BILL NUMBER: AB 339 CHAPTERED
BILL TEXT
CHAPTER 495
FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2006
APPROVED BY GOVERNOR SEPTEMBER 27, 2006
PASSED THE ASSEMBLY AUGUST 31, 2006
PASSED THE SENATE AUGUST 29, 2006
AMENDED IN SENATE AUGUST 28, 2006
AMENDED IN SENATE AUGUST 17, 2006
AMENDED IN SENATE AUGUST 8, 2006
AMENDED IN SENATE AUGUST 7, 2006
AMENDED IN SENATE JUNE 26, 2006
AMENDED IN SENATE JUNE 8, 2006
AMENDED IN SENATE MAY 24, 2005
AMENDED IN ASSEMBLY MAY 2, 2005
AMENDED IN ASSEMBLY APRIL 11, 2005
INTRODUCED BY Assembly Member Harman
FEBRUARY 10, 2005
An act to amend Sections 16601, 16602.5, and 17900 of the Business
and Professions Code, to amend Sections 167.5, 171.05, 1107.5, 1113,
1152, 1157, 2113, 6019.1, 6020.5, 8019.1, 8020.5, 12540.1, 12550.5,
15800, 16101, 16901, 16903, 16908, 16911, 16915.5, 17001, 17540.3,
17540.8, 17554.5, 17555, and 25005.1 of, to add Chapter 5.5
(commencing with Section 15900) to Title 2 of, and to add and repeal
Sections 15534 and 15724 of, the Corporations Code, to amend Section
12197 of, and to repeal and add Section 12188 of, the Government
Code, and to amend Section 17935 of the Revenue and Taxation Code,
relating to business entities.
LEGISLATIVE COUNSEL'S DIGEST
AB 339, Harman Limited partnerships and limited liability
companies.
Existing law sets forth rules of organization and governance for
limited partnerships.
This bill would revise and recast these provisions by enacting the
Limited Partnership Act of 2008 and would repeal the existing
provisions for limited partnerships on January 1, 2010. The bill
would make other related changes.
Existing law authorizes a person who sells all or substantially
all of the assets of, or the goodwill of, a business entity,
including a limited liability company, to agree to refrain from
carrying on a similar business within a specified geographic area, as
specified. Existing law similarly authorizes a member of a limited
liability company to make such an agreement upon or in anticipation
of a dissolution of the company.
This bill would make a technical change to these provisions with
respect to limited liability companies.
This bill would incorporate additional changes to Section 16101 of
the Corporations Code, proposed by AB 2914, to be operative only if
AB 2914 and this bill are both chaptered and become effective on or
before January 1, 2007, and this bill is chaptered last.
This bill would incorporate additional changes to Sections 1107.5,
1113, 6019.1, 6020.5, 8019.1, 8020.5, 12540.1, 12550.5, 16915.5, and
17554.5, of the Corporations Code, proposed by AB 2341, to be
operative only if AB 2341 and this bill are both chaptered and become
effective on or before January 1, 2007, but AB 2341 becomes
operative first, and this bill is chaptered last.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 16601 of the Business and Professions Code is
amended to read:
16601. Any person who sells the goodwill of a business, or any
owner of a business entity selling or otherwise disposing of all of
his or her ownership interest in the business entity, or any owner of
a business entity that sells (a) all or substantially all of its
operating assets together with the goodwill of the business entity,
(b) all or substantially all of the operating assets of a division or
a subsidiary of the business entity together with the goodwill of
that division or subsidiary, or (c) all of the ownership interest of
any subsidiary, may agree with the buyer to refrain from carrying on
a similar business within a specified geographic area in which the
business so sold, or that of the business entity, division, or
subsidiary has been carried on, so long as the buyer, or any person
deriving title to the goodwill or ownership interest from the buyer,
carries on a like business therein.
For the purposes of this section, "business entity" means any
partnership (including a limited partnership or a limited liability
partnership), limited liability company (including a series of a
limited liability company formed under the laws of a jurisdiction
that recognizes such a series), or corporation.
For the purposes of this section, "owner of a business entity"
means any partner, in the case of a business entity that is a
partnership (including a limited partnership or a limited liability
partnership), or any member, in the case of a business entity that is
a limited liability company (including a series of a limited
liability company formed under the laws of a jurisdiction that
recognizes such a series), or any owner of capital stock, in the case
of a business entity that is a corporation.
For the purposes of this section, "ownership interest" means a
partnership interest, in the case of a business entity that is a
partnership (including a limited partnership a limited liability
partnership), a membership interest, in the case of a business entity
that is a limited liability company (including a series of a limited
liability company formed under the laws of a jurisdiction that
recognizes such a series), or a capital stockholder, in the case of a
business entity that is a corporation.
For the purposes of this section, "subsidiary" means any business
entity over which the selling business entity has voting control or
from which the selling business entity has a right to receive a
majority share of distributions upon dissolution or other liquidation
of the business entity (or has both voting control and a right to
receive these distributions.)
SEC. 2. Section 16602.5 of the Business and Professions Code is
amended to read:
16602.5. Any member may, upon or in anticipation of a dissolution
of, or the termination of his or her interest in, a limited
liability company (including a series of a limited liability company
formed under the laws of a jurisdiction recognizing such a series),
agree that he or she or it will not carry on a similar business
within a specified geographic area where the limited liability
company business has been transacted, so long as any other member of
the limited liability company, or any person deriving title to the
business or its goodwill from any such other member of the limited
liability company, carries on a like business therein.
SEC. 3. Section 17900 of the Business and Professions Code is
amended to read:
17900. (a) As used in this chapter, "fictitious business name"
means:
(1) In the case of an individual, a name that does not include the
surname of the individual or a name that suggests the existence of
additional owners.
(2) In the case of a partnership or other association of persons,
other than a limited partnership that has filed a certificate of
limited partnership with the Secretary of State pursuant to Section
15621 or 15902.01 of the Corporations Code, a foreign limited
partnership that has filed an application for registration with the
Secretary of State pursuant to Section 15692 or 15909.02 of the
Corporations Code, a registered limited liability partnership that
has filed a registration pursuant to Section 15049 or 16953 of the
Corporations Code, or a foreign limited liability partnership that
has filed an application for registration pursuant to Section 15055
or 16959 of the Corporations Code, a name that does not include the
surname of each general partner or a name that suggests the existence
of additional owners.
(3) In the case of a corporation, any name other than the
corporate name stated in its articles of incorporation.
(4) In the case of a limited partnership that has filed a
certificate of limited partnership with the Secretary of State
pursuant to Section 15621 or 15902.01 of the Corporations Code and in
the case of a foreign limited partnership that has filed an
application for registration with the Secretary of State pursuant to
Section 15692 or 15902.02 of the Corporations Code, any name other
than the name of the limited partnership as on file with the
Secretary of State.
(5) In the case of a limited liability company, any name other
than the name stated in its articles of organization and in the case
of a foreign limited liability company that has filed an application
for registration with the Secretary of State pursuant to Section
17451 of the Corporations Code, any name other than the name of the
limited liability company as on file with the Secretary of State.
(b) A name that suggests the existence of additional owners within
the meaning of subdivision (a) is one which includes such words as
"Company," "& Company," "& Son," "& Sons," "& Associates," "Brothers,"
and the like, but not words that merely describe the business being
conducted.
SEC. 4. Section 167.5 of the Corporations Code is amended to read:
167.5. "Domestic limited partnership" means any limited
partnership formed under the laws of this state.
SEC. 5. Section 171.05 of the Corporations Code is amended to
read:
171.05. "Foreign limited partnership" means any limited
partnership, including a limited liability limited partnership,
formed under the laws of any state other than this state or of the
District of Columbia or under the laws of a foreign country.
SEC. 6. Section 1107.5 of the Corporations Code is amended to
read:
1107.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) Notwithstanding Sections 1103, 1108, 1110, 1113, 6014, 6018,
6019.1, 8014, 8018, 8019.1, 12535, 12539, 12540.1, 15678.4, 15911.14,
and 17552 of this code and Sections 17945, 17948.1, and 23334 of the
Revenue and Taxation Code, if the surviving entity is a domestic
limited liability company, domestic corporation, or registered
limited liability partnership or a foreign limited liability company,
foreign limited liability partnership, or foreign corporation that
is registered or qualified to do business in California, the
Secretary of State shall file the merger without the certificate of
satisfaction of the Franchise Tax Board and shall notify the
Franchise Tax Board of the merger.
SEC. 6.5. Section 1107.5 of the Corporations Code is amended to
read:
1107.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) If the surviving entity is a domestic limited liability
company, domestic corporation, or registered limited liability
partnership or a foreign limited liability company, foreign limited
liability partnership, or foreign corporation that is registered or
qualified to do business in California, the Secretary of State shall
notify the Franchise Tax Board of the merger.
SEC. 7. Section 1113 of the Corporations Code is amended to read:
1113. (a) Any one or more corporations may merge with one or more
other business entities (Section 174.5). One or more domestic
corporations (Section 167) not organized under this division and one
or more foreign corporations (Section 171) may be parties to the
merger. Notwithstanding the provisions of this section, the merger of
any number of corporations with any number of other business
entities may be effected only if:
(1) In a merger in which a domestic corporation not organized
under this division or a domestic other business entity is a party,
it is authorized by the laws under which it is organized to effect
the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve, and shall be a party to, an agreement of merger. Other
persons, including a parent party (Section 1200), may be parties to
the agreement of merger. The board of each corporation which desires
to merge, and, if required the shareholders, shall approve the
agreement of merger. The agreement of merger shall be approved on
behalf of each party by those persons required to approve the merger
by the laws under which it is organized. The agreement of merger
shall state:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party to the merger and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 900 and 907, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. If any amendment changes the name of the
surviving corporation, if applicable, the new name may be, subject to
subdivision (b) of Section 201, the same as or similar to the name
of a disappearing party to the merger.
(4) The manner of converting the shares of each constituent
corporation into shares, interests, or other securities of the
surviving party. If any shares of any constituent corporation are not
to be converted solely into shares, interests or other securities of
the surviving party, the agreement of merger shall state (i) the
cash, rights, securities, or other property which the holders of
those shares are to receive in exchange for the shares, which cash,
rights, securities, or other property may be in addition to or in
lieu of shares, interests or other securities of the surviving party,
or (ii) that the shares are canceled without consideration.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a public
benefit corporation or a religious corporation is a party to the
merger, Section 6019.1, or, if a mutual benefit corporation is a
party to the merger, Section 8019.1, or, if a consumer cooperative
corporation is a party to the merger, Section 12540.1, or, if a
domestic limited partnership is a party to the merger, Section
15678.2 or 15911.12, or, if a domestic partnership is a party to the
merger, Section 16911, or, if a domestic limited liability company is
a party to the merger, Section 17551.
(6) Any other details or provisions as are desired, including,
without limitation, a provision for the payment of cash in lieu of
fractional shares or for any other arrangement with respect thereto
consistent with the provisions of Section 407.
(c) Each share of the same class or series of any constituent
corporation (other than the cancellation of shares held by a party to
the merger or its parent, or a wholly owned subsidiary of either, in
another constituent corporation) shall, unless all shareholders of
the class or series consent and except as provided in Section 407, be
treated equally with respect to any distribution of cash, rights,
securities, or other property. Notwithstanding paragraph (4) of
subdivision (b), the unredeemable common shares of a constituent
corporation may be converted only into unredeemable common shares of
a surviving corporation or a parent party (Section 1200) or
unredeemable equity securities of a surviving party other than a
corporation if another party to the merger or its parent owns,
directly or indirectly, prior to the merger shares of that
corporation representing more than 50 percent of the voting power of
that corporation, unless all of the shareholders of the class consent
and except as provided in Section 407.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger or the
certificate of merger, as is applicable, if the amendment is approved
by the board of each constituent corporation and, if the amendment
changes any of the principal terms of the agreement, by the
outstanding shares (Section 152), if required by Chapter 12
(commencing with Section 1200), in the same manner as the original
agreement of merger. If the agreement of merger as so amended and
approved is also approved by each of the other parties to the
agreement of merger, the agreement of merger as so amended shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the outstanding shares (Section 152), at
any time before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president or a vice president
and also by its secretary or an assistant secretary acting on behalf
of their respective corporations.
(g) (1) If the surviving party is a corporation or a foreign
corporation, or if a public benefit corporation (Section 5060), a
mutual benefit corporation (Section 5059), a religious corporation
(Section 5061), or a corporation organized under the Consumer
Cooperative Corporation Law (Section 12200) is a party to the merger,
after required approvals of the merger by each constituent
corporation through approval of the board (Section 151) and any
approval of the outstanding shares (Section 152) required by Chapter
12 (commencing with Section 1200) and by the other parties to the
merger, the surviving party shall file a copy of the agreement of
merger with an officers' certificate of each constituent domestic and
foreign corporation attached stating the total number of outstanding
shares or membership interests of each class entitled to vote on the
merger (and identifying any other person or persons whose approval
is required), that the agreement of merger in the form attached or
its principal terms, as required, were approved by that corporation
by a vote of a number of shares or membership interests of each class
that equaled or exceeded the vote required, specifying each class
entitled to vote and the percentage vote required of each class and,
if applicable, by that other person or persons whose approval is
required, or that the merger agreement was entitled to be and was
approved by the board alone (as provided in Section 1201, in the case
of corporations subject to that section). If equity securities of a
parent party (Section 1200) are to be issued in the merger, the
officers' certificate of that controlled party shall state either
that no vote of the shareholders of the parent party was required or
that the required vote was obtained. In lieu of an officers'
certificate, a certificate of merger, on a form prescribed by the
Secretary of State, shall be filed for each constituent other
business entity. The certificate of merger shall be executed and
acknowledged by each domestic constituent limited liability company
by all managers of the limited liability company (unless a lesser
number is specified in its articles of organization or operating
agreement) and by each domestic constituent limited partnership by
all general partners (unless a lesser number is provided in its
certificate of limited partnership or partnership agreement) and by
each domestic constituent general partnership by two partners (unless
a lesser number is provided in its partnership agreement) and by
each foreign constituent limited liability company by one or more
managers and by each foreign constituent general partnership or
foreign constituent limited partnership by one or more general
partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed those officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for that
party the provision of law or other basis for the authority of the
signing persons. The certificate of merger shall set forth, if a vote
of the shareholders, members, partners, or other holders of
interests of the constituent other business entity was required, a
statement setting forth the total number of outstanding interests of
each class entitled to vote on the merger and that the agreement of
merger in the form attached or its principal terms, as required, were
approved by a vote of the number of interests of each class that
equaled or exceeded the vote required, specifying each class entitled
to vote and the percentage vote required of each class, and any
other information required to be set forth under the laws under which
the constituent other business entity is organized, including, if a
domestic limited partnership is a party to the merger, subdivision
(a) of Section 15678.4 or subdivision (a) of Section 15911.14, if a
domestic partnership is a party to the merger, subdivision (b) of
Section 16915, and, if a domestic limited liability company is a
party to the merger, subdivision (a) of Section 17552. The
certificate of merger for each constituent foreign other business
entity, if any, shall also set forth the statutory or other basis
under which that foreign other business entity is authorized by the
laws under which it is organized to effect the merger. The merger and
any amendment of the articles of the surviving corporation, if
applicable, contained in the agreement of merger shall be effective
upon filing of the agreement of merger with an officer's certificate
of each constituent domestic and foreign corporation and a
certificate of merger for each constituent other business entity,
subject to subdivision (c) of Section 110 and subject to the
provisions of subdivision (j), and the several parties thereto shall
be one entity. The agreement of merger shall not be filed, however,
until there has been filed by or on behalf of each party to the
merger taxed under the Corporation Tax Law, the existence of which is
terminated by the merger, the certificate of satisfaction of the
Franchise Tax Board that all taxes imposed by that law have been paid
or secured. If a domestic reciprocal insurer organized after 1974 to
provide medical malpractice insurance is a party to the merger, the
agreement of merger or certificate of merger shall not be filed until
there has been filed the certificate issued by the Insurance
Commissioner approving the merger pursuant to Section 1555 of the
Insurance Code. The Secretary of State may certify a copy of the
agreement of merger separate from the officers' certificates and
certificates of merger attached thereto.
(2) If the surviving entity is an other business entity, and no
public benefit corporation (Section 5060), mutual benefit corporation
(Section 5059), religious corporation (Section 5061), or corporation
organized under the Consumer Cooperative Corporation Law (Section
12200) is a party to the merger, after required approvals of the
merger by each constituent corporation through approval of the board
(Section 151) and any approval of the outstanding shares (Section
152) required by Chapter 12 (commencing with Section 1200) and by the
other parties to the merger, the parties to the merger shall file a
certificate of merger in the office of, and on a form prescribed by,
the Secretary of State. The certificate of merger shall be executed
and acknowledged by each constituent domestic and foreign corporation
by its chairperson of the board, president or a vice president and
also by its secretary or an assistant secretary and by each domestic
constituent limited liability company by all managers of the limited
liability company (unless a lesser number is specified in its
articles of organization or operating agreement) and by each domestic
constituent limited partnership by all general partners (unless a
lesser number is provided in its certificate of limited partnership
or partnership agreement) and by each domestic constituent general
partnership by two partners (unless a lesser number is provided in
its partnership agreement) and by each foreign constituent limited
liability company by one or more managers and by each foreign
constituent general partnership or foreign constituent limited
partnership by one or more general partners, and by each constituent
reciprocal insurer by the chairperson of the board, president, or
vice president, and by the secretary or assistant secretary, or, if a
constituent reciprocal insurer has not appointed those officers, by
the chairperson of the board, president, or vice president, and by
the secretary or assistant secretary of the constituent reciprocal
insurer's attorney-in-fact. The certificate of merger shall be signed
by each other party to the merger by those persons required or
authorized to execute the certificate of merger by the laws under
which that party is organized, specifying for that party the
provision of law or other basis for the authority of the signing
persons. The certificate of merger shall set forth all of the
following:
(A) The name, place of incorporation or organization, and the
Secretary of State's file number, if any, of each party to the
merger, separately identifying the disappearing parties and the
surviving party.
(B) If the approval of the outstanding shares of a constituent
corporation was required by Chapter 12 (commencing with Section
1200), a statement setting forth the total number of outstanding
shares of each class entitled to vote on the merger and that the
principal terms of the agreement of merger were approved by a vote of
the number of shares of each class entitled to vote and the
percentage vote required of each class.
(C) The future effective date or time, not more than 90 days
subsequent to the date of filing of the merger, if the merger is not
to be effective upon the filing of the certificate of merger with the
office of the Secretary of State.
(D) A statement, by each party to the merger which is a domestic
corporation not organized under this division, a foreign corporation,
or an other business entity, of the statutory or other basis under
which that party is authorized by the laws under which it is
organized to effect the merger.
(E) Any other information required to be stated in the certificate
of merger by the laws under which each party to the merger is
organized, including, if a domestic limited liability company is a
party to the merger, subdivision (a) of Section 17552, if a domestic
partnership is a party to the merger, subdivision (b) of Section
16915, and, if a domestic limited partnership is a party to the
merger, subdivision (a) of Section 15678.4 or subdivision (a) of
Section 15911.14.
(F) Any other details or provisions that may be desired.
Unless a future effective date or time is provided in a
certificate of merger, in which event the merger shall be effective
at that future effective date or time, a merger shall be effective
upon the filing of the certificate of merger in the office of the
Secretary of State and the several parties thereto shall be one
entity. The certificate of merger shall not be filed, however, until
there has been filed by or on behalf of each party to the merger that
is taxed under the Corporation Tax Law, the existence of which is
terminated by the merger, the certificate of satisfaction of the
Franchise Tax Board that all taxes imposed by the Corporation Tax Law
have been paid or secured. The surviving other business entity
shall keep a copy of the agreement of merger at its principal place
of business which, for purposes of this subdivision, shall be the
office referred to in Section 17057 if a domestic limited liability
company, at the business address specified in paragraph (5) of
subdivision (a) of Section 17552 if a foreign limited liability
company, at the office referred to in subdivision (a) of Section
16403 if a domestic general partnership, at the business address
specified in subdivision (f) of Section 16911 if a foreign
partnership, at the office referred to in subdivision (a) of Section
15614 or in subdivision (a) of Section 15901.14 if a domestic limited
partnership, or at the business address specified in paragraph (5)
of subdivision (a) of Section 15678.4 or in paragraph (3) of
subdivision (a) of Section 15909.02 if a foreign limited partnership.
Upon the request of a holder of equity securities of a party to the
merger, a person with authority to do so on behalf of the surviving
other business entity shall promptly deliver to that holder,
a copy of the agreement of merger.
A waiver by that holder of the rights provided in the foregoing
sentence shall be unenforceable. If a domestic reciprocal insurer
organized after 1974 to provide medical malpractice insurance is a
party to the merger, the agreement of merger or certificate of merger
shall not be filed until there has been filed the certificate issued
by the Insurance Commissioner approving the merger in accordance
with Section 1555 of the Insurance Code.
(h) (1) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger and the performance of the conditions necessary
to the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger.
(2) For all purposes for a merger in which the surviving entity is
a domestic other business entity and the filing of a certificate of
merger is required by paragraph (2) of subdivision (g), a copy of the
certificate of merger duly certified by the Secretary of State is
conclusive evidence of the merger of the constituent corporations,
either by themselves or together with the other parties to the
merger, into the surviving other business entity.
(i) (1) Upon a merger pursuant to this section, the separate
existences of the disappearing parties to the merger cease and the
surviving party to the merger shall succeed, without other transfer,
to all the rights and property of each of the disappearing parties to
the merger and shall be subject to all the debts and liabilities of
each in the same manner as if the surviving party to the merger had
itself incurred them.
(2) All rights of creditors and all liens upon the property of
each of the constituent corporations and other parties to the merger
shall be preserved unimpaired, provided that those liens upon
property of a disappearing party shall be limited to the property
affected thereby immediately prior to the time the merger is
effective.
(3) Any action or proceeding pending by or against any
disappearing corporation or disappearing party to the merger may be
prosecuted to judgment, which shall bind the surviving party, or the
surviving party may be proceeded against or substituted in its place.
(4) If a limited partnership or a general partnership is a party
to the merger, nothing in this section is intended to affect the
liability a general partner of a disappearing limited partnership or
general partnership may have in connection with the debts and
liabilities of the disappearing limited partnership or general
partnership existing prior to the time the merger is effective.
(j) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivision (a) and this subdivision.
(2) If the surviving party is a domestic corporation or domestic
other business entity, the merger proceedings with respect to that
party and any domestic disappearing corporation shall conform to the
provisions of this section. If the surviving party is a foreign
corporation or foreign other business entity, then, subject to the
requirements of subdivision (c), and of Section 407 and Chapter 12
(commencing with Section 1200) and Chapter 13 (commencing with
Section 1300), and, if applicable, corresponding provisions of the
Nonprofit Corporation Law or the Consumer Cooperative Corporation
Law, with respect to any domestic constituent corporations, Chapter
13 (commencing with Section 17600) of Title 2.5 with respect to any
domestic constituent limited liability companies, Article 6
(commencing with Section 16601) of Chapter 5 of Title 2 with respect
to any domestic constituent general partnerships, and Article 7.6
(commencing with Section 15679.1) of Chapter 3, and Article 11.5
(commencing with Section 15911.20) of Chapter 5.5, of Title 2 with
respect to any domestic constituent limited partnerships, the merger
proceedings may be in accordance with the laws of the state or place
of incorporation or organization of the surviving party.
(3) If the surviving party is a domestic corporation or domestic
other business entity, the certificate of merger or the agreement of
merger with attachments shall be filed as provided in subdivision (g)
and thereupon, subject to subdivision (c) of Section 110 or
paragraph (2) of subdivision (g), as is applicable, the merger shall
be effective as to each domestic constituent corporation and domestic
constituent other business entity.
(4) If the surviving party is a foreign corporation or foreign
other business entity, the merger shall become effective in
accordance with the law of the jurisdiction in which the surviving
party is organized, but, except as provided in paragraph (5), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of each constituent foreign and domestic
corporation and a certificate of merger of each constituent other
business entity attached, which officers' certificates and
certificates of merger shall conform to the requirements of paragraph
(1) of subdivision (g). If one or more domestic other business
entities is a disappearing party in a merger pursuant to this
subdivision in which a foreign other business entity is the surviving
entity, a certificate of merger required by the laws under which
that domestic other business entity is organized, including
subdivision (a) of Section 15678.4, subdivision (a) of Section
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17552, as is applicable, shall also be filed at the same time
as the filing of the agreement of merger.
(5) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(6) In a merger described in paragraph (3) or (4), each foreign
disappearing corporation that is qualified for the transaction of
intrastate business shall by virtue of the filing pursuant to this
subdivision, subject to subdivision (c) of Section 110, automatically
surrender its right to transact intrastate business in this state.
The filing of the agreement of merger or certificate of merger, as is
applicable, pursuant to this subdivision, by a disappearing foreign
other business entity registered for the transaction of intrastate
business in this state shall, by virtue of that filing, subject to
subdivision (c) of Section 110, automatically cancels the
registration for that foreign other business entity, without the
necessity of the filing of a certificate of cancellation.
(7) A certificate of satisfaction of the Franchise Tax Board for
each disappearing party to the merger shall be filed when required by
subdivision (g) or when required by Section 23334 of the Revenue and
Taxation Code.
SEC. 7.5. Section 1113 of the Corporations Code is amended to
read:
1113. (a) Any one or more corporations may merge with one or more
other business entities (Section 174.5). One or more domestic
corporations (Section 167) not organized under this division and one
or more foreign corporations (Section 171) may be parties to the
merger. Notwithstanding the provisions of this section, the merger of
any number of corporations with any number of other business
entities may be effected only if:
(1) In a merger in which a domestic corporation not organized
under this division or a domestic other business entity is a party,
it is authorized by the laws under which it is organized to effect
the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve, and shall be a party to, an agreement of merger. Other
persons, including a parent party (Section 1200), may be parties to
the agreement of merger. The board of each corporation which desires
to merge, and, if required the shareholders, shall approve the
agreement of merger. The agreement of merger shall be approved on
behalf of each party by those persons required to approve the merger
by the laws under which it is organized. The agreement of merger
shall state:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party to the merger and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 900 and 907, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. If any amendment changes the name of the
surviving corporation, if applicable, the new name may be, subject to
subdivision (b) of Section 201, the same as or similar to the name
of a disappearing party to the merger.
(4) The manner of converting the shares of each constituent
corporation into shares, interests, or other securities of the
surviving party. If any shares of any constituent corporation are not
to be converted solely into shares, interests or other securities of
the surviving party, the agreement of merger shall state (i) the
cash, rights, securities, or other property which the holders of
those shares are to receive in exchange for the shares, which cash,
rights, securities, or other property may be in addition to or in
lieu of shares, interests or other securities of the surviving party,
or (ii) that the shares are canceled without consideration.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a public
benefit corporation or a religious corporation is a party to the
merger, Section 6019.1, or, if a mutual benefit corporation is a
party to the merger, Section 8019.1, or, if a consumer cooperative
corporation is a party to the merger, Section 12540.1, or, if a
domestic limited partnership is a party to the merger, Section
15678.2 or 15911.12, or, if a domestic partnership is a party to the
merger, Section 16911, or, if a domestic limited liability company is
a party to the merger, Section 17551.
(6) Any other details or provisions as are desired, including,
without limitation, a provision for the payment of cash in lieu of
fractional shares or for any other arrangement with respect thereto
consistent with the provisions of Section 407.
(c) Each share of the same class or series of any constituent
corporation (other than the cancellation of shares held by a party to
the merger or its parent, or a wholly owned subsidiary of either, in
another constituent corporation) shall, unless all shareholders of
the class or series consent and except as provided in Section 407, be
treated equally with respect to any distribution of cash, rights,
securities, or other property. Notwithstanding paragraph (4) of
subdivision (b), the unredeemable common shares of a constituent
corporation may be converted only into unredeemable common shares of
a surviving corporation or a parent party (Section 1200) or
unredeemable equity securities of a surviving party other than a
corporation if another party to the merger or its parent owns,
directly or indirectly, prior to the merger shares of that
corporation representing more than 50 percent of the voting power of
that corporation, unless all of the shareholders of the class consent
and except as provided in Section 407.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger or the
certificate of merger, as is applicable, if the amendment is approved
by the board of each constituent corporation and, if the amendment
changes any of the principal terms of the agreement, by the
outstanding shares (Section 152), if required by Chapter 12
(commencing with Section 1200), in the same manner as the original
agreement of merger. If the agreement of merger as so amended and
approved is also approved by each of the other parties to the
agreement of merger, the agreement of merger as so amended shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the outstanding shares (Section 152), at
any time before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president or a vice president
and also by its secretary or an assistant secretary acting on behalf
of their respective corporations.
(g) (1) If the surviving party is a corporation or a foreign
corporation, or if a public benefit corporation (Section 5060), a
mutual benefit corporation (Section 5059), a religious corporation
(Section 5061), or a corporation organized under the Consumer
Cooperative Corporation Law (Section 12200) is a party to the merger,
after required approvals of the merger by each constituent
corporation through approval of the board (Section 151) and any
approval of the outstanding shares (Section 152) required by Chapter
12 (commencing with Section 1200) and by the other parties to the
merger, the surviving party shall file a copy of the agreement of
merger with an officers' certificate of each constituent domestic and
foreign corporation attached stating the total number of outstanding
shares or membership interests of each class entitled to vote on the
merger (and identifying any other person or persons whose approval
is required), that the agreement of merger in the form attached or
its principal terms, as required, were approved by that corporation
by a vote of a number of shares or membership interests of each class
that equaled or exceeded the vote required, specifying each class
entitled to vote and the percentage vote required of each class and,
if applicable, by that other person or persons whose approval is
required, or that the merger agreement was entitled to be and was
approved by the board alone (as provided in Section 1201, in the case
of corporations subject to that section). If equity securities of a
parent party (Section 1200) are to be issued in the merger, the
officers' certificate of that controlled party shall state either
that no vote of the shareholders of the parent party was required or
that the required vote was obtained. In lieu of an officers'
certificate, a certificate of merger, on a form prescribed by the
Secretary of State, shall be filed for each constituent other
business entity. The certificate of merger shall be executed and
acknowledged by each domestic constituent limited liability company
by all managers of the limited liability company (unless a lesser
number is specified in its articles of organization or operating
agreement) and by each domestic constituent limited partnership by
all general partners (unless a lesser number is provided in its
certificate of limited partnership or partnership agreement) and by
each domestic constituent general partnership by two partners (unless
a lesser number is provided in its partnership agreement) and by
each foreign constituent limited liability company by one or more
managers and by each foreign constituent general partnership or
foreign constituent limited partnership by one or more general
partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed those officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for that
party the provision of law or other basis for the authority of the
signing persons. The certificate of merger shall set forth, if a vote
of the shareholders, members, partners, or other holders of
interests of the constituent other business entity was required, a
statement setting forth the total number of outstanding interests of
each class entitled to vote on the merger and that the agreement of
merger in the form attached or its principal terms, as required, were
approved by a vote of the number of interests of each class that
equaled or exceeded the vote required, specifying each class entitled
to vote and the percentage vote required of each class, and any
other information required to be set forth under the laws under which
the constituent other business entity is organized, including, if a
domestic limited partnership is a party to the merger, subdivision
(a) of Section 15678.4 or subdivision (a) of Section 15911.14, if a
domestic partnership is a party to the merger, subdivision (b) of
Section 16915, and, if a domestic limited liability company is a
party to the merger, subdivision (a) of Section 17552. The
certificate of merger for each constituent foreign other business
entity, if any, shall also set forth the statutory or other basis
under which that foreign other business entity is authorized by the
laws under which it is organized to effect the merger. The merger and
any amendment of the articles of the surviving corporation, if
applicable, contained in the agreement of merger shall be effective
upon filing of the agreement of merger with an officer's certificate
of each constituent domestic and foreign corporation and a
certificate of merger for each constituent other business entity,
subject to subdivision (c) of Section 110 and subject to the
provisions of subdivision (j), and the several parties thereto shall
be one entity. If a domestic reciprocal insurer organized after 1974
to provide medical malpractice insurance is a party to the merger,
the agreement of merger or certificate of merger shall not be filed
until there has been filed the certificate issued by the Insurance
Commissioner approving the merger pursuant to Section 1555 of the
Insurance Code. The Secretary of State may certify a copy of the
agreement of merger separate from the officers' certificates and
certificates of merger attached thereto.
(2) If the surviving entity is an other business entity, and no
public benefit corporation (Section 5060), mutual benefit corporation
(Section 5059), religious corporation (Section 5061), or corporation
organized under the Consumer Cooperative Corporation Law (Section
12200) is a party to the merger, after required approvals of the
merger by each constituent corporation through approval of the board
(Section 151) and any approval of the outstanding shares (Section
152) required by Chapter 12 (commencing with Section 1200) and by the
other parties to the merger, the parties to the merger shall file a
certificate of merger in the office of, and on a form prescribed by,
the Secretary of State. The certificate of merger shall be executed
and acknowledged by each constituent domestic and foreign corporation
by its chairperson of the board, president or a vice president and
also by its secretary or an assistant secretary and by each domestic
constituent limited liability company by all managers of the limited
liability company (unless a lesser number is specified in its
articles of organization or operating agreement) and by each domestic
constituent limited partnership by all general partners (unless a
lesser number is provided in its certificate of limited partnership
or partnership agreement) and by each domestic constituent general
partnership by two partners (unless a lesser number is provided in
its partnership agreement) and by each foreign constituent limited
liability company by one or more managers and by each foreign
constituent general partnership or foreign constituent limited
partnership by one or more general partners, and by each constituent
reciprocal insurer by the chairperson of the board, president, or
vice president, and by the secretary or assistant secretary, or, if a
constituent reciprocal insurer has not appointed those officers, by
the chairperson of the board, president, or vice president, and by
the secretary or assistant secretary of the constituent reciprocal
insurer's attorney-in-fact. The certificate of merger shall be signed
by each other party to the merger by those persons required or
authorized to execute the certificate of merger by the laws under
which that party is organized, specifying for that party the
provision of law or other basis for the authority of the signing
persons. The certificate of merger shall set forth all of the
following:
(A) The name, place of incorporation or organization, and the
Secretary of State's file number, if any, of each party to the
merger, separately identifying the disappearing parties and the
surviving party.
(B) If the approval of the outstanding shares of a constituent
corporation was required by Chapter 12 (commencing with Section
1200), a statement setting forth the total number of outstanding
shares of each class entitled to vote on the merger and that the
principal terms of the agreement of merger were approved by a vote of
the number of shares of each class entitled to vote and the
percentage vote required of each class.
(C) The future effective date or time, not more than 90 days
subsequent to the date of filing of the merger, if the merger is not
to be effective upon the filing of the certificate of merger with the
office of the Secretary of State.
(D) A statement, by each party to the merger which is a domestic
corporation not organized under this division, a foreign corporation,
or an other business entity, of the statutory or other basis under
which that party is authorized by the laws under which it is
organized to effect the merger.
(E) Any other information required to be stated in the certificate
of merger by the laws under which each party to the merger is
organized, including, if a domestic limited liability company is a
party to the merger, subdivision (a) of Section 17552, if a domestic
partnership is a party to the merger, subdivision (b) of Section
16915, and, if a domestic limited partnership is a party to the
merger, subdivision (a) of Section 15678.4 or subdivision (a) of
Section 15911.14.
(F) Any other details or provisions that may be desired.
Unless a future effective date or time is provided in a
certificate of merger, in which event the merger shall be effective
at that future effective date or time, a merger shall be effective
upon the filing of the certificate of merger in the office of the
Secretary of State and the several parties thereto shall be one
entity. The surviving other business entity shall keep a copy of the
agreement of merger at its principal place of business which, for
purposes of this subdivision, shall be the office referred to in
Section 17057 if a domestic limited liability company, at the
business address specified in paragraph (5) of subdivision (a) of
Section 17552 if a foreign limited liability company, at the office
referred to in subdivision (a) of Section 16403 if a domestic general
partnership, at the business address specified in subdivision (f) of
Section 16911 if a foreign partnership, at the office referred to in
subdivision (a) of Section 15614 or in subdivision (a) of Section
15901.14 if a domestic limited partnership, or at the business
address specified in paragraph (5) of subdivision (a) of Section
15678.4 or paragraph (3) of subdivision (a) of Section 15909.02 if a
foreign limited partnership. Upon the request of a holder of equity
securities of a party to the merger, a person with authority to do so
on behalf of the surviving other business entity shall promptly
deliver to that holder, a copy of the agreement of merger. A waiver
by that holder of the rights provided in the foregoing sentence shall
be unenforceable. If a domestic reciprocal insurer organized after
1974 to provide medical malpractice insurance is a party to the
merger the agreement of merger or certificate of merger shall not be
filed until there has been filed the certificate issued by the
Insurance Commissioner approving the merger in accordance with
Section 1555 of the Insurance Code.
(h) (1) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger and the performance of the conditions necessary
to the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger.
(2) For all purposes for a merger in which the surviving entity is
a domestic other business entity and the filing of a certificate of
merger is required by paragraph (2) of subdivision (g), a copy of the
certificate of merger duly certified by the Secretary of State is
conclusive evidence of the merger of the constituent corporations,
either by themselves or together with the other parties to the
merger, into the surviving other business entity.
(i) (1) Upon a merger pursuant to this section, the separate
existences of the disappearing parties to the merger cease and the
surviving party to the merger shall succeed, without other transfer,
to all the rights and property of each of the disappearing parties to
the merger and shall be subject to all the debts and liabilities of
each in the same manner as if the surviving party to the merger had
itself incurred them.
(2) All rights of creditors and all liens upon the property of
each of the constituent corporations and other parties to the merger
shall be preserved unimpaired, provided that those liens upon
property of a disappearing party shall be limited to the property
affected thereby immediately prior to the time the merger is
effective.
(3) Any action or proceeding
pending by or against any disappearing corporation or disappearing
party to the merger may be prosecuted to judgment, which shall bind
the surviving party, or the surviving party may be proceeded against
or substituted in its place.
(4) If a limited partnership or a general partnership is a party
to the merger, nothing in this section is intended to affect the
liability a general partner of a disappearing limited partnership or
general partnership may have in connection with the debts and
liabilities of the disappearing limited partnership or general
partnership existing prior to the time the merger is effective.
