the limited liability company has placed in effect reasonable measures to verify that the sender is the member or manager (in person or by proxy) purporting to send the transmission, and (c) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form. (p) "Foreign corporation" means a corporation formed under the laws of any state other than this state or under the laws of the United States or of a foreign country. (q) "Foreign limited liability company" means either (1) an entity formed under the limited liability company laws of any state other than this state, or (2) an entity organized under the laws of any foreign country that is (A) an unincorporated association, (B) organized under a statute pursuant to which an association may be formed that affords each of its members limited liability with respect to the liabilities of the entity, and (C) not an entity that is required to be registered or qualified pursuant to the provisions of Title 1 (commencing with Section 100) or Title 2 (commencing with Section 15001); but the term "foreign limited liability company" does not include a foreign association, as defined in Section 170. (r) "Foreign limited partnership" means a partnership formed under the laws of any state other than this state or under the laws of a foreign country, including a limited liability limited partnership, and having as partners one or more general partners and one or more limited partners or their equivalents under any name. (s) "Foreign other business entity" means any other business entity formed under the laws of any state other than this state or under the laws of the United States or of a foreign country. (t) "Limited liability company" or "domestic limited liability company" means an entity having one or more members that is organized under this title and is subject to the provisions of Section 17101. (u) "Mail" unless otherwise provided in the operating agreement, means first-class mail, postage prepaid, unless registered mail is specified. Registered mail includes certified mail. (v) "Majority in interest of the members," unless otherwise provided in the operating agreement, means more than 50 percent of the interests of members in current profits of the limited liability company. (w) "Manager" means a person elected by the members of a limited liability company to manage the limited liability company if the articles of organization contain the statement referred to in subdivision (b) of Section 17151 or, if the articles of organization do not contain that statement, "manager" means each of the members of the limited liability company. (x) "Member" means a person who: (1) Has been admitted to a limited liability company as a member in accordance with the articles of organization or operating agreement, or an assignee of an interest in a limited liability company who has become a member pursuant to Section 17303. (2) Has not resigned, withdrawn, or been expelled as a member or, if other than an individual, been dissolved. (y) "Member of record" means a member named as a member on the list maintained in accordance with paragraph (1) of subdivision (a) of Section 17058. (z) "Membership interest" means a member's rights in the limited liability company, collectively, including the member's economic interest, any right to vote or participate in management, and any right to information concerning the business and affairs of the limited liability company provided by this title. (aa) "Officer" means any person elected or appointed pursuant to Section 17154. (ab) "Operating agreement" means any agreement, written or oral, between all of the members as to the affairs of a limited liability company and the conduct of its business in any manner not inconsistent with law or the articles of organization, including all amendments thereto, or, in the case of a foreign limited liability company, all documents that serve a like function under the laws of the jurisdiction in which the foreign limited liability company is organized. The term "operating agreement" may include, without more, an agreement between all the members to organize a limited liability company pursuant to the provisions of this title. (ac) "Other business entity" means a corporation, limited partnership, general partnership, business trust, real estate investment trust, or an unincorporated association (other than a nonprofit association), but excluding a domestic limited liability company and a foreign limited liability company. (ad) "Parent," when used in relation to a specified limited liability company, means a person who owns, directly or indirectly, membership interests possessing more than 50 percent of the voting power of the specified limited liability company. When used in relation to a specified corporation or limited partnership, the term "parent" shall have the meanings set forth in Section 175 and subdivision (w) of Section 15611 or subdivision (v) of Section 15901.02 respectively. (ae) "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign. (af) �RESERVED) (ag) �RESERVED) (ah) �RESERVED) (ai) "Proxy," unless otherwise provided in the operating agreement, means a written authorization signed or an electronic transmission authorized by a member or the member's attorney-in-fact giving another person the power to exercise the voting rights of that member. "Signed," for the purpose of this section, means the placing of the member's name on the proxy (whether by manual signature, typewriting, telegraphic or electronic transmission, or otherwise) by the member or member's attorney-in-fact. A proxy may be transmitted by an oral telephonic transmission if it is submitted with information from which it may be determined that the proxy was authorized by the member, or by the member's attorney-in-fact. (aj) "Return of capital," unless otherwise provided in the operating agreement, means any distribution to a member to the extent that the member's capital account, immediately after the distribution, is less than the amount of that member's contributions to the limited liability company as reduced by prior distributions that were a return of capital. (ak) "State" means a state, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. (al) "Subsidiary of a specified limited liability company" means a limited liability company or other business entity in which shares, interests, or other securities possessing more than 50 percent of the voting power are owned by the specified limited liability company. (am) "Surviving limited liability company" means a limited liability company into which one or more other limited liability companies or other business entities are merged. (an) "Surviving other business entity" means an other business entity into which one or more limited liability companies are merged. (ao) "Time a notice is given or sent," unless otherwise expressly provided, means the time a written notice is deposited in the United States mail; is personally delivered to the recipient, is delivered to a common carrier for transmission, or is actually transmitted by the person giving the notice by electronic transmission, to the recipient; or the time any oral notice is communicated, in person or by telephone, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. (ap) "Transact intrastate business" means to enter into repeated and successive transactions of business in this state, other than in interstate or foreign commerce. (1) Without excluding other activities which may not be considered to be transacting intrastate business, a foreign limited liability company shall not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business, or merely because of its status as any one or more of the following: (A) A shareholder of a domestic corporation. (B) A shareholder of a foreign corporation transacting intrastate business. (C) A limited partner of a foreign limited partnership transacting intrastate business. (D) A limited partner of a domestic limited partnership. (E) A member or manager of a foreign limited liability company transacting intrastate business. (F) A member or manager of a domestic limited liability company. (2) Without excluding other activities which may not be considered to be transacting intrastate business, a foreign limited liability company shall not be considered to be transacting intrastate business within the meaning of this subdivision solely by reason of carrying on in this state any one or more of the following activities: (A) Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof, or the settlement of claims or disputes. (B) Holding meetings of its managers or members or carrying on any other activities concerning its internal affairs. (C) Maintaining bank accounts. (D) Maintaining offices or agencies for the transfer, exchange, and registration of the foreign limited liability company's securities or maintaining trustees or depositaries with respect to those securities. (E) Effecting sales through independent contractors. (F) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where those orders require acceptance without this state before becoming binding contracts. (G) Creating or acquiring evidences of debt or mortgages, liens, or security interests in real or personal property. (H) Securing or collecting debts or enforcing mortgages and security interests in property securing the debts. (I) Conducting an isolated transaction that is completed within 180 days and not in the course of a number of repeated transactions of a like nature. (3) A person shall not be deemed to be transacting intrastate business in this state merely because of its status as a member or manager of a domestic limited liability company or a foreign limited liability company registered to transact intrastate business in this state. (aq) "Vote" includes authorization by written consent. (ar) "Voting power" means the power to vote on any matter at the time any determination of voting power is made and does not include the right to vote upon the happening of some condition or event which has not yet occurred. (as) "Withdrawal" includes the resignation or retirement of a member as a member. (at) "Written" or "in writing" includes facsimile, telegraphic, and other electronic communication as authorized by this code.


17002. (a) Subject to any limitations contained in the articles of organization and to compliance with any other applicable laws, a limited liability company may engage in any lawful business activity, whether or not for profit, except the banking business, the business of issuing policies of insurance and assuming insurance risks, or the trust company business. (b) Notwithstanding subdivision (a) and as specifically provided in this subdivision, a limited liability company may operate as a health care service plan licensed pursuant to Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code if the limited liability company is a subsidiary of a health care service plan licensed pursuant to those provisions and the limited liability company is established to serve an existing line of business of the parent health care service plan. Notwithstanding any other provision of law, the tort or contract liability of a limited liability company created to operate as a health care service plan under this subdivision and its members is not limited or restricted in any manner because of the limited liability company status of the health care service plan. (c) Notwithstanding Section 17375, a limited liability company may render services that may be lawfully rendered only pursuant to a license, certificate, or registration authorized by the Business and Professions Code if the applicable provisions of the Business and Professions Code authorize a limited liability company to hold that license, certificate, or registration.


17003. Subject to any limitations contained in the articles of organization and to compliance with this title and any other applicable laws, a limited liability company organized under this title shall have all of the powers of a natural person in carrying out its business activities, including, without limitation, the power to: (a) Transact its business, carry on its operations, qualify to do business, and have and exercise the powers granted by this title in any state, territory, district, possession, or dependency of the United States, and in any foreign country. (b) Sue, be sued, complain and defend any action, arbitration, or proceeding, whether judicial, administrative, or otherwise, in its own name. (c) Adopt, use, and at will alter a company seal; but failure to affix a seal does not affect the validity of any instrument. (d) Make contracts and guarantees, incur liabilities, act as surety, and borrow money. (e) Sell, lease, exchange, transfer, convey, mortgage, pledge, and otherwise dispose of all or any part of its property and assets. (f) Purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, or otherwise deal in and with any interest in real or personal property, wherever located. (g) Lend money to and otherwise assist its members and employees. (h) Issue notes, bonds, and other obligations and secure any of them by mortgage or deed of trust or security interest of any or all of its assets. (i) Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, loan, pledge, or otherwise dispose of and otherwise use and deal in and with stock or other interests in and obligations of any person, or direct or indirect obligations of the United States or of any government, state, territory, governmental district, or municipality, or of any instrumentality of any of them. (j) Invest its surplus funds, lend money from time to time in any manner which may be appropriate to enable it to carry on the operations or fulfill the purposes set forth in its articles of organization, and take and hold real property and personal property as security for the payment of funds so loaned or invested. (k) Be a promoter, stockholder, partner, member, manager, associate, or agent of any person. (l) Indemnify or hold harmless any person. (m) Purchase and maintain insurance. (n) Issue, purchase, redeem, receive, take, or otherwise acquire, own, hold, sell, lend, exchange, transfer, or otherwise dispose of, pledge, use, and otherwise deal in and with its own bonds, debentures, and other securities. (o) Pay pensions and establish and carry out pension, profit-sharing, bonus, share purchase, option, savings, thrift, and other retirement, incentive, and benefit plans, trusts, and provisions for all or any of the current or former members, managers, officers, or employees of the limited liability company or any of its subsidiary or affiliated entities, and to indemnify and purchase and maintain insurance on behalf of any fiduciary of such plans, trusts, or provisions. (p) Make donations, regardless of specific benefit to the limited liability company, to the public welfare or for community, civic, religious, charitable, scientific, literary, educational, or similar purposes. (q) Make payments or donations or do any other act, not inconsistent with this title or any other applicable law, that furthers the business and affairs of the limited liability company. (r) Pay compensation, and pay additional compensation, to any or all managers, officers, members, and employees on account of services previously rendered to the limited liability company, whether or not an agreement to pay such compensation was made before such services were rendered. (s) Insure for its benefit the life of any of its members, managers, officers, or employees, insure the life of any member for the purpose of acquiring at his or her death the interest owned by such member, and continue such insurance after the relationship terminates. (t) Do every other act not inconsistent with law that is appropriate to promote and attain the purposes set forth in its articles of organization.

17004. (a) A member may lend money to and transact other business with the limited liability company and, subject to other applicable law, has the same rights and obligations with respect thereto as a person who is not a member. (b) Except as otherwise authorized in, or pursuant to, the operating agreement or other agreement among all the members, no member is entitled to remuneration for acting in the limited liability company business, subject to the entitlement of managers or members winding up the affairs of the limited liability company to reasonable compensation pursuant to subdivision (c) of Section 17352.


17005. (a) Except as provided in subdivisions (b) and (c), relations among members and between the members and the limited liability company are governed by the articles of organization and operating agreement. To the extent the articles of organization or operating agreement do not otherwise provide, this title governs relations among the members and between the members and the limited liability company. (b) The effect of the provisions of this title may be varied as among the members or as between the members and the limited liability company by the articles of organization or operating agreement, provided, however, that the provisions of Sections 17059, 17103, 17104, 17152, 17154, and 17155 may only be varied by the articles of organization or a written operating agreement. Notwithstanding the first sentence of this subdivision, neither the articles of organization nor the operating agreement may: (1) Vary the definitions in Section 17001, except as specifically provided therein. (2) Eliminate the right of a member pursuant to subdivision (c) of Section 17100 to assert that a provision in the operating agreement governing the termination of that member's interest and the return of that member's contribution was unreasonable under the circumstances existing at the time the agreement was made. (3) Vary the voting requirements or voting rights set forth in subdivisions (b) and (c) of Section 17103. (4) Vary a member's rights under Sections 17106 and 17453. (c) The provisions of Chapter 2 (commencing with Section 17050), Chapter 8 (commencing with Section 17350), Chapter 10 (commencing with Section 17450), Chapter 11 (commencing with Section 17500), Chapter 12 (commencing with Section 17550), and Chapter 13 (commencing with Section 17600) may be varied by the articles of organization or by a written operating agreement only to the extent expressly provided in those chapters. (d) The fiduciary duties of a manager to the limited liability company and to the members of the limited liability company may only be modified in a written operating agreement with the informed consent of the members. (e) The presence in certain provisions of this title of the words "unless otherwise provided in the articles of organization or operating agreement" or words of similar import does not imply that the effect of other provisions may not be varied as among the members by the articles of organization or operating agreement. (f) If any provision of the articles of organization conflicts with one or more provisions of a written operating agreement, the articles of organization shall control.


Chapter 2. Formation

Ca Codes (corp:17050-17062) Corporations Code Section 17050-17062



17050. (a) In order to form a limited liability company, one or more persons shall execute and file articles of organization with, and on a form prescribed by, the Secretary of State and, either before or after the filing of articles of organization, the members shall have entered into an operating agreement. The person or persons who execute and file the articles of organization may, but need not, be members of the limited liability company. (b) A limited liability company shall have one or more members. (c) The existence of a limited liability company begins upon the filing of the articles of organization. For all purposes, a copy of the articles of organization duly certified by the Secretary of State is conclusive evidence of the formation of a limited liability company and prima facie evidence of its existence. (d) The Secretary of State shall include with instructional materials provided in conjunction with the form for filing articles of organization under subdivision (a) a notice that filing the registration will obligate the limited liability company to pay an annual tax for that taxable year to the Franchise Tax Board pursuant to Section 17941 of the Revenue and Taxation Code. That notice shall be updated annually to specify the dollar amount of the tax.


17051. (a) The articles of organization shall set forth: (1) The name of the limited liability company. (2) The following statement: The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea Limited Liability Company Act. (3) �RESERVED) (4) The name and address of the initial agent for service of process on the limited liability company who meets the qualifications specified in paragraph (1) of subdivision (b) of Section 17061, unless a corporate agent is designated, in which case only the name of the agent shall be set forth. (5) If the limited liability company is to be managed by one or more managers and not by all its members, the statement referred to in subdivision (b) of Section 17151. If the limited liability company is to be managed by only one manager, the articles of organization shall contain a statement to that effect. (b) It is not necessary to set out in the articles of organization any of the powers of a limited liability company enumerated in this title. (c) The articles of organization may contain any other provision not inconsistent with law, including, but not limited to: (1) A provision limiting or restricting the business in which the limited liability company may engage or the powers that the limited liability company may exercise or both. (2) Provisions governing the admission of members to the limited liability company. (3) The time at which the limited liability company is to dissolve. (4) Any events that will cause a dissolution of the limited liability company. (5) A statement of whether there are limitations on the authority of managers or members to bind the limited liability company, and, if so, what the limitations are. (6) The names of the managers of the limited liability company. (d) No limitation upon the business, purposes, or powers of the limited liability company contained in or implied by the articles of organization or the operating agreement may be asserted by any person, except in one of the following types of proceedings: (1) In a proceeding by a member or the state to enjoin the doing of unauthorized business by the limited liability company or its managers or officers, if third parties have not acquired rights thereby. (2) In a proceeding to dissolve the limited liability company. (3) In a derivative proceeding by the limited liability company or by a member suing on the company's behalf against the officers or managers of the limited liability company for violation of their authority. However, the limitation may not be asserted if the person asserting the limitation had actual knowledge of the limitation at the time of the act or event complained of. (e) The Secretary of State may cancel the filing of articles of organization if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. Upon receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of this section to the agent for service of process or to the person submitting the instrument. Thereafter, if the amount has not been paid by cashier's check or equivalent, the Secretary of State shall give a second written notice of cancellation and the cancellation shall be effective at that time. The second notice shall be given 20 days or more after the first notice and 90 days or less after the original filing.

17052. The name of each limited liability company as set forth in its articles of organization: (a) Shall contain either the words "limited liability company" or the abbreviation "LLC" or "L.L.C." as the last words in the name of the limited liability company. The words "limited" and "company" may be abbreviated to "Ltd." and "Co.," respectively. (b) May contain the name of one or more members. (c) Shall not be a name that the Secretary of State determines is likely to mislead the public and shall not be the same as, or resemble so closely as to tend to deceive, (1) the name of any limited liability company that has filed articles of organization pursuant to Section 17050, (2) the name of any foreign limited liability company registered to do business in this state pursuant to Section 17451, or (3) any name that is under reservation for another domestic limited liability company or foreign limited liability company pursuant to Section 17053. However, a limited liability company may adopt a name that is substantially the same as that of an existing domestic limited liability company or foreign limited liability company that is registered pursuant to Section 17451 upon proof of consent by that domestic limited liability company or foreign limited liability company and a finding by the Secretary of State that, under the circumstances, the public is not likely to be misled. (d) Shall not contain the words "bank," "trust," "trustee," "incorporated," "inc.," "corporation," or "corp.," and shall not contain the words "insurer" or "insurance company" or any other words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks. (e) The use by a limited liability company or a foreign limited liability company of a name in violation of this section may be enjoined, notwithstanding the filing of its articles of organization or its registration with the Secretary of State. (f) A limited liability company may record in the office of the county recorder of any county in this state, and county recorders, on request, shall record a certified copy of the limited liability company articles of organization and any exhibits or attachments, or any amendment or correction thereto, that has been filed in the office of the Secretary of State. A foreign limited liability company may record in the office of the county recorder of any county in the state a certified copy of the limited liability company application for registration, certificate of registration, or any amendment thereto, that has been filed in the office of the Secretary of State. The recording shall create a conclusive presumption in favor of any bona fide purchaser or encumbrancer for value of the limited liability company real property located in the county in which the certified copy has been recorded, of the statements contained therein.


