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CALIFORNIA CORPORATE & SECURITIES LAW

More Silliness In California’s Revised Uniform Limited Liability Company Act

Readers will know that I have been a frequent critic of California’s Revised Uniform Limited Liability Company Act, Cal. Corp. Code § 17701.01 et seq. In many cases, it is simply hard to believe that the legislature really intended what it enacted. See, e.g., How Confused Is This? California Defines LLCs Subject To New Law To Include…

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One More Thing That A Limited Liability Company May Not Be Able To Do

California law does not permit limited liability companies to render a variety of professional services.  See,  Contractors Do It, PIs Do It; Why Not Real Estate Brokers?  To add insult to injury, the California General Corporation Law does not explicitly authorize LLCs to act as incorporators, even while permitting a wide variety of natural and unnatural persons to…

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CARULLCA Amendment Purporting To Eliminate Surprise May Do The Opposite

Readers will know that I’m no fan of California’s Revised Uniform Limited Liability Company Act (aka CARULLCA).  As originally enacted, the law was rife with technical errors.  As the legislature continues to tinker with the CARULLCA, it creates even more problems for existing California LLCs.  The legislature’s recent enactment of AB 1722 (Wagner) is yet another dispiriting legislative “fix” that is likely to increase, rather than…

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Contractors Do It, PIs Do It; Why Not Real Estate Brokers?

Individuals and corporations, but not limited liability companies, may be licensed as real estate brokers under the California Real Estate Law.  This is a result of a bargain reached when California’s enacted its first limited liability company law – the Beverly-Killea Act.  In order to overcome the objection of the California Trial Lawyers Association, the act proscribed…

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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. …

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Is a Trustee Ever Just A Trustee?

Trusts are confusing.  Fundamentally, a trust describes a relationship, not a person.  Thus, the California Supreme Court has described a trust as “a fiduciary relationship with respect to property in which the person holding legal title to the property — the trustee — has an equitable obligation to manage the property for the benefit of another — the…

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SEC Alleges LLC Names Were “Deceptively Similar”, But What Would The California SOS Do?

Yesterday, the SEC announced that it had filed a complaint against a securities professional alleging that he had defrauded “two institutions he solicited to invest in a shell company he controlled whose name was deceptively similar to that of a legitimate private equity fund.”  (The SEC likes to say that it “charges” defendants, but it…

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Senator Introduces Bill To Allow LLCs To Be Licensed As Real Estate Brokers

Section 17701.04(b) of the California Corporations Code provides: A limited liability company may have any lawful purpose, regardless of whether for profit, except the banking business, the business of issuing policies of insurance and assuming insurance risks, or the trust company business. A domestic or foreign limited liability company may render services that may be…

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California Member Rights To Inspect Delaware LLC Records

A Delaware limited liability company might reasonably expect that Section 18-305 of Title 6 of the Delaware Code governs the inspection rights of its members.  However, members of a foreign LLC, including an LLC organized under Delaware law, may have inspection rights under California’s Revised Uniform Limited Liability Company Act.  Section 17708.o8 of the California Corporations…

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What Vote Should Be Required To Pull The Plug On An LLC?

There are three paths to dissolution under California’s Revised Uniform Limited Liability Company Act (RULLCA).  First, an event of dissolution set forth in a written operating agreement or the articles of organization may occur.  Cal. Corp. Code § 17707.01(a).  Second, ninety consecutive days may pass during which the limited liability company has no members.  Cal. Corp. Code § 17707.01(c).…

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