BILL NUMBER: SB 323	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JANUARY 13, 2012
	AMENDED IN SENATE  JANUARY 4, 2012

INTRODUCED BY   Senator Vargas

                        FEBRUARY 14, 2011

   An act to  amend Sections 9653.6, 17900, and 23405.2 of the
Business and Professions Code, to amend Section 708.310 of the Code
of Civil Procedure, to amend Sections 171.03, 171.3, 1113, 1152,
1157, 2113, 6019.1, 8019.1, 12540.1, 15911.   03, 15911.08,
16903, 16908, 16911, and 25005.1 of, to  add Section 17657 to,
and to add Title  2.5   2.6  (commencing
with Section 17701.01) to, the Corporations Code,  to amend
Section 12262 of the Government Code, to amend Section 1192.95 of the
Insurance Code, to amend Sections 19141 and 23332 of the Revenue and
Taxation Code, and   to amend Section 1116 of the
Unemployment Insurance Code,   relating to limited liability
companies.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 323, as amended, Vargas. California Revised Uniform Limited
Liability Company Act.
   (1) Existing law, the Beverly-Killea Limited Liability Company
Act, authorizes a limited liability company to engage in any lawful
business activity, as specified, and governs the formation of limited
liability companies, including requiring the members to enter into
an operating agreement that shall be in writing or oral and to
execute and file articles of organization with the Secretary of
State.
   This bill would repeal that act and enact the California Revised
Uniform Limited Liability Company Act which would recast provisions
governing the formation and operation of limited liability companies.
The bill would also authorize an operating agreement to be in a
record or implied, in addition to being in writing or oral, and
authorize a combination of those forms.
   (2) Existing law establishes requirements and procedures for
membership interests in limited liability companies, including
voting, meeting, and inspection rights. Existing law also specifies
the duties and obligations of the managers of a limited liability
company, including member-managers, as specified.  Existing
law does not provide for the existence of a series of a limited
liability company.  
   This bill would provide that a member is not an agent of a limited
liability company merely by being a member. The 
    The  bill would  also  distinguish
between a manager-managed limited liability company and a
member-managed limited liability company for purposes of 
defining the scope of a member's agency and  imposing fiduciary
duties only on persons in control of a limited liability company.
 The bill would also provide for a series of a limited
liability company comprised of certain assets and liabilities
identified by a limited liability company as separate from the assets
and liabilities of the other series of the limited liability
company.   The bill would  authorize  the
establishment of classes of  members.
   (3) Existing law provides that the Secretary of State may issue a
certificate of status with respect to a limited liability company.
   This bill would also authorize the Secretary of State to issue
 a certificate of existence with respect to a limited
liability company and  a certificate of 
authorization   registration  with respect to a
foreign limited liability company.
   The bill would provide for the filing of specified records and
would further provide that an individual who signs such a record
affirms under penalty of perjury that the information in the record
is accurate.
   (4) Existing law does not specifically provide for jurisdiction of
courts in matters regarding a limited liability company.
   This bill would allow a limited liability company to be subject to
the nonexclusive jurisdiction of courts in another state or the
exclusive jurisdiction of California courts. The bill would also
allow a member to consent to arbitration, as specified.
   (5) Existing law does not specifically provide for a member to
dissociate from a limited liability company.
   This bill would specify when a member would be dissociated from a
limited liability company and the effects of dissociation on the
member.
   (6) Existing law establishes capital contribution standards and
liability of members, and regulates the allocation of profits and
losses, distributions of money and property, withdrawal of
membership, assignment of interests, and dissolution of limited
liability companies. Existing law requires the registration of
foreign limited liability companies, as defined, with the Secretary
of State, and prohibits the transaction of business in this state by
an unregistered foreign limited liability company, subject to
specified penalties. Existing law also regulates the merger of a
limited liability company with one or more limited liability
companies or other business entities, as specified, including
requiring an agreement of merger and protection of the rights and
liabilities of limited liability companies, creditors, and dissenting
members.
   This bill would revise and recast those provisions.
   (7) Because this bill would expand the scope of the crime of
perjury, the bill would impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 9653.6 of the  
Business and Professions Code   is amended to read: 
   9653.6.  (a) No person licensed under this code as a cemetery
broker, cemetery salesperson, cemetery manager, funeral director,
embalmer, crematorium licensee, or other person licensed to provide
services related to cemeteries and funerals shall have any ownership
interest as a member in a limited liability company certificated as a
cemetery authority pursuant to Section 7018 of the Health and Safety
Code.
   (b) If a limited liability company admits, as a member with
ownership interest, a licensed person described in subdivision (a),
the limited liability company, by operation of law, shall be deemed
in violation of  subdivision (e) of  Section  17375
  17701.04  of the Corporations Code, and the
members shall be treated as partners with joint and several liability
for claims made upon acts, errors, or omissions arising out of
services provided by any licensed person described in subdivision
(a).
   (c) If the bureau determines that a licensed cemetery broker,
cemetery salesperson, cemetery manager, funeral director, embalmer,
crematorium licensee, or other person licensed to provide services
related to cemeteries and funerals has an ownership interest as a
member in the limited liability company, the bureau shall suspend the
limited liability company's certificate of authority. The bureau
shall reinstate the certificate of authority only upon finding that
the licensed cemetery broker, cemetery salesperson, cemetery manager,
funeral director, embalmer, crematorium licensee, or other person
licensed to provide services related to cemeteries and funerals has
been divested of his or her ownership interest in the limited
liability company or has voluntarily surrendered his or her license.
   SEC. 2.    Section 17900 of the   Business
and Professions Code   is amended to read: 
   17900.  (a) (1) The purpose of this section is to protect those
dealing with individuals or partnerships doing business under
fictitious names, and it is not intended to confer any right or
advantage on individuals or firms that fail to comply with the law.
The filing of a fictitious business name certificate is designed to
make available to the public the identities of persons doing business
under the fictitious name.
   (2) Nothing in this section shall be construed to impair or impede
the rebuttable presumption described in Section 14411.
   (b) 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, as described in subdivision (c).
   (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 California 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 California 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, as described in
subdivision (c) and in Section 17901.
   (3) In the case of a domestic or foreign corporation, any name
other than the corporate name stated in its articles of incorporation
filed with the California Secretary of State, in accordance with
subdivision (a) of Section 17910.5.
   (4) In the case of a limited partnership that has filed a
certificate of limited partnership with the California 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 California 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 California 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 California Secretary of State pursuant to
Section  17451   17708.02  of the
Corporations Code, any name other than the name of the limited
liability company as on file with the California Secretary of State,
in accordance with subdivision (b) of Section 17910.5.
   (c) A name that suggests the existence of additional owners within
the meaning of subdivision (b) is one that includes such words as
"Company," "& Company," "& Son," "& Sons," "& Associates," "Brothers,"
and the like, but not words that merely describe the business being
conducted.
   SEC. 3.    Section 23405.2 of the   Business
and Professions Code   is amended to read: 
   23405.2.  (a) Any limited liability company holding a license
under this division shall maintain a record of its members at the
principal office of the company in California and the record of its
members shall be available to the department for inspection. The
company shall report to the department in writing any of the
following:
   (1) Issuance or transfer of memberships to any person where the
issuance or transfer results in the person owning 10 percent or more
of the voting interests of the company.
   (2) If the limited liability company is managed by a manager or
managers, any change in the manager or managers of the company.
   (3) If any officer has been appointed, any change in the officers
of the company.
   The report shall be filed with the department within 30 days after
the issuance or transfer of membership voting interests, or any
change in members, managers, or officers.
   (b) Any limited liability company within the purview of this
section that is required under the provisions of the Federal Alcohol
Administration Act or the Internal Revenue Code to report to the
federal government the information required by this section may send
to the department a copy of the report at the same time as it is sent
to the federal government. The copy of the report sent to the
department by the company shall be deemed sufficient compliance with
the provisions of this section.
   (c) The reporting requirements of subdivision (b) shall not apply
to a limited liability company that is required by law to file
periodic reports with the Securities and Exchange Commission.
   (d) The person or persons who are required to sign the application
shall certify to the department on forms prescribed by the
department whether or not any member, manager, or officer holds an
ownership interest, directly or indirectly, in any license within or
without this state to manufacture, import, distribute, rectify, or
sell alcoholic beverages. The department may deny any application or
suspend or revoke any license under this section in the event any
member, manager, or officer holds or acquires any prohibited
ownership interest, directly or indirectly, in any licensed business
in violation of the tied-house provisions of Chapter 15 (commencing
with Section 25500).
   (e) The department may deny any application and suspend or revoke
any license of a limited liability company subject to the provisions
of this section where conditions exist in relation to any manager,
officer, or person holding 10 percent or more of the voting interests
of the limited liability company that would constitute grounds for
disciplinary action against the person if he or she was a licensee.
   (f) All articles of organization and operating agreements of a
limited liability company or certificates or amendments thereto shall
be filed with the department at the time of filing the application
for the license. All articles of organization, operating agreements,
certificates, or amendments executed after the issuance of the
license shall be filed with the department within 30 days after
execution.
   (g) The requirements of this section are in addition to the
requirements set forth in the  Beverly-Killea  
California Revised Uniform  Limited Liability Company Act, Title
 2.5   2.6  (commencing with Section
 17000)   17701.01)  of the Corporations
Code.
   SEC. 4.    Section 70   8.310 of the 
 Code of Civil Procedure   is amended to read: 
   708.310.  If a money judgment is rendered against a partner or
member but not against the partnership or limited liability company,
the judgment debtor's interest in the partnership or limited
liability company may be applied toward the satisfaction of the
judgment by an order charging the judgment debtor's interest pursuant
to Section 15673, 16504, or 17302   17705.03
 of the Corporations Code.
   SEC. 5.    Section 171.   03 of the 
 Corporations Code   is amended to read: 
   171.03.  "Foreign limited liability company" means a foreign
limited liability company as defined in subdivision  (q)
  (j)  of Section  17001  
17701.02  .
   SEC. 6.   Section 171.3 of the  
Corporations Code   is amend   ed to read: 
   171.3.  "Limited liability company" means a limited liability
company as defined in subdivision  (t)   (k)
 of Section  17001   17701.02  .
   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 that 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 that 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 an
unincorporated association is a party to the merger, Section 18370,
or, if a domestic limited partnership is a party to the merger,
Section 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  
17710.12  .
   (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 flexible purpose corporation (Section 171.08), 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 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   17710.04  . 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
  17710.14  , 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 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   17710.13  if a domestic
limited liability company, at the business address specified in
paragraph (5) of subdivision (a) of Section  17552 
 17710.14  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 15901.14 if a domestic
limited partnership, or at the business address specified 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   Article 11  (commencing with Section
 17600)   17711.01)  of Title  2.5
  2.6  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 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 15911.14, subdivision (b) of Section
16915, or subdivision (a) of Section  17552  
17710.14  , 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, or a
greater vote if required in the articles, of outstanding shares
(Section 152) 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) If the corporation is converting into a flexible purpose
corporation, both of the following shall apply:
   (1) Notwithstanding subdivision (b), the plan of conversion shall
be approved by the affirmative vote of at least two-thirds of each
class, or a greater vote if required in the articles, of outstanding
shares (Section 152) of that converting corporation.
   (2) The shareholders of the converting corporation shall have all
of the rights under Chapter 13 (commencing with Section 1300) of the
shareholders of a corporation involved in a reorganization requiring
the approval of its outstanding shares (Section 152), and the
converting corporation shall have all of the obligations under
Chapter 13 (commencing with Section 1300) of a corporation involved
in a reorganization, without regard to whether the conversion
constitutes a reorganization requiring a shareholder vote under
Chapter 12 (commencing with Section 1200).
   (e) 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.
   (f) 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.
   (g) 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.
   (h) 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
  17701.13  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, 15909.07, or
 17455   17708.06  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   17710.08
 , 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 an
unincorporated association is a party to the merger, Section 18370,
or 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  
17710.12  .
   (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
  17710.14  . 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   17710.14  , 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 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  ( Section   (Section  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 an
unincorporated association is a party to the merger, Section 18370,
or 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 
 17710.12  .
   (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   17710.14  . 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   17710.14  , 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.    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   17710.12
 .
   (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   17710.14  . 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   17710.14  , 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. 14.    Section 15911.03 of the  
Corporations Code   is amended to read: 
   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   17701.13  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.
   SEC. 15.    Section 15911.08 of the  
Corporations Code   is amended to read: 
   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   17708.08  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. 16.    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   17701.13  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. 17.    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   17708.08  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. 18.    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   17701.13
 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.
   SECTION 1.   SEC. 19.   Section 17657 is
added to the Corporations Code, to read:
   17657.  This title shall become inoperative on January 1, 
2013   2014  , and is repealed on January 1,
 2015   2016  .
   SEC. 2.   SEC. 20.   Title 2.5
(commencing with Section 17701.01) is added to the Corporations Code,
to read:

      TITLE  2.5.   2.6.   CALIFORNIA
REVISED UNIFORM LIMITED LIABILITY COMPANY ACT



      Article 1.  General Provisions


   17701.01.  This title may be cited as the California Revised
Uniform Limited Liability Company Act.
   17701.02.  In 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 the articles required by
Section 17702.01.  the   The  term includes
the articles of organization as amended or restated.
   (c) "Contribution" means any benefit provided by a person to a
limited liability company:
   (1) In order to become a member upon formation of the limited
liability company and in accordance with an agreement between or
among the persons that have agreed to become the initial members of
the limited liability company.
   (2) In order to become a member after formation of the limited
liability company and in accordance with an agreement between the
person and the limited liability company.
   (3) In the person's capacity as a member and in accordance with
the operating agreement or an agreement between the member and the
limited liability company.
   (d) "Debtor in bankruptcy" means a person that is the subject of
either of the following:
   (1) An order for relief under Title 11 of the United States Code
or a successor statute of general application.
   (2) A comparable order under federal, state, or foreign law
governing bankruptcy or insolvency, an assignment for the benefit of
creditors, or an order appointing a trustee, receiver, or liquidator
of the person or of all or substantially all of the person's
property.
   (e) "Designated office" means either of the following:
   (1) The office that a limited liability company is required to
designate and maintain under Section 17701.13.
   (2) The principal office of a foreign limited liability company.
   (f) "Distribution," except as otherwise provided in subdivision
(g) of Section 17704.05, means a transfer of money or other property
from a limited liability company to another person on account of a
transferable interest.
   (g) "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.
   (h) "Effective," with respect to a record required or permitted to
be delivered to the Secretary of State for filing under this title,
means effective under subdivision (c) of Section 17702.05.
   (i) (1) "Electronic transmission by the limited liability company"
means a communication delivered by any of the following means:
                                                     (A)  A
facsimile   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.
    (B) 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.
   (C) Other means of electronic communication to which both of the
following apply:
    (i) The communication is delivered to a recipient who has
provided an unrevoked consent to the use of those means of
transmission.
    (ii) The communication 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  federal  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 delivered by any of the following means:
   (A) Facsimile telecommunication or electronic mail when directed
to the facsimile number or electronic mail address, respectively,
that the limited liability company has provided from time to time to
members or managers for sending communications to the limited
liability company.
    (B) Posting on an electronic message board or network that the
limited liability company has designated for those communications,
which transmission shall be validly delivered upon the posting.
    (C) Other means of electronic communication to which both of the
following apply:
    (i) 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.
   (ii) The communication creates a record that is capable of
retention, retrieval, and review, and that may thereafter be rendered
into clearly legible tangible form.
   (j) "Foreign limited liability company" means an unincorporated
entity formed under the law of a jurisdiction other than this state
and denominated by that law as a limited liability company.
   (k) "Limited liability company," except in the phrase "foreign
limited liability company," means an entity formed under this title.
   (l) "Majority of the managers" unless otherwise provided in the
operating agreement, means more than 50 percent of the interests of
managers in current profits of the limited liability company.
   (m) "Majority of the members" unless otherwise provided in the
operating agreement, means more than 50 percent of the membership
interests of members in current profits of the limited liability
company.
   (n) "Manager" means a person that under the operating agreement of
a manager-managed limited liability company is responsible, alone or
in concert with others, for performing the management functions
stated in subdivision (c) of Section 17704.07.
   (o) "Manager-managed limited liability company" means a limited
liability company that qualifies under subdivision (a) of Section
17704.07.
   (p) "Member" means a person that has become a member of a limited
liability company under Section 17704.01 and has not dissociated
under Section 17706.02.
   (q) "Member-managed limited liability company" means a limited
liability company that is not a manager-managed limited liability
company.
   (r) "Membership interest" means a member's rights in the limited
liability company, including the member's transferrable 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.
   (s) "Operating agreement" means the agreement, whether or not
referred to as an operating agreement and whether oral, in a record,
implied, or in any combination thereof, of all the members of a
limited liability company, including a sole member, concerning the
matters described in subdivision (a) of Section 17701.10. An
operating agreement of a limited liability company having only one
member shall not be unenforceable by reason of there being only one
person who is a party to the operating agreement. The term includes
the agreement as amended or restated.
   (t) "Organization" means, whether domestic or foreign, a
partnership whether general or limited, limited liability company,
association, corporation, professional corporation, professional
association, nonprofit corporation, business trust, or statutory
business trust having a governing statute.
   (u) "Organizer" means a person that acts under Section 17702.01 to
form a limited liability company. 
   (v) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited liability company, association,
joint venture, public corporation, government or governmental
subdivision, agency, instrumentality, or any other legal or
commercial entity.  
   (v) "Person" means an individual, partnership, limited
partnership, trust, estate, association, corporation, limited
liability company, or other entity, whether domestic or foreign.
Nothing in this subdivision shall be construed to confer any rights
under the California Constitution or the United States Constitution.

