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New LLC Act May Curtail Authority Of Managers Of Pre-Existing LLCs

California’s Revised Uniform Limited Liability Company Act (RULLCA) took effect on the first of this year. The RULLCA repealed California’s first LLC law – the Beverly-Killea Limited Liability Company Act. The forced...more

10/14/2014 - LLC Mergers RULLCA

Is The LLC A Party To Its Own Operating Agreement?

Is an LLC a party to its own operating agreement? California’s new Revised Uniform Limited Liability Company Act (RULLCA) defines “operating agreement” as “the agreement, whether or not referred to as an operating...more

9/25/2014 - Choice of Entity LLC Operating Agreements RULLCA

Court Rules LLC Form Provided No Fiduciary Shield To Personal Jurisdiction

Last Friday’s post concerned whether a plaintiff could establish jurisdiction by tagging a corporate officer attending a conference in California. The question was whether a corporation is present wherever its officers are...more

8/25/2014 - Breach of Duty Fiduciary Duty Jurisdiction LLC Officers Personal Jurisdiction

How Confused Is This? California Defines LLCs Subject To New Law To Include Foreign LLCs

The California Revised Uniform Limited Liability Company Act. which took effect on January 1 of this year, provides the statutory framework for the formation and operation of limited liability companies. The law appears to...more

6/24/2014 - Foreign Corporations Limited Liability Companies LLC

This Volte-Face Might Prove Problematical For LLCs

Under the Beverly-Killea Limited Liability Company Act, the articles of organization prevailed over conflicting provisions of a written operating agreement. Cal. Corp. Code § 17005(f) (repealed). The drafters of the...more

5/21/2014 - Choice of Entity Corporate Governance LLC Operating Agreements

And You Thought Dissenters’ Rights Didn’t Apply To Delaware LLCs

Delaware’s Limited Liability Company Act provides that a limited liability company agreement or an agreement of merger or consolidation or plan of merger may provide for appraisal rights. 6 Del. Code § 18-210. Does this...more

4/11/2014 - Appraisal Blue Sky Laws Delaware Limited Liability Company Act Dissenters Rights Equity Securities Foriegn LLCs LLC Merger Agreements RULLCA

California’s RULLCA Impossible Pleading Requirement For Derivative Suits

California’s Revised Uniform Limited Liability Company Act requires a member of a domestic or foreign LLC to include two specific allegations in any complaint brought in the right of the company. Failure to include these two...more

4/7/2014 - Derivative Suit LLC Pleadings RULLCA Shareholder Litigation Shareholder Rights Shareholders

Foreign LLCs Take Note: This Legislative Oversight May Affect You Too

Section 407 of the California Labor Code provides - Investments and the sale of stock or an interest in a business in connection with the securing of a position are illegal as against the public policy of the State and...more

4/2/2014 - LLC RULLCA Sales Stocks

Why A Form LLC-1 May Be Only Half Right

Under California’s new Revised Uniform Limited Liability Act, an LLC is formed when the California Secretary of State’s Office files the articles of organization. Cal. Corp. Code § 17702.01(d). Only five items of...more

3/31/2014 - Articles of Incorporation Incorporation LLC Operating Agreements

How Will The Courts Interpret This?

I recently commented on the awkwardness of Subdivisions (a) and (b) Corporations Code Section 17703.04 that seemingly are intended to establish that the members of an LLC aren’t liable qua members for the obligations of the...more

3/28/2014 - Corporate Governance LLC Professional Liability

What Exactly Was The Legislature Trying To Say?

Section 17703.04(a) is one of many bizarre provisions in California’s new Revised Uniform Limited Liability Company Act: (a) All of the following apply to debts, obligations, or other liabilities of a limited...more

3/24/2014 - Corporate Governance Debt LLC

Before This LLC Was Formed, These Members Knew It

The new California Revised Uniform Limited Liability Company Act contains some weird inversions of time and logical order. For example, it allows for the formation of an operating agreement even before an LLC is formed. In...more

3/19/2014 - Limited Liability Companies LLC Operating Agreements RULLCA Supplemental Disclosures