(j) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivision (a) and this subdivision.
(2) If the surviving party is a domestic corporation or domestic
other business entity, the merger proceedings with respect to that
party and any domestic disappearing corporation shall conform to the
provisions of this section. If the surviving party is a foreign
corporation or foreign other business entity, then, subject to the
requirements of subdivision (c), and of Section 407 and Chapter 12
(commencing with Section 1200) and Chapter 13 (commencing with
Section 1300), and, if applicable, corresponding provisions of the
Nonprofit Corporation Law or the Consumer Cooperative Corporation
Law, with respect to any domestic constituent corporations, Chapter
13 (commencing with Section 17600) of Title 2.5 with respect to any
domestic constituent limited liability companies, Article 6
(commencing with Section 16601) of Chapter 5 of Title 2 with respect
to any domestic constituent general partnerships, and Article 7.6
(commencing with Section 15679.1) of Chapter 3, and Article 11.5
(commencing with Section 15911.20) of Chapter 5.5 of Title 2 with
respect to any domestic constituent limited partnerships, the merger
proceedings may be in accordance with the laws of the state or place
of incorporation or organization of the surviving party.
(3) If the surviving party is a domestic corporation or domestic
other business entity, the certificate of merger or the agreement of
merger with attachments shall be filed as provided in subdivision (g)
and thereupon, subject to subdivision (c) of Section 110 or
paragraph (2) of subdivision (g), as is applicable, the merger shall
be effective as to each domestic constituent corporation and domestic
constituent other business entity.
(4) If the surviving party is a foreign corporation or foreign
other business entity, the merger shall become effective in
accordance with the law of the jurisdiction in which the surviving
party is organized, but, except as provided in paragraph (5), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of each constituent foreign and domestic
corporation and a certificate of merger of each constituent other
business entity attached, which officers' certificates and
certificates of merger shall conform to the requirements of paragraph
(1) of subdivision (g). If one or more domestic other business
entities is a disappearing party in a merger pursuant to this
subdivision in which a foreign other business entity is the surviving
entity, a certificate of merger required by the laws under which
that domestic other business entity is organized, including
subdivision (a) of Section 15678.4, subdivision (a) of Section
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17552, as is applicable, shall also be filed at the same time
as the filing of the agreement of merger.
(5) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(6) In a merger described in paragraph (3) or (4), each foreign
disappearing corporation that is qualified for the transaction of
intrastate business shall by virtue of the filing pursuant to this
subdivision, subject to subdivision (c) of Section 110, automatically
surrender its right to transact intrastate business in this state.
The filing of the agreement of merger or certificate of merger, as is
applicable, pursuant to this subdivision, by a disappearing foreign
other business entity registered for the transaction of intrastate
business in this state shall, by virtue of that filing, subject to
subdivision (c) of Section 110, automatically cancels the
registration for that foreign other business entity, without the
necessity of the filing of a certificate of cancellation.
SEC. 8. Section 1152 of the Corporations Code is amended to read:
1152. (a) A corporation that desires to convert to a domestic
other business entity shall approve a plan of conversion. The plan of
conversion shall state all of the following:
(1) The terms and conditions of the conversion.
(2) The jurisdiction of the organization of the converted entity
and of the converting corporation and the name of the converted
entity after conversion.
(3) The manner of converting the shares of each of the
shareholders of the converting corporation into securities of, or
interests in, the converted entity.
(4) The provisions of the governing documents for the converted
entity, including the partnership agreement or limited liability
company articles of organization and operating agreement, to which
the holders of interests in the converted entity are to be bound.
(5) Any other details or provisions that are required by the laws
under which the converted entity is organized, or that are desired by
the converting corporation.
(b) The plan of conversion shall be approved by the board of the
converting corporation (Section 151), and the principal terms of the
plan of the conversion shall be approved by the outstanding shares
(Section 152) of each class of the converting corporation. The
approval of the outstanding shares may be given before or after
approval by the board. Notwithstanding the foregoing, if a converting
corporation is a close corporation, the conversion shall be approved
by the affirmative vote of at least two-thirds of each class of
outstanding shares of that converting corporation; provided, however,
that the articles may provide for a lesser vote, but not less than a
majority of the outstanding shares of each class.
(c) If the corporation is converting into a general or limited
partnership or into a limited liability company, then in addition to
the approval of the shareholders set forth in subdivision (b), the
plan of conversion shall be approved by each shareholder who will
become a general partner or manager, as applicable, of the converted
entity pursuant to the plan of conversion unless the shareholders
have dissenters' rights pursuant to Section 1159 and Chapter 13
(commencing with Section 1300).
(d) Upon the effectiveness of the conversion, all shareholders of
the converting corporation, except those that exercise dissenters'
rights as provided in Section 1159 and Chapter 13 (commencing with
Section 1300), shall be deemed parties to any agreement or agreements
constituting the governing documents for the converted entity
adopted as part of the plan of conversion, irrespective of whether or
not a shareholder has executed the plan of conversion or those
governing documents for the converted entity. Any adoption of
governing documents made pursuant thereto shall be effective at the
effective time or date of the conversion.
(e) Notwithstanding its prior approval by the board and the
outstanding shares or either of them, a plan of conversion may be
amended before the conversion takes effect if the amendment is
approved by the board and, if it changes any of the principal terms
of the plan of conversion, by the shareholders of the converting
corporation in the same manner and to the same extent as was required
for approval of the original plan of conversion.
(f) A plan of conversion may be abandoned by the board of a
converting corporation, or by the shareholders of a converting
corporation if the abandonment is approved by the outstanding shares,
in each case in the same manner as required for approval of the plan
of conversion, subject to the contractual rights of third parties,
at any time before the conversion is effective.
(g) The converted entity shall keep the plan of conversion at (1)
the principal place of business of the converted entity if the
converted entity is a domestic partnership or (2) at the office at
which records are to be kept under Section 15614 or 15901.11 if the
converted entity is a domestic limited partnership or at the office
at which records are to be kept under Section 17057 if the converted
entity is a domestic limited liability company. Upon the request of a
shareholder of a converting corporation, the authorized person on
behalf of the converted entity shall promptly deliver to the
shareholder, at the expense of the converted entity, a copy of the
plan of conversion. A waiver by a shareholder of the rights provided
in this subdivision shall be unenforceable.
SEC. 9. Section 1157 of the Corporations Code is amended to read:
1157. (a) An other business entity or a foreign other business
entity or a foreign corporation may be converted into a corporation
pursuant to this chapter only if the converting entity is authorized
by the laws under which it is organized to effect the conversion.
(b) An other business entity or a foreign other business entity or
a foreign corporation that desires to convert into a corporation
shall approve a plan of conversion or other instrument as is required
to be approved to effect the conversion pursuant to the laws under
which that entity is organized.
(c) The conversion of an other business entity or a foreign other
business entity or a foreign corporation shall be approved by the
number or percentage of the partners, members, shareholders, or other
holders of interest of the converting entity that is required by the
laws under which that entity is organized, or a greater or lesser
percentage as may be set forth in the converting entity's partnership
agreement, articles of organization, operating agreement, articles
of incorporation or other governing document in accordance with
applicable laws.
(d) The conversion by an other business entity or a foreign other
business entity or a foreign corporation shall be effective under
this chapter upon the filing with the Secretary of State of the
articles of incorporation of the converted corporation, containing a
statement of conversion that complies with subdivision (e).
(e) A statement of conversion of an entity converting into a
corporation pursuant to this chapter shall set forth all of the
following:
(1) The name, form, and jurisdiction of organization of the
converting entity.
(2) The Secretary of State's file number, if any, of the
converting entity.
(3) If the converting entity is a foreign other business entity or
a foreign corporation, the statement of conversion shall contain the
following:
(A) A statement that the converting entity is authorized to effect
the conversion by the laws under which it is organized.
(B) A statement that the converting entity has approved a plan of
conversion or other instrument as is required to be approved to
effect the conversion pursuant to the laws under which the converting
entity is organized.
(C) A statement that the conversion has been approved by the
number or percentage of the partners, members, shareholders, or other
holders of interest of the converting entity that is required by the
laws under which that entity is organized, or a greater or lesser
percentage as may be set forth in the converting entity's partnership
agreement, articles of organization, operating agreement, articles
of incorporation, or other governing document in accordance with
applicable laws.
(f) The filing with the Secretary of State of articles of
incorporation containing a statement pursuant to subdivision (e)
shall have the effect of the filing of a certificate of cancellation
by a converting foreign limited liability company or foreign limited
partnership, and no converting foreign limited liability company or
foreign limited partnership that has made the filing is required to
file a certificate of cancellation under Section 15696, 15909.06, or
17455 as a result of that conversion. If a converting entity is a
foreign corporation qualified to transact business in this state, the
foreign corporation shall, by virtue of the filing, automatically
surrender its right to transact intrastate business.
SEC. 10. Section 2113 of the Corporations Code is amended to read:
2113. (a) The filing of an agreement of merger of a foreign
disappearing corporation qualified to transact intrastate business in
this state pursuant to Section 1103, or the filing pursuant to
subdivision (d) of Section 1108 of an agreement, certificate, or
other document as to a merger that includes a disappearing foreign
corporation qualified to transact intrastate business, or the filing
of a certificate of ownership as to a foreign subsidiary corporation
qualified to transact intrastate business in this state pursuant to
Section 1110, or the filing by a foreign corporation qualified to
transact intrastate business in this state of an organizational
document containing a statement of conversion pursuant to Section
15677.8, 15911.08, 16908, or 17540.8, constitutes the surrender by
the foreign corporation of its right to engage in intrastate business
within this state.
(b) With respect to corporations for which documents have not been
filed as provided in subdivision (a), a certificate of surrender as
prescribed by Section 2112 shall be filed by a foreign corporation
qualified to transact intrastate business upon its merger into
another foreign corporation.
(c) In lieu of a signature as prescribed by Section 2112, a
certificate of surrender pursuant to subdivision (b) for a merged
foreign corporation may be signed in the name of the surviving
corporation by an officer thereof. In that case, the certificate of
surrender shall be accompanied by a certificate of an authorized
public official of the state or place of incorporation of the merged
foreign corporation stating that the corporation has been merged into
another foreign corporation and setting forth the name and state or
place of incorporation of the surviving foreign corporation.
SEC. 11. Section 6019.1 of the Corporations Code is amended to
read:
6019.1. (a) Subject to the provisions of Sections 6010 and 9640,
any one or more corporations may merge with one or more other
business entities (Section 5063.5). One or more other domestic
corporations and foreign corporations (Section 5053) may be parties
to the merger. Notwithstanding the provisions of this section, such a
merger may be effected only if:
(1) In a merger in which a domestic corporation or domestic other
business entity is a party, it is authorized by the laws under which
it is organized to effect the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve an agreement of merger. The board and the members
(Section 5034) of each corporation which desires to merge, and each
other person or persons, if any, whose approval of an amendment of
the articles of that corporation is required by the articles or
bylaws shall approve the agreement of merger. The agreement of merger
shall be approved on behalf of each other party by those persons
authorized or required to approve the merger by the laws under which
it is organized. The parties desiring to merge shall be parties to
the agreement of merger and other persons, including a parent party
(Section 5064.5), may be parties to the agreement of merger. The
agreement of merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 5810 and 5816, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. The name of the surviving corporation may be,
subject to subdivision (b) of Section 5122 and subdivision (b) of
Section 9122, the same as, or similar to, the name of a disappearing
party to the merger.
(4) The manner, if any, of converting the memberships of each of
the constituent corporations into shares, memberships, interests, or
other securities of the surviving party; and, if any memberships of
any of the constituent corporations are not to be converted solely
into shares, memberships, interests, or other securities of the
surviving party, the cash, rights, securities, or other property
which the holders of those memberships are to receive in exchange for
the memberships, which cash, rights, securities, or other property
may be in addition to, or in lieu of, shares, memberships, interests,
or other securities of the surviving corporation or surviving other
business entity.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a domestic
limited partnership is a party to the merger, subdivision (a) of
Section 15678.2 or 15911.12 or, if a domestic general partnership is
a party to the merger, subdivision (a) of Section 16911, or, if a
domestic limited liability company is a party to the merger,
subdivision (a) of Section 17551.
(6) Any other details or provisions as are desired.
(c) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger if the
amendment is approved by each constituent corporation in the same
manner as the original agreement of merger. If the agreement of
merger as so amended and approved is also approved by each of the
other parties to the agreement of merger, as so amended it shall then
constitute the agreement of merger.
(d) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the members (Section 5034) or other
persons, at any time before the merger is effective.
(e) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president or a vice
president, and also by its secretary or an assistant secretary acting
on behalf of their respective corporations.
(f) After required approvals of the merger by each constituent
corporation and each other party to the merger, the surviving party
shall file a copy of the agreement of merger with an officers'
certificate of each constituent domestic and foreign corporation
attached stating the total number of outstanding shares or membership
interests of each class, if any, entitled to vote on the merger (and
identifying any other person or persons whose approval is required),
that the agreement of merger in the form attached or its principal
terms, as required, were approved by that corporation by a vote of a
number of shares or membership interests of each class entitled to
vote, if any, which equaled or exceeded the vote required, specifying
each class entitled to vote and the percentage vote required of each
class, and, if applicable, by that other person or persons whose
approval is required.
If equity securities of a parent party (Section 5064.5) are to be
issued in the merger, the officers' certificate or certificate of
merger of the controlled party shall state either that no vote of the
shareholders of the parent party was required or that the required
vote was obtained. The merger and any amendment of the articles of
the surviving corporation, if applicable, contained in the agreement
of merger shall be effective upon the filing of the agreement of
merger, subject to the provisions of subdivision (h). The agreement
of merger shall not be filed, however, until there has been filed by
or on behalf of each party to the merger taxed under the Corporation
Tax Law, the existence of which is terminated by the merger, the
certificate of satisfaction of the Franchise Tax Board that all taxes
imposed by that law have been paid or secured. If a domestic
reciprocal insurer organized after 1974 to provide medical
malpractice insurance is a party to the merger, the agreement of
merger or certificate of merger shall not be filed until there has
been filed the certificate issued by the Insurance Commissioner
approving the merger pursuant to Section 1555 of the Insurance Code.
In lieu of an officers' certificate, a certificate of merger, on a
form prescribed by the Secretary of State, shall be filed for each
constituent other business entity. The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all of the managers of the limited liability
company (unless a lesser number is specified in its articles of
organization or operating agreement) and by each domestic constituent
limited partnership by all general partners (unless a lesser number
is provided in its certificate of limited partnership or partnership
agreement) and by each domestic constituent general partnership by
two partners (unless a lesser number is provided in its partnership
agreement) and by each foreign constituent limited liability company
by one or more managers and by each foreign constituent general
partnership or foreign constituent limited partnership by one or more
general partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and also by
the secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed such officers, by the chairperson of the
board, president, or vice president, and also by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for such
party the provision of law or other basis for the authority of the
signing persons.
The certificate of merger shall set forth, if a vote of the
shareholders, members, partners, or other holders of interests of a
constituent other business entity was required, a statement setting
forth the total number of outstanding interests of each class
entitled to vote on the merger and that the agreement of merger or
its principal terms, as required, were approved by a vote of the
number of interests of each class which equaled or exceeded the vote
required, specifying each class entitled to vote and the percentage
vote required of each class, and any other information required to be
set forth under the laws under which the constituent other business
entity is organized, including, if a domestic limited partnership is
a party to the merger, subdivision (a) of Section 15678.4 or
15911.14, if a domestic general partnership is a party to the merger,
subdivision (b) of Section 16915, and, if a domestic limited
liability company is a party to the merger, subdivision (a) of
Section 17552. The certificate of merger for each constituent foreign
other business entity, if any, shall also set forth the statutory or
other basis under which that foreign other business entity is
authorized by the laws under which it is organized to effect the
merger.
The Secretary of State may certify a copy of the agreement of
merger separate from the officers' certificates and certificates of
merger attached thereto.
(g) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger, the performance of the conditions necessary to
the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger, and the merger of the
constituent corporations, either by themselves or together with other
constituent parties, into the surviving party to the merger.
(h) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivisions (a) and (f) and this subdivision.
(2) Subject to subdivision (c) of Section 5008 and paragraph (3),
the merger shall be effective as to each domestic constituent
corporation and domestic constituent other business entity upon
filing of the agreement of merger with attachments as provided in
subdivision (f).
(3) If the surviving party is a foreign corporation or foreign
other business entity, except as provided in paragraph (4), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of the surviving foreign corporation and of
each constituent foreign and domestic corporation and a certificate
of merger of each constituent other business entity attached, which
officers' certificates and certificates of merger shall conform to
the requirements of subdivision (f).
If one or more domestic other business entities is a disappearing
party in a merger pursuant to this subdivision in which a foreign
other business entity is the surviving entity, a certificate of
merger required by the laws under which each domestic other business
entity is organized, including subdivision (a) of Section 15678.4 or
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17552, if applicable, shall also be filed at the same time as
the filing of the agreement of merger.
(4) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(5) Each foreign disappearing corporation that is qualified for
the transaction of intrastate business shall automatically by the
filing pursuant to subdivision (f) surrender its right to transact
intrastate business as of the date of filing in this state or, if
later, the effective date of the merger. With respect to each foreign
disappearing other business entity previously registered for the
transaction of intrastate business in this state, the filing of the
agreement of merger pursuant to subdivision (f) automatically has the
effect of a cancellation of registration for that foreign other
business entity as of the date of filing in this state or, if later,
the effective date of the merger, without the necessity of the filing
of a certificate of cancellation.
SEC. 11.5. Section 6019.1 of the Corporations Code is amended to
read:
6019.1. (a) Subject to the provisions of Sections 6010 and 9640,
any one or more corporations may merge with one or more other
business entities (Section 5063.5). One or more other domestic
corporations and foreign corporations (Section 5053) may be parties
to the merger. Notwithstanding the provisions of this section, such a
merger may be effected only if:
(1) In a merger in which a domestic corporation or domestic other
business entity is a party, it is authorized by the laws under which
it is organized to effect the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve an agreement of merger. The board and the members
(Section 5034) of each corporation which desires to merge, and each
other person or persons, if any, whose approval of an amendment of
the articles of that corporation is required by the articles or
bylaws shall approve the agreement of merger. The agreement of merger
shall be approved on behalf of each other party by those persons
authorized or required to approve the merger by the laws under which
it is organized. The parties desiring to merge shall be parties to
the agreement of merger and other persons, including a parent party
(Section 5064.5), may be parties to the agreement of merger. The
agreement of merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 5810 and 5816, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. The name of the surviving corporation may be,
subject to subdivision (b) of Section 5122 and subdivision (b) of
Section 9122, the same as, or similar to, the name of a disappearing
party to the merger.
(4) The manner, if any, of converting the memberships of each of
the constituent corporations into shares, memberships, interests, or
other securities of the surviving party; and, if any memberships of
any of the constituent corporations are not to be converted solely
into shares, memberships, interests, or other securities of the
surviving party, the cash, rights, securities, or other property
which the holders of those memberships are to receive in exchange for
the memberships, which cash, rights, securities, or other property
may be in addition to, or in lieu of, shares, memberships, interests,
or other securities of the surviving corporation or surviving other
business entity.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a domestic
limited partnership is a party to the merger, subdivision (a) of
Section 15678.2 or 15911.12, if a domestic general partnership is a
party to the merger, subdivision (a) of Section 16911, or, if a
domestic limited liability company is a party to the merger,
subdivision (a) of Section 17551.
(6) Any other details or provisions as are desired.
(c) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger if the
amendment is approved by each constituent corporation in the same
manner as the original agreement of merger. If the agreement of
merger as so amended and approved is also approved by each of the
other parties to the agreement of merger, as so amended it shall then
constitute the agreement of merger.
(d) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the members (Section 5034) or other
persons, at any time before the merger is effective.
(e) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president or a vice
president, and also by its secretary or an assistant secretary acting
on behalf of their respective corporations.
(f) After required approvals of the merger by each constituent
corporation and each other party to the merger, the surviving party
shall file a copy of the agreement of merger with an officers'
certificate of each constituent domestic and foreign corporation
attached stating the total number of outstanding shares or membership
interests of each class, if any, entitled to vote on the merger (and
identifying any other person or persons whose approval is required),
that the agreement of merger in the form attached or its principal
terms, as required, were approved by that corporation by a vote of a
number of shares or membership interests of each class entitled to
vote, if any, which equaled or exceeded the vote required, specifying
each class entitled to vote and the percentage vote required of each
class, and, if applicable, by that other person or persons whose
approval is required.
If equity securities of a parent party (Section 5064.5) are to be
issued in the merger, the officers' certificate or certificate of
merger of the controlled party shall state either that no vote of the
shareholders of the parent party was required or that the required
vote was obtained. The merger and any amendment of the articles of
the surviving corporation, if applicable, contained in the agreement
of merger shall be effective upon the filing of the agreement of
merger, subject to the provisions of subdivision (h). If a domestic
reciprocal insurer organized after 1974 to provide medical
malpractice insurance is a party to the merger, the agreement of
merger or certificate of merger shall not be filed until there has
been filed the certificate issued by the Insurance Commissioner
approving the merger pursuant to Section 1555 of the Insurance Code.
In lieu of an officers' certificate, a certificate of merger, on a
form prescribed by the Secretary of State, shall be filed for each
constituent other business entity. The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all of the managers of the limited liability
company (unless a lesser number is specified in its articles of
organization or operating agreement) and by each domestic constituent
limited partnership by all general partners (unless a lesser number
is provided in its certificate of limited partnership or partnership
agreement) and by each domestic constituent general partnership by
two partners (unless a lesser number is provided in its partnership
agreement) and by each foreign constituent limited liability company
by one or more managers and by each foreign constituent general
partnership or foreign constituent limited partnership by one or more
general partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and also by
the secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed such officers, by the chairperson of the
board, president, or vice president, and also by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for such
party the provision of law or other basis for the authority of the
signing persons.
The certificate of merger shall set forth, if a vote of the
shareholders, members, partners, or other holders of interests of a
constituent other business entity was required, a statement setting
forth the total number of outstanding interests of each class
entitled to vote on the merger and that the agreement of merger or
its principal terms, as required, were approved by a vote of the
number of interests of each class which equaled or exceeded the vote
required, specifying each class entitled to vote and the percentage
vote required of each class, and any other information required to be
set forth under the laws under which the constituent other business
entity is organized, including, if a domestic limited partnership is
a party to the merger, subdivision (a) of Section 15678.4 or
15911.14, if a domestic general partnership is a party to the merger,
subdivision (b) of Section 16915, and, if a domestic limited
liability company is a party to the merger, subdivision (a) of
Section 17552. The certificate of merger for each constituent foreign
other business entity, if any, shall also set forth the statutory or
other basis under which that foreign other business entity is
authorized by the laws under which it is organized to effect the
merger.
The Secretary of State may certify a copy of the agreement of
merger separate from the officers' certificates and certificates of
merger attached thereto.
(g) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger, the performance of the conditions necessary to
the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger, and the merger of the
constituent corporations, either by themselves or together with other
constituent parties, into the surviving party to the merger.
(h) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivisions (a) and (f) and this subdivision.
(2) Subject to subdivision (c) of Section 5008 and paragraph (3),
the merger shall be effective as to each domestic constituent
corporation and domestic constituent other business entity upon
filing of the agreement of merger with attachments as provided in
subdivision (f).
(3) If the surviving party is a foreign corporation or foreign
other business entity, except as provided in paragraph (4), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of the surviving foreign corporation and of
each constituent foreign and domestic corporation and a certificate
of merger of each constituent other business entity attached, which
officers' certificates and certificates of merger shall conform to
the requirements of subdivision (f).
If one or more domestic other business entities is a disappearing
party in a merger pursuant to this subdivision in which a foreign
other business entity is the surviving entity, a certificate of
merger required by the laws under which each domestic other business
entity is organized, including subdivision (a) of Section 15678.4 or
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17552, if applicable, shall also be filed at the same time as
the filing of the agreement of merger.
(4) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(5) Each foreign disappearing corporation that is qualified for
the transaction of intrastate business shall automatically by the
filing pursuant to subdivision (f) surrender its right to transact
intrastate business as of the date of filing in this state or, if
later, the effective date of the merger. With respect to each foreign
disappearing other business entity previously registered for the
transaction of intrastate business in this state, the filing of the
agreement of merger pursuant to subdivision (f) automatically has the
effect of a cancellation of registration for that foreign other
business entity as of the date of filing in this state or, if later,
the effective date of the merger, without the necessity of the filing
of a certificate of cancellation.
SEC. 12. Section 6020.5 of the Corporations Code is amended to
read:
6020.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) Notwithstanding Sections 1103, 1108, 1110, 1113, 6014, 6018,
6019.1, 8014, 8018, 8019.1, 12535, 12539, 12540.1, 15678.4, 15911.14,
and 17552 of this code and Sections 17945, 17948.1, and 23334 of the
Revenue and Taxation Code, if the surviving entity is a domestic
limited liability company, domestic corporation, or registered
limited liability partnership or a foreign limited liability company,
foreign limited liability partnership, or foreign corporation that
is registered or qualified to do business in California, the
Secretary of State shall file the merger without the certificate of
satisfaction of the Franchise Tax Board and shall notify the
Franchise Tax Board of the merger.
SEC. 12.5. Section 6020.5 of the Corporations Code is amended to
read:
6020.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) If the surviving entity is a domestic limited liability
company, domestic corporation, or registered limited liability
partnership or a foreign limited liability company, foreign limited
liability partnership, or foreign corporation that is registered or
qualified to do business in California, the Secretary of State shall
notify the Franchise Tax Board of the merger.
SEC. 13. Section 8019.1 of the Corporations Code is amended to
read:
8019.1. (a) Subject to the provisions of Section 8010, any one or
more corporations may merge with one or more other business entities
(Section 5063.5). One or more other domestic corporations, foreign
corporations (Sections 5053), and foreign business corporations
(Section 5052) may be parties to the merger. Notwithstanding the
provisions of this section, such a merger may be effected only if:
(1) In a merger in which a domestic corporation or domestic other
business entity is a party, it is authorized by the laws under which
it is organized to effect the merger.
(2) In a merger in which a foreign corporation or foreign business
corporation is a party, it is authorized by the laws under which it
is organized to effect the merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve an agreement of merger. The board and the members
(Section 5034) of each corporation which desires to merge, and each
other person or persons, if any, whose approval of an amendment of
the articles of that corporation is required by the articles or
bylaws shall approve the agreement of merger. The agreement of merger
shall be approved on behalf of each other constituent party by those
persons authorized or required to approve the merger by the laws
under which it is organized. The parties desiring to merge shall be
parties to the agreement of merger and other persons, including a
parent party (Section 5064.5), may be parties to the agreement of
merger. The agreement of merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 7810 and 7816, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. The name of the surviving corporation may be,
subject to subdivisions (b) and (c) of Section 7122, the same as or
similar to the name of a disappearing party to the merger.
(4) The manner, if any, of converting the memberships or
securities of each of the constituent corporations into shares,
memberships, interests, or other securities of the surviving party;
and, if any memberships or securities of any of the constituent
corporations are not to be converted solely into shares, memberships,
interests, or other securities of the surviving party, cash, rights,
securities, or other property which the holders of those memberships
or securities are to receive in exchange for the memberships or
securities, which cash, rights, securities, or other property may be
in addition to or in lieu of shares, memberships, interests, or other
securities of the surviving party.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a domestic
limited partnership is a party to the merger, subdivision (a) of
Section 15678.2 or 15911.12, or, if a domestic general partnership is
a party to the merger, subdivision (a) of Section 16911, or, if a
domestic limited liability company is a party to the merger,
subdivision (a) of Section 17551.
(6) Any other details or provisions as are desired.
(c) Each membership of the same class of any constituent
corporation (other than the cancellation of memberships held by a
party to the merger or its parent or a wholly owned subsidiary of
either in another constituent corporation) shall be treated equally
with respect to any distribution of cash, property, rights, or
securities unless (i) all members of the class consent or (ii) the
commissioner has approved the terms and conditions of the transaction
and the fairness of those terms pursuant to Section 25142.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger if the
amendment is approved by each constituent corporation in the same
manner as the original agreement of merger. If the agreement of
merger as so amended and approved is also approved by each of the
other parties to the agreement of merger, as so amended it shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the members (Section 5034) or other
persons, at any time before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president, or a vice
president and also by its secretary or an assistant secretary acting
on behalf of their respective corporations.
(g) After required approvals of the merger by each constituent
corporation and each other party to the merger, the surviving party
shall file a copy of the agreement of merger with an officers'
certificate of each constituent domestic corporation, foreign
corporation, and foreign business corporation attached stating the
total number of outstanding shares or membership interests of each
class entitled to vote on the merger (and identifying any other
person or persons whose approval is required), that the agreement of
merger in the form attached or its principal terms, as required, were
approved by that corporation by a vote of a number of shares or
membership interests of each class which equaled or exceeded the vote
required, specifying each class entitled to vote required of each
class, and, if applicable, by such other person or persons whose
approval is required.
If equity securities of a parent party (Section 5064.5) are to be
issued in the merger, the officers' certificate or certificate of
merger of the controlled party shall state either that no vote of the
shareholders of the parent party was required or that the required
vote was obtained. The merger and any amendment of the articles of
the surviving corporation, if applicable, contained in the agreement
of merger shall be effective upon the filing of the agreement of
merger, subject to the provisions of subdivision (i). The agreement
of merger shall not be filed, however, until there has been filed by
or on behalf of each party to the merger taxed under the Corporation
Tax Law, the existence of which is terminated by the merger, the
certificate of satisfaction of the Franchise Tax Board that all taxes
imposed by that law have been paid or secured. If a domestic
reciprocal insurer organized after 1974 to provide medical
malpractice insurance is a party to the merger, the agreement of
merger or certificate of merger shall not be filed until there has
been filed the certificate issued by the Insurance Commissioner
approving the merger pursuant to Section 1555 of the Insurance Code.
In lieu of an officers' certificate, a certificate of merger, on a
form prescribed by the Secretary of State, shall be filed for each
constituent other business entity. The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all of the managers of the limited liability
company (unless a lesser number is specified in its articles of
organization or operating agreement) and by each domestic constituent
limited partnership by all general partners (unless a lesser number
is provided in its certificate of limited partnership or partnership
agreement) and by each domestic constituent general partnership by
two partners (unless a lesser number is provided in its partnership
agreement) and by each foreign constituent limited liability company
by one or more managers and by each foreign constituent general
partnership or foreign constituent limited partnership by one or more
general partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed such officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for such
party the provision of law or other basis for the authority of the
signing persons.
The certificate of merger shall set forth, if a vote of the
shareholders, members, partners, or other holders of interests of a
constituent other business entity was required, a statement setting
forth the total number of outstanding interests of each class
entitled to vote on the merger and that the principal terms of the
agreement of merger were approved by a vote of the number of
interests of each class which equaled or exceeded the vote required,
specifying each class entitled to vote and the percentage vote
required of each class, and any other information required to be set
forth under the laws under which the constituent other business
entity is organized, including, if a domestic limited partnership is
a party to the merger, subdivision (a) of Section 15678.4 or
15911.14, if a domestic general partnership is a party to the merger,
subdivision (b) of Section 16915 and, if a domestic limited
liability company is a party to the merger, subdivision (a) of
Section 17552. The certificate of merger for each constituent foreign
other business entity, if any, shall also set forth the statutory or
other basis under which that foreign other business entity is
authorized by the laws under which it is organized to effect the
merger.
The Secretary of State may certify a copy of the agreement of
merger separate from the officers' certificates and certificates of
merger attached thereto.
(h) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against
the state, is conclusive evidence
of the performance of all conditions precedent to the merger, the
existence on the effective date of the surviving party to the merger,
the performance of the conditions necessary to the adoption of any
amendment to the articles, if applicable, contained in the agreement
of merger, and of the merger of the constituent corporations, either
by themselves or together with other constituent parties, into the
surviving party to the merger.
(i) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivisions (a) and (g) and this subdivision.
(2) Subject to subdivision (c) of Section 5008 and paragraph (3),
the merger shall be effective as to each domestic constituent
corporation and domestic constituent other business entity upon
filing of the agreement of merger with attachments as provided in
subdivision (g).
(3) If the surviving party is a foreign corporation or foreign
business corporation or foreign other business entity, except as
provided in paragraph (4), the merger shall be effective as to any
domestic disappearing corporation as of the time of effectiveness in
the foreign jurisdiction upon the filing in this state of a copy of
the agreement of merger with an officers' certificate of the
surviving foreign corporation or foreign business corporation and of
each constituent foreign and domestic corporation and a certificate
of merger of each constituent other business entity attached, which
officers' certificates and certificates of merger shall conform to
the requirements of subdivision (g).
If one or more domestic other business entities is a disappearing
party in a merger pursuant to this subdivision in which a foreign
other business entity is the surviving entity, a certificate of
merger required by the laws under which each domestic other business
entity is organized, including subdivision (a) of Section 15678.4 or
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17522, if applicable, shall also be filed at the same time as
the filing of the agreement of merger.
(4) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(5) Each foreign disappearing corporation that is qualified for
the transaction of intrastate business shall automatically by the
filing pursuant to subdivision (g) surrender its right to transact
intrastate business as of the date of filing in this state or, if
later, the effective date of the merger. With respect to each foreign
disappearing other business entity previously registered for the
transaction of intrastate business in this state, the filing of the
agreement of merger pursuant to subdivision (g) automatically has the
effect of a cancellation of registration for that foreign other
business entity as of the date of filing in this state or, if later,
the effective date of the merger, without the necessity of the filing
of a certificate of cancellation.
SEC. 13.5. Section 8019.1 of the Corporations Code is amended to
read:
8019.1. (a) Subject to the provisions of Section 8010, any one or
more corporations may merge with one or more other business entities
(Section 5063.5). One or more other domestic corporations, foreign
corporations (Sections 5053), and foreign business corporations
(Section 5052) may be parties to the merger. Notwithstanding the
provisions of this section, such a merger may be effected only if:
(1) In a merger in which a domestic corporation or domestic other
business entity is a party, it is authorized by the laws under which
it is organized to effect the merger.
(2) In a merger in which a foreign corporation or foreign business
corporation is a party, it is authorized by the laws under which it
is organized to effect the merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve an agreement of merger. The board and the members
(Section 5034) of each corporation which desires to merge, and each
other person or persons, if any, whose approval of an amendment of
the articles of that corporation is required by the articles or
bylaws shall approve the agreement of merger. The agreement of merger
shall be approved on behalf of each other constituent party by those
persons authorized or required to approve the merger by the laws
under which it is organized. The parties desiring to merge shall be
parties to the agreement of merger and other persons, including a
parent party (Section 5064.5), may be parties to the agreement of
merger. The agreement of merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 7810 and 7816, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. The name of the surviving corporation may be,
subject to subdivisions (b) and (c) of Section 7122, the same as or
similar to the name of a disappearing party to the merger.
(4) The manner, if any, of converting the memberships or
securities of each of the constituent corporations into shares,
memberships, interests, or other securities of the surviving party;
and, if any memberships or securities of any of the constituent
corporations are not to be converted solely into shares, memberships,
interests, or other securities of the surviving party, cash, rights,
securities, or other property which the holders of those memberships
or securities are to receive in exchange for the memberships or
securities, which cash, rights, securities, or other property may be
in addition to or in lieu of shares, memberships, interests, or other
securities of the surviving party.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a domestic
limited partnership is a party to the merger, subdivision (a) of
Section 15678.2 or 15911.12, or, if a domestic general partnership is
a party to the merger, subdivision (a) of Section 16911, or, if a
domestic limited liability company is a party to the merger,
subdivision (a) of Section 17551.
(6) Any other details or provisions as are desired.
(c) Each membership of the same class of any constituent
corporation (other than the cancellation of memberships held by a
party to the merger or its parent or a wholly owned subsidiary of
either in another constituent corporation) shall be treated equally
with respect to any distribution of cash, property, rights, or
securities unless (i) all members of the class consent or (ii) the
commissioner has approved the terms and conditions of the transaction
and the fairness of those terms pursuant to Section 25142.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger if the
amendment is approved by each constituent corporation in the same
manner as the original agreement of merger. If the agreement of
merger as so amended and approved is also approved by each of the
other parties to the agreement of merger, as so amended it shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the members (Section 5034) or other
persons, at any time before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president, or a vice
president and also by its secretary or an assistant secretary acting
on behalf of their respective corporations.
(g) After required approvals of the merger by each constituent
corporation and each other party to the merger, the surviving party
shall file a copy of the agreement of merger with an officers'
certificate of each constituent domestic corporation, foreign
corporation, and foreign business corporation attached stating the
total number of outstanding shares or membership interests of each
class entitled to vote on the merger (and identifying any other
person or persons whose approval is required), that the agreement of
merger in the form attached or its principal terms, as required, were
approved by that corporation by a vote of a number of shares or
membership interests of each class which equaled or exceeded the vote
required, specifying each class entitled to vote required of each
class, and, if applicable, by such other person or persons whose
approval is required.
If equity securities of a parent party (Section 5064.5) are to be
issued in the merger, the officers' certificate or certificate of
merger of the controlled party shall state either that no vote of the
shareholders of the parent party was required or that the required
vote was obtained. The merger and any amendment of the articles of
the surviving corporation, if applicable, contained in the agreement
of merger shall be effective upon the filing of the agreement of
merger, subject to the provisions of subdivision (i). If a domestic
reciprocal insurer organized after 1974 to provide medical
malpractice insurance is a party to the merger, the agreement of
merger or certificate of merger shall not be filed until there has
been filed the certificate issued by the Insurance Commissioner
approving the merger pursuant to Section 1555 of the Insurance Code.
In lieu of an officers' certificate, a certificate of merger, on a
form prescribed by the Secretary of State, shall be filed for each
constituent other business entity. The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all of the managers of the limited liability
company (unless a lesser number is specified in its articles of
organization or operating agreement) and by each domestic constituent
limited partnership by all general partners (unless a lesser number
is provided in its certificate of limited partnership or partnership
agreement) and by each domestic constituent general partnership by
two partners (unless a lesser number is provided in its partnership
agreement) and by each foreign constituent limited liability company
by one or more managers and by each foreign constituent general
partnership or foreign constituent limited partnership by one or more
general partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed such officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for such
party the provision of law or other basis for the authority of the
signing persons.