   (w) "Principal office" means the principal executive office of a
limited liability company or foreign limited liability company,
whether or not the office is located in this state.
   (x) "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. 
   (y) "Series" means one or more designated series of assets of a
limited liability company established in accordance with Section
17712.01.  
   (z) 
    (y)  "Sign" means, with the present intent to
authenticate or adopt a record, either of the following:
   (1) To execute or adopt a tangible symbol.
   (2) To attach to or logically associate with the record an
electronic symbol, sound, or process. 
   (aa) 
    (z)  "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. 
   (ab) 
   (aa)  "Transfer" includes an assignment, conveyance,
deed, bill of sale, lease, mortgage, security interest, encumbrance,
gift, and transfer by operation of law. 
   (ac) 
    (ab)  "Transferable interest" means the right, as
originally associated with a person's capacity as a member, to
receive distributions from a limited liability company in accordance
with the operating agreement, whether or not the person remains a
member or continues to own any part of the right. 
   (ad) 
    (ac)  "Transferee" means a person to which all or part
of a transferable interest has been transferred, whether or not the
transferor is a member. 
   17701.03.  (a) A person knows a fact when either of the following
applies:
   (1) The person has actual knowledge of the fact.
   (2) The person is deemed to know the fact under paragraph (1) of
subdivision (d) or law other than this title.
   (b) A person has notice of a fact when either of the following
applies:
   (1) The person has reason to know the fact from all of the facts
known to the person at the time in question.
   (2) The person is deemed to have notice of the fact under
paragraph (2) of subdivision (d).
   (c) A person notifies another of a fact by taking steps reasonably
required to inform the other person in ordinary course, whether or
not the other person knows the fact.
   (d) A person that is not a member is deemed:
   (1) To know of a limitation on authority to transfer real property
as provided in subdivision (g) of Section 17703.02.
   (2) To have notice, with respect to a limited liability company,
of all of the following:
   (A) Dissolution, 90 days after a certificate of dissolution under
subdivision (a) of Section 17707.08 has been filed.
   (B) Termination, 90 days after a certificate of cancellation under
either Section 17707.02 or subdivision (b) of Section 17707.08 has
been filed.
   (C) Merger or conversion, 90 days after certificate of merger or
conversion under Article 10 (commencing with Section 17710.01)
becomes effective.
   (e) A member's knowledge, notice, or receipt of a notification of
a fact relating to the limited liability company is not knowledge,
notice, or receipt of a notification of a fact by the limited
liability company solely by reason of the member's capacity as a
member. 
   17701.04.  (a) A limited liability company is an entity distinct
from its members.
   (b) A limited liability company may have any lawful purpose,
regardless of whether for profit, except the banking business, the
business of issuing policies of insurance and assuming insurance
risks, or the trust company business. A domestic or foreign limited
liability company may render services that may be lawfully rendered
only pursuant to a license, certificate, or registration authorized
by the Business and Professions Code, the Chiropractic Act, the
Osteopathic Act, or the Yacht and Ship Brokers Act, if the applicable
provisions of the Business and Professions Code, the Chiropractic
Act, the Osteopathic Act, or the Yacht and Ship Brokers Act authorize
a limited liability company to hold that license, certificate, or
registration.
   (c) A limited liability company has perpetual duration.
   (d) Notwithstanding subdivision (a) and as specifically provided
in this subdivision, a limited liability company may operate as a
health care service plan licensed pursuant to Chapter 2.2 (commencing
with Section 1340) of Division 2 of the Health and Safety Code if
the limited liability company is a subsidiary of a health care
service plan licensed pursuant to those provisions and the limited
liability company is established to serve an existing line of
business of the parent health care service plan. Notwithstanding any
other law, the tort or contract liability of a limited liability
company created to operate as a health care service plan under this
subdivision and its members is not limited or restricted in any
manner because of the limited liability company status of the health
care service plan.
   (e) Nothing in this title shall be construed to permit a domestic
or foreign limited liability company to render professional services,
as defined in subdivision (a) of Section 13401 and in Section
13401.3, in this state.
   17701.05.   (a)     A
  Subject to any limitation contained in the articles of
organization and to compliance with any other applicable laws, a
 limited liability company established under this title has the
power and capacity in the limited liability company's own name to do
all of the following: 
   (1) 
    (a)  Sue and be sued. 
   (2) 
    (b)  Contract. 
   (3) 
    (c)  Hold and convey title to assets of the limited
liability company, including real property, personal property, and
intangible property. 
   (4) 
    (d)  Grant lien and security interests in the assets of
the limited liability company. 
   (b) A series established under this title has the power and
capacity in the series' own name to do all of the following:
 
   (1) Sue and be sued.  
   (2) Contract.  
   (3) Hold and convey title to assets of the series, including real
property, personal property, and intangible property. 

   (4) Grant liens and security interests in assets of the series.

   17701.06.  The law of this state governs all of the following:
   (a) The internal affairs of a limited liability company.
   (b) The liability of a member as member and a manager as manager
for the debts, obligations, or other liabilities of a limited
liability company.
   (c) The authority of the members and agents of a limited liability
company. 
   (d) The availability of the assets of a series or the obligations
of another series or the limited liability company. 
   17701.07.  (a) It is the policy of this title and this state to
give maximum effect to the principles of freedom of contract and to
the enforceability of operating agreements.
   (b) Unless displaced by particular provisions of this title, the
principles of law and equity supplement this title.
   (c) Rules that statutes in derogation of the common law are to be
strictly construed shall have no application to this title.
   (d) Unless the context otherwise requires, as used in this title,
the singular shall include the plural and the plural may refer to
only the singular. The use of any gender shall be applicable to all
genders.
   17701.08.  (a) The name of a limited liability company shall
contain the words "limited liability company," or the abbreviation
"L.L.C." or "LLC." "Limited" may be abbreviated as "Ltd.," and
"company" may be abbreviated as "Co."
   (b) Unless authorized by subdivision (c), the name of a limited
liability company shall not be a name that the Secretary of State
determines is likely to mislead the public and shall be
distinguishable in the records of the Secretary of State from all of
the following:
   (1) The name of each person that is not an individual and that is
incorporated, organized, or authorized to transact business in this
state.
   (2) Each name reserved under Section 17701.09.
   (c) A limited liability company may apply to the Secretary of
State for authorization to use a name that does not comply with
subdivision (b). The Secretary of State shall authorize use of the
name applied for if, as to each noncomplying name, either of the
following applies:
   (1) The present user, registrant, or owner of the noncomplying
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 noncomplying name to a name that complies with subdivision
(b) 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 establishing the applicant's
right to use in this state the name applied for.
   (d) Subject to Section 17708.04, this section applies to a foreign
limited liability company transacting business in this state that
has a certificate of registration to transact business in this state
or that has applied for a certificate of registration.
   (e) The name shall not include the words  bank, trusts,
trustee, incorporated, inc., corporation, or corp.  
"bank," "trusts," "trustee," "incorporated," "inc.," "corporation,"
or "corp."  and shall not include the words  insurer
  "insurer   "  or  insurance
company   "insurance company   "  or any
other words suggesting that it is in the business of issuing policies
of insurance and assuming insurance risks.
   17701.09.  (a) A person may reserve the exclusive use of the name
of a limited liability company, including a fictitious or assumed
name for a foreign limited liability company whose name is not
available, by delivering an application to the Secretary of State for
filing. The application shall state the name and address of the
applicant and the name proposed to be reserved. If the Secretary of
State finds that the name applied for is available, it shall be
reserved for the applicant's exclusive use for up to 60 days. The
Secretary of State shall not issue certificates 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; nor shall consecutive
reservations be made by or for the use or benefit of the same person
for a name so similar as to fall within the prohibitions of
subdivision (b) of Section 17701.08.
   (b) The owner of a name reserved for a limited liability company
may transfer the reservation to another person by delivering to the
Secretary of State for filing a signed notice of the transfer which
states the name and address of the transferee.
   17701.10.  (a) Except as otherwise provided in subdivisions (b)
and (c), the operating agreement governs all of the following:
   (1) Relations among the members as members and between the members
and the limited liability company.
   (2) The rights and duties under this title of a person in the
capacity of manager.
   (3) The activities of the limited liability company and the
conduct of those activities.
   (4) The means and conditions for amending the operating agreement.

   (b) To the extent the operating agreement does not otherwise
provide for a matter described in subdivision (a), this title governs
the matter.
   (c) An operating agreement shall not do any of the following:
   (1) Vary a limited liability company's capacity  , or the
capacity of a series of a limited liability company  under
Section 17701.05 to sue and be sued in its own name.
   (2) Vary the law applicable under Section 17701.06.
   (3) Vary the power of the court under Section 17702.04.
   (4) Subject to subdivisions (d) to  (g)   (i)
 , inclusive, eliminate the duty of loyalty, the duty of care,
or any other fiduciary duty.
   (5) Subject to subdivisions (d) to  (g)   (i)
 , inclusive, eliminate the contractual obligation of good
faith and fair dealing under subdivision (d) of Section 17704.09.
   (6) Unreasonably restrict the duties and rights stated in Section
17704.10.
   (7) Vary the power of a court to decree dissolution in the
circumstances specified in subdivision (a) of Section 17707.03 or the
provisions for avoidance of dissolution in subdivision (c) of
Section 17707.03.
   (8) Except as stated herein, vary the requirements of Sections
17707.04 to 17707.08, inclusive.
   (9) Unreasonably restrict the right of a member to maintain an
action under Article 9 (commencing with Section 17709.01).
   (10) Restrict the right to approve a merger, conversion, or
domestication under Section 17710.14 to a member that will have
personal liability with respect to a surviving, converted, or
domesticated organization.
   (11) Except as otherwise provided in subdivision (b) of Section
17701.12, restrict the rights under this title of a person other than
a member or manager.
   (12) Vary any provision under Article 10 (commencing with Section
17710.01).
   (13) Vary any provision under Article 12 (commencing with Section
17712.01).
   (14) Eliminate the duty of loyalty under subdivision (b) of
Section 17704.09, but the operating agreement may do any of the
following:
   (A) Identify specific types or categories of activities that do
not violate the duty of loyalty, if not manifestly unreasonable.
   (B) Specify the number or percentage of members that may authorize
or ratify, after full disclosure to all members of all material
facts, a specific act or transaction that otherwise would violate the
duty of loyalty.
   (15) Unreasonably reduce the duty of care under subdivision (c) of
Section 17704.09.
   (16) Eliminate the obligation of good faith and fair dealing under
subdivision (d) of Section 17704.09, but the operating agreement may
prescribe the standards by which the performance of the obligation
is to be measured, if the standards are not manifestly unreasonable.

   (d) The effects of the provisions of this title may be varied as
among the members or as between the members and the limited liability
company by the articles of organization or operating agreement;
provided, however, that the provisions of Sections 17701.13,
17703.01, 17704.07, and 17704.08 shall only be varied by the articles
of organization or a written operating agreement. Notwithstanding
the first sentence of this subdivision, neither the articles of
organization nor the operating agreement shall do either of the
following:  
   (1) Vary the definitions of Section 17701.02, except as
specifically provided therein.  
   (2) Vary a member's rights under Sections 17701.13 and 17703.01.
 
   (e) The fiduciary duties of a manager to the limited liability
company and to the members of the limited liability company shall
only be modified in a written operating agreement with the informed
consent of the members.  
   (d) 
    (f)  To the extent the operating agreement of a
member-managed limited liability company expressly relieves a member
of a responsibility that the member would otherwise have under this
title and imposes the responsibility on one or more other members,
the operating agreement may, to the benefit of the member that the
operating agreement relieves of the responsibility, also eliminate or
limit any fiduciary duty that would have pertained to the
responsibility. 
   (e) 
    (g)  The operating agreement may alter or eliminate the
indemnification for a member or manager provided by subdivision (a)
of Section 17704.08 and may eliminate or limit a member or manager's
liability to the limited liability company and members for money
damages, except for the following:
   (1) Breach of the duty of loyalty.
   (2) A financial benefit received by the member or manager to which
the member or manager is not entitled.
   (3) A breach of a duty under Section 17704.06.
   (4) Intentional infliction of harm on the limited liability
company or a member.
   (5) An intentional violation of criminal law. 
   (f) 
    (h)  A court shall decide any claim under subdivision
 (d)   (f)  that a term of an operating
agreement is manifestly unreasonable.
   (1) The court shall make its determination as of the time the
challenged term became part of the operating agreement and by
considering only circumstances existing at that time.
   (2) The court may invalidate the term only if, in light of the
purposes and activities of the limited liability company, it is
readily apparent that either of the following apply:
   (A) The objective of the term is unreasonable.
   (B) The term is an unreasonable means to achieve the provision's
objective. 
   (g) 
    (i)  An operating agreement may provide that:
   (1) A member or transferee that fails to perform in accordance
with, or to comply with the terms and conditions of, the operating
agreement shall be subject to specified penalties or specified
consequences.
   (2) At the time or upon the happening of events specified in the
operating agreement, a member or transferee may be subject to
specified penalties or specified consequences. The penalty or
consequence may include and take the form of reducing or eliminating
the defaulting member's or transferee's proportionate interest in a
limited liability company, subordinating the member's or transferee's
membership interest to that of nondefaulting members or transferees,
forcing a sale of that membership interest, forfeiting the
defaulting member's or transferee's membership interest, the lending
by other members or transferees of the amount necessary to meet the
defaulting member's or transferee's commitment, a fixing of the value
of the defaulting member's or transferee's membership interest by
appraisal or by formula and redemption or sale of the membership
interest at that value, or other penalty or consequence.
   17701.11.  (a) A limited liability company is bound by and may
enforce the operating agreement, whether or not the limited liability
company has itself manifested assent to the operating agreement.
   (b) A person that becomes a member of a limited liability company
is deemed to assent to the operating agreement.
   (c) Two or more persons intending to become the initial members of
a limited liability company may make an agreement providing that
upon the formation of the limited liability company the agreement
will become the operating agreement. One person intending to become
the initial member of a limited liability company may assent to terms
providing that upon the formation of the limited liability company
the terms will become the operating agreement.
   17701.12.  (a) An operating agreement may specify that its
amendment requires the approval of a person that is not a party to
the operating agreement or the satisfaction of a condition. An
amendment is ineffective if its adoption does not include the
required approval or satisfy the specified condition.
   (b) The obligations of a limited liability company and its members
to a person in the person's capacity as a transferee or dissociated
member are governed by the operating agreement. Subject only to any
court order issued under paragraph (2) of subdivision (b) of Section
17705.03 to effectuate a charging order, an amendment to the
operating agreement made after a person becomes a transferee or
dissociated member is effective with regard to any debt, obligation,
or other liability of the limited liability company or its members to
the person in the person's capacity as a transferee or dissociated
member.
   (c) If a record that has been delivered by a limited liability
company to the Secretary of State for filing and has become effective
under this title contains a provision that would be ineffective
under subdivision (c) of Section 17701.10 if contained in the
operating agreement, the provision is likewise ineffective in the
record.
   (d) Subject to subdivision (c), if a record that has been
delivered by a limited liability company to the Secretary of State
for filing and has become effective under this title conflicts with a
provision of the operating agreement both of the following apply:
   (1) The operating agreement prevails as to members, dissociated
members, transferees, and managers.
   (2) The record prevails as to other persons to the extent they
reasonably rely on the record.
   17701.13.  (a) A limited liability company shall designate and
continuously maintain in this state both of the following:
   (1) An office, which need not be a place of its activity in this
state.
                                               (2) An agent for
service of process.
   (b) A foreign limited liability company that has a certificate of
registration under Section 17708.02 shall designate and continuously
maintain in this state an agent for service of process.
   (c) An agent for service of process of a limited liability company
or foreign limited liability company shall be an individual who is a
resident of this state or other person with authority to
transact business in this state, or if the designated person is a
corporation, any person named in the latest certificate of the
corporate agent filed pursuant to Section 1505 at the office of the
corporate agent   a corporation that has complied with
Section 1505 and whose capacity to act as an agent has not terminated
 . 
   (d) Each limited liability company shall maintain in writing or in
any other form capable of being converted into clearly legible
tangible form at the office referred to in subdivision (a) all of the
following:  
   (1) A current list of the full name and last known business or
residence address of each member and of each holder of a transferable
interest in the limited liability company set forth in alphabetical
order, together with the contribution and the share in profits and
losses of each member and holder of a transferable interest. 

   (2) If the limited liability company is a manager-managed limited
liability company, a current list of the full name and business or
residence address of each manager.  
   (3) A copy of the articles of organization and all amendments
thereto, together with any powers of attorney pursuant to which the
articles of organization or any amendments thereto were executed.
 
   (4) Copies of the limited liability company's federal, state, and
local income tax or information returns and reports, if any, for the
six most recent fiscal years.  
   (5) A copy of the limited liability company's operating agreement,
if in writing, and any amendments thereto, together with any powers
of attorney pursuant to which any written operating agreement or any
amendments thereto were executed.  
   (6) Copies of the financial statement of the limited liability
company, if any, for the six most recent fiscal years.  
   (7) The books and records of the limited liability company as they
relate to the internal affairs of the limited liability company for
at least the current and past four fiscal years.  
   (e) Upon request of an assessor, a domestic or foreign limited
liability company owning, claiming, possessing, or controlling
property in this state subject to local assessment shall make
available at the limited liability company's principal office in this
state or at the office required to be kept pursuant to subdivision
(a) or at a place mutually acceptable to the assessor and the limited
liability company a true copy of the business records relevant to
the amount, cost, and value of all property that the limited
liability company owns, claims, possesses, or controls within the
county. 
   17701.14.  (a) A limited liability company or foreign limited
liability company may change its designated office, its agent for
service of process, or the address of its agent for service of
process by delivering to the Secretary of State for filing a
statement of information as set forth in Section 17702.09.
   (b) Subject to subdivision (c) of Section 17702.05, a statement of
information is effective when filed by the Secretary of State.
   17701.15.  (a) To resign as an agent for service of process of a
limited liability company or foreign limited liability company, the
agent shall deliver to the Secretary of State for filing a signed and
acknowledged statement of resignation containing the limited
liability company name and stating that the agent is resigning.
   (b) The Secretary of State shall file a statement of resignation
delivered under subdivision (a) and mail or otherwise provide or
deliver a copy to the designated office of the limited liability
company or foreign limited liability company and another copy to the
principal office of the limited liability company if the mailing
address of the principal office appears in the records of the
Secretary of State and is different from the mailing address of the
designated office.
   (c) An agency for service of process terminates on the earlier of
the following:
   (1) The 31st day after the Secretary of State files the statement
of resignation.
   (2) When a record designating a new agent for service of process
is delivered to the Secretary of State for filing on behalf of the
limited liability company and becomes effective.
   17701.16.  (a) An agent for service of process appointed by a
limited liability company or foreign limited liability company is an
agent of the limited liability company for service of any process,
notice, or demand required or permitted by law to be served on the
limited liability company.
   (b) (1) If an agent for service of process has resigned and has
not been replaced or if the designated agent 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 liability company or foreign
limited liability company cannot be served with reasonable diligence
upon the designated agent 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
liability company or upon a registered foreign limited liability
company 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 the copy of process and the fee therefor, the
Secretary of State shall give notice of the service of the process to
the limited liability company or foreign limited liability company,
at its principal executive 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 title and shall record
therein the time of service and the action taken by the Secretary of
State. A certificate under the Secretary of State's official seal,
certifying to the receipt of process, the giving of notice to the
limited liability company or foreign limited liability company, and
the forwarding of the process pursuant to this section, shall be
competent and prima facie evidence of the service of process.
   (c) Service of any process, notice, or demand on the Secretary of
State as an agent for a limited liability company or foreign limited
liability company may be made by delivering to the Secretary of State
duplicate copies of the process, notice, or demand. If a process,
notice, or demand is served on the Secretary of State, the Secretary
of State shall forward one of the copies by registered or certified
mail, return receipt requested, to the limited liability company at
its designated office.
   (d) Service is effected under subdivision (c) at the earliest of
the following:
   (1) The date the limited liability company or foreign limited
liability company receives the process, notice, or demand.
   (2) The date shown on the return receipt, if signed on behalf of
the limited liability company.
   (3) Five days after the process, notice, or demand is deposited
with the United States Postal Service, if correctly addressed and
with sufficient postage.
   (e) The Secretary of State shall keep a record of each process,
notice, and demand served pursuant to this section and record the
time of, and the action taken regarding, the service.
   (f) This section does not affect the right to serve process,
notice, or demand in any other manner provided by law.
   17701.17.  (a) A member may, in a written operating 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 member desires to use the arbitration process, that
member may, in a written operating 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 member may consent to be served with legal process in
the manner prescribed in the operating agreement or other writing.

