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CALIFORNIA CORPORATE & SECURITIES LAW

Does An LLC Maintain Its Records At Its Designated Office When They Are In The Cloud?

Section 17701.13 of the California Corporations Code requires that a limited liability company designate and continuously maintain in California both an office and an agent for service of process.  The office need not be a place of the LLC’s activity in California.  However, the LLC is required to maintain specified records at the designated office.  I won’t repeat the statutory list in this posting, but suffice it to say that some of the requirements are quite specific.  For example, the LLC must maintain a current list of the full name and address (business or residence) of each member and each transferee in alphabetical order, together with the contribution and the shares in profits and losses of each member and transferee.

The statute requires that these records be maintained in writing or “in any other form capable of being converted into clearly legible tangible form”.  Based on this language, the statutory requirement would be met if the records were stored on a computer located at the designated office (provided that the stored records were capable of being converted into legible tangible form).  It is less clear whether the statute would be satisfied if the records were stored “in the cloud” or on a computer located in a different location.  Presumably, the intent was that the records be available at the designated office, but the statute doesn’t clearly make that a requirement.  Rather, it requires that the records be maintained at the designated office.

Hammurabi, Cuneiform and Coins

Originally, the creation of written records involved the application or impression of words or symbols on some form of medium such as papyrus, vellum, clay or wax tablets, or stones.  The famous Code of Hammurabi, for example, was carved on a basalt stele in cuneiform script.  Cuneiform is a term for a form of writing, not a language.  It refers to a technique in which words were impressed into soft clay tablets using a wedge-shaped stylus.  The Latin word for a wedge is cuneus, and this style became known as cuneiform.  The word “coin” was also has its origins in cuneus because images were stamped on coins using a wedge-shaped die.

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