The certificate of merger shall set forth, if a vote of the
shareholders, members, partners, or other holders of interests of a
constituent other business entity was required, a statement setting
forth the total number of outstanding interests of each class
entitled to vote on the merger and that the principal terms of the
agreement of merger were approved by a vote of the number of
interests of each class which equaled or exceeded the vote required,
specifying each class entitled to vote and the percentage vote
required of each class, and any other information required to be set
forth under the laws under which the constituent other business
entity is organized, including, if a domestic limited partnership is
a party to the merger, subdivision (a) of Section 15678.4 or
15911.14, if a domestic general partnership is a party to the merger,
subdivision (b) of Section 16915 and, if a domestic limited
liability company is a party to the merger, subdivision (a) of
Section 17552. The certificate of merger for each constituent foreign
other business entity, if any, shall also set forth the statutory or
other basis under which that foreign other business entity is
authorized by the laws under which it is organized to effect the
merger.
The Secretary of State may certify a copy of the agreement of
merger separate from the officers' certificates and certificates of
merger attached thereto.
(h) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger, the performance of the conditions necessary to
the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger, and of the merger of the
constituent corporations, either by themselves or together with other
constituent parties, into the surviving party to the merger.
(i) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivisions (a) and (g) and this subdivision.
(2) Subject to subdivision (c) of Section 5008 and paragraph (3),
the merger shall be effective as to each domestic constituent
corporation and domestic constituent other business entity upon
filing of the agreement of merger with attachments as provided in
subdivision (g).
(3) If the surviving party is a foreign corporation or foreign
business corporation or foreign other business entity, except as
provided in paragraph (4), the merger shall be effective as to any
domestic disappearing corporation as of the time of effectiveness in
the foreign jurisdiction upon the filing in this state of a copy of
the agreement of merger with an officers' certificate of the
surviving foreign corporation or foreign business corporation and of
each constituent foreign and domestic corporation and a certificate
of merger of each constituent other business entity attached, which
officers' certificates and certificates of merger shall conform to
the requirements of subdivision (g).
If one or more domestic other business entities is a disappearing
party in a merger pursuant to this subdivision in which a foreign
other business entity is the surviving entity, a certificate of
merger required by the laws under which each domestic other business
entity is organized, including subdivision (a) of Section 15678.4 or
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17522, if applicable, shall also be filed at the same time as
the filing of the agreement of merger.
(4) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(5) Each foreign disappearing corporation that is qualified for
the transaction of intrastate business shall automatically by the
filing pursuant to subdivision (g) surrender its right to transact
intrastate business as of the date of filing in this state or, if
later, the effective date of the merger. With respect to each foreign
disappearing other business entity previously registered for the
transaction of intrastate business in this state, the filing of the
agreement of merger pursuant to subdivision (g) automatically has the
effect of a cancellation of registration for that foreign other
business entity as of the date of filing in this state or, if later,
the effective date of the merger, without the necessity of the filing
of a certificate of cancellation.
SEC. 14. Section 8020.5 of the Corporations Code is amended to
read:
8020.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) Notwithstanding Sections 1103, 1108, 1110, 1113, 6014, 6018,
6019.1, 8014, 8018, 8019.1, 12535, 12539, 12540.1, 15678.4, 15911.14,
and 17552 of this code and Sections 17945, 17948.1, and 23334 of the
Revenue and Taxation Code, if the surviving entity is a domestic
limited liability company, domestic corporation, or registered
limited liability partnership or a foreign limited liability company,
foreign limited liability partnership, or foreign corporation that
is registered or qualified to do business in California, the
Secretary of State shall file the merger without the certificate of
satisfaction of the Franchise Tax Board and shall notify the
Franchise Tax Board of the merger.
SEC. 14.5. Section 8020.5 of the Corporations Code is amended to
read:
8020.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) If the surviving entity is a domestic limited liability
company, domestic corporation, or registered limited liability
partnership or a foreign limited liability company, foreign limited
liability partnership, or foreign corporation that is registered or
qualified to do business in California, the Secretary of State shall
notify the Franchise Tax Board of the merger.
SEC. 15. Section 12540.1 of the Corporations Code is amended to
read:
12540.1. (a) Any one or more corporations may merge with one or
more other business entities (Section 12242.5). Subject to the
provisions of Section 12530, one or more other domestic corporations
or foreign corporations (Section 12237) may be parties to the merger.
Notwithstanding the provisions of this section, such a merger may
be effected only if:
(1) In a merger in which a domestic corporation or domestic other
business entity is a party, it is authorized by the laws under which
it is organized to effect the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation, other domestic corporation, foreign
corporation, and other business entity which desires to merge shall
approve an agreement of merger. The board and the members of each
corporation which desires to merge shall approve (Sections 12222 and
12224) the agreement of merger. The agreement of merger shall be
approved on behalf of each other constituent party by those persons
authorized or required to approve the merger by the laws under which
it is organized.
The parties desiring to merge shall be parties to the agreement of
merger and other persons, including a parent party (Section
12242.6), may be parties to the agreement of merger. The agreement of
merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 12500 and 12507,
to the articles of the surviving corporation, if applicable, to be
effected by the merger. The name of the surviving corporation may be,
subject to subdivisions (b) and (c) of Section 12302, the same as,
or similar to, the name of a disappearing party to the merger.
(4) The manner, if any, of converting the memberships or
securities of each of the constituent corporations into shares,
memberships, interests, or other securities of the surviving party
and, if any memberships or securities of any of the constituent
corporations are not to be converted solely into shares, memberships,
interests, or other securities of the surviving party, the cash,
rights, securities, or other property which the holders of those
memberships or securities are to receive in exchange for the
memberships or securities, which cash, rights, securities, or other
property may be in addition to or in lieu of shares, memberships,
interests, or other securities of the surviving party.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a domestic
limited partnership is a party to the merger, subdivision (a) of
Section 15678.2 or 15911.12, or, if a domestic general partnership is
a party to the merger, subdivision (a) of Section 16911, or, if a
domestic limited liability company is a party to the merger,
subdivision (a) of Section 17551.
(6) Any other details or provisions as are desired.
(c) Each membership of the same class of any constituent
corporation (other than the cancellation of memberships held by a
party to the merger or its parent or a wholly owned subsidiary of
either in another constituent corporation) shall be treated equally
with respect to any distribution of cash, property, rights, or
securities unless (i) all members of the class consent or (ii) the
commissioner has approved the terms and conditions of the transaction
and the fairness of those terms pursuant to Section 25142.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger if the
amendment is approved by each constituent corporation in the same
manner as the original agreement of merger. If the agreement of
merger as so amended and approved is also approved by each of the
other parties to the agreement of merger, as so amended it shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the members (Section 12224), at any time
before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president, or a vice
president and also by its secretary or an assistant secretary acting
on behalf of their respective corporations.
(g) After required approvals of the merger by each constituent
corporation and each other party to the merger, the surviving party
shall file a copy of the agreement of merger with an officers'
certificate of each constituent domestic and foreign corporation
attached stating the total number of outstanding shares or membership
interests of each class entitled to vote on the merger (and
identifying any other person or persons whose approval is required),
that the agreement of merger in the form attached or its principal
terms, as required, were approved by that corporation by a vote of a
number of shares or membership interests of each class which equaled
or exceeded the vote required, specifying each class entitled to vote
and the percentage vote required of each class, and, if applicable,
by that other person or persons whose approval is required.
If equity securities of a parent party (Section 12242.6) are to be
issued in the merger, the officers' certificate or certificate of
merger of the controlled party shall state either that no vote of the
shareholders of the parent party was required or that the required
vote was obtained. The merger and any amendment of the articles of
the surviving corporation, if applicable, contained in the agreement
of merger shall be effective upon the filing of the agreement of
merger, subject to the provisions of subdivision (i). The agreement
of merger shall not be filed, however, until there has been filed by
or on behalf of each party to the merger taxed under the Corporation
Tax Law, the existence of which is terminated by the merger, the
certificate of satisfaction of the Franchise Tax Board that all taxes
imposed by that law have been paid or secured. If a domestic
reciprocal insurer organized after 1974 to provide medical
malpractice insurance is a party to the merger, the agreement of
merger or certificate of merger shall not be filed until there has
been filed the certificate issued by the Insurance Commissioner
approving the merger pursuant to Section 1555 of the Insurance Code.
In lieu of an officers' certificate, a certificate of merger, on a
form prescribed by the Secretary of State, shall be filed for each
constituent other business entity. The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all of the managers of the limited liability
company (unless a lesser number is specified in its articles of
organization or operating agreement) and by each domestic constituent
limited partnership by all general partners (unless a lesser number
is provided in its certificate
of limited partnership or partnership agreement) and by each
domestic constituent general partnership by two partners (unless a
lesser number is provided in its partnership agreement) and by each
foreign constituent general partnership or foreign constituent
limited liability company by one or more managers and by each foreign
constituent limited partnership by one or more general partners, and
by each constituent reciprocal insurer by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary, or, if a constituent reciprocal insurer has not
appointed such officers, by the chairperson of the board, president,
or vice president, and by the secretary or assistant secretary of the
constituent reciprocal insurer's attorney-in-fact, and by each other
party to the merger by those persons required or authorized to
execute the certificate of merger by the laws under which that party
is organized, specifying for such party the provision of law or other
basis for the authority of the signing persons.
The certificate of merger shall set forth, if a vote of the
shareholders, members, partners, or other holders of interests of the
constituent other business entity was required, a statement setting
forth the total number of outstanding interests of each class
entitled to vote on the merger and that the agreement of merger or
its principal terms, as required, were approved by a vote of the
number of interests of each class which equaled or exceeded the vote
required, specifying each class entitled to vote and the percentage
vote required of each class, and any other information required to be
set forth under the laws under which the constituent other business
entity is organized, including, if a domestic limited partnership is
a party to the merger, subdivision (a) of Section 15678.4 or
15911.14, if a domestic general partnership is a party to the merger,
subdivision (b) of Section 16915, and, if a domestic limited
liability company is a party to the merger, subdivision (a) of
Section 17552. The certificate of merger for each constituent foreign
other business entity, if any, shall also set forth the statutory or
other basis under which that foreign other business entity is
authorized by the laws under which it is organized to effect the
merger.
The Secretary of State may certify a copy of the agreement of
merger separate from the officers' certificates and certificates of
merger attached thereto.
(h) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger, the performance of the conditions necessary to
the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger, and of the merger of the
constituent corporations, either by themselves or together with other
constituent parties, into the surviving party to the merger.
(i) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivisions (a) and (g) and this subdivision.
(2) Subject to subdivision (c) of Section 12214 and paragraph (3),
the merger shall be effective as to each domestic constituent
corporation and domestic constituent other business entity upon
filing of the agreement of merger with attachments as provided in
subdivision (g).
(3) If the surviving party is a foreign corporation or foreign
other business entity, except as provided in paragraph (4), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of the surviving foreign corporation and of
each constituent foreign and domestic corporation and a certificate
of merger of each constituent other business entity attached, which
officers' certificates and certificates of merger shall conform to
the requirements of subdivision (g).
If one or more domestic other business entities is a disappearing
party in a merger pursuant to this subdivision in which a foreign
other business entity is the surviving entity, a certificate of
merger required by the laws under which each domestic other business
entity is organized, including subdivision (a) of Section 15678.4 or
15911.14, subdivision (b) of Section 16915 or subdivision (a) of
Section 17552, if applicable, shall also be filed at the same time as
the filing of the agreement of merger.
(4) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(5) Each foreign disappearing corporation that is qualified for
the transaction of intrastate business shall automatically by the
filing pursuant to subdivision (g) surrender its right to transact
intrastate business as of the date of filing in this state or, if
later, the effective date of the merger. With respect to each foreign
disappearing other business entity previously registered for the
transaction of intrastate business in this state, the filing of the
agreement of merger pursuant to subdivision (g) automatically has the
effect of a cancellation of registration for that foreign other
business entity without the necessity of the filing of a certificate
of cancellation.
SEC. 15.5. Section 12540.1 of the Corporations Code is amended to
read:
12540.1. (a) Any one or more corporations may merge with one or
more other business entities (Section 12242.5). Subject to the
provisions of Section 12530, one or more other domestic corporations
or foreign corporations (Section 12237) may be parties to the merger.
Notwithstanding the provisions of this section, such a merger may
be effected only if:
(1) In a merger in which a domestic corporation or domestic other
business entity is a party, it is authorized by the laws under which
it is organized to effect the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation, other domestic corporation, foreign
corporation, and other business entity which desires to merge shall
approve an agreement of merger. The board and the members of each
corporation which desires to merge shall approve (Sections 12222 and
12224) the agreement of merger. The agreement of merger shall be
approved on behalf of each other constituent party by those persons
authorized or required to approve the merger by the laws under which
it is organized.
The parties desiring to merge shall be parties to the agreement of
merger and other persons, including a parent party (Section
12242.6), may be parties to the agreement of merger. The agreement of
merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 12500 and 12507,
to the articles of the surviving corporation, if applicable, to be
effected by the merger. The name of the surviving corporation may be,
subject to subdivisions (b) and (c) of Section 12302, the same as,
or similar to, the name of a disappearing party to the merger.
(4) The manner, if any, of converting the memberships or
securities of each of the constituent corporations into shares,
memberships, interests, or other securities of the surviving party
and, if any memberships or securities of any of the constituent
corporations are not to be converted solely into shares, memberships,
interests, or other securities of the surviving party, the cash,
rights, securities, or other property which the holders of those
memberships or securities are to receive in exchange for the
memberships or securities, which cash, rights, securities, or other
property may be in addition to or in lieu of shares, memberships,
interests, or other securities of the surviving party.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a domestic
limited partnership is a party to the merger, subdivision (a) of
Section 15678.2 or 15911.12, or, if a domestic general partnership is
a party to the merger, subdivision (a) of Section 16911, or, if a
domestic limited liability company is a party to the merger,
subdivision (a) of Section 17551.
(6) Any other details or provisions as are desired.
(c) Each membership of the same class of any constituent
corporation (other than the cancellation of memberships held by a
party to the merger or its parent or a wholly owned subsidiary of
either in another constituent corporation) shall be treated equally
with respect to any distribution of cash, property, rights, or
securities unless (i) all members of the class consent or (ii) the
commissioner has approved the terms and conditions of the transaction
and the fairness of those terms pursuant to Section 25142.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger if the
amendment is approved by each constituent corporation in the same
manner as the original agreement of merger. If the agreement of
merger as so amended and approved is also approved by each of the
other parties to the agreement of merger, as so amended it shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the members (Section 12224), at any time
before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president, or a vice
president and also by its secretary or an assistant secretary acting
on behalf of their respective corporations.
(g) After required approvals of the merger by each constituent
corporation and each other party to the merger, the surviving party
shall file a copy of the agreement of merger with an officers'
certificate of each constituent domestic and foreign corporation
attached stating the total number of outstanding shares or membership
interests of each class entitled to vote on the merger (and
identifying any other person or persons whose approval is required),
that the agreement of merger in the form attached or its principal
terms, as required, were approved by that corporation by a vote of a
number of shares or membership interests of each class which equaled
or exceeded the vote required, specifying each class entitled to vote
and the percentage vote required of each class, and, if applicable,
by that other person or persons whose approval is required.
If equity securities of a parent party (Section 12242.6) are to be
issued in the merger, the officers' certificate or certificate of
merger of the controlled party shall state either that no vote of the
shareholders of the parent party was required or that the required
vote was obtained. The merger and any amendment of the articles of
the surviving corporation, if applicable, contained in the agreement
of merger shall be effective upon the filing of the agreement of
merger, subject to the provisions of subdivision (i). If a domestic
reciprocal insurer organized after 1974 to provide medical
malpractice insurance is a party to the merger, the agreement of
merger or certificate of merger shall not be filed until there has
been filed the certificate issued by the Insurance Commissioner
approving the merger pursuant to Section 1555 of the Insurance Code.
In lieu of an officers' certificate, a certificate of merger, on a
form prescribed by the Secretary of State, shall be filed for each
constituent other business entity. The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all of the managers of the limited liability
company (unless a lesser number is specified in its articles of
organization or operating agreement) and by each domestic constituent
limited partnership by all general partners (unless a lesser number
is provided in its certificate of limited partnership or partnership
agreement) and by each domestic constituent general partnership by
two partners (unless a lesser number is provided in its partnership
agreement) and by each foreign constituent general partnership or
foreign constituent limited liability company by one or more managers
and by each foreign constituent limited partnership by one or more
general partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed such officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for such
party the provision of law or other basis for the authority of the
signing persons.
The certificate of merger shall set forth, if a vote of the
shareholders, members, partners, or other holders of interests of the
constituent other business entity was required, a statement setting
forth the total number of outstanding interests of each class
entitled to vote on the merger and that the agreement of merger or
its principal terms, as required, were approved by a vote of the
number of interests of each class which equaled or exceeded the vote
required, specifying each class entitled to vote and the percentage
vote required of each class, and any other information required to be
set forth under the laws under which the constituent other business
entity is organized, including, if a domestic limited partnership is
a party to the merger, subdivision (a) of Section 15678.4 or
15911.14, if a domestic general partnership is a party to the merger,
subdivision (b) of Section 16915, and, if a domestic limited
liability company is a party to the merger, subdivision (a) of
Section 17552. The certificate of merger for each constituent foreign
other business entity, if any, shall also set forth the statutory or
other basis under which that foreign other business entity is
authorized by the laws under which it is organized to effect the
merger.
The Secretary of State may certify a copy of the agreement of
merger separate from the officers' certificates and certificates of
merger attached thereto.
(h) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger, the performance of the conditions necessary to
the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger, and of the merger of the
constituent corporations, either by themselves or together with other
constituent parties, into the surviving party to the merger.
(i) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivisions (a) and (g) and this subdivision.
(2) Subject to subdivision (c) of Section 12214 and paragraph (3),
the merger shall be effective as to each domestic constituent
corporation and domestic constituent other business entity upon
filing of the agreement of merger with attachments as provided in
subdivision (g).
(3) If the surviving party is a foreign corporation or foreign
other business entity, except as provided in paragraph (4), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of the surviving foreign corporation and of
each constituent foreign and domestic corporation and a certificate
of merger of each constituent other business entity attached, which
officers' certificates and certificates of merger shall conform to
the requirements of subdivision (g).
If one or more domestic other business entities is a disappearing
party in a merger pursuant to this subdivision in which a foreign
other business entity is the surviving entity, a certificate of
merger required by the laws under which each domestic other business
entity is organized, including subdivision (a) of Section 15678.4 or
15911.14, subdivision (b) of Section 16915 or subdivision (a) of
Section 17552, if applicable, shall also be filed at the same time as
the filing of the agreement of merger.
(4) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(5) Each foreign disappearing corporation that is qualified for
the transaction of intrastate business shall automatically by the
filing pursuant to subdivision (g) surrender its right to transact
intrastate business as of the date of filing in this state or, if
later, the effective date of the merger. With respect to each foreign
disappearing other business entity previously registered for the
transaction of intrastate business in this state, the filing of the
agreement of merger pursuant to subdivision (g) automatically has the
effect of a cancellation of registration for that foreign other
business entity without the necessity of the filing of a certificate
of cancellation.
SEC. 16. Section 12550.5 of the Corporations Code is amended to
read:
12550.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) Notwithstanding Sections 1103, 1108, 1110, 1113, 6014, 6018,
6019.1, 8014, 8018, 8019.1, 12535, 12539, 12540.1, 15678.4, 15911.14,
and 17552 of this code and Sections 17945, 17948.1, and 23334 of the
Revenue and Taxation Code, if the surviving entity is a domestic
limited liability company, domestic corporation, or registered
limited liability partnership or a foreign limited liability company,
foreign limited liability partnership, or foreign corporation that
is registered or qualified to do business in California, the
Secretary of State shall file the merger without the certificate of
satisfaction of the Franchise Tax Board and shall notify the
Franchise Tax Board of the merger.
SEC. 16.5. Section 12550.5 of the Corporations Code is amended to
read:
12550.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign corporation or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign corporation or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) If the surviving entity is a domestic limited liability
company, domestic corporation, or registered limited liability
partnership or a foreign limited liability company, foreign limited
liability partnership, or foreign corporation that is registered or
qualified to do business in California, the Secretary of State shall
notify the Franchise Tax Board of the merger.
SEC. 17. Section 15534 is added to the Corporations Code, to read:
15534. This chapter shall become inoperative and be repealed on
January 1, 2010, unless a later enacted statute, which becomes
effective on or before January 1, 2010, deletes or extends the dates
on which it becomes inoperative and is repealed.
SEC. 18. Section 15724 is added to the Corporations Code, to read:
15724. This chapter shall become inoperative and be repealed on
January 1, 2010, unless a later enacted statute, which becomes
effective on or before January 1, 2010, deletes or extends the dates
on which it becomes inoperative and is repealed.
SEC. 19. Section 15800 of the Corporations Code is amended to
read:
15800. (a) Every partnership, other than a foreign limited
partnership, subject to Chapter 3 (commencing with Section 15611) or
Chapter 5.5 (commencing with Section 15900), or a commercial or
banking partnership established and transacting business in a place
outside the United States, that is domiciled without this state and
has no regular place of business within this state, shall, within 40
days from the time it commences to do business in this state, file a
statement in the office of the Secretary of State in accordance with
Section 16309 designating some natural person or corporation as the
agent of the partnership upon whom process issued by authority of or
under any law of this state directed against the partnership may be
served. A copy of the designation, duly certified by the Secretary of
State, is sufficient evidence of the appointment.
(b) The process may be served in the manner provided in
subdivision (b) of Section 16310 on the person so designated, or, in
the event that no person has been designated, or if the agent
designated for the service of process is a natural person and cannot
be found with due diligence at the address stated in the designation,
or if the agent is a corporation and no person can be found with due
diligence to whom the delivery authorized by subdivision (b) of
Section 16310 may be made for the purpose of delivery to the
corporate agent, or if the agent designated is no longer authorized
to act, then service may be made by personal delivery to the
Secretary of State, Assistant Secretary of State, or a Deputy
Secretary of State of the process, together with a written statement
signed by the party to the action seeking the service, or by the
party's attorney, setting forth the last known address of the
partnership and a service fee as set forth in Section 12197 of the
Government Code. The Secretary of State shall immediately give notice
of the service to the partnership by forwarding the process to it by
registered mail, return receipt requested, at the address given in
the written statement.
(c) Service on the person designated, or personal delivery of the
process and statement of address together with a service fee as set
forth in Section 12197 of the Government Code to the Secretary of
State, Assistant Secretary of State, or a Deputy Secretary of State,
pursuant to this section is a valid service on the partnership. The
partnership so served shall appear within 30 days after service on
the person designated or within 30 days after delivery of the process
to the Secretary of State, Assistant Secretary of State, or a Deputy
Secretary of State.
SEC. 20. Chapter 5.5 (commencing with Section 15900) is added to
Title 2 of the Corporations Code, to read:
CHAPTER 5.5. Uniform Limited Partnership Act of 2008
Article 1. General Provisions
15900. This chapter may be cited as the Uniform Limited
Partnership Act of 2008.
15901.02. In this chapter, the following terms have the following
meanings:
(a) "Acknowledged" means that an instrument is either of the
following:
(1) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code.
(2) Executed to include substantially the following wording
preceding the signature: "It is hereby declared that I am the person
who executed this instrument, which execution is my act and deed. Any
certificate of acknowledgment taken without this state before a
notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated."
(b) "Certificate of limited partnership" means the certificate
required by Section 15902.01. The term includes the certificate as
amended or restated.
(c) "Contribution," except in the phrase "right of contribution,"
means any benefit provided by a person to a limited partnership in
order to become a partner or in the person's capacity as a partner.
(d) "Debtor in bankruptcy" means a person that is the subject of:
(1) an order for relief under Title 11 of the United States Code
or a comparable order under a successor statute of general
application; or
(2) a comparable order under federal, state, or foreign law
governing insolvency.
(e) "Designated office" means:
(1) with respect to a limited partnership, the office that the
limited partnership is required to designate and maintain under
Section 15901.14; and
(2) with respect to a foreign limited partnership, its
principal office.
(f) "Distribution" means a transfer of money or other property
from a limited partnership to a partner in the partner's capacity as
a partner or to a transferee on account of a transferable interest
owned by the transferee.
(g) "Domestic corporation" means a corporation formed under the
laws of this state.
(h) "Electronic transmission by the partnership" means a
communication that meets both of the following requirements:
(1) It is delivered by any of the following means:
(A) Facsimile transmission or electronic mail when directed to the
facsimile number or electronic mail address, respectively, for the
recipient on the record with the partnership.
(B) Posting on an electronic message board or other electronic
database, that the partnership has designated for the communication,
together with a separate notice to the recipient of the posting,
which shall be validly delivered upon the later of either the posting
or delivery of the separate notice thereof.
(C) Other means of electronic communication.
(2) It is to a recipient that has provided an unrevoked consent to
the use of the means of transmission used by the partnership in the
electronic transmission.
(i) "Electronic transmission to the partnership" means a
communication that meets both of the following requirements:
(1) It is delivered by any of the following means:
(A) Facsimile communication or other electronic mail when directed
to the facsimile number or electronic mail address, respectively,
that the partnership has provided from time to time to the partners
for sending communications to the partnership.
(B) Posting on an electronic message board or electronic database
that the partnership has designated for the communication. A
transmission shall have been validly delivered upon the posting.
(C) Other means of electronic communication.
(2) It is a communication as to which the partnership has placed
in effect reasonable measures to verify that the sender is the
partner purporting to send the transmission, either in person or by
proxy.
(j) "Foreign limited liability limited partnership" means a
foreign limited partnership whose general partners have limited
liability for the obligations of the foreign limited partnership.
(k) "Foreign limited partnership" means a partnership formed under
the laws of a jurisdiction other than this state and required by
those laws to have one or more general partners and one or more
limited partners. The term includes a foreign limited liability
limited partnership.
(l) "Foreign other business entity" means an other business entity
formed under the laws of any state other than this state or under
the laws of a foreign country.
(m) "General partner" means:
(1) with respect to a limited partnership, a person that:
(A) becomes a general partner under Section 15904.01; or
(B) was a general partner in a limited partnership when the
limited partnership became subject to this chapter under subdivision
(a) or (b) of Section 15912.06; and
(2) with respect to a foreign limited partnership, a person that
has rights, powers, and obligations similar to those of a general
partner in a limited partnership.
(n) "Interests of all partners" means the aggregate interests of
all partners in the current profits derived from business operations
of the partnership.
(o) "Interests of limited partners" means the aggregate interests
of all limited partners in their respective capacities as limited
partners in the current profits derived from business operations of
the partnership.
(p) "Limited partner" means:
(1) with respect to a limited partnership, a person that:
(A) becomes a limited partner under Section 15903.01 or
subdivision (g) of 15907.02; or
(B) was a limited partner in a limited partnership when the
limited partnership became subject to this chapter under subdivision
(a) or (b) of Section 15912.06; and
(2) with respect to a foreign limited partnership, a person that
has rights, powers, and obligations similar to those of a limited
partner in a limited partnership.
(q) "Limited partnership or domestic limited partnership," except
in the phrases "foreign limited partnership" and "foreign limited
liability limited partnership," means an entity, having one or more
general partners and one or more limited partners, which is formed
under this chapter by two or more persons or becomes subject to this
chapter under Article 11 (commencing with Section 15911.01) or
subdivisions (a) or (b) of Section 15912.06.
(r) "Mail" means first-class mail, postage prepaid, unless
registered mail is specified. Registered mail includes certified
mail.
(s) "Majority in interest of all partners" means more than 50
percent of the interests of all partners.
(t) "Majority in interest of the limited partners" means more than
50 percent of the interests of limited partners.
(u) "Other business entity" means a corporation, general
partnership, limited liability company, business trust, real estate
investment trust, or an unincorporated association other than a
nonprofit association, but excludes a limited partnership.
(v) "Parent" of a limited partnership means any of the following:
(1) A general partner of the limited partnership.
(2) A person possessing, directly or indirectly, the power to
direct or cause the direction of the management and policies of a
general partner of the limited partnership.
(3) A person owning, directly or indirectly, limited partnership
interests possessing more than 50 percent of the aggregate voting
power of the limited partnership.
(w) "Partner" means a limited partner or general partner.
(x) "Partnership agreement" means the partners' agreement, whether
oral, implied, in a record, or in any combination, concerning the
limited partnership. The term includes the agreement as amended.
(y) "Person" means an individual, partnership, limited
partnership, trust, estate, association, corporation, limited
liability company, or other entity, whether domestic or foreign.
(z) "Person dissociated as a general partner" means a person
dissociated as a general partner of a limited partnership.
(aa) "Principal office" means the office where the principal
executive office of a limited partnership or foreign limited
partnership is located, whether or not the office is located in this
state.
(ab) "Proxy" means a written authorization signed by a partner or
the partner's attorney in fact giving another person the power to
vote with respect to the interest of that partner. "Signed," for the
purpose of this subdivision, means the placing of the partner's name
on the proxy, whether by manual signature, typewriting, telegraphic
transmission, or otherwise, by the partner or the partner's attorney
in fact.
(ac) "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(ad) "Required information" means the information that a limited
partnership is required to maintain under Section 15901.11.
(ae) "Return of capital" means any distribution to a partner to
the extent that the aggregate distributions to that partner do not
exceed that partner's contributions to the partnership.
(af) "Sign" means:
(1) to execute or adopt a tangible symbol with the present intent
to authenticate a record; or
(2) to attach or logically associate an electronic symbol, sound,
or process to or with a record with the present intent to
authenticate the record.
(ag) "State" means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the
United States.
(ah) "Time a notice is given or sent," unless otherwise expressly
provided, means any of the following:
(1) The time a written notice to a partner or the limited
partnership is deposited in the United States mail.
(2) The time any other written notice is personally delivered to
the recipient, is delivered to a common carrier for transmission, or
is actually transmitted by the person giving the notice by electronic
means to the recipient.
(3) The time any oral notice is communicated, in person or by
telephone or wireless, to the recipient or to a person at the office
of the recipient who the person giving the notice has reason to
believe will promptly communicate it to the recipient.
(ai) (1) "Transact intrastate business" means, for purposes of
registration, entering into repeated and successive transactions of
business in this state, other than interstate or foreign commerce.
(2) A foreign limited partnership shall not be considered to be
transacting intrastate business within the meaning of paragraph (1)
solely because of its status as one or more of the following:
(A) A shareholder of a foreign corporation transacting intrastate
business.
(B) A shareholder of a domestic corporation.
(C) A limited partner of a foreign limited partnership transacting
intrastate business.
(D) A limited partner of a domestic limited partnership.
(E) A member or manager of a foreign limited liability company
transacting intrastate business.
(F) A member or manager of a domestic limited liability company.
(3) Without excluding other activities that may not constitute
transacting intrastate business, a foreign limited partnership shall
not be considered to be transacting intrastate business within the
meaning of paragraph (1) solely by reason of carrying on in this
state one or more of the following activities:
(A) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims and disputes.
(B) Holding meetings of its partners or carrying on other
activities concerning its internal affairs.
(C) Maintaining bank accounts.
(D) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositories with relation to
its securities.
(E) Effecting sales through independent contractors.
(F) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where the orders require acceptance
without this state before becoming binding contracts.
(G) Creating or acquiring evidences of debt or mortgages, liens,
or security interests on real or personal property.
(H) Securing or collecting debts or enforcing mortgages and
security interests in property securing the debts.
(I) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(J) Transacting business in interstate commerce.
(4) A person shall not be deemed to be transacting intrastate
business in this state within the meaning of paragraph (1) solely
because of the person's status as a limited partner of a domestic
limited partnership or a foreign limited partnership registered to
transact intrastate business in this state.
This definition shall not apply in determining the contacts or
activities that may subject a foreign limited partnership to service
of process, taxation, jurisdiction, or other regulation under any
other law of this state.
(aj) "Transfer" includes an assignment, conveyance, deed, bill of
sale, lease, mortgage, creation of a security interest or
encumbrance, gift, and transfer by operation of law.
(ak) "Transferable interest" means a partner's right to receive
distributions.
(al) "Transferee" means a person to which all or part of a
transferable interest has been transferred, whether or not the
transferor is a partner.
15901.03. (a) A person knows a fact if the person has actual
knowledge of it.
(b) A person has notice of a fact if the person:
(1) knows of it;
(2) has received a notification of it;
(3) has reason to know it exists from all of the facts known to
the person at the time in question; or
(4) has notice of it under subdivision (c) or (d).
(c) A certificate of limited partnership on file in the office of
the Secretary of State is notice that the partnership is a limited
partnership and the persons designated in the certificate as general
partners are general partners. Except as otherwise provided in
subdivision (d), the certificate is not notice of any other fact.
(d) A person has notice of:
(1) another person's dissociation as a general partner, 90 days
after the effective date of an amendment to the certificate of
limited partnership which states that the other person has
dissociated or 90 days after the effective date of a certificate of
dissociation pertaining to the other person, whichever occurs first;
(2) a limited partnership's dissolution, 90 days after the
effective date of an amendment to the certificate of limited
partnership stating that the limited partnership is dissolved;
(3) a limited partnership's termination, 90 days after the
effective date of a certificate of cancellation;
(4) a limited partnership's conversion under Article 11
(commencing with Section 15911.01), 90 days after the effective date
of the certificate of conversion; or
(5) a merger under Article 11 (commencing with Section 15911.01),
90 days after the effective date of the certificate of merger.
(e) A person notifies or gives a notification to another person by
taking steps reasonably required to inform the other person in
ordinary course, whether or not the other person learns of it.
(f) A person receives a notification when the notification:
(1) comes to the person's attention; or
(2) is delivered at the person's place of business or at any other
place held out by the person as a place for receiving
communications.
(g) Except as otherwise provided in subdivision (h), a person
other than an individual knows, has notice, or receives a
notification of a fact for purposes of a particular transaction when
the individual conducting the transaction for the person knows, has
notice, or receives a notification of the fact, or in any event when
the fact would have been brought to the individual's attention if the
person had exercised reasonable diligence. A person other than an
individual exercises reasonable diligence if it maintains reasonable
routines for communicating significant information to the individual
conducting the transaction for the person and there is reasonable
compliance with the routines. Reasonable diligence does not require
an individual acting for the person to communicate information unless
the communication is part of the individual's regular duties or the
individual has reason to know of the transaction and that the
transaction would be materially affected by the information.
(h) A general partner's knowledge, notice, or receipt of a
notification of a fact relating to the limited partnership is
effective immediately as knowledge of, notice to, or receipt of a
notification by the limited partnership, except in the case of a
fraud on the limited partnership committed by or with the consent of
the general partner. A limited partner's knowledge, notice, or
receipt of a notification of a fact relating to the limited
partnership is not effective as knowledge of, notice to, or receipt
of a notification by the limited partnership.
15901.04. (a) A limited partnership is an entity distinct from
its partners.
(b) A limited partnership may be organized under this chapter for
any lawful purpose. A limited partnership may engage in any lawful
business activity, whether or not for profit, except the banking
business, the business of issuing policies of insurance and assuming
insurance risks, or the trust company business.
(c) A limited partnership has a perpetual duration.
15901.05. A limited partnership has the powers to do all things
necessary or convenient to carry on its activities, including the
power to sue, be sued, and defend in its own name and to maintain an
action against a partner for harm caused to the limited partnership
by a breach of the partnership agreement or violation of a duty to
the partnership.
15901.06. The law of this state governs relations among the
partners of a limited partnership and between the partners and the
limited partnership and the liability of partners as partners for an
obligation of the limited partnership.
15901.07. (a) Unless displaced by particular provisions of this
chapter, the principles of law and equity supplement this chapter.
(b) If an obligation to pay interest arises under this chapter and
the rate is not specified, the rate is that specified in Section
3289 of the Civil Code.
15901.08. (a) The name of a limited partnership may contain the
name of any partner.
(b) The name of a limited partnership must contain the phrase
"limited partnership" or the abbreviation "L.P." or "LP" at the end
of its name.
(c) The name of a foreign limited liability limited partnership
that is applying for a certificate of registration pursuant to
Section 15909.02 must contain the phrase "limited liability limited
partnership" or the abbreviation "LLLP" or "L.L.L.P." and must not
contain the abbreviation "L.P." or "LP."
(d) Unless authorized by subdivision (e), the name of a limited
partnership must be distinguishable in the records of the Secretary
of State from:
(1) the name of any limited partnership that has previously filed
a certificate pursuant to Section 15902.01 or any foreign limited
partnership registered pursuant to Section 15909.01; and
(2) each name reserved under Section 15901.09.
(e) A limited partnership may apply to the Secretary of State for
authorization to use a name that does not comply with subdivision
(d). The Secretary of State shall authorize use of the name applied
for if, as to each conflicting name:
(1) the present user, registrant, or owner of the conflicting name
consents in a signed record to the use and submits an undertaking in
a form satisfactory to the Secretary of State to change the
conflicting name to a name that complies with subdivision (d) and is
distinguishable in the records of the Secretary of State from the
name applied for;
(2) the applicant delivers to the Secretary of State a certified
copy of the final judgment of a court of competent jurisdiction
establishing the applicant's right to use in this state the name
applied for; or
(3) the applicant delivers to the Secretary of State proof
satisfactory to the Secretary of State that the present user,
registrant, or owner of the conflicting name:
(A) has merged into the applicant;
(B) has been converted into the applicant; or
(C) has transferred substantially all of its assets, including the
conflicting name, to the applicant.
(f) Subject to Section 15909.05, this section applies to any
foreign limited partnership transacting business in this state,
having a certificate of registration to transact business in this
state, or applying for a certificate of registration.
(g) The name of a limited partnership may not contain the words
"bank," "insurance," "trust," "trustee," "incorporated," "inc.,"
"corporation" or "corp."
15901.09. (a) The exclusive right to the use of a name that
complies with Section 15901.08 may be reserved by:
(1) a person intending to organize a limited partnership under
this chapter and to adopt the name;
(2) a limited partnership or a foreign limited partnership
authorized to transact business in this state intending to adopt the
name;
(3) a foreign limited partnership intending to obtain a
certificate of registration to transact business in this state and
adopt the name;
(4) a person intending to organize a foreign limited partnership
and intending to have it obtain a certificate of registration to
transact business in this state and adopt the name;
(5) a foreign limited partnership formed under the name; or
(6) a foreign limited partnership formed under a name that does
not comply with subdivision (b) or (c) of Section 15901.08, but the
name reserved under this paragraph may differ from the foreign
limited partnership's name only to the extent necessary to comply
with subdivision (b) or (c) of Section 15901.08.
