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California Court Green Lights Reverse Veil Piercing Of Delaware LLC

Courts historically have applied the alter ego doctrine to “pierce the corporate veil” so that a shareholder may be held liable for the debts or conduct of the corporation.  California has extended the possibility of alter ego liability to members of California limited liability companies: A member of a limited liability company shall be subject to…

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Court Declines To Impose Alter Ego Liability On LLC’s President

In general, the debts, obligations, or other liabilities of a California limited liability company do not become the debts, obligations, or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager for the LLC.  Cal. Corp. Code § 17703.04(a).  An important exception to this…

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How Will The Courts Interpret This?

I recently commented on the awkwardness of Subdivisions (a) and (b) Corporations Code Section 17703.04 that seemingly are intended to establish that the members of an LLC aren’t liable qua members for the obligations of the LLC.  The statute also includes the following provision: Nothing in this section [17703.04]  shall be construed to affect the…

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California’s New RULLCA Provides Ample Potential For Member Liability

Recently, I wrote about Corporations Code Section 17703.04(a) which in singularly inept fashion attempts to establish the non-liability of members of a limited liability company under the California’s new Revised Uniform Limited Liability Company Act.  Whatever principle Section 17703.04(a) may be trying to enunciate, it’s clear that the new act provides ample opportunity for member liability, including the following: Liability…

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What Exactly Was The Legislature Trying To Say?

Section 17703.04(a) is one of many bizarre provisions in California’s new Revised Uniform Limited Liability Company Act: (a) All of the following apply to debts, obligations, or other liabilities of a limited liability company, whether arising in contract, tort, or otherwise: (1) They are solely the debts, obligations, or other liabilities of the limited liability company to…

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