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CALIFORNIA CORPORATE & SECURITIES LAW

Governor Signs Bill Aimed At Fixing CARULLCA

Readers of this blog will know that I’ve been censorious of California’s Revised Uniform Limited Liability Company Act (CARULLCA), Corporations Code §§ 17701.01 – 17713.13.  The Partnership and Limited Liability Companies Committee of the Business Law Section of the California State Bar recognized the flaws in CARULLCA and worked on a bill, AB 506 (Maienschein), to fix its multifarious problems.…

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Court Sorts Out California RULLCA Transition Muddle

Yesterday, I wrote about Kennedy v. Kennedy, 2015 Cal. App. LEXIS 329 (Apr. 20, 2015).  That post discussed the Court of Appeal’s holding that under the General Corporation Law the dismissal of a cause of action for involuntary dissolution with prejudice vitiates any right to buy out the shareholder seeking dissolution.  The plaintiff, however, also…

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Court Of Appeal Embraces De Facto LLC Dissolution

Under the former Beverly-Killea Limited Liability Company Act, a limited liability company was dissolved upon the first to occur of any of the following three events: The occurrence of an event specified in its governing documents; A majority vote of the members to dissolve; or A judicial decree of dissolution. Cal. Corp. Code § 17350…

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Californians To Vote On Stripping Common Cause Of Its First Amendment Rights

I recently wrote about SB 1272 (Lieu) which calls a special election for this November 4 at which California voters will be able to cast an advisory vote on whether the U.S. Constitution should be amended to overturn the U.S. Supreme Court’s holding in Citizens United v. Federal Election Commission, 130 S.Ct. 876 (2010).  Last week, Governor…

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This Volte-Face Might Prove Problematical For LLCs

Under the Beverly-Killea Limited Liability Company Act, the articles of organization prevailed over conflicting provisions of a written operating agreement.  Cal. Corp. Code § 17005(f) (repealed).  The drafters of the California Revised Uniform Limited Liability Company Act marched to the beat of their own drummer.  In Corporations Code Section 17701.12(d) they provided that in the case of…

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Defendants Owed No Duty, But Still Liable

In Am. Master Lease Llc v. Idanta, 2014 Cal. App. LEXIS 402 (Cal. Ct. App. 2014), the Second District Court of Appeal resolved the following four questions: Can a defendant be liable for aiding and abetting breach of fiduciary duty without owing the plaintiff a fiduciary duty? Answer: Yes What is the statute of limitations…

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Legislature Shuts The Barn Door After The Horse Has Bolted And Then Burns Down The Barn

Not many people use horses as a means of transportation in the U.S. anymore, but numerous horse related expressions and aphorisms persist in everyday speech, including: Don’t look a gift horse in the mouth; You can lead a horse to water but you can’t make it drink; A wink is as good as a nod…

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Secretary Of State Changes Forms And Procedures For LLC Filings

Novelty does not mean better.  With the change from 2013 to 2014, California repealed, albeit unconstitutionally, the Beverly-Killea Limited Liability Company Act (former California Corporations Code sections 17000 – 17657), and installed in its place the California Revised Uniform Limited Liability Company Act” (California Corporations Code sections 17701.01 – 17713.13).  See California’s New LLC Act – Call…

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When The RULLCA Is Spun, California’s Done?

I’ve prophesized at some length about the looming catastrophe that is the California Revised Uniform Limited Liability Company Act, Cal. Corp. Code § 17701.01 et seq.  My problem isn’t with the RULLCA itself, but with the transition being forced on LLCs formed under the current Beverly-Killea Limited Liability Company Act, Cal. Corp. Code § 17000…

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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…

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