(b) A person may apply to reserve a name under subdivision (a) by
delivering to the Secretary of State an application that states the
name to be reserved and the paragraph of subdivision (a) which
applies. If the Secretary of State finds that the name is available
for use by the applicant, the Secretary of State shall issue a
certificate of name reservation and thereby reserve the name for the
exclusive use of the applicant for 60 days.
(c) An applicant that has reserved a name pursuant to subdivision
(b) may reserve the same name for an additional 60-day period. The
Secretary of State shall not issue a certificate reserving the same
name for two or more consecutive 60-day periods to the same applicant
or for the use or benefit of the same person.
(d) A person that has reserved a name under this section may
transfer the reserved name to another person, effective upon delivery
to the Secretary of State of a notice of transfer that states the
reserved name, the name and address of the person to which the
reservation is to be transferred, and the paragraph of subdivision
(a) which applies to the other person.
15901.10. (a) Except as otherwise provided in subdivision (b),
the partnership agreement governs relations among the partners and
between the partners and the partnership. To the extent the
partnership agreement does not otherwise provide, this chapter
governs relations among the partners and between the partners and the
partnership.
(b) A partnership agreement may not:
(1) vary a limited partnership's power under Section 15901.05 to
sue, be sued, and defend in its own name;
(2) vary the law applicable to a limited partnership under Section
15901.06;
(3) vary the requirements of Section 15902.04;
(4) vary the information required under Section 15901.11 or
unreasonably restrict the right to information under Section 15903.04
or 15904.07, but the partnership agreement may impose reasonable
restrictions on the availability and use of information obtained
under those sections and may define appropriate remedies, including
liquidated damages, for a breach of any reasonable restriction on
use;
(5) eliminate the duty of loyalty under Section 15904.08, but the
partnership agreement may:
(A) identify specific types or categories of activities that do
not violate the duty of loyalty, if not manifestly unreasonable; and
(B) specify the number or percentage of partners which may
authorize or ratify, after full disclosure to all partners of all
material facts, a specific act or transaction that otherwise would
violate the duty of loyalty;
(6) unreasonably reduce the duty of care under subdivision (c) of
Section 15904.08;
(7) eliminate the obligation of good faith and fair dealing under
subdivision (b) of Section 15903.05 and subdivision (d) of Section
15904.08, but the partnership agreement may prescribe the standards
by which the performance of the obligation is to be measured, if the
standards are not manifestly unreasonable;
(8) vary the power of a person to dissociate as a general partner
under subdivision (a) of Section 15906.04 except to require that the
notice under subdivision (a) of Section 15906.03 be in a record;
(9) eliminate the power of a court to decree dissolution in the
circumstances specified in subdivision (a) of Section 15908.02;
(10) vary the requirement to wind up the partnership's business as
specified in Section 15908.03;
(11) unreasonably restrict the right to maintain an action under
Article 10 (commencing with Section 15910.01);
(12) restrict the right of a partner to approve a conversion or
merger;
(13) vary the provisions of Article 11.5 (commencing with Section
15911.14), except to the extent expressly permitted by such
provisions; or
(14) restrict rights under this chapter of a person other than a
partner or a transferee.
15901.11. A limited partnership shall maintain at its designated
office the following information:
(1) a current list showing the full name and last known street and
mailing address of each partner, separately identifying the general
partners, in alphabetical order, and the limited partners, in
alphabetical order;
(2) a copy of the initial certificate of limited partnership and
all amendments to and restatements of the certificate, together with
signed copies of any powers of attorney under which any certificate,
amendment, or restatement has been signed;
(3) a copy of any filed certificate of conversion or merger;
(4) a copy of the limited partnership's federal, state, and local
income tax returns and reports, if any, for the six most recent
years;
(5) a copy of any partnership agreement made in a record and any
amendment made in a record to any partnership agreement;
(6) a copy of any financial statement of the limited partnership
for the six most recent years;
(7) a copy of any record made by the limited partnership during
the past three years of any consent given by or vote taken of any
partner pursuant to this chapter or the partnership agreement; and
(8) unless contained in a partnership agreement made in a record,
a record stating:
(A) the amount of cash, and a description and statement of the
agreed value of the other benefits, contributed and agreed to be
contributed by each partner;
(B) (1) the times at which, or events on the happening of which,
any additional contributions agreed to be made by each partner are to
be made;
(C) for any person that is both a general partner and a limited
partner, a specification of what transferable interest the person
owns in each capacity; and
(D) any events upon the happening of which the limited partnership
is to be dissolved and its activities wound up.
15901.12. A partner may lend money to and transact other business
with the limited partnership and has the same rights and obligations
with respect to the loan or other transaction as a person that is
not a partner.
15901.13. A person may be both a general partner and a limited
partner. A person that is both a general and limited partner has the
rights, powers, duties, and obligations provided by this chapter and
the partnership agreement in each of those capacities. When the
person acts as a general partner, the person is subject to the
obligations, duties and
restrictions under this chapter and the partnership agreement for
general partners. When the person acts as a limited partner, the
person is subject to the obligations, duties and restrictions under
this chapter and the partnership agreement for limited partners.
15901.14. (a) A limited partnership shall designate and
continuously maintain in this state:
(1) an office, which need not be a place of its activity in this
state; and
(2) an agent for service of process.
(b) A foreign limited partnership shall designate and continuously
maintain in this state an agent for service of process.
(c) An agent for service of process of a limited partnership or
foreign limited partnership must be an individual who is a resident
of this state or a corporation that has complied with Section 1505 of
the Corporations Code and whose capacity to act as an agent has not
terminated.
15901.15. Action requiring the consent of partners under this
chapter may be taken without a meeting, and a partner may appoint a
proxy to consent or otherwise act for the partner by signing an
appointment record, either personally or by the partner's attorney in
fact.
15901.16. (a) In addition to Chapter 4 (commencing with Section
413.10) of Title 5 of Part 2 of the Code of Civil Procedure, process
may be served upon limited partnerships and foreign limited
partnerships as provided in this section.
(b) Personal service of a copy of any process against the limited
partnership or the foreign limited partnership will constitute valid
service on the limited partnership if delivered either (1) to any
individual designated by it as agent or, if a limited partnership, to
any general partner or (2) if the designated agent or, if a limited
partnership, general partner is a corporation, to any person named in
the latest certificate of the corporate agent filed pursuant to
Section 1505 of the Corporations Code at the office of the corporate
agent or to any officer of the general partner, shall constitute
valid service on the limited partnership or the foreign limited
partnership. No change in the address of the agent for service of
process where the agent is an individual or appointment of a new
agent for service of process shall be effective (1) for a limited
partnership until an amendment to the certificate of limited
partnership is filed or (2) for a foreign limited partnership until
an amendment to the application for registration is filed. In the
case of a foreign limited partnership that has appointed the
Secretary of State as agent for service of process by reason of
subdivision (e) of Section 15909.07, process shall be delivered by
hand to the Secretary of State, or to any person employed in the
capacity of assistant or deputy, which shall be one copy of the
process for each defendant to be served, together with a copy of the
court order authorizing the service and the fee therefor. The order
shall include and set forth an address to which such process shall be
sent by the Secretary of State.
(c) (1) If an agent for service of process has resigned and has
not been replaced or if the agent designated cannot with reasonable
diligence be found at the address designated for personal delivery of
the process, and it is shown by affidavit to the satisfaction of the
court that process against a limited partnership or foreign limited
partnership cannot be served with reasonable diligence upon the
designated agent or, if a foreign limited partnership, upon any
general partner by hand in the manner provided in Section 415.10,
subdivision (a) of Section 415.20 or subdivision (a) of Section
415.30, of the Code of Civil Procedure, the court may make an order
that the service shall be made upon a domestic limited partnership
which has filed a certificate or upon a foreign limited partnership
which has a certificate of registration to transact business in this
state by delivering by hand to the Secretary of State, or to any
person employed in the Secretary of State's office in the capacity of
assistant or deputy, one copy of the process for each defendant to
be served, together with a copy of the order authorizing the service.
Service in this manner shall be deemed complete on the 10th day
after delivery of the process to the Secretary of State.
(2) Upon receipt of any such copy of process and the fee therefor,
the Secretary of State shall give notice of the service of the
process to the limited partnership or foreign limited partnership, at
its principal office, by forwarding to that office, by registered
mail with request for return receipt, the copy of the process.
(3) The Secretary of State shall keep a record of all process
served upon the Secretary of State under this chapter and shall
record therein the time of service and the Secretary of State's
action with reference thereto. A certificate under the Secretary of
State's official seal, certifying to the receipt of process, the
giving of notice thereof to the limited partnership or foreign
limited partnership, and the forwarding of the process pursuant to
this section, shall be competent and prima facie evidence of the
matters stated therein.
(d) (1) The certificate of a limited partnership and the
application for a certificate of registration of a foreign limited
partnership shall designate, as the agent for service of process, an
individual residing in this state or a corporation which has complied
with Section 1505 of the Corporations Code and whose capacity to act
as an agent has not terminated. If an individual is designated, the
statement shall set forth that person's complete business or
residence address in this state. If a corporate agent is designated,
no address for it shall be set forth.
(2) An agent designated for service of process may file with the
Secretary of State a signed and acknowledged written statement of
resignation as an agent. Thereupon the authority of the agent to act
in that capacity shall cease and the Secretary of State forthwith
shall give written notice of the filing of the certificate of
resignation by mail to the limited partnership or foreign limited
partnership addressed to its designated office.
(3) If an individual who has been designated agent for service of
process dies or resigns or no longer resides in the state or if the
corporate agent for that purpose, resigns, dissolves, withdraws from
the state, forfeits its right to transact intrastate business, has
its corporate rights, powers and privileges suspended or ceases to
exist, (A) the limited partnership shall promptly file an amendment
to the certificate designating a new agent or (B) the foreign limited
partnership shall promptly file an amendment to the application for
registration.
(e) In addition to any other discovery rights which may exist, in
any case pending in a California court having jurisdiction in which a
party seeks records from a partnership formed under this chapter,
whether or not the partnership is a party, the court shall have the
power to order the production in California of the books and records
of the partnership on the terms and conditions that the court deems
appropriate.
15901.17. (a) A partner may, in a written partnership agreement
or other writing, consent to be subject to the nonexclusive
jurisdiction of the courts of a specified jurisdiction, or the
exclusive jurisdiction of the courts of this state.
(b) If a partner desires to use the arbitration process, that
partner may in a written partnership agreement or other writing,
consent to be nonexclusively subject to arbitration in a specified
state, or to be exclusively subject to arbitration in this state.
(c) Along with this consent to the jurisdiction of courts or
arbitration, a partner may consent to be served with legal process in
the manner prescribed in the partnership agreement or other writing.
Article 2. Formation; Certificate of Limited Partnership and
Other Filings
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 of State and, either before or after the
filing of a certificate of limited partnership, the partners shall
have entered into a partnership agreement. The certificate must
state:
(1) the name of the limited partnership, which must comply with
Section 15901.08;
(2) the address of the initial designated office; and
(3) the name and address of the initial agent for service of
process in accordance with paragraph (1) of subdivision (d) of
Section 15901.16.
(4) the name and the address of each general partner.
(b) A certificate of limited partnership may also contain any
other matters but may not vary or otherwise affect the provisions
specified in subdivision (b) of Section 15901.10 in a manner
inconsistent with that section.
(c) Subject to subdivision (c) of Section 15902.06 a limited
partnership is formed when the Secretary of State files the
certificate of limited partnership.
(d) Subject to subdivision (b), if any provision of a partnership
agreement is inconsistent with the filed certificate of limited
partnership or with a filed certificate of dissociation,
cancellation, or amendment or filed certificate of conversion or
merger:
(1) the partnership agreement prevails as to partners and
transferees; and
(2) the filed certificate of limited partnership, certificate of
dissociation, cancellation, or amendment or filed certificate of
conversion or merger prevails as to persons, other than partners and
transferees, that reasonably rely on the filed record to their
detriment.
(e) A limited partnership may record in the office of the county
recorder of any county in this state a certified copy of the
certificate of limited partnership, or any amendment thereto, which
has been filed by the Secretary of State. A foreign limited
partnership may record in the office of the county recorder of any
county in the state a certified copy of the application for
registration to transact business, together with the certificate of
registration, referred to in Section 15909.02, or any amendment
thereto, which has been filed by the Secretary of State. The
recording shall create a conclusive presumption in favor of any bona
fide purchaser or encumbrancer for value of the partnership real
property located in the county in which the certified copy has been
recorded, that the persons named as general partners therein are the
general partners of the partnership named and that they are all of
the general partners of the partnership.
(f) The Secretary of State may cancel the filing of certificates
of limited partnership if a check or other remittance accepted in
payment of the filing fee is not paid upon presentation. For partners
and transferees, the partnership agreement is paramount. Upon
receiving written notification that the item presented for payment
has not been honored for payment, the Secretary of State shall give a
first written notice of the applicability of this section to the
agent for service of process or to the person submitting the
instrument. Thereafter, if the amount has not been paid by cashier's
check or equivalent, the Secretary of State shall give a second
written notice of cancellation and the cancellation shall thereupon
be effective. The second notice shall be given 20 days or more after
the first notice and 90 days or less after the original filing.
(g) The Secretary of State shall include with instructional
materials, provided in conjunction with the form for filing a
certificate of limited partnership under subdivision (a), a notice
that the filing of the certificate of limited partnership will
obligate the limited partnership to pay an annual tax for that
taxable year to the Franchise Tax Board pursuant to Section 17935 of
the Revenue and Taxation Code. That notice shall be updated annually
to specify the dollar amount of the annual tax.
15902.02. (a) In order to amend its certificate of limited
partnership, a limited partnership must deliver to and on a form
prescribed by the Secretary of State for filing an amendment stating:
(1) the name and the Secretary of State's file number of the
limited partnership; and
(2) the changes the amendment makes to the certificate as most
recently amended or restated.
(b) A limited partnership shall promptly deliver to the Secretary
of State for filing an amendment to a certificate of limited
partnership to reflect:
(1) the admission of a new general partner;
(2) the dissociation of a person as a general partner; or
(3) the appointment of a person to wind up the limited partnership'
s activities under subdivisions (c) or (d) of Section 15908.03.
(c) A general partner that knows that any information in a filed
certificate of limited partnership was false when the certificate was
filed or has become false due to changed circumstances shall
promptly:
(1) cause the certificate to be amended; or
(2) if appropriate, deliver to the Secretary of State for filing
an amendment or a certificate of correction pursuant to Section
15902.07.
(d) A certificate of limited partnership may be amended at any
time for any other proper purpose as determined by the limited
partnership.
(e) A restated certificate of limited partnership may be delivered
to and on a form prescribed by the Secretary of State for filing in
the same manner as an amendment.
(1) A restated certificate of limited partnership may be filed
that embodies all of the provisions that are in effect contained in
the different certificates that have been filed with the Secretary of
State.
(2) A restated certificate of limited partnership may include an
amendment of the certificate of limited partnership not previously
filed with the Secretary of State.
(3) The restated certificate of limited partnership shall
supersede the initial certificate of limited partnership and all
amendments thereto previously filed with the Secretary of State.
(4) Any amendment effected in connection with the restatement of
the certificate of limited partnership shall be subject to any other
provision of this chapter not inconsistent with this section that
would apply if a separate certificate of amendment were filed to
effect that amendment.
(f) Subject to subdivision (c) of Section 15902.06, an amendment
or restated certificate is effective when filed by the Secretary of
State.
15902.03. A dissolved limited partnership that has completed
winding up shall deliver to and on a form prescribed by the Secretary
of State for filing a certificate of cancellation that states:
(1) the name of the limited partnership and the Secretary of State'
s file number;
(2) the date of filing of its initial certificate of limited
partnership; and
(3) any other information as determined by the general partners
filing the certificate or by a person appointed pursuant to
subdivisions (c) or (d) of Section 15908.03.
15902.04. (a) Each record delivered to the Secretary of State for
filing pursuant to this chapter must be signed in the following
manner:
(1) An initial certificate of limited partnership must be signed
by all general partners listed in the certificate.
(2) An amendment designating as general partner a person admitted
under paragraph (2) of subdivision (c) of Section 15908.01 following
the dissociation of a limited partnership's last general partner must
be signed by that person.
(3) An amendment required by subdivision (c) of Section 15908.03
following the appointment of a person to wind up the dissolved
limited partnership's activities must be signed by that person.
(4) Any other amendment must be signed by:
(A) at least one general partner listed in the certificate of
limited partnership;
(B) each other person designated in the amendment as a new general
partner; and
(C) each person that the amendment indicates has dissociated as a
general partner, unless:
(i) the person is deceased or a guardian or general conservator
has been appointed for the person and the amendment so states; or
(ii) the person has previously delivered to the Secretary of State
for filing a certificate of dissociation.
(5) A restated certificate of limited partnership must be signed
by at least one general partner listed in the certificate, and, to
the extent the restated certificate effects a change under any other
paragraph of this subdivision, the restated certificate must be
signed in a manner that satisfies that paragraph.
(6) A certificate of cancellation must be signed by all general
partners listed in the certificate of limited partnership or, if the
certificate of limited partnership of a dissolved limited partnership
lists no general partners, by the person appointed pursuant to
subdivisions (c) or (d) of Section 15908.03 to wind up the dissolved
limited partnership's activities.
(7) Certificates of conversion must be signed as provided in
subdivision (b) of Section 15911.06.
(8) Certificates of merger must be signed as provided in
subdivision (a) of Section 15911.14.
(9) Any other record delivered on behalf of a limited partnership
to the Secretary of State for filing must be signed by at least one
general partner listed in the certificate of limited partnership.
(10) A certificate of dissociation by a person pursuant to
paragraph (4) of subdivision (a) of Section 15906.05 stating that the
person has dissociated as a general partner must be signed by that
person.
(11) A certificate of withdrawal by a person pursuant to Section
15903.06 must be signed by that person.
(12) A record delivered on behalf of a foreign limited partnership
to the Secretary of State for filing must be signed by at least one
general partner of the foreign limited partnership.
(13) Any other record delivered on behalf of any person to the
Secretary of State for filing must be signed by that person.
(b) Any person may sign by an attorney in fact any record to be
filed pursuant to this chapter.
(c) The Secretary of State shall not be required to verify that
the person withdrawing or dissociating was ever actually named in an
official filing as a general or limited partner.
15902.05. (a) If a person required by this chapter to sign a
record or deliver a record to the Secretary of State for filing does
not do so, any other person that is aggrieved may petition the
superior court to order:
(1) the person to sign the record;
(2) deliver the record to the Secretary of State for filing; or
(3) the Secretary of State to file the record unsigned.
(b) If the person aggrieved under subdivision (a) is not the
limited partnership or foreign limited partnership to which the
record pertains, the aggrieved person shall make the limited
partnership or foreign limited partnership a party to the action. A
person aggrieved under subdivision (a) may seek the remedies provided
in subdivision (a) in the same action in combination or in the
alternative. In any action under this subdivision, if the court finds
the failure of the person to comply with the requirement to sign a
record or deliver a record to the Secretary of State for filing to
have been without justification, the court may award an amount
sufficient to reimburse the persons aggrieved under subdivision (a)
bringing the action for the reasonable expenses incurred by such
persons, including attorneys' fees, in connection with the action or
proceeding.
(c) A record filed unsigned pursuant to this section is effective
without being signed.
(d) Any person, other than a general partner, delivering a record
to the Secretary of State for filing, shall state the statutory
authority for such action after the signature on the appropriate
record.
15902.06. (a) A record authorized or required to be delivered to
the Secretary of State for filing under this chapter must be
completed on a form prescribed by and in a medium permitted by the
Secretary of State, and be delivered to the Secretary of State.
Unless the Secretary of State determines that a record does not
comply with the filing requirements of this chapter, and if all
requisite fees have been paid, the Secretary of State shall file the
record.
(b) Except as otherwise provided in Sections 15901.16, 15902.01,
and 15902.07, a record delivered to the Secretary of State for filing
under this chapter may specify an effective time and a delayed
effective date. Except as otherwise provided in this chapter, a
record filed by the Secretary of State is effective:
(1) if the record does not specify a delayed effective date, on
the date the record is filed as evidenced by the Secretary of State's
endorsement of the date on the record;
(2) if the record specifies a delayed effective date on the
earlier of:
(A) the specified date; or
(B) the 90th day after the record is filed; or
(c) In case a delayed effective date is specified, the record may
be prevented from becoming effective by a certificate stating that by
appropriate action it has been revoked and is null and void,
executed in the same manner as the original record and delivered to
the Secretary of State for filing before the specified effective
date. In the case of certificate of merger, a certificate revoking
the earlier filing need only be executed on behalf of one of the
constituent parties to the merger. If no such revocation certificate
is filed, the record becomes effective on the date specified.
(d) If the Secretary of State determines that a record delivered
to the Secretary of State for filing does not conform to the law and
returns it to the person delivering it, the record may be resubmitted
accompanied by a written opinion of the member of the State Bar of
California delivering the record or representing the person
delivering it, to the effect that the specific provisions of the
record objected to by the Secretary of State do conform to law and
stating the points and authorities upon which the opinion is based.
The Secretary of State shall rely, with respect to any disputed point
of law, other than the application of Sections 15901.08, 15901.09,
15909.02, and 15909.05, upon that written opinion in determining
whether the record conforms to law. When filed by the Secretary of
State upon resubmission, such record is effective retroactively as of
the date that the original record was delivered to the Secretary of
State for filing.
15902.07. (a) A limited partnership or foreign limited
partnership may deliver to and on a form prescribed by the Secretary
of State for filing a certificate of correction to correct a record
previously delivered by the limited partnership or foreign limited
partnership to the Secretary of State and filed by the Secretary of
State, if at the time of filing the record contained false or
erroneous information or was defectively signed.
(b) A certificate of correction may not state a delayed effective
date and must:
(1) describe the record to be corrected, including its filing date
and file number;
(2) specify the incorrect information and the reason it is
incorrect or the manner in which the signing was defective; and
(3) correct the incorrect information or defective signature.
(c) When filed by the Secretary of State, a certificate of
correction is effective retroactively as of the effective date of the
record the certificate corrects, but the certificate is effective
when filed:
(1) for the purposes of subdivisions (c) and (d) of Section
15901.03; and
(2) as to persons relying on the uncorrected record and adversely
affected by the correction.
15902.08. (a) If a record delivered to the Secretary of State for
filing under this chapter and filed by the Secretary of State
contains false information, a person that suffers loss by reliance on
the information may recover damages for the loss from:
(1) a person that signed the record, or caused another to sign it
on the person's behalf, and knew the information to be false at the
time the record was signed; and
(2) a general partner that has notice that the information was
false when the record was filed or has become false because of
changed circumstances, if the general partner has notice for a
reasonably sufficient time before the information is relied upon to
enable the general partner to effect an amendment under Section
15902.02, file a petition pursuant to Section 15902.05, or deliver to
the Secretary of State for filing a certificate of correction
pursuant to Section 15902.07.
(b) Signing a record authorized or required to be filed under this
chapter constitutes an affirmation under the penalties of perjury
that the facts stated in the record are true.
15902.09. (a) A domestic limited partnership whose certificate of
limited partnership has been canceled pursuant to Section 15902.03
may be revived by filing with, and on a form prescribed by, the
Secretary of State a certificate of revival. The certificate of
revival shall be accompanied by written confirmation by the Franchise
Tax Board that all of the following have been paid to the Franchise
Tax Board:
(1) The annual tax due under Section 17935 of the Revenue and
Taxation Code.
(2) All penalties and interest thereof for each year for which the
domestic limited partnership failed to pay such annual tax,
including each year between the cancellation of its certificate of
limited partnership and its revival.
(b) The certificate of revival shall set forth all of the
following:
(1) The name of the limited partnership at the time its
certificate of limited partnership was cancelled, and if the name is
not available at the time of revival, the name under which the
limited partnership is to be revived.
(2) The date of filing of the original certificate of limited
partnership.
(3) The address of the limited partnership's designated office.
(4) The name and address of the initial agent for service of
process in accordance with paragraph (1) of subdivision (d) of
Section 15901.16.
(5) A statement that the certificate of revival is filed by one or
more general partners of the limited partnership authorized to
execute and file the certificate of revival to revive the limited
partnership.
(6) The Secretary of State's file number for the original limited
partnership.
(7) The name and address of each general partner.
(8) Any other matters the general partner or partners executing
the certificate of revival determine to include therein.
(c) The certificate of revival should be deemed to be an amendment
to the certificate of limited partnership, and the limited
partnership shall not be required to take any further action to amend
its certificate of
limited partnership pursuant to Section 15902.02 with respect to the
matter set forth in the certificate of revival.
(d) Upon the filing of the certificate of revival, the limited
partnership shall be revived with the same force and effect as if the
certificate of limited partnership had not been canceled pursuant to
Section 15902.03. The revival shall validate all contracts, acts,
matters, and things made, done, and performed by the limited
partnership, its partners, employees, and agents following the time
its certificate of limited partnership was canceled pursuant to
Section 15902.03 with the same force and effect and all intents and
purposes as if the certificate of limited partnership had remained in
full force and effect. This provision shall apply provided that
third parties are relying on the acts of the partnership, its
partners, employees, and agents. All real and personal property, and
all rights and interests, that belong to a limited partnership at the
time its certificate of limited partnership was cancelled pursuant
to Section 15902.03 or that were acquired by the limited partnership
following the cancellation of the certificate of limited partnership,
that were not disposed of prior to the time of its revival, shall be
vested in the limited partnership after its revival as fully as if
they were held by the limited partnership at, and during the time
after, as the case may be, the time the certificate of limited
partnership was cancelled. After its revival, the limited partnership
and its partners shall have all of the same liability for contracts,
acts, matters, and things made, done, or performed in the limited
partnership's name and on behalf of its partners, employees, and
agents, as the limited partnership and its partners would have had if
the limited partnership's certificate of limited partnership had at
all times remained in full force and effect.
Article 3. Limited Partners
15903.01. A person becomes a limited partner:
(a) as provided in the partnership agreement;
(b) as the result of a conversion or merger under Article 11
(commencing with Section 15911.01); or
(c) with the consent of all the partners.
15903.02. A limited partner does not have the right or the power
as a limited partner to act for or bind the limited partnership.
15903.03. (a) A limited partner is not liable for any obligation
of a limited partnership unless named as a general partner in the
certificate or, in addition to exercising the rights and powers of a
limited partner, the limited partner participates in the control of
the business. If a limited partner participates in the control of the
business without being named as a general partner, that partner may
be held liable as a general partner only to persons who transact
business with the limited partnership with actual knowledge of that
partner's participation in control and with a reasonable belief,
based upon the limited partner's conduct, that the partner is a
general partner at the time of the transaction. Nothing in this
chapter shall be construed to affect the liability of a limited
partner to third parties for the limited partner's participation in
tortious conduct.
(b) A limited partner does not participate in the control of the
business within the meaning of subdivision (a) solely by doing,
attempting to do, or having the right or power to do, one or more of
the following:
(1) Being any of the following:
(A) An independent contractor for, an agent or employee of, or
transacting business with, the limited partnership or a general
partner of the limited partnership.
(B) An officer, director, or shareholder of a corporate general
partner of the limited partnership.
(C) A member, manager, or officer of a limited liability company
that is a general partner of the limited partnership.
(D) A limited partner of a partnership that is a general partner
of the limited partnership.
(E) A trustee, administrator, executor, custodian, or other
fiduciary or beneficiary of an estate or trust that is a general
partner.
(F) A trustee, officer, advisor, shareholder, or beneficiary of a
business trust that is a general partner.
(2) Consulting with and advising a general partner with respect to
the business of the limited partnership.
(3) Acting as surety for the limited partnership or for a general
partner, guaranteeing one or more specific debts of the limited
partnership, providing collateral for the limited partnership or
general partner, borrowing money from the limited partnership or a
general partner, or lending money to the limited partnership or a
general partner.
(4) Approving or disapproving an amendment to the partnership
agreement.
(5) Voting on, proposing, or calling a meeting of the partners.
(6) Winding up the partnership pursuant to Section 15908.03.
(7) Executing and filing a certificate pursuant to Section
15902.05, a certificate of withdrawal pursuant to paragraph (12) of
subdivision (a) of Section 15902.04, or a certificate of cancellation
of certificate of limited partnership pursuant to paragraph (7) of
subdivision (a) of Section 15902.04.
(8) Serving on an audit committee or committee performing the
functions of an audit committee.
(9) Serving on a committee of the limited partnership or the
limited partners for the purpose of approving actions of the general
partner.
(10) Calling, requesting, attending, or participating at any
meeting of the partners or the limited partners.
(11) Taking any action required or permitted by law to bring,
pursue, settle, or terminate a derivative action on behalf of the
limited partnership.
(12) Serving on the board of directors or a committee of,
consulting with or advising, being or acting as an officer, director,
stockholder, partner, member, manager, agent, or employee of, or
being or acting as a fiduciary for, any person in which the limited
partnership has an interest.
(13) Exercising any right or power permitted to limited partners
under this chapter and not specifically enumerated in this
subdivision.
(c) The enumeration in subdivision (b) does not mean that any
other conduct or the possession or exercise of any other power by a
limited partner constitutes participation by the limited partner in
the control of the business of the limited partnership.
15903.04. (a) On 10 days' demand, made in a record received by
the limited partnership, a limited partner may inspect and copy any
information required to be maintained pursuant to Section 15901.11
during regular business hours in the limited partnership's designated
office. The limited partner need not have any particular purpose for
seeking the information.
(b) Subject to subdivision (g), during regular business hours and
at a reasonable location specified by the limited partnership, a
limited partner may obtain from the limited partnership, which may be
transmitted via electronic transmission, and inspect and copy true
and full information regarding the state of the activities and
financial condition of the limited partnership and other information
regarding the activities of the limited partnership as is just and
reasonable if:
(1) the limited partner seeks the information for a purpose
reasonably related to the partner's interest as a limited partner;
(2) the limited partner makes a demand in a record received by the
limited partnership, describing with reasonable particularity the
information sought and the purpose for seeking the information; and
(3) the information sought is directly connected to the limited
partner's purpose.
(c) Within 10 days after receiving a demand pursuant to
subdivision (b), the limited partnership in a record shall inform the
limited partner that made the demand:
(1) what information the limited partnership will provide in
response to the demand;
(2) when and where the limited partnership will provide the
information; and
(3) if the limited partnership declines to provide any demanded
information, the limited partnership's reasons for declining.
(d) Subject to subdivision (f), a person dissociated as a limited
partner may inspect and copy required information during regular
business hours in the limited partnership's designated office if:
(1) the information pertains to the period during which the person
was a limited partner;
(2) the person seeks the information in good faith; and
(3) the person meets the requirements of subdivision (b).
(e) The limited partnership shall respond to a demand made
pursuant to subdivision (d) in the same manner as provided in
subdivision (c).
(f) If a limited partner dies, Section 15907.04 applies.
(g) The limited partnership shall have the right to keep
confidential from limited partners for such period of time as the
limited partnership deems reasonable, any information which the
limited partnership reasonably believes to be in the nature of trade
secrets or other information the disclosure of which the limited
partnership in good faith believes is not in the best interest of the
limited partnership or could damage the limited partnership or its
business or which the limited partnership is required by law or by
agreement with a third party to keep confidential.
(h) The limited partnership may impose reasonable restrictions on
the use of information obtained under this section. In a dispute
concerning the reasonableness of a restriction under this
subdivision, the limited partnership has the burden of proving
reasonableness.
(i) A limited partnership may charge a person that makes a demand
under this section reasonable costs of copying, limited to the costs
of labor and material.
(j) Whenever this chapter or a partnership agreement provides for
a limited partner to give or withhold consent to a matter, before the
consent is given or withheld, the limited partnership shall, without
demand, provide the limited partner with all information material to
the limited partner's decision that the limited partnership knows.
(k) A limited partner or person dissociated as a limited partner
may exercise the rights under this section through an attorney or
other agent. Any restriction imposed under subdivision (g),
subdivision (h) or by the partnership agreement applies both to the
attorney or other agent and to the limited partner or person
dissociated as a limited partner.
(l) The rights stated in this section do not extend to a person as
transferee, but may be exercised by the legal representative of an
individual under legal disability who is a limited partner or person
dissociated as a limited partner.
15903.05. (a) A limited partner does not have any fiduciary duty
to the limited partnership or to any other partner solely by reason
of being a limited partner.
(b) A limited partner shall discharge the duties to the
partnership and the other partners under this chapter or under the
partnership agreement and exercise any rights consistently with the
obligation of good faith and fair dealing.
(c) A limited partner does not violate a duty or obligation under
this chapter or under the partnership agreement merely because the
limited partner's conduct furthers the limited partner's own
interest.
15903.06. (a) Except as otherwise provided in subdivision (b), a
person that makes an investment in a business enterprise and
erroneously but in good faith believes that the person has become a
limited partner in the enterprise is not liable for the enterprise's
obligations by reason of making the investment, receiving
distributions from the enterprise, or exercising any rights of or
appropriate to a limited partner, if, on ascertaining the mistake,
the person:
(1) causes an appropriate certificate of limited partnership,
amendment, or certificate of correction to be signed and delivered to
the Secretary of State for filing; or
(2) withdraws from future participation as an owner in the
enterprise by signing and delivering to and on a form prescribed by
the Secretary of State for filing a certificate of withdrawal under
this section.
(b) A person that makes an investment described in subdivision (a)
is liable to the same extent as a general partner to any third party
that enters into a transaction with the enterprise, believing in
good faith that the person is a general partner, before the Secretary
of State files a certificate of withdrawal, certificate of limited
partnership, amendment, or certificate of correction to show that the
person is not a general partner.
(c) If a person makes a diligent effort in good faith to comply
with paragraph (1) of subdivision (a) and is unable to cause the
appropriate certificate of limited partnership, amendment, or
certificate of correction to be signed and delivered to the Secretary
of State for filing, the person has the right to withdraw from the
enterprise pursuant to paragraph (2) of subdivision (a) even if the
withdrawal would otherwise breach an agreement with others that are
or have agreed to become co-owners of the enterprise.
15903.07. (a) The partnership agreement may provide for the
creation of classes of limited partners. The partnership agreement
shall define the rights, powers, and duties of those classes,
including rights, powers, and duties senior to other classes of
limited partners.
(b) The partnership agreement may provide to all or certain
specified classes of limited partners the right to vote separately or
with all or any class or the general partners on any matter.
Article 4. General Partners
15904.01. A person becomes a general partner:
(a) as provided in the partnership agreement:
(b) under paragraph (2) of subdivision (c) of Section 15908.01
following the dissociation of a limited partnership's last general
partner;
(c) as the result of a conversion or merger under Article 11
(commencing with Section 15911.01); or
(d) with the consent of all the partners.
15904.02. (a) Each general partner is an agent of the limited
partnership for the purposes of its activities. An act of a general
partner, including the signing of a record in the partnership's name,
for apparently carrying on in the ordinary course the limited
partnership's activities or activities of the kind carried on by the
limited partnership binds the limited partnership, unless the general
partner did not have authority to act for the limited partnership in
the particular matter and the person with which the general partner
was dealing knew, had received a notification, or had notice under
subdivision (d) of Section 15901.03 that the general partner lacked
authority.
(b) An act of a general partner which is not apparently for
carrying on in the ordinary course the limited partnership's
activities or activities of the kind carried on by the limited
partnership binds the limited partnership only if the act was
actually authorized by all the other partners.
15904.03. (a) A limited partnership is liable for loss or injury
caused to a person, or for a penalty incurred, as a result of a
wrongful act or omission, or other actionable conduct, of a general
partner acting in the ordinary course of activities of the limited
partnership or with authority of the limited partnership.
(b) If, in the course of the limited partnership's activities or
while acting with authority of the limited partnership, a general
partner receives or causes the limited partnership to receive money
or property of a person not a partner, and the money or property is
misapplied by a general partner, the limited partnership is liable
for the loss.
15904.04. (a) Except as otherwise provided in subdivision (b),
all general partners are liable jointly and severally for all
obligations of the limited partnership unless otherwise agreed by the
claimant or provided by law.
(b) A person that becomes a general partner of an existing limited
partnership is not personally liable for an obligation of a limited
partnership incurred before the person became a general partner.
15904.05. (a) To the extent not inconsistent with Section
15904.04, a general partner may be joined in an action against the
limited partnership or named in a separate action.
(b) A judgment against a limited partnership is not by itself a
judgment against a general partner. A judgment against a limited
partnership may not be satisfied from a general partner's assets
unless there is also a judgment against the general partner.
(c) A judgment creditor of a general partner may not levy
execution against the assets of the general partner to satisfy a
judgment based on a claim against the limited partnership, unless the
partner is personally liable for the claim under Section 15904.04
and:
(1) a judgment based on the same claim has been obtained against
the limited partnership and a writ of execution on the judgment has
been returned unsatisfied in whole or in part;
(2) the limited partnership is a debtor in bankruptcy;
(3) the general partner has agreed that the creditor need not
exhaust limited partnership assets;
(4) a court grants permission to the judgment creditor to levy
execution against the assets of a general partner based on a finding
that limited partnership assets subject to execution are clearly
insufficient to satisfy the judgment, that exhaustion of limited
partnership assets is excessively burdensome, or that the grant of
permission is an appropriate exercise of the court's equitable
powers; or
(5) liability is imposed on the general partner by law or contract
independent of the existence of the limited partnership.
15904.06. (a) Each general partner has equal rights in the
management and conduct of the limited partnership's activities.
Except as expressly provided in this chapter, any matter relating to
the activities of the limited partnership may be exclusively decided
by the general partner or, if there is more than one general partner,
by a majority of the general partners.
(b) The consent of each partner is necessary to:
(1) amend the partnership agreement; and
(2) sell, lease, exchange, or otherwise dispose of all, or
substantially all, of the limited partnership's property, with or
without the good will, other than in the usual and regular course of
the limited partnership's activities.
(c) A limited partnership shall reimburse a general partner for
payments made and indemnify a general partner for liabilities
incurred by the general partner in the ordinary course of the
activities of the partnership or for the preservation of its
activities or property.
