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CALIFORNIA CORPORATE & SECURITIES LAW

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 the returning legislators will be to consider pending bills introduced in the first year.  Under the Joint Rules of the Senate and Assembly, these bills must be reported out of the applicable policy committee by Friday, January 17.  J.R. 61(b)(1).

Last February, I wrote that Assembly Member Scott Wilk had introduced a bill, AB 1355, that would mandate indemnification of agents of limited liability companies pursuant to the California Revised Uniform Limited Liability Company Act which became operative only yesterday.  AB 1355 would mandate indemnification if an agent:

  • Has been successful on the merits in defense or settlement of any claim, issue, or matter in any proceeding;
  • Was or is a party or is threatened to be made a party in the proceeding by reason of the fact that the person is or was an agent of the limited liability company; and
  • Acted in good faith, in a manner the agent believed to be in the best interests of the limited liability company and its members.

AB 1355 is set for hearing before the Assembly Committee on Judiciary on January 14.

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