One More Thing That LLCs Can’t Do In California . . .

Recently, I wrote about what happens when an incorporator dies.  This will be an issue, of course, only when the incorporator is a natural person.   Thus, the problem of the dead incorporator can be avoided entirely by having a non-natural person, such as a corporation, fulfill the parental responsibilities.  The legislature, however, has decided that not just any type of entity may parent a corporation.

In the case of a corporation formed under the General Corporation Law, the list of suitable progenitors is short.  Only partnerships, associations or corporations (domestic or foreign) may serve as non-natural incorporators.  Notably missing from this list are limited liability companies.  One might guess that the term “association” includes a limited liability company.  However, the Corporations Code doesn’t actually define “association”, and the Secretary of State’s office has advised me that it won’t accept articles of incorporation executed by a limited liability company.

The legislature isn’t quite as punctilious when it comes to nonprofit corporations, whether they be public benefit, mutual benefit or religious.  In each case, the legislature authorizes one or more persons to do the begetting.  Yet, a “person” still doesn’t include limited liability companies.  As defined in Corporations Code Section 5065, a “person” includes: any association, business corporation, company, corporation, corporation sole, domestic corporation, estate, foreign corporation, foreign business corporation, individual, joint stock company, joint venture, mutual benefit corporation, public benefit corporation, religious corporation, partnership, government or political subdivision, agency or instrumentality of a government in addition to natural persons.

Limited liability companies are not completely sterile vis-a-vis corporations.  By virtue of Corporations Code Sections 12245 and 12300(a), a limited liability company may serve as an incorporator to a consumer cooperative corporation.

Immortality, or continuity of existence, is, of course, one of the characteristics of the corporate form.  This was perhaps most famously recognized by Sir Edward Coke in The Case of Sutton’s Hospital (1612):

For a Corporation aggregate of many is invisible, immortal, & resteth only in intendment and consideration of the Law . . .  it is not subject to imbecilities, or death of the natural, body . . . .


Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins Leck Gamble Mallory & Natsis LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.