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CALIFORNIA CORPORATE & SECURITIES LAW

Fiduciary Duties And The Nevada LLC

Recently, UCLA Law School Professor Stephen Bainbridge posted this response to the question of “How far will Delaware courts allow an agreement to permit self-dealing in an LLC?”  How would this question be answered with respect to a Nevada limited liability company? Like Delaware, Nevada explicitly favors both freedom of contract and enforceability when it comes…

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Some Important Bills To Watch Tomorrow

Tomorrow, the Assembly Judiciary Committee will hear several important bills that passed out of the Senate:  SB 323 (Vargas) – This bill would enact the California Revised Uniform Limited Liability Company Act to supersede the Beverly-Killea Limited Liability Company Act.  The bill purports to repeal the Beverly-Killea Act but this presents a constitutional issue because the legislature failed…

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Is “Corporation” Spelt “LLC”?

When I first started practicing law, the idea of the limited liability company had yet to be birthed.  A decade later, I co-authored an article speculating on whether California would enact a limited liability company law: Are Limited Liability Companies Coming to California? 13 CEB California Business Law Reporter 135 (1991).  Five years later, I participated in the…

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Nevada Supreme Court Clarifies Status of LLC Charging Orders

Last week, the Nevada Supreme Court analyzed the rights of a judgment creditor of a member/manager of a limited liability company.  In Weddell v. H2O, Inc., 2012 Nev. LEXIS 26 (March 1, 2012), the court reviewed the development of Nevada’s LLC legislation and provided a historical overview of the charging order remedy, citing my book, Bishop…

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Digital Collaboration In Entity Formation May Soon Come To Nevada

Earlier this week, Nevada Secretary of State Ross Miller announced an invitation for bids to produce a comprehensive review of legal requirements for a digital model operating agreement for limited liability companies.  Never having heard of a digital model operating agreement, I read further. According to the Secretary of State, Harvard’s Berkman Center for Internet & Society developed the digital…

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Court of Appeal Holds That Employee Indemnification Statute Does Not Reach “First Party” Lawsuits

If you ask a corporate law attorney about indemnification of officers and other corporate agents, she will likely steer you to Corporations Code § 317.  Ask an employment law attorney the same question, and she will likely refer you to Labor Code § 2802.  In Nicholas Laboratories, LLC v. Chen, 4th Dist. Ct. Appeal Case No. G044105 (Oct.…

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Corporate Ownership Disclosure Again In The Crosshairs

Nevada Secretary of State Announces Task Force Last month, Nevada Secretary of State Ross Miller announced the formation of a task force to investigate registered Nevada business entities that are suspected of being involved in illegal activities including tax evasion, money laundering, securities violations, and the marketing of shell or shelf companies for fraudulent and/or…

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The Missing Link In LLC Formations

When a corporation is formed under the California General Corporation Law, an incorporator (or incorporators) signs the initial articles of incorporation and files them with the California Secretary of State.  Corporations Code § 200(a).  The articles may, but are not required to, name the initial directors.  Corporations Code § 204(c).  If directors are named, then they…

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LLCs May Have An Occupation But Usually Not A Profession

California requires a permit, license or registration to engage in a wide variety of activities.  The CalGOLD (California Government On-line to Desktops) website allows you to search 147 different business types that require some form of permit, license or registration.  The site lists everything from Acupuncture to Wrecking and Demolition Contractor.  When the legislature enacted the…

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The CSL And Membership Interests In LLCs

Two decades ago, Bob Rizzi and I wrote an article for the California Business Law Reporter asking whether limited liability company legislation would ever be enacted in California.  Only three years later, California enacted the Beverly-Killea Limited Liability Company Act, Corporations Code Section 17000 et seq.  Stats. 1994, c. 1200 (SB 469). As a member of…

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