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 whether a foreign corporation or limited liability company must qualify with the California Secretary of State. The latter determines whether a corporation or LLC must Read more...
The FTB’s “Doing Business” Trap For Foreign LLCs With California Managers, Members Or Agents
According to the California Franchise Tax Board, a limited liability company classified as a partnership must do all of the following: File Form 568 (limited liability company return of income); Pay an annual tax of $800; Pay an annual LLC fee based on total income from all sources derived from or attributable to California. An LLC is subject to these requirements Read more...
Bill Would Mandate Indemnification Of LLC Agents
California’s current limited liability act permits indemnification of any person (including 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. Cal. Corp. Code § 17155(a). The statute excepts indemnification against liability for a manager’s breach of fiduciary duty to Read more...
Here’s One More Thing You Can Do Legally In Nevada But Not In California
Suppose you are a real estate developer with two buildings and you anticipate that investors in each building will have different investment objectives. If the buildings are placed in a single limited liability company, each building will be subject to the liabilities of the other. In addition, conflicting investment objectives could lead to unnecessary internal disputes. Although you could form Read more...
California’s Revised Uniform LLC Act – Countdown To Disaster?
Previously, I’ve written about the constitutional problem arising from the legislature’s attempt to bring all existing LLCs under the newly enacted Revised Uniform Limited Liability Company Act (aka RULLCA). See California’s New LLC Act – Call Me Laocoon, But I Foresee A Mess! In today’s post, I discuss just a few other reasons why practitioners would be well advised to avoid Read more...
Legislature Imposes New Penalty On LLCs
As I discussed in this earlier post, “transacting intrastate business” is not the same as “doing business” in this state. Foreign corporations and limited liability companies must register with the Secretary of State if they transact intrastate business. Even though foreign corporations and LLCs are not transacting intrastate business in California, they may be considered to be doing business here. Read more...
“Sweat Equity” Means No Security
There was no such thing as a limited liability company in 1933, 1934 or even 1968. Thus, Congress and the California legislature had no reason to consider whether a membership interest in an LLC constitutes a security when they drafted the Securities Act, the Exchange Act and the Corporate Securities Law. When California enacted the Beverely-Killea Limited Liability Company Act (SB 469), Read more...
Dissolution Does Not Preclude Entry Of Default Judgment Against Nevada Corporation(?)
Stephens Media, LLC is the publisher of the Las Vegas Review-Journal. In 2009, Stephens Media filed a lawsuit in the U.S. District Court against Citihealth, L.L.C. alleging a variety of trademark related claims. Citihealth failed to respond to the suit and Stephens Media filed a motion for entry of a default judgment. One of the co-owners of Citihealth then notified the court that Read more...
California’s New LLC Act – Call Me Laocoon, But I Foresee A Mess!
On Friday, Governor Brown signed SB 323 (Vargas) into law. It was chaptered by the Secretary of State the same day. Section 20 of the bill adds the California Revised Uniform Limited Liability Company Act (RULLCA) to the Corporations Code as a new Title 2.6. The RULLCA will become operative on January 1, 2014 (See new Corporations Code Section 17713.13). The existing Read more...