17053. Any applicant may, upon payment of the fee prescribed in subdivision (a) of Section 17701, obtain from the Secretary of State a certificate of reservation of any name not prohibited by Section 17052, and upon the issuance of the certificate the name stated therein may be reserved for a period of 60 days. The Secretary of State shall not issue certificates reserving the same name for two or more consecutive 60-day periods to the same applicant or for the use or benefit of the same person; nor shall consecutive reservations be made by or for the use or benefit of the same person for names so similar as to fall within the prohibitions of subdivision (c) of Section 17052.


17054. (a) Subject to subdivision (b) of Section 17103, the articles of organization may be amended at any time and in any manner as the members may determine, as long as the articles of organization as amended contain only those provisions as it would be lawful to insert in original articles of organization filed at the time of the filing of the amendment. The articles of organization may be amended regardless of whether any provision contained in the amendment was permissible at the time of the original organization of the limited liability company. (b) The articles of organization shall be amended by filing a certificate of amendment thereto duly executed by at least one manager, unless a greater number is provided in the articles of organization. The certificate of amendment shall be filed with, and on a form prescribed by, the Secretary of State, and shall set forth all of the following: (1) The name and the Secretary of State's file number of the limited liability company. (2) The text of the amendment to the articles of organization. (c) A certificate of amendment to the articles of organization shall be filed to effect any of the following: (1) A change in the name of the limited liability company. (2) Any change in the statement referred to in subdivision (b) of Section 17151. (3) Any change in the time as stated in the articles of organization for the dissolution of the limited liability company. (4) Any change in the events that will cause a dissolution of the limited liability company. (d) The managers shall cause to be filed a certificate of amendment to the articles of organization within 30 days of the discovery by any of the managers of any false or erroneous material statement contained in the articles of organization or any amendment thereto. (e) Any manager who executes a certificate of amendment shall be liable for any statement materially inconsistent with the operating agreement or any material misstatement of fact contained in the certificate of amendment if the manager knew or should have known that the statement was false when made or that the statement became false and an amendment required by subdivision (d) was not filed, and the person suffering the loss relied on the statement or misstatement. (f) Articles of organization may be restated at any time. Restated articles of organization shall be filed with, and on a form prescribed by, the Secretary of State, shall be specifically designated as restated in the heading, shall set forth the limited liability company's name and the Secretary of State's file number, may set forth the name and address of the agent for service of process required to be maintained by Section 17057, unless a corporate agent is designated, in which case only the name of the agent shall be set forth, shall set forth all the other matters required by Section 17051 to be set forth in the articles of organization, and may set forth any other matters that may be set forth as authorized by Section 17051. If restated articles of organization include the agent for service of process, any previously filed statements pursuant to Section 17060 are superseded as to the agent for service of process until another statement pursuant to Section 17060 is filed subsequent to the filing of the restated articles of organization. If the name of the limited liability company is to be changed by the filing of the restated articles of organization, the old name shall also be set forth in the heading in a manner to indicate the intent to change the name.


17055. (a) If any document filed with the Secretary of State under this title contains any typographical error, error of transcription, or other technical error, or has been defectively executed, the document may be corrected by the filing of a certificate of correction. (b) A certificate of correction shall be filed with, and on a form prescribed by, the Secretary of State, and shall set forth: (1) The name and the Secretary of State's file number of the limited liability company. (2) The title of the document being corrected. (3) The name of each party to the document being corrected. (4) The date that the document being corrected was filed. (5) The provision in the document as previously filed and as corrected and, if execution of the document was defective, the manner in which it was defective. (c) A certificate of correction shall not make any other change or amendment that would not have complied in all respects with the requirements of this title at the time the document being corrected was filed. (d) A certificate of correction shall be executed in the same manner in which the document being corrected was required to be executed. (e) A certificate of correction may not: (1) Change the effective date of the document being corrected. (2) Affect any right or liability accrued or incurred before its filing, except that any right or liability accrued or incurred by reason of the error or defect being corrected shall be extinguished by the filing if the person having the right or to whom the liability is owed has not detrimentally relied on the original document.


17056. (a) Unless otherwise specified in any other section of this title, any document required by this title to be executed and filed with the Secretary of State shall be executed: (1) By the person or persons organizing the limited liability company when the limited liability company has not yet been formed. (2) By any manager. (3) If the limited liability company is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary. (4) In the case of a foreign limited liability company, in the manner required by the laws of the state of its organization. (b) Any person may execute any document referred to in subdivision (a) by an attorney in fact. Powers of attorney relating to the signing of those documents by an attorney in fact need not be sworn to, verified, or acknowledged, and need not be filed with the Secretary of State. (c) Any instrument filed with respect to a limited liability company, other than the original articles of organization, may provide that it is to become effective not more than 90 days after its filing date. In case a delayed effective date is specified, the instrument may be prevented from becoming effective by a certificate stating that by appropriate action it has been revoked and is null and void. This certificate shall be executed in the same manner as the original instrument and shall be filed before the specified effective date. In the case of a merger agreement or certificate of merger, a certificate revoking the earlier filing need only be executed on behalf of one of the constituent parties to the merger. If no revocation certificate is filed, the instrument becomes effective on the date specified. (d) If the Secretary of State determines that an instrument submitted for filing or otherwise submitted does not conform to the law and returns it to the person submitting it, the instrument may be resubmitted accompanied by a written opinion of a member of the State Bar of California submitting the instrument or representing the person submitting it, to the effect that the specific provisions of the instrument objected to by the Secretary of State does conform to law and stating the points and authorities upon which the opinion is based. The Secretary of State shall rely, with respect to any disputed point of law, other than the application of Sections 17052, 17053, 17451, and 17452, upon that written opinion in determining whether the instrument conforms to law. The date of filing in that case shall be the date the instrument is received on resubmission.


17057. Each limited liability company shall continuously maintain in this state each of the following: (a) An office at which shall be maintained the records required by Section 17058. (b) An agent in this state for service of process on the limited liability company.


17058. (a) Each limited liability company shall maintain in writing or in any other form capable of being converted into clearly legible tangible form at the office referred to in subdivision (a) of Section 17057 all of the following: (1) A current list of the full name and last known business or residence address of each member and of each holder of an economic interest in the limited liability company set forth in alphabetical order, together with the contribution and the share in profits and losses of each member and holder of an economic interest. (2) If the articles of organization contain the statement described in subdivision (b) of Section 17151, a current list of the full name and business or residence address of each manager. (3) A copy of the articles of organization and all amendments thereto, together with any powers of attorney pursuant to which the articles of organization or any amendments thereto were executed. (4) Copies of the limited liability company's federal, state, and local income tax or information returns and reports, if any, for the six most recent taxable years. (5) A copy of the limited liability company's operating agreement, if in writing, and any amendments thereto, together with any powers of attorney pursuant to which any written operating agreement or any amendments thereto were executed. (6) Copies of the financial statements of the limited liability company, if any, for the six most recent fiscal years. (7) The books and records of the limited liability company as they relate to the internal affairs of the limited liability company for at least the current and past four fiscal years. (b) Upon request of an assessor, a domestic or foreign limited liability company owning, claiming, possessing, or controlling property in this state subject to local assessment shall make available at the limited liability company's principal office in California or at the office required to be kept pursuant to subdivision (a) of Section 17057 or at a place mutually acceptable to the assessor and the limited liability company, a true copy of business records relevant to the amount, cost, and value of all property that it owns, claims, possesses, or controls within the county.


17059. The power to adopt, alter, amend, or repeal the operating agreement of a limited liability company shall be vested in the members. The articles of organization or a written operating agreement may prescribe the manner in which the operating agreement may be altered, amended, or repealed.


17060. (a) Every limited liability company and every foreign limited liability company registered to transact intrastate business in this state shall file within 90 days after the filing of its original articles of organization and biennially thereafter during the applicable filing period, on a form prescribed by the Secretary of State, a statement containing: (1) The name of the limited liability company and the Secretary of State's file number and, in the case of a foreign limited liability company, the state under the laws of which it is organized. (2) The name and address of the agent for service of process required to be maintained pursuant to subdivision (b) of Section 17057. If a corporate agent is designated, only the name of the agent shall be set forth. (3) The street address of its principal executive office and, in the case of a domestic limited liability company, of the office required to be maintained pursuant to Section 17057. (4) The name and complete business or residence addresses of any manager or managers and the chief executive officer, if any, appointed or elected in accordance with the articles of organization or operating agreement or, if no manager has been so elected or appointed, the name and business or residence address of each member. (5) The general type of business that constitutes the principal business activity of the limited liability company (for example, manufacturer of aircraft; wholesale liquor distributor; or retail department store). (b) If there has been no change in the information in the last filed statement of the limited liability company on file in the Secretary of State's office, the limited liability company may, in lieu of filing the statement required by subdivision (a), advise the Secretary of State, on a form prescribed by the Secretary of State, that no changes in the required information have occurred during the applicable filing period. (c) For the purposes of this section, the applicable filing period for a limited liability company shall be the calendar month during which its original articles of organization were filed or, in the case of a foreign limited liability company, the month during which its application for registration was filed, and the immediately preceding five calendar months. The Secretary of State shall mail a form for compliance with this section to each limited liability company approximately three months prior to the close of the applicable filing period. The form shall state the due date thereof and shall be mailed to the last address of the limited liability company according to the records of the Secretary of State. The failure of the limited liability company to receive the form shall not exempt the limited liability company from complying with this section. (d) Whenever any of the information required by subdivision (a) changes, other than the name and address of the agent for service of process, the limited liability company may file a current statement containing all the information required by subdivision (a). When changing its agent for service of process or when the address of the agent changes, the limited liability company shall file a current statement containing all the information required by subdivision (a). Whenever any statement is filed pursuant to this section changing the name and address of the agent for service of process, that statement supersedes any previously filed statement pursuant to this section, the statement in the original articles of organization, and the statement in any restated articles of organization that have been filed, or in the case of a foreign limited liability company, in the application for registration. Whenever restated articles of organization are filed, the statement therein, if any, of the name and address of the agent for service of process supersedes any previously filed statement pursuant to this section. (e) The Secretary of State may destroy or otherwise dispose of any statement filed pursuant to this section after it has been superseded by the filing of a new statement. (f) This section shall not be construed to place any person dealing with the limited liability company on notice of, or under any duty to inquire about, the existence or content of a statement filed pursuant to this section.


17061. (a) In addition to Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure, process may be served upon limited liability companies and foreign limited liability companies as provided in this section. (b) Personal service of a copy of any process against the limited liability company or the foreign limited liability company by delivery (1) to any individual designated by it as agent, or (2) if the designated agent is a corporation, to any person named in the latest certificate of the corporate agent filed pursuant to Section 1505 at the office of the corporate agent, shall constitute valid service on the limited liability company or the foreign limited liability company. No change in the address of the agent for service of process or appointment of a new agent for service of process shall be effective until an amendment to the statement described in Section 17060 is filed. In the case of a foreign limited liability company that has appointed the Secretary of State as agent for service of process by reason of subdivision (d) of Section 17456, process shall be delivered by hand to the Secretary of State, or to any person employed in the capacity of assistant or deputy, and shall include one copy of the process for each defendant to be served, together with a copy of the court order authorizing the service and the fee therefor. The order shall set forth the address to which the process shall be sent by the Secretary of State. (c) (1) If an agent for service of process has resigned and has not been replaced or if the designated agent cannot with reasonable diligence be found at the address designated for personal delivery of the process, and it is shown by affidavit to the satisfaction of the court that process against a limited liability company or foreign limited liability company cannot be served with reasonable diligence upon the designated agent by hand in the manner provided in Section 415.10, subdivision (a) of Section 415.20, or subdivision (a) of Section 415.30 of the Code of Civil Procedure, the court may make an order that the service shall be made upon a domestic limited liability company or upon a registered foreign limited liability company by delivering by hand to the Secretary of State, or to any person employed in the Secretary of State's office in the capacity of assistant or deputy, one copy of the process for each defendant to be served, together with a copy of the order authorizing the service. Service in this manner shall be deemed complete on the 10th day after delivery of the process to the Secretary of State. (2) Upon receipt of the copy of process and the fee therefor, the Secretary of State shall give notice of the service of the process to the limited liability company or foreign limited liability company, at its principal executive office, by forwarding to that office, by registered mail with request for return receipt, the copy of the process. (3) The Secretary of State shall keep a record of all process served upon the Secretary of State under this title and shall record therein the time of service and the action taken by the Secretary of State. A certificate under the Secretary of State's official seal, certifying to the receipt of process, the giving of notice to the limited liability company or foreign limited liability company, and the forwarding of the process pursuant to this section, shall be competent and prima facie evidence of the service of process. (d) (1) The articles of organization of a limited liability company and the application for registration of a foreign limited liability company shall designate, as the agent for service of process, an individual residing in this state or a corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated. If an individual is designated, the statement shall set forth that person's complete business or residence address in this state. (2) An agent designated for service of process may file with the Secretary of State a signed and acknowledged written statement of resignation as an agent. Upon filing of the statement of resignation, the authority of the agent to act in that capacity shall cease and the Secretary of State shall give written notice of the filing of the statement of resignation by mail to the limited liability company or foreign limited liability company addressed to its principal executive office. (3) If an individual who has been designated agent for service of process dies or resigns or no longer resides in the state, or if the corporate agent for that purpose resigns, dissolves, withdraws from the state, forfeits its right to transact intrastate business, has its corporate rights, powers, and privileges suspended, or ceases to exist, the limited liability company or foreign limited liability company shall promptly file an initial or amended statement described in Section 17060 designating a new agent. (e) In addition to any other discovery rights that may exist, in any case pending in a California court in which a party seeks records from a limited liability company formed under this title, whether or not the limited liability company is a party, the court may order the production in California of the books and records of the limited liability company on those terms and conditions that the court deems appropriate. (f) A member may, in a written operating agreement or other writing, consent to be subject to the nonexclusive jurisdiction of the courts of a specified jurisdiction, or the exclusive jurisdiction of the courts of this state. (g) If a member desires to use the arbitration process, that member may, in a written operating agreement or other writing, consent to be nonexclusively subject to arbitration in a specified state, or to be exclusively subject to arbitration in this state. (h) Along with the consent to the jurisdiction of courts or to be subject to arbitration as provided in subdivisions (f) and (g), a member may consent to be served with legal process in the manner prescribed in a written operating agreement or other writing.


17062. An instrument shall be deemed filed, and the date of filing endorsed thereon, upon receipt by the Secretary of State of any instrument accompanied by the fee prescribed in Chapter 15 (commencing with Section 17700). The date of filing shall be the date the instrument is received by the Secretary of State unless the instrument is withheld from filing for a period of time not to exceed 90 days pursuant to a request by the party submitting it for filing or unless, in the judgment of the Secretary of State, the filing is intended to be coordinated with the filing of some other document that cannot be filed. The Secretary of State shall file a document as of any requested future date not more than 90 days after its receipt, including a Saturday, Sunday, or legal holiday, if that document is received in the Secretary of State's office at least one business day prior to the requested date of filing. Upon receipt and after filing of any document under this title, the Secretary of State may microfilm or reproduce by other techniques any filings or documents and destroy the original filing or document. The microfilm or other reproduction of any document under the provision of this section shall be admissible in any court of law.


Chapter 3. Members

Ca Codes (corp:17100-17107) Corporations Code Section 17100-17107



17100. (a) After formation of a limited liability company, a person may become a member: (1) In the case of a person acquiring a membership interest directly from the limited liability company, at the time provided in and upon compliance with the articles of organization or the operating agreement or, if the articles of organization or operating agreement do not so provide, only upon the vote of a majority in interest of the members, excluding the vote of the person acquiring the membership interest, and only when the person becomes a party to the operating agreement. (2) In the case of an assignee of a membership interest, upon compliance with subdivision (a) of Section 17303 and at the time provided in and upon compliance with the articles of organization or the operating agreement or, if the articles of organization or operating agreement do not so provide, when the assignee becomes a party to the operating agreement. (b) In each case under subdivision (a), the person acquiring the membership interest shall be added as a member to the list required by paragraph (1) of subdivision (a) of Section 17058. (c) The operating agreement may provide for the termination in whole or in part of the membership interest or economic interest of a member in the limited liability company. If a member's economic interest in the limited liability company is terminated pursuant to the operating agreement, the member may demand and shall be entitled to receive a return of that member's contribution. Any provision in an operating agreement governing the termination of a member's interest and the return of a member's contribution shall be enforceable in accordance with its terms unless the member seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the agreement was made. Upon any termination of a membership interest, the list required by paragraph (1) of subdivision (a) of Section 17058 shall be amended accordingly. (d) Sections 406 and 407 of the Labor Code shall not apply to membership interests issued by any foreign or domestic limited liability company to the following persons: (1) Any employee of the limited liability company or of any parent or subsidiary thereof, pursuant to a membership interest purchase plan or agreement or membership interest option plan or agreement. (2) In any transaction in connection with securing employment, to a person, who is or is about to become an officer of the limited liability company or a manager (as appointed or elected by the members) of the limited liability company, or of any parent or subsidiary thereof.


17101. (a) Except as otherwise provided in Section 17254 or in subdivision (e), no member of a limited liability company shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a member of the limited liability company. (b) A member of a limited liability company shall be subject to liability under the common law governing alter ego liability, and shall also be personally liable under a judgment of a court or for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, under the same or similar circumstances and to the same extent as a shareholder of a corporation may be personally liable for any debt, obligation, or liability of the corporation; except that the failure to hold meetings of members or managers or the failure to observe formalities pertaining to the calling or conduct of meetings shall not be considered a factor tending to establish that a member or the members have alter ego or personal liability for any debt, obligation, or liability of the limited liability company where the articles of organization or operating agreement do not expressly require the holding of meetings of members or managers. (c) Nothing in this section shall be construed to affect the liability of a member of a limited liability company (1) to third parties for the member's participation in tortious conduct, or (2) pursuant to the terms of a written guarantee or other contractual obligation entered into by the member, other than an operating agreement. (d) A limited liability company or foreign limited liability company shall carry insurance or provide an undertaking to the same extent and in the same amount as is required by any law, rule, or regulation of this state that would be applicable to the limited liability company or foreign limited liability company were it a corporation organized and existing or duly qualified for the transaction of intrastate business under the General Corporation Law. (e) Notwithstanding subdivision (a), a member of a limited liability company may agree to be obligated personally for any or all of the debts, obligations, and liabilities of the limited liability company as long as the agreement to be so obligated is set forth in the articles of organization or in a written operating agreement that specifically references this subdivision.


17102. The articles of organization or the operating agreement may provide for the creation of classes of members having those relative rights, powers, and duties as the articles of organization or operating agreement may provide, including rights, powers, and duties senior to other classes of members.