(d) A limited partnership shall reimburse a general partner for an
advance to the limited partnership beyond the amount of capital the
general partner agreed to contribute.
(e) A payment or advance made by a general partner which gives
rise to an obligation of the limited partnership under subdivision
(c) or (d) constitutes a loan to the limited partnership which
accrues interest from the date of the payment or advance.
(f) A general partner is not entitled to remuneration for services
performed for the partnership.
15904.07. (a) A general partner, without having any particular
purpose for seeking the information, may inspect and copy during
regular business hours:
(1) in the limited partnership's designated office, required
information; and
(2) at a reasonable location specified by the limited partnership,
any other records maintained by the limited partnership regarding
the limited partnership's activities and financial condition.
(b) Each general partner and the limited partnership shall furnish
to a general partner which may be transmitted via electronic
transmission:
(1) without demand, any information concerning the limited
partnership's activities and activities reasonably required for the
proper exercise of the general partner's rights and duties under the
partnership agreement or this chapter; and
(2) on demand, any other information concerning the limited
partnership's activities, except to the extent the demand or the
information demanded is unreasonable or otherwise improper under the
circumstances.
(c) Subject to subdivision (e), on 10 days' demand made in a
record received by the limited partnership, a person dissociated as a
general partner may have access to the information and records
described in subdivision (a) at the location specified in subdivision
(a) if:
(1) the information or record pertains to the period during which
the person was a general partner;
(2) the person seeks the information or record in good faith; and
(3) the person satisfies the requirements imposed on a limited
partner by subdivision (b) of Section 15903.04.
(d) The limited partnership shall respond to a demand made
pursuant to subdivision (c) in the same manner as provided in
subdivision (c) of Section 15903.04.
(e) If a general partner dies, Section 15907.04 applies.
(f) The limited partnership may impose reasonable restrictions on
the use of information under this section. In any dispute concerning
the reasonableness of a restriction under this subdivision, the
limited partnership has the burden of proving reasonableness.
(g) A limited partnership may charge a person dissociated as a
general partner that makes a demand under this section reasonable
costs of copying, limited to the costs of labor and material.
(h) A general partner or person dissociated as a general partner
may exercise the rights under this section through an attorney or
other agent. Any restriction imposed under subdivision (f) or by the
partnership agreement applies both to the attorney or other agent and
to the general partner or person dissociated as a general partner.
(i) The rights under this section do not extend to a person as
transferee, but the rights under subdivision (c) of a person
dissociated as a general partner may be exercised by the legal
representative of an individual who dissociated as a general partner
under paragraph (2) or (3) of subdivision (g) of Section 15906.03.
15904.08. (a) The fiduciary duties that a general partner owes to
the limited partnership and the other partners are the duties of
loyalty and care under subdivisions (b) and (c).
(b) A general partner's duty of loyalty to the limited partnership
and the other partners is limited to the following:
(1) to account to the limited partnership and hold as trustee for
it any property, profit, or benefit derived by the general partner in
the conduct and winding up of the limited partnership's activities
or derived from a use by the general partner of limited partnership
property, including the appropriation of a limited partnership
opportunity;
(2) to refrain from dealing with the limited partnership in the
conduct or winding up of the limited partnership's activities as or
on behalf of a party having an interest adverse to the limited
partnership; and
(3) to refrain from competing with the limited partnership in the
conduct or winding up of the limited partnership's activities.
(c) A general partner's duty of care to the limited partnership
and the other partners in the conduct and winding up of the limited
partnership's activities is limited to refraining from engaging in
grossly negligent or reckless conduct, intentional misconduct, or a
knowing violation of law.
(d) A general partner shall discharge the duties to the
partnership and the other partners under this chapter or under the
partnership agreement and exercise any rights consistently with the
obligation of good faith and fair dealing.
(e) A general partner does not violate a duty or obligation under
this chapter or under the partnership agreement merely because the
general partner's conduct furthers the general partner's own
interest.
15904.09. (a) A partnership agreement may provide for the
creation of classes of general partners. The partnership agreement
shall define the rights, powers, and duties of those classes
including rights, powers, and duties senior to other classes of
general partners.
(b) The partnership agreement may provide to all or certain
specified classes of general partners the right to vote separately or
with all or any class of the general partners on any matters.
Article 5. Contributions and Distributions
15905.01. A contribution of a partner may consist of tangible or
intangible property or other benefit to the limited partnership,
including money, services performed, promissory notes, other
agreements to contribute cash or property, and contracts for services
to be performed.
15905.02. (a) A partner's obligation to contribute money or other
property or other benefit to, or to perform services for, a limited
partnership is not excused by the partner's death, disability, or
other inability to perform personally.
(b) If a partner does not make a promised nonmonetary
contribution, the partner is obligated at the option of the limited
partnership to contribute money equal to the value of that portion,
as stated in the required information, of the stated contribution
which has not been made.
(c) The obligation of a partner to make a contribution or return
money or other property paid or distributed in violation of this
chapter may be compromised only by consent of all partners. A
creditor of a limited partnership which extends credit or otherwise
acts in reliance on an obligation described in subdivision (a),
without notice of any compromise under this subdivision, may enforce
the original obligation.
(d) A partnership agreement may provide that the interest of a
partner who fails to make any contribution or other payment that the
partner is required to make will be subject to specific remedies for,
or specific consequences of, the failure. A provision shall be
enforceable in accordance with its terms unless the partner seeking
to invalidate the provision establishes that the provision was
unreasonable under the circumstances existing at the time the
agreement was made. The specific remedies or consequences may include
loss of voting, approval, or other rights, loss of the partner's
ability to actively participate in the management and operations of
the partnership, liquidated damages, or a reduction of the defaulting
partner's economic rights. The reduction of the defaulting partner's
economic rights may include one or more of the following provisions:
(1) Diluting, reducing or eliminating the defaulting partner's
proportionate interest in the partnership.
(2) Subordinating the defaulting partner's interest in the
partnership to that of nondefaulting partners.
(3) Permitting a forced sale of the partnership interest.
(4) Permitting the lending or contribution by other partners of
the amount necessary to meet the defaulting partner's commitment.
(5) Adjusting the interest rates or other rates of return,
preferred, priority, or otherwise, with respect to contributions by
or capital accounts of the other partners.
(6) Fixing the value of the defaulting partner's interest in the
partnership by appraisal, formula and redemption, or sale of the
defaulting partner's interest in the partnership at a percentage of
that value.
(7) Nothing in this section shall be construed to affect the
rights of third-party creditors of the partnership to seek equitable
remedies nor any rights existing under the Uniform Fraudulent
Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of
Part 2 of Division 4 of the Civil Code).
15905.03. A distribution by a limited partnership must be shared
among the partners on the basis of the value, as stated in the
required records when the limited partnership decides to make the
distribution, of the contributions the limited partnership has
received from each partner.
15905.035. The profits and losses of a limited partnership shall
be allocated among the partners in the manner provided in the
partnership agreement. If the partnership agreement does not
otherwise provide, profits and losses shall be allocated in the same
manner as the partners share distributions.
15905.04. A partner does not have a right to any distribution
before the dissolution and winding up of the limited partnership
unless the limited partnership decides to make an interim
distribution.
15905.05. A person does not have a right to receive a
distribution on account of dissociation.
15905.06. A partner does not have a right to demand or receive
any distribution from a limited partnership in any form other than
cash. Subject to subdivision (b) of Section 15908.11, a limited
partnership may distribute an asset in kind to the extent each
partner receives a percentage of the asset equal to the partner's
share of distributions.
15905.07. When a partner or transferee becomes entitled to
receive a distribution, the partner or transferee has the status of,
and is entitled to all remedies available to, a creditor of the
limited partnership with respect to the distribution. However, the
limited partnership's obligation to make a distribution is subject to
offset for any amount owed to the limited partnership by the partner
or dissociated partner on whose account the distribution is made.
15905.08. (a) A limited partnership may not make a distribution
in violation of the partnership agreement.
(b) A limited partnership may not make a distribution if after the
distribution:
(1) the limited partnership would not be able to pay its debts as
they become due in the ordinary course of the limited partnership's
activities; or
(2) the limited partnership's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if
the limited partnership were to be dissolved, wound up, and
terminated at the time of the distribution, to satisfy the
preferential rights upon dissolution, winding up, and termination of
partners whose preferential rights are superior to those of persons
receiving the distribution.
(c) A limited partnership may base a determination that a
distribution is not prohibited under subdivision (b) on financial
statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in the circumstances.
(d) Except as otherwise provided in subdivision (g), the effect of
a distribution under subdivision (b) is measured:
(1) in the case of distribution by purchase, redemption, or other
acquisition of a transferable interest in the limited partnership, as
of the date money or other property is transferred or debt incurred
by the limited partnership; and
(2) in all other cases, as of the date:
(A) the distribution is authorized, if the payment occurs within
120 days after that date; or
(B) the payment is made, if payment occurs more than l20 days
after the distribution is authorized.
(e) A limited partnership's indebtedness to a partner incurred by
reason of a distribution made in accordance with this section is at
parity with the limited partnership's indebtedness to its general
unsecured creditors.
(f) A limited partnership's indebtedness, including indebtedness
issued in connection with or as part of a distribution, is not
considered a liability for purposes of subdivision (b) if the terms
of the indebtedness provide that payment of principal and interest
are made only to the extent that a distribution could then be made to
partners under this section.
(g) If indebtedness is issued as a distribution, each payment of
principal or interest on the indebtedness is treated as a
distribution, the effect of which is measured on the date the payment
is made.
15905.09. (a) A general partner that consents to a distribution
made in violation of Section 15905.08 is personally liable to the
limited partnership for the amount of the distribution which exceeds
the amount that could have been distributed without the violation if
it is established that in consenting to the distribution the general
partner failed to comply with Section 15904.08.
(b) A partner or transferee that received a distribution knowing
that the distribution to that partner or transferee was made in
violation of Section 15905.08 is personally liable to the limited
partnership but only to the extent that the distribution received by
the partner or transferee exceeded the amount that could have been
properly paid under Section 15905.08.
(c) A general partner against which an action is commenced under
subdivision (a) may:
(1) implead in the action any other person that is liable under
subdivision (a) and compel contribution from the person; and
(2) implead in the action any person that received a distribution
in violation of subdivision (b) and compel contribution from the
person in the amount the person received in violation of subdivision
(b).
(d) An action under this section is barred if it is not commenced
within four years after the distribution.
Article 6. Dissociation
15906.01. (a) A person does not have a right to dissociate as a
limited partner before the termination of the limited partnership.
(b) A person is dissociated from a limited partnership as a
limited partner upon the occurrence of any of the following events:
(1) the limited partnership's having notice of the person's
express will to withdraw as a limited partner or on a later date
specified by the person;
(2) an event agreed to in the partnership agreement as causing the
person's dissociation as a limited partner;
(3) the person's expulsion as a limited partner pursuant to the
partnership agreement;
(4) the person's expulsion as a limited partner by the unanimous
consent of the other partners if:
(A) it is unlawful to carry on the limited partnership's
activities with the person as a limited partner;
(B) there has been a transfer of all of the person's transferable
interest in the limited partnership, other than a transfer for
security purposes, or a court order charging the person's interest,
which has not been foreclosed;
(C) the person is a corporation and, within 90 days after the
limited partnership notifies the person that it will be expelled as a
limited partner because it has filed a certificate of dissolution or
the equivalent, its charter has been revoked, or its right to
conduct business has been suspended by the jurisdiction of its
incorporation, there is no revocation of the certificate of
dissolution or no reinstatement of its charter or its right to
conduct business; or
(D) the person is a limited liability company or partnership that
has been dissolved and whose business is being wound up;
(5) on application by the limited partnership, the person's
expulsion as a limited partner by judicial order because:
(A) the person engaged in wrongful conduct that adversely and
materially affected the limited partnership's activities;
(B) the person willfully or persistently committed a material
breach of the partnership agreement or of the obligation of good
faith and fair dealing under subdivision (b) of Section 15903.05; or
(C) the person engaged in conduct relating to the limited
partnership's activities which makes it not reasonably practicable to
carry on the activities with the person as limited partner;
(6) in the case of a person who is an individual, the person's
death;
(7) in the case of a person that is a trust or is acting as a
limited partner by virtue of being a trustee of a trust, distribution
of the trust's entire transferable interest in the limited
partnership, but not merely by reason of the substitution of a
successor trustee;
(8) in the case of a person that is an estate or is acting as a
limited partner by virtue of being a personal representative of an
estate, distribution of the estate's entire transferable interest in
the limited partnership, but not merely by reason of the substitution
of a successor personal representative;
(9) termination of a limited partner that is not an individual,
partnership, limited liability company, corporation, trust, or
estate;
(10) the limited partnership's participation in a conversion or
merger under Article 11 (commencing with Section 15911.01), if the
limited partnership:
(A) is not the converted or surviving entity; or
(B) is the converted or surviving entity but, as a result of the
conversion or merger, the person ceases to be a limited partner.
15906.02. (a) Upon a person's dissociation as a limited partner:
(1) subject to Section 15907.04, the person does not have further
rights as a limited partner;
(2) the person's obligation of good faith and fair dealing as a
limited partner under subdivision (b) of Section 15903.05 continues
only as to matters arising and events occurring before the
dissociation; and
(3) subject to Section 15907.04 and Article 11 (commencing with
Section 15911.01), any transferable interest owned by the person in
the person's capacity as a limited partner immediately before
dissociation is owned by the person as a mere transferee.
(b) A person's dissociation as a limited partner does not of
itself discharge the person from any obligation to the limited
partnership or the other partners which the person incurred while a
limited partner.
15906.03. A person is dissociated from a limited partnership as a
general partner upon the occurrence of any of the following events:
(a) the limited partnership's having notice of the person's
express will to withdraw as a general partner or on a later date
specified by the person;
(b) an event agreed to in the partnership agreement as causing the
persons dissociation as a general partner;
(c) the person's expulsion as a general partner pursuant to the
partnership agreement;
(d) the person's expulsion as a general partner by the unanimous
consent of the other partners if:
(1) it is unlawful to carry on the limited partnership's
activities with the person as a general partner;
(2) there has been a transfer of all or substantially all of the
person's transferable interest in the limited partnership, other than
a transfer for security purposes, or a court order charging the
person's interest, which has not been foreclosed;
(3) the person is a corporation and, within 90 days after the
limited partnership notifies the person that it will be expelled as a
general partner because it has filed a certificate of dissolution or
the equivalent, its charter has been revoked, or its right to
conduct business has been suspended by the jurisdiction of its
incorporation, there is no revocation of the certificate of
dissolution or no reinstatement of its charter or its right to
conduct business; or
(4) the person is a limited liability company or partnership that
has been dissolved and whose business is being wound up;
(e) on application by the limited partnership, the person's
expulsion as a general partner by judicial order because:
(1) the person engaged in wrongful conduct that adversely and
materially affected the limited partnership activities;
(2) the person willfully or persistently committed a material
breach of the partnership agreement or of a duty owed to the
partnership or the other partners under Section 15904.08; or
(3) the person engaged in conduct relating to the limited
partnership's activities which makes it not reasonably practicable to
carry on the activities of the limited partnership with the person
as a general partner;
(f) the person's:
(1) becoming a debtor in bankruptcy;
(2) execution of an assignment for the benefit of creditors;
(3) seeking, consenting to, or acquiescing in the appointment of a
trustee, receiver, or liquidator of the person or of all or
substantially all of the person's property; or
(4) failure, within 90 days after the appointment, to have vacated
or stayed the appointment of a trustee, receiver, or liquidator of
the general partner or of all or substantially all of the person's
property obtained without the person's consent or acquiescence, or
failing within 90 days after the expiration of a stay to have the
appointment vacated;
(g) in the case of a person who is an individual:
(1) the person's death;
(2) the appointment of a guardian or general conservator for the
person; or
(3) a judicial determination that the person has otherwise become
incapable of performing the person's duties as a general partner
under the partnership agreement;
(h) in the case of a person that is a trust or is acting as a
general partner by virtue of being a trustee of a trust, distribution
of the trust's entire transferable interest in the limited
partnership, but not merely by reason of the substitution of a
successor trustee;
(i) in the case of a person that is an estate or is acting as a
general partner by virtue of being a personal representative of an
estate, distribution of the estate's entire transferable interest in
the limited partnership, but not merely by reason of the substitution
of a successor personal representative;
(j) termination of a general partner that is not an individual,
partnership, limited liability company, corporation, trust, or
estate; or
(k) the limited partnership's participation in a conversion or
merger under Article 11 (commencing with Section 15911.01), if the
limited partnership:
(1) is not the converted or surviving entity; or
(2) is the converted or surviving entity but, as a result of the
conversion or merger, the person ceases to be a general partner.
15906.04. (a) A person has the power to dissociate as a general
partner at any time, rightfully or wrongfully, by express will
pursuant to subdivision (a) of Section 15906.03.
(b) A person's dissociation as a general partner is wrongful only
if:
(1) it is in breach of an express provision of the partnership
agreement; or
(2) it occurs before the termination of the limited partnership,
and:
(A) the person withdraws as a general partner by express will;
(B) the person is expelled as a general partner by judicial
determination under subdivision (e) of Section 15906.03;
(C) the person is dissociated as a general partner by becoming a
debtor in bankruptcy; or
(D) in the case of a person that is not an individual, trust other
than a business trust, or estate, the person is expelled or
otherwise dissociated as a general partner because it willfully
dissolved or terminated.
(c) A person that wrongfully dissociates as a general partner is
liable to the limited partnership and, subject to Section 15910.01,
to the other partners for damages caused by the dissociation. The
liability is in addition to any other obligation of the general
partner to the limited partnership or to the other partners.
15906.05. (a) Upon a person's dissociation as a general partner:
(1) the person's right to participate as a general partner in the
management and conduct of the partnership's activities terminates;
(2) the person's duty of loyalty as a general partner under
paragraph (3) of subdivision (b) of Section 15904.08 terminates;
(3) the person's duty of loyalty as a general partner under
paragraphs (1) and (2) of subdivision (b) of Section 15904.08 and
duty of care under subdivision (c) of Section 15904.08 continue only
with regard to matters arising and events occurring before the person'
s dissociation as a general partner;
(4) the person may sign and deliver to the Secretary of State for
filing , on a form prescribed by the Secretary of State, a
certificate of dissociation pertaining to the person and, at the
request of the limited partnership, shall sign an amendment to the
certificate of limited partnership which states that the person has
dissociated; and
(5) subject to Section 15907.04 and Article 11 (commencing with
Section 15911.01), any transferable interest owned by the person
immediately before dissociation in the person's capacity as a general
partner is owned by the person as a mere transferee.
(b) A person's dissociation as a general partner does not of
itself discharge the person from any obligation to the limited
partnership or the other partners which the person incurred while a
general partner.
15906.06. (a) After a person is dissociated as a general partner
and before the limited partnership is dissolved, converted under
Article 11 (commencing with Section 15911.01), or merged out of
existence under that article, the limited partnership is bound by an
act of the person only if:
(1) the act would have bound the limited partnership under Section
15904.02 before the dissociation; and
(2) at the time the other party enters into the transaction:
(A) less than two years have passed since the dissociation; and
(B) the other party does not have notice of the dissociation and
reasonably believes that the person is a general partner.
(b) If a limited partnership is bound under subdivision (a), the
person dissociated as a general partner which caused the limited
partnership to be bound is liable:
(1) to the limited partnership for any damage caused to the
limited partnership arising from the obligation incurred under
subdivision (a); and
(2) if a general partner or another person dissociated as a
general partner is liable for the obligation, to the general partner
or other person for any damage caused to the general partner or other
person arising from the liability.
15906.07. (a) A person's dissociation as a general partner does
not of itself discharge the person's liability as a general partner
for an obligation of the limited partnership incurred before
dissociation. Except as otherwise provided in subdivisions (b) and
(c), the person is not liable for a limited partnership's obligation
incurred after dissociation.
(b) A person whose dissociation as a general partner resulted in a
dissolution and winding up of the limited partnership's activities
is liable to the same extent as a general partner under Section
15904.04 on an obligation incurred by the limited partnership under
Section 15908.04.
(c) A person that has dissociated as a general partner but whose
dissociation did not result in a dissolution and winding up of the
limited partnership's activities is liable on a transaction entered
into by the limited partnership after the dissociation only if:
(1) a general partner would be liable on the transaction; and
(2) at the time the other party enters into the transaction:
(A) less than two years have passed since the dissociation; and
(B) the other party does not have notice of the dissociation and
reasonably believes that the person is a general partner.
(d) By agreement with a creditor of a limited partnership and the
limited partnership, a person dissociated as a general partner may be
released from liability to the creditor for an obligation of the
limited partnership.
(e) A person dissociated as a general partner is released from
liability for an obligation of the limited partnership if the limited
partnership's creditor, with notice of the person's dissociation as
a general partner but without the person's consent, agrees to a
material alteration in the nature or time of payment of the
obligation.
Article 7. Transferable Interests and Rights of Transferees
and Creditors
15907.01. The only interest of a partner which is transferable is
the partner's transferable interest. A transferable interest is
personal property.
15907.02. (a) A transfer, in whole or in part, of a partner's
transferable interest:
(1) is permissible;
(2) does not by itself cause the partner's dissociation or a
dissolution and winding up of the limited partnership's activities;
and
(3) does not, as against the other partners or the limited
partnership, entitle the transferee to participate in the management
or conduct of the limited partnership's activities, to require access
to information concerning the limited partnership's transactions
except as otherwise provided in subdivision (c), or to inspect or
copy the required information or the limited partnership's other
records or to exercise any other rights or powers of a partner.
(b) A transferee has a right to receive, in accordance with the
transfer, distributions to which the transferor would otherwise be
entitled.
(c) A transferee is entitled to an account of the limited
partnership's transactions only upon the dissolution and winding up
of the limited partnership.
(d) Upon transfer, the transferor retains the rights of a partner
other than the interest in distributions transferred and retains all
duties and obligations of a partner.
(e) A limited partnership need not give effect to a transferee's
rights under this section until the limited partnership has notice of
the transfer.
(f) A transfer of a partner's transferable interest in the limited
partnership in violation of a restriction on transfer contained in
the partnership agreement is ineffective as to a person having notice
of the restriction at the time of transfer.
(g) A transferee that becomes a partner with respect to a
transferable interest is liable for the transferor's obligations
under Sections 15905.02 and 15905.09. However, the transferee is not
obligated for liabilities unknown to the transferee at the time the
transferee became a partner.
(h) A transferee of a partnership interest, including a transferee
of a general partner, may become a limited partner if and to the
extent that (1) the partnership agreement provides or (2) all general
partners and a majority in interest of the limited partners consent.
15907.03. (a) On application to a court of competent jurisdiction
by any judgment creditor of a partner or transferee, the court may
charge the transferable interest of the judgment debtor with payment
of the unsatisfied amount of the judgment with interest. To the
extent so charged, the judgment creditor has only the rights of a
transferee. The court may appoint a receiver of the share of the
distributions due or to become due to the judgment debtor in respect
of the limited partnership and make all other orders, directions,
accounts, and inquiries the judgment debtor might have made or which
the circumstances of the case may require to give effect to the
charging order.
(b) A charging order constitutes a lien on the judgment debtor's
transferable interest. The court may order a foreclosure upon the
interest subject to the charging order at any time. The purchaser at
the foreclosure sale has the rights of a transferee.
(c) At any time before foreclosure, an interest charged may be
redeemed:
(1) by the judgment debtor;
(2) with property other than limited partnership property, by one
or more of the other partners; or
(3) with limited partnership property, by the limited partnership
with the consent of all partners whose interests are not so charged.
(d) This chapter does not deprive any partner or transferee of the
benefit of any exemption laws applicable to the partner's or
transferee's transferable interest.
(e) This section provides the exclusive remedy by which a judgment
creditor of a partner or transferee may satisfy a judgment out of
the judgment debtor's transferable interest.
(f) No creditor of a partner shall have any right to obtain
possession or otherwise exercise legal or equitable remedies with
respect to the property of the limited partnership.
15907.04. If a partner dies, the deceased partner's personal
representative or other legal representative may exercise the rights
of a transferee as provided in Section 15907.02 and, for the purposes
of settling the estate, may exercise the rights of a current limited
partner under Section 15903.04.
Article 8. Dissolution
15908.01. Except as otherwise provided in Section 15908.02, a
limited partnership is dissolved, and its activities must be wound
up, only upon the occurrence of any of the following:
(a) the happening of an event specified in the partnership
agreement;
(b) the consent of all general partners and of limited partners
owning a majority of the rights to receive distributions as limited
partners at the time the consent is to be effective;
(c) after the dissociation of a person as a general partner:
(1) if the limited partnership has at least one remaining general
partner, and a consent to dissolve the limited partnership is given
within 90 days after the dissociation by partners owning a majority
of the rights to receive distributions as partners at the time the
consent is to be effective; or
(2) if the limited partnership does not have a remaining general
partner, the passage of 90 days after the dissociation, unless before
the end of the period:
(A) consent to continue the activities of the limited partnership
and admit at least one general partner is given by limited partners
owning a majority of the rights to receive distributions as limited
partners at the time the consent is to be effective; and
(B) at least one person is admitted as a general partner in
accordance with the consent; or
(d) the passage of 90 days after the dissociation of the limited
partnership's last limited partner, unless before the end of the
period the limited partnership admits at least
one limited partner.
15908.02. (a) On application by a partner, a court of competent
jurisdiction may order dissolution of a limited partnership if it is
not reasonably practicable to carry on the activities of the limited
partnership in conformity with the partnership agreement.
(b) In any suit for judicial dissolution, the other partners may
avoid the dissolution of the limited partnership by purchasing for
cash the partnership interests owned by the partners so initiating
the proceeding (the "moving parties") at their fair market value. In
fixing the value, the amount of any damages resulting if the
initiation of the dissolution is a breach by any moving party or
parties of an agreement with the purchasing party or parties,
including, without limitation, the partnership agreement, may be
deducted from the amount payable to the moving party or parties.
(c) If the purchasing parties (1) elect to purchase the
partnership interests owned by the moving parties, (2) are unable to
agree with the moving parties upon the fair market value of the
partnership interests, and (3) give bond with sufficient security to
pay the estimated reasonable expenses, including attorneys' fees, of
the moving parties if the expenses are recoverable under paragraph
(3), the court, upon application of the purchasing parties, either in
the pending action or in a proceeding initiated in the superior
court of the proper county by the purchasing parties, shall stay the
winding up and dissolution proceeding and shall proceed to ascertain
and fix the fair market value of the partnership interests owned by
the moving parties.
(d) The court shall appoint three disinterested appraisers to
appraise the fair market value of the partnership interests owned by
the moving parties, and shall make an order referring the matter to
the appraisers so appointed for the purpose of ascertaining that
value. The order shall prescribe the time and manner of producing
evidence, if evidence is required. The award of the appraisers or a
majority of them, when confirmed by the court, shall be final and
conclusive upon all parties. The court shall enter a decree that
shall provide in the alternative for winding up and dissolution of
the limited partnership unless payment is made for the partnership
interests within the time specified by the decree. If the purchasing
parties do not make payment for the partnership interests within the
time specified, judgment shall be entered against them and the surety
or sureties on the bond for the amount of the expenses, including
attorneys' fees, of the moving parties. Any member aggrieved by the
action of the court may appeal therefrom.
(e) If the purchasing parties desire to prevent the winding up and
dissolution of the limited partnership, they shall pay to the moving
parties the value of their partnership interests ascertained and
decreed within the time specified pursuant to this section, or, in
the case of an appeal, as fixed on appeal. On receiving that payment
or the tender thereof, the moving parties shall transfer their
partnership interests to the purchasing parties.
(f) For the purposes of this section, the valuation date shall be
the date upon which the action for judicial dissolution was
commenced. However, the court may, upon the hearing of a motion by
any party, and for good cause shown, designate some other date as the
valuation date.
15908.03. (a) A limited partnership continues after dissolution
only for the purpose of winding up its activities.
(b) In winding up its activities, the limited partnership:
(1) may amend its certificate of limited partnership to state that
the limited partnership is dissolved, preserve the limited
partnership business or property as a going concern for a reasonable
time, prosecute and defend actions and proceedings, whether civil,
criminal, or administrative, transfer the limited partnership's
property, settle disputes by mediation or arbitration, file a
certificate of cancellation as provided in Section 15902.03, and
perform other necessary acts; and
(2) shall discharge the limited partnership's liabilities, settle
and close the limited partnership's activities, and marshal and
distribute the assets of the partnership.
(c) If a dissolved limited partnership does not have a general
partner, a person to wind up the dissolved limited partnership's
activities may be appointed by the consent of limited partners owning
a majority of the rights to receive distributions as limited
partners at the time the consent is to be effective. A person
appointed under this subdivision:
(1) has the powers of a general partner under Section 15908.04;
and
(2) shall promptly amend the certificate of limited partnership to
state:
(A) that the limited partnership does not have a general partner;
(B) the name of the person that has been appointed to wind up the
limited partnership; and
(C) the address of the person.
(d) On the application of any partner, the appropriate court may
order judicial supervision of the winding up, including the
appointment of a person to wind up the dissolved limited partnership'
s activities, if:
(1) a limited partnership does not have a general partner and
within a reasonable time following the dissolution no person has been
appointed pursuant to subdivision (c); or
(2) the applicant establishes other good cause.
(e) Unless otherwise provided in the partnership agreement, the
limited partners winding up the affairs of the partnership pursuant
to this section shall be entitled to reasonable compensation.
15908.04. (a) A limited partnership is bound by a general partner'
s act after dissolution which:
(1) is appropriate for winding up the limited partnership's
activities; or
(2) would have bound the limited partnership under Section
15904.02 before dissolution, if, at the time the other party enters
into the transaction, the other party does not have notice of the
dissolution.
(b) A person dissociated as a general partner binds a limited
partnership through an act occurring after dissolution if:
(1) at the time the other party enters into the transaction:
(A) less than two years have passed since the dissociation; and
(B) the other party does not have notice of the dissociation and
reasonably believes that the person is a general partner; and
(2) the act:
(A) is appropriate for winding up the limited partnership's
activities; or
(B) would have bound the limited partnership under Section
15904.02 before dissolution and at the time the other party enters
into the transaction the other party does not have notice of the
dissolution.
15908.05. (a) If a general partner having knowledge of the
dissolution causes a limited partnership to incur an obligation under
subdivision (a) of Section 15908.04 by an act that is not
appropriate for winding up the partnership's activities, the general
partner is liable:
(1) to the limited partnership for any damage caused to the
limited partnership arising from the obligation; and
(2) if another general partner or a person dissociated as a
general partner is liable for the obligation, to that other general
partner or person for any damage caused to that other general partner
or person arising from the liability.
(b) If a person dissociated as a general partner causes a limited
partnership to incur an obligation under subdivision (b) of Section
15908.04, the person is liable:
(1) to the limited partnership for any damage caused to the
limited partnership arising from the obligation; and
(2) if a general partner or another person dissociated as a
general partner is liable for the obligation, to the general partner
or other person for any damage caused to the general partner or other
person arising from the liability.
15908.06. (a) A dissolved limited partnership may dispose of the
known claims against it by following the procedure described in
subdivision (b).
(b) A dissolved limited partnership may notify its known claimants
of the dissolution in a record. The notice must:
(1) specify the information required to be included in a claim;
(2) provide a mailing address to which the claim is to be sent;
(3) state the deadline for receipt of the claim, which may not be
less than 120 days after the date the notice is received by the
claimant; and
(4) state that the claim will be barred if not received by the
deadline.
(c) A claim against a dissolved limited partnership is barred if
the requirements of subdivision (b) are met and:
(1) the claim is not received by the specified deadline; or
(2) in the case of a claim that is timely received but rejected in
writing by the dissolved limited partnership, the claimant does not
commence an action to enforce the claim against the limited
partnership within 90 days after the receipt of a written notice of
the rejection.
(d) This section does not apply to a claim based on an event
occurring after the effective date of dissolution or a liability that
is contingent on that date.
15908.07. (a) A dissolved limited partnership may publish notice
of its dissolution and request persons having claims against the
limited partnership to present them in accordance with the notice.
(b) The notice must:
(1) be published at least once in a newspaper of general
circulation in the county in which the dissolved limited partnership'
s principal office is located or, if it has none in this state, in
the county in which the limited partnership's designated office is or
was last located;
(2) describe the information required to be contained in a claim
and provide a mailing address to which the claim is to be sent; and
(3) state that a claim against the limited partnership is barred
unless an action to enforce the claim is commenced within four years
after publication of the notice.
(c) If a dissolved limited partnership publishes a notice in
accordance with subdivision (b), the claim of each of the following
claimants is barred unless the claimant commences an action to
enforce the claim against the dissolved limited partnership within
four years after the publication date of the notice:
(1) a claimant that did not receive notice in a record under
Section 15908.06;
(2) a claimant whose claim was timely sent to the dissolved
limited partnership but not acted on; and
(3) a claimant whose claim is contingent or based on an event
occurring after the effective date of dissolution.
(d) A claim not barred under this section may be enforced:
(1) against the dissolved limited partnership, to the extent of
its undistributed assets;
(2) if the assets have been distributed in liquidation, against a
partner or transferee to the extent of that person's proportionate
share of the claim or the limited partnership's assets distributed to
the partner or transferee in liquidation, whichever is less, but a
person's total liability for all claims under this paragraph does not
exceed the total amount of assets distributed to the person as part
of the winding up of the dissolved limited partnership; or
(3) against any person liable on the claim under Section 15904.04.
(e) Publication of a notice of dissolution of a limited
partnership pursuant to this section shall not bar the collection of
any tax, interest, penalty or addition to tax under Part 10
(commencing with Section 17001) of, Part 10.20 (commencing with
Section 18401) of, and Part 11 (commencing with Section 23001) of,
Division 2 of the Revenue and Taxation Code.
15908.08. If a claim against a dissolved limited partnership is
barred under Section 15908.06 or 15908.07, any corresponding claim
under Section 15904.04 is also barred.
15908.09. (a) In winding up a limited partnership's activities,
the assets of the limited partnership, including the contributions
required by this section, must be applied to satisfy the limited
partnership's obligations to creditors, including, to the extent
permitted by law, partners that are creditors.
(b) Any surplus remaining after the limited partnership complies
with subdivision (a) must be returned to the partners as they share
in distributions.
(c) If a limited partnership's assets are insufficient to satisfy
all of its obligations under subdivision (a) the following rules
apply:
(1) Each person that was a general partner when the obligation was
incurred and that has not been released from the obligation under
Section 15906.07 shall contribute to the limited partnership for the
purpose of enabling the limited partnership to satisfy the
obligation. The contribution due from each of those persons is in
proportion to the right to receive distributions in the capacity of
general partner in effect for each of those persons when the
obligation was incurred.
(2) If a person does not contribute the full amount required under
paragraph (1) with respect to an unsatisfied obligation of the
limited partnership, the other persons required to contribute by
paragraph (1) on account of the obligation shall contribute the
additional amount necessary to discharge the obligation. The
additional contribution due from each of those other persons is in
proportion to the right to receive distributions in the capacity of
general partner in effect for each of those other persons when the
obligation was incurred.
(3) If a person does not make the additional contribution required
by paragraph (2), further additional contributions are determined
and due in the same manner as provided in that paragraph.
(d) A person that makes an additional contribution under paragraph
(2) or (3) of subdivision (c) may recover from any person whose
failure to contribute under paragraph (1) or (2) of subdivision (c)
necessitated the additional contribution. A person may not recover
under this subdivision more than the amount additionally contributed.
A person's liability under this subdivision may not exceed the
amount the person failed to contribute.
(e) The estate of a deceased individual is liable for the person's
obligations under this section.
(f) An assignee for the benefit of creditors of a limited
partnership or a partner, or a person appointed by a court to
represent creditors of a limited partnership or a partner, may
enforce a person's obligation to contribute under subdivision (c).
Article 9. Foreign Limited Partnership
15909.01. (a) The laws of the state or other jurisdiction under
which a foreign limited partnership is organized govern relations
among the partners of the foreign limited partnership and between the
partners and the foreign limited partnership and the liability of
partners as partners for an obligation of the foreign limited
partnership, except as to foreign limited liability limited
partnerships, which shall be treated as if they were foreign limited
partnerships.
(b) A foreign limited partnership may not be denied a certificate
of registration by reason of any difference between the laws of the
jurisdiction under which the foreign limited partnership is organized
and the laws of this state.
(c) A certificate of registration does not authorize a foreign
limited partnership to engage in any business or exercise any power
that a limited partnership may not engage in or exercise in this
state.
15909.02. (a) A foreign limited partnership may apply for a
certificate of registration to transact business in this state by
delivering an application signed and acknowledged by a general
partner of the foreign limited partnership to, and on a form
prescribed by, the Secretary of State for filing. The application
must state:
(1) the name of the foreign limited partnership and, if the name
does not comply with Section 15901.08, an alternate name adopted
pursuant to subdivision (a) of Section 15909.05.
(2) the name of the state or other jurisdiction under whose law
the foreign limited partnership is organized and the date of its
formation;
(3) the address of the foreign limited partnership's designated
office and, if the laws of the jurisdiction under which the foreign
limited partnership is organized require the foreign limited
partnership to maintain an office in that jurisdiction, the address
of the required office;
(4) the name and address of the foreign limited partnership's
initial agent for service of process in this state in accordance with
paragraph (1) of subdivision (d) of Section 15901.16;
(5) the name and address of each of the foreign limited
partnership's general partners; and
(6) whether the foreign limited partnership is a foreign limited
liability limited partnership.
(b) A foreign limited partnership shall deliver with the completed
application a certificate of existence or a record of similar import
signed by the Secretary of State or other official having custody of
the foreign limited partnership's publicly filed records in the
state or other jurisdiction under whose law the foreign limited
partnership is organized.
15909.03. (a) Activities of a foreign limited partnership that do
not constitute transacting business in this state for registration
purposes within the meaning of this article include the activities
set forth in subdivision (ai) of Section 15901.02.
(b) For purposes of this article, the ownership in this state of
income-producing real property or tangible personal property, other
than property excluded under subdivision (a), constitutes transacting
business in this state.
(c) This section does not apply in determining the contacts or
activities that may subject a foreign limited partnership to service
of process, taxation jurisdiction, or regulation under any other law
of this state.