      Article 2.  Formation: Articles of Organization and Other
Filings


   17702.01.  (a) One or more persons may act as organizers to form a
limited liability company by signing and delivering to the Secretary
of State for filing articles of organization on a form prescribed by
the Secretary of State.
   (b) Articles of organization shall state all of the following:
   (1) The name of the limited liability company, which shall comply
with Section 17701.08.
   (2) The street and mailing addresses of the initial designated
office and the name and the street and mailing addresses of the
initial agent for service of process of the limited liability
company. 
   (3) If the limited liability company will have one or more
designated series of assets subject to limitations on liabilities, a
statement to that effect. 
   (c) Subject to subdivision (c) of Section 17701.12, articles of
organization may also contain statements as to matters other than
those required by subdivision (b).
   (d) A limited liability company is formed when the Secretary of
State has filed the articles of organization and the limited
liability company has at least one member.
   (e) Except in a proceeding by this state to dissolve a limited
liability company, the filing of the articles of organization by the
Secretary of State is conclusive proof that the organizer satisfied
all conditions to the formation of a limited liability company. 
   (f) The Secretary of State shall include with the instructional
materials, provided in conjunction with the form for filing articles
of organization under subdivision (a), a notice that filing the
registration will obligate the limited liability company to pay an
annual tax for that taxable year to the Franchise Tax Board pursuant
to Section 17941 of the Revenue and Taxation Code. That notice shall
be updated annually to specify the dollar amount of the tax. 
   17702.02.  (a) The articles of organization may be amended or
restated at any time.
   (b) To amend its articles of organization, a limited liability
company shall deliver to the Secretary of State for filing an
amendment stating all of the following:
   (1) The name of the limited liability company.
   (2) The date of filing of its articles of organization.
   (3) The changes the amendment makes to the articles as most
recently amended or restated.
   (c) To restate its articles of organization, a limited liability
company shall deliver to the Secretary of State for filing a
restatement, designated as such in its heading, stating, as
applicable, the following:
   (1) In the heading or an introductory paragraph, the limited
liability company's present name and the date of the filing of the
limited liability company's initial articles of organization.
   (2) If the limited liability company's name has been changed at
any time since the limited liability company's formation, each of the
limited liability company's former names.
   (3) The changes the restatement makes to the articles as most
recently amended or restated.
   (d) Subject to subdivision (c) of Section 17701.12 and subdivision
(c) of Section 17702.05, an amendment to or restatement of the
articles of organization is effective when filed by the Secretary of
State.
   (e) If a member of a member-managed limited liability company, or
a manager of a manager-managed limited liability company, knows that
any information in a filed articles of organization was inaccurate
when the articles were filed or has become inaccurate owing to
changed circumstances, the member or manager shall promptly do the
following:
   (1) Cause the articles to be amended.
   (2) If appropriate, deliver to the Secretary of State for filing a
 statement   certificate  of information
under Section 17701.14 or a statement of correction under Section
17702.06.
   17702.03.  (a) A record delivered to the Secretary of State for
filing pursuant to this title shall be signed as follows:
   (1) Except as otherwise provided in paragraphs (2)  to
(4), inclusive   and (3)  , a record signed on
behalf of a limited liability company shall be signed by a person
authorized by the limited liability company.
   (2) A limited liability company's initial articles of organization
shall be signed by at least one person acting as an organizer.

   (3) A notice under paragraph (1) of subdivision (e) of Section
17702.01 shall be signed by an organizer.  
   (4) 
    (3)  A record filed on behalf of a dissolved limited
liability company that has no members shall be signed by the person
winding up the limited liability company's activities or a person
appointed under Section 17707.04 to wind up those activities.

   (5) 
    (4)  A  statement   certificate
 of cancellation under  paragraph (2) of subdivision (d)
of  Section  17702.01   17707.02 
shall be signed by each organizer that signed the initial articles
of organization, but a personal representative of a deceased or
incompetent organizer may sign in the place of the decedent or
incompetent.
   (b) Any record filed under this title may be signed by an agent.
   (c) A limited liability company may record in the office of the
county recorder of any county in this state, and county recorders, on
request, shall record a certified copy of the limited liability
company articles of organization and any exhibit or attachment, or
any amendment or correction thereto, that has been filed in the
office of the Secretary of State. A foreign limited liability company
may record in the office of the county recorder of any county in the
state a certified copy of the limited liability company certificate
of registration, or any amendment thereto, that has been filed in the
office of the Secretary of State. The recording shall create a
conclusive presumption in favor of any bona fide purchaser or
encumbrancer for value of the limited liability company real property
located in the county in which the certified copy has been recorded,
of the statements contained therein.
   (d) If the Secretary of State determines that an instrument
submitted for filing or otherwise submitted does not conform to the
law and returns it to the person submitting it, the instrument may be
resubmitted accompanied by a written opinion of a member of the
State Bar of California submitting the instrument or representing the
person submitting it, to the effect that the specific provisions of
the instrument 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
17701.08, 17701.09, 17708.02, and 17708.03, upon that written opinion
in determining whether the instrument conforms to law. The date of
filing in that case shall be the date the instrument is received on
resubmission.
   17702.04.  (a) If a person required by this title to sign a record
or deliver a record to the Secretary of State for filing under this
title does not do so, any other person that is aggrieved may petition
the superior court to order any of the following:
   (1) The person to sign the record.
   (2) The person to deliver the record to the Secretary of State for
filing.
   (3) The Secretary of State to file the record unsigned.
   (b) If a petitioner under subdivision (a) is not the limited
liability company or foreign limited liability company to which the
record pertains, the petitioner shall make the limited liability
company a party to the action.
   17702.05.  (a) A record authorized or required to be delivered to
the Secretary of State for filing under this title shall be captioned
to describe the record's purpose, be in a medium permitted by the
Secretary of State, and be delivered to the Secretary of State. If
the filing fees have been paid, unless the Secretary of State
determines that a record does not comply with the filing requirements
of this title, the Secretary of State shall file the record and send
a copy of the filed record and a receipt for the fees to the person
on whose behalf the record was filed.
   (b) Upon request and payment of the requisite fee, the Secretary
of State shall send to the requester a certified copy of a requested
record.
   (c) Except as otherwise provided in Sections 17701.15 and
17702.06, a record delivered to the Secretary of State for filing
under this title may specify a delayed effective date. Subject to
 Section   Sections  17701.15  ,
paragraph (1) of subdivision (d) of Section 17702.01,  and
 Section  17702.06, a record filed by the Secretary
of State is effective as follows:
   (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 the following:
   (A) The specified date.
   (B) The 90th day after the record is filed.
   17702.06.  (a) A limited liability company or foreign limited
liability company may deliver to the Secretary of State for filing a
certificate of correction on a form prescribed by the Secretary of
State to correct a record previously delivered by the limited
liability company to the Secretary of State and filed by the
Secretary of State, if at the time of filing the record contained
inaccurate information or was defectively signed.
   (b) A certificate of correction under subdivision (a) may not
state a delayed effective date and shall do all of the following:
   (1) Describe the record to be corrected, including its filing
date, or attach a copy of the record as filed.
   (2) Specify the inaccurate information and the reason it is
inaccurate or the manner in which the signing was defective.
   (3) Correct the defective signature or inaccurate information.
   (c) When filed by the Secretary of State, a certificate of
correction under subdivision (a) is effective retroactively as of the
effective date of the record the certificate corrects, but the
statement is effective when filed  : (1)  
  For the purposes of subdivision (d) of Section
17701.03. (2)     As  
as  to persons that previously relied on the uncorrected record
and would be adversely affected by the retroactive effect.
   17702.07.  (a) If a record delivered to the Secretary of State for
filing under this title and filed by the Secretary of State contains
inaccurate information, a person that suffers a loss by reliance on
the information may recover damages for the loss as follows:
   (1) A person that signed the record, or caused another to sign it
on the person's behalf, and knew the information to be inaccurate at
the time the record was signed.
   (2) Subject to subdivision (b), a member of a member-managed
limited liability company or the manager of a manager-managed limited
liability company, if all of the following apply:
   (A) The record was delivered for filing on behalf of the limited
liability company.
   (B) The member or manager had notice of the inaccuracy for a
reasonably sufficient time before the information was relied upon so
that, before the reliance, the member or manager reasonably could
have done all of the following:
   (i) Effected an amendment under Section 17702.02.
   (ii) Filed a petition under Section 17702.04.
   (iii) Delivered to the Secretary of State for filing a statement
of information under Section 17701.14 or a certificate of correction
under Section 17702.06.
   (b) To the extent that the operating agreement of a member-managed
limited liability company expressly relieves a member of
responsibility for maintaining the accuracy of information contained
in records delivered on behalf of the limited liability company to
the Secretary of State for filing under this title and imposes that
responsibility on one or more other members, the liability stated in
paragraph (2) of subdivision (a) applies to those other members and
not to the member that the operating agreement relieves of the
responsibility.
   (c) An individual who signs a record authorized or required to be
filed under this title affirms under penalty of perjury that the
information stated in the record is accurate.
   17702.08.  The Secretary of State, upon request and payment of the
requisite fee, shall furnish to any person a certificate of status
for a limited liability company if the records filed in the office of
the Secretary of State show that the limited liability company has
been formed under Section 17702.01 and the Secretary of State has not
filed a certificate of dissolution under Section 17707.08 pertaining
to the limited liability company.
   17702.09.  (a) Every limited liability company and every foreign
limited liability company registered to transact intrastate business
in this state shall deliver to the Secretary of State for filing
within 90 days after the filing of its original articles of
organization and biennially thereafter during the applicable filing
period, on a form prescribed by the Secretary of State, a statement
of information containing:
   (1) The name of the limited liability company and the Secretary of
State's file number and, in the case of a foreign limited liability
company, the state under the laws of which it is organized.
   (2) The name and address of the agent in this state for service of
process required to be maintained pursuant to Section 17701.13. If a
corporate agent is designated, only the name of the agent shall be
set forth.
   (3) The street address of its principal executive office and, in
the case of a domestic limited liability company, of the office
required to be maintained pursuant to Section 17701.13.
   (4) The mailing address of the limited liability company, if
different from the street address of its  principle 
 principal  executive office.
   (5) The name and complete business or residence addresses of any
manager or managers and the chief executive officer, if any,
appointed or elected in accordance with the articles of organization
or operating agreement or, if no manager has been so elected or
appointed, the name and business or residence address of each member.

   (6) If the limited liability company chooses to receive renewal
notices and any other notifications from the Secretary of State by
electronic mail instead of by United States mail, the limited
liability company shall include a valid electronic mail address for
the limited liability company or for the limited liability company's
designee to receive those notices.
   (7) The general type of business that constitutes the principal
business activity or the limited liability company, such as, for
example, manufacture of aircraft, wholesale liquor distributor, or
retail department store.
   (b) If there has been no change in the information contained in
the last filed statement of information of the limited liability
company on file in the office of Secretary of State, the limited
liability company may, in lieu of filing the statement of information
required by subdivision (a), advise the Secretary of State, on a
form prescribed by the Secretary of State, that no changes in the
required information have occurred during the applicable filing
period.
   (c) For purposes of this section, the applicable filing period for
a limited liability company shall be the calendar month during which
its original articles of organization was filed or, in the case of a
foreign limited liability company, the month during which its
application for registration was filed, and the immediately preceding
five calendar months. The Secretary of State shall provide a notice
to each limited liability company to comply with this section
approximately three months prior to the close of the applicable
filing period. The notice shall state the due date for compliance and
shall be sent to the last address of the limited liability company
according to the records of the Secretary of State or to the last
electronic mail address according to the records of the Secretary of
State if the limited liability company has elected to receive notices
from the Secretary of State by electronic mail. The failure of the
limited liability company to receive the notice shall not exempt the
limited liability company from complying with this section.
   (d) Whenever any of the information required by subdivision (a)
changes, other than the name and address of the agent for service of
process, the limited liability company may file a current statement
containing all the information required by subdivision (a). When
changing its agent for service of process or when the address of the
agent changes, the limited liability company shall file a current
statement containing all the information required by subdivision (a).
Whenever any statement is filed pursuant to this section changing
the name and address of the agent for service of process, that
statement supersedes any previously filed statement pursuant to this
section, the statement in the original articles of organization, and
the statement in any restated articles of organization that have been
filed, or in the case of a foreign limited liability company, in the
application for registration. Whenever restated articles of
organization are filed, the statement therein, if any, of the name
and address of the agent for service of process supersedes any
previously filed statement pursuant to this
                        section.
   (e) If a statement of information delivered to the Secretary of
State for filing under this section does not contain the information
required by subdivision (a), the Secretary of State shall promptly
return the statement of information to the reporting limited
liability company or foreign limited liability company for
correction.
   (f) The Secretary of State may destroy or otherwise dispose of any
statement filed pursuant to this section after it has been
superseded by the filing of a new statement.
   17702.10.  An instrument shall be deemed filed, and the date of
filing endorsed thereon, upon receipt by the Secretary of State of
any instrument accompanied by the fee prescribed by the Secretary of
State. The date of filing shall be the date the instrument is
received by the Secretary of State unless the instrument is withheld
from filing for a period of time not to exceed 90 days pursuant to a
request by the party submitting it for filing or unless, in the
judgment of the Secretary of State, the filing is intended to be
coordinated with the filing of some other document that cannot be
filed. The Secretary of State shall file a document as of any
requested future date not more than 90 days after its receipt,
including a Saturday, Sunday, or legal holiday, if that document is
received in the office of the Secretary of State at least one
business day prior to the requested date of filing. Upon receipt and
after filing of any document under this title, the Secretary of State
may microfilm or reproduce by other techniques any filings or
documents and destroy the original filing or document. The microfilm
or other reproduction of any document under the provision of this
section shall be admissible in any court of law.

      Article 3.  Relations of Members and Managers to Persons
Dealing with a Limited Liability Company


   17703.01.  (a) A member is not an agent of a limited liability
company solely by reason of being a member.
   (b) A person's status as a member does not prevent or restrict law
other than this title from imposing liability on a limited liability
company because of the person's conduct. 
    17703.01.    (a) Unless the articles of organization
indicate the limited liability company is a manager-managed limited
liability company, every member is an agent of the limited liability
company for the purpose of its business or affairs, and the act of
any member, including, but not limited to, the execution in the name
of the limited liability company of any instrument, for the apparent
purpose of carrying on in the usual way the business or affairs of
the limited liability company of which that person is a member, binds
the limited liability company in the particular matter, unless the
member so acting has, in fact, no authority to act for the limited
liability company in the particular matter and the person with whom
the member is dealing has actual knowledge of the fact that the
member has no such authority.  
   (b) If the articles of organization indicate that the limited
liability company is manager-managed limited liability company, each
of the following applies:  
   (1) No member acting solely in the capacity of a member is an
agent of the limited liability company nor can any member bind or
execute any instrument on behalf of the limited liability company.
 
   (2) Every manager is an agent of the limited liability company for
the purpose of its business or affairs, and the act of any manager,
including, but not limited to, the execution in the name of the
limited liability company of any instrument for apparently carrying
on in the usual way the business or affairs of the limited liability
company of which the person is a manager, binds the limited liability
company, unless the manager so acting has, in fact, no authority to
act for the limited liability company in the particular matter and
the person with whom the manager is dealing has actual knowledge of
the fact that the manager has no such authority.  
   (c) No act of a manager or member in contravention of a
restriction on authority shall bind the limited liability company to
persons having actual knowledge of the restriction.  
   (d) Notwithstanding the provisions of subdivision (c), any note,
mortgage, evidence of indebtedness, contract, certificate, statement,
conveyance, or other instrument in writing, and any assignment or
endorsement thereof, executed or entered into between any limited
liability company and any other person, when signed by at least two
managers, or by one manager in the case of a limited liability
company whose articles of organization state that it is managed by
only one manager, is not invalidated as to the limited liability
company by any lack of authority of the signing managers or manager
in the absence of actual knowledge on the part of the other person
that the signing managers or manager had no authority to execute the
same. 
   17703.04.  (a) All of the following apply to debts, obligations,
or other liabilities of a limited liability company,  or a
series of a limited liability company,  whether arising in
contract, tort, or otherwise:
   (1) They are solely the debts, obligations, or other liabilities
of the limited liability company  , or of the series of a
limited liability company  to which the debts, obligations,
or other liabilities relate.
   (2) They do not become the debts, obligations, or other
liabilities of a member or manager  or any other series
 solely by reason of the member acting as a member or
manager acting as a manager for the limited liability company
 or a series of a limited liability company  .
   (b) A member of a limited liability company  or a series
of a limited liability company  shall be subject to
liability under the common law governing alter ego liability, and
shall also be personally liable under a judgment of a court or for
any debt, obligation, or liability of the limited liability company
 or a series of a limited liability company  ,
whether that liability or obligation arises in contract, tort, or
otherwise, under the same or similar circumstances and to the same
extent as a shareholder of a corporation may be personally liable for
any debt, obligation, or liability of the corporation; except that
the failure to hold meetings of members or managers or the failure to
observe formalities pertaining to the calling or conduct of meetings
shall not be considered a factor tending to establish that a member
or the members have alter ego or personal liability for any debt,
obligation, or liability of the limited liability company  or
a series of a limited liability company  where the articles
of organization or operating agreement do not expressly require the
holding of meetings of members or managers.
   (c) Nothing in this section shall be construed to affect the
liability of a member of a limited liability company  or a
series of a limited liability company  to third parties for
the member's participation in tortious conduct, or pursuant to the
terms of a written guarantee or other contractual obligation entered
into by the member, other than an operating agreement.
   (d) A limited liability company or foreign limited liability
company  or a series of a limited liability company 
shall carry insurance or provide an undertaking to the same extent
and in the same amount as is required by any law, rule, or regulation
of this state that would be applicable to the limited liability
company or foreign limited liability company  or a series of
a limited liability company  were it a corporation organized
and existing or duly qualified for the transaction of intrastate
business under the General Corporation Law.
   (e) Notwithstanding subdivision (a), a member of a limited
liability company  or a series of a limited liability company
 may agree to be obligated personally for any or all of the
debts, obligations, and liabilities of the limited liability company
 or a series of a limited liability company  as
long as the agreement to be so obligated is set forth in the articles
of organization or in a written operating agreement that
specifically references this subdivision.