17103. (a) The articles of organization or a written operating agreement may provide to all or certain identified members or a specified class or group of members the right to vote separately or with all or any class or group of members on any matter. Voting by members may be on a per capita, number, financial interest, class, group, or any other basis. If no voting provision is contained in the articles of organization or written operating agreement: (1) The members of a limited liability company shall vote in proportion to their interests in current profits of the limited liability company or, in the case of a member who has assigned his or her or its entire economic interest in the limited liability company to a person who has not been admitted as a member, in proportion to the interest in current profits that the assigning member would have, had the assignment not been made. (2) Any amendment of the articles of organization or operating agreement shall require the unanimous vote of all members. (3) In all other matters in which a vote is required, a vote of a majority in interest of the members shall be sufficient. (b) Notwithstanding any provision to the contrary in the articles of organization or operating agreement, in no event shall the articles of organization be amended by a vote of less than a majority in interest of the members. (c) Notwithstanding any provision to the contrary in the articles of organization or operating agreement, members shall have the right to vote on a dissolution of the limited liability company as provided in subdivision (b) of Section 17350 and on a merger of the limited liability company as provided in Section 17551.


17104. (a) Meetings of members may be held at any place, by electronic video screen communication or by electronic transmission by and to the limited liability company pursuant to paragraphs (1) and (2) of subdivision (o) of Section 17001, either within or without this state, selected by the person or persons calling the meeting or as may be stated in or fixed in accordance with the articles of organization or a written operating agreement. If no other place is stated or so fixed, all meetings shall be held at the principal executive office of the limited liability company. Unless prohibited by the articles of organization of the limited liability company, if authorized by the operating agreement, members not physically present in person or by proxy at a meeting of members may, by electronic transmission by and to the limited liability company pursuant to paragraphs (1) and (2) of subdivision (o) of Section 17001 or by electronic video screen communication, participate in a meeting of members, be deemed present in person or by proxy, and vote at a meeting of members whether that meeting is to be held at a designated place or in whole or in part by means of electronic transmission by and to the limited liability company or by electronic video screen communication, in accordance with subdivision (l). (b) A meeting of the members may be called by any manager or by any member or members representing more than 10 percent of the interests of members for the purpose of addressing any matters on which the members may vote. (c) (1) Whenever members are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than 10 days nor more than 60 days before the date of the meeting to each member entitled to vote at the meeting. The notice shall state the place, date, and hour of the meeting, the means of electronic transmission by and to the limited liability company or electronic video screen communication, if any, and the general nature of the business to be transacted. No other business may be transacted at this meeting. (2) Any report or any notice of a members' meeting shall be given personally, by electronic transmission by the limited liability company, or by mail or other means of written communication, addressed to the member at the address of the member appearing on the books of the limited liability company or given by the member to the limited liability company for the purpose of notice, or, if no address appears or is given, at the place where the principal executive office of the limited liability company is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally, delivered by electronic transmission by the limited liability company, deposited in the mail, or sent by other means of written communication. An affidavit of mailing or delivered by electronic transmission by the limited liability company of any notice or report in accordance with this article, executed by a manager, shall be prima facie evidence of the giving of the notice or report. (3) If any notice or report addressed to the member at the address of the member appearing on the books of the limited liability company is returned to the limited liability company by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the member at the address, all future notices or reports shall be deemed to have been duly given without further mailing if they are available for the member at the principal executive office of the limited liability company for a period of one year from the date of the giving of the notice or report to all other members. (4) Notice given by electronic transmission by the limited liability company under this subdivision shall be valid only if it complies with paragraph (1) of subdivision (o) of Section 17001. Notwithstanding this condition, notice shall not be given by electronic transmission by the limited liability company under this subdivision after either of the following: (A) The limited liability company is unable to deliver two consecutive notices to the member by that means. (B) The inability to so deliver the notices to the member becomes known to the secretary, any assistant secretary, the transfer agent, or any other person responsible for the giving of the notice. (5) Upon written request to a manager by any person entitled to call a meeting of members, the manager shall immediately cause notice to be given to the members entitled to vote that a meeting will be held at a time requested by the person calling the meeting, not less than 10 days nor more than 60 days after the receipt of the request. If the notice is not given within 20 days after receipt of the request, the person entitled to call the meeting may give the notice or, upon the application of that person, the superior court of the county in which the principal executive office of the limited liability company is located, or if the principal executive office is not in this state, the county in which the limited liability company' s address in this state is located, shall summarily order the giving of the notice, after notice to the limited liability company affording it an opportunity to be heard. The procedure provided in subdivision (c) of Section 305 shall apply to the application. The court may issue any order as may be appropriate, including, without limitation, an order designating the time and place of the meeting, the record date for determination of members entitled to vote, and the form of notice. (d) When a members' meeting is adjourned to another time or place, unless the articles of organization or a written operating agreement otherwise require and, except as provided in this subdivision, notice need not be given of the adjourned meeting if the time and place thereof or the means of electronic transmission by and to the limited liability company or electronic video screen communication, if any, are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the limited liability company may transact any business that may have been transacted at the original meeting. If the adjournment is for more than 45 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each member of record entitled to vote at the meeting. (e) The actions taken at any meeting of members, however called and noticed, and wherever held, have the same validity as if taken at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the members entitled to vote, not present in person or by proxy, provides a waiver of notice or consents to the holding of the meeting or approves the minutes of the meeting in writing. All waivers, consents, and approvals shall be filed with the limited liability company records or made a part of the minutes of the meeting after conversion to the form in which those records or minutes are kept. Attendance of a person at a meeting shall constitute a waiver of notice of the meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this title to be included in the notice but not so included, if the objection is expressly made at the meeting. Neither the business to be transacted nor the purpose of any meeting of members need be specified in any written waiver of notice, unless otherwise provided in the articles of organization or operating agreement, except as provided in subdivision (g). (f) Members may participate in a meeting of the limited liability company through the use of conference telephones or electronic video screen communication, as long as all members participating in the meeting can hear one another, or by electronic transmission by and to the limited liability company pursuant to paragraphs (1) and (2) of subdivision (o) of Section 17001. Participation in a meeting pursuant to this provision constitutes presence in person at that meeting. (g) Any action approved at a meeting, other than by unanimous approval of those entitled to vote, shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice. (h) (1) A majority in interest of the members represented in person or by proxy shall constitute a quorum at a meeting of members. (2) The members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the loss of a quorum, if any action taken after loss of a quorum, other than adjournment, is approved by the requisite percentage of interests of members specified in this title or in the articles of organization or a written operating agreement. (3) In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the interests represented either in person or by proxy, but no other business may be transacted, except as provided in paragraph (2). (i) (1) Any action that may be taken at any meeting of the members may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed and delivered to the limited liability company within 60 days of the record date for that action by members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all members entitled to vote thereon were present and voted. (2) Unless the consents of all members entitled to vote have been solicited in writing, (A) notice of any member approval of an amendment to the articles of organization or operating agreement, a dissolution of the limited liability company as provided in Section 17350, or a merger of the limited liability company as provided in Section 17551, without a meeting by less than unanimous written consent shall be given at least 10 days before the consummation of the action authorized by the approval, and (B) prompt notice shall be given of the taking of any other action approved by members without a meeting by less than unanimous written consent, to those members entitled to vote who have not consented in writing. (3) Any member giving a written consent, or the member's proxyholder, may revoke the consent personally or by proxy by a writing received by the limited liability company prior to the time that written consents of members having the minimum number of votes that would be required to authorize the proposed action have been filed with the limited liability company, but may not do so thereafter. This revocation is effective upon its receipt at the office of the limited liability company required to be maintained pursuant to Section 17057. (j) The use of proxies in connection with this section will be governed in the same manner as in the case of corporations formed under the General Corporation Law. (k) In order that the limited liability company may determine the members of record entitled to notices of any meeting or to vote, or entitled to receive any distribution or to exercise any rights in respect of any other lawful action, a manager, or members representing more than 10 percent of the interests of members, may fix, in advance, a record date, that is not more than 60 days nor less than 10 days prior to the date of the meeting and not more than 60 days prior to any other action. If no record date is fixed the following shall apply: (1) The record date for determining members entitled to notice of or to vote at a meeting of members shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. (2) The record date for determining members entitled to give consent to limited liability company action in writing without a meeting shall be the day on which the first written consent is given. (3) The record date for determining members for any other purpose shall be at the close of business on the day on which the managers adopt the resolution relating thereto, or the 60th day prior to the date of the other action, whichever is later. (4) The determination of members of record entitled to notice of or to vote at a meeting of members shall apply to any adjournment of the meeting unless a manager or the members who called the meeting fix a new record date for the adjourned meeting, but the manager or the members who called the meeting shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. (l) A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the limited liability company or by electronic video screen communication if both of the following requirements are met: (1) The limited liability company implements reasonable measures to provide members, in person or by proxy, a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with those proceedings. (2) When any member votes or takes other action at the meeting by means of electronic transmission to the limited liability company or electronic video screen communication, a record of that vote or action is maintained by the limited liability company.


17105. (a) The operating agreement may provide that the interest of a member or assignee in a limited liability company may be evidenced by a certificate of interest issued by the limited liability company, and may make other provisions not inconsistent with this title with respect to the transfer of interests represented by those certificates or with respect to the form of those certificates. (b) The operating agreement may provide that the certificate may be signed by a manager or officer of the limited liability company, whose signature may be a facsimile. In case any manager or officer of the limited liability company who has signed or whose facsimile signature has been placed upon a certificate has ceased to be a manager or officer before the certificate is issued, it may be issued by the limited liability company with the same effect as if the person were a manager or officer at the date of issue. If a certificate is worn out or lost, it may be renewed on production of the worn out or lost certificate or on satisfactory proof of its loss together with such indemnity as may be required by the manager or managers or a resolution of members.


17106. (a) Upon the request of a member or a holder of an economic interest, for purposes reasonably related to the interest of that person as a member or a holder of an economic interest, a manager shall promptly deliver, in writing, to the member or holder of an economic interest, at the expense of the limited liability company, a copy of the information required to be maintained by paragraphs (1), (2), and (4) of subdivision (a) of Section 17058, and any written operating agreement of the limited liability company. (b) Each member, manager, and holder of an economic interest has the right upon reasonable request, for purposes reasonably related to the interest of that person as a member, manager, or holder of an economic interest, to each of the following: (1) To inspect and copy during normal business hours any of the records required to be maintained by Section 17058. (2) To obtain in writing from the limited liability company promptly after becoming available, a copy of the limited liability company's federal, state, and local income tax or information returns for each year. (c) In the case of any limited liability company with more than 35 members: (1) A manager shall cause an annual report to be sent to each of the members not later than 120 days after the close of the fiscal year. That report, which may be sent by electronic transmission by the limited liability company (paragraph (1) of subdivision (o) of Section 17001), shall contain a balance sheet as of the end of the fiscal year and an income statement and a statement of cashflows for the fiscal year. (2) Members representing at least 5 percent of the voting interests of members, or three or more members, may make a written request to a manager for an income statement of the limited liability company for the initial three-month, six-month, or nine-month period of the current fiscal year ended more than 30 days prior to the date of the request, and a balance sheet of the limited liability company as of the end of that period. The statement shall be delivered or mailed to the members within 30 days thereafter. (3) The financial statements referred to in this section shall be accompanied by the report thereon, if any, of the independent accountants engaged by the limited liability company or, if there is no report, the certificate of a manager of the limited liability company that the financial statements were prepared without audit from the books and records of the limited liability company. (d) A manager shall promptly furnish to a member a copy of any amendment to the articles of organization or operating agreement executed by a manager pursuant to a power of attorney from the member. The articles of organization or operating agreement may be sent by electronic transmission by the limited liability company. (e) The limited liability company shall send or cause information to be sent in writing to each member or holder of an economic interest within 90 days after the end of each taxable year the information necessary to complete federal and state income tax or information returns, and, in the case of a limited liability company with 35 or fewer members, a copy of the limited liability company's federal, state, and local income tax or information returns for the year. (f) In addition to any other remedies, a court of competent jurisdiction may enforce the duty of making and mailing or delivering the information and financial statements required by this section and, for good cause shown, may extend the time therefor. (g) In any action under this section, if the court finds the failure of the limited liability company to comply with the requirements of this section is without justification, the court may award an amount sufficient to reimburse the person bringing the action for the reasonable expenses incurred by that person, including attorneys' fees, in connection with the action or proceeding. (h) Any waiver of the rights provided in this section shall be unenforceable. (i) Any request, inspection, or copying by a member or holder of an economic interest may be made by that person or by that person's agent or attorney.


17107. (a) Upon complaint that a limited liability company is failing to comply with the provisions of Section 17106, or to afford to the members rights given to them in the articles of organization or operating agreement, the Attorney General may, in the name of the people of the State of California, send to the office required to be maintained pursuant to Section 17057, notice of the complaint. (b) If the answer of the limited liability company is not received within 30 days of the date the notice was transmitted, or if the answer is not satisfactory, and if the enforcement of the rights of the aggrieved persons by private civil action, by class action, or otherwise, would be so burdensome or expensive as to be impracticable, the Attorney General may institute, maintain, or intervene in any court of competent jurisdiction or before any administrative agency for relief by way of injunction, the dissolution of entities, the appointment of receivers, or any other temporary, preliminary, provisional, or final remedies as may be appropriate to protect the rights of members or to restore the position of the members for the failure to comply with the requirements of Section 17106 or the articles of organization or the operating agreement. In any action, suit, or proceeding, there may be joined as parties all persons and entities responsible for or affected by the activity.


Chapter 4. Management

Ca Codes (corp:17150-17158) Corporations Code Section 17150-17158



17150. Unless the articles of organization include the statement referred to in subdivision (b) of Section 17151 vesting management of the limited liability company in a manager or managers, the business and affairs of a limited liability company shall be managed by the members subject to any provisions of the articles of organization or operating agreement restricting or enlarging the management rights and duties of any member or class of members. If management is vested in the members, each of the members shall have the same rights and be subject to all duties and obligations of managers as set forth in this title.

17151. (a) The articles of organization may provide that the business and affairs of the limited liability company shall be managed by or under the authority of one or more managers who may, but need not, be members. (b) If the limited liability company is to be managed by one or more managers and not by all its members, the articles of organization shall contain a statement to that effect. Neither the names of the managers nor the number of managers need be specified in the articles of organization, but if management is vested in only one manager, the articles of organization shall so state. (c) The articles of organization or operating agreement may prescribe the number and qualifications of managers who may, but need not, be natural persons.


17152. If management of the limited liability company is vested in one or more managers pursuant to a statement in the articles of organization: (a) Election of managers to fill initial positions or vacancies shall be by the affirmative vote of a majority in interest of the members. (b) Any or all managers may be removed, with or without cause, by the vote of a majority in interest of the members at a meeting called expressly for that purpose. Any removal shall be without prejudice to the rights, if any, of the manager under any contract of employment. (c) Any manager may resign as a manager at any time upon written notice to the limited liability company, without prejudice to the rights, if any, of the limited liability company under any contract to which the manager is a party. (d) Unless they have earlier resigned or been removed, managers shall hold office until the expiration of the term for which they were elected or, if no term was provided, until their successors have been elected and qualified.

17153. The fiduciary duties a manager owes to the limited liability company and to its members are those of a partner to a partnership and to the partners of the partnership.


17154. (a) A written operating agreement may provide for the appointment of officers, including, without limitation, a chairperson or a president, or both, a secretary, a chief financial officer, and any other officers with such titles, powers, and duties as shall be specified in the articles of organization or operating agreement, or determined by the managers or members. An officer may, but need not, be a member or manager of the limited liability company, and any number of offices may be held by the same person. (b) Officers, if any, shall be appointed in accordance with the written operating agreement or, if no such provision is made in the operating agreement, any officers shall be appointed by the managers and shall serve at the pleasure of the managers, subject to the rights, if any, of an officer under any contract of employment. Any officer may resign at any time upon written notice to the limited liability company without prejudice to the rights, if any, of the limited liability company under any contract to which the officer is a party. (c) Subject to the provisions of subdivision (d) of Section 17051, any note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any limited liability company and any other person, when signed by the chairperson of the board, the president or any vice president and any secretary, any assistant secretary, the chief financial officer, or any assistant treasurer of the limited liability company, is not invalidated as to the limited liability company by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same.


17155. (a) Except for a breach of the duty set forth in Section 17153, the articles of organization or written operating agreement of a limited liability company may provide for indemnification of any person, including, without limitation, any manager, member, officer, employee, or agent of the limited liability company, against judgments, settlements, penalties, fines, or expenses of any kind incurred as a result of acting in that capacity. (b) A limited liability company shall have power to purchase and maintain insurance on behalf of any manager, member, officer, employee, or agent of the limited liability company against any liability asserted against or incurred by the person in that capacity or arising out of the person's status as a manager, member, officer, employee, or agent of the limited liability company.


17156. Except as otherwise provided in the articles of organization or the operating agreement, if the members have appointed more than one manager, decisions of the managers shall be made by majority vote of the managers if at a meeting, or by unanimous written consent.


17157. (a) Unless the statement referred to in subdivision (b) of Section 17151 is included in the articles of organization, every member is an agent of the limited liability company for the purpose of its business or affairs, and the act of any member, including, but not limited to, the execution in the name of the limited liability company of any instrument, for the apparent purpose of carrying on in the usual way the business or affairs of the limited liability company of which that person is a member, binds the limited liability company, unless the member so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the member is dealing has actual knowledge of the fact that the member has no such authority. (b) If the articles of organization contain the statement referred to in subdivision (b) of Section 17151 that management of the limited liability company is vested in a manager or managers, then: (1) No member, acting solely in the capacity of a member, is an agent of the limited liability company nor can any member bind, nor execute any instrument on behalf of, the limited liability company. (2) Every manager is an agent of the limited liability company for the purpose of its business or affairs, and the act of any manager, including, but not limited to, the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company of which the person is the manager, binds the limited liability company, unless the manager so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the manager is dealing has actual knowledge of the fact that the manager has no such authority. (c) No act of a manager or member in contravention of a restriction on authority shall bind the limited liability company to persons having actual knowledge of the restriction. (d) Notwithstanding the provisions of subdivision (c) of this section, and subject to the provisions of subdivision (d) of Section 17051, any note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any limited liability company and any other person, when signed by at least two managers (or by one manager in the case of a limited liability company whose articles of organization state that it is managed by only one manager), is not invalidated as to the limited liability company by any lack of authority of the signing managers or manager in the absence of actual knowledge on the part of the other person that the signing managers or manager had no authority to execute the same.