15909.04. Unless the Secretary of State determines that an
application for a certificate of registration does not comply with
the filing requirements of this chapter, the Secretary of State, upon
payment of all requisite fees, shall file the application and shall
issue to the foreign limited partnership a certificate of
registration stating the date of filing of the application and that
the foreign limited partnership is qualified to transact intrastate
business, subject, however, to any licensing requirements otherwise
imposed by the laws of this state.
15909.05. (a) A foreign limited partnership whose name does not
comply with Section 15901.08 may not obtain a certificate of
registration until it adopts, for the purpose of transacting business
in this state, an alternate name that complies with Section
15901.08.
(b) If a foreign limited partnership authorized to transact
business in this state changes its name to one that does not comply
with Section 15901.08, it may not thereafter transact business in
this state until it complies with subdivision (a) and obtains an
amended certificate of registration.
(c) The Secretary of State may cancel the application and
certificate of registration of a foreign limited partnership if a
check or other remittance accepted in payment of the filing fee is
not paid upon presentation. Upon receiving written notification that
the item presented for payment has not been honored for payment, the
Secretary of State shall give a first written notice of the
applicability of this section to the agent for service of process or
to the person submitting the instrument. Thereafter, if the amount
has not been paid by cashier's check or equivalent, the Secretary of
State shall give a second written notice of cancellation and the
cancellation shall thereupon be effective. The second notice shall be
given 20 days or more after the first notice and 90 days or less
after the original filing.
15909.06. If any statement in the application for registration of
a foreign limited partnership was false when made or any statements
made have become erroneous, the foreign limited partnership shall
promptly deliver to, and on a form prescribed by, the Secretary of
State an amendment to the application for registration signed and
acknowledged by the general partner amending the statement.
15909.07. (a) In order to cancel its certificate of registration
to transact business in this state, a foreign limited partnership
must deliver to and on a form prescribed by the Secretary of State
for filing a certificate of cancellation signed and acknowledged by a
general partner of the foreign limited partnership. The registration
is canceled when the certificate becomes effective under Section
15902.06.
(b) A foreign limited partnership transacting business in this
state may not maintain an action or proceeding in this state unless
it has a certificate of registration to transact business in this
state.
(c) Any foreign limited partnership that transacts intrastate
business in this state without registration is subject to a penalty
of twenty dollars ($20) for each day that the unauthorized intrastate
business is transacted, up to a maximum of ten thousand dollars
($10,000). An action to recover this penalty may be brought, and any
recovery shall be paid, as provided in Section 2258.
(d) The failure of a foreign limited partnership to have a
certificate of registration to transact business in this state does
not impair the validity of a contract or act of the foreign limited
partnership or prevent the foreign limited partnership from defending
an action or proceeding in this state.
(e) A partner of a foreign limited partnership is not liable for
the obligations of the foreign limited partnership solely by reason
of the foreign limited partnership's having transacted business in
this state without a certificate of registration.
(f) If a foreign limited partnership transacts business in this
state without a certificate of registration or cancels its
certificate of registration, it appoints the Secretary of State as
its agent for service of process for rights of action arising out of
the transaction of business in this state.
15909.08. The Attorney General may maintain an action to restrain
a foreign limited partnership from transacting business in this
state in violation of this article.
Article 10. Actions by Partners
15910.01. (a) Subject to subdivision (b), a partner may maintain
a direct action against the limited partnership or another partner
for legal or equitable relief, with or without an accounting as to
the partnership's activities, to enforce the rights and otherwise
protect the interests of the partner, including rights and interests
under the partnership agreement or this chapter or arising
independently of the partnership relationship.
(b) A partner bringing a direct action under this section is
required to plead and prove an actual or threatened injury that is
not solely the result of an injury suffered or threatened to be
suffered by the limited partnership.
(c) The accrual of, and any time limitation on, a right of action
for a remedy under this section is governed by other law. A right to
an accounting upon a dissolution and winding up does not revive a
claim barred by law.
15910.02. A partner may bring a derivative action to enforce a
right of a limited partnership if:
(1) the partner first makes a demand on the general partners,
requesting that they cause the limited partnership to bring an action
to enforce the right, and the general partners do not bring the
action within a reasonable time; or
(2) a demand would be futile.
15910.03. (a) A derivative action may be maintained only by a
person that is a partner at the time the action is commenced and:
(1) that was a partner when the conduct giving rise to action
occurred; or
(2) whose status as a partner devolved upon the person by
operation of law or pursuant to the terms of the partnership
agreement from a person that was a partner at the time of that
conduct.
(b) Notwithstanding the foregoing, any partner who does not meet
the foregoing requirements may nevertheless be allowed in the
discretion of the court to maintain the action on a preliminary
showing to and determination by the court, by motion and after a
hearing, at which the court shall consider such evidence, by
affidavit or testimony, as it deems material that (1) there is a
strong prima facie case in favor of the claim asserted on behalf of
the partnership, (2) no other similar action has been or is likely to
be instituted, (3) the plaintiff acquired the shares before there
was disclosure to the public and to the plaintiff of the wrongdoing
of which plaintiff complains, (4) unless the action can be maintained
the defendant may retain a gain derived from the defendant's willful
breach of a fiduciary duty, and (5) the requested relief will not
result in unjust enrichment of the partnership or any partner.
15910.04. In a derivative action, the complaint must state with
particularity:
(1) the date and content of plaintiff's demand and the general
partners' response to the demand; or
(2) why demand is excused as futile.
15910.05. (a) Except as otherwise provided in subdivision (b):
(1) any proceeds or other benefits of a derivative action, whether
by judgment, compromise, or settlement, belong to the limited
partnership and not to the derivative plaintiff;
(2) if the derivative plaintiff receives any of those proceeds,
the derivative plaintiff shall immediately remit them to the limited
partnership.
(b) If a derivative action is successful in whole or in part, the
court may award the plaintiff reasonable expenses, including
reasonable attorney's fees, from the recovery of the limited
partnership.
15910.06. (a) In any derivative action, at any time within 30
days after service of summons upon the limited partnership or the
general partner, the limited partnership or general partner may move
the court for an order, upon notice and hearing, requiring the
plaintiff to furnish a bond as hereinafter provided. The motion shall
be based upon one or both of the following grounds:
(1) That there is no reasonable possibility that the prosecution
of the cause of action alleged in the complaint against the moving
party will benefit the limited partnership or its partners.
(2) That the moving party, if other than the partnership, did not
participate in the transaction complained of in any capacity. The
court on application of the limited partnership or the general
partner may, for good cause shown, extend the 30-day period for an
additional period or periods not exceeding 60 days.
(b) At the hearing upon any motion pursuant to subdivision (a) the
court shall consider such evidence, written or oral, by witnesses or
affidavit, as may be material (1) to the ground or grounds upon
which the motion is based, or (2) to
a determination of the probable reasonable expenses,
including attorneys' fees, of the limited partnership and the general
partner which will be incurred in defense of the action. If the
court determines, after hearing the evidence adduced by the parties,
that the moving party has established a probability in support of any
of the grounds upon which the motion is based, the court shall fix
the amount of the bond, not to exceed fifty thousand dollars
($50,000), to be furnished by the plaintiff for reasonable expenses,
including attorneys fees, which may be incurred by the moving party
and the limited partnership in connection with the action, including
expenses for which the limited partnership may become liable pursuant
to subdivision (c) of Section 15904.06. A ruling by the court on the
motion shall not be a determination of any issue in the action or of
the merits thereof. If the court, upon motion, makes a determination
that a bond shall be furnished by the plaintiff as to any one or
more defendants, the action shall be dismissed as to the defendant or
defendants, unless the bond required by the court has been furnished
within such reasonable time as may be fixed by the court.
(c) If the plaintiff shall, either before or after a motion is
made pursuant to subdivision (a), or any order or determination
pursuant to the motion, furnish a bond in the aggregate amount of
fifty thousand dollars ($50,000) to secure the reasonable expenses of
the parties entitled to make the motion, the plaintiff has complied
with the requirements of this section and with any order for a bond
theretofore made, any such motion then pending shall be dismissed and
no further additional bond shall be required.
(d) If a motion is filed pursuant to subdivision (a), no pleadings
need to be filed by the limited partnership or any other defendant
and the prosecution of the action shall be stayed until 10 days after
the motion has been disposed of.
Article 11. Conversion and Merger
15911.01. For purposes of this article, the following definitions
apply:
(a) "Converted entity" means the other business entity or foreign
other business entity or foreign limited partnership that results
from a conversion of a domestic limited partnership under this
chapter.
(b) "Converted limited partnership" means a domestic limited
partnership that results from a conversion of an other business
entity or a foreign other business entity or a foreign limited
partnership pursuant to Section 15911.08.
(c) "Converting limited partnership" means a domestic limited
partnership that converts to an other business entity or a foreign
other business entity or a foreign limited partnership pursuant to
this chapter.
(d) "Converting entity" means an other business entity or a
foreign other business entity or a foreign limited partnership that
converts to a domestic limited partnership pursuant to the terms of
Section 15911.08.
(e) "Constituent corporation" means a corporation that is merged
with or into one or more limited partnerships or other business
entities, and that includes a surviving corporation.
(f) "Constituent limited partnership" means a limited partnership
that is merged with or into one or more other limited partnerships or
other business entities, and that includes a surviving limited
partnership.
(g) "Constituent other business entity" means an other business
entity that is merged with or into one or more limited partnerships,
and that includes a surviving other business entity.
(h) "Disappearing limited partnership" means a constituent limited
partnership that is not the surviving limited partnership.
(i) "Disappearing other business entity" means a constituent other
business entity that is not the surviving other business entity.
(j) "Foreign other business entity" means an other business entity
formed under the laws of any state other than this state or under
the laws of a foreign country.
(k) "Other business entity" means a corporation, general
partnership, limited liability company, business trust, real estate
investment trust, or unincorporated association, other than a
nonprofit association, but excludes a limited partnership.
(l) "Surviving limited partnership" means a limited partnership
into which one or more other limited partnerships or other business
entities are merged.
(m) "Surviving other business entity" means another business
entity into which one or more limited partnerships are merged.
15911.02. (a) A limited partnership may be converted into another
business entity or a foreign other business entity or a foreign
limited partnership pursuant to this article if both of the following
apply:
(1) Pursuant to a conversion into a domestic or foreign
partnership or limited liability company or into a foreign limited
partnership, each of the partners of the converting limited
partnership receives a percentage interest in the profits and capital
of the converted entity equal to that partner's percentage interest
in profits and capital of the converting limited partnership as of
the effective time of the conversion.
(2) Pursuant to a conversion into an other business entity or
foreign other business entity not specified in paragraph (1), both of
the following occur:
(A) Each limited partnership interest of the same class is treated
equally with respect to any distribution of cash, property, rights,
interests, or securities of the converted entity, unless all limited
partners of the class consent.
(B) The nonredeemable limited partnership interests of the
converting limited partnership are converted only into nonredeemable
interests or securities of the converted entity, unless all holders
of the unredeemable interests consent.
(b) The conversion of a limited partnership to an other business
entity or a foreign other business entity or a foreign limited
partnership may be effected only if both of the following conditions
are satisfied:
(1) The law under which the converted entity will exist expressly
permits the formation of that entity pursuant to a conversion.
(2) The limited partnership complies with all other requirements
of any other law that applies to conversion to the converted entity.
15911.03. (a) A limited partnership that desires to convert to an
other business entity or a foreign other business entity or a
foreign limited partnership shall approve a plan of conversion. The
plan of conversion shall state all of the following:
(1) The terms and conditions of the conversion.
(2) The place of the organization of the converted entity and of
the converting limited partnership and the name of the converted
entity after conversion.
(3) The manner of converting the limited and general partnership
interests of each of the partners into shares of, securities of, or
interests in, the converted entity.
(4) The provisions of the governing documents for the converted
entity, including the partnership agreement, limited liability
company articles of organization and operating agreement, or articles
or certificate of incorporation if the converted entity is a
corporation, to which the holders of interests in the converted
entity are to be bound.
(5) Any other details or provisions that are required by the laws
under which the converted entity is organized, or that are desired by
the parties.
(b) The plan of conversion shall be approved by all general
partners of the converting limited partnership and by a majority in
interest of each class of limited partners of the converting limited
partnership, unless a greater or lesser approval is required by the
partnership agreement of the converting limited partnership. However,
if the limited partners of the limited partnership would become
personally liable for any obligations of the converted entity as a
result of the conversion, the plan of conversion shall be approved by
all of the limited partners of the converting limited partnership,
unless the plan of conversion provides that all limited partners will
have dissenters' rights as provided in Article 11.5 (commencing with
Section 15911.20).
(c) Upon the effectiveness of the conversion, all partners of the
converting limited partnership, except those that exercise dissenters'
rights as provided in Article 11.5 (commencing with Section
15911.20), shall be deemed parties to any governing documents for the
converted entity adopted as part of the plan of conversion,
irrespective of whether or not the partner has executed the plan of
conversion or the governing documents for the converted entity. Any
adoption of governing documents made pursuant thereto shall be
effective at the effective time or date of the conversion.
(d) Notwithstanding its prior approval, a plan of conversion may
be amended before the conversion takes effect if the amendment is
approved by all general partners of the converting limited
partnership and, if the amendment changes any of the principal terms
of the plan of conversion, the amendment is approved by the limited
partners of the converting limited partnership in the same manner and
to the same extent as required for the approval of the original plan
of conversion.
(e) The general partners of a converting limited partnership may,
by unanimous approval at any time before the conversion is effective,
in their discretion, abandon a conversion, without further approval
by the limited partners, subject to the contractual rights of third
parties other than limited partners.
(f) The converted entity shall keep the plan of conversion at the
principal place of business of the converted entity if the converted
entity is a domestic partnership or foreign other business entity, at
the principal executive office of, or registrar or transfer agent
of, the converted entity, if the converted entity is a domestic
corporation, or at the office at which records are to be kept under
Section 17057 if the converted entity is a domestic limited liability
company. Upon the request of a partner of a converting limited
partnership, the authorized person on behalf of the converted entity
shall promptly deliver to the partner or the holder of shares,
interests, or other securities, at the expense of the converted
entity, a copy of the plan of conversion. A waiver by a partner of
the rights provided in this subdivision shall be unenforceable.
15911.04. (a) A conversion into an other business entity or a
foreign other business entity or a foreign limited partnership shall
become effective upon the earliest date that all of the following
occur:
(1) The plan of conversion is approved by the partners of the
converting limited partnership, as provided in Section 15911.03.
(2) All documents required by law to create the converted entity
are filed, which documents shall also contain a statement of
conversion if required under Section 15911.06.
(3) The effective date, if set forth in the plan of conversion,
occurs.
(b) A copy of the statement of partnership authority or articles
of organization complying with Section 15911.06, if applicable, duly
certified by the Secretary of State, is conclusive evidence of the
conversion of the limited partnership.
15911.05. (a) The conversion of a limited partnership into a
foreign limited partnership or foreign other business entity shall be
required to comply with Section 15911.02.
(b) If the limited partnership is converting into a foreign
limited partnership or foreign other business entity, those
conversion proceedings shall be in accordance with the laws of the
state or place of organization of the foreign limited partnership or
foreign other business entity and the conversion shall become
effective in accordance with that law.
(c) (1) To enforce an obligation of a limited partnership that has
converted to a foreign limited partnership or foreign other business
entity, the Secretary of State shall only be the agent for service
of process in an action or proceeding against that converted foreign
entity if the agent designated for the service of process for that
entity is a natural person and cannot be found with due diligence or
if the agent is a corporation and no person to whom delivery may be
made may be located with due diligence, or if no agent has been
designated and if no one of the officers, partners, managers,
members, or agents of that entity may be located after diligent
search and it is so shown by affidavit to the satisfaction of the
court. The court then may make an order that service be made by
personal delivery to the Secretary of State or to an assistant or
deputy Secretary of State of two copies of the process together with
two copies of the order, and the order shall set forth an address to
which the process shall be sent by the Secretary of State. Service in
this manner is deemed complete on the 10th day after delivery of the
process to the Secretary of State.
(2) Upon receipt of the process and order and the fee set forth in
Section 12206 of the Government Code, the Secretary of State shall
provide notice to that entity of the service of the process by
forwarding by certified mail, return receipt requested, a copy of the
process and order to the address specified in the order.
(3) The Secretary of State shall keep a record of all process
served upon the Secretary of State and shall record therein the time
of service and the Secretary of State's action with respect thereto.
The certificate of the Secretary of State, under the Secretary of
State's official seal, certifying to the receipt of process, the
providing of notice thereof to that entity, and the forwarding of the
process shall be competent and prima facie evidence of the matters
stated therein.
15911.06. (a) Upon conversion of a limited partnership, one of
the following applies:
(1) If the limited partnership is converting into a domestic
limited liability company, a statement of conversion shall be
completed on the articles of organization for the converted entity
and shall be filed with the Secretary of State.
(2) If the limited partnership is converting into a domestic
partnership, a statement of conversion shall be completed on the
statement of partnership authority for the converted entity. If no
statement of partnership authority is filed, a certificate of
conversion shall be filed separately with the Secretary of State.
(3) If the limited partnership is converting into a domestic
corporation, a statement of conversion shall be completed on the
articles of incorporation for the converted entity and shall be filed
with the Secretary of State.
(4) If the limited partnership is converting to a foreign limited
partnership or foreign other business entity, a certificate of
conversion shall be filed with the Secretary of State.
(b) Any certificate or statement of conversion shall be executed
and acknowledged by all general partners, unless a lesser number is
provided in the certificate of limited partnership, and shall set
forth all of the following:
(1) The name and the Secretary of State's file number of the
converting limited partnership.
(2) A statement that the principal terms of the plan of conversion
were approved by a vote of the partners, that equaled or exceeded
the vote required under Section 15911.03, specifying each class
entitled to vote and the percentage vote required of each class.
(3) The form of organization of the converted entity.
(4) The mailing address of the converted entity's agent for
service of process and the chief executive office of the converted
entity.
(c) The filing with the Secretary of State of a certificate of
conversion or a statement of partnership authority, articles of
organization, or articles of incorporation containing a statement of
conversion as set forth in subdivision (a) shall have the effect of
the filing of a certificate of cancellation by the converting limited
partnership, and no converting limited partnership that has made the
filing is required to file a certificate of cancellation under
Section 15902.03 as a result of that conversion.
15911.07. (a) Whenever a limited partnership or other business
entity having any real property in this state converts into a limited
partnership or an other business entity pursuant to the laws of this
state or of the state or place in which the limited partnership or
other business entity was organized, and the laws of the state or
place of organization, including this state, of the converting
limited partnership or other converting entity provide substantially
that the conversion vests in the converted limited partnership or
other converted entity all the real property of the converting
limited partnership or other converting entity, the filing for record
in the office of the county recorder of any county in this state in
which any of the real property of the converting limited partnership
or other converting entity is located of either of the following
shall evidence record ownership in the converted limited partnership
or other converted entity of all interest of the converting limited
partnership or other converting entity in and to the real property
located in that county:
(1) A certificate of conversion or statement of partnership
authority, a certificate of limited partnership, articles of
incorporation, or articles of organization complying with Section
15911.06, in the form prescribed and certified by the Secretary of
State.
(2) A copy of a certificate of conversion or a statement of
partnership authority, certificate of limited partnership, articles
of organization, articles of incorporation, or other certificate or
document evidencing the creation of a foreign other business entity
or foreign limited partnership by conversion, containing a statement
of conversion, certified by the Secretary of State or an authorized
public official of the state or place pursuant to the laws of which
the conversion is effected.
(b) A filed and, if appropriate, recorded certificate of
conversion or a statement of partnership authority, certificate of
limited partnership, articles of organization, articles or
certificate of incorporation, or other certificate evidencing the
creation of a foreign other business entity or foreign limited
partnership by conversion, containing a statement of conversion,
filed pursuant to subdivision (a) of Section 15911.06, stating the
name of the converting limited partnership or other converting entity
in whose name property was held before the conversion and the name
of the converted entity or converted limited partnership, but not
containing all of the other information required by Section 15911.06,
operates with respect to the entities named to the extent provided
in subdivision (a).
(c) Recording of a certificate of conversion, or a statement of
partnership authority, certificate of limited partnership, articles
of organization, articles of incorporation, or other certificate
evidencing the creation of another business entity or a limited
partnership by conversion, containing a statement of conversion, in
accordance with subdivision (a), shall create, in favor of bona fide
purchasers or encumbrances for value, a conclusive presumption that
the conversion was validly completed.
15911.08. (a) An other business entity or a foreign other
business entity or a foreign limited partnership may be converted to
a domestic limited partnership pursuant to this article only if the
converting entity is authorized by the laws under which it is
organized to effect the conversion.
(b) An other business entity or a foreign other business entity or
a foreign limited partnership that desires to convert into a
domestic limited partnership shall approve a plan of conversion or
another instrument as is required to be approved to effect the
conversion pursuant to the laws under which that entity is organized.
(c) The conversion of an other business entity or a foreign other
business entity or a foreign limited partnership into a domestic
limited partnership shall be approved by the number or percentage of
the partners, members, shareholders, or holders of interest of the
converting entity as is required by the laws under which that entity
is organized, or a greater or lesser percentage, subject to
applicable laws, as set forth in the converting entity's partnership
agreement, articles of organization, operating agreement, articles or
certificate of incorporation, or other governing document.
(d) The conversion by an other business entity or a foreign other
business entity or a foreign limited partnership into a domestic
limited partnership shall be effective under this article at the time
the conversion is effective under the laws under which the
converting entity is organized, as long as a certificate of limited
partnership containing a statement of conversion has been filed with
the Secretary of State. If the converting entity's governing law is
silent as to the effectiveness of the conversion, the conversion
shall be effective upon the completion of all acts required under
this title to form a limited partnership.
(e) The filing with the Secretary of State of a certificate of
conversion or a certificate of limited partnership containing a
statement of conversion pursuant to subdivision (a) shall have the
effect of the filing of a certificate of cancellation by the
converting foreign limited partnership or foreign limited liability
company and no converting foreign limited partnership or foreign
limited liability company that has made the filing is required to
file a certificate of cancellation under Section 15902.03 or 17455 as
a result of that conversion. If a converting other business entity
is a foreign corporation qualified to transact business in this
state, the foreign corporation shall, by virtue of the filing,
automatically surrender its right to transact intrastate business.
15911.09. (a) An entity that converts into another entity
pursuant to this article is, for all purposes, other than for the
purposes of Part 10 (commencing with Section 17001) of, Part 10.20
(commencing with Section 18401) of, and Part 11 (commencing with
Section 23001) of, Division 2 of the Revenue and Taxation Code, the
same entity that existed before the conversion and the conversion
shall not be deemed a transfer of property.
(b) Upon a conversion taking effect, all of the following apply:
(1) All the rights and property, whether real, personal, or mixed,
of the converting entity or converting limited partnership are
vested in the converted entity or converted limited partnership.
(2) All debts, liabilities, and obligations of the converting
entity or converting limited partnership continue as debts,
liabilities, and obligations of the converted entity or converted
limited partnership.
(3) All rights of creditors and liens upon the property of the
converting entity or converting limited partnership shall be
preserved unimpaired and remain enforceable against the converted
entity or converted limited partnership to the same extent as against
the converting entity or converting limited partnership as if the
conversion had not occurred.
(4) Any action or proceeding pending by or against the converting
entity or converting limited partnership may be continued against the
converted entity or converted limited partnership as if the
conversion had not occurred.
(c) A partner of a converting limited partnership is liable for
the following:
(1) All obligations of the converting limited partnership for
which the partner was personally liable before the conversion.
(2) All obligations of the converted entity incurred after the
conversion takes effect, but those obligations may be satisfied only
out of property of the entity if that partner is a limited partner or
a shareholder in a corporation, or unless expressly provided
otherwise in the articles of organization or other governing
documents, a member of a limited liability company, or a holder of
equity securities in another converted entity if the holders of
equity securities in that entity are not personally liable for the
obligations of that entity under the law under which the entity is
organized or its governing documents.
(d) A partner of a converted limited partnership remains liable
for any and all obligations of the converting entity for which the
partner was personally liable before the conversion, but only to the
extent that the partner was liable for the obligations of the
converting entity prior to the conversion.
(e) If the other party to a transaction with the limited
partnership reasonably believes when entering the transaction that
the limited partner is a general partner, the limited partner is
liable for an obligation incurred by the limited partnership within
90 days after the conversion takes effect. The limited partner's
liability for all other obligations of the limited partnership
incurred after the conversion takes effect is that of a limited
partner.
15911.10. Mergers of limited partnerships shall be governed by
Sections 15911.11 to 15911.19, inclusive.
15911.11. The following entities may be merged pursuant to this
article:
(a) Two or more limited partnerships into one limited partnership.
(b) One or more limited partnerships and one or more other
business entities into one of those other business entities.
(c) One or more limited partnerships and one or more other
business entities into one limited partnership. Notwithstanding this
section, the merger of any number of limited partnerships with any
number of other business entities may be effected only if the other
business entities that are organized in California are authorized by
the laws under which they are organized to effect the merger, and (1)
if a limited partnership is the surviving limited partnership, the
foreign other business entities are not prohibited by the laws under
which they are organized from effecting that merger, and (2) if a
foreign limited partnership or foreign other business entity is the
survivor of the merger, the laws of the jurisdiction under which the
survivor is organized authorize that merger. Notwithstanding the
first sentence of this paragraph, if one or more domestic
corporations is also a party to the merger described in that
sentence, the merger may be effected only if, with respect to any
foreign other business entity that is a corporation, the foreign
corporation is authorized by the laws under which it is organized to
effect that merger.
15911.12. (a) Each limited partnership and other business entity
that desires to merge shall approve an agreement of merger. The
agreement of merger shall be approved by all general partners of
each constituent
limited partnership and the principal terms of the merger shall be
approved by a majority in interest of each class of limited partners
of each constituent limited partnership, unless a greater approval is
required by the partnership agreement of the constituent limited
partnership. Notwithstanding the previous sentence, if the limited
partners of any constituent limited partnership become personally
liable for any obligations of a constituent limited partnership or
constituent other business entity as a result of the merger, the
principal terms of the agreement of merger shall be approved by all
of the limited partners of the constituent limited partnership,
unless the agreement of merger provides that all limited partners
will have the dissenters' rights provided in Article 11.5 (commencing
with Section 15911.20). The agreement of merger shall be approved on
behalf of each constituent other business entity by those persons
required to approve the merger by the laws under which it is
organized. Other persons, including a parent of a constituent limited
partnership, may be parties to the agreement of merger. The
agreement of merger shall state:
(1) The terms and conditions of the merger.
(2) The name and place of organization of the surviving limited
partnership or surviving other business entity, and of each
disappearing limited partnership and disappearing other business
entity, and the agreement of merger may change the name of the
surviving limited partnership, which new name may be the same as or
similar to the name of a disappearing domestic or foreign limited
partnership, subject to Section 15901.08.
(3) The manner of converting the partnership interests of each of
the constituent limited partnerships into interests, shares, or other
securities of the surviving limited partnership or surviving other
business entity, and if partnership interests of any of the
constituent limited partnerships are not to be converted solely into
interests, shares, or other securities of the surviving limited
partnership or surviving other business entity, the cash, property,
rights, interests, or securities that the holders of the partnership
interests are to receive in exchange for the partnership interests,
which cash, property, rights, interests, or securities may be in
addition to or in lieu of interests, shares, or other securities of
the surviving limited partnership or surviving other business entity,
or that the partnership interests are canceled without
consideration.
(4) Any other details or provisions that are required by the laws
under which any constituent other business entity is organized,
including, if a domestic corporation is a party to the merger,
subdivision (b) of Section 1113.
(5) Any other details or provisions that are desired, including,
without limitation, a provision for the treatment of fractional
partnership interests.
(b) Each limited partnership interest of the same class of any
constituent limited partnership, other than a limited partnership
interest in another constituent limited partnership that is being
canceled and that is held by a constituent limited partnership or its
parent or a limited partnership of which the constituent limited
partnership is a parent, shall, unless all limited partners of the
class consent, be treated equally with respect to any distribution of
cash, property, rights, interests, or securities. Notwithstanding
this subdivision, except in a merger of a limited partnership with a
limited partnership in which it controls at least 90 percent of the
limited partnership interests entitled to vote with respect to the
merger, the unredeemable limited partnership interests of a
constituent limited partnership may be converted only into
unredeemable interests or securities of the surviving limited
partnership or other business entity or a parent if a constituent
limited partnership or a constituent other business entity or its
parent owns, directly or indirectly, prior to the merger, limited
partnership interests of another constituent limited partnership or
interests or securities of a constituent other business entity
representing more than 50 percent of the interests or securities
entitled to vote with respect to the merger of the other constituent
limited partnership or constituent other business entity or more than
50 percent of the voting power, as defined in Section 194.5, of a
constituent other business entity that is a domestic corporation,
unless all of the limited partners of the class consent. This
subdivision shall apply only to constituent limited partnerships with
over 35 limited partners.
(c) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the certificate of merger or the
agreement of merger, as provided in Section 15911.14, if the
amendment is approved by the general partners of each constituent
limited partnership in the same manner as required for approval of
the original agreement of merger and, if the amendment changes any of
the principal terms of the agreement of merger, the amendment is
approved by the limited partners of each constituent limited
partnership in the same manner and to the same extent as required for
the approval of the original agreement of merger, and by each of the
constituent other business entities.
(d) The general partners of a constituent limited partnership may,
in their discretion, abandon a merger, subject to the contractual
rights, if any, of third parties, including other constituent limited
partnerships and constituent other business entities, without
further approval by the limited partnership interests, at any time
before the merger is effective.
(e) An agreement of merger approved in accordance with subdivision
(a) may (1) effect any amendment to the partnership agreement of any
constituent limited partnership or (2) effect the adoption of a new
partnership agreement for a constituent limited partnership if it is
the surviving limited partnership in the merger. Any amendment to a
partnership agreement or adoption of a new partnership agreement made
pursuant to the foregoing sentence shall be effective at the
effective time or date of the merger. Notwithstanding the above
provisions of this subdivision, if a greater number of limited
partners is required to approve an amendment to the partnership
agreement of a constituent limited partnership than is required to
approve the agreement of merger pursuant to subdivision (a), and the
number of limited partners that approve the agreement of merger is
less than the number of limited partners required to approve an
amendment to the partnership agreement of the constituent limited
partnership, any amendment to the partnership agreement or adoption
of a new partnership agreement of that constituent limited
partnership made pursuant to the first sentence of this subdivision
shall be effective only if the agreement of merger provides that all
of the limited partners shall have the dissenters' rights provided in
Article 7.6 (commencing with Section 15911.20).
(f) The surviving limited partnership or surviving other business
entity shall keep the agreement of merger at its designated office or
at the business address specified in paragraph (5) of subdivision
(a) of Section 15911.14, as applicable, and, upon the request of a
limited partner of a constituent limited partnership or a holder of
shares, interests, or other securities of a constituent other
business entity, the general partners of the surviving limited
partnership or the authorized person of the surviving other business
entity shall promptly deliver to the limited partner or the holder of
shares, interests, or other securities, at the expense of the
surviving limited partnership or surviving other business entity, a
copy of the agreement of merger. A waiver by a partner or holder of
shares, interests, or other securities of the rights provided in this
subdivision shall be unenforceable.
15911.13. Subdivision (b) of Section 15911.12 shall not apply to
any transaction if the commissioner has approved the terms and
conditions of the transaction and the fairness of such terms and
conditions pursuant to Section 25142.
15911.14. (a) If the surviving entity is a limited partnership or
an other business entity, other than a corporation in a merger in
which a domestic corporation is a constituent party, after approval
of a merger by the constituent limited partnerships and any
constituent other business entities, the constituent limited
partnerships and constituent other business entities shall file a
certificate of merger in the office of, and on a form prescribed by,
the Secretary of State. The certificate of merger shall be executed
and acknowledged by each domestic constituent limited partnership by
all general partners, unless a lesser number is provided in the
certificate of limited partnership of the domestic constituent
limited partnership, and by each foreign constituent limited
partnership by one or more general partners, and by each constituent
other business entity by those persons required to execute the
certificate of merger by the laws under which the constituent other
business entity is organized. The certificate of merger shall set
forth all of the following:
(1) The names and the Secretary of State's file numbers, if any,
of each of the constituent limited partnerships and constituent other
business entities, separately identifying the disappearing limited
partnerships and disappearing other business entities and the
surviving limited partnership or surviving other business entity.
(2) If a vote of the limited partners was required under Section
15911.12, a statement setting forth the total number of outstanding
interests of each class entitled to vote on the merger and that the
principal terms of the agreement of merger were approved by a vote of
the number of interests of each class which equaled or exceeded the
vote required, specifying each class entitled to vote and the
percentage vote required of each class.
(3) If the surviving entity is a limited partnership and not an
other business entity, any change required to the information set
forth in the certificate of limited partnership of the surviving
limited partnership resulting from the merger, including any change
in the name of the surviving limited partnership resulting from the
merger. The filing of a certificate of merger setting forth any such
changes to the certificate of limited partnership of the surviving
limited partnership shall have the effect of the filing of a
certificate of amendment by the surviving limited partnership, and
the surviving limited partnership need not file a certificate of
amendment under Section 15902.02 to reflect those changes.
(4) The future effective date or time, which shall be a date or
time certain not more than 90 days subsequent to the date of filing,
of the merger, if the merger is not to be effective upon the filing
of the certificate of merger with the office of the Secretary of
State.
(5) If the surviving entity is an other business entity or a
foreign limited partnership, the full name of the entity, type of
entity, legal jurisdiction in which the entity was organized and by
whose laws its internal affairs are governed, and the address of the
principal place of business of the entity.
(6) Any other information required to be stated in the certificate
of merger by the laws under which each constituent other business
entity is organized, including, if a domestic corporation is a party
to the merger, paragraph (2) of subdivision (g) of Section 1113. If
the surviving entity is a foreign limited partnership in a merger in
which a domestic corporation is a disappearing other business entity,
a copy of the agreement of merger and attachments as required under
paragraph (1) of subdivision (g) of Section 1113 shall be filed at
the same time as the filing of the certificate of merger.
(b) If the surviving entity is a domestic corporation or a foreign
corporation in a merger in which a domestic corporation is a
constituent party, after approval of the merger by the constituent
limited partnerships and constituent other business entities, the
surviving corporation shall file in the office of the Secretary of
State a copy of the agreement of merger and attachments required
under paragraph (1) of subdivision (g) of Section 1113. The
certificate of merger shall be executed and acknowledged by each
domestic constituent limited partnership by all general partners,
unless a lesser number is provided in the certificate of limited
partnership of the domestic constituent limited partnership.
(c) A certificate of merger or the agreement of merger, as is
applicable under subdivision (a) or (b), shall have the effect of the
filing of a certificate of cancellation for each disappearing
limited partnership, and no disappearing limited partnership need
file a certificate of cancellation under Section 15902.03 as a result
of the merger.
(d) If the organization disappearing into the other business
entity is a foreign corporation qualified to transact intrastate
business in this state, a certificate of satisfaction of the
Franchise Tax Board as required by Section 23334 of the Revenue and
Taxation Code shall be filed with the certificate of merger or
agreement of merger, as is applicable under subdivision (a) or (b).
By the filing of the certificate of merger or agreement of merger, as
is applicable, the foreign corporation shall automatically surrender
its right to transact intrastate business.
15911.15. (a) Unless a future effective date or time is provided
in a certificate of merger or the agreement of merger, if an
agreement of merger is required to be filed under Section 15911.14,
in which event the merger shall be effective at that future effective
date or time, a merger shall be effective upon the filing of the
certificate of merger or the agreement of merger, as is applicable,
in the office of the Secretary of State.
(b) (1) For all purposes, a copy of the certificate of merger duly
certified by the Secretary of State is conclusive evidence of the
merger of (A) the constituent limited partnerships, either by
themselves or together with constituent other business entities, into
the surviving other business entity, or (B) the constituent limited
partnerships or the constituent other business entities, or both,
into the surviving limited partnership.
(2) In a merger in which the surviving entity is a corporation in
a merger in which a domestic corporation and a domestic limited
partnership are parties to the merger, a copy of an agreement of
merger certified on or after the effective date by an official having
custody thereof has the same force in evidence as the original and,
except as against the state, is conclusive evidence of the
performance of all conditions precedent to the merger, the existence
on the effective date of the surviving corporation, and the
performance of the conditions necessary to the adoption of any
amendment to the articles of incorporation of the surviving
corporation, if applicable, contained in the agreement of merger.
15911.16. (a) Upon a merger of limited partnerships or limited
partnerships and other business entities pursuant to this chapter,
the separate existence of the disappearing limited partnerships and
disappearing other business entities ceases and the surviving limited
partnership or surviving other business entity shall succeed,
without other transfer, act or deed, to all the rights and property,
whether real, personal, or mixed, of each of the disappearing limited
partnerships and disappearing other business entities, and shall be
subject to all the debts and liabilities of each in the same manner
as if the surviving limited partnership or surviving other business
entity had itself incurred them.
(b) All rights of creditors and all liens upon the property of
each of the constituent limited partnerships and constituent other
business entities shall be preserved unimpaired and may be enforced
against the surviving limited partnership or the surviving other
business entity to the same extent as if the debt, liability, or duty
which gave rise to that lien had been incurred or contracted by the
surviving limited partnership or the surviving other business entity,
provided that such liens upon the property of a disappearing limited
partnership or disappearing other business entity shall be limited
to the property affected thereby immediately prior to the time the
merger is effective.
(c) Any action or proceeding pending by or against any
disappearing limited partnership or disappearing other business
entity may be prosecuted to judgment, which shall bind the surviving
limited partnership or surviving other business entity, or the
surviving limited partnership or surviving other business entity may
be proceeded against or be substituted in the place of the
disappearing limited partnership or disappearing other business
entity.
(d) Nothing in this article is intended to affect the liability a
general partner of a disappearing limited partnership may have in
connection with the debts and liabilities of the disappearing limited
partnership existing prior to the time the merger is effective.
15911.17. (a) The merger of any number of domestic limited
partnerships with any number of foreign limited partnerships or
foreign other business entities shall be required to comply with
Section 15911.10.