      Article 4.  Relations of Members to Each Other and to Limited
Liability Company


   17704.01.  (a) If a limited liability company is to have only one
member upon formation, the person becomes a member as agreed by that
person and the organizer of the limited liability company. That
person and the organizer may be, but need not be, different persons.
If different, the organizer acts on behalf of the initial member.
   (b) If a limited liability company  , or a series thereof,
 is to have more than one member upon formation, those
persons become members as agreed by the persons before the formation
of the limited liability company. The organizer acts on behalf of the
persons in forming the limited liability company and may be, but
need not be, one of the persons.
   (c) After formation of a limited liability company, a person
becomes a member as follows:
   (1) As provided in the operating agreement.
   (2) As the result of a transaction effective under Article 10
(commencing with Section 17710.01).
   (3) With the consent of all the members.
   (4) If, within 90 consecutive days after the limited liability
company ceases to have any members, the last person to have been a
member, or the legal representative of that person, designates a
person to become a member, and the designated person consents to
become a member.
   (d) A person may become a member without acquiring a transferable
interest and without making or being obligated to make a contribution
to the limited liability company.
   (e) A person may be admitted as the sole member without acquiring
a membership interest and without making or being obligated to make a
contribution to the limited liability company.
   17704.02.  A contribution may consist of tangible or intangible
property or other benefit to a limited liability company, or
a series of a limited liability company,  including money,
services performed, promissory notes, other agreements to contribute
money or property, and contracts for services to be performed.
   17704.03.  (a) A person's obligation to make a contribution to a
limited liability company  , or a series of a limited
liability company,  is not excused by the person's death,
disability, or other inability to perform personally. If a person
does not make a required contribution, the person or the person's
estate is obligated to contribute money equal to the value of the
part of the contribution that has not been made, at the option of the
limited liability company  or a series of a limited
liability company  .
   (b) The obligation of a member to make a contribution to a limited
liability company may be compromised only by consent of all the
members. A conditional obligation of a member to make a contribution
to a limited liability company shall not be enforced unless the
conditions of the obligation have been satisfied or waived as to or
by that member. Conditional obligations include contributions payable
upon a discretionary call of a limited liability company before the
time the call occurs. 
   (c) The obligation of a member of a series to make a contribution
to the series may be compromised only by consent of all the members
of that series. A conditional obligation of a member to make a
contribution to a series shall not be enforced unless the conditions
of the obligation have been satisfied or waived as to or by that
member. Conditional obligations include contributions payable upon a
discretionary call of that series before the time the call occurs.
 
   (d) Subdivision (b) shall not apply to a member's obligation to
make a contribution to a series of a limited liability company.
 
   (e) 
    (c)  A creditor of a limited liability company 
or a series of a limited liability company  that extends
credit or otherwise acts in reliance on an obligation described in
subdivision (a) may enforce the obligation. 
   (d) Nothing in this section shall be construed to affect the
rights of third-party creditors of the limited liability company to
seek equitable remedies or 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). 
   17704.04.  (a) Any distributions made by a limited liability
company before its dissolution and winding up shall be among the
members in accordance with the operating agreement. If the operating
agreement does not otherwise provide, distributions shall be on the
basis of the value, as stated in the required records when the
limited liability company decides to make the distribution, of the
contributions the limited liability company has received from each
member, except to the extent necessary to comply with any transfer
effective under Section 17705.02 and any charging order in effect
under Section 17705.03.
   (b) A person has a right to a distribution before the dissolution
and winding up of a limited liability company only if the limited
liability company decides to make an interim distribution. A person's
dissociation does not entitle the person to a distribution.
   (c) A person does not have a right to demand or receive a
distribution from a limited liability company in any form other than
money. A limited liability company may distribute an asset in kind if
each part of the asset is fungible with each other part and each
person receives a percentage of the asset equal in value to the
person's share of distributions.
   (d) If a member or transferee becomes entitled to receive a
distribution, the member or transferee has the status of, and is
entitled to all remedies available to, a creditor of the limited
liability company with respect to the distribution. 
   (e) (1) All members of a series shall share equally in any
distributions made by the series before its dissolution and winding
up.  
   (2) A member of a series has a right to a distribution before the
dissolution and winding up of the series as provided in the operating
agreement. A decision of the series to make a distribution before
the dissolution and winding up of the series is a decision in the
ordinary course of activities of the series. A member's dissociation
from a series with which the member is associated does not entitle
the dissociated member to a distribution from the series. 

   (3) A member of a series does not have a right to demand and
receive a distribution from the series in any form other than money.
A series may distribute an asset in kind if each member of the series
receives a percentage of the asset in proportion to the member's
share of distributions from the series.  
   (4) If a member of a series becomes entitled to receive a
distribution from the series, the member has the status of, and is
entitled to all remedies available to, a creditor of the series with
respect to the distribution.  
   (f) Subdivisions (a) through (d) shall not apply to a distribution
made by a series. 
   17704.05.  (a) A limited liability company shall not make a
distribution if after the distribution either of the following
applies:
   (1) The limited liability company would not be able to pay its
debts as they become due in the ordinary course of the limited
liability company's activities.
   (2) The limited liability company's total assets would be less
than the sum of its total liabilities plus the amount that would be
needed, if the limited liability company 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
members whose preferential rights are superior to those of persons
receiving the distribution.
   (b) A limited liability company may base a determination that a
distribution is not prohibited under subdivision (a) 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 under the circumstances.

   (c) Except as otherwise provided in subdivision (f), the effect of
a distribution under subdivision (a) is measured as follows:
   (1) In the case of a distribution by purchase, redemption, or
other acquisition of a transferable interest in the limited liability
company, as of the date money or other property is transferred or
debt incurred by the limited liability company.
   (2) In all other cases, as of the date the distribution is
authorized, if the payment occurs within 120 days after that date, or
the payment is made, if the payment occurs more than 120 days after
the distribution is authorized.
   (d) A limited liability company's indebtedness to a member
incurred by reason of a distribution made in accordance with this
section is at parity with the limited liability company's
indebtedness to its general, unsecured creditors.
   (e) A limited liability company's indebtedness, including
indebtedness issued in connection with or as part of a distribution,
is not a liability for purposes of subdivision (a) if the terms of
the indebtedness provide that payment of principal and interest are
made only to the extent that a distribution could be made to members
under this section.
   (f) 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.
   (g) In subdivision  (a) and subdivision  (f) of
Section 17701.02, "distribution" does not include amounts
constituting reasonable compensation for present or past services or
reasonable payments made in the ordinary course of business under a
bona fide retirement plan or other benefits program. 
   (h) (1) A series shall not make a distribution to a member of the
series to the extent that at the time of the distribution, after
giving effect to the distribution, all liabilities of the series,
other than liabilities to members of the series on account of their
membership interests and liabilities for which the recourse of
creditors is limited to specific property of the series, exceed the
fair value of the assets of the series, except that the fair value of
the property that is subject to a liability for which recourse of
creditors is limited shall be included in the assets of the series
only to the extent that the fair value of the property exceeds that
liability.  
   (2) A member of a series who receives a distribution in violation
of paragraph (1) or the operating agreement, and who knew at the time
of the distribution that the distribution violated paragraph (1) or
the operating agreement, shall be personally liable to that series
for the amount of the distribution. A member of a series who receives
a distribution in violation of paragraph (1) or the limited
liability company agreement, and who did not know at the time of the
distribution that the distribution violated paragraph (1) or the
operating agreement, shall not be liable for the amount of the
distribution.  
   (3) Subdivision (a) through (g) shall not apply to a distribution
made by a series. 
   17704.06.  (a) Except as otherwise provided in subdivision (b)
 and paragraph (2) of subdivision (h)  of Section
17704.05, if a member of a member-managed limited liability company
or manager of a manager-managed limited liability company  or
a series of limited liability company  consents to a
distribution made in violation of Section 17704.05, the member or
manager is personally liable to the limited liability company
 , or, if applicable, to the series of the limited liability
company making the distribution,  for the amount of the
distribution that exceeds the amount that could have been distributed
without the violation of Section 17704.05.
   (b) To the extent the operating agreement of a member-managed
limited liability company expressly relieves a member of the
authority and responsibility to consent to distributions and imposes
that authority and responsibility on one or more other members, the
liability stated in subdivision (a) applies to the other members and
not the member that the operating agreement relieves of authority and
responsibility.
   (c) A person that receives a distribution knowing that the
distribution to that person was made in violation of Section 17704.05
is personally liable to the limited liability company but only to
the extent that the distribution received by the person exceeded the
amount that could have been properly paid under Section 17704.05.
   (d) A person against which an action is commenced because the
person is liable under subdivision (a) may do all of the following:
   (1) Implead any other person that is subject to liability under
subdivision (a) and seek to compel contribution from the person.
   (2) Implead any person that received a distribution in violation
of subdivision (c) and seek to compel contribution from the person in
the amount the person received in violation of subdivision (c).
   (e) An action under this section is barred if not commenced within
four years after the distribution.
   17704.07.  (a) A limited liability company is a member-managed
limited liability company unless the operating agreement does either
of the following:
   (1) Expressly provides that:
   (A) The limited liability company is or will be "manager-managed."

   (B) The limited liability company is or will be "managed by
managers."
   (C) Management of the limited liability company is or will be
"vested in managers."
   (2) Includes words of similar import.
   (b) In a member-managed limited liability company, the following
rules apply:
   (1) The management and conduct of the limited liability company
are vested in the members. 
   (2) The management and conduct of a series are vested in the
members of that series.  
   (3) Paragraph (1) shall not apply to the management and conduct of
a series.  
   (4) 
    (2)  Each member has equal rights in the management and
conduct of the limited liability company's activities. 
   (5) Each member of a series has equal rights in the management and
conduct of the series' activities.  
   (6) Paragraph (4) shall not apply to the management and conduct of
the series.  
   (7) 
    (3)  A difference arising among members as to a matter
in the ordinary course of the activities of the limited liability
company  or a series of the limited liability company
 shall be decided by a majority of the members of the
limited liability company  or of the  
series in  which the difference among the members has
arisen. 
   (8) 
    (4)  An act outside the ordinary course of the
activities of the limited liability company may be undertaken only
with the consent of all members. 
   (9) An act outside the ordinary course of the activities of a
series of the limited liability company may be undertaken only with
the consent of all members of that series.  
   (10) 
    (5)  The operating agreement may be amended only with
the consent of all members.
   (c) In a manager-managed limited liability company, the following
rules apply:
   (1) Except as otherwise expressly provided in this title, any
matter relating to the activities of the limited liability company is
decided exclusively by the managers. 
   (2) Except as otherwise expressly provided in this title, any
matter related to the activity of the series is decided exclusively
by the managers of the series.  
   (3) Paragraph (1) shall not apply to the activities of a series.
 
   (4) 
    (2)  Each manager has equal rights in the management and
conduct of the activities of the limited liability company. 

   (5) Each manager of a series has equal rights in the management
and conduct of the activity of the series.  
   (6) Paragraph (4) shall not apply to the management and conduct of
the activity of the series.  
   (7) 
    (3)  A difference arising among managers as to a matter
in the ordinary course of the activities of the limited liability
company may be decided by a majority of the managers of the limited
liability company. 
   (8) A difference arising among managers of a series of a limited
liability company as to a matter in the ordinary course of the
activities of that series shall be decided by a majority of the
managers of that series.  
   (9) 
    (4)  The consent of all members of the limited liability
company is required to do any of the following:
   (A) Sell, lease, exchange, or otherwise dispose of all, or
substantially all, of the limited liability company's property, with
or without the goodwill, outside the ordinary course of the limited
liability company's activities.
   (B) Approve a merger or conversion under Article 10 (commencing
with Section 17710.01).
   (C) Undertake any other act outside the ordinary course of the
limited liability company's activities.
   (D) Amend the operating agreement. 
   (10) The consent of all members of a series is required to any of
the following:  
   (A) Sell, lease, exchange, or afterward dispose of all or
substantially all, of the series' property, with or without the
goodwill, outside the ordinary course of the series activities.
 
                                             (B) Approve a merger or
conversion of the series under Article 10 (commencing with Section
17710.01).  
   (C) Undertake any other act outside the ordinary course of the
series' activities.  
   (D) Amend the operating agreement with respect to the series.
 
   (11) 
    (5)  A manager may be chosen at any time by the consent
of a majority of the members and remains a manager until a successor
has been chosen, unless the manager at an earlier time resigns, is
removed, or dies, or, in the case of a manager that is not an
individual, terminates. A manager may be removed at any time by the
consent of a majority of the members without notice or cause.

   (12) A manager of a series may be chosen at any time by the
consent of a majority of members of that series and remains a manager
until a successor has been chosen, unless the manager at an earlier
time resigns, is removed, or dies, or in the case of a manager that
is not an individual, terminates. A manager of a series may be
removed at any time by the consent of a majority of the members of
that series without notice or cause.  
   (13) 
    (6)  A person need not be a member to be a manager, but
the dissociation of a member that is also a manager removes the
person as a manager. If a person that is both a manager and a member
ceases to be a manager, that cessation does not by itself dissociate
the person as a member. 
   (14) 
    (7)  A person's ceasing to be a manager does not
discharge any debt, obligation, or other liability to the limited
liability company or members which the person incurred while a
manager.
   (d) The dissolution of a limited liability company  , or a
series   of a limited liability company, 
does not affect the applicability of this section. However, a person
that wrongfully causes dissolution of the limited liability company
loses the right to participate in management as a member and a
manager.
   (e) This title does not entitle a member to remuneration for
services performed for a member-managed limited liability company,
except for reasonable compensation for services rendered in winding
up the activities of a limited liability company.
   (f) Meetings of members may be held at any place, by electronic
video screen communication or by electronic transmission by and to
the limited liability company pursuant to paragraphs (1) and (2) of
subdivision  (h)   (i)  of Section
17701.02, either within or without this state, selected by the person
or persons calling the meeting or as may be stated in or fixed in
accordance with the articles of organization or a written operating
agreement. If no other place is stated or so fixed, all meetings
shall be held at the principal executive office of the limited
liability company. Unless prohibited by the articles of organization
of the limited liability company, if authorized by the operating
agreement, members not physically present in person or by proxy at a
meeting of members may, by electronic transmission by and to the
limited liability company pursuant to paragraphs (1) and (2) of
subdivision (i) of Section 17701.02 or by electronic video screen
communication, participate in a meeting of members, be deemed present
in person or by proxy, and vote at a meeting of members whether that
meeting is to be held at a designated place or in whole or in part
by means of electronic transmission by and to the limited liability
company or by electronic video screen communication, in accordance
with subdivision (l).
   (g) A meeting of the members may be called by any manager or by
any member or members representing more than 10 percent of the
interests of members for the purpose of addressing any matters on
which the members may vote.
   (h) (1) Whenever members are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given
not less than 10 days nor more than 60 days before the date of the
meeting to each member entitled to vote at the meeting. The notice
shall state the place, date, and hour of the meeting, the means of
electronic transmission by and to the limited liability company or
electronic video screen communication, if any, and the general nature
of the business to be transacted. No other business may be
transacted at that meeting.
   (2) Any report or any notice of a members' meeting shall be given
personally, by electronic transmission by the limited liability
company, or by mail or other means of written communication,
addressed to the member at the address of the member appearing on the
books of the limited liability company or given by the member to the
limited liability company for the purpose of notice, or, if no
address appears or is given, at the place where the principal
executive office of the limited liability company is located or by
publication at least once in a newspaper of general circulation in
the county in which the principal executive office is located. The
notice or report shall be deemed to have been given at the time when
delivered personally, delivered by electronic transmission by the
limited liability company, deposited in the mail, or sent by other
means of written communication. An affidavit of mailing or delivered
by electronic transmission by the limited liability company of any
notice or report in accordance with this article, executed by a
manager, shall be prima facie evidence of the giving of the notice or
report.
   (3) If any notice or report addressed to the member at the address
of the member appearing on the books of the limited liability
company is returned to the limited liability company by the United
States Postal Service marked to indicate that the United States
Postal Service is unable to deliver the notice or report to the
member at the address, all future notices or reports shall be deemed
to have been duly given without further mailing if they are available
for the member at the principal executive office of the limited
liability company for a period of one year from the date of the
giving of the notice or report to all other members.
   (4) Notice given by electronic transmission by the limited
liability company under this subdivision shall be valid only if it
complies with paragraph (1) of subdivision  (h) 
 (i)  of Section 17701.02.
   Notwithstanding this condition, notice shall not be given by
electronic transmission by the limited liability company under this
subdivision after either of the following has occurred:
   (A) The limited liability company is unable to deliver two
consecutive notices to the member by that means.
   (B) The inability to so deliver the notices to the member becomes
known to the secretary, any assistant secretary, the transfer agent,
or any other person responsible for the giving of the notice.
   (5) Upon written request to a manager by any person entitled to
call a meeting of members, the manager shall immediately cause notice
to be given to the members entitled to vote that a meeting will be
held at a time requested by the person calling the meeting, not less
than 10 days nor more than 60 days after the receipt of the request.
If the notice is not given within 20 days after receipt of the
request, the person entitled to call the meeting may give the notice
or, upon the application of that person, the superior court of the
county in which the principal executive office of the limited
liability company is located, or if the principal executive office is
not in this state, the county in which the limited liability company'
s address in this state is located, shall summarily order the giving
of the notice, after notice to the limited liability company
affording it an opportunity to be heard. The procedure provided in
subdivision (c) of Section 305 shall apply to the application. The
court may issue any order as may be appropriate, including, without
limitation, an order designating the time and place of the meeting,
the record date for determination of members entitled to vote, and
the form of notice.
   (i) When a members' meeting is adjourned to another time or place,
unless the articles of organization or a written operating agreement
otherwise require and except as provided in this subdivision, notice
need not be given of the adjourned meeting if the time and place
thereof or the means of electronic transmission by and to the limited
liability company or electronic video screen communication, if any,
are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the limited liability company may transact any
business that may have been transacted at the original meeting. If
the adjournment is for more than 45 days, or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each member of record
entitled to vote at the meeting.
   (j) The actions taken at any meeting of members, however called
and noticed, and wherever held, have the same validity as if taken at
a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after
the meeting, each of the members entitled to vote, not present in
person or by proxy, provides a waiver of notice or consents to the
holding of the meeting or approves the minutes of the meeting in
writing. All waivers, consents, and approvals shall be filed with the
limited liability company records or made a part of the minutes of
the meeting after conversion to the form in which those records or
minutes are kept. Attendance of a person at a meeting shall
constitute a waiver of notice of the meeting, except when the person
objects, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Attendance at a meeting is not a waiver of any right to object to the
consideration of matters required by this title to be included in
the notice but not so included, if the objection is expressly made at
the meeting. Neither the business to be transacted nor the purpose
of any meeting of members need be specified in any written waiver of
notice, unless otherwise provided in the articles of organization or
operating agreement, except as provided in subdivision (l).
   (k) Members may participate in a meeting of the limited liability
company through the use of conference telephones or electronic video
screen communication, as long as all members participating in the
meeting can hear one another, or by electronic transmission by and to
the limited liability company pursuant to paragraphs (1) and (2) of
subdivision  (h)   (i)  of Section
17701.02. Participation in a meeting pursuant to this provision
constitutes presence in person at that meeting.
   (l) Any action approved at a meeting, other than by unanimous
approval of those entitled to vote, shall be valid only if the
general nature of the proposal so approved was stated in the notice
of meeting or in any written waiver of notice.
   (m) (1) A majority  in interest  of the members
represented in person or by proxy shall constitute a quorum at a
meeting of members.
   (2) The members present at a duly called or held meeting at which
a quorum is present may continue to transact business until
adjournment, notwithstanding the loss of a quorum, if any action
taken after loss of a quorum, other than adjournment, is approved by
the requisite percentage of interests of members specified in this
title or in the articles of organization or a written operating
agreement.
   (3) In the absence of a quorum, any meeting of members may be
adjourned from time to time by the vote of a majority of the
interests represented either in person or by proxy, but no other
business may be transacted, except as provided in paragraph (2).
   (n) (1) Any action that may be taken at any meeting of the members
may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed and delivered to the limited
liability company within 60 days of the record date for that action
by members having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at
which all members entitled to vote thereon were present and voted.
   (2) Unless the consents of all members entitled to vote have been
solicited in writing, (A) notice of any member approval of an
amendment to the articles of organization or operating agreement, a
dissolution of the limited liability company as provided in Section
17707.01, or a merger of the limited liability company as provided in
Section 17710.10, without a meeting by less than unanimous written
consent shall be given at least 10 days before the consummation of
the action authorized by the approval, and (B) prompt notice shall be
given of the taking of any other action approved by members without
a meeting by less than unanimous written consent, to those members
entitled to vote who have not consented in writing.
   (3) Any member giving a written consent, or the member's
proxyholder, may revoke the consent personally or by proxy by a
writing received by the limited liability company prior to the time
that written consents of members having the minimum number of votes
that would be required to authorize the proposed action have been
filed with the limited liability company, but may not do so
thereafter. This revocation is effective upon its receipt at the
office of the limited liability company required to be maintained
pursuant to Section 17701.13.
   (o) The use of proxies in connection with this section shall be
governed in the same manner as in the case of corporations formed
under the General Corporation Law, Division 1 (commencing with
Section 100) of Title 1.
   (p) In order that the limited liability company may determine the
members of record entitled to notices of any meeting or to vote, or
entitled to receive any distribution or to exercise any rights in
respect of any other lawful action, a manager, or members
representing more than 10 percent of the interests of members, may
fix, in advance, a record date, that is not more than 60 days nor
less than 10 days prior to the date of the meeting and not more than
60 days prior to any other action. If no record date is fixed the
following shall apply:
   (1) The record date for determining members entitled to notice of
or to vote at a meeting of members shall be at the close of business
on the business day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the business day
next preceding the day on which the meeting is held.
   (2) The record date for determining members entitled to give
consent to limited liability company action in writing without a
meeting shall be the day on which the first written consent is given.