17158. (a) No person who is a manager or officer or both a manager and officer of a limited liability company shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a manager or officer or both a manager and officer of the limited liability company. (b) Notwithstanding subdivision (a), a manager of a limited liability company may agree to be obligated personally for any or all of the debts, obligations, and liabilities of the limited liability company as follows: (1) If the agreement to be so liable is set forth in the articles of organization or in a written operating agreement that specifically references this subdivision. (2) Pursuant to the terms of a written guarantee or other contractual obligation entered into by the manager, other than an operating agreement.


Chapter 5. Finance

Ca Codes (corp:17200-17202) Corporations Code Section 17200-17202



17200. (a) The articles of organization or the operating agreement may provide for capital contributions of members. The contribution of a person may be in money, property, or services, or other obligation to contribute money or property or to render services. (b) Unless the articles of organization or operating agreement provide otherwise, no member shall be required to make any additional contribution to the limited liability company.


17201. (a) (1) Subject to the terms of the articles of organization or the operating agreement, a member is not excused from an obligation to the limited liability company to perform any promise to contribute cash or property or to perform services because of death, disability, dissolution, or any other reason. (2) If a member does not make the required contribution of property or services, that member is obligated, at the option of the limited liability company, to contribute cash equal to that portion of the fair market value (or agreed value if stated in writing and signed by the limited liability company and the member) of the contribution that has not been made. The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the limited liability company may have against the member under the articles of organization, operating agreement, or applicable law. (3) An operating agreement may provide that the interest of a member who fails to make any contribution or other payment that the member is required to make will be subject to specific remedies for, or specific consequences of, the failure. A provision shall be enforceable in accordance with its terms unless the member seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the agreement was made. The specific remedies or consequences may include loss of voting, approval, or other rights, loss of the member's ability to actively participate in the management and operations of the limited liability company, liquidated damages, or a reduction of the defaulting member's economic rights. The reduction of the defaulting member's economic rights may include one or more of the following provisions: (A) Diluting, reducing, or eliminating the defaulting member's proportionate interest in the limited liability company. (B) Subordinating the defaulting member's interest in the limited liability company to that of nondefaulting members. (C) Permitting a forced sale of the membership interest. (D) Permitting the lending or contribution by other members of the amount necessary to meet the defaulting member's commitment. (E) Adjusting the interest rates or other rates of return, preferred, priority, or otherwise, with respect to contributions by or capital accounts of the other members. (F) Fixing the value of the defaulting member's interest in the limited liability company by appraisal, formula and redemption, or sale of the defaulting member's interest in the limited liability company at a percentage of that value. (b) (1) Unless otherwise provided in the articles of organization or the operating agreement, the obligation of a member to make a contribution or return money or property paid or distributed in violation of this section may be compromised only by the unanimous vote of the members. (2) Notwithstanding the compromise of an obligation referred to in paragraph (1), a person whose claim against a limited liability company arises before the receipt of notice of the compromise may enforce the original obligation of a member to make a contribution to the limited liability company or to return a distribution if the person had knowledge of the original obligation prior to the time the claim arose and if the compromise occurred after the time the claim arose. Any other person with a claim against a limited liability company may enforce only the existing obligation of a member to make a contribution to the limited liability company or to return to the limited liability company money or other property paid or distributed. (c) A person with a claim against a limited liability company may not enforce a conditional obligation of a member unless the conditions have been satisfied or waived. Conditional obligations include, without limitation, a capital contribution payable upon a discretionary call of the limited liability company prior to the time the call occurs. (d) Nothing in this section shall be construed to affect the rights of third-party creditors of the limited liability company to seek equitable remedies nor any rights existing under the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).


17202. The profits and losses of a limited liability company shall be allocated among the members, and among classes of members, in the manner provided in the operating agreement. If the operating agreement does not otherwise provide, profits and losses shall be allocated in proportion to the contributions of each member.



Chapter 6. Distributions And Withdrawals

Ca Codes (corp:17250-17255) Corporations Code Section 17250-17255



17250. Distributions of the money or property of a limited liability company shall be made to the members and to any classes of members in the manner provided in the operating agreement. If the operating agreement does not otherwise provide, distributions that are a return of capital shall be made in proportion to the contributions made by each member and distributions that are not a return of capital shall be made in proportion to the allocation of profits. Subject to Sections 17254 and 17353, at the time a member becomes entitled to receive a distribution, the member has the status of, and is entitled to all remedies available to, a creditor of the limited liability company with respect to the distribution. An operating agreement may provide for the establishment of a record date with respect to the sharing of profits and distributions from a limited liability company.


17251. Except as provided in this chapter, a member is entitled to receive distributions from a limited liability company before the withdrawal of that member from the company and before the dissolution and winding up of the company, subject to the limitations contained in Section 17254, to the extent and at the times or upon the happening of the events specified in the operating agreement.


17252. (a) The articles of organization or a written operating agreement may provide that a member may withdraw, resign, or retire from a limited liability company at the time or upon the happening of events specified in the operating agreement or that the member shall not have the right to withdraw, resign, or retire as a member of a limited liability company. Notwithstanding any restriction upon the right of a member to withdraw, resign, or retire, a member may withdraw from a limited liability company at any time by giving written notice to the other members. However, unless the articles of organization or written operating agreement provide otherwise, the withdrawn member shall not be entitled to payment for the member's interest in the limited liability company, and, beginning on the date of the withdrawal, the withdrawn member shall have only the right of a holder of an economic interest with respect to that withdrawn member's interest in the limited liability company, and then only with respect to distributions, if any, to which a holder of an economic interest is entitled under the operating agreement of the limited liability company, and the withdrawn member shall no longer be a member of the limited liability company. If the withdrawal, resignation, or retirement is in violation of the operating agreement, the limited liability company shall have the right to offset any damages for the breach of the operating agreement from the amounts, if any, otherwise distributable to the withdrawn member with respect to the withdrawn member's economic interest in the limited liability company. (b) Upon the withdrawal of a member, the list required to be kept pursuant to paragraph (1) of subdivision (a) of Section 17058 shall be amended accordingly.


17253. (a) A member, regardless of the nature of the member's contribution, has no right to demand and receive any distribution from a limited liability company in any form other than money. (b) No member may be compelled to accept from a limited liability company a distribution of any asset in kind in lieu of a proportionate distribution of money being made to other members. (c) Except upon a dissolution and winding up of a limited liability company, no member may be compelled to accept a distribution of any asset in kind.


17254. (a) No distribution shall be made if, after giving effect to the distribution, either of the following occurs: (1) The limited liability company would not be able to pay its debts as they become due in the usual course of business. (2) The limited liability company's total assets would be less than the sum of its total liabilities plus, unless the operating agreement provides otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights of other members upon dissolution that are superior to the rights of the member receiving the distribution. (b) The limited liability company may base a determination that a distribution is not prohibited under subdivision (a) on any of the following: (1) Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances. (2) A fair valuation. (3) Any other method that is reasonable in the circumstances. (c) Except as provided in subdivision (e), the effect of a distribution under subdivision (a) is measured as of (1) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization, or (2) the date payment is made if it occurs more than 120 days after the date of authorization. (d) (1) If terms of the indebtedness provide that payment of principal and interest is to be made only if, and to the extent that, payment of a distribution to members could then be made under this section, indebtedness of a limited liability company, including indebtedness issued as a distribution, is not a liability for purposes of determinations made under subdivision (b). (2) If the indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is actually made. (e) A member or assignee of a member is obligated to return a distribution from a limited liability company to the extent that (1) the member or assignee had actual knowledge of facts indicating the impropriety of the distribution, and (2) immediately after giving effect to the distribution, and notwithstanding the compromise of an obligation referred to in subdivision (b) of Section 17201, all liabilities of the limited liability company, other than liabilities to members or assignees on account of their interest in the limited liability company and liabilities as to which recourse of creditors is limited to specified property of the limited liability company, exceed the fair market value of the limited liability company's assets, provided that the fair market value of any property that is subject to a liability as to which recourse of creditors is so limited shall be included in the limited liability company assets only to the extent that the fair market value of the property exceeds this liability. (f) A cause of action with respect to an obligation to return a distribution pursuant to subdivision (e) is extinguished unless the action is brought within four years after the distribution is made.


17255. (a) A member or manager who votes for a distribution in violation of the operating agreement or Section 17254 or 17353 is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating Section 17254 or 17353 or the operating agreement if it is established that the member or manager did not act in compliance with Section 17254 or 17353. (b) Each member or manager held liable under subdivision (a) for an unlawful distribution is entitled to compel contribution: (1) From each other member or manager who could be held liable under subdivision (a) for the unlawful distribution. (2) From each member for the amount the member received with knowledge of facts indicating that the distribution was made in violation of Section 17254 or 17353 or the operating agreement. (c) A proceeding under this section is barred unless it is commenced within four years after the date on which the effect of the distribution is measured under Section 17254 or 17353.


Chapter 7. Interest In Limited Liability Company: Assignment Of Interests

Ca Codes (corp:17300-17304) Corporations Code Section 17300-17304



17300. A membership interest and an economic interest in a limited liability company constitute personal property of the member or assignee. A member or assignee has no interest in specific limited liability company property.

17301. (a) Except as provided in the articles of organization or the operating agreement: (1) A membership interest or an economic interest is assignable in whole or in part, provided, however, that no membership interest may be assigned without the consent of a majority in interest of the members not transferring their interests, as required pursuant to Section 17303. (2) An assignment of an economic interest does not of itself dissolve the limited liability company or, other than as set forth in the articles of organization or operating agreement, entitle the assignee to vote or participate in the management and affairs of the limited liability company or to become or exercise any rights of a member. (3) An assignment of an economic interest merely entitles the assignee to receive, to the extent assigned, the distributions and the allocations of income, gains, losses, deductions, credit, or similar items to which the assignor would be entitled. (4) Upon the assignment of all or part of an economic interest, the assignor shall provide the manager or member of the limited liability company responsible for maintaining its books and records with the name and address of the assignee, together with details of the interest assigned. Upon receipt of that notice, the limited liability company shall amend the list required by paragraph (1) of subdivision (a) of Section 17058 accordingly. Until the assignee of that interest becomes a member, the assignor continues to be a member and to have the power to exercise any rights and powers of a member, including the right to vote which, in the case of a member who has assigned his or her or its entire economic interest in the limited liability company, shall include the right to vote in proportion to the interest in current profits that the assigning member would have, had the assignment not been made. (b) Except to the extent assumed by agreement, until an assignee of an economic interest in a limited liability company becomes a member, the assignee shall have no liability to the limited liability company under Chapter 5 (commencing with Section 17200) and Chapter 6 (commencing with Section 17250) solely as a result of the assignment. The assignor of a membership interest is not released from liability as a member solely as a result of the assignment. (c) The pledge of, or granting of, a security interest, lien, or other encumbrance in or against any or all of the membership interest of a member shall not cause the member to cease to be a member or to grant to anyone else the power to exercise any rights or powers of a member.

17302. (a) On application by a judgment creditor of a member or of a member's assignee, a court having jurisdiction may charge the assignable membership interest of the judgment debtor to satisfy the judgment. The court may appoint a receiver of the share of the distributions due or to become due to the judgment debtor in respect to the limited liability company and may make all other orders, directions, accounts, and inquiries that the judgment debtor might have made or that the circumstances of the case may require. (b) A charging order constitutes a lien on the judgment debtor's assignable membership interest. The court may order a foreclosure on the membership interest subject to the charging order at any time. The purchaser at the foreclosure sale has the rights of an assignee. (c) At any time before foreclosure, a membership interest charged may be redeemed in any of the following manners: (1) By the judgment debtor. (2) With property other than property of the limited liability company by one or more of the other members. (3) With property of the limited liability company by one or more of the other members with the consent of all of the members whose membership interests are not so charged. (d) This section does not deprive any member or assignee of a membership interest of the benefit of any exemption laws applicable to the membership interest in the limited liability company. (e) This section provides the exclusive remedy by which a judgment creditor of a member or of a member's assignee may satisfy a judgment out of the judgment debtor's membership interest in the limited liability company.


17303. (a) Except as otherwise provided in the articles of organization or the operating agreement, an assignee of an interest in a limited liability company may become a member only if a majority in interest of the other members vote in favor of the assignee's admission to the limited liability company as a member. (b) An assignee who has become a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under the articles of organization, any operating agreement, and this title. An assignee who becomes a member also is liable for the obligations of the assignor to make contributions as provided in Chapter 5 (commencing with Section 17200), and to return any unlawful distributions made to the assignee under Chapter 6 (commencing with Section 17250) or Chapter 8 (commencing with Section 17350). However, the assignee is not obligated for liabilities unknown to the assignee at the time the assignee became a member and that could not be ascertained from the articles of organization or operating agreement. (c) Whether or not an assignee of a membership interest becomes a member, the assignor is not released from the assignor's liability to the limited liability company under Chapter 5 (commencing with Section 17200) and Chapter 6 (commencing with Section 17250).


17304. (a) If a member who is an individual dies or is adjudged by a court of competent jurisdiction to be incompetent to manage the member's person or property, the member's executor, administrator, guardian, conservator, or other legal representative may exercise all of the member's rights for the purpose of settling the member's estate or administering the member's property, including any power the member had under the articles of organization or an operating agreement to give an assignee the right to become a member. (b) If a member is a corporation, trust, or other entity and is dissolved or terminated, the powers of that member may be exercised by its legal representative or successor.


Chapter 8. Dissolution

Ca Codes (corp:17350-17357) Corporations Code Section 17350-17357



17350. A limited liability company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following: (a) At the time specified in the articles of organization, if any, or upon the happening of the events, if any, specified in the articles of organization or a written operating agreement. (b) By the vote of a majority in interest of the members, or a greater percentage of the voting interests of members as may be specified in the articles of organization or a written operating agreement. (c) Entry of a decree of judicial dissolution pursuant to Section 17351.

17350.5. (a) Notwithstanding any other provision of this division, if a domestic limited liability company has not conducted any business, only a majority of the members, or, if there are no members, the majority of the managers, if any, or if no members or managers, the person or a majority of the persons signing the articles of organization, may execute and acknowledge a certificate of cancellation of articles of organization, on a form prescribed by the Secretary of State, stating all of the following: (1) The name of the domestic limited liability company and the Secretary of State's file number. (2) That the certificate of cancellation is being filed within 12 months from the date the articles of organization were filed. (3) That the limited liability company does not have any debts or other liabilities, except as provided in paragraph (4). (4) That a final franchise tax return, as described by Section 23332 of the Revenue and Taxation Code, or a final annual tax return, as described by Section 17947 of the Revenue and Taxation Code, has been or will be filed with the Franchise Tax Board, as required under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code. (5) That the known assets of the limited liability company remaining after payment of, or adequately providing for, known debts and liabilities have been distributed to the persons entitled thereto or that the limited liability company acquired no known assets, as the case may be. (6) That the limited liability company has not conducted any business from the time of the filing of the articles of organization. (7) That a majority of the managers or members voted, or, if no managers or members, the person or a majority of the persons signing the articles of organization, voted to dissolve the limited liability company. (8) If the limited liability company has received payments for interests from investors, that those payments have been returned to those investors. (b) A certificate of cancellation executed and acknowledged pursuant to subdivision (a) shall be filed with the Secretary of State within 12 months from the date that the articles of organization were filed. The Secretary of State shall notify the Franchise Tax Board of the cancellation. (c) Upon filing a certificate of cancellation pursuant to subdivision (a), a limited liability company shall be cancelled and its powers, rights, and privileges shall cease. (d) A domestic limited liability company that filed articles of organization on or after January 1, 2004, and that meets all of the conditions described in subdivision (a) may file a certificate of cancellation under this section.


17351. (a) Pursuant to an action filed by any manager or by any member or members, a court of competent jurisdiction may decree the dissolution of a limited liability company whenever any of the following occurs: (1) It is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. (2) Dissolution is reasonably necessary for the protection of the rights or interests of the complaining members. (3) The business of the limited liability company has been abandoned. (4) The management of the limited liability company is deadlocked or subject to internal dissention. (5) Those in control of the company have been guilty of, or have knowingly countenanced persistent and pervasive fraud, mismanagement, or abuse of authority. (b) (1) In any suit for judicial dissolution, the other members may avoid the dissolution of the limited liability company by purchasing for cash the membership interests owned by the members so initiating the proceeding (the "moving parties") at their fair market value. In fixing the value, the amount of any damages resulting if the initiation of the dissolution is a breach by any moving party or parties of an agreement with the purchasing party or parties, including, without limitation, the operating agreement, may be deducted from the amount payable to the moving party or parties; provided, that no member who sues for dissolution on the grounds set forth in paragraph (3), (4), or (5) of subdivision (a) shall be liable for damages for breach of contract in bringing that action. (2) If the purchasing parties (A) elect to purchase the membership interests owned by the moving parties, (B) are unable to agree with the moving parties upon the fair market value of the membership interests, and (C) give bond with sufficient security to pay the estimated reasonable expenses, including attorneys' fees, of the moving parties if the expenses are recoverable under paragraph (3), the court, upon application of the purchasing parties, either in the pending action or in a proceeding initiated in the superior court of the proper county by the purchasing parties, shall stay the winding up and dissolution proceeding and shall proceed to ascertain and fix the fair market value of the membership interests owned by the moving parties. (3) The court shall appoint three disinterested appraisers to appraise the fair market value of the membership interests owned by the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining that value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers or a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree that shall provide in the alternative for winding up and dissolution of the limited liability company unless payment is made for the membership interests within the time specified by the decree. If the purchasing parties do not make payment for the membership interests within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses, including attorneys' fees, of the moving parties. Any member aggrieved by the action of the court may appeal therefrom. (4) If the purchasing parties desire to prevent the winding up and dissolution of the limited liability company, they shall pay to the moving parties the value of their membership interests ascertained and decreed within the time specified pursuant to this section, or, in the case of an appeal, as fixed on appeal. On receiving that payment or the tender thereof, the moving parties shall transfer their membership interests to the purchasing parties. (5) For the purposes of this section, the valuation date shall be the date upon which the action for judicial dissolution was commenced. However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date.

17352. In the event of a dissolution of a limited liability company: (a) The managers who have not wrongfully dissolved the limited liability company or, if none, the members may wind up the limited liability company's affairs, unless the dissolution occurs pursuant to subdivision (c) of Section 17350, in which event the winding up shall be conducted in accordance with the decree of dissolution. The persons winding up the affairs of the limited liability company shall give written notice of the commencement of winding up by mail to all known creditors and claimants whose addresses appear on the records of the limited liability company. (b) Upon the petition of any manager or of any member or members, or three or more creditors, a court of competent jurisdiction may enter a decree ordering the winding up of the limited liability company if that appears necessary for the protection of any parties in interest. The decree shall designate the managers or members who are to wind up the limited liability company's affairs. (c) Except as otherwise provided in the articles of organization or a written operating agreement, the managers or members winding up the affairs of the limited liability company pursuant to this section shall be entitled to reasonable compensation.