(b) If the surviving entity is a domestic limited partnership or a
domestic other business entity, the merger proceedings with respect
to that limited partnership or other business entity and any domestic
disappearing limited partnership shall conform to the provisions of
this chapter governing the merger of domestic limited partnerships,
but if the surviving entity is a foreign limited partnership or a
foreign other business entity, then, subject to the requirements of
subdivision (d) and Article 11.5 (commencing with Section 15911.20)
and, with respect to any domestic constituent corporation, Section
1113 and Chapters 12 (commencing with Section 1200) and 13
(commencing with Section 1300) of Division 1 of Title 1, the merger
proceedings may be in accordance with the laws of the state or place
of organization of the surviving limited partnership or surviving
other business entity.
(c) If the surviving entity is a domestic limited partnership or
domestic other business entity, other than a domestic corporation,
the certificate of merger shall be filed as provided in subdivision
(a) of Section 15911.14, and thereupon, subject to subdivision (a) of
Section 15911.15, the merger shall be effective as to each domestic
constituent limited partnership and domestic constituent other
business entity. If the surviving entity is a domestic corporation,
the agreement of merger with attachments shall be filed as provided
in subdivision (b) of Section 15911.14, and thereupon, subject to
subdivision (a) of Section 15911.15, the merger shall be effective as
to each domestic constituent limited partnership and domestic
constituent other business entity unless another effective date is
provided in Chapter 11 (commencing with Section 1100) of Division 1
of Title 1, with respect to any constituent corporation or
constituent limited partnership.
(d) If the surviving entity is a foreign limited partnership or
foreign other business entity, the merger shall become effective in
accordance with the law of the jurisdiction in which the surviving
limited partnership or surviving other business entity is organized,
but shall be effective as to any domestic disappearing limited
partnership as of the time of effectiveness in the foreign
jurisdiction upon the filing in this state of a certificate of merger
or agreement of merger as provided in Section 15911.14.
(e) If a merger described in subdivision (c) or (d) also includes
a foreign disappearing limited partnership previously registered for
the transaction of intrastate business in this state pursuant to
Section 15909.02, the filing of the certificate of merger or
agreement of merger, as is applicable under Section 15911.14,
automatically has the effect of a cancellation of registration for
that foreign limited partnership pursuant to Section 15909.06 without
the necessity of the filing of a certificate of cancellation.
(f) The provisions of subdivision (b) of Section 15911.12 and
Article 11.5 (commencing with Section 15911.20) apply to the rights
of the limited partners of any of the constituent limited
partnerships that are domestic limited partnerships and of any
domestic limited partnership that is a parent of any foreign
constituent limited partnership.
15911.18. Whenever a domestic or foreign limited partnership or
other business entity having any real property in this state merges
with another limited partnership or other business entity pursuant to
the laws of this state or of the state or place in which any
constituent limited partnership or constituent other business entity
was organized, and the laws of the state or place of organization,
including this state, of any disappearing limited partnership or
disappearing other business entity provide substantially that the
making and filing of the agreement of merger or certificate of merger
vests in the surviving limited partnership or surviving other
business entity all the real property of any disappearing limited
partnership and disappearing other business entity, the filing for
record in the office of the county recorder of any county in this
state in which any of the real property of the disappearing limited
partnership or disappearing other business entity is located of
either of the following shall evidence record ownership in the
surviving limited partnership or surviving other business entity of
all interest of such disappearing limited partnership or disappearing
other business entity in and to the real property located in that
county:
(a) A certificate of merger certified by the Secretary of State,
or other certificate prescribed by the Secretary of State.
(b) A copy of the agreement of merger or certificate of merger,
certified by the Secretary of State or an authorized public official
of the state or place pursuant to the laws of which the merger is
effected.
15911.19. Recording of the certificate of merger in accordance
with Section 15911.18 shall create, in favor of bona fide purchasers
or encumbrancers for value, a conclusive presumption that the merger
was validly completed.
Article 11.5 Dissenting Limited Partners' Rights
15911.20. (a) For purposes of this article, "reorganization"
refers to any of the following:
(1) A conversion pursuant to Article 11 (commencing with Section
15911.01).
(2) A merger pursuant to Article 11 (commencing with Section
15911.10).
(3) The acquisition by one limited partnership in exchange, in
whole or in part, for its partnership interests (or the partnership
interests or equity securities of a partnership or other business
entity that is in control of the acquiring limited partnership) of
partnership interests or equity securities of another limited
partnership or other business entity if, immediately after the
acquisition, the acquiring limited partnership has control of the
other limited partnership or other business entity.
(4) The acquisition by one limited partnership in exchange in
whole or in part for its partnership interests (or the partnership
interests or equity securities of a partnership or other business
entity which is in control of the acquiring limited partnership) or
for its debts securities (or debt securities of a limited partnership
or other business entity which is in control of the acquiring
limited partnership) which are not adequately secured and which have
a maturity date in excess of five years after the consummation of the
acquisition, or both, of all or substantially all of the assets of
another limited partnership or other business entity.
(b) For purposes of this article, "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a limited partnership or other
business entity.
15911.21. (a) If the approval of outstanding limited partnership
interests is required for a limited partnership to participate in a
reorganization, pursuant to the limited partnership agreement of the
partnership, or otherwise, then each limited partner of the limited
partnership holding those interests may, by complying with this
article, require the limited partnership to purchase for cash, at its
fair market value, the interest owned by the limited partner in the
limited partnership, if the interest is a dissenting interest as
defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the
proposed reorganization, excluding any appreciation or depreciation
in consequence of the proposed reorganization.
(b) As used in this article, "dissenting interest" means the
interest of a limited partner that satisfies all of the following
conditions:
(1) Either:
(A) Was not, immediately prior to the reorganization, either (i)
listed on any national securities exchange certified by the
Commissioner of Corporations under subdivision (o) of Section 25100,
or (ii) listed on the list of OTC margin stocks issued by the Board
of Governors of the Federal Reserve System, provided that in either
such instance the limited partnership whose outstanding interests are
so listed provides, in its notice to limited partners requesting
their approval of the proposed reorganization, a summary of the
provisions of this section and Sections 15911.22, 15911.23, 15911.24,
and 15911.25.
(B) If the interest is of a class of interests listed as described
in clause (i) or (ii) of subparagraph (A), demands for payment are
filed with respect to 5 percent or more of the outstanding interests
of that class.
(2) Was outstanding on the date for the determination of limited
partners entitled to vote on the reorganization.
(3) (A) Was not voted in favor of the reorganization, or (B) if
the interest is described in clause (i) or (ii) of subparagraph (A)
of paragraph (1), was voted against the reorganization; provided,
however, that clause (A) rather than clause (B) of this paragraph
applies in any event where the approval for the proposed
reorganization is sought by written consent rather than at a meeting.
(4) The limited partner has demanded that it be purchased by the
limited partnership at its fair market value in accordance with
Section 15911.22.
(5) The limited partner has submitted it for
endorsement, if applicable, in accordance with Section 15911.23.
(c) As used in this article, "dissenting limited partner" means
the recordholder of a dissenting interest, and includes an assignee
of record of such an interest.
15911.22. (a) If limited partners have a right under Section
15911.21, subject to compliance with paragraphs (4) and (5) of
subdivision (b) thereof, to require the limited partnership to
purchase their limited partnership interests for cash, such limited
partnership shall mail to each such limited partner a notice of the
approval of the reorganization by the requisite vote or consent of
the limited partners, within 10 days after the date of such approval,
accompanied by a copy of this section and Sections 15911.21,
15911.23, 15911.24, and 15911.25, a statement of the price determined
by the limited partnership to represent the fair market value of its
outstanding interests, and a brief description of the procedure to
be followed if the limited partner desires to exercise the limited
partner's rights under such sections. The statement of price
constitutes an offer by the limited partnership to purchase at the
price stated any dissenting interests as defined in subdivision (b)
of Section 15911.21, unless they lose their status as dissenting
interests under Section 15911.30.
(b) Any limited partner who has a right to require the limited
partnership to purchase the limited partner's interest for cash under
Section 15911.21, subject to compliance with paragraphs (4) and (5)
of subdivision (b) thereof, and who desires the limited partnership
to purchase such interest, shall make written demand upon the limited
partnership for the purchase of such interest and the payment to the
limited partner in cash of its fair market value. The demand is not
effective for any purpose unless it is received by the limited
partnership or any transfer agent thereof (1) in the case of
interests described in clause (i) or (ii) of subparagraph (A) of
paragraph (1) of subdivision (b) of Section 15911.21, not later than
the date of the limited partners' meeting to vote upon the
reorganization, or (2) in any other case, within 30 days after the
date on which notice of the approval of the reorganization by the
requisite vote or consent of the limited partners is mailed by the
limited partnership to the limited partners.
(c) The demand shall state the number or amount of the limited
partner's interest in the limited partnership and shall contain a
statement of what such limited partner claims to be the fair market
value of that interest on the day before the announcement of the
proposed reorganization. The statement of fair market value
constitutes an offer by the limited partner to sell the interest at
such price.
15911.23. Within 30 days after the date on which notice of the
approval of the outstanding interests of the limited partnership is
mailed to the limited partner pursuant to subdivision (a) of Section
15911.22, the limited partner shall submit to the limited partnership
at its principal office or at the office of any transfer agent
thereof, (a) if the interest is evidenced by a certificate, the
limited partner's certificate representing the interest which the
limited partner demands that the limited partnership purchase, to be
stamped or endorsed with a statement that the interest is a
dissenting interest or to be exchanged for certificates of
appropriate denominations so stamped or endorsed, or (b) if the
interest is not evidenced by a certificate, written notice of the
number or amount of interest which the limited partner demands that
the limited partnership purchase. Upon subsequent transfers of the
dissenting interest on the books of the limited partnership, the new
certificates or other written statement issued therefor shall bear a
like statement, together with the name of the original holder of the
dissenting interest.
15911.24. (a) If the limited partnership and the dissenting
limited partner agree that such limited partner's interest is a
dissenting interest and agree upon the price to be paid for the
dissenting interest, the dissenting limited partner is entitled to
the agreed price with interest thereon at the legal rate on judgments
from the date of consummation of the reorganization. All agreements
fixing the fair market value of any dissenting limited partner's
interest as between the limited partnership and such limited partner
shall be in writing and filed in the records of the limited
partnership.
(b) Subject to the provisions of Section 15911.27, payment of the
fair market value for a dissenting interest shall be made within 30
days after the amount thereof has been agreed to or within 30 days
after any statutory or contractual conditions to the reorganization
are satisfied, whichever is later, and in the case of dissenting
interests evidenced by certificates of interest, subject to surrender
of such certificates of interest, unless provided otherwise by
agreement.
15911.25. (a) If the limited partnership denies that a limited
partnership interest is a dissenting interest, or the limited
partnership and a dissenting limited partner fail to agree upon the
fair market value of a dissenting interest, then such limited partner
or any interested limited partnership, within six months after the
date on which notice of the approval of the reorganization by the
requisite vote or consent of the limited partners was mailed to the
limited partner, but not thereafter, may file a complaint in the
superior court of the proper county praying the court to determine
whether the interest is a dissenting interest, or the fair market
value of the dissenting interest, or both, or may intervene in any
action pending on such a complaint.
(b) Two or more dissenting limited partners may join as plaintiffs
or be joined as defendants in any such action and two or more such
actions may be consolidated.
(c) On the trial of the action, the court shall determine the
issues. If the status of the limited partnership interest as a
dissenting interest is in issue, the court shall first determine that
issue. If the fair market value of the dissenting interest is in
issue, the court shall determine, or shall appoint one or more
impartial appraisers to determine, the fair market value of the
dissenting interest.
15911.26. (a) If the court appoints an appraiser or appraisers,
they shall proceed forthwith to determine the fair market value per
interest of the outstanding limited partnership interests of the
limited partnership, by class if necessary. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file
a report in the office of the clerk of the court. Thereupon, on the
motion of any party, the report shall be submitted to the court and
considered on such additional evidence as the court considers
relevant. If the court finds the report reasonable, the court may
confirm it.
(b) If a majority of the appraisers appointed fails to make and
file a report within 30 days from the date of their appointment, or
within such further time as may be allowed by the court, or the
report is not confirmed by the court, the court shall determine the
fair market value per interest of the outstanding limited partnership
interests of the limited partnership, by class if necessary.
(c) Subject to Section 15911.27, judgment shall be rendered
against the limited partnership for payment of an amount equal to the
fair market value, as determined by the court, of each dissenting
interest which any dissenting limited partner who is a party, or has
intervened, is entitled to require the limited partnership to
purchase, with interest thereon at the legal rate on judgments from
the date of consummation of the reorganization.
(d) Any such judgment shall be payable forthwith, provided,
however, that with respect to limited partnership interests evidenced
by transferable certificates of interest, only upon the endorsement
and delivery to the limited partnership of those certificates
representing the interests described in the judgment. Any party may
appeal from the judgment.
(e) The costs of the action, including reasonable compensation for
the appraisers, to be fixed by the court, shall be assessed or
apportioned as the court considers equitable, but, if the appraisal
exceeds the price offered by the limited partnership, the limited
partnership shall pay the costs (including, in the discretion of the
court, if the value awarded by the court for the dissenting interest
is more than 125 percent of the price offered by the limited
partnership under subdivision (a) of Section 15912.03, attorneys'
fees and fees of expert witnesses).
15911.27. To the extent that the payment to dissenting limited
partners of the fair market value of their dissenting interests would
require the dissenting limited partners to return such payment or a
portion thereof by reason of Section 15905.09 or the Uniform
Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of
Title 2 of Part 2 of Division 4 of the Civil Code), then that payment
or portion thereof shall not be made and the dissenting limited
partners shall become creditors of the limited partnership for the
amount not paid, together with interest thereon at the legal rate on
judgments until the date of payment, but subordinate to all other
creditors in any proceeding relating to the winding up and
dissolution of the limited partnership, such debt to be payable when
permissible.
15911.28. Any cash distributions made by a limited partnership to
a dissenting limited partner after the date of consummation of the
reorganization, but prior to any payment by the limited partnership
for such dissenting limited partner's interest, shall be credited
against the total amount to be paid by the limited partnership for
such dissenting interest.
15911.29. Except as expressly limited by this article, dissenting
limited partners shall continue to have all the rights and
privileges incident to their interests immediately prior to the
reorganization, including limited liability, until payment by the
limited partnership for their dissenting interests. A dissenting
limited partner may not withdraw a demand for payment unless the
limited partnership consents thereto.
15911.30. A dissenting interest loses its status as a dissenting
interest and the holder thereof ceases to be a dissenting limited
partner and ceases to be entitled to require the limited partnership
to purchase the interest upon the happening of any of the following:
(a) The limited partnership abandons the reorganization. Upon
abandonment of the reorganization, the limited partnership shall pay,
on demand, to any dissenting limited partner who has initiated
proceeding in good faith under this article, all reasonable expenses
incurred in such proceedings and reasonable attorneys' fees.
(b) The interest is transferred prior to its submission for
endorsement in accordance with Section 15911.23.
(c) The dissenting limited partner and the limited partnership do
not agree upon the status of the interest as a dissenting interest or
upon the purchase price of the dissenting interest, and neither
files a complaint nor intervenes in a pending action, as provided in
Section 15911.25, within six months after the date upon which notice
of the approval of the reorganization by the requisite vote or
consent of limited partners was mailed to the limited partner.
(d) The dissenting limited partner, with the consent of the
limited partnership, withdraws such limited partner's demand for
purchase of the dissenting interest.
15911.31. If litigation is instituted to test the sufficient or
regularity of the vote or consent of the limited partners in
authorizing a reorganization, any proceedings under Sections 15911.25
and 15911.26 shall be suspended until final determination of that
litigation.
15911.32. (a) This article applies to the following:
(1) A domestic limited partnership formed on or after January 1,
1991.
(2) A foreign limited partnership if (A) the foreign limited
partnership was formed on or after January 1, 1991, or filed an
application to qualify to do business on or after January 1, 1991,
and (B) limited partners holding more than 50 percent of the voting
power held by all limited partners of the foreign limited partnership
reside in this state.
(3) A limited partnership if the partnership agreement so provides
or if all general partners and a majority in interest of the limited
partners determine that this article shall apply.
(b) This article does not apply to limited partnership interests
governed by limited partnership agreements whose terms and provisions
specifically set forth the amount to be paid in respect of such
interests in the event of a reorganization of the limited
partnership, or to limited partnerships with 35 or fewer limited
partners, unless the partnership agreement provides that this article
shall apply or unless all general partners and a majority in
interest of the limited partners agree that this article shall apply.
15911.33. (a) No limited partner of a limited partnership who has
a right under this article to demand payment of cash for the
interest owned by such limited partner in a limited partnership shall
have any right at law or in equity to attack the validity of the
reorganization, or to have the reorganization set aside or rescinded,
except in an action to test whether the vote or consent of limited
partners required to authorize or approve the reorganization has been
obtained in accordance with the procedures established therefor by
the partnership agreement of the limited partnership.
(b) If one of the parties to a reorganization is directly or
indirectly controlled by, or under common control with, another party
to the reorganization, subdivision (a) shall not apply to any
limited partner of such controlled party who has not demanded payment
of cash for such limited partner's interest pursuant to this
article; but if such limited partner institutes any action to attack
the validity of the reorganization or to have the reorganization set
aside or rescinded, the limited partner shall not thereafter have any
right to demand payment of cash for such limited partner's interest
pursuant to this article.
(c) If one of the parties to a reorganization is directly or
indirectly controlled by, or under common control with, another party
to the reorganization, then, in any action to attack the validity of
the reorganization or to have the reorganization set aside or
rescinded, (1) a party to a reorganization which controls another
party to a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the limited partners of the
controlled party, and (2) a person who controls two or more parties
to a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the limited partners of any
party so controlled.
(d) Subdivisions (b) and (c) shall not apply if a majority in
interest of the limited partners other than limited partners who are
directly or indirectly controlled by, or under common control with,
another party to the reorganization approve or consent to the
reorganization.
(e) This section shall not prevent a partner of a limited
partnership that is a party to a reorganization from bringing an
action against a general partner of the limited partnership, the
limited partnership, or any person controlling a general partner at
law or in equity as to any matters (including, without limitation, an
action for breach of fiduciary obligation or fraud) other than to
attack the validity of the reorganization or to have the
reorganization set aside or rescinded.
Article 12. Miscellaneous Provisions
15912.01. In applying and construing this chapter, consideration
must be given to the need to promote uniformity of the law with
respect to its subject matter among states that enact it.
15912.02. If any provision of this chapter or its application to
any person or circumstance is held invalid, the invalidity does not
affect other provisions or applications of this chapter which can be
given effect without the invalid provision or application, and to
this end, the provisions of this chapter are severable.
15912.03. This chapter modifies, limits, or supersedes the
federal Electronic Signatures in Global and National Commerce Act, 15
U.S.C. Section 7001 et seq., but this chapter does not modify,
limit, or supersede Section 101(c) of that act or authorize
electronic delivery of any of the notices described in Section 103(b)
of that act.
15912.04. This chapter shall become operative on January 1, 2008.
15912.06. (a) Before January 1, 2010, this chapter governs only:
(1) a limited partnership formed on or after January 1, 2008; and
(2) except as otherwise provided in subdivisions (c) and (d), a
limited partnership formed before January 1, 2008, which elects, in
the manner provided in its partnership agreement or by law for
amending the partnership agreement, to be subject to this chapter.
(b) Except as otherwise provided in subdivision (c), on and after
January 1, 2010, this chapter governs all limited partnerships.
(c) With respect to a limited partnership formed before January 1,
2008, the following rules apply except as the partners otherwise
elect in the manner provided in the partnership agreement or by law
for amending the partnership agreement:
(1) Section 15901.04(c) does not apply and the limited partnership
has whatever duration it had under the law applicable immediately
before January 1, 2008.
(2) Sections 15906.01 and 15906.02 do not apply and a limited
partner has the same right and power to dissociate from the limited
partnership, with the same consequences, as existed immediately
before January 1, 2008.
(3) Subdivision (d) of Section 15906.03 does not apply.
(4) Subdivision (e) of Section 15906.03 does not apply and a court
has the same power to expel a general partner as the court had
immediately before January 1, 2008.
(5) Subdivision (c) of Section 15908.01 does not apply and the
connection between a person's dissociation as a general partner and
the dissolution of the limited partnership is the same as existed
immediately before January 1, 2008.
(d) With respect to a limited partnership that elects pursuant to
paragraph (2) of subdivision (a) to be subject to this chapter, after
the election takes effect, the provisions of this chapter relating
to the liability of the limited partnership's general partners to
third parties apply:
(1) before January 1, 2010, to:
(A) a third party that had not done business with the limited
partnership in the year before the election took effect; and
(B) a third party that had done business with the limited
partnership in the year before the election took effect only if the
third party knows or has received a notification of the election; and
(2) on and after January 1, 2010, to all third parties, but those
provisions remain inapplicable to any obligation incurred while those
provisions were inapplicable under subparagraph (B) of paragraph
(1).
15912.07. This chapter does not affect an action commenced,
proceeding brought, or right accrued before this chapter becomes
operative.
SEC. 21. Section 16101 of the Corporations Code is amended to
read:
16101. As used in this chapter, the following terms and phrases
have the following meanings:
(1) "Business" includes every trade, occupation, and profession.
(2) "Debtor in bankruptcy" means a person who is the subject of
either of the following:
(A) An order for relief under Title 11 of the United States Code
or a comparable order under a successor statute of general
application.
(B) A comparable order under federal, state, or foreign law
governing insolvency.
(3) "Distribution" means a transfer of money or other property
from a partnership to a partner in the partner's capacity as a
partner or to the partner's transferee.
(4) "Electronic transmission by the partnership" means a
communication (a) delivered by (1) facsimile telecommunication or
electronic mail when directed to the facsimile number or electronic
mail address, respectively, for that recipient on record with the
partnership, (2) posting on an electronic message board or network
that the partnership has designated for those communications,
together with a separate notice to the recipient of the posting,
which transmission shall be validly delivered upon the later of the
posting or delivery of the separate notice thereof, or (3) other
means of electronic communication, (b) to a recipient who has
provided an unrevoked consent to the use of those means of
transmission, and (c) that creates a record that is capable of
retention, retrieval, and review, and that may thereafter be rendered
into clearly legible tangible form. However, an electronic
transmission by a partnership to an individual partner is not
authorized unless, in addition to satisfying the requirements of this
section, the transmission satisfies the requirements applicable to
consumer consent to electronic records as set forth in the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001
(c)(1)).
(5) "Electronic transmission to the partnership" means a
communication (a) delivered by (1) facsimile telecommunication or
electronic mail when directed to the facsimile number or electronic
mail address, respectively, which the partnership has provided from
time to time to partners for sending communications to the
partnership, (2) posting on an electronic message board or network
that the partnership has designated for those communications, and
which transmission shall be validly delivered upon the posting, or
(3) other means of electronic communication, (b) as to which the
partnership has placed in effect reasonable measures to verify that
the sender is the partner (in person or by proxy) purporting to send
the transmission, and (c) that creates a record that is capable of
retention, retrieval, and review, and that may thereafter be rendered
into clearly legible tangible form.
(6) (A) "Foreign limited liability partnership" means a
partnership, other than a limited partnership, formed pursuant to an
agreement governed by the laws of another jurisdiction and
denominated or registered as a limited liability partnership or
registered limited liability partnership under the laws of that
jurisdiction (i) in which each partner is a licensed person or a
person licensed or authorized to provide professional limited
liability partnership services in a jurisdiction or jurisdictions
other than this state, (ii) which is licensed under the laws of the
state to engage in the practice of architecture, the practice of
public accountancy, or the practice of law, or (iii) which (I) is
related to a registered limited liability partnership that practices
public accountancy or, to the extent permitted by the State Bar,
practices law or is related to a foreign limited liability
partnership and (II) provides services related or complementary to
the professional limited liability partnership services provided by,
or provides services or facilities to, that registered limited
liability partnership or foreign limited liability partnership.
(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority
of the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each
partnership hold interests in or are members of another person,
except an individual, and each partnership renders services pursuant
to an agreement with that other person, or (iii) one partnership,
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the other
partnership.
(7) "Licensed person" means any person who is duly licensed,
authorized, or registered under the provisions of the Business and
Professions Code to provide professional limited liability
partnership services or who is lawfully able to render professional
limited liability partnership services in this state.
(8) (A) "Registered limited liability partnership" means a
partnership, other than a limited partnership, formed pursuant to an
agreement governed by Article 10 (commencing with Section 16951),
that is registered under Section 16953 and (i) each of the partners
of which is a licensed person or a person licensed or authorized to
provide professional limited liability partnership services in a
jurisdiction or jurisdictions other than this state, (ii) is licensed
under the laws of the state to engage in the practice of
architecture, practice of public accountancy, or the practice of law,
or (iii)(I) is related to a registered limited liability partnership
that practices public accountancy or, to the extent permitted by the
State Bar, practices law or is related to a foreign limited
liability partnership and (II) provides services related or
complementary to the professional limited liability partnership
services provided by, or provides services or facilities to, that
registered limited liability partnership or foreign limited liability
partnership.
(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority
of the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each
partnership hold interests in or are members of another person, other
than an individual, and each partnership renders services pursuant
to an agreement with that other person, or (iii) one partnership,
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the other
partnership.
(9) "Partnership" means an association of two or more persons to
carry on as coowners a business for profit formed under Section
16202, predecessor law, or comparable law of another jurisdiction,
and includes, for all purposes of the laws of this state, a
registered limited liability partnership, and excludes any
partnership formed under Chapter 2 (commencing with Section 15501),
Chapter 3 (commencing with Section 15611), or Chapter 5.5 (commencing
with Section 15900).
(10) "Partnership agreement" means the agreement, whether written,
oral, or implied, among the partners concerning the partnership,
including amendments to the partnership agreement.
(11) "Partnership at will" means a partnership in which the
partners have not agreed to remain partners until the expiration of a
definite term or the completion of a particular undertaking.
(12) "Partnership interest" or "partner's interest in the
partnership" means all of a partner's interests in the partnership,
including the partner's transferable interest and all management and
other rights.
(13) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited partnership, limited liability
partnership, limited liability company, association, joint venture,
government, governmental subdivision, agency, or instrumentality, or
any other legal or commercial entity.
(14) "Professional limited liability partnership services" means
the practice of architecture, the practice of public accountancy, or
the practice of law.
(15) "Property" means all property, real, personal, or mixed,
tangible or intangible, or any interest therein.
(16) "State" means a state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
insular possession subject to the jurisdiction of the United States.
(17) "Statement" means a statement of partnership authority under
Section 16303, a statement of denial under Section 16304, a statement
of dissociation under Section 16704, a statement of dissolution
under Section 16805, a statement of conversion or a certificate of
conversion under Section 16906, a statement of merger under Section
16915, or an amendment or cancellation of any of the foregoing.
(18) "Transfer" includes an assignment, conveyance, lease,
mortgage, deed, and encumbrance.
(19) The inclusion of the practice of architecture as a
professional limited liability partnership service permitted by this
section shall extend only until January 1, 2007.
SEC. 21.5. Section 16101 of the Corporations Code is amended to
read:
16101. As used in this chapter, the following terms and phrases
have the following meanings:
(1) "Business" includes every trade, occupation, and profession.
(2) "Debtor in bankruptcy" means a person who is the subject of
either of the following:
(A) An order for relief under Title 11 of the United States Code
or a comparable order under a successor statute of general
application.
(B) A comparable order under federal, state, or foreign law
governing insolvency.
(3) "Distribution" means a transfer of money or other property
from a partnership to a partner in the partner's capacity as a
partner or to the partner's transferee.
(4) "Electronic transmission by the partnership" means a
communication (a) delivered by (1) facsimile telecommunication or
electronic mail when directed to the facsimile number or electronic
mail address, respectively, for that recipient on record with the
partnership, (2) posting on an electronic message board or network
that the partnership has designated for those communications,
together with a separate notice to the recipient of the posting,
which transmission shall be validly delivered upon the later of the
posting or delivery of the separate notice thereof, or (3) other
means of electronic communication, (b) to a recipient who has
provided an unrevoked consent to the use of those means of
transmission, and (c) that creates a record that is capable of
retention, retrieval, and review, and that may thereafter be rendered
into clearly legible tangible form. However, an electronic
transmission by a partnership to an individual partner is not
authorized unless, in addition to satisfying the requirements of this
section, the transmission satisfies the requirements applicable to
consumer consent to electronic records as set forth in the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001
(c)(1)).
(5) "Electronic transmission to the partnership" means a
communication (a) delivered by (1) facsimile telecommunication or
electronic mail when directed to the facsimile number or electronic
mail address, respectively, which the partnership has provided from
time to time to partners for sending communications to the
partnership, (2) posting on an electronic message board or network
that the partnership has designated for those communications, and
which transmission shall be validly delivered upon the posting, or
(3) other means of electronic communication, (b) as to which the
partnership has placed in effect reasonable measures to verify that
the sender is the partner (in person or by proxy) purporting to send
the transmission, and (c) that creates a record that is capable of
retention, retrieval, and review, and that may thereafter be rendered
into clearly legible tangible form.
(6) (A) "Foreign limited liability partnership" means a
partnership, other than a limited partnership, formed pursuant to an
agreement governed by the laws of another jurisdiction and
denominated or registered as a limited liability partnership or
registered limited liability partnership under the laws of that
jurisdiction (i) in which each partner is a licensed person or a
person licensed or authorized to provide professional limited
liability partnership services in a jurisdiction or jurisdictions
other than this state, (ii) which is licensed under the laws of the
state to engage in the practice of architecture, the practice of
public accountancy, or the practice of law, or (iii) which (I) is
related to a registered limited liability partnership that practices
public accountancy or, to the extent permitted by the State Bar,
practices law or is related to a foreign limited liability
partnership and (II) provides services related or complementary to
the professional limited liability partnership services provided by,
or provides services or facilities to, that registered limited
liability partnership or foreign limited liability partnership.
(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority
of the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each
partnership hold interests in or are members of another person,
except an individual, and each partnership renders services pursuant
to an agreement with that other person, or (iii) one partnership,
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the other
partnership.
(7) "Licensed person" means any person who is duly licensed,
authorized, or registered under the provisions of the Business and
Professions Code to provide professional limited liability
partnership services or who is lawfully able to render professional
limited liability partnership services in this state.
(8) (A) "Registered limited liability partnership" means a
partnership, other than a limited partnership, formed pursuant to an
agreement governed by Article 10 (commencing with Section 16951),
that is registered under Section 16953 and (i) each of the partners
of which is a licensed person or a person licensed or authorized to
provide professional limited liability partnership services in a
jurisdiction or jurisdictions other than this state, (ii) is licensed
under the laws of the state to engage in the practice of
architecture, practice of public accountancy, or the practice of law,
or (iii)(I) is related to a registered limited liability partnership
that practices public accountancy or, to the extent permitted by the
State Bar, practices law or is related to a foreign limited
liability partnership and (II) provides services related or
complementary to the professional limited liability partnership
services provided by, or provides services or facilities to, that
registered limited liability partnership or foreign limited liability
partnership.
(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority
of the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each
partnership hold interests in or are members of another person, other
than an individual, and each partnership renders services pursuant
to an agreement with that other person, or (iii) one partnership,
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the other
partnership.
(9) "Partnership" means an association of two or more persons to
carry on as coowners a business for profit formed under Section
16202, predecessor law, or comparable law of another jurisdiction,
and includes, for all purposes of the laws of this state, a
registered limited liability partnership, and excludes any
partnership formed under Chapter 2 (commencing with Section 15501),
Chapter 3 (commencing with Section 15611), or Chapter 5.5 (commencing
with Section 15900).
(10) "Partnership agreement" means the agreement, whether written,
oral, or implied, among the partners concerning the partnership,
including amendments to the partnership agreement.
(11) "Partnership at will" means a partnership in which the
partners have not agreed to remain partners until the expiration of a
definite term or the completion of a particular undertaking.
(12) "Partnership interest" or "partner's interest in the
partnership" means all of a partner's interests in the partnership,
including the partner's transferable interest and all management and
other rights.
(13) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited partnership, limited liability
partnership, limited liability company, association, joint venture,
government, governmental subdivision, agency, or instrumentality, or
any other legal or commercial entity.
(14) "Professional limited liability partnership services" means
the practice of architecture, the practice of public accountancy, or
the practice of law.
(15) "Property" means all property, real, personal, or mixed,
tangible or intangible, or any interest therein.
(16) "State" means a state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
insular possession subject to the jurisdiction of the United States.
(17) "Statement" means a statement of partnership authority under
Section 16303, a statement of denial under Section 16304, a statement
of dissociation under Section 16704, a statement of dissolution
under Section 16805, a statement of conversion or a certificate of
conversion under Section 16906, a statement of merger under Section
16915, or an amendment or cancellation of any of the foregoing.
(18) "Transfer" includes an assignment, conveyance, lease,
mortgage, deed, and encumbrance.
(19) The inclusion of the practice of architecture as a
professional limited liability partnership service permitted by this
section shall extend only until January 1, 2012.
SEC. 22. Section 16901 of the Corporations Code is amended to
read:
16901. In this article, the following terms have the following
meanings:
(1) "Constituent other business entity" means any other business
entity that is merged with or into one or more partnerships and
includes a surviving other business entity.
(2) "Constituent partnership" means a partnership that is merged
with or into one or more other partnerships or other business
entities and includes a surviving partnership.
(3) "Disappearing other business entity" means a constituent other
business entity that is not the surviving other business entity.
(4) "Disappearing partnership" means a constituent partnership
that is not the surviving partnership.
(5) "Domestic" means organized under the laws of this state when
used in relation to any partnership, other business entity, or person
(other than an individual).
(6) "Foreign other business entity" means any other business
entity formed under the laws of any state other than this state or
under the laws of the United States or of a foreign country.
(7) "Foreign partnership" means a partnership formed under the
laws of any state other than this state or under the laws of a
foreign country.
(8) "General partner" means a partner in a partnership and a
general partner in a limited partnership.
(9) "Limited liability company" means a limited liability company
created under Title 2.5 (commencing with Section 17000), or
comparable law of another jurisdiction.
(10) "Limited partner" means a limited partner in a limited
partnership.
(11) "Limited partnership" means a limited partnership created
under Chapter 3 (commencing with Section 15611) or Chapter 5.5
(commencing with Section 15900), predecessor law, or comparable law
of another jurisdiction.
(12) "Other business entity" means a limited partnership, limited
liability company, corporation, business trust, real estate
investment trust, or an unincorporated association (other than a
nonprofit association), but excluding a partnership.
(13) "Partner" includes both a general partner and a limited
partner.
(14) "Surviving other business entity" means an other business
entity into which one or more partnerships are merged.
(15) "Surviving partnership" means a partnership into which one or
more other partnerships or other business entities are merged.
SEC. 23. Section 16903 of the Corporations Code is amended to
read:
16903. (a) A partnership that desires to convert to a domestic or
foreign other business entity shall approve a plan of conversion.
The plan of conversion shall state the following:
(1) The terms and conditions of the conversion.
(2) The place of the organization of the converted entity and of
the converting partnership and the name of the converted entity after
conversion, if different from that of the converting partnership.
(3) The manner of converting the partnership interests of each of
the partners into shares of, securities of, or interests in the
converted entity.
(4) The provisions of the governing documents for the converted
entity, including the limited partnership agreement, limited
liability company articles of organization and operating agreement,
or articles or certificate of incorporation if the converted entity
is a corporation, to which the holders of interest in the converted
entity are to be bound.
(5) Any other details or provisions as are required by laws under
which the converted entity is organized.
(6) Any other details or provisions that are desired.
(b) The plan of conversion shall be approved by that number or
percentage of partners required by the partnership agreement to
approve a conversion of the partnership as set forth in the
partnership agreement. If the partnership agreement fails to specify
the required partner approval for a conversion of the partnership,
the plan of conversion shall be approved by that number or percentage
of partners required by the partnership agreement to approve an
amendment to the partnership agreement unless the conversion effects
a change for which the partnership agreement requires a greater
number or percentage of partners than that required to amend the
partnership agreement, in which case the plan of conversion shall be
approved by that greater number or percentage. If the partnership
agreement fails to specify the vote required to amend the partnership
agreement, the plan of conversion shall be approved by all partners.
(c) If the partnership is converting into a limited partnership,
in addition to the approval of the partners as set forth in
subdivision (b), the plan of conversion shall be approved by all
partners who will become general partners of the converted limited
partnership pursuant to the plan of conversion.
(d) All partners of the converting partnership except those that
dissociate upon effectiveness of the conversion pursuant to
subdivision (e) of Section 16909 shall be deemed parties to any
partnership or operating agreement, articles or certificate of
incorporation, or organic document for the converted entity adopted
as part of the plan of conversion, regardless of whether that partner
has executed the plan of conversion or the operating agreement,
articles or certificate of incorporation, partnership agreement, or
other organic document for the converted entity. Any adoption of a
new partnership or operating agreement, articles or certificate of
incorporation, or other organic document made pursuant to the
foregoing sentence shall be effective at the effective time or date
of the conversion.
(e) Notwithstanding its prior approval, a plan of conversion may
be amended before the conversion takes effect if the amendment is
approved by the partnership in the same manner, and by the same
number or percentage of partners, as was required for approval of the
original plan of conversion.
(f) The partners of a converting partnership may, at any time
before the conversion is effective, in their discretion, abandon a
conversion, without further approval by the partners, in the same
manner, and by the same number or percentage of partners, as was
required for approval of the original plan of conversion at any time
before the conversion is effective, subject to the contractual rights
of third parties.
(g) The converted entity shall keep the plan of conversion at: (1)
the principal place of business of the converted entity, if the
converted entity is a foreign other business entity or a corporation;
or (2) the office at which records are to be kept under Section
15614 or 15901.14 if the converted entity is a domestic limited
partnership, or at the office at which records are to be kept under
Section 17057 if the converted entity is a domestic limited liability
company. Upon the request of a partner of a converting partnership,
the authorized person on behalf of the converted entity shall
promptly deliver to the partner or the holder of interests or other
securities, at the expense of the converted entity, a copy of the
plan of conversion. A waiver by a partner of the rights provided in
this subdivision shall be unenforceable.
SEC. 24. Section 16908 of the Corporations Code is amended to
read:
16908. (a) A domestic limited partnership, limited liability
company, or corporation, or a foreign other business entity may be
converted to a domestic partnership pursuant to this article, but
only if the converting entity is authorized by the laws under which
it is organized to effect the conversion.
(b) An entity that desires to convert into a domestic partnership
shall approve a plan of conversion or the instrument that is required
to be approved to effect the conversion pursuant to the laws under
which the entity is organized.