The Odd Case Of The Unformed Applicant And The Non-Complying Name Holder

Suppose you are forming an LLC and have even settled on the perfect name. Alas, the Secretary of State’s office refuses to file the articles of organization because your perfect name is so perfect that someone has already...more

3/18/2014 - Choice of Entity LLC Startups

Another Reason Not To Like California’s New LLC Act

Suppose Bob asks his lawyer, Paul, to form an LLC under California’s new Revised Limited Liability Company Act. Paul’s paralegal, Natalie, signs the Form LLC-1 as the organizer....more

3/17/2014 - LLC Operating Agreements

Contract Found To Exist Despite Revocation Of The LLC’s Charter Five Years Before The Contract Was Signed

Nevada’s LLC Act requires LLCs to file annually a list of managers or managing members. NRS 86.263. If an LLC fails to do so, the Nevada Secretary of State may revoke the LLC’s charter and it will forfeit the right to...more

1/16/2014 - Filing Requirements Joint and Several Liability Limited Liability Companies LLC

Is LLC Veil Piercing Really “Not Required By Statute”?

Professor Stephen Bainbridge begins his abstract Abolishing LLC Veil Piercing with the following assertion: Courts are now routinely applying the corporate law doctrine of veil piercing to limited liability companies. ...more

1/10/2014 - Corporate Veil LLC Statutory Interpretation

Assembly To Consider Mandatory Indemnification Of LLC Agents

The California legislature operates on a two-year schedule. Cal. Const. Art. IV, Sec.3(a). The legislature will convene for the second year of the current biennium next Monday (Jan. 6). J.R. 51(a). One immediate job for...more

1/2/2014 - Agents LLC

Does Failure To Qualify Deprive A Foreign LLC Of Standing Under The SSFMJA?

The U.S. Constitution enjoins each state to accord “full faith and credit” to “the public acts, records, and judicial proceedings of every other State”. U.S. Const. Art. IV, § 1. However, a judgment creditor can’t directly...more

11/26/2013 - Full Faith and Credit LLC SSFMJA Standing

There May Be Fifty Ways To Leave Your Lover, But In Nevada There Are Four Ways To Change A Corporation

There are only few days left until Nevada Day. See “Out by the Truckee’s Silvery Rills”. If you’re still looking for that special Nevada Day gift, nothing says “Happy Nevada Day” quite like a gift of Bishop & Zucker on...more

10/24/2013 - Choice of Entity Conversion LLC Mergers SEC

When The RULLCA Is Spun, California’s Done?

I’ve prophesized at some length about the looming catastrophe that is the California Revised Uniform Limited Liability Company Act, Cal. Corp. Code § 17701.01 et seq. My problem is with the RULLCA itself, but with the...more

8/28/2013 - LLC New Legislation RULLCA

Why Your LLC May Be Doing More Than You Think In California Even When It’s Doing Nothing

Until two years ago, determining whether a company was “doing business” in California depended upon whether it was “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit”. Cal. Rev. &...more

8/27/2013 - Franchise Tax Board LLC Property Ownership

LLC Has No First Amendment Right To Send Its Lawyer To Board Meetings

Usually when someone invokes her right to counsel, she usually has in mind the Sixth Amendment of the U.S. Constitution (or perhaps Article I, § 15 of the California Constitution). Thus, I was surprised to see a case in...more

6/20/2013 - Board of Directors First Amendment LLC Right To Counsel

If You Pay More, Do You Actually Get More?

The typical private fund is organized as a limited partnership or limited liability company that is managed by a general partner or manager. The fund manager is usually compensated in three ways – an annual management fee...more

6/14/2013 - Fees Fund Managers Limited Partnerships LLC Private Funds

Conversion Is Not So Easy, And So Smooth A Thing . . .

Entity conversions are a relatively new phenomena. The legislature first provided for conversion in 1999 when it enacted AB 197 (Ackerman). The conversion of partnerships and limited liability companies to other types of...more

6/12/2013 - Corporate Conversions LLC Partnerships

Bill Aims To Make Foreign Nonqualified LLC Contracts Voidable

As discussed in prior posts, “transacting intrastate business” is not the same as “doing business”. See You may Be Doing Business in California Even When Not Transacting Intrastate Business. The former is what determines...more

5/6/2013 - Franchise Tax Board LLC Voidable

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