17353. (a) Except as otherwise provided in the articles of organization or the written operating agreement, after determining that all the known debts and liabilities of a limited liability company in the process of winding up, including, without limitation, debts and liabilities to members who are creditors of the limited liability company, have been paid or adequately provided for, the remaining assets shall be distributed among the members according to their respective rights and preferences as follows: (1) To members in satisfaction of liabilities for distributions pursuant to Section 17201, 17202, or 17255. (2) To members of the limited liability company for the return of their contributions. (3) To members in the proportions in which those members share in distributions. (b) If the winding up is by court proceeding or subject to court supervision, the distribution shall not be made until after the expiration of any period for the presentation of claims that has been prescribed by order of the court. (c) The payment of a debt or liability, whether the whereabouts of the creditor is known or unknown, has been adequately provided for if the payment has been provided for by either of the following means: (1) Payment thereof has been assumed or guaranteed in good faith by one or more financially responsible persons or by the United States government or any agency thereof, and the provision, including the financial responsibility of the person, was determined in good faith and with reasonable care by the members or managers of the limited liability company to be adequate at the time of any distribution of the assets pursuant to this section. (2) The amount of the debt or liability has been deposited as provided in Section 2008. This subdivision shall not prescribe the exclusive means of making adequate provision for debts and liabilities.


17354. (a) A limited liability company that is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it in order to collect and discharge obligations, disposing of and conveying its property, and collecting and dividing its assets. A limited liability company shall not continue business except so far as necessary for the winding up thereof. (b) No action or proceeding to which a limited liability company is a party abates by the dissolution of the limited liability company or by reason of proceedings for the winding up and dissolution thereof. (c) Any assets inadvertently or otherwise omitted from the winding up continue in the dissolved limited liability company for the benefit of the persons entitled thereto upon dissolution and on realization shall be distributed accordingly.


17355. (a) (1) Causes of action against a dissolved limited liability company, whether arising before or after the dissolution of the limited liability company, may be enforced against any of the following: (A) Against the dissolved limited liability company, to the extent of its undistributed assets, including, without limitation, any insurance assets held by the limited liability company that may be available to satisfy claims. (B) If any of the assets of the dissolved limited liability company have been distributed to members, against members of the dissolved limited liability company to the extent of the limited liability company assets distributed to them upon dissolution of the limited liability company. Any member compelled to return distributed assets in an amount that exceeds the sum of the member's pro rata share of the claim and the amount for which the member could otherwise be held liable under Section 17254 or 17255 may seek contribution for the excess from any other member or manager, up to the sum of that other person's pro rata share of the claim and that other person's liabilities under Section 17254 or 17255. (2) Except as set forth in subdivision (c), all causes of action against a member of a dissolved limited liability company arising under this section are extinguished unless the claimant commences a proceeding to enforce the cause of action against that member of a dissolved limited liability company prior to the earlier of the following: (A) The expiration of the statute of limitations applicable to the cause of action. (B) Four years after the effective date of the dissolution of the limited liability company. (3) As a matter of procedure only, and not for purposes of determining liability, members of the dissolved limited liability company may be sued in the name of the limited liability company upon any cause of action against the limited liability company. This section does not affect the rights of the limited liability company or its creditors under Sections 17254 and 17255, or the rights, if any, of creditors under the Uniform Fraudulent Transfer Act, that may arise against the member of a limited liability company. (b) Summons or other process against a limited liability company may be served by delivering a copy thereof to a manager, member, officer, or person having charge of its assets or, if no such person can be found, to any agent upon whom process might be served at the time of dissolution. If none of those persons can be found with due diligence and it is so shown by affidavit to the satisfaction of the court, then the court may make an order that summons or other process be served upon the dissolved limited liability company by personally delivering a copy thereof, together with a copy of the order, to the Secretary of State or an assistant or deputy Secretary of State. Service in this manner is deemed complete on the 10th day after delivery of the process to the Secretary of State. Upon receipt of process and the fee therefor, the Secretary of State shall give notice to the limited liability company as provided in Section 1702. (c) Every limited liability company shall survive and continue to exist indefinitely for the purpose of being sued in any quiet title action. Any judgment rendered in any such action shall bind each and all of its members or other persons having any equity or other interest in the limited liability company, to the extent of their interest therein, and the action shall have the same force and effect as an action brought under the provisions of Sections 410.50 and 410.60 of the Code of Civil Procedure. Service of summons or other process in any action may be made as provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure or as provided in subdivision (b). (d) For purposes of Article 4 (commencing with Section 19071) of Chapter 4 of Part 10.2 of Division 2 of the Revenue and Taxation Code, the liability described in this section shall be considered a liability at law within respect to a dissolved limited liability company.

17356. (a) (1) The managers shall cause to be filed in the office of, and on a form prescribed by, the Secretary of State, a certificate of dissolution upon the dissolution of the limited liability company pursuant to Chapter 8 (commencing with Section 17350), unless the event causing the dissolution is that specified in subdivision (c) of Section 17350, in which case the managers or members conducting the winding up of the limited liability company's affairs pursuant to Section 17352 shall have the obligation to file the certificate of dissolution. (2) The certificate of dissolution shall set forth all of the following: (A) The name of the limited liability company and the Secretary of State's file number. (B) Any other information the managers or members filing the certificate of dissolution determine to include. (3) If a dissolution pursuant to subdivision (b) of Section 17350 is made by the vote of all of the members and a statement to that effect is added to the certificate of cancellation of articles of organization pursuant to subdivision (b), the separate filing of a certificate of dissolution pursuant to this subdivision is not required. (b) (1) The managers or members who filed the certificate of dissolution shall cause to be filed in the office of, and on a form prescribed by, the Secretary of State, a certificate of cancellation of articles of organization upon the completion of the winding up of the affairs of the limited liability company pursuant to Chapter 8 (commencing with Section 17350), unless the event causing the dissolution is that specified in subdivision (c) of Section 17350, in which case the managers or members conducting the winding up of the limited liability company's affairs pursuant to Section 17352 shall have the obligation to file the certificate of cancellation of articles of organization. (2) The certificate of cancellation of articles of organization shall set forth all of the following: (A) The name of the limited liability company and the Secretary of State's file number. (B) That a final franchise tax return, as described by Section 23332 of the Revenue and Taxation Code, or a final annual tax return, as described by Section 17947 of the Revenue and Taxation Code, has been or will be filed with the Franchise Tax board, as required under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code. (C) Any other information the managers or members filing the certificate of cancellation of articles of organization determine to include. (3) The Secretary of State shall notify the Franchise Tax Board of the filing.


17357. (a) Notwithstanding the filing of a certificate of dissolution, a majority in interest of the members may cause to be filed, in the office of, and on a form prescribed by, the Secretary of State, a certificate of continuation, in any of the following circumstances: (1) The business of the limited liability company is to be continued pursuant to a unanimous vote of the remaining members. (2) The dissolution of the limited liability company was by vote of the members pursuant to subdivision (b) of Section 17350 and each member who consented to the dissolution has agreed in writing to revoke his or her vote in favor of or consent to the dissolution. (3) The limited liability company was not, in fact, dissolved. (b) The certificate of continuation shall set forth all of the following: (1) The name of the limited liability company and the Secretary of State's file number. (2) The grounds provided by subdivision (a) that are the basis for filing the certificate of continuation. (c) Upon the filing of a certificate of continuation, the certificate of dissolution shall be of no effect from the time of the filing of the certificate of dissolution.


Chapter 9. Professional Limited Liability Companies: Reserved

Ca Codes (corp:17375) Corporations Code Section 17375



17375. Nothing in this title shall be construed to permit a domestic or foreign limited liability company to render professional services, as defined in subdivision (a) of Section 13401 and in Section 13401.3, in this state.


Chapter 10. Foreign Limited Liability Companies

Ca Codes (corp:17450-17457) Corporations Code Section 17450-17457



17450. Subject to the provisions of Section 17453: (a) The laws of the state or foreign country under which a foreign limited liability company is organized shall govern its organization and internal affairs and the liability and authority of its managers and members. (b) A foreign limited liability company may not be denied registration by reason of any difference between those laws and the laws of this state.


17451. (a) Before transacting intrastate business in this state, a foreign limited liability company shall register with the Secretary of State. In order to register, a foreign limited liability company shall submit to the Secretary of State an application for registration as a foreign limited liability company, signed by a person with authority to do so under the laws of the state of its organization, on a form prescribed by the Secretary of State and setting forth: (1) The name of the foreign limited liability company and, if different, the name under which it proposes to transact business in this state. (2) The state and date of its organization and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state. (3) The name and address of an agent for service of process on the foreign limited liability company meeting the qualifications specified in paragraph (1) of subdivision (d) of Section 17061, unless a corporate agent is designated, in which case only the name of the agent shall be set forth. (4) A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence. (5) The address of the principal executive office of the foreign limited liability company and of its principal office in this state, if any. (b) Annexed to the application for registration shall be a certificate from an authorized public official of the foreign limited liability company's jurisdiction of organization to the effect that the foreign limited liability company is in good standing in that jurisdiction, if the laws of that jurisdiction permit the issuance of those certificates; or, in the alternative, a statement by the foreign limited liability company that the laws of its jurisdiction of organization do not permit the issuance of those certificates. (c) The Secretary of State may cancel the application and certificate of registration of a foreign limited liability company if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. Upon receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of this section to the agent for service of process or to the person submitting the instrument. Thereafter, if the amount has not been paid by cashier's check or equivalent, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice and 90 days or less after the original filing. (d) The Secretary of State shall include with instructional materials, provided in conjunction with registration under subdivision (a), a notice that filing the registration will obligate the limited liability company to pay an annual tax to the Franchise Tax Board pursuant to Section 17941 of the Revenue and Taxation Code. That notice shall be updated annually to specify the dollar amount of the tax.

17452. (a) If the Secretary of State finds that an application for registration conforms to law and all requisite fees have been paid, the Secretary of State shall issue a certificate of registration to transact intrastate business in this state, subject, however, to any licensing requirements imposed by the laws of this state. However, no certificate of registration shall be issued for a foreign limited liability company to transact intrastate business in this state under a name that falls within the prohibitions of subdivision (c) of Section 17052. (b) If the name of a foreign limited liability company does not satisfy the requirements of Section 17052, to obtain or maintain a certificate of registration, a foreign limited liability company may either: (1) Add the words "limited liability company" or the abbreviation "LLC" to its name for use in this state. (2) Use an assumed name that is available, and that satisfies the requirements of Section 17052, provided the foreign limited liability company agrees that it will use the assumed name in all its dealings with the Secretary of State and in the conduct of its affairs in this state. The assumed name may be the name of the foreign limited liability company with the addition of some distinguishing word or words acceptable to the Secretary of State or a name available for the name of a domestic limited liability company pursuant to Section 17052. Any foreign limited liability company that has made such an agreement with the Secretary of State shall not do business in this state except under the name agreed upon, as long as the agreement remains in effect.


17453. If the members of a foreign limited liability company residing in this state represent 25 percent or more of the voting interests of members of that limited liability company, those members shall be entitled to all information and inspection rights provided in Section 17106.


17454. If any statement in the application for registration of a foreign limited liability company was false when made or any statements made have become erroneous, the foreign limited liability company shall promptly file in the office of the Secretary of State an amendment to the application for registration, signed by a person with authority to do so under the laws of the state of its organization, amending the statement.


17455. A foreign limited liability company may cancel its registration by filing with the Secretary of State a certificate of cancellation signed by a person with authority to do so under the laws of the state of its organization. A cancellation does not terminate the authority of the Secretary of State to accept service of process on the foreign limited liability company with respect to causes of action arising out of the transaction of business in this state.

17456. (a) A foreign limited liability company transacting intrastate business in this state shall not maintain any action, suit, or proceeding in any court of this state until it has registered in this state. (b) Any foreign limited liability company that transacts intrastate business in this state without registration is subject to a penalty of twenty dollars ($20) for each day that unauthorized intrastate business is transacted, up to a maximum of ten thousand dollars ($10,000). An action to recover this penalty may be brought, and any recovery shall be paid, as provided in Section 2258. (c) A member of a foreign limited liability company is not liable for the debts and obligations of the foreign limited liability company solely by reason of its having transacted business in this state without registration. (d) A foreign limited liability company, transacting business in this state without registration, appoints the Secretary of State as its agent for service of process with respect to causes of action arising out of the transaction of business in this state.


17457. The Attorney General may bring an action to restrain a foreign limited liability company from transacting intrastate business in this state in violation of this chapter.


Chapter 11. Class Actions And Derivative Actions

Ca Codes (corp:17500-17501) Corporations Code Section 17500-17501



17500. Any member of a foreign or domestic limited liability company may bring a class action on behalf of all or a class of members to enforce any claim common to those members and any such action shall be governed by the law governing class actions generally, provided that in order to maintain the class action there shall be no requirement that the class be so numerous that joinder of all members of the class is impracticable.


17501. (a) No action shall be instituted or maintained in right of any domestic or foreign limited liability company by any member of the limited liability company unless both of the following conditions exist: (1) The plaintiff alleges in the complaint that plaintiff was a member of record, or beneficiary, at the time of the transaction or any part thereof of which plaintiff complains, or that plaintiff's interest thereafter devolved upon plaintiff by operation of law from a member who was a member at the time of the transaction or any part thereof complained of. Any member who does not meet these requirements may nevertheless be allowed in the discretion of the court to maintain the action on a preliminary showing to and determination by the court, by motion and after a hearing at which the court shall consider any evidence, by affidavit or testimony, as it deems material, of all of the following: (A) There is a strong prima facie case in favor of the claim asserted on behalf of the limited liability company. (B) No other similar action has been or is likely to be instituted. (C) The plaintiff acquired the interest before there was disclosure to the public or to the plaintiff of the wrongdoing of which plaintiff complains. (D) Unless the action can be maintained, the defendant may retain a gain derived from defendant's willful breach of a fiduciary duty. (E) The requested relief will not result in unjust enrichment of the limited liability company or any member of the limited liability company. (2) The plaintiff alleges in the complaint with particularity plaintiff's efforts to secure from the managers the action plaintiff desires or the reasons for not making that effort, and alleges further that plaintiff has either informed the limited liability company or the managers in writing of the ultimate facts of each cause of action against each defendant or delivered to the limited liability company or the managers a true copy of the complaint that plaintiff proposes to file. (b) In any action referred to in subdivision (a), at any time within 30 days after service of summons upon the limited liability company or upon any defendant who is a manager of the limited liability company or held that position at the time of the acts complained of, the limited liability company or the defendant may move the court for an order, upon notice and hearing, requiring the plaintiff to furnish security as hereinafter provided. The motion shall be based upon one or both of the following grounds: (1) That there is no reasonable possibility that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the limited liability company or its members. (2) That the moving party, if other than the limited liability company, did not participate in the transaction complained of in any capacity. The court, on application of the limited liability company or any defendant, may, for good cause shown, extend the 30-day period for an additional period not exceeding 60 days. (c) At the hearing upon any motion pursuant to subdivision (b), the court shall consider evidence, written or oral, by witnesses or affidavit, as may be material (1) to the ground upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys' fees, of the limited liability company and the moving party that will be incurred in the defense of the action. If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the nature and amount of security, not to exceed fifty thousand dollars ($50,000), to be furnished by the plaintiff for reasonable expenses, including attorneys' fees, that may be incurred by the moving party and the limited liability company in connection with the action. A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. The amount of the security may thereafter be increased or decreased in the discretion of the court upon a showing that the security provided has or may become inadequate or is excessive, but the court may not in any event increase the total amount of the security beyond fifty thousand dollars ($50,000) in the aggregate for all defendants. If the court, upon a motion, makes a determination that security shall be furnished by the plaintiff as to any one or more defendants, the action shall be dismissed as to that defendant or defendants, unless the security required by the court has been furnished within any reasonable time as may be fixed by the court. The limited liability company and the moving party shall have recourse to the security in the amount that the court determines upon the termination of the action. (d) If the plaintiff, either before or after a motion is made pursuant to subdivision (b), or any order or determination pursuant to that motion, posts good and sufficient bond or bonds in the aggregate amount of fifty thousand dollars ($50,000) to secure the reasonable expenses of the parties entitled to make the motion, the plaintiff shall be deemed to have complied with the requirements of this section and with any order for security made pursuant to this section. Any motion then pending shall be dismissed and no further or additional bond or other security shall be required. (e) If a motion is filed pursuant to subdivision (b), no pleadings need be filed by the limited liability company or any other defendant and the prosecution of the action shall be stayed until 10 days after the motion has been disposed of.


Chapter 11.5. Conversion

Ca Codes (corp:17540.1-17540.9) Corporations Code Section 17540.1-17540.9



17540.1. For purposes of this chapter, the following definitions shall apply: (a) "Converted entity" means the other business entity or foreign other business entity or foreign limited liability company that results from a conversion of a domestic limited liability company under this chapter. (b) "Converted limited liability company" means a domestic limited liability company that results from a conversion of an other business entity or a foreign other business entity or a foreign limited liability company pursuant to Section 17540.8. (c) "Converting limited liability company" means a domestic limited liability company that converts to an other business entity or a foreign other business entity or a foreign limited liability company pursuant to this chapter. (d) "Converting entity" means an other business entity or a foreign other business entity or a foreign limited liability company that converts to a domestic limited liability company pursuant to the terms of Section 17540.8.


17540.2. (a) A limited liability company may be converted into an other business entity or a foreign other business entity or a foreign limited liability company pursuant to this chapter if, (1) pursuant to a conversion into a domestic or foreign general partnership or limited partnership or into a foreign limited liability company, each of the members of the converting limited liability company would receive a percentage interest in profits and capital of the converted entity equal to that member's percentage interest in profits and capital of the converting limited liability company as of the effective time of the conversion, and (2) pursuant to a conversion into an other business entity or foreign other business entity not specified in clause (1) above, both of the following occur: (A) each of the membership interests of the same class is treated equally with respect to any distribution of cash, property, rights, interests, or securities of the converted entity, unless all members of the class consent, and (B) the nonredeemable membership interests of the converting limited liability company are converted only into nonredeemable interests or securities of the converted entity, unless all holders of the nonredeemable interests consent. (b) Notwithstanding this section, the conversion of a limited liability company to an other business entity or a foreign other business entity or a foreign limited liability company may be effected only if both of the following conditions are complied with: (1) The law under which the converted entity will exist expressly permits the formation of that entity pursuant to a conversion. (2) The limited liability company complies with any and all other requirements of any other law that applies to conversion to the converted entity.