   (3) The record date for determining members for any other purpose
shall be at the close of business on the day on which the managers
adopt the resolution relating thereto, or the 60th day prior to the
date of the other action, whichever is later.
   (4) The determination of members of record entitled to notice of
or to vote at a meeting of members shall apply to any adjournment of
the meeting unless a manager or the members who called the meeting
fix a new record date for the adjourned meeting, but the manager or
the members who called the meeting shall fix a new record date if the
meeting is adjourned for more than 45 days from the date set for the
original meeting.
   (q) A meeting of the members may be conducted, in whole or in
part, by electronic transmission by and to the limited liability
company or by electronic video screen communication if both of the
following requirements are met:
   (1) The limited liability company implements reasonable measures
to provide members, in person or by proxy, a reasonable opportunity
to participate in the meeting and to vote on matters submitted to the
members, including an opportunity to read or hear the proceedings of
the meeting substantially concurrently with those proceedings.
   (2) When any member votes or takes other action at the meeting by
means of electronic transmission to the limited liability company or
electronic video screen communication, a record of that vote or
action shall be maintained by the limited liability company. 
   (r) The articles of organization or a written operating agreement
may provide to all or certain identified members of a specified class
or group of members the right to vote separately or with all or any
class or group of members on any matter. Voting by members may be on
a per capita, number, financial interest, class, group, or any other
basis. If no voting provision is contained in the articles of
organization or written operating agreement, each of the following
shall apply:  
   (1) The members of a limited liability company shall vote in
proportion to their interests in current profits of the limited
liability company or, in the case of a member who has assigned the
member's entire transferable interest in the limited liability
company to a person who has not been admitted as a member, in
proportion to the interest in current profits that the assigning
member would have, had the assignment not been made.  
   (2) Any amendment to the articles of organization or operating
agreement shall require the unanimous vote of all members.  

   (3) In all other matters in which a vote is required, except as
otherwise provided in this section, a vote of a majority of the
members shall be sufficient.  
   (s) Notwithstanding any provision to the contrary in the articles
of organization or operating agreement, in no event shall the
articles of organization be amended by a vote of less than a majority
of the members.  
   (t) Notwithstanding any provision to the contrary in the articles
of organization or operating agreement, members shall have the right
to vote on a dissolution of the limited liability company as provided
in subdivision (b) of Section 17707.01 and on a merger of the
limited liability company as provided in Section 17710.12.  

   (u) A written operating agreement may provide for the appointment
of officers, including, but not limited to, a chairperson or a
president, or both a chairperson and a president, a secretary, a
chief financial officer, and any other officers with the titles,
powers, and duties as shall be specified in the articles of
organization or operating agreement or as determined by the managers
or members. An officer may, but does not need to, be a member or
manager of the limited liability company, and any number of offices
may be held by the same person.  
   (v) Officers, if any, shall be appointed in accordance with the
written operating agreement or, if no such provision is made in the
operating agreement, any officers shall be appointed by the managers
and shall serve at the pleasure of the managers, subject to the
rights, if any, of an officer under any contract of employment. Any
officer may resign at any time upon written notice to the limited
liability company without prejudice to the rights, if any, of the
limited liability under any contract to which the officer is a party.
 
   (w) Subject to the provisions of the articles of organization, any
note, mortgage, evidence of indebtedness, contract, certificate,
statement, conveyance, or other instrument in writing, and any
assignment or endorsement thereof, executed or entered into between
any limited liability company and any other person, when signed by
the chairperson of the board, the president, or any vice president
and any secretary, any assistant secretary, the chief financial
officer, or any assistant treasurer of the limited liability company,
is not invalidated as to the limited liability company by any lack
of authority of the signing officers in the absence of actual
knowledge on the part of the other person that the signing officers
had no authority to execute the same. 
   17704.08.  (a) A limited liability company  , or a series
of a limited liability company,  shall reimburse for any
payment made and indemnify for any debt, obligation, or other
liability incurred by a member of a member-managed limited liability
company or the manager of a manager-managed limited liability company
in the course of the member's or manager's activities on behalf of
the limited liability company, if, in making the payment or incurring
the debt, obligation, or other liability, the member or manager
complied with the duties stated in Sections 17704.05 and 17704.09.
   (b) A limited liability company  , or a series of a
limited liability company,  may purchase and maintain
insurance on behalf of a member or manager of the limited liability
company against liability asserted against or incurred by the member
or manager in that capacity or arising from that status even if,
under subdivision (g) of Section 17701.10, the operating agreement
could not eliminate or limit the person's liability to the limited
liability company for the conduct giving rise to the liability.
   17704.09.  (a) The fiduciary duties that a member owes to a
member-managed limited liability company  , or a series of a
limited liability company,  and the other members of the
limited liability company  , or a series of a limited
liability company,  are the duties of loyalty and care under
subdivisions (b) and (c).
   (b) A member's duty of loyalty to a limited liability company
 , or a series of a limited liability company, and
the other members is limited to the following:
   (1) To account to a limited liability company  , or a
series of a limited liability company,  and hold as trustee
for it any property, profit, or benefit derived by the member in the
conduct and winding up of the activities of a limited liability
company  , or a series of the limited liability company,
 or derived from a use by the member of a limited liability
company  , or a series of a limited liability company,
 property, including the appropriation of a limited
liability company  , or a series of a limited liability
company,  opportunity.
   (2) To refrain from dealing with a limited liability company
 , or a series of a limited liability company,  in
the conduct or winding up of the activities of a limited liability
company  , or a series of a limited liability company,
 as or on behalf of a party having an interest adverse to a
limited liability company  , or a series of a limited
liability company  .
   (3) To refrain from competing with a limited liability company
 , or a series of a limited liability company,  in
the conduct or winding up of the activities of the limited liability
company  , or a series of the limited liability company
 .
   (c) A member's duty of care to a limited liability company
 , or a series of a limited liability company,  and
the other members in the conduct and winding up the activities of the
limited liability company  , or a series of the limited
liability company,  is limited to refraining from engaging
in grossly negligent or reckless conduct, intentional misconduct, or
a knowing violation of law.
   (d) A member shall discharge the duties to a limited liability
company  , or a series of a limited liability company,
 and the other members under this title or under the
operating agreement and exercise any rights consistent with the
obligation of good faith and fair dealing.
   (e) A member does not violate a duty or obligation under this
article or under the operating agreement merely because the member's
conduct furthers the member's own interest.
   (f) In a manager-managed limited liability company, all of the
following rules apply:
   (1) Subdivisions (a), (b), (c), and (e) apply to the manager or
managers and not the members.
   (2) Subdivision (d) applies to the members and managers.
   (3) A member does not have any fiduciary duty to the limited
liability company  , or a series of a limited liability
company,  or to any other member solely by reason of being a
member.
   17704.10.  (a)  In a member-managed limited liability
company, all of the following rules apply:   Upon the
request of a member or holder of a transferable interest, for
purposes reasonably related to the interest of that person as a
member or a holder of a transferable interest, a manager shall
promptly deliver, in writing, to the member or holder of a
transferable interest, at the expense of the limited liability
company, a copy of the information required to be maintained by
paragraphs (1), (2), and (4) of subdivision (d) of Section 17701.13,
and any written operating agreement of the limited liability company.
 
   (1) On reasonable notice, a member may inspect and copy during
regular business hours, at a reasonable location specified by the
limited liability company, any record maintained by the limited
liability company regarding the limited liability company's
activities, financial condition, and other circumstances, to the
extent the information is material to the member's rights and duties
under the operating agreement or this title.  
   (2) The limited liability company shall furnish to each member all
of the following:  
   (A) Without demand, any information concerning the limited
liability company's activities, financial condition, and other
circumstances that the limited liability company knows and that is
material to the proper exercise of the member's rights and duties
under the operating agreement or this title, except to the extent the
limited liability company can establish that it reasonably believes
the member already knows the information.  
   (B) On demand, any other information concerning the limited
liability company's activities, financial condition, and other
circumstances, except to the extent the demand or information
demanded is                                            unreasonable
or otherwise improper under the circumstances.  
   (3) The duty to furnish information under paragraph (2) also
applies to each member to the extent the member knows any of the
information described in paragraph (2). 
   (b)  In a manager-managed limited liability company, all
of the following rules apply:   Each member, manager,
and holder of a transferable interest has the right, upon reasonable
request, for purposes reasonably related to the interest of that
person as a member, manager, or holder of a transferable interest, to
each of the following: 
   (1)  The informational rights stated in subdivision (a)
and the duty stated in paragraph (3) of subdivision (a) apply to the
managers and not the members.   To   inspect
and copy during normal business hours any of the records required to
be maintained pursuant to Section 17701.13. 
   (2)  During regular business hours and at a reasonable
location specified by   To obtain   in writing
from  the limited liability company,  a member may
obtain from the limited liability company and inspect and copy full
information regarding the activities, financial condition, and other
circumstances   promptly after becoming available, a
copy  of the limited liability  company as is just and
reasonable if all of the following apply:   company's
federal, state, and local income tax returns for each year. 

   (A) The member seeks the information for a purpose material to the
member's interest as a member.  
   (B) The member makes a demand in a record received by the limited
liability company, describing with reasonable particularity the
information sought, and the purpose for seeking the information.
 
   (C) The information sought is directly connected to the member's
purpose.  
   (3) Within 10 days after receiving a demand pursuant to
subparagraph (B) of paragraph (2), the limited liability company
shall in a record inform the member that made the demand of all the
following:  
   (A) The information that the limited liability company will
provide in response to the demand and when and where the limited
liability company will provide the information.  
   (B) If the limited liability company declines to provide any
demanded information, the limited liability company's reasons for
declining.  
   (4) Whenever this title or an operating agreement provides for a
member to give or withhold consent to a matter, before the consent is
given or withheld, the limited liability company shall, without
demand, provide the member with all information that is known to the
limited liability company and is material to the member's decision.
 
   (c) On 10 days' demand made in a record received by a limited
liability company, a dissociated member may have access to
information to which the person was entitled while a member if the
information pertains to the period during which the person was a
member, the person seeks the information in good faith, and the
person satisfies the requirements imposed on a member by paragraph
(2) of subdivision (b). The limited liability company shall respond
to a demand made pursuant to this subdivision in the manner provided
in paragraph (3) of subdivision (b). 
   (d) A limited liability company may charge a person that makes a
demand under this section the reasonable costs of copying the
information, limited to the costs of labor and material. 

   (e) A member or dissociated member may exercise rights under this
section through an agent or, in the case of an individual under legal
disability, a legal representative. Any restriction or condition
imposed by the operating agreement or under subdivision (g) applies
both to the agent or legal representative and the member or
dissociated member.  
   (f) The rights under this section do not extend to a person as
transferee.  
   (g) In addition to any restriction or condition stated in its
operating agreement, a limited liability company, as a matter within
the ordinary course of its activities, may impose reasonable
restrictions and conditions on access to and use of information to be
furnished under this section, including designating information
confidential and imposing nondisclosure and safeguarding obligations
on the recipient. In a dispute concerning the reasonableness of a
restriction under this subdivision, the limited liability company has
the burden of proving reasonableness.  
   (c) In the case of a limited liability company with more than 35
members, each of the following shall apply:  
   (1) A manager shall cause an annual report to be sent to each of
the members not later than 120 days after the close of the fiscal
year. The report, which may be sent by electronic transmission by the
limited liability company (paragraph (1) of subdivision (i) of
Section 17701.02) shall contain a balance sheet as of the end of the
fiscal year and an income statement and a statement of cashflows for
the fiscal year.  
   (2) Members representing at least 5 percent of the voting
interests of members, or three or more members, may make a written
request to a manager for an income statement of the limited liability
company for the initial three-month, six-month, or nine-month period
of the current fiscal year ended more than 30 days prior to the date
of the request, and a balance sheet of the limited liability company
as of the end of that period. The statement shall be delivered or
mailed to the members within 30 days thereafter.  
   (3) The financial statements referred to in this section shall be
accompanied by the report thereon, if any, of the independent
accountants engaged by the limited liability company or, if there is
no report, the certificate of the manager of the limited liability
company that the financial statements were prepared without audit
from the books and records of the limited liability company. 

   (d) A manager shall promptly furnish to a member a copy of any
amendment to the articles of organization or operating agreement
executed by a manager pursuant to a power of attorney from the
member. The articles of organization or operating agreement may be
sent by electronic transmission by the limited liability company.
 
   (e) The limited liability company shall send or cause information
to be sent in writing to each member or holder of a transferable
interest within 90 days after the end of each taxable year the
information necessary to complete federal and state income tax or
information returns and, in the case of a limited liability company
with 35 or fewer members, a copy of the limited liability company's
federal, state, and local income tax or information returns for the
year.  
   (f) In addition to any other remedies, a court of competent
jurisdiction may enforce the duty of making and mailing or delivering
the information and financial statements required by this section
and, for good cause shown, extend the time therefor.  
   (g) In any action under this section, if the court finds the
failure of the limited liability company to comply with the
requirements of this section is without justification, the court may
award an amount sufficient to reimburse the person bringing the
action for the reasonable expenses incurred by that person, including
attorneys' fees, in connection with the action or proceeding. 

   (h) Any waiver of the rights provided in this section shall be
unenforceable.  
   (i) Any request, inspection, or copying by a member or holder of a
transferable interest may be made by that person or by that person's
agent or attorney.  
   (h) 
    (j)  Upon complaint that a limited liability company is
failing to comply with the provisions of  Section 17704.11
  this section  , or to afford to the members
rights given to them in the articles of organization or operating
agreement, the Attorney General may, in the name of the people of the
State of California, send to the office required to be maintained
pursuant to Section 17701.13, notice of the complaint. 
   (i) 
    (k)  If the answer of the limited liability company is
not received within 30 days of the date the notice was transmitted,
or if the answer is not satisfactory, and if the enforcement of the
rights of the aggrieved persons by private civil action, by class
action, or otherwise, would be so burdensome or expensive as to be
impracticable, the Attorney General may institute, maintain, or
intervene in any court of competent jurisdiction or before any
administrative agency for relief by way of injunction, the
dissolution of entities, the appointment of receivers, or any other
temporary, preliminary, provisional, or final remedies as may be
appropriate to protect the rights of members or to restore the
position of the members for the failure to comply with the
requirements of Section 17701.13 or the articles of organization or
the operating agreement. In any action, suit, or proceeding, there
may be joined as parties all persons and entities responsible for or
affected by the activity.

      Article 5.  Transferable Interests and Rights of Transferees
and Creditors


   17705.01.  A transferable interest is personal property.
   17705.02.  (a) With respect to a transfer, in whole or in part, of
a transferable interest, all of the following apply:
   (1) A transfer is permissible.
   (2) A transfer does not by itself cause a member's dissociation or
a dissolution and winding up of the activities of a limited
liability company  , or a series of a limited liability
company  .
   (3) Subject to Section 17705.04, a transfer does not entitle the
transferee to do any of the following:
   (A) Participate in the management or conduct of the activities of
a limited liability company  or a series of a limited
liability company  .
   (B) Except as otherwise provided in subdivision (c), have access
to records or other information concerning the activities of a
limited liability company  or a series of a limited liability
company  .
   (b) A transferee has the right to receive, in accordance with the
transfer, distributions to which the transferor would otherwise be
entitled.
   (c) In a dissolution and winding up of a limited liability
company, a transferee is entitled to an account of the limited
liability company's transactions only from the date of dissolution.
   (d) A transferable interest may be evidenced by a certificate of
the interest issued by the limited liability company  , or a
series of a limited liability company,  in a record, and,
subject to this article, the interest represented by the certificate
may be transferred by a transfer of the certificate.
   (e) A limited liability company  , or a series of a
limited liability company,  need not give effect to a
transferee's rights under this section until the limited liability
company  , or a series of a limited liability company,
 has notice of the transfer.
   (f) A transfer of a transferable interest in violation of a
restriction on transfer contained in the operating agreement is
ineffective as to a person having notice of the restriction at the
time of transfer.
   (g) Except as otherwise provided in paragraph (2) of subdivision
(d) of Section 17706.02, when a member transfers a transferable
interest, the transferor retains the rights of a member, other than
the interest in distributions transferred, and retains all duties and
obligations of a member.
   (h) When a member transfers a transferable interest to a person
that becomes a member with respect to the transferred interest, the
transferee is liable for the member's obligations under Section
17704.03 and subdivision (c) of Section 17704.06 known to the
transferee when the transferee becomes a member.
   17705.03.  (a) On application by a judgment creditor of a member
or transferee, a court may enter a charging order against the
transferable interest of the judgment debtor for the unsatisfied
amount of the judgment. A charging order constitutes a lien on a
judgment debtor's transferable interest and requires the limited
liability company to pay over to the person to which the charging
order was issued any distribution that would otherwise be paid to the
judgment debtor.
   (b) To the extent necessary to effectuate the collection of
distributions pursuant to a charging order in effect under
subdivision (a), the court may do any of the following:
   (1) Appoint a receiver of the distributions subject to the
charging order, with the power to make all inquiries the judgment
debtor might have made.
   (2) Make all other orders necessary to give effect to the charging
order.
   (3) Upon a showing that distributions under a charging order will
not pay the judgment debt within a reasonable time, foreclose the
lien and order the sale of the transferable interest. The purchaser
at the foreclosure sale obtains only the transferable interest, does
not thereby become a member, and is subject to Section 17705.02.
   (c) At any time before foreclosure under paragraph (3) of
subdivision (b), the member or transferee whose transferable interest
is subject to a charging order under subdivision (a) may extinguish
the charging order by satisfying the judgment and filing a certified
copy of the satisfaction with the court that issued the charging
order.
   (d) At any time before foreclosure under paragraph (3) of
subdivision (b), a limited liability company or one or more members
whose transferable interests are not subject to the charging order
may pay to the judgment creditor the full amount due under the
judgment and thereby succeed to the rights of the judgment creditor,
including the charging order.
   (e) This title does not deprive any member or transferee of the
benefit of any exemption laws applicable to the member's or
transferee's transferable interest.
   (f) This section provides the exclusive remedy by which a person
seeking to enforce a judgment against a member or transferee may, in
the capacity of judgment creditor, satisfy the judgment from the
judgment debtor's transferable interest.
   17705.04.  If a member dies, the deceased member's personal
representative or other legal representative may exercise the rights
of a transferee provided in subdivision (c) of Section 17705.02 and,
for the purposes of settling the estate, the rights of a current
member under Section 17704.10.