(c) The conversion of a domestic limited partnership, limited
liability company, or corporation, or foreign other business entity
shall be approved by the number or percentage of the partners,
members, shareholders, or holders of interest of the converting
entity as is required by the law under which the entity is organized,
or a greater or lesser percentage (subject to applicable laws) as
set forth in the limited partnership agreement, articles of
organization, operating agreement, or articles or certificate of
organization, or other governing document for the converting entity.
(d) The conversion by a domestic limited partnership, limited
liability company, or corporation, or a foreign other business entity
into a partnership shall be effective under this article at the time
that the conversion is effective under the laws under which the
converting entity is organized.
(e) The filing with the Secretary of State of a certificate of
conversion or a statement of partnership authority containing a
statement of conversion pursuant to subdivision (a) shall have the
effect of the filing of a certificate of cancellation by the
converting foreign limited partnership or foreign limited liability
company, and no converting foreign limited partnership or foreign
limited liability company that has made the filing is required to
file a certificate of cancellation under Section 15696, 15909.07, or
17455 as a result of that conversion. If a converting other business
entity is a foreign corporation qualified to transact business in
this state, the foreign corporation shall, by virtue of the filing,
automatically surrender its right to transact intrastate business.
SEC. 25. Section 16911 of the Corporations Code is amended to
read:
16911. (a) Each partnership and other business entity which
desires to merge shall approve an agreement of merger. The agreement
of merger shall be approved by the number or percentage of partners
specified for merger in the partnership agreement of the constituent
partnership. If the partnership agreement fails to specify the
required partner approval for merger of the constituent partnership,
then the agreement of merger shall be approved by that number or
percentage of partners specified by the partnership agreement to
approve an amendment to the partnership agreement. However, if the
merger effects a change for which the partnership agreement requires
a greater number or percentage of partners than that required to
amend the partnership agreement, then the merger shall be approved by
that greater number or percentage. If the partnership agreement
contains no provision specifying the vote required to amend the
partnership agreement, then the agreement of merger must be approved
by all the partners. The agreement of merger shall be approved on
behalf of each constituent other business entity by those persons
required to approve the merger by the laws under which it is
organized. Other persons may be parties to the agreement of merger.
The agreement of merger shall state all of the following:
(1) The terms and conditions of the merger.
(2) The name and place of organization of the surviving
partnership or surviving other business entity, and of each
disappearing partnership and disappearing other business entity, and
the agreement of merger may change the name of the surviving
partnership, which new name may be the same as, or similar to, the
name of a disappearing partnership.
(3) The manner of converting the partnership interests of each of
the constituent partnerships into interests or other securities of
the surviving partnership or surviving other business entity, and if
partnership interests of any of the constituent partnerships are not
to be converted solely into interest or other securities of the
surviving partnership or surviving other business entity, the cash,
property, rights, interests, or securities which the holders of the
partnership interest are to receive in exchange for the partnership
interests, which cash, property, rights, interests, or securities may
be in addition to or in lieu of interests or other securities of the
surviving partnership or surviving other business entity, or that
the partnership interests are canceled without consideration.
(4) Any other details or provisions as are required by the laws
under which any constituent other business entity is organized.
(5) Any other details or provisions that are desired, including,
without limitation, a provision for the treatment of fractional
partnership interests.
(b) If the partnership is merging into a limited partnership, then
in addition to the approval of the partners as set forth under
subdivision (a), the agreement of merger must be approved by all
partners who will become general partners of the surviving limited
partnership upon the effectiveness of the merger.
(c) Notwithstanding its prior approval, an agreement of merger may
be amended before the merger takes effect if the amendment is
approved by the partners of each constituent partnership, in the same
manner as required for approval of the original agreement of merger,
and by each of the constituent other business entities.
(d) The partners of a constituent partnership may in their
discretion, abandon a merger, subject to the contractual rights, if
any, of third parties, including other constituent partnerships and
constituent other business entities, if the abandonment is approved
by the partners of the constituent partnership in the same manner as
required for approval of the original agreement of merger.
(e) An agreement of merger approved in accordance with subdivision
(a) may (1) effect any amendment to the partnership agreement of any
domestic constituent partnership or (2) effect the adoption of a new
partnership agreement for a domestic constituent partnership if it
is the surviving partnership in the merger. Any amendment to a
partnership agreement or adoption of a new partnership agreement made
pursuant to the foregoing sentence shall be effective at the
effective time or date of the merger.
(f) The surviving partnership or surviving other business entity
shall keep the agreement of merger at the principal place of business
of the surviving entity if the surviving entity is a partnership or
a foreign other business entity, at the office referred to in Section
1500 if the surviving entity is a domestic corporation, at the
office referred to in subdivision (a) of Section 15614 or 15901.14 if
the surviving entity is a domestic limited partnership or at the
office referred to in Section 17057 if the surviving entity is a
domestic limited liability company and, upon the request of a partner
of a constituent partnership or a holder of interests or other
securities of a constituent other business entity, the authorized
person on behalf of the partnership or the surviving other business
entity shall promptly deliver to the partner or the holder of
interests or other securities, at the expense of the surviving
partnership or surviving other business entity, a copy of the
agreement of merger. A waiver by a partner or holder of interests or
other securities of the rights provided in this subdivision shall be
unenforceable.
SEC. 26. Section 16915.5 of the Corporations Code is amended to
read:
16915.5. (a) Upon merger pursuant to this article, a surviving
domestic or foreign partnership or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign partnership or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001)
of, Division 2 of the Revenue and Taxation Code for the
following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) Notwithstanding Sections 1103, 1108, 1110, 1113, 6014, 6018,
6019.1, 8014, 8018, 8019.1, 12535, 12539, 12540.1, 15678.4, 15911.14,
and 17552 of this code and Sections 17945, 17948.1, and 23334 of the
Revenue and Taxation Code, if the surviving entity is a domestic
limited liability company, domestic corporation, or registered
limited liability partnership or a foreign limited liability company,
foreign limited liability partnership, or foreign corporation that
is registered or qualified to do business in California, the
Secretary of State shall file the merger without the certificate of
satisfaction of the Franchise Tax Board and shall notify the
Franchise Tax Board of the merger.
SEC. 26.5. Section 16915.5 of the Corporations Code is amended to
read:
16915.5. (a) Upon merger pursuant to this article, a surviving
domestic or foreign partnership or other business entity shall be
deemed to have assumed the liability of each disappearing domestic or
foreign partnership or other business entity that is taxed under
Part 10 (commencing with Section 17001) of, or under Part 11
(commencing with Section 23001) of, Division 2 of the Revenue and
Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) If the surviving entity is a domestic limited liability
company, domestic corporation, or registered limited liability
partnership or a foreign limited liability company, foreign limited
liability partnership, or foreign corporation that is registered or
qualified to do business in California, the Secretary of State shall
notify the Franchise Tax Board of the merger.
SEC. 27. Section 17001 of the Corporations Code is amended to
read:
17001. Unless the context otherwise indicates, the following
definitions govern the construction of this title:
(a) "Acknowledged" means that an instrument is either of the
following:
(1) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code.
(2) Executed to include substantially the following wording
preceding the signature: It is hereby declared that I am the person
who executed this instrument, which execution is my act and deed.
Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.
(b) "Articles of organization" means articles of organization
filed under Section 17050, including all amendments thereto or
restatements thereof, or, in the case of a foreign limited liability
company, all documents that serve a like function under the laws of
the jurisdiction in which the foreign limited liability company is
organized.
(c) "Bankrupt" or "bankruptcy" means, with respect to any person,
being the subject of an order for relief under Title 11 of the United
States Code, or any successor statute or other statute in any
foreign jurisdiction having like import or effect.
(d) "Capital account" means, unless otherwise provided in the
operating agreement, the amount of the capital interest of a member
in the limited liability company consisting of that member's original
contribution, as (1) increased by any additional contributions and
by that member's share of the limited liability company's profits,
and (2) decreased by any distribution to that member and by that
member's share of the limited liability company's losses.
(e) "Constituent limited liability company" means a limited
liability company that is merged with or into one or more other
limited liability companies or other business entities and includes a
surviving limited liability company.
(f) "Constituent other business entity" means any other business
entity that is merged with or into one or more limited liability
companies and includes a surviving other business entity.
(g) "Contribution" means any money, property, or services
rendered, or a promissory note or other binding obligation to
contribute money or property, or to render services as permitted in
this title, which a member contributes to a limited liability company
as capital in that member's capacity as a member pursuant to an
agreement between the members, including an agreement as to value.
(h) "Disappearing limited liability company" means a constituent
limited liability company that is not the surviving limited liability
company.
(i) "Disappearing other business entity" means a constituent other
business entity that is not the surviving other business entity.
(j) "Distribution" means the transfer of money or property by a
limited liability company to its members without consideration.
(k) "Domestic" means organized under the laws of this state when
used in relation to any limited liability company, other business
entity or person (other than a natural person).
(l) "Domestic corporation" means a corporation as defined in
Section 162.
(m) "Domestic limited partnership" means a partnership formed by
two or more persons under the laws of this state and having one or
more general partners and one or more limited partners.
(n) "Economic interest" means a person's right to share in the
income, gains, losses, deductions, credit, or similar items of, and
to receive distributions from, the limited liability company, but
does not include any other rights of a member, including, without
limitation, the right to vote or to participate in management, or,
except as provided in Section 17106, any right to information
concerning the business and affairs of the limited liability company.
(o) (1) "Electronic transmission by the limited liability company"
means a communication (a) delivered by (1) facsimile
telecommunication or electronic mail when directed to the facsimile
number or electronic mail address, respectively, for that recipient
on record with the limited liability company, (2) posting on an
electronic message board or network that the limited liability
company has designated for those communications, together with a
separate notice to the recipient of the posting, which transmission
shall be validly delivered upon the later of the posting or delivery
of the separate notice thereof, or (3) other means of electronic
communication, (b) to a recipient who has provided an unrevoked
consent to the use of those means of transmission, and (c) that
creates a record that is capable of retention, retrieval, and review,
and that may thereafter be rendered into clearly legible tangible
form. However, an electronic transmission by a limited liability
company to an individual member is not authorized unless, in addition
to satisfying the requirements of this section, the transmission
satisfies the requirements applicable to consumer consent to
electronic records as set forth in the Electronic Signatures in
Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)).
(2) "Electronic transmission to the limited liability company"
means a communication (a) delivered by (1) facsimile
telecommunication or electronic mail when directed to the facsimile
number or electronic mail address, respectively, which the limited
liability company has provided from time to time to members or
managers for sending communications to the limited liability company,
(2) posting on an electronic message board or network that the
limited liability company has designated for those communications,
and which transmission shall be validly delivered upon the posting,
or (3) other means of electronic communication, (b) as to which the
limited liability company has placed in effect reasonable measures to
verify that the sender is the member or manager (in person or by
proxy) purporting to send the transmission, and (c) that creates a
record that is capable of retention, retrieval, and review, and that
may thereafter be rendered into clearly legible tangible form.
(p) "Foreign corporation" means a corporation formed under the
laws of any state other than this state or under the laws of the
United States or of a foreign country.
(q) "Foreign limited liability company" means either (1) an entity
formed under the limited liability company laws of any state other
than this state, or (2) an entity organized under the laws of any
foreign country that is (A) an unincorporated association, (B)
organized under a statute pursuant to which an association may be
formed that affords each of its members limited liability with
respect to the liabilities of the entity, and (C) not an entity that
is required to be registered or qualified pursuant to the provisions
of Title 1 (commencing with Section 100) or Title 2 (commencing with
Section 15001); but the term "foreign limited liability company" does
not include a foreign association, as defined in Section 170.
(r) "Foreign limited partnership" means a partnership formed under
the laws of any state other than this state or under the laws of a
foreign country, including a limited liability limited partnership,
and having as partners one or more general partners and one or more
limited partners or their equivalents under any name.
(s) "Foreign other business entity" means any other business
entity formed under the laws of any state other than this state or
under the laws of the United States or of a foreign country.
(t) "Limited liability company" or "domestic limited liability
company" means an entity having one or more members that is organized
under this title and is subject to the provisions of Section 17101.
(u) "Mail" unless otherwise provided in the operating agreement,
means first-class mail, postage prepaid, unless registered mail is
specified. Registered mail includes certified mail.
(v) "Majority in interest of the members," unless otherwise
provided in the operating agreement, means more than 50 percent of
the interests of members in current profits of the limited liability
company.
(w) "Manager" means a person elected by the members of a limited
liability company to manage the limited liability company if the
articles of organization contain the statement referred to in
subdivision (b) of Section 17151 or, if the articles of organization
do not contain that statement, "manager" means each of the members of
the limited liability company.
(x) "Member" means a person who:
(1) Has been admitted to a limited liability company as a member
in accordance with the articles of organization or operating
agreement, or an assignee of an interest in a limited liability
company who has become a member pursuant to Section 17303.
(2) Has not resigned, withdrawn, or been expelled as a member or,
if other than an individual, been dissolved.
(y) "Member of record" means a member named as a member on the
list maintained in accordance with paragraph (1) of subdivision (a)
of Section 17058.
(z) "Membership interest" means a member's rights in the limited
liability company, collectively, including the member's economic
interest, any right to vote or participate in management, and any
right to information concerning the business and affairs of the
limited liability company provided by this title.
(aa) "Officer" means any person elected or appointed pursuant to
Section 17154.
(ab) "Operating agreement" means any agreement, written or oral,
between all of the members as to the affairs of a limited liability
company and the conduct of its business in any manner not
inconsistent with law or the articles of organization, including all
amendments thereto, or, in the case of a foreign limited liability
company, all documents that serve a like function under the laws of
the jurisdiction in which the foreign limited liability company is
organized. The term "operating agreement" may include, without more,
an agreement between all the members to organize a limited liability
company pursuant to the provisions of this title.
(ac) "Other business entity" means a corporation, limited
partnership, general partnership, business trust, real estate
investment trust, or an unincorporated association (other than a
nonprofit association), but excluding a domestic limited liability
company and a foreign limited liability company.
(ad) "Parent," when used in relation to a specified limited
liability company, means a person who owns, directly or indirectly,
membership interests possessing more than 50 percent of the voting
power of the specified limited liability company. When used in
relation to a specified corporation or limited partnership, the term
"parent" shall have the meanings set forth in Section 175 and
subdivision (w) of Section 15611 or subdivision (v) of Section
15901.02 respectively.
(ae) "Person" means an individual, partnership, limited
partnership, trust, estate, association, corporation, limited
liability company, or other entity, whether domestic or foreign.
(af) (RESERVED)
(ag) (RESERVED)
(ah) (RESERVED)
(ai) "Proxy," unless otherwise provided in the operating
agreement, means a written authorization signed or an electronic
transmission authorized by a member or the member's attorney-in-fact
giving another person the power to exercise the voting rights of that
member. "Signed," for the purpose of this section, means the placing
of the member's name on the proxy (whether by manual signature,
typewriting, telegraphic or electronic transmission, or otherwise) by
the member or member's attorney-in-fact.
A proxy may be transmitted by an oral telephonic transmission if
it is submitted with information from which it may be determined that
the proxy was authorized by the member, or by the member's
attorney-in-fact.
(aj) "Return of capital," unless otherwise provided in the
operating agreement, means any distribution to a member to the extent
that the member's capital account, immediately after the
distribution, is less than the amount of that member's contributions
to the limited liability company as reduced by prior distributions
that were a return of capital.
(ak) "State" means a state, territory, or possession of the United
States, the District of Columbia, or the Commonwealth of Puerto
Rico.
(al) "Subsidiary of a specified limited liability company" means a
limited liability company or other business entity in which shares,
interests, or other securities possessing more than 50 percent of the
voting power are owned by the specified limited liability company.
(am) "Surviving limited liability company" means a limited
liability company into which one or more other limited liability
companies or other business entities are merged.
(an) "Surviving other business entity" means an other business
entity into which one or more limited liability companies are merged.
(ao) "Time a notice is given or sent," unless otherwise expressly
provided, means the time a written notice is deposited in the United
States mail; is personally delivered to the recipient, is delivered
to a common carrier for transmission, or is actually transmitted by
the person giving the notice by electronic transmission, to the
recipient; or the time any oral notice is communicated, in person or
by telephone, to the recipient or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.
(ap) "Transact intrastate business" means to enter into repeated
and successive transactions of business in this state, other than in
interstate or foreign commerce.
(1) Without excluding other activities which may not be considered
to be transacting intrastate business, a foreign limited liability
company shall not be considered to be transacting intrastate business
merely because its subsidiary transacts intrastate business, or
merely because of its status as any one or more of the following:
(A) A shareholder of a domestic corporation.
(B) A shareholder of a foreign corporation transacting intrastate
business.
(C) A limited partner of a foreign limited partnership transacting
intrastate business.
(D) A limited partner of a domestic limited partnership.
(E) A member or manager of a foreign limited liability company
transacting intrastate business.
(F) A member or manager of a domestic limited liability company.
(2) Without excluding other activities which may not be considered
to be transacting intrastate business, a foreign limited liability
company shall not be considered to be transacting intrastate business
within the meaning of this subdivision solely by reason of carrying
on in this state any one or more of the following activities:
(A) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof, or the settlement of claims or disputes.
(B) Holding meetings of its managers or members or carrying on any
other activities concerning its internal affairs.
(C) Maintaining bank accounts.
(D) Maintaining offices or agencies for the transfer, exchange,
and registration of the foreign limited liability company's
securities or maintaining trustees or depositaries with respect to
those securities.
(E) Effecting sales through independent contractors.
(F) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance without this state before becoming binding contracts.
(G) Creating or acquiring evidences of debt or mortgages, liens,
or security interests in real or personal property.
(H) Securing or collecting debts or enforcing mortgages and
security interests in property securing the debts.
(I) Conducting an isolated transaction that is completed within
180 days and not in the course of a number of repeated transactions
of a like nature.
(3) A person shall not be deemed to be transacting intrastate
business in this state merely because of its status as a member or
manager of a domestic limited liability company or a foreign limited
liability company registered to transact intrastate business in this
state.
(aq) "Vote" includes authorization by written consent.
(ar) "Voting power" means the power to vote on any matter at the
time any determination of voting power is made and does not include
the right to vote upon the happening of some condition or event which
has not yet occurred.
(as) "Withdrawal" includes the resignation or retirement of a
member as a member.
(at) "Written" or "in writing" includes facsimile, telegraphic,
and other electronic communication as authorized by this code.
SEC. 28. Section 17540.3 of the Corporations Code is amended to
read:
17540.3. (a) A limited liability company that desires to convert
to an other business entity or a foreign other business entity or a
foreign limited liability company shall approve a plan of conversion.
The plan of conversion shall state all of the following:
(1) The terms and conditions of the conversion.
(2) The place of the organization of the converted entity and of
the converting limited liability company and the name of the
converted entity after conversion.
(3) The manner of converting the membership interests of each of
the members into securities of, shares of, or interests in, the
converted entity.
(4) The provisions of the governing documents for the converted
entity, including the articles or certificate of incorporation if the
converted entity is a domestic or foreign corporation, the
partnership agreement, or the limited liability company articles of
organization and operating agreement, to which the holders of
interests in the converted entity are to be bound.
(5) Any other details or provisions that are required by the laws
under which the converted entity is organized, or that are desired by
the parties.
(b) The plan of conversion shall be approved by a vote of a
majority in interest of the members of the converting limited
liability company, or a greater percentage of the voting interests of
members as may be specified in the articles of organization or
written operating agreement of the converting limited liability
company. However, if the members of the limited liability company
would become personally liable for any obligations of the converted
entity as a result of the conversion, the plan of conversion shall be
approved by all of the members of the converting limited liability
company, unless the plan of conversion provides that all members will
have dissenters' rights as provided in Chapter 13 (commencing with
Section 17600).
(c) If the limited liability company is converting into a limited
partnership, then in addition to the approval of the members set
forth in subdivision (b), the plan of conversion shall be approved by
those members who will become general partners of the converted
limited partnership pursuant to the plan of conversion.
(d) Upon the effectiveness of the conversion, all members of the
converting limited liability company, except those that exercise
dissenters' rights as provided in Chapter 13 (commencing with Section
17600), shall be deemed parties to any governing documents for the
converted entity adopted as part of the plan of conversion,
irrespective of whether or not a member has executed the plan of
conversion or the governing documents for the converted entity. Any
adoption of governing documents made pursuant thereto shall be
effective at the effective time or date of the conversion.
(e) Notwithstanding its prior approval, a plan of conversion may
be amended before the conversion takes effect if the amendment is
approved by the members of the converting limited liability company
in the same manner as was required for approval of the original plan
of conversion.
(f) A plan of conversion may be abandoned by the members of a
converting limited liability company in the manner as required for
approval of the plan of conversion, subject to the contractual rights
of third parties, at any time before the conversion is effective.
(g) The converted entity shall keep the plan of conversion at the
principal place of business of the converted entity if the converted
entity is a domestic partnership or foreign other business entity, at
the principal executive office of or registrar or transfer agent of
the converted entity if the converted entity is a domestic
corporation, or at the office at which records are to be kept under
Section 15614 or 15901.14 if the converted entity is a domestic
limited partnership. Upon the request of a member of a converting
limited liability company, the authorized person on behalf of the
converted entity shall promptly deliver to the member or the holder
of interests, shares, or other securities, at the expense of the
converted entity, a copy of the plan of conversion. A waiver by a
member of the rights provided in this subdivision shall be
unenforceable.
SEC. 29. Section 17540.8 of the Corporations Code is amended to
read:
17540.8. (a) An other business entity or a foreign other business
entity or a foreign limited liability company may be converted to a
domestic limited liability company pursuant to this chapter only if
the converting entity is authorized by the laws under which it is
organized to effect the conversion.
(b) An other business entity or a foreign other business entity or
a foreign limited liability company that desires to convert into a
domestic limited liability company shall approve a plan of conversion
or an other instrument as is required to be approved to effect the
conversion pursuant to the laws under which that entity is organized.
(c) The conversion of an other business entity or a foreign other
business entity or a foreign limited liability company into a
domestic limited liability company shall be approved by that number
or percentage of the partners, members, shareholders, or holders of
interest of the converting entity as is required by the laws under
which that entity is organized, or a greater or lesser percentage,
subject to applicable laws, as set forth in the converting entity's
partnership agreement, articles of organization, operating agreement,
articles or certificate of incorporation, or other governing
document.
(d) The conversion by an other business entity or a foreign other
business entity or a foreign limited liability company into a
domestic limited liability company shall be effective under this
chapter at the time the conversion is effective under the laws under
which the converting entity is organized as long as the articles of
organization containing a statement of conversion have been filed
with the Secretary of State. If the converting entity's governing law
is silent as to the effectiveness of the conversion, the conversion
shall be effective upon the completion of all acts required under
this title to form a limited liability company.
(e) The filing with the Secretary of State of a certificate of
conversion or articles of organization containing a statement of
conversion pursuant to subdivision (a) shall have the effect of the
filing of a certificate of cancellation by the converting foreign
limited liability company or foreign limited partnership, and no
converting foreign limited liability company or foreign limited
partnership that has made the filing is required to file a
certificate of cancellation under Section 15696, 15909.07, or 17455
as a result of that conversion. If a converting other business entity
is a foreign corporation qualified to transact business in this
state, the foreign corporation shall, by virtue of the filing,
automatically surrender its right to transact intrastate business.
SEC. 30. Section 17554.5 of the Corporations Code is amended to
read:
17554.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign limited liability company or other business
entity shall be deemed to have assumed the liability of each
disappearing domestic or foreign limited liability company or other
business entity that is taxed under Part 10 (commencing with Section
17001) of, or under Part 11 (commencing with Section 23001) of,
Division 2 of the
Revenue and Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) Notwithstanding Sections 1103, 1108, 1110, 1113, 6014, 6018,
6019.1, 8014, 8018, 8019.1, 12535, 12539, 12540.1, 15678.4, 15911.14,
and 17552 of this code and Sections 17945, 17948.1, and 23334 of the
Revenue and Taxation Code, if the surviving entity is a domestic
limited liability company, domestic corporation, or registered
limited liability partnership or a foreign limited liability company,
foreign limited liability partnership, or foreign corporation that
is registered or qualified to do business in California, the
Secretary of State shall file the merger without the certificate of
satisfaction of the Franchise Tax Board and shall notify the
Franchise Tax Board of the merger.
SEC. 30.5. Section 17554.5 of the Corporations Code is amended to
read:
17554.5. (a) Upon merger pursuant to this chapter, a surviving
domestic or foreign limited liability company or other business
entity shall be deemed to have assumed the liability of each
disappearing domestic or foreign limited liability company or other
business entity that is taxed under Part 10 (commencing with Section
17001) of, or under Part 11 (commencing with Section 23001) of,
Division 2 of the Revenue and Taxation Code for the following:
(1) To prepare and file, or to cause to be prepared and filed, tax
and information returns otherwise required of that disappearing
entity as specified in Chapter 2 (commencing with Section 18501) of
Part 10.2 of Division 2 of the Revenue and Taxation Code.
(2) To pay any tax liability determined to be due.
(b) If the surviving entity is a domestic limited liability
company, domestic corporation, or registered limited liability
partnership or a foreign limited liability company, foreign limited
liability partnership, or foreign corporation that is registered or
qualified to do business in California, the Secretary of State shall
notify the Franchise Tax Board of the merger.
SEC. 31. Section 17555 of the Corporations Code is amended to
read:
17555. (a) The merger of any number of domestic limited liability
companies with any number of foreign limited liability companies or
foreign other business entities shall be required to comply with
Section 17550.
(b) If the surviving entity is a domestic limited liability
company or a domestic other business entity, the merger proceedings
with respect to that limited liability company or other business
entity and any domestic disappearing limited liability company shall
conform to the provisions of this chapter governing the merger of
domestic limited liability companies, but if the surviving entity is
a foreign limited liability company or a foreign other business
entity, then, subject to the requirements of subdivision (d) and
Chapter 13 (commencing with Section 17600), with respect to any
domestic constituent corporation, Section 1113 and Chapters 12
(commencing with Section 1200) and 13 (commencing with Section 1300)
of Division 1 of Title 1, and with respect to any domestic
constituent limited partnership, Article 7.6 (commencing with Section
15679.1) of Chapter 3 and Article 11.5 (commencing with Section
15911.20) of Chapter 5.5 of Title 2, the merger proceedings may be in
accordance with the laws of the state or place of organization of
the surviving limited liability company or surviving other business
entity.
(c) If the surviving entity is a domestic limited liability
company or domestic other business entity, other than a domestic
corporation, a certificate of merger shall be filed as provided in
subdivision (a) of Section 17552 and thereupon, subject to
subdivision (a) of Section 17553, the merger shall be effective as to
each domestic constituent limited liability company and domestic
constituent other business entity. If the surviving entity is a
domestic corporation, the agreement of merger with attachments shall
be filed as provided in subdivision (b) of Section 17552, and
thereupon, subject to subdivision (a) of Section 17553, the merger
shall be effective as to each domestic constituent limited liability
company and domestic constituent other business entity unless another
effective date is provided for in Chapter 11 (commencing with
Section 1100) of Division 1 of Title 1, with respect to any
constituent corporation or any constituent other business entity.
(d) If the surviving entity is a foreign limited liability company
or foreign other business entity, the merger shall become effective
in accordance with the laws of the jurisdiction in which the
surviving limited liability company or surviving other business
entity is organized; but the merger shall be effective as to any
domestic disappearing limited liability company as of the time of
effectiveness in the foreign jurisdiction upon the filing in this
state of a certificate of merger or agreement of merger as provided
in Section 17552.
(e) If a merger described in subdivision (c) or (d) also includes
a foreign disappearing limited liability company previously
registered for the transaction of intrastate business in this state
pursuant to Section 17451, the filing of the certificate of merger or
agreement of merger, as applicable, automatically has the effect of
a cancellation of registration for that foreign limited liability
company pursuant to Section 17456 without the necessity of the filing
of a certificate of cancellation.
(f) The provisions of subdivision (b) of Section 17551 and Chapter
13 (commencing with Section 17600) apply to the rights of the
members of any of the constituent limited liability companies that
are domestic limited liability companies and of any domestic limited
liability company that is a parent of any foreign constituent limited
liability company.
(g) If the surviving entity is a foreign limited liability company
or foreign other business entity, the surviving entity shall file
the following with the Secretary of State:
(1) An agreement that it may be served in this state in a
proceeding for the enforcement of an obligation of any constituent
entity and in a proceeding to enforce the rights of any holder of a
dissenting interest or dissenting shares in a constituent domestic
limited liability company or domestic other business entity.
(2) An irrevocable appointment of the Secretary of State as its
agent for service of process, and an address to which process may be
forwarded.
(3) An agreement that it will promptly pay the holder of any
dissenting interest or dissenting share in a constituent domestic
limited liability company or domestic other business entity the
amount to which that person is entitled under California law.
SEC. 32. Section 25005.1 of the Corporations Code is amended to
read:
25005.1. "Entity conversion transaction" means a conversion
pursuant to Section 1151, 1157, 15677.2, 15677.8, 15911.02, 15911.08,
16902, 16908, 17540.2, 17540.8, or a conversion that occurs entirely
out of state, unless the interests in the entity resulting from the
conversion to be held by the equity holders of the entity being
converted as a result of the conversion are not securities. For
purposes of Sections 25103 and 25120 an entity conversion transaction
is not a change in the rights, preferences, privileges, or
restrictions of or on outstanding securities or an exchange of
securities by the issuer with its existing security holders
exclusively.
SEC. 33. Section 12188 of the Government Code is repealed.
SEC. 34. Section 12188 is added to the Government Code, to read:
12188. The limited partnership filing fees are the following:
(a) Issuing a certificate of reservation of limited partnership
name: ten dollars ($10).
(b) Filing a certificate of limited partnership of a limited
partnership: seventy dollars ($70).
(c) Filing an application for registration as a foreign limited
partnership: seventy dollars ($70).
(d) Filing a certificate of amendment to the certificate of
limited partnership of a limited partnership: thirty dollars ($30).
(e) Filing a restated certificate of limited partnership of a
limited partnership: thirty dollars ($30).
(f) Filing an amendment to the application for registration of a
foreign limited partnership: thirty dollars ($30).
(g) Filing a certificate of correction for a limited partnership
or a foreign limited partnership: thirty dollars ($30).
(h) Filing a certificate of revival for a limited partnership:
thirty dollars ($30).
(i) Filing a certificate of merger solely with one or more other
limited partnerships (not including the merger of one or more limited
partnerships with one or more other business entities) the fee for
filing a certificate of merger: seventy dollars ($70).
(j) Filing a certificate of merger of one or more limited
partnerships with one or more other business entities: one hundred
fifty dollars ($150).
(k) Filing a certificate of conversion of a limited partnership
into a foreign other business entity or general partnership: thirty
dollars ($30).
(l) Filing articles of organization or statement of partnership
authority containing a statement of conversion of a limited
partnership into a domestic limited liability company or a registered
general partnership: seventy dollars ($70).
(m) Filing the substitute service of a limited partnership: fifty
dollars ($50).
(n) Filing a certificate of cancellation for a limited partnership
or a foreign limited partnership: no fee.
(o) Filing a statement of resignation as an agent for service of
process: no fee.
(p) Filing any instrument by or on behalf of a limited partnership
unless another fee is specified or the law specifies that no fee is
to be charged: thirty dollars ($30).
SEC. 35. Section 12197 of the Government Code is amended to read:
12197. The Secretary of State shall charge and collect, as
applicable, fees for the following:
(a) Service of process, as provided in Section 15800 of the
Corporations Code, for every partnership other than a foreign limited
partnership subject to Article 9 (commencing with Section 15691) of
Chapter 3 or Article 9 (commencing with Section 15909.01) of Chapter
5.5 of Title 2 of the Corporations Code or a commercial banking
partnership established and transacting business in a place without
the United States, which is domiciled without this state and has no
regular place of business within the state: Fifty dollars ($50).
(b) Service of process for each registered limited liability
partnership whose principal office is not in this state and each
foreign limited liability partnership registered under Section 16959
of the Corporations Code: Fifty dollars ($50).
(c) Acceptance of copies of process against a corporation, firm,
partnership, limited liability company, association, business trust,
or natural person: Fifty dollars ($50), unless another fee is
specified by law or the law specifies that no fee is to be charged.
(d) Filing a statement of resignation as an agent pursuant to
paragraph (2) of subdivision (d) of Section 17061 of the Corporations
Code for an individual or entity previously designated as an agent
for service of process by a limited liability company: No fee.
SEC. 36. Section 17935 of the Revenue and Taxation Code is amended
to read:
17935. (a) For each taxable year beginning on or after January 1,
1997, every limited partnership doing business in this state (as
defined by Section 23101) and required to file a return under Section
18633 shall pay annually to this state a tax for the privilege of
doing business in this state in an amount equal to the applicable
amount specified in Section 23153.
(b) (1) In addition to any limited partnership that is doing
business in this state and therefore is subject to the tax imposed by
subdivision (a), for each taxable year beginning on or after January
1, 1997, every limited partnership that has executed, acknowledged,
and filed a certificate of limited partnership with the Secretary of
State pursuant to Section 15621 or 15902.01 of the Corporations Code,
and every foreign limited partnership that has registered with the
Secretary of State pursuant to Section 15692 or 15909.01 of the
Corporations Code, shall pay annually the tax prescribed in
subdivision (a). The tax shall be paid for each taxable year, or part
thereof, until a certificate of cancellation is filed on behalf of
the limited partnership with the office of the Secretary of State
pursuant to Section 15623, 15696, 15902.03, or 15909.07 of the
Corporations Code.
(2) If a taxpayer files a return with the Franchise Tax Board that
is designated its final return, that board shall notify the taxpayer
that the tax imposed by this chapter is due annually until a
certificate of cancellation is filed with the Secretary of State
pursuant to Section 15623, 15696, 15902.03, or 15909.07 of the
Corporations Code.
(c) The tax imposed by this chapter shall be due and payable on
the date the return is required to be filed under former Section
18432 or 18633.
(d) For purposes of this section, "limited partnership" means any
partnership formed by two or more persons under the laws of this
state or any other jurisdiction and having one or more general
partners and one or more limited partners.
(e) Notwithstanding subdivision (b), any limited partnership that
ceased doing business prior to January 1, 1997, filed a final return
with the Franchise Tax Board for a taxable year ending before January
1, 1997, and filed a certificate of dissolution with the Secretary
of State pursuant to Section 15623 of the Corporations Code prior to
January 1, 1997, shall not be subject to the tax imposed by this
chapter for any period following the date the certificate of
dissolution was filed with the Secretary of State, but only if the
limited partnership files a certificate of cancellation with the
Secretary of State pursuant to Section 15623 of the Corporations
Code. In the case where a notice of proposed deficiency assessment of
tax or a notice of tax due (whichever is applicable) is mailed after
January 1, 2001, the first sentence of this subdivision shall not
apply unless the certificate of cancellation is filed with the
Secretary of State not later than 60 days after the date of the
mailing of the notice.
SEC. 37. Nothing in this act shall be construed to affect or
overturn any decision of law or existing statute regarding the
liability of limited partners. Except as provided herein, nothing in
this act shall be construed to affect any existing statute pertaining
to limited liability partnerships and limited liability companies.
This act does not permit the formation of limited liability limited
partnerships in this state.
SEC. 38. Section 21.5 of this bill incorporates amendments to
Section 16101 of the Corporations Code proposed by both this bill and
AB 2914. It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 2007, (2) each
bill amends Section 16101 of the Corporations Code, and (3) this bill
is enacted after AB 2914, in which case Section 21 of this bill
shall not become operative.
SEC. 39. (a) Section 6.5 of this bill incorporates amendments to
Section 1107.5 of the Corporations Code proposed by both this bill
and AB 2341. It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 2007, but AB
2341 becomes operative first (2) each bill amends Section 1107.5 of
the Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 1107.5 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 6.5 of this bill shall become operative,
and Section 6 of this bill shall not become operative.
(b) Section 7.5 of this bill incorporates amendments to Section
1113 of the Corporations Code proposed by both this bill and AB 2341.
It shall only become operative if (1) both bills are enacted and
become effective on or before January 1, 2007, but AB 2341 becomes
operative first (2) each bill amends Section 1113 of the Corporations
Code, and (3) this bill is enacted after AB 2341, in which case
Section 1113 of the Corporations Code as amended by AB 2341, shall
remain operative only until the operative date of this bill, at which
time Section 7.5 of this bill shall become operative, and Section 7
of this bill shall not become operative.
(c) Section 11.5 of this bill incorporates amendments to Section
6019.1 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 6019.1 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 6019.1 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 11.5 of this bill shall become operative,
and Section 11 of this bill shall not become operative.
(d) Section 12.5 of this bill incorporates amendments to Section
6020.5 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 6020.5 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 6020.5 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 12.5 of this bill shall become operative,
and Section 12 of this bill shall not become operative.
(e) Section 13.5 of this bill incorporates amendments to Section
8019.1 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 8019.1 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 8019.1 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 13.5 of this bill shall become operative,
and Section 13 of this bill shall not become operative.
(f) Section 14.5 of this bill incorporates amendments to Section
8020.5 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 8020.5 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 8020.5 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 14.5 of this bill shall become operative,
and Section 14 of this bill shall not become operative.
(g) Section 15.5 of this bill incorporates amendments to Section
12540.1 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 12540.1 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 12540.1 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 15.5 of this bill shall become operative,
and Section 15 of this bill shall not become operative.
(h) Section 16.5 of this bill incorporates amendments to Section
12550.5 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 12550.5 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 12550.5 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 16.5 of this bill shall become operative,
and Section 16 of this bill shall not become operative.
(i) Section 26.5 of this bill incorporates amendments to Section
16915.5 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 16915.5 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 16915.5 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 26.5 of this bill shall become operative,
and Section 26 of this bill shall not become operative.
(j) Section 30.5 of this bill incorporates amendments to Section
17554.5 of the Corporations Code proposed by both this bill and AB
2341. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2007, but AB 2341
becomes operative first (2) each bill amends Section 17554.5 of the
Corporations Code, and (3) this bill is enacted after AB 2341, in
which case Section 17554.5 of the Corporations Code as amended by AB
2341, shall remain operative only until the operative date of this
bill, at which time Section 30.5 of this bill shall become operative,
and Section 30 of this bill shall not become operative.