17540.3. (a) A limited liability company that desires to convert to an other business entity or a foreign other business entity or a foreign limited liability company shall approve a plan of conversion. The plan of conversion shall state all of the following: (1) The terms and conditions of the conversion. (2) The place of the organization of the converted entity and of the converting limited liability company and the name of the converted entity after conversion. (3) The manner of converting the membership interests of each of the members into securities of, shares of, or interests in, the converted entity. (4) The provisions of the governing documents for the converted entity, including the articles or certificate of incorporation if the converted entity is a domestic or foreign corporation, the partnership agreement, or the limited liability company articles of organization and operating agreement, to which the holders of interests in the converted entity are to be bound. (5) Any other details or provisions that are required by the laws under which the converted entity is organized, or that are desired by the parties. (b) The plan of conversion shall be approved by a vote of a majority in interest of the members of the converting limited liability company, or a greater percentage of the voting interests of members as may be specified in the articles of organization or written operating agreement of the converting limited liability company. However, if the members of the limited liability company would become personally liable for any obligations of the converted entity as a result of the conversion, the plan of conversion shall be approved by all of the members of the converting limited liability company, unless the plan of conversion provides that all members will have dissenters' rights as provided in Chapter 13 (commencing with Section 17600). (c) If the limited liability company is converting into a limited partnership, then in addition to the approval of the members set forth in subdivision (b), the plan of conversion shall be approved by those members who will become general partners of the converted limited partnership pursuant to the plan of conversion. (d) Upon the effectiveness of the conversion, all members of the converting limited liability company, except those that exercise dissenters' rights as provided in Chapter 13 (commencing with Section 17600), shall be deemed parties to any governing documents for the converted entity adopted as part of the plan of conversion, irrespective of whether or not a member has executed the plan of conversion or the governing documents for the converted entity. Any adoption of governing documents made pursuant thereto shall be effective at the effective time or date of the conversion. (e) Notwithstanding its prior approval, a plan of conversion may be amended before the conversion takes effect if the amendment is approved by the members of the converting limited liability company in the same manner as was required for approval of the original plan of conversion. (f) A plan of conversion may be abandoned by the members of a converting limited liability company in the manner as required for approval of the plan of conversion, subject to the contractual rights of third parties, at any time before the conversion is effective. (g) The converted entity shall keep the plan of conversion at the principal place of business of the converted entity if the converted entity is a domestic partnership or foreign other business entity, at the principal executive office of or registrar or transfer agent of the converted entity if the converted entity is a domestic corporation, or at the office at which records are to be kept under Section 15614 or 15901.14 if the converted entity is a domestic limited partnership. Upon the request of a member of a converting limited liability company, the authorized person on behalf of the converted entity shall promptly deliver to the member or the holder of interests, shares, or other securities, at the expense of the converted entity, a copy of the plan of conversion. A waiver by a member of the rights provided in this subdivision shall be unenforceable.

17540.4. (a) A conversion into an other business entity or a foreign other business entity or a foreign limited liability company shall become effective upon the earliest date that all of the following occur: (1) The approval of the plan of conversion by the members of the converting limited liability company as provided in Section 17540.3. (2) The filing of all documents required by law to effect the conversion and create the converted entity, which documents shall also contain a statement of conversion, if required under Section 17540.6. (3) The occurrence of the effective date, if set forth in the plan of conversion. (b) A copy of the statement of partnership authority or certificate of limited partnership complying with Section 17540.6, if applicable, duly certified by the Secretary of State, is conclusive evidence of the conversion of the limited liability company.


17540.5. (a) The conversion of a limited liability company into a foreign other business entity or a foreign limited liability company shall be required in order to comply with Section 17540.2. (b) If the limited liability company is converting into a foreign other business entity or a foreign limited liability company, those conversion proceedings shall be in accordance with the laws of the state or place of organization of the foreign other business entity or foreign limited liability company and the conversion shall become effective in accordance with that law. (c) (1) To enforce an obligation of a limited liability company that has converted to a foreign limited liability company or foreign other business entity, the Secretary of State shall only be the agent for service of process in an action or proceeding against that converted foreign entity, if the agent designated for the service of process for the entity is a natural person and cannot be located with due diligence or if the agent is a corporation and no person, to whom delivery may be made, may be located with due diligence, or if no agent has been designated and if no one of the officers, partners, managers, members, or agents of that entity may be located after diligent search, and it is so shown by affidavit to the satisfaction of the court. The court then may make an order that service be made by personal delivery to the Secretary of State or to an assistant or deputy Secretary of State of two copies of the process together with two copies of the order, and the order shall set forth an address to which the process shall be sent by the Secretary of State. Service in this manner is deemed complete on the 10th day after delivery of the process to the Secretary of State. (2) Upon receipt of the process and order and the fee set forth in Section 12206 of the Government Code, the Secretary of State shall give notice to such entity of the service of the process by forwarding by certified mail, return receipt requested, a copy of the process and order to the address specified in the order. (3) The Secretary of State shall keep a record of all process served upon the Secretary of State and shall record therein the time of service and the Secretary of State's action with respect thereto. The certificate of the Secretary of State, under the Secretary of State's official seal, certifying to the receipt of process, the giving of notice thereof to that entity, and the forwarding of the process, shall be competent and prima facie evidence of the matters stated therein.


17540.6. (a) Upon conversion of a limited liability company: (1) If the limited liability company is converting into a domestic limited partnership, a statement of conversion shall be completed on the certificate of limited partnership for the converted entity. (2) If the limited liability company is converting into a domestic partnership, a statement of conversion shall be completed on the statement of partnership authority for the converted entity, or if no statement of partnership authority is filed then a certificate of conversion shall be filed separately. (3) If the limited liability company is converting to a domestic corporation, a statement of conversion shall be completed on the articles of incorporation for the converted entity. (4) If the limited liability company is converting into a foreign limited liability company or foreign other business entity, a certificate of conversion shall be filed with the Secretary of State. (b) Any certificate or statement of conversion shall be executed and acknowledged by all of the managers, unless a lesser number is provided in the articles of organization or the operating agreement of the converting limited liability company, and shall set forth all of the following: (1) The name and the Secretary of State's file number of the converting limited liability company. (2) A statement that the principal terms of the plan of conversion were approved by a vote of the members, which equaled or exceeded the vote required under Section 17540.3, specifying each class entitled to vote and the percentage vote required of each class. (3) The form of organization of the converted entity. (c) The filing with the Secretary of State of a certificate of conversion or an organizational document containing a statement of conversion as set forth in subdivision (a) shall have the effect of the filing of a certificate of cancellation by the converting limited liability company and no converting limited liability company that has made the filing is required to file a certificate of dissolution or a certificate of cancellation under Section 17356 as a result of that conversion.


17540.7. (a) Whenever a limited liability company or other business entity having any real property in this state converts into a limited liability company or an other business entity pursuant to the laws of this state or of the state or place in which the limited liability company or other business entity was organized, and the laws of the state or place of organization, including this state, of the converting limited liability company or other converting entity provide substantially that the conversion vests in the converted limited liability company or other converted entity all the real property of the converting limited liability company or other converting entity, the filing for record in the office of the county recorder of any county in this state in which any of the real property of the converting limited liability company or other converting entity is located of either (1) a certificate of conversion, statement of partnership authority, certificate of limited partnership, or articles of organization complying with Section 17540.6, in the form prescribed and certified by the Secretary of State, or (2) a copy of a certificate of conversion, or a statement of partnership authority, certificate of limited partnership, articles of organization, articles or certificate of incorporation, or other certificate or document evidencing the creation of a foreign other business entity or foreign limited liability company by conversion, containing a statement of conversion, certified by the Secretary of State or an authorized public official of the state or place pursuant to the laws of which the conversion is effected, shall evidence record ownership in the converted limited liability company or other converted entity of all interest of the converting limited liability company or other converting entity in and to the real property located in that county. (b) A filed and, if appropriate, recorded certificate of conversion, or a statement of partnership authority, certificate of limited partnership, articles of organization, articles or certificate of incorporation, or other certificate evidencing the formation of a foreign other business entity or a foreign limited liability company filed pursuant to Section 17540.6 containing a statement of conversion, stating the name of the converting limited liability company or other converting entity in whose name property was held before the conversion and the name of the converted entity or converted limited liability company, but not containing all of the other information required by Section 17540.6, operates with respect to the converted entities named to the extent provided in subdivision (a). (c) Recording of a certificate of conversion or a statement of partnership authority, certificate of limited partnership, articles of organization, or articles or certificate of incorporation, or other certificate evidencing the creation of an other business entity or a limited liability company by conversion, containing a statement of conversion, in accordance with subdivision (a), shall create, in favor of bona fide purchasers or encumbrances for value, a conclusive presumption that the conversion was validly completed.


17540.8. (a) An other business entity or a foreign other business entity or a foreign limited liability company may be converted to a domestic limited liability company pursuant to this chapter only if the converting entity is authorized by the laws under which it is organized to effect the conversion. (b) An other business entity or a foreign other business entity or a foreign limited liability company that desires to convert into a domestic limited liability company shall approve a plan of conversion or an other instrument as is required to be approved to effect the conversion pursuant to the laws under which that entity is organized. (c) The conversion of an other business entity or a foreign other business entity or a foreign limited liability company into a domestic limited liability company shall be approved by that number or percentage of the partners, members, shareholders, or holders of interest of the converting entity as is required by the laws under which that entity is organized, or a greater or lesser percentage, subject to applicable laws, as set forth in the converting entity's partnership agreement, articles of organization, operating agreement, articles or certificate of incorporation, or other governing document. (d) The conversion by an other business entity or a foreign other business entity or a foreign limited liability company into a domestic limited liability company shall be effective under this chapter at the time the conversion is effective under the laws under which the converting entity is organized as long as the articles of organization containing a statement of conversion have been filed with the Secretary of State. If the converting entity's governing law is silent as to the effectiveness of the conversion, the conversion shall be effective upon the completion of all acts required under this title to form a limited liability company. (e) The filing with the Secretary of State of a certificate of conversion or articles of organization containing a statement of conversion pursuant to subdivision (a) shall have the effect of the filing of a certificate of cancellation by the converting foreign limited liability company or foreign limited partnership, and no converting foreign limited liability company or foreign limited partnership that has made the filing is required to file a certificate of cancellation under Section 15696, 15909.07, or 17455 as a result of that conversion. If a converting other business entity is a foreign corporation qualified to transact business in this state, the foreign corporation shall, by virtue of the filing, automatically surrender its right to transact intrastate business.


17540.9. (a) An entity that converts into another entity pursuant to this chapter is for all purposes the same entity that existed before the conversion. (b) Upon a conversion taking effect, all of the following apply: (1) All the rights and property, whether real, personal, or mixed, of the converting entity or converting limited liability company are vested in the converted entity or converted limited liability company. (2) All debts, liabilities, and obligations of the converting entity or converting limited liability company continue as debts, liabilities, and obligations of the converted entity or converted limited liability company. (3) All rights of creditors and liens upon the property of the converting entity or converting limited liability company shall be preserved unimpaired and remain enforceable against the converted entity or converted limited liability company to the same extent as against the converting entity or converting limited liability company as if the conversion had not occurred. (4) Any action or proceeding pending by or against the converting entity or converting limited liability company may be continued against the converted entity or converted limited liability company as if the conversion had not occurred. (c) A member of a converting limited liability company is liable for: (1) All obligations of the converting limited liability company for which the member was personally liable before the conversion. (2) All obligations of the converted entity incurred after the conversion takes effect, but those obligations may be satisfied only out of property of the entity if that member is a limited partner, a shareholder in a corporation, or unless expressly provided otherwise in the articles of organization or other governing documents, a member of a converted limited liability company or a holder of equity securities in an other converted entity if the holders of equity securities in such entity are not personally liable for the obligations of such entity under the law under which that entity is organized or its governing documents. (d) A member of a converted limited liability company remains liable for any and all obligations of the converting entity for which the member was personally liable before the conversion, but only to the extent that the member was personally liable for the obligations of the converting entity prior to the conversion. (e) If the other party to a transaction with the limited liability company reasonably believes when entering the transaction that the limited liability company member is a general partner, the limited liability company member is liable for an obligation incurred by the limited liability company within 90 days after the conversion takes effect. The limited liability company member's liability for all other obligations of the limited liability company incurred after the conversion takes effect is that of a limited liability company member.


Chapter 12. Merger

Ca Codes (corp:17550-17556) Corporations Code Section 17550-17556



17550. (a) The following entities may be merged pursuant to this chapter: (1) Two or more limited liability companies into one limited liability company. (2) One or more limited liability companies and one or more other business entities into one of those other business entities. (3) One or more limited liability companies and one or more other business entities into one limited liability company. (b) Notwithstanding this section, the merger of any number of limited liability companies with any number of other business entities may be effected only if the other business entities that are organized in California are authorized by the laws under which they are organized to effect the merger, and: (1) If a limited liability company is the surviving limited liability company, the foreign other business entities are not prohibited by the laws under which they are organized from effecting that merger. (2) If a foreign limited liability company or foreign other business entity is the survivor of the merger, the laws of the jurisdiction under which the survivor is organized authorize that merger. Notwithstanding the foregoing sentence, if one or more domestic corporations is also a party to the merger, the merger may be effected only if, with respect to any foreign other business entity that is a corporation, the foreign corporation is authorized by the laws under which it is organized to effect that merger.


17551. (a) Each limited liability company and other business entity that desires to merge shall approve an agreement of merger. The agreement of merger shall be approved by the vote of a majority in interest of the members of each constituent limited liability company, or such greater percentage of the voting interests of members as may be specified in the articles of organization or written operating agreement of that constituent limited liability company. Notwithstanding the previous sentence, if the members of any constituent limited liability company become personally liable for any obligations of a constituent limited liability company or constituent other business entity as a result of the merger, the principal terms of the agreement of merger shall be approved by all of the members of the constituent limited liability company, unless the agreement of merger provides that all members will have the dissenters' rights provided in Chapter 13 (commencing with Section 17600). The agreement of merger shall be approved on behalf of each constituent other business entity by those persons required to approve the merger by the laws under which it is organized. Other persons, including a parent of a constituent limited liability company, may be parties to the agreement of merger. The agreement of merger shall state: (1) The terms and conditions of the merger. (2) The name and place of organization of the surviving limited liability company or surviving other business entity, and of each disappearing limited liability company and disappearing other business entity. The agreement of merger may change the name of the surviving limited liability company, which new name may be the same as or similar to the name of a disappearing domestic or foreign limited liability company, subject to Section 17052. (3) The manner of converting the interests of each of the constituent limited liability companies into interests, shares, or other securities of the surviving limited liability company or surviving other business entity. If interests of any of the constituent limited liability companies are not to be converted solely into interests, shares, or other securities of the surviving limited liability company or surviving other business entity, the agreement of merger shall state the cash, property, rights, interests, or securities that the holders of the interests are to receive in exchange for the interests, that cash, property, rights, interests, or securities may be in addition to or in lieu of interests, shares, or other securities of the surviving limited liability company or surviving other business entity, or that the interests are canceled without consideration. (4) The amendments to the articles of organization of the surviving limited liability company, if applicable, to be effected by the merger, if any. (5) Any other details or provisions as are required by the laws under which any constituent other business entity is organized, including, if a domestic corporation is a party to the merger, subdivision (b) of Section 1113. (6) Any other details or provisions that are desired, including, without limitation, a provision for the treatment of fractional interests. (b) Each interest of the same class of any constituent limited liability company, other than an interest in another constituent limited liability company, that is being canceled and that is held by a constituent limited liability company or its parent or a limited liability company of which the constituent limited liability company is a parent, unless all members of the class consent, shall be treated equally with respect to any distribution of cash, property, rights, interests, or securities. Notwithstanding this subdivision, except in a merger of a limited liability company with a limited liability company in which it controls at least 90 percent of the membership interests entitled to vote with respect to the merger, the nonredeemable interests of a constituent limited liability company may be converted only into nonredeemable interests or securities of the surviving limited liability company or other business entity or a parent if a constituent limited liability company or a constituent other business entity or its parent owns, directly or indirectly, prior to the merger, interests of another constituent limited liability company or interests or securities of a constituent other business entity representing more than 50 percent of the interests or securities entitled to vote with respect to the merger of the other constituent limited liability company or constituent other business entity, or more than 50 percent of the voting power, as defined in Section 194.5, of a constituent other business entity that is a domestic corporation unless all of the members of the class consent. The provisions of this subdivision do not apply to any transaction if the commissioner has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142. (c) Notwithstanding its prior approval, an agreement of merger may be amended prior to the filing of the certificate of merger or the agreement of merger as provided in Section 17552 if the amendment is approved by the members of each constituent limited liability company in the same manner as required for approval of the original agreement of merger and, if the amendment changes any of the principal terms of the agreement of merger, the amendment is approved by each of the constituent other business entities in the same manner as required for approval of the original agreement of merger. (d) A merger may be abandoned by the members of a constituent limited liability company in the same manner as required for approval of the agreement of merger, subject to the contractual rights, if any, of third parties, including other constituent limited liability companies and constituent other business entities, at any time before the merger is effective. (e) An agreement of merger approved in accordance with subdivision (a) may effect any amendment to the operating agreement of any constituent limited liability company or effect the adoption of a new operating agreement for a constituent limited liability company if it is the surviving limited liability company in the merger. Any amendment to an operating agreement or adoption of a new operating agreement made pursuant to the foregoing sentence shall be effective at the effective time or date of the merger. Notwithstanding the above provisions of this subdivision, if a greater number of members is required to approve an amendment to the operating agreement of the constituent limited liability company than is required to approve the agreement of merger pursuant to subdivision (a), and the number of members that approve the agreement of merger is less than the number of members required to approve an amendment to the operating agreement of the constituent limited liability company, any amendment to the operating agreement or adoption of a new operating agreement of the surviving limited liability company made pursuant to the first sentence of this subdivision shall be effective only if the agreement of merger is approved by the number of members required to approve an amendment to the operating agreement of the constituent limited liability company. (f) The surviving limited liability company or surviving other business entity shall keep the agreement of merger at the office referred to in subdivision (a) of Section 17057 or at the business address specified in paragraph (5) of subdivision (a) of Section 17552, as applicable. Upon the request of a member of a constituent limited liability company or a holder of shares, interests, or other securities of a constituent other business entity, a manager or, if no managers have been elected, any member of the surviving limited liability company or a person with authority to do so on behalf of the surviving other business entity shall promptly deliver to the member or the holder of shares, interests, or other securities, at the expense of the surviving limited liability company or surviving other business entity, a copy of the agreement of merger. A waiver by a member or holder of shares, interests, or other securities of the rights provided in this subdivision shall be unenforceable.