      Article 6.  Member's Dissociation


   17706.01.  (a) A person has the power to dissociate as a member at
any time, rightfully or wrongfully, by withdrawing as a member by
express will pursuant to  paragraph (1) of 
subdivision (a) of Section 17706.02.
   (b) A person's dissociation from a limited liability company is
wrongful only if either of the following apply to the dissociation:
   (1) The dissociation is in breach of an express provision of the
operating agreement.
   (2) The dissociation occurs before the termination of the limited
liability company and any of the following:
   (A) The person withdraws as a member by express will.
   (B) The person is expelled as a member by judicial order under
 paragraph (5) of  subdivision  (a)
  (e)  of Section 17706.02.
   (C) The person is dissociated under  subparagraph (A) of
paragraph (7) of  subdivision  (a)  
(g)  of Section 17706.02 by becoming a debtor in bankruptcy.
   (D) In the case of a person that is not a trust other than a
business trust, an estate, or an individual, the person is expelled
or otherwise dissociated as a member because it dissolved or
terminated.
   (c) A person that wrongfully dissociates as a member is liable to
the limited liability company and, subject to Section 17709.01, to
the other members for damages caused by the dissociation. The
liability is in addition to any other debt, obligation, or other
liability of the member to the limited liability company or the other
members.
   17706.02.  A person is dissociated as a member from a limited
liability company when any of the following occur:
   (a) The limited liability company has notice of the person's
express will to withdraw as a member, but, if the person specified a
withdrawal date later than the date the limited liability company had
notice, on that later date.
   (b) An event stated in the operating agreement as causing the
person's dissociation to occur.
   (c) The person is expelled as a member pursuant to the operating
agreement.
   (d) The person is expelled as a member by the unanimous consent of
the other members because any of the following applies:
   (1) It is unlawful to carry on the limited liability company's
activities with the person as a member.
   (2) There has been a transfer of all of the person's transferable
interest in the limited liability company, other than either of the
following:
   (A) A transfer for security purposes.
   (B) A charging order in effect under Section 17705.03 that has not
been foreclosed.
   (3) The person is a corporation and, within 90 days after the
limited liability company notifies the person that it will be
expelled as a member because the person 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 and the certificate of dissolution has not been
revoked or its charter or right to conduct business has not been
reinstated.
   (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 liability company, the person is
expelled as a member by judicial order because the person has done
any of the following:
   (1) Engaged, or is engaging, in wrongful conduct that has
adversely and materially affected, or will adversely and materially
affect, the limited liability company's activities.
   (2) Willfully or persistently committed, or is willfully and
persistently committing, a material breach of the operating agreement
or the person's duties or obligations under Section 17704.09.
   (3) Engaged, or is engaging, in conduct relating to the limited
liability company's activities that makes it not reasonably
practicable to carry on the activities with the person as a 
member:   member   . 
   (f) In the case of a person who is an individual, if either of the
following applies:
   (1) The person dies.
   (2) In a member-managed limited liability company if either of the
following applies:
   (A) A guardian or general conservator for the person is appointed.

   (B) There is a judicial order that the person has otherwise become
incapable of performing the person's duties as a member under this
title or the operating agreement.
   (g) In a member-managed limited liability company, the person
becomes a debtor in bankruptcy.
   (h) In the case of a person that is a trust or is acting as a
member by virtue of being a trustee of a trust, the trust's entire
transferable interest in the limited liability company is distributed
but not solely by reason of a substitution of a successor trustee.
   (i) In the case of a person that is an estate or is acting as a
member by virtue of being a personal representative of an estate, the
estate's entire transferable interest in the limited liability
company is distributed but not solely by reason of a substitution of
a successor personal representative.
   (j) In the case of a member that is not an individual,
partnership, limited liability company, corporation, trust, or
estate, the termination of the member.
   (k) The limited liability company participates in a merger under
Article 10 (commencing with Section 17710.01), if either of the
following applies:
   (1) The limited liability company is not the surviving entity.
   (2) Otherwise as a result of the merger, the person ceases to be a
member.
   (l) The limited liability company terminates.
   17706.03.  (a) When a person is dissociated as a member of a
limited liability company all of the following apply:
   (1) The person's right to participate as a member in the
management and conduct of the limited liability company's activities
terminates.
   (2) If the limited liability company is member-managed, the person'
s fiduciary duties as a member end with regard to matters arising
and events occurring after the person's dissociation.
   (3) Subject to Section 17705.04 and Article 10 (commencing with
Section 17710.01), any transferable interest owned by the person
immediately before dissociation in the person's capacity as a member
is owned by the person solely as a transferee.
   (b) A person's dissociation as a member of a limited liability
company does not of itself discharge the person from any debt,
obligation, or other liability to the limited liability company or
the other members that the person incurred while a member.

      Article 7.  Dissolution and Winding Up


   17707.01.  A limited liability company  , or a series of a
limited liability company,  is dissolved, and its
activities shall be wound up, upon the happening of the first to
occur of the following:
   (a) On the happening of an event set forth in a written operating
agreement or the articles of organization.
   (b) By the vote of a majority  in interest  of
the members of the limited liability company  , or a series
of a limited liability company,  or a greater percentage of
the voting interests of members as may be specified in the articles
of organization, or a written operating agreement.
   (c) The passage of 90 consecutive days during which the limited
liability company  , or a series of a limited liability
company,  has no members, except on the death of a natural
person who is the sole member of a limited liability company,
 or a series of a limited liability company,  the
status of the member, including a membership interest, may pass to
the heirs, successors, and assigns of the member by will or
applicable law. The heir, successor, or assign of the member's
interest becomes a substituted member pursuant to subdivision (d) of
Section 17704.01, subject to administration as provided by applicable
law, without the permission or consent of the heirs, successors, or
assigns or, those administering the estate of the deceased member.
   (d) Entry of a decree of judicial dissolution pursuant to Section
17707.03.
   17707.02.  (a) Notwithstanding any other provision of this title,
if a domestic limited liability company has not conducted any
business, only a majority of the members, or, if there are no
members, the majority of the managers, if any, or if no members or
managers, the person or a majority of the persons signing the
articles of organization, may execute and acknowledge a certificate
of cancellation of articles of organization, on a form prescribed by
the Secretary of State, stating all of the following:
   (1) The name of the domestic limited liability company and the
Secretary of State's file number.
   (2) That the certificate of cancellation is being filed within 12
months from the date the articles of organization was filed.
   (3) That the limited liability company does not have any debts or
other liabilities, except as provided in paragraph (4).
   (4) That a final franchise tax return, as described by Section
23332 of the Revenue and Taxation Code, or a final annual tax return,
as described by Section 17947 of the Revenue and Taxation Code, has
been or will be filed with the Franchise Tax Board, as required under
Part 10.2 (commencing with Section 18401) of Division 2 of the
Revenue and Taxation Code.
   (5) That the known assets of the limited liability company
remaining after payment of, or adequately providing for, known debts
and liabilities have been distributed to the persons entitled thereto
or that the limited liability company acquired no known assets, as
the case may be.
   (6) That the limited liability company has not conducted any
business from the time of the filing of the articles of organization.

   (7) That a majority of the managers or members voted, or, if no
managers or members, the person or a majority of the persons signing
the articles of organization, voted to dissolve the limited liability
company.
   (8) If the limited liability company has received payments for
interests from investors, that those payments have been returned to
those investors.
   (b) A certificate of cancellation executed and acknowledged
pursuant to subdivision (a) shall be filed with the Secretary of
State within 12 months from the date that the articles of
organization was filed. The Secretary of State shall notify the
Franchise Tax Board of the cancellation.
   (c) Upon filing a certificate of cancellation pursuant to
subdivision (a), a limited liability company shall be canceled and
its powers, rights, and privileges shall cease.
   (d) A domestic limited liability company that filed articles of
organization on or after January 1, 2004, and that meets all of the
conditions described in subdivision (a) may file a certificate of
cancellation under this section.
   17707.03.  (a) Pursuant to an action filed by any manager or by
any member or members of a limited liability company, a court of
competent jurisdiction may decree the dissolution of a limited
liability company whenever any of the events specified in subdivision
(b) occurs.  Pursuant to an action filed by a manager or by
any member or members of a series, a court of competent jurisdiction
may decree the dissolution of that series whenever any of the events
specified in subdivision (b) with respect to that series occurs.

                                                                  (b)
(1) It is not reasonably practicable to carry on the business in
conformity with the articles of organization or operating agreement.
   (2) Dissolution is reasonably necessary for the protection of the
rights or interests of the complaining members.
   (3) The business of the limited liability company  , or a
series of a limited liability company,  has been abandoned.
   (4) The management of the limited liability company  , or
a series of a limited liability company,  is deadlocked or
subject to internal dissention.
   (5) Those in control of the limited liability company  ,
or a series of a limited liability company,  have been
guilty of, or have knowingly countenanced persistent and pervasive
fraud, mismanagement, or abuse of authority.
   (c) (1) In any suit for judicial dissolution, the other members
may avoid the dissolution of the limited liability company  ,
or a series of a limited liability company,  by purchasing
for cash the membership interests owned by the members 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 operating agreement, may be
deducted from the amount payable to the moving party or parties;
provided, that no member who sues for dissolution on the grounds set
forth in paragraph (3), (4), or (5) of subdivision (a) shall be
liable for damages for breach of contract in bringing that action.
   (2) If the purchasing parties elect to purchase the membership
interests owned by the moving parties, are unable to agree with the
moving parties upon the fair market value of the membership
interests, and give bond with sufficient security to pay the
estimated reasonable expenses, including  attorneys'
  attorney's  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 membership interests owned by the moving
parties.
   (3) The court shall appoint three disinterested appraisers to
appraise the fair market value of the membership 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 liability company,  or a series of a limited
liability company,  unless payment is made for the
membership interests within the time specified by the decree. If the
purchasing parties do not make payment for the membership 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'   attorney's  fees,
of the moving parties. Any member aggrieved by the action of the
court may appeal therefrom.
   (4) If the purchasing parties desire to prevent the winding up and
dissolution of the limited liability company,  or a series
of a limited liability company,  they shall pay to the
moving parties the value of their membership 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 of payment, the moving parties shall transfer
their membership interests to the purchasing parties.
   (5) 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.
   (6) A dismissal of any suit for judicial dissolution by a manager,
member, or members shall not affect the other members' rights to
avoid dissolution pursuant to this section.
   17707.04.  In the event of a dissolution of a limited liability
company all of the following apply:
   (a) The managers who have not wrongfully dissolved the limited
liability company,  or a series of a limited liability
company,  or, if none, the members, or, if none, the person
or a majority of the persons signing the articles of organization,
may wind up the affairs of the limited liability company,  or
a series of the limited liability company,  unless the
dissolution occurs pursuant to Section 17707.03, in which event the
winding up shall be conducted in accordance with the decree of
dissolution. The persons winding up the affairs of the limited
liability company  , or a series of a limited liability
company,  shall give written notice of the commencement of
winding up by mail to all known creditors and claimants whose
addresses appear on the records of the limited liability company.
   (b) Upon the petition of any manager or of any member or members,
or three or more creditors of a limited liability company  or
a series of a limited liability company  , a court of
competent jurisdiction may enter a decree ordering the winding up of
the limited liability company,  or a series of a limited
liability company,  if that appears necessary for the
protection of any parties in interest. The decree shall designate the
managers or members, or if good cause is shown, another person or
persons, who are to wind up the affairs of the limited liability
 company, or a series of the limited liability 
company.
   (c) Except as otherwise provided in the articles of organization
or a written operating agreement, the persons winding up the affairs
of the limited liability company  , or a series of a limited
liability company,  pursuant to this section shall be
entitled to reasonable compensation.
   17707.05.  (a) Except as otherwise provided in the articles of
organization or the written operating agreement, after determining
that all the known debts and liabilities of a limited liability
company  , or a series of a limited liability company,
 in the process of winding up, including, without
limitation, debts and liabilities to members who are creditors of the
limited liability company,  or a series of a limited
liability company,  have been paid or adequately provided
for, the remaining assets shall be distributed among the members
according to their respective rights and preferences as follows:
   (1) To members in satisfaction of liabilities for distributions
pursuant to Sections 17704.04, 17704.05, and 17704.06.
   (2) To members of the limited liability company  , or a
series of a limited liability company,  for the return of
their contributions.
   (3) To members in the proportions in which those members share in
distributions.
   (b) If the winding up is by court proceeding or subject to court
supervision, the distribution shall not be made until after the
expiration of any period for the presentation of claims that has been
prescribed by order of the court.
   (c) (1) The payment of a debt or liability, whether the
whereabouts of the creditor is known or unknown, has been adequately
provided for if the payment has been provided for by either of the
following means:
   (A) Payment for the debt or liability has been assumed or
guaranteed in good faith by one or more financially responsible
persons or by the United States government or any agency of the
United States government, and the provision, including the financial
responsibility of the person, was determined in good faith and with
reasonable care by the members or managers of the limited liability
company to be adequate at the time of any distribution of the assets
pursuant to this section.
   (B) The amount of the debt or liability has been deposited as
provided in Section 2008 of the General Corporation Law.
   (2) This subdivision shall not prescribe the exclusive means of
making adequate provision for debts and liabilities.
   17707.06.  (a) A limited liability company  , or a series
of a limited liability company,  that is dissolved
nevertheless continues to exist for the purpose of winding up its
affairs, prosecuting and defending actions by or against it in order
to collect and discharge obligations, disposing of and conveying its
property, and collecting and dividing its assets. A limited liability
company  , or a series of a limited liability company,
 shall not continue business except so far as necessary for
its winding up.
   (b) No action or proceeding to which a limited liability company
is a party abates by the dissolution of the limited liability company
 , or a series of a limited liability company,  or
by reason of proceedings for its winding up and dissolution.
   (c) Any assets inadvertently or otherwise omitted from the winding
up continue in the dissolved limited liability company  , or
a series of a limited liability company,  for the benefit
of the persons entitled to those assets upon dissolution and on
realization shall be distributed accordingly.
   (d) After dissolution of the limited liability company, 
or a series of a limited liability company,  the limited
liability company  , or a series of a limited liability
company,  is bound by both of the following:
   (1) The act of a person authorized to wind up the affairs of the
limited liability company,  or a series of a limited
liability company,  if the act is appropriate for winding up
the activities of the limited liability  company, or a
series of the limited liability  company.
   (2) The act of a person authorized to act on behalf of the limited
liability company,  or a series of a limited liability
company,  if the act would have bound the limited liability
company  , or a series of a limited liability company,
 before dissolution, if the other party to the transaction
did not have notice of the dissolution.
   17707.07.  (a) (1) Causes of action against a dissolved limited
liability company,  or a series of a limited liability
company,  whether arising before or after the dissolution of
the limited liability company,  or a series of a limited
liability company,  may be enforced against any of the
following:
   (A) Against the dissolved limited liability company  , or
a series of a limited liability company,  to the extent of
its undistributed assets, including, without limitation, any
insurance assets held by the limited liability company  , or
a series of a limited liability company,  that may be
available to satisfy claims.
   (B) If any of the assets of the dissolved limited liability
company  , or a series of a limited liability company,
 have been distributed to members, against members of the
dissolved limited liability company  , or a series of a
limited liability company,  to the extent of the limited
liability company  , or a series of a limited liability
company,  assets distributed to them upon dissolution of the
limited liability company  , or a series of a limited
liability company  .
   Any member compelled to return distributed assets in an amount
that exceeds the sum of the member's pro rata share of the claim and
the amount for which the member could otherwise be held liable under
Section 17704.05 or 17704.06 may seek contribution for the excess
from any other member or manager, up to the sum of that other
 person' s   person's  pro rata share of
the claim and that other person's liabilities under Section 17704.05
or 17704.06  ; provided that in case of dissolution of a
series, such member may seek contribution as provided in this section
only from another member or manager of that series  .
   (2) Except as set forth in subdivision (c), all causes of action
against a member of a dissolved limited liability company  ,
or a series of a limited liability company,  arising under
this section are extinguished unless the claimant commences a
proceeding to enforce the cause of action against that member of a
dissolved limited liability company  , or a series of a
limited liability company,  prior to the earlier of the
following:
   (A) The expiration of the statute of limitations applicable to the
cause of action.
   (B) Four years after the effective date of the dissolution of the
limited liability  company or a series of a limited liability
 company.
   (3) As a matter of procedure only, and not for purposes of
determining liability, members of the dissolved limited liability
company  , or a series of a limited liability company,
 may be sued in the name of the limited liability company
 , or a series of a limited liability company,  upon
any cause of action against the limited liability  company,
or a series of a limited liability  company. This section
does not affect the rights of the limited liability company 
, or a series of a limited liability company,  or its
creditors under Sections 17704.05 and 17704.06, or the rights, if
any, of creditors under the Uniform Fraudulent Transfer Act, that may
arise against the member of a limited liability  company, or
a series of a limited liability  company.
   (b) Summons or other process against a limited liability company
 , or a series of a limited liability company,  may
be served by delivering a copy thereof to a manager, member, officer,
or person having charge of its assets or, if none of these persons
can be found, to any agent upon whom process might be served at the
time of dissolution. If none of those persons can be found with due
diligence and it is so shown by affidavit to the satisfaction of the
court, then the court may make an order that summons or other process
be served upon the dissolved limited liability company  , or
a series of a limited liability company,  by personally
delivering a copy of the summons or other process, together with a
copy of the order, to the Secretary of State or an assistant or
Deputy Secretary of State. Service in this manner is deemed complete
on the 10th day after delivery of the process to the Secretary of
State. Upon receipt of process and the fee therefor, the Secretary of
State shall give notice to the limited liability company as provided
in Section  17717.02   1702  .
   (c) Every limited liability company and each series of a
 limited liability company shall survive and continue to
exist indefinitely for the purpose of being sued in any quiet title
action. Any judgment rendered in that action shall bind each and all
of its members or other persons having any equity or other interest
in the limited liability company  , or a series of a limited
liability company,  to the extent of that interest and the
action shall have the same force and effect as an action brought
under the provisions of Sections 410.50 and 410.60 of the Code of
Civil Procedure. Service of summons or other process in any action
may be made as provided in Chapter 4 (commencing with Section 413.10)
of Title 5 of Part 2 of the Code of Civil Procedure or as provided
in subdivision (b).
   (d) For purposes of Article 4 (commencing with Section 19071) of
Chapter 4 of Part 10.2 of Division 2 of the Revenue and Taxation
Code, the liability described in this section shall be considered a
liability at law with respect to a dissolved limited liability
 company, or a series of a limited liability 
company.
   17707.08.  (a) (1) The managers shall cause to be filed in the
office of, and on a form prescribed by, the Secretary of State, a
certificate of dissolution upon the dissolution of the limited
liability company pursuant to Article 7 (commencing with Section
17707.01), unless the event causing the dissolution is that specified
in subdivision (c) of Section 17707.01, in which case the persons
conducting the winding up of the limited liability company's affairs
pursuant to Section 17707.04 shall have the obligation to file the
certificate of dissolution.
   (2) The certificate of dissolution shall set forth all of the
following:
   (A) The name of the limited liability company and the Secretary of
State's file number.
   (B) Any other information the persons filing the certificate of
dissolution determine to include.
   (3) If a dissolution pursuant to subdivision (b) of Section
17707.01 is made by the vote of all of the members and a statement to
that effect is added to the certificate of cancellation of articles
of organization pursuant to subdivision (b), the separate filing of a
certificate of dissolution pursuant to this subdivision is not
required.
   (b) (1) The persons who filed the certificate of dissolution shall
cause to be filed in the office of, and on a form prescribed by, the
Secretary of State, a certificate of cancellation of articles of
organization upon the completion of the winding up of the affairs of
the limited liability company pursuant to Section 17707.06, unless
the event causing the dissolution is that specified in subdivision
(c) of Section 17707.01, in that case the persons conducting the
winding up of the limited liability company's affairs pursuant to
Section 17707.04 shall have the obligation to file the certificate of
cancellation of articles of organization.
   (2) The certificate of cancellation of articles of organization
shall set forth all of the following:
   (A) The name of the limited liability company and the Secretary of
State's file number.
   (B) That a final franchise tax return, as described by Section
23332 of the Revenue and Taxation Code, or a final annual tax return,
as described by Section 17947 of the Revenue and Taxation Code, has
been or will be filed with the Franchise Tax Board, as required under
Part 10.2 (commencing with Section 18401) of Division 2 of the
Revenue and Taxation Code.
   (C) Any other information the persons filing the certificate of
cancellation of articles of organization determine to include.
   (3) The Secretary of State shall notify the Franchise Tax Board of
the filing.
   17707.09.  (a) Notwithstanding the filing of a certificate of
dissolution, a majority in interest of the members may cause to be
filed, in the office of, and on a form prescribed by, the Secretary
of State, a certificate of continuation, in any of the following
circumstances:
   (1) The business of the limited liability company is to be
continued pursuant to a unanimous vote of the remaining members.
   (2) The dissolution of the limited liability company was by vote
of the members pursuant to subdivision (b) of Section 17707.01 and
each member who consented to the dissolution has agreed in writing to
revoke his or her vote in favor of or consent to the dissolution.
   (3) The limited liability company was not, in fact, dissolved.
   (b) The certificate of continuation shall set forth all of the
following:
   (1) The name of the limited liability company and the Secretary of
State's file number.
   (2) The grounds provided by subdivision (a) that are the basis for
filing the certificate of continuation.
   (c) Upon the filing of a certificate of continuation, the
certificate of dissolution shall be of no effect from the time of the
filing of the certificate of dissolution.

