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CALIFORNIA CORPORATE & SECURITIES LAW

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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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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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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Bill Would Clarify When Limited Partnership Life Begins

When does life begin for a California limited partnership?  The California Uniform Limited Partnership Act of 2008 seems to provide inconsistent answers.  The first is found in Corporations Code Section 15902.01(a). In order for a limited partnership to be formed, a certificate of limited partnership must be filed with and on a form prescribed by the Secretary…

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Unregistered Foreign LLCs – Are They In Violation?

The California Revised Uniform Limited Liability Company Act (RULLCA), which took effect on January 1 of last year, is fraught with drafting mysteries.  Why, for example, did the legislature deem it necessary to change the default rules with respect to whether a California LLC is member-managed or manager-managed?  See Why A Form LLC-1 May Be Only…

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New LLC Act May Curtail Authority Of Managers Of Pre-Existing LLCs

California’s Revised Uniform Limited Liability Company Act (RULLCA) took effect on the first of this year.  The RULLCA repealed California’s first LLC law – the Beverly-Killea Limited Liability Company Act.  The forced subjugation of pre-existing LLCs to the RULLCA is subject to constitutional question.  See Legislature Shuts The Barn Door After The Horse Has Bolted And Then…

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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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How Confused Is This? California Defines LLCs Subject To New Law To Include Foreign LLCs

The California Revised Uniform Limited Liability Company Act. which took effect on January 1 of this year, provides the statutory framework for the formation and operation of limited liability companies.  The law appears to distinguish between a “limited liability company” and a “foreign limited liability company”.  As might be expected, a “limited liability company” is defined…

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This Legislative Lacuna Looms Large In RULLCA

I expect that most limited liability company operating agreements specify how profits and losses are to be allocated among members.  Sometimes, they may not.  The now repealed Beverly-Killea Act provided a default provision for just this contingency, former Corp. Code § 17202.  A similar default rule can be found in the California Revised Uniform Limited Partnership…

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