17552. (a) If the surviving entity is a limited liability company or an other business entity (other than a corporation in a merger in which a domestic corporation is a constituent party), after approval of a merger by the constituent limited liability companies and any constituent other business entities, the constituent limited liability companies or constituent other business entities shall file a certificate of merger in the office of, and on a form prescribed by, the Secretary of State. The certificate of merger shall be executed and acknowledged by each domestic constituent limited liability company by all of the managers of the limited liability company, unless a lesser number is specified in the articles of organization or the operating agreement of the constituent limited liability company, and by each constituent foreign limited liability company and each constituent other business entity by those persons required to execute the certificate or agreement of merger by the laws under which the constituent foreign limited liability company or other business entity is organized. The certificate of merger shall set forth all of the following: (1) The names and the Secretary of State's file numbers, if any, of each of the constituent limited liability companies and constituent other business entities, separately identifying the disappearing limited liability companies and disappearing other business entities and the surviving limited liability company or surviving other business entity. (2) If a vote of the members was required under Section 17551, a statement setting forth the total number of outstanding interests of each class entitled to vote on the merger and that the principal terms of the agreement of merger were approved by a vote of the number of interests of each class that equaled or exceeded the vote required, specifying each class entitled to vote and the percentage vote required of each class. (3) If the surviving entity is a limited liability company and not an other business entity, any change required to the information set forth in the articles of organization of the surviving limited liability company resulting from the merger, including any change in the name of the surviving limited liability company resulting from the merger. The filing of a certificate of merger setting forth any changes to the articles of organization of the surviving limited liability company shall have the effect of the filing of an amendment to the articles of organization by the surviving limited liability company, and the surviving limited liability company need not file a certificate of amendment under Section 17054 to reflect those changes. (4) The future effective date or time (which shall be a date or time certain not more than 90 days subsequent to the date of filing) of the merger, if the merger is not to be effective upon the filing of the certificate of merger with the office of the Secretary of State. (5) If the surviving entity is an other business entity or a foreign limited liability company, the full name, type of entity, legal jurisdiction in which the entity was organized and by whose laws its internal affairs are governed, and the address of the principal place of business of the entity. (6) Any other information required to be stated in the certificate of merger by the laws under which each constituent other business entity is organized, including, if a domestic corporation is a party to the merger, paragraph (2) of subdivision (g) of Section 1113. If the surviving entity is a foreign limited liability company in a merger in which a domestic corporation is a disappearing other business entity, a copy of the agreement of merger and attachments as required under paragraph (1) of subdivision (g) of Section 1113 shall be filed at the same time as the filing of the certificate of merger. (b) If the surviving entity is a domestic corporation or a foreign corporation in a merger in which a domestic corporation is a constituent party, after approval of the merger by the constituent limited liability companies and constituent other business entities, the surviving corporation shall file in the office of the Secretary of State a copy of the agreement of merger and attachments required under paragraph (1) of subdivision (g) of Section 1113. The certificate of merger shall be executed and acknowledged by each domestic constituent limited liability company by all of the managers of the limited liability company unless a lesser number is specified in the articles of organization or the operating agreement of the domestic constituent limited liability company. (c) A certificate of merger, or the agreement of merger, as is applicable under subdivisions (a) or (b), shall have the effect of the filing of a certificate of cancellation of articles of organization for each disappearing limited liability company and no disappearing limited liability company need file a certificate of cancellation of articles of organization under Section 17356 as a result of the merger. (d) If a disappearing other business entity is a foreign corporation qualified to transact intrastate business in this state, the filing of the certificate of merger or the agreement of merger shall automatically surrender its right to transact intrastate business.

17553. (a) Unless a future effective date or time is provided in the certificate of merger or in any agreement of merger required to be filed under Section 17552, in which event the merger shall be effective at that future effective date or time (which shall be a date or time certain not more than 90 days subsequent to the date of filing), a merger shall be effective upon the filing of the certificate of merger, or the agreement of merger, as is applicable under subdivision (a) or (b), in the office of the Secretary of State. (b) (1) For all purposes, a copy of the certificate of merger duly certified by the Secretary of State is conclusive evidence of the merger of (A) the constituent limited liability companies (either by themselves or together with constituent other business entities) into the surviving other business entity, or (B) the constituent limited liability companies or the constituent other business entities, or both, into the surviving limited liability company. (2) In a merger in which the surviving entity is a corporation in a merger in which a domestic corporation and a domestic limited liability company are parties to the merger, a copy of an agreement of merger certified on or after the effective date by an official having custody thereof has the same force in evidence as the original and, except as against the state, is conclusive evidence of the performance of all conditions precedent to the merger, the existence on the effective date of the surviving corporation, and the performance of the conditions necessary to the adoption of any amendment to the articles of incorporation of the surviving corporation, if applicable, contained in the agreement of merger.


17554. (a) Upon a merger of limited liability companies or limited liability companies and other business entities pursuant to this chapter, the separate existence of the disappearing limited liability companies and disappearing other business entities ceases and the surviving limited liability company or surviving other business entity shall succeed, without other transfer, act, or deed, to all the rights and property, whether real, personal, or mixed, of each of the disappearing limited liability companies and disappearing other business entities and shall be subject to all the debts and liabilities of each in the same manner as if the surviving limited liability company or surviving other business entity had itself incurred them. (b) All rights of creditors and all liens upon the property of each of the constituent limited liability companies and constituent other business entities shall be preserved unimpaired and may be enforced against the surviving limited liability company or the surviving other business entity to the same extent as if the debt, liability, or duty that gave rise to that lien had been incurred or contracted by it, provided that such liens upon the property of a disappearing limited liability company or disappearing other business entity shall be limited to the property affected thereby immediately prior to the time the merger is effective. (c) Any action or proceeding pending by or against any disappearing limited liability company or disappearing other business entity may be prosecuted to judgment, that shall bind the surviving limited liability company or surviving other business entity, or the surviving limited liability company or surviving other business entity may be proceeded against or be substituted in the disappearing limited liability company's or disappearing other business entity's place. (d) If a partnership is a party to a merger nothing in this chapter is intended to affect the liability a general partner of a disappearing partnership may have in connection with the debts and liabilities of the disappearing partnership existing prior to the time the merger is effective.

17554.5. (a) Upon merger pursuant to this chapter, a surviving domestic or foreign limited liability company or other business entity shall be deemed to have assumed the liability of each disappearing domestic or foreign limited liability company or other business entity that is taxed under Part 10 (commencing with Section 17001) of, or under Part 11 (commencing with Section 23001) of, Division 2 of the Revenue and Taxation Code for the following: (1) To prepare and file, or to cause to be prepared and filed, tax and information returns otherwise required of that disappearing entity as specified in Chapter 2 (commencing with Section 18501) of Part 10.2 of Division 2 of the Revenue and Taxation Code. (2) To pay any tax liability determined to be due. (b) If the surviving entity is a domestic limited liability company, domestic corporation, or registered limited liability partnership or a foreign limited liability company, foreign limited liability partnership, or foreign corporation that is registered or qualified to do business in California, the Secretary of State shall notify the Franchise Tax Board of the merger.


17555. (a) The merger of any number of domestic limited liability companies with any number of foreign limited liability companies or foreign other business entities shall be required to comply with Section 17550. (b) If the surviving entity is a domestic limited liability company or a domestic other business entity, the merger proceedings with respect to that limited liability company or other business entity and any domestic disappearing limited liability company shall conform to the provisions of this chapter governing the merger of domestic limited liability companies, but if the surviving entity is a foreign limited liability company or a foreign other business entity, then, subject to the requirements of subdivision (d) and Chapter 13 (commencing with Section 17600), with respect to any domestic constituent corporation, Section 1113 and Chapters 12 (commencing with Section 1200) and 13 (commencing with Section 1300) of Division 1 of Title 1, and with respect to any domestic constituent limited partnership, Article 7.6 (commencing with Section 15679.1) of Chapter 3 and Article 11.5 (commencing with Section 15911.20) of Chapter 5.5 of Title 2, the merger proceedings may be in accordance with the laws of the state or place of organization of the surviving limited liability company or surviving other business entity. (c) If the surviving entity is a domestic limited liability company or domestic other business entity, other than a domestic corporation, a certificate of merger shall be filed as provided in subdivision (a) of Section 17552 and thereupon, subject to subdivision (a) of Section 17553, the merger shall be effective as to each domestic constituent limited liability company and domestic constituent other business entity. If the surviving entity is a domestic corporation, the agreement of merger with attachments shall be filed as provided in subdivision (b) of Section 17552, and thereupon, subject to subdivision (a) of Section 17553, the merger shall be effective as to each domestic constituent limited liability company and domestic constituent other business entity unless another effective date is provided for in Chapter 11 (commencing with Section 1100) of Division 1 of Title 1, with respect to any constituent corporation or any constituent other business entity. (d) If the surviving entity is a foreign limited liability company or foreign other business entity, the merger shall become effective in accordance with the laws of the jurisdiction in which the surviving limited liability company or surviving other business entity is organized; but the merger shall be effective as to any domestic disappearing limited liability company as of the time of effectiveness in the foreign jurisdiction upon the filing in this state of a certificate of merger or agreement of merger as provided in Section 17552. (e) If a merger described in subdivision (c) or (d) also includes a foreign disappearing limited liability company previously registered for the transaction of intrastate business in this state pursuant to Section 17451, the filing of the certificate of merger or agreement of merger, as applicable, automatically has the effect of a cancellation of registration for that foreign limited liability company pursuant to Section 17456 without the necessity of the filing of a certificate of cancellation. (f) The provisions of subdivision (b) of Section 17551 and Chapter 13 (commencing with Section 17600) apply to the rights of the members of any of the constituent limited liability companies that are domestic limited liability companies and of any domestic limited liability company that is a parent of any foreign constituent limited liability company. (g) If the surviving entity is a foreign limited liability company or foreign other business entity, the surviving entity shall file the following with the Secretary of State: (1) An agreement that it may be served in this state in a proceeding for the enforcement of an obligation of any constituent entity and in a proceeding to enforce the rights of any holder of a dissenting interest or dissenting shares in a constituent domestic limited liability company or domestic other business entity. (2) An irrevocable appointment of the Secretary of State as its agent for service of process, and an address to which process may be forwarded. (3) An agreement that it will promptly pay the holder of any dissenting interest or dissenting share in a constituent domestic limited liability company or domestic other business entity the amount to which that person is entitled under California law.


17556. Whenever a domestic or foreign limited liability company or other business entity having any real property in this state merges with another limited liability company or other business entity pursuant to the laws of this state or of the state or place in which any constituent limited liability company or constituent other business entity was organized, and the laws of the state or place of organization (including this state) of any disappearing limited liability company or disappearing other business entity provide substantially that the making and filing of the agreement of merger or certificate of merger vests in the surviving limited liability company or surviving other business entity all the real property of any disappearing limited liability company and disappearing other business entity, the filing for record in the office of the county recorder of any county in this state in which any of the real property of the disappearing limited liability company or disappearing other business entity is located of either of the documents specified in subdivision (a) or (b) shall evidence record ownership in the surviving limited liability company or surviving other business entity of all interest of the disappearing limited liability company or disappearing other business entity in and to the real property located in that county. (a) A certificate of merger certified by the Secretary of State, or any other certificate as may be prescribed by the Secretary of State. (b) A copy of the agreement of merger or certificate of merger, certified by the Secretary of State or an authorized public official of the state or place pursuant to the laws of which the merger is effected.


Chapter 13. Dissenting Members' Rights

Ca Codes (corp:17600-17613) Corporations Code Section 17600-17613



17600. (a) For purposes of this chapter, "reorganization" refers to any of the following: (1) A conversion pursuant to Chapter 11.5 (commencing with Section 17540.1). (2) A merger pursuant to Chapter 12 (commencing with Section 17550). (3) The acquisition by one limited liability company in exchange, in whole or in part, for its membership interests (or the membership interests or equity securities of a limited liability company or other business entity that is in control of the acquiring limited liability company), of membership interests or equity securities of another limited liability company or other business entity if, immediately after the acquisition, the acquiring limited liability company has control of the other limited liability company or other business entity. (4) The acquisition by one limited liability company in exchange in whole or in part for its membership interests (or the membership interests or equity securities of a limited liability company or other business entity that is in control of the acquiring limited liability company) or for its debt securities (or debt securities of a limited liability company or other business entity that is in control of the acquiring limited liability company) that are not adequately secured and that have a maturity date in excess of five years after the consummation of the acquisition, or both, of all or substantially all of the assets of another limited liability company or other business entity. (b) For purposes of this chapter, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a limited liability company or other business entity.


17601. (a) If the approval of outstanding membership interests is required for a limited liability company to participate in a reorganization, pursuant to the operating agreement of the limited liability company, or otherwise, then each member of the limited liability company holding those membership interests may, by complying with this chapter, require the limited liability company to purchase for cash, at its fair market value, the interest owned by the member in the limited liability company, if the interest is a dissenting interest as defined in subdivision (b). The fair market value shall be determined as of the day before the first announcement of the terms of the proposed reorganization, excluding any appreciation or depreciation in consequence of the proposed reorganization unless exclusion would be inequitable. (b) As used in this chapter, "dissenting interest" means a membership interest that satisfies all of the following conditions: (1) The membership interest was outstanding on the date for the determination of members entitled to vote on the reorganization. (2) (A) The membership interest was not voted in favor of the reorganization, or (B) the membership interest was voted against the reorganization; provided, however, that subparagraph (A) rather than subparagraph (B) of this paragraph applies in any event where the approval for the proposed reorganization is sought by written consent rather than at a meeting. (3) That the member has demanded that the limited liability company purchase at its fair market value in accordance with Section 17602. (4) That the member submits for endorsement, if applicable, in accordance with Section 17603. (c) As used in this chapter, "dissenting member" means the recordholder of a dissenting interest, and includes an assignee of record of that interest.


17602. (a) If members have a right under Section 17601, subject to compliance with paragraphs (4) and (5) of subdivision (b) thereof, to require the limited liability company to purchase their membership interests for cash, that limited liability company shall mail to each member a notice of the approval of the reorganization by the requisite vote or consent of the members. This notice shall be mailed within 10 days after the date of the approval, accompanied by a copy of this section and Sections 17601, 17603, 17604, and 17605, a statement of the price determined by the limited liability company to represent the fair market value of its outstanding interests, a statement of the method of valuation employed, the latest available balance sheet of the limited liability company, the latest available income statement of the limited liability company, and a brief description of the procedure to be followed if the member desires to exercise the member's rights under those sections. The statement of price constitutes an offer by the limited liability company to purchase at the price stated any dissenting interests as defined in subdivision (b) of Section 17601, unless they lose their status as dissenting interests under Section 17610. (b) Any member who has a right to require the limited liability company to purchase the member's interest for cash under Section 17601, subject to compliance with paragraphs (4) and (5) of subdivision (b) thereof, and who desires the limited liability company to purchase that interest, shall make written demand upon the limited liability company for the purchase of the interest and the payment to the member in cash of its fair market value. The demand is not effective for any purpose unless it is received by the limited liability company or any transfer agent thereof within 30 days after the date on which notice of the approval of the reorganization by the requisite vote or consent of the members is mailed by the limited liability company to the members. (c) The demand shall state the number or amount of the dissenting member's interest in the limited liability company and shall contain a statement of what that member claims to be the fair market value of that interest on the day before the announcement of the proposed reorganization. The statement of fair market value constitutes an offer by the dissenting member to sell the interest at that price.


17603. Within 30 days after the date on which notice of the approval of the outstanding interests of the limited liability company is mailed to the dissenting member pursuant to subdivision (a) of Section 17602, the member shall submit to the limited liability company at its principal office or at the office of any transfer agent thereof, the following: (a) If the interest is evidenced by a certificate, the dissenting member's certificate representing the interest that the member demands that the limited liability company purchase, to be stamped or endorsed with a statement that the interest is a dissenting interest, or to be exchanged for certificates of appropriate denominations so stamped or endorsed. (b) If the interest is not evidenced by a certificate, written notice of the number or amount of interest that the dissenting member demands that the limited liability company purchase. Upon subsequent transfers of the dissenting interest on the books of the limited liability company, the new certificates or other written statement issued therefor shall bear a like statement, together with the name of the original holder of the dissenting interest.


17604. (a) If the limited liability company and the dissenting member agree that the member's interest is a dissenting interest and agree upon the price to be paid for the dissenting interest, the dissenting member is entitled to the agreed price with interest thereon at the legal rate on judgments from the date of consummation of the reorganization. All agreements fixing the fair market value of any dissenting member's interest as between the limited liability company and the member shall be in writing and filed in the records of the limited liability company. (b) Subject to the provisions of Section 17607, payment of the fair market value for a dissenting interest shall be made within 30 days after the amount thereof has been agreed upon or within 30 days after any statutory or contractual conditions to the reorganization are satisfied, whichever is later. In the case of dissenting interests evidenced by certificates of interest, payment shall be subject to surrender of the certificates of interest, unless provided otherwise by agreement.


17605. (a) If the limited liability company denies that a membership interest is a dissenting interest, or the limited liability company and a dissenting member fail to agree upon the fair market value of a dissenting interest, then the member or any interested limited liability company, within six months after the date on which notice of the approval of the reorganization by the requisite vote or consent of the members was mailed to the member, but not thereafter, may file a complaint in the superior court of the proper county to determine whether the interest is a dissenting interest, or the fair market value of the dissenting interest, or both, or to intervene in any action pending on such a complaint. (b) Two or more dissenting members may join as plaintiffs or be joined as defendants in any action and two or more actions may be consolidated. (c) On the trial of the action, the court shall determine the issues. If the status of the membership interest as a dissenting interest is an issue, the court shall first determine that issue. If the fair market value of the dissenting interest is an issue, the court shall determine, or shall appoint one or more impartial appraisers to determine, the fair market value of the dissenting interest.