      Article 8.  Foreign Limited Liability Companies


   17708.01.  (a) The law of the state or other jurisdiction under
which a foreign limited liability company is formed governs all of
the following:
   (1) The organization of the limited liability company, its
internal affairs, and the authority of its members and managers.
   (2) The liability of a member as member and a manager as manager
for the debts, obligations, or other liabilities of the limited
liability  company or a series of the limited liability
 company.
   (b) A foreign limited liability company shall not be denied a
certificate of registration by reason of any difference between the
law of the jurisdiction under which the limited liability company is
formed and the law of this state.
   (c) A certificate of registration does not authorize a foreign
limited liability company to engage in any business or exercise any
power that a limited liability company shall not engage in or
exercise in this state.
   17708.02.  (a) A foreign limited liability company  , or a
series of a foreign limited liability company,  may apply
for a certificate of registration to transact business in this state
by delivering an application to the Secretary of State for filing on
a form prescribed by the Secretary of State. The application shall
state all of the following:
   (1) The name of the foreign limited liability company  or
a series of a limited liability company and, if the name does not
comply with Section 17701.08, an alternate name adopted pursuant to
subdivision (a) of Section 17708.05  ,   and,
if different, the name under which it proposes to transact business
in this state  .
   (2) The state and date of its organization and a statement that
the foreign limited liability company is authorized to exercise its
powers and privileges in that state or other jurisdiction under whose
law the limited liability company  or a series of a foreign
limited liability company  is formed.
   (3) The address of the limited liability company's principal
executive office and of its principal office in this state, if any.
   (4) The name and address of the foreign limited liability company'
s initial agent for service of process in this state, unless a
corporate agent is designated in which case only the name of the
agent shall be set forth.
   (5) A statement that the Secretary of State is appointed the agent
of the foreign limited liability company for service of process if
the agent has resigned and has not been replaced or if the agent
cannot be found or served with the exercise of reasonable diligence.
   (b) A foreign limited liability company shall deliver with a
completed application under subdivision (a) a certificate of
existence, status  ,  or good standing or a record of
similar import signed by the Secretary of State or other official
having custody of the limited liability company's publicly filed
records in the state or other jurisdiction under whose law the
limited liability company is formed.  If a series of a
foreign limited liability company may not obtain a certificate of
existence or a record of similar import signed by the secretary of
state for the state or other jurisdiction under whose law it is
formed, it may deliver a certificate of existence or record of
similar import for the limited liability company of which it is a
series signed by the secretary of state for the state or other
jurisdiction under whose law it is formed. 
   (c) The Secretary of State shall include with instructional
materials, provided in conjunction with registration under
subdivision (a), a notice that filing the registration will obligate
the limited liability company to pay an annual tax to the Franchise
Tax Board pursuant to Section 17941 of the Revenue and Taxation Code.
That notice shall be updated annually to specify the dollar amount
of the tax. 
   (d) If a foreign limited liability company establishes or provides
for the establishment of one or more series of assets, that fact
shall be stated on the certificate of registration. In addition, the
foreign limited liability company shall state on the certificate of
registration whether the debts, liabilities, and obligations
incurred, contracted for or otherwise existing with respect to a
series, if any, shall be enforceable against the assets of that
series only, and not against the assets of the foreign limited
liability company generally or any other series of the foreign
limited liability company, and whether any of the debts, liabilities,
obligations, and expenses incurred, contracted for, or otherwise
existing with respect to the foreign limited liability company
generally or any other series of the foreign limited liability
company shall be enforceable against the assets of that series.

   17708.03.  (a) A foreign limited liability company that enters
into repeated and successive transactions of business in this state,
other than in interstate or foreign commerce, is considered to be
transacting business in this state within the meaning of this
article.
   (b) Without excluding other activities that may not be considered
to be transacting business in this state within the meaning of this
article, activities of a foreign limited liability company  ,
or a series of the foreign limited liability company,  that
do not constitute transacting business in this state include all of
the following:
   (1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
of those, or the settlement of claims or disputes.
   (2) Carrying on any activity concerning its internal affairs,
including holding meetings of its members or managers.
   (3) Maintaining accounts in financial institutions.
   (4) Maintaining offices or agencies for the transfer, exchange,
and registration of the limited liability company's own securities or
maintaining trustees or depositories with respect to those
securities.
   (5) Selling through independent contractors.
   (6) Soliciting or procuring orders, whether by mail or electronic
means or through employees or agents or otherwise, if the orders
require acceptance outside this state before they become contracts.
   (7) Creating or acquiring indebtedness, evidences of indebtedness,
mortgages, liens, or security interests in real or personal
property.
   (8) Securing or collecting debts or enforcing mortgages or other
security interests in property securing the debts and holding,
protecting, or maintaining property so acquired.
   (9) Conducting an isolated transaction that is completed within
180 days and is not in the course of a number of repeated
transactions of a like nature.
                                                            (10)
Transacting business in interstate commerce.
   (c) Without excluding other activities that may not be considered
to be transacting business in this state within the meaning of this
article, a foreign limited liability company  , or a series
of a foreign limited liability company,  shall not be
considered to be transacting that business in this state merely
because its subsidiary transacts that business in this state, or
merely because of its status as any one or more of the following:
   (1) A shareholder of a domestic corporation.
   (2) A shareholder of a foreign corporation transacting intrastate
business.
   (3) A limited partner of a foreign limited partnership transacting
intrastate business.
   (4) A limited partner of a domestic limited partnership.
   (5) A member or manager of a foreign limited liability company
transacting intrastate business.
   (6) A member or manager of a domestic limited liability company.
   (d) A person shall not be deemed to be transacting business in
this state within the meaning of this article merely because of its
status as a member or manager of a domestic limited liability company
 , or a series of a domestic limited liability company,
 or a foreign limited liability company registered to
transact intrastate business in this state.
   (e) This section does not apply in determining the contacts or
activities that may subject a foreign limited liability company
 , or a series of a foreign limited liability company,
 to service of process, taxation, or regulation under 
the  law of this state other than this article.
   17708.04.  Unless the Secretary of State determines that an
application for a certificate of registration does not comply with
the filing requirements of this article, the Secretary of State, upon
payment of all required filing fees, shall file the application of a
foreign limited liability company, prepare, sign, and file a
certificate of registration to transact business in this state, and
send a copy of the filed certificate, together with a receipt for the
fees paid, to the limited liability company or its representative.
   17708.05.  (a) A  foreign limited liability company or
series of a  foreign limited liability company whose name
does not comply with Section 17701.08 shall 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
17701.08. A  foreign limited liability company or series of a
 foreign limited liability company that adopts an alternate
name under this subdivision and obtains a certificate of
registration with the alternate name need not comply with fictitious
or assumed name statutes. After obtaining a certificate of
registration with an alternate name,  a foreign limited
liability company or series of  a foreign limited liability
company shall transact business in this state under the alternate
name unless the limited liability company  or series of a
foreign limited liability company  is authorized under
fictitious or assumed name statutes to transact business in this
state under another name.
   (b) If a foreign limited liability company  , or a series
of a foreign limited liability company  authorized to
transact business in this state changes its name to one that does not
comply with Section  17701.07   17701.08 
, it shall not thereafter transact business in this state until it
complies with subdivision (a) and obtains an amended certificate of
registration.
   17708.06.   (a)    To cancel its certificate of
registration to transact business in this state, a foreign limited
liability company shall deliver to the Secretary of State for filing
a notice of cancellation stating the name of the limited liability
company and that the limited liability company desires to cancel its
certificate of registration. The certificate is canceled when the
notice becomes effective. 
   (b) The Secretary of State may cancel the application and
certificate of registration of a foreign limited liability company 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 the 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. 
   17708.07.  (a) A foreign limited liability company  , or a
series of a foreign limited liability company,  transacting
business in this state shall not maintain an action or proceeding in
this state unless it has a certificate of registration to transact
business in this state.
   (b) The failure of a foreign limited liability company  ,
or a series of a foreign limited liability company,  to have
a certificate of registration to transact business in this state
does not impair the validity of a contract or act of the limited
liability company or prevent the limited liability company from
defending an action or proceeding in this state.
   (c) A member or manager of a foreign limited liability company
 , or a series of a foreign limited liability company,
 is not liable for the debts, obligations, or other
liabilities of the limited liability company solely because the
limited liability company transacted business in this state without a
certificate of registration.
   (d) If a foreign limited liability company  , or a series
of a foreign limited liability company,  transacts business
in this state without a certificate of registration or cancels its
certificate of registration, it shall be deemed to have appointed 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.

   17708.08.  If the members of a foreign limited liability company
residing in this state represent 25 percent or more of the voting
interests of the members of that limited liability company, those
members shall be entitled to all information and inspection rights
provided in Section 17704.10. 
    17708.08.   17708.09.   The Attorney
General may maintain an action to enjoin a foreign limited liability
company from transacting business in this state in violation of this
title.

      Article 9.  Actions by Members


   17709.01.  Any member of a foreign or domestic limited liability
company  or a series of foreign or domestic limited liability
company  may bring a class action on behalf of all or a
class of members to enforce any claim common to those members and any
of those actions shall be governed by the law governing class
actions generally, provided that in order to maintain the class
action there shall be no requirement that the class be so numerous
that joinder of all members of the class is impracticable.
   17709.02.  (a) No action shall be instituted or maintained in
right of any domestic or foreign limited liability company by any
member of the limited liability company  , or a series of a
limited liability company,  unless both of the following
conditions exist:
   (1) The plaintiff alleges in the complaint that the plaintiff was
a member of record, or beneficiary, at the time of the transaction or
any part of the transaction of which the plaintiff complains, or
that the plaintiff's interest later devolved upon the plaintiff by
operation of law from a member who was a member at the time of the
transaction or any part of the transaction complained of. Any member
who does not meet these 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 any evidence, by affidavit
or testimony, as it deems material, of all of the following:
   (A) There is a strong prima facie case in favor of the claim
asserted on behalf of the limited liability  company or a
series of a limited liability  company.
   (B) No other similar action has been or is likely to be
instituted.
   (C) The plaintiff acquired the interest before there was
disclosure to the public or to the plaintiff of the wrongdoing of
which plaintiff complains.
   (D) Unless the action can be maintained, the defendant may retain
a gain derived from defendant's willful breach of a fiduciary duty.
   (E) The requested relief will not result in unjust enrichment of
the limited liability company or any member of the limited liability
 company or a series of a limited liability 
company.
   (2) The plaintiff alleges in the complaint with particularity the
plaintiff's efforts to secure from the managers the action the
plaintiff desires or the reasons for not making that effort, and
alleges further that the plaintiff has either informed the limited
liability company  , or a series of a limited liability
company,  or the managers in writing of the ultimate facts
of each cause of action against each defendant or delivered to the
limited liability company or the managers a true copy of the
complaint that the plaintiff proposes to file.
   (b) In any action referred to in subdivision (a), at any time
within 30 days after service of summons upon the limited liability
company or upon any defendant who is a manager of the limited
liability company  , or a series of the limited liability
company,  or held that position at the time of the acts
complained of, the limited liability company or the defendant may
move the court for an order, upon notice and hearing, requiring the
plaintiff to furnish security 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 liability company  , or a
series of the limited liability company,  or its members.
   (2) That the moving party, if other than the limited liability
company  , or a series of the limited liability company,
 did not participate in the transaction complained of in any
capacity. The court, on application of the limited liability company
 , or a series of the limited liability company, 
or any defendant, may, for good cause shown, extend the 30-day period
for an additional period not exceeding 60 days.
   (c) (1) At the hearing upon any motion pursuant to subdivision
(b), the court shall consider evidence, written or oral, by witnesses
or affidavit, as may be material to the ground upon which the motion
is based, or to a determination of the probable reasonable expenses,
including  attorneys'   attorney's  fees,
of the limited liability company  , or a series of the
limited liability company,  and the moving party that will
be incurred in the defense of the action.
   (2) 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 nature and amount of security, not to exceed
fifty thousand dollars ($50,000), to be furnished by the plaintiff
for reasonable expenses, including attorney's fees, that may be
incurred by the moving party and the limited liability company in
connection with the action. A ruling by the court on the motion shall
not be a determination of any issue in the action or of the merits
of the action. The amount of the security may thereafter be increased
or decreased in the discretion of the court upon a showing that the
security provided has or may become inadequate or is excessive, but
the court shall not in any event increase the total amount of the
security beyond fifty thousand dollars ($50,000) in the aggregate for
all defendants. If the court, upon a motion, makes a determination
that security shall be furnished by the plaintiff as to any one or
more defendants, the action shall be dismissed as to that defendant
or those defendants, unless the security required by the court has
been furnished within any reasonable time as shall be fixed by the
court. The limited liability company and the moving party shall have
recourse to the security in the amount that the court determines upon
the termination of the action.
   (d) If the plaintiff, either before or after a motion is made
pursuant to subdivision (b), or any order or determination pursuant
to that motion, posts good and sufficient bond or bonds 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 shall be deemed to have complied with the requirements of
this section and with any order for security made pursuant to this
section. Any motion then pending shall be dismissed and no further or
additional bond or other security shall be required.
   (e) If a motion is filed pursuant to subdivision (b), no pleadings
need be filed by the limited liability company or any other
defendant and the prosecution of the action shall be stayed until 10
days after the motion has been disposed of. 
   17709.03.  (a) If a limited liability company or a series of a
limited liability company is named as or made a party in a derivative
proceeding, the limited liability company or a series that is a
party to the proceeding may appoint a special litigation committee to
investigate the claims asserted in the proceeding and determine
whether pursuing the action is in the best interests of the limited
liability company or the series that is a party to the proceeding. If
the limited liability company or such series appoints a special
litigation committee, on motion by the committee made in the name of
the limited liability company, except for good cause shown, the court
shall stay discovery for the time reasonably necessary to permit the
committee to make its investigation. This subdivision does not
prevent the court from enforcing a person's right to information
under Section 17704.10 or, for good cause shown, granting
extraordinary relief in the form of a temporary restraining order or
preliminary injunction.
   (b) A special litigation committee shall be composed of one or
more disinterested and independent individuals, who may be members.
   (c) A special litigation committee shall be appointed as follows:
   (1) In a member-managed limited liability company as follows:
   (A) By the consent of a majority of the members or a series of a
member-managed limited liability company not named as defendants or
plaintiffs in the proceeding.
   (B) If all members are named as defendants or plaintiffs in the
proceeding, by a majority of the members named as defendants.
   (2) In a manager-managed limited liability company or a series of
a manager-managed limited liability company as follows:
   (A) By a majority of the managers not named as defendants or
plaintiffs in the proceeding.
   (B) If all managers are named as defendants or plaintiffs in the
proceeding, by a majority of the managers named as defendants.
   (d) After appropriate investigation, a special litigation
committee may determine that it is in the best interests of the
limited liability company or of the series that is a party to the
proceeding that the proceeding do any of the following:
   (1) Continue under the control of the plaintiff.
   (2) Continue under the control of the committee.
   (3) Be settled on terms approved by the committee.
   (4) Be dismissed.
   (e) After making a determination under subdivision (d), a special
litigation committee shall file with the court a statement of its
determination and its report supporting its determination, giving
notice to the plaintiff. The court shall determine whether the
members of the committee were disinterested and independent and
whether the committee conducted its investigation and made its
recommendation in good faith, independently, and with reasonable
care, with the committee having the burden of proof. If the court
finds that the members of the committee were disinterested and
independent and that the committee acted in good faith,
independently, and with reasonable care, the court shall enforce the
determination of the committee. Otherwise, the court shall dissolve
the stay of discovery entered under subdivision (a) and allow the
action to proceed under the direction of the plaintiff. 