17606. (a) If the court appoints an appraiser or appraisers, they shall determine the fair market value per interest of the outstanding membership interests of the limited liability company, by class if necessary. Within the time fixed by the court, the appraisers, or a majority of them, shall make and file a report in the office of the clerk of the court. On the motion of any party, the report shall be submitted to the court and considered along with any additional evidence as the court considers relevant. If the court finds the report reasonable, the court may confirm it. (b) If a majority of the appraisers appointed fail to make and file a report within 30 days from the date of their appointment, or within such further time as may be allowed by the court, or the report is not confirmed by the court, the court shall determine the fair market value per interest of the outstanding membership interests of the limited liability company, by class if necessary. (c) Subject to Section 17607, judgment shall be rendered against the limited liability company for payment of an amount equal to the fair market value, as determined by the court, of each dissenting interest that any dissenting member who is a party, or has intervened, is entitled to require the limited liability company to purchase, with interest thereon at the legal rate on judgments from the date of consummation of the reorganization. (d) Any judgment shall be payable forthwith, provided, however, that with respect to membership interests evidenced by transferable certificates of interest, only upon the endorsement and delivery to the limited liability company of those certificates representing the interest described in the judgment. Any party may appeal from the judgment. (e) The costs of the action, including reasonable compensation for the appraisers, to be fixed by the court, shall be assessed or apportioned as the court considers equitable, but, if the appraisal exceeds the price offered by the limited liability company, the limited liability company shall pay the costs, including, in the discretion of the court, if the value awarded by the court for the dissenting interest is more than 125 percent of the price offered by the limited liability company under subdivision (a) of Section 17602, attorneys' fees and fees of expert witnesses.


17607. To the extent that the payment to dissenting members of the fair market value of their dissenting interests would require the dissenting members to return that payment or a portion thereof by reason of subdivision (f) of Section 17254 or the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code), then that payment or portion thereof shall not be made and the dissenting members shall become creditors of the limited liability company for the amount not paid, together with interest thereon at the legal rate on judgments until the date of payment. The dissenting members shall be subordinate to all other creditors in any proceeding relating to the winding up and dissolution of the limited liability company.


17608. Any cash distributions made by a limited liability company to a dissenting member after the date of consummation of the reorganization, but prior to any payment by the limited liability company for the dissenting member's interest, shall be credited against the total amount to be paid by the limited liability company for that dissenting interest.


17609. Except as expressly limited by this chapter, dissenting members shall continue to have all the rights and privileges incident to their interests immediately prior to the reorganization, including limited liability, until payment by the limited liability company for their dissenting interests. A dissenting member may not withdraw a demand for payment unless the limited liability company consents thereto.


17610. A dissenting interest loses its status as a dissenting interest and the holder thereof ceases to be a dissenting member and ceases to be entitled to require the limited liability company to purchase the interest upon the occurrence of any of the following: (a) The limited liability company abandons the reorganization. Upon abandonment of the reorganization, the limited liability company shall pay, on demand, to any dissenting member who has initiated proceedings in good faith under this chapter, all reasonable expenses incurred in those proceedings and reasonable attorneys' fees. (b) The interest is transferred prior to its submission for endorsement in accordance with Section 17603. (c) The dissenting member and the limited liability company do not agree upon the status of the interest as a dissenting interest or upon the purchase price of the dissenting interest, and neither files a complaint nor intervenes in a pending action, as provided in Section 17605, within six months after the date upon which notice of the approval of the reorganization by the requisite vote or consent of members was mailed to the member. (d) The dissenting member, with the consent of the limited liability company, withdraws that member's demand for purchase of the dissenting interest.


17611. If litigation is instituted to test the sufficiency or regularity of the vote of the members in authorizing a reorganization, any proceedings under Sections 17605 and 17606 shall be suspended until final determination of that litigation.


17612. (a) Subject to subdivisions (b) and (c), this chapter applies to the following: (1) A domestic limited liability company. (2) A foreign limited liability company if members holding more than 50 percent of the voting interests of the foreign limited liability company reside in this state. (b) This chapter does not apply to membership interests governed by operating agreements whose terms and provisions specifically set forth the amount to be paid in respect of those interests in the event of a reorganization of the limited liability company. (c) This chapter shall not apply to any limited liability company with 35 or fewer members if all the members have waived the application of this chapter in writing, whether in an operating agreement or otherwise, provided that if, at the time of the reorganization, the limited liability company had more than 35 members, any waiver shall be ineffective as to that reorganization.


17613. (a) No member of a limited liability company who has a right under this chapter to demand payment of cash for the interest owned by that member in a limited liability company shall have any right at law or in equity to attack the validity of the reorganization, or to have the reorganization set aside or rescinded, except (1) in an action to test whether the vote or consent of members required to authorize or approve the reorganization has been obtained in accordance with the procedures established therefor by the operating agreement of the limited liability company, or if there is no written operating agreement, this chapter, or (2) when the limited liability company action is fraudulent with respect to the complaining member or the limited liability company. (b) If one of the parties to a reorganization is directly or indirectly controlled by, or under common control with, another party to the reorganization, subdivision (a) shall not apply to any member of the controlled party who has not demanded payment of cash for the member's interest pursuant to this chapter; but if the member institutes any action to attack the validity of the reorganization or to have the reorganization set aside or rescinded, the member shall not thereafter have any right to demand payment of cash for that member's interest pursuant to this chapter. (c) If one of the parties to a reorganization is directly or indirectly controlled by, or under common control with, another party to the reorganization, then, in any action to attack the validity of the reorganization or to have the reorganization set aside or rescinded, (1) a party to a reorganization that controls another party to a reorganization shall have the burden of proving that the transaction is just and reasonable as to the members of the controlled party, and (2) a person who controls two or more parties to a reorganization shall have the burden of proving that the transaction is just and reasonable as to the members of any party so controlled. (d) Subdivisions (b) and (c) shall not apply if a majority in interest of the members other than members who are directly or indirectly controlled by, or under common control with, another party to the reorganization approve or consent to the reorganization. (e) This section shall not prevent a member of a limited liability company that is a party to a reorganization from bringing an action against the limited liability company or any manager, officer, employee, or agent of the limited liability company, at law or in equity, as to any matters, including, without limitation, an action for breach of fiduciary obligation or fraud, other than to attack the validity of the reorganization or to have the reorganization set aside or rescinded.


Chapter 14. Miscellaneous Provisions

Ca Codes (corp:17650-17656) Corporations Code Section 17650-17656



17650. (a) If a manager or member required by this title to execute or file any document fails, after demand, to do so within a reasonable time or refuses to do so, any other manager or member, or any person appointed by a court of competent jurisdiction, may prepare, execute, and file that document with the Secretary of State. (b) If there is any dispute concerning the filing of a document, or the failure to file a document, any manager or member may petition the superior court to direct the execution of the document. (c) If the court finds that it is proper for the document to be executed and that any person so designated has failed or refused to execute the document, or if the court determines that any document should be filed, it shall order a party to file the document, on a form prescribed by the Secretary of State if appropriate, as ordered by the court. (d) In any action under this section, if the court finds the failure of the manager or member to comply with the requirement to file any document to have been without justification, the court may award an amount sufficient to reimburse the managers or members bringing the action for the reasonable expenses incurred by them, including attorneys' fees, in connection with the action or proceeding. (e) Any member who is not a manager, or any person filing any document under this section, shall state the statutory authority after the signature on the appropriate document.


17651. (a) Every limited liability company that neglects, fails, or refuses to keep or cause to be kept or maintained the documents, books, and records required by Section 17058 to be kept or maintained shall be subject to a penalty of twenty-five dollars ($25) for each day that the failure or refusal continues, beginning 30 days after receipt of written request by any member that the duty be performed, up to a maximum of one thousand five hundred dollars ($1,500). The penalty shall be paid to the member or members jointly making the request for performance of the duty and damaged by the neglect, failure, or refusal, if suit therefor is commenced within 90 days after the written request is made; but the maximum daily penalty because of failure to comply with any number of separate requests made on any one day or for the same act shall be two hundred fifty dollars ($250). (b) Upon the failure of a limited liability company, or a foreign limited liability company registered to transact intrastate business in this state, to file the statement required by Section 17060, the Secretary of State shall mail a notice of that delinquency to the limited liability company or foreign limited liability company. The notice shall also contain information concerning the application of this section, advise the limited liability company or foreign limited liability company of the penalty imposed by this subdivision for failure to timely file the required statement after notice of delinquency has been mailed by the Secretary of State, and shall advise the limited liability company or foreign limited liability company of its right to request relief from the Secretary of State because of reasonable cause or unusual circumstances that justify the failure to file. If, within 60 days after the mailing of the notice of delinquency, a statement pursuant to Section 17060 has not been filed by the limited liability company or foreign limited liability company, the limited liability company or foreign limited liability company shall be subject to a penalty of two hundred fifty dollars ($250).


17652. Any penalty prescribed by Section 17651 shall be in addition to any remedy by injunction or action for damages or by writ of mandate for the nonperformance of acts and duties enjoined by law upon the limited liability company or its managers. The court in which an action for any penalty is brought may reduce, remit or suspend the penalty on any terms and conditions as it may deem reasonable when it is made to appear that the neglect, failure or refusal was inadvertent or excusable.


17653. (a) Upon the failure of a limited liability company to file the statement required by Section 17060, the Secretary of State shall mail a notice of the delinquency to the limited liability company. The notice shall also contain information concerning the application of this section, advise the limited liability company of the penalty imposed by Section 19141 of the Revenue and Taxation Code for failure to timely file the required statement after notice of delinquency has been mailed by the Secretary of State, and shall advise the limited liability company of its right to request relief from the Secretary of State because of reasonable cause or unusual circumstances that justify such failure to file. If, within 60 days after the mailing of the notice of delinquency, a statement pursuant to Section 17060 has not been filed by the limited liability company, the Secretary of State shall certify the name of such limited liability company to the Franchise Tax Board. (b) Upon certification pursuant to subdivision (a), the Franchise Tax Board shall assess against the limited liability company the penalty provided in Section 19141 of the Revenue and Taxation Code. (c) The penalty provided by Section 19141 shall not apply to a limited liability company that on or prior to the date of certification pursuant to subdivision (a) has dissolved or has been merged into another limited liability company or other business entity. (d) The penalty herein provided shall not apply and the Secretary of State need not mail a notice of delinquency to a limited liability company the powers, rights and privileges of which have been suspended by the Franchise Tax Board pursuant to Section 23301, 23301.5 or 23775 of the Revenue and Taxation Code on or prior to, and remain suspended on, the last day of the filing period pursuant to Section 17060. The Secretary of State need not mail a form pursuant to Section 17060 to a limited liability company the powers, rights and privileges of which have been so suspended by the Franchise Tax Board on or prior to, and remain suspended on, the day the Secretary of State prepares the forms for mailing. (e) If, after certification pursuant to subdivision (a) the Secretary of State finds (1) the required statement was filed or the required fee was paid before the expiration of the 60-day period after mailing of the notice of delinquency, or (2) the failure to provide notice of delinquency was due to an error of the Secretary of State, the Secretary of State shall promptly decertify the name of the limited liability company to the Franchise Tax Board. The Franchise Tax Board shall then promptly abate any penalty assessed against the limited liability company pursuant to Section 19141 of the Revenue and Taxation Code. (f) If the Secretary of State determines that the failure of a limited liability company to file the statement required by Section 17060 is excusable because of reasonable cause or unusual circumstances that justify such failure, the Secretary of State may waive the penalty imposed by this section and by Section 19141 of the Revenue and Taxation Code, in which case the Secretary of State shall not certify the name of the limited liability company to the Franchise Tax Board, or if already certified, the Secretary of State shall promptly decertify the name of the limited liability company.


17654. (a) A limited liability company that (1) fails to file a statement pursuant to Section 17060 for an applicable filing period, (2) has not filed a statement pursuant to Section 17060 during the preceding 24 months, and (3) was certified for penalty pursuant to Section 17653 for the same filing period, shall be subject to suspension pursuant to this section rather than to penalty pursuant to Section 17653. (b) When subdivision (a) is applicable, the Secretary of State shall mail a notice to the limited liability company informing the limited liability company that its powers, rights, and privileges will be suspended after 60 days if it fails to file a statement pursuant to Section 17060. (c) After the expiration of the 60-day period without any statement filed pursuant to Section 17060, the Secretary of State shall notify the Franchise Tax Board of the suspension, and mail a notice of the suspension to the limited liability company and thereupon, except for the purpose of amending the articles of organization to set forth a new name, the powers, rights, and privileges of the limited liability company are suspended. (d) A statement pursuant to Section 17060 may be filed notwithstanding suspension of the powers, rights, and privileges pursuant to this section or Section 23301 or 23301.5 of the Revenue and Taxation Code. Upon the filing of a statement pursuant to Section 17060 by a limited liability company that has suffered suspension pursuant to this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the limited liability company may thereupon be relieved from suspension unless the limited liability company is held in suspension by the Franchise Tax Board by reason of Section 23301 or 23301.5 of the Revenue and Taxation Code.


17655. (a) Sections 17653 and 17654 apply to foreign limited liability companies with respect to the statements required to be filed by Section 17060. For this purpose, the suspension of the powers, rights, and privileges of a domestic limited liability company shall mean the forfeiture of the exercise of the powers, rights, and privileges of a foreign limited liability company in this state. (b) The forfeiture of the exercise of the powers, rights, and privileges of a foreign limited liability company in this state as used in subdivision (a) does not prohibit the transaction of business in this state by a foreign limited liability company if the business transacted subsequent to the forfeiture would not, considered as an entirety, require the foreign limited liability company to obtain a certificate of registration pursuant to subdivision (ao) of Section 17001 and Section 17452.


17656. (a) A limited liability company is liable for a civil penalty in an amount not exceeding one million dollars ($1,000,000) if the limited liability company does both of the following: (1) Has actual knowledge that a member, officer, manager, or agent of the limited liability company does any of the following: (A) Makes, publishes, or posts, or has made, published, or posted, either generally or privately to the shareholders or other persons, either of the following: (i) An oral, written, or electronically transmitted report, exhibit, notice, or statement of its affairs or pecuniary condition that contains a material statement or omission that is false and intended to give membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess. (ii) An oral, written, or electronically transmitted report, prospectus, account, or statement of operations, values, business, profits, or expenditures that includes a material false statement or omission intended to give membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess. (B) Refuses or has refused to make any book entry or post any notice required by law in the manner required by law. (C) Misstates or conceals or has misstated or concealed from a regulatory body a material fact in order to deceive a regulatory body to avoid a statutory or regulatory duty, or to avoid a statutory or regulatory limit or prohibition. (2) Within 30 days after actual knowledge is acquired of the actions described in paragraph (1), the limited liability company knowingly fails to do both of the following: (A) Notify the Attorney General or appropriate government agency in writing, unless the limited liability company has actual knowledge that the Attorney General or appropriate government agency has been notified. (B) Notify its members and investors in writing, unless the limited liability company has actual knowledge that the members and investors have been notified. (b) The requirement for notification under this section is not applicable if the action taken or about to be taken by the limited liability company, or by a member, officer, manager, or agent of the limited liability company under paragraph (1) of subdivision (a), is abated within the time prescribed for reporting, unless the appropriate government agency requires disclosure by regulation. (c) If the action reported to the Attorney General pursuant to this section implicates the government authority of an agency other than the Attorney General, the Attorney General shall promptly forward the written notice to that agency. (d) If the Attorney General was not notified pursuant to subparagraph (A) of paragraph (2) of subdivision (a), but the limited liability company reasonably and in good faith believed that it had complied with the notification requirements of this section by notifying a government agency listed in paragraph (5) of subdivision (e), no penalties shall apply. (e) For purposes of this section: (1) "Manager" means a person defined by subdivision (w) of Section 17001 having both of the following: (A) Management authority over the limited liability company. (B) Significant responsibility for an aspect of the limited liability company that includes actual authority for the financial operations or financial transactions of the limited liability company. (2) "Agent" means a person or entity authorized by the limited liability company to make representations to the public about the limited liability company's financial condition and who is acting within the scope of the agency when the representations are made. (3) "Member" means a person as defined by subdivision (x) of Section 17001 that is a member of the limited liability company at the time the disclosure is required pursuant to subparagraph (B) of paragraph (2) of subdivision (a). (4) "Notify its members" means to give sufficient description of an action taken or about to be taken that would constitute acts or omissions as described in paragraph (1) of subdivision (a). A notice or report filed by a limited liability company with the United States Securities and Exchange Commission that relates to the facts and circumstances giving rise to an obligation under paragraph (1) of subdivision (a) shall satisfy all notice requirements arising under paragraph (2) of subdivision (a) but shall not be the exclusive means of satisfying the notice requirements, provided that the Attorney General or appropriate agency is informed in writing that the filing has been made together with a copy of the filing or an electronic link where it is available online without charge. (5) "Appropriate government agency" means an agency on the following list that has regulatory authority with respect to the financial operations of a limited liability company: (A) Department of Corporations. (B) Department of Insurance. (C) Department of Financial Institutions. (D) Department of Managed Health Care. (E) United States Securities and Exchange Commission. (6) "Actual knowledge of the limited liability company" means the knowledge a member, officer, or manager of a limited liability company actually possesses or does not consciously avoid possessing, based on an evaluation of information provided pursuant to the limited liability company's disclosure controls and procedures. (7) "Refuse to make a book entry" means the intentional decision not to record an accounting transaction when all of the following conditions are satisfied: (A) The independent auditors required recordation of an accounting transaction during the course of an audit. (B) The audit committee of the limited liability company has not approved the independent auditor's recommendation. (C) The decision is made for the primary purpose of rendering the financial statements materially false or misleading. (8) "Refuse to post any notice required by law" means an intentional decision not to post a notice required by law when all of the following conditions exist: (A) The decision not to post the notice has not been approved by the limited liability company's audit committee. (B) The decision is intended to give the membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess. (9) "Misstate or conceal material facts from a regulatory body" means an intentional decision not to disclose material facts when all of the following conditions exist: (A) The decision not to disclose material facts has not been approved by the limited liability company's audit committee. (B) The decision is intended to give the membership shares in the limited liability company a greater or a less apparent market value than they really possess. (10) "Material false statement or omission" means an untrue statement of material fact or an omission to state a material fact necessary in order to make the statements made under the circumstances under which they were made not misleading. (11) "Officer" means a person appointed pursuant to Section 17154, except an officer of a specified subsidiary limited liability company who is not also an officer of the parent limited liability company. (f) This section only applies to limited liability companies that are issuers, as defined in Section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec. 7201 and following). (g) An action to enforce this section may only be brought by the Attorney General or a district attorney or city attorney in the name of the people of the State of California.


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