      Article 10.  Merger and Conversion


   17710.01.  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 liability company that
results from a conversion of a domestic limited liability company
under this title.
   (b) "Converted limited liability company" means a domestic limited
liability company that results from a conversion of an other
business entity or a foreign other business entity or a foreign
limited liability company pursuant to Section 17710.08.
   (c) "Converting limited liability company" means a domestic
limited liability company that converts to an other business entity
or a foreign other business entity or a foreign limited liability
company pursuant to this title.
   (d) "Converting entity" means an other business entity or a
foreign other business entity or a foreign limited liability company
that converts to a domestic limited liability company pursuant to
Section 17710.08.
   (e) "Constituent corporation" means a corporation that is merged
with or into one or more limited liability companies or other
business entities and that includes a surviving corporation.
   (f) "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 that
includes a surviving limited liability company.
   (g) "Constituent other business entity" means an other business
entity that is merged with or into one or more limited liability
companies and that includes a surviving other business entity.
   (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) "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 liability
company, limited membership, business trust, real estate investment
trust, or unincorporated association, other than a nonprofit
association, but excludes a limited liability company.
   (l) "Surviving limited liability company" means a limited
liability company into which one or more other limited liability
companies or other business entities are merged.
   (m) "Surviving other business entity" means an other business
entity into which one or more limited liability companies are merged.

   17710.02.  (a) A limited liability company may be converted into
an other business entity or a foreign other business entity or a
foreign limited liability company pursuant to this article if both of
the following apply:
   (1) Pursuant to a conversion into a domestic or foreign general
partnership or limited partnership or into a foreign limited
liability company, each of the members of the converting limited
liability company receives a percentage interest in the profits and
capital of the converted entity equal to that member's percentage
interest in profits and capital of the converting limited liability
company 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 liability company 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
members of the class consent.
   (B) The nonredeemable limited liability company interests of the
converting limited liability company 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 liability company to an other
business entity or a foreign other business entity or a foreign
limited liability company 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 liability company complies with all other
requirements of any other law that applies to conversion to the
converted entity.
   17710.03.  (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 shares of, securities of, or interests in, the
converted entity.
   (4) The provisions of the governing documents for the converted
entity, including the 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) (1) The plan of conversion shall be approved by all managers
and a majority in interest of each class of membership interest or if
there are no managers, a majority in interest of each class of
membership of the converting limited liability company, unless a
greater or lesser approval is required by the operating agreement of
the converting limited liability company.
   (2) 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 limited members of the converting limited
liability company, unless the plan of conversion provides that all
members will have dissenters' rights as provided in Article 11
(commencing with Section 17711.01).
   (c) Upon the effectiveness of the conversion, all members of the
converting limited liability company, except those that exercise
dissenters' rights as provided in Article 11 (commencing with Section
17711.01), shall be deemed parties to any governing documents for
the converted entity adopted as part of the plan of conversion,
regardless of whether or not the member has executed the plan of
conversion or the governing documents for the converted entity. Any
adoption of governing documents made pursuant to the conversion 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 managers and a majority of the members or if there
are no managers, a majority of the members of the converting limited
liability company and, if the amendment changes any of the principal
terms of the plan of conversion, the amendment is approved by the
managers and members of the converting limited liability company in
the same manner and to the same extent as required for the approval
of the original plan of conversion.
   (e) The managers by unanimous approval and the members of a
converting limited liability company may, by majority approval at any
time before the conversion is effective, in their discretion,
abandon a conversion, without further approval by the managers or
members, subject to the contractual rights of third parties other
than managers or members.
   (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 limited liability company 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 where records are to be
kept pursuant to Section 17701.13 if the converted entity is a
domestic limited liability company. 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 shares, interests, 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.
   17710.04.  (a) A conversion into an other business entity or a
foreign other business entity or a foreign limited liability company
shall become effective upon the earliest date that all of the
following occur:
   (1) The plan of conversion is approved by the members of the
converting limited liability company, as provided in Section
17710.03.
   (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 17710.06.
   (3) The effective date, if set forth in the plan of conversion,
occurs.
   (b) A copy of the statement of  limited liability company
 partnership  authority or articles of organization
complying with Section 17710.06, if applicable, duly certified by
the Secretary of State, is conclusive evidence of the conversion of
the limited liability company.
   17710.05.  (a) If the limited liability company is converting into
a foreign limited liability company 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
liability company or foreign other business entity and the conversion
shall become effective in accordance with that law.
   (b) (1) To enforce an obligation of a limited liability company
that has converted to a foreign limited liability company 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 none of the officers, members,
managers, or agents of that entity may be located after diligent
search, and it is 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 the time of
service and the Secretary of State's action with respect to the
process served. 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 of process to that entity, and the
forwarding of the process shall be competent and prima facie evidence
of the matters stated therein.
   17710.06.  (a) Upon conversion of a limited liability company, one
of the following applies:
   (1) If the limited liability company is converting into a domestic
limited partnership, a statement of conversion shall be completed on
a certificate of limited partnership for the converted entity and
shall be filed with the Secretary of State.
   (2) If the limited liability company 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 liability company 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 liability company is converting to a foreign
limited liability company 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 members, unless a lesser number is provided
in the articles of organization or operating agreement, and shall set
forth all of the following:
   (1) The name and the Secretary of State's file number of the
converting limited liability company.
   (2) A statement that the principal terms of the plan of conversion
were approved by a vote of the members, that equaled or exceeded the
vote required under Section 17710.03, 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
liability company, and no converting limited liability company that
has made the filing is required to take any action under Article 7
(commencing with Section 17707.01) as a result of that conversion.
   17710.07.  (a) Whenever a limited liability company or other
business entity having any real property in this state converts into
a limited liability company or an other business entity pursuant to
the laws of this state or of the state or place where the limited
liability company or other business entity was organized, and the
laws of the state or place of organization, including this state, of
the converting limited liability company or other converting entity
provide substantially that the conversion vests in the converted
limited liability company or other converted entity all the real
property of the converting limited liability company or other
converting entity, the filing for record in the office of the county
recorder of any county in this state where any of the real property
of the converting limited liability company or other converting
entity is located shall evidence record ownership in the converted
limited liability company or other converted entity of all interest
of the converting limited liability company or other converting
entity in and to the real property located in that county if both of
the following apply:
   (1) A certificate of conversion or statement of partnership
authority, certificate of limited partnership, or articles of
organization complying with Section 17710.06, in the form prescribed
and certified by the Secretary of State.
   (2) A copy of a certificate of conversion on a statement of
limited 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 liability company 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
liability company by conversion, containing a statement of
conversion, filed pursuant to subdivision (a) of Section 17710.06,
stating the name of the converting limited liability company or other
converting entity in whose name property was held before the
conversion and the name of the converted entity or converted limited
liability company, but not containing all of the other information
required by Section 17710.06, 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 an other business entity or a limited
liability company 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.
   17710.08.  (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
article only if the converting entity is authorized by the laws
pursuant to 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 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 liability company into a
domestic limited liability company shall be approved by the number or
percentage of the members, managers, 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
article 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 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 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 liability company and no
converting foreign limited liability company or foreign limited
liability company that has made the filing is required to take any
action under Article 7 (commencing with Section  17701.01)
  17707.01)  concerning dissolution 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.
   17710.09.  (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 17701), Part 10.20
(commencing with Section 18401), 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 liability company are
vested in the converted entity or converted limited liability
company.
   (2) All debts, liabilities, and obligations of the converting
entity or converting limited liability company continue as debts,
liabilities, and obligations of the converted entity or converted
limited liability company.
   (3) All rights of creditors and liens upon the property of the
converting entity or converting limited liability company shall be
preserved unimpaired and remain enforceable against the converted
entity or converted limited liability company to the same extent as
against the converting entity or converting limited liability company
as if the conversion had not occurred.
   (4) Any action or proceeding pending by or against the converting
entity or converting limited liability company may be continued
against the converted entity or converted limited liability company
as if the conversion had not occurred.
   (c) A member of a converting limited liability company is liable
for all of the following:
   (1) All obligations of the converting limited liability company
for which the member 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 member of a limited liability
company, or a shareholder in a corporation, or unless expressly
provided otherwise in the articles of organization or other governing
documents, a limited partner of a limited partnership, 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.
   (3) A member of a converted limited liability company remains
liable for any and all obligations of the converting entity for which
the member was personally liable before the conversion, but only to
the extent that the member was liable for the obligations of the
converting entity prior to the conversion.
   17710.10.  Mergers of limited liability companies shall be
governed by Sections 17710.11 to 17710.19, inclusive.
   17710.11.  The following entities may be merged pursuant to this
article:
   (a) Two or more limited liability companies into one limited
liability company.
   (b) One or more limited liability companies and one or more other
business entities into one of those other business entities.
   (c) (1) One or more limited liability companies and one or more
other business entities into one limited liability company.
   (2) Notwithstanding this section, the merger of any number of
limited liability companies 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 the following apply:
   (A) If a limited liability company is the surviving limited
liability company, the foreign other business entities are not
prohibited by the laws under which they are organized from effecting
that merger. 
   If 
    (B)     If  a foreign limited
liability company 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.
   17710.12.  (a) Each limited liability company and other business
entity that desires to merge shall approve an agreement of merger.
   The agreement of merger shall be approved by all managers and a
majority in interest of each class of membership interests of each
constituent limited liability company, unless a greater approval is
required by the operating agreement of the constituent limited
liability company. Notwithstanding the previous sentence, if the
members of any constituent limited liability company become
personally liable for any obligations of a constituent limited
liability company 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 members of the constituent limited liability
company, unless the agreement of merger provides that all members
shall have the dissenters' rights provided in Article 11 (commencing
with Section 17711.01). 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
liability company, 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 the organization of the surviving
limited liability company or surviving other business entity, and of
each disappearing limited liability company and disappearing other
business entity, and the agreement of merger may change the name of
the surviving limited liability company, the new name may be the same
as or similar to the name of a disappearing domestic or foreign
limited liability company, subject to Section 17710.08.
   (3) The manner of converting the membership interests of each of
the constituent limited liability companies into interests, shares,
or other securities of the surviving limited liability company or
surviving other business entity, and if limited liability company
interests of any of the constituent limited liability companies are
not to be converted solely into interests, shares, or other
securities of the surviving limited liability company or surviving
other business entity, the cash, property, rights, interests, or
securities that the holders of the limited liability company
interests are to receive in exchange for the membership interests,
the cash, property, rights, interests, or securities that may be in
addition to or in lieu of interests, shares, or other securities of
the surviving limited liability company or surviving other business
entity, or that the  limited  liability company 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, as
provided in subdivision (b) of Section  17711.13 
 17710.14  .
   (5) Any other details or provisions that are desired, including,
without limitation, a provision for the treatment of fractional
membership interests.
   (b) (1) Each membership interest of the same class of any
constituent limited liability company, other than a membership
interest in another constituent limited liability company that is
being canceled and that is held by a constituent limited liability
company or its parent or a limited liability company of which the
constituent limited liability company is a parent shall, unless all
members of the class consent, be treated equally with respect to any
distribution of cash, property, rights, interests, or securities.
   (2) Notwithstanding paragraph (1), except in a merger of a limited
liability company with a limited liability company that controls at
least 90 percent of the membership interests entitled to vote with
respect to the merger, the unredeemable membership interests of a
constituent limited liability company may be converted only into
unredeemable interests or securities of the surviving limited
liability company or other business entity, or a parent if a
constituent limited liability company or a constituent other business
entity or its parent owns, directly or indirectly, prior to the
merger, membership interests of another constituent limited liability
company 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 liability company 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 members of the class consent.

   (3) This subdivision shall apply only to constituent limited
liability companies with over 35 members.
   (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 17710.14, if the
amendment is approved by the managers and members of each constituent
limited liability company 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 managers and members of each constituent
limited liability company 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 managers and members of a constituent limited liability
company may, in their discretion, abandon a merger, subject to the
contractual rights, if any, of third parties, including other
constituent limited liability companies and constituent other
business entities, without further approval by the membership
interests, at any time before the merger is effective.
   (e) An agreement of merger approved in accordance with subdivision
(a) may do the following:
   (1) Effect any amendment to the operating agreement of any
constituent limited liability company.
   (2) Effect the adoption of a new operating agreement for a
constituent limited liability company if it is the surviving limited
liability company in the merger. Any amendment to an operating
agreement or adoption of a new operating 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 members is required to approve an
amendment to the operating agreement of a constituent limited
liability company than is required to approve the agreement of merger
pursuant to subdivision (a), and the number of members that approve
the agreement of merger is less than the number of members required
to approve an amendment to the operating agreement of the constituent
limited liability company, any amendment to the operating agreement
or adoption of a new operating agreement of that constituent limited
liability company made pursuant to the first sentence of this
subdivision shall be effective only if the agreement of merger
provides that all of the members shall have the dissenters' rights
provided in Article 11 (commencing with Section 17711.01).
   (f) The surviving limited liability company 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 17710.14, as applicable, and, upon the
request of a member of a constituent limited liability company or a
holder of shares, interests, or other securities of a constituent
other business entity, the managers or members of the surviving
limited liability company or the authorized person of the surviving
other business entity shall promptly deliver to the member or the
holder of shares, interests, or other securities, at the expense of
the surviving limited liability company or surviving other business
entity, a copy of the agreement of merger. A waiver by a member or
holder of shares, interests, or other securities of the rights
provided in this subdivision shall be unenforceable.
   17710.13.  Subdivision (b) of Section 17710.12 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.
   17710.14.  (a) If the surviving entity is a limited liability
company 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 liability companies
and any constituent other business entities, the constituent limited
liability companies 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 liability company by all managers, or if none, all members
unless a lesser number is provided in the articles of organization or
operating agreement of the domestic constituent limited liability
company and by each foreign constituent limited liability company by
one or more managers, or if none, members, 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 liability companies and
constituent other business entities, separately identifying the
disappearing limited liability companies and disappearing other
business entities and the surviving limited liability company or
surviving other business entity.
   (2) If a vote of the members was required pursuant to Section
17710.12, 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 that 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 liability company and not
an other business entity, any change required to the information set
forth in the articles of organization of the surviving limited
liability company resulting from the merger, including any change in
the name of the surviving limited liability company resulting from
the merger. The filing of a certificate of merger setting forth any
such changes to the articles of organization of the surviving limited
liability company shall have the effect of the filing of a
certificate of amendment by the surviving limited liability company,
and the surviving limited liability company need not file an
amendment under Section 17702.02 to reflect those changes.

(4) The future effective date, that shall be a date 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 liability company, the full name of the entity, type
of entity, legal jurisdiction where 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 where each constituent other business entity
is organized, including, if a domestic corporation is a party to the
merger,  as   or  required under paragraph
(2) of subdivision (g) of Section  17711.13  
1113  . If the surviving entity is a foreign limited liability
company in a merger where 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  17711.13   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 that a domestic corporation is a constituent
party, after approval of the merger by the constituent limited
liability companies 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  17711.13
  1113  . The certificate of merger shall be
executed and acknowledged by each domestic constituent limited
liability company by all general members, unless a lesser number is
provided in the articles of organization of limited liability company
of the domestic constituent limited liability company.
   (c) A certificate of merger or the agreement of merger, as is
applicable under subdivisions (a) and (b), shall have the effect of
the filing of a certificate of cancellation for each disappearing
limited liability company, and no disappearing limited liability
company need take any action under Article 7 (commencing with Section
17707.01) concerning dissolution 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 subdivisions (a) and (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.
   17710.15.  (a) Unless a future effective date is provided in a
certificate of merger or the agreement of merger, if an agreement of
merger is required to be filed under Section 17710.14, in which event
the merger shall be effective at that future effective date, 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 the constituent limited liability companies, either by
themselves or together with constituent other business entities, into
the surviving other business entity, or the constituent limited
liability companies or the constituent other business entities, or
both, into the surviving limited liability company.
   (2) In a merger in which the surviving entity is a corporation in
a merger in which a domestic corporation and a domestic limited
liability company 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.
   17710.16.  (a) Upon a merger of limited liability companies or
limited liability companies and other business entities pursuant to
this chapter, the separate existence of the disappearing limited
liability companies and disappearing other business entities ceases
and the surviving limited liability company 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 liability companies 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
liability company 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 liability companies and constituent
other business entities shall be preserved unimpaired and may be
enforced against the surviving limited liability company 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 liability company or the
surviving other business entity, provided that such liens upon the
property of a disappearing limited liability company 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 liability company or disappearing other business
entity may be prosecuted to judgment, which shall bind the surviving
limited liability company or surviving other business entity, or the
surviving limited liability company or surviving other business
entity may be proceeded against or be substituted in the place of the
disappearing limited liability company or disappearing other
business entity.
   (d) Nothing in this article is intended to affect the liability a
member of a disappearing limited liability company may have in
connection with the debts and liabilities of the disappearing limited
liability company existing prior to the time the merger is
effective.
   17710.17.  (a) 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 Article 11 (commencing with Section 17711.01) and, with respect
to any domestic constituent corporation, Section  17711.13
  1113  , and Chapter 12 (commencing with Section
 17712.00)   1200)   , and Chapter
13 (commencing with Section  17713.00)   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 liability company or surviving other business
entity.
   (b) If the surviving entity is a domestic limited liability
company or domestic other business entity, other than a domestic
corporation, the certificate of merger shall be filed as provided in
subdivision (a) of Section 17710.14, and thereupon, subject to
subdivision (a) of Section 17710.15, 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 pursuant to  in  subdivision (b) of Section
17710.14, and thereupon, subject to subdivision (a) of Section
17710.15, 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 pursuant to
Article 11 (commencing with Section 17711.01) of Division 1 of Title
1, with respect to any constituent corporation or constituent
limited liability company.
   (c) If the surviving entity is a foreign limited liability company
or foreign other business entity, the merger shall become effective
in accordance with the  law   laws  of the
jurisdiction where the surviving limited liability company or
surviving other business entity is organized, but 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 pursuant
to Section 17710.14.
   (d) 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 17708.02, the filing of the certificate of merger
or agreement of merger, as is applicable under Section 17710.14,
automatically has the effect of a cancellation of registration for
that foreign limited liability company pursuant to Section 17708.07
without the necessity of the filing of a certificate of cancellation.

   (e) The provisions of subdivision (b) of Section 17710.12 and
Article 11 (commencing with Section 17711.01) 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.
   (f) 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 the laws of this state.

   17710.18.  Whenever a domestic or foreign limited liability
company or other business entity having any real property in this
state merges with another limited liability company or other business
entity pursuant to the laws of this state or of the state or place
where any constituent limited liability company or constituent other
business entity was organized, and the laws of the state or place of
organization, including this state of any disappearing limited
liability company 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 liability
company or surviving other business entity all the real property of
any disappearing limited liability company and disappearing other
business entity, the filing for record in the office of the county
recorder of any county in this state where any of the real property
of the disappearing limited liability company or disappearing other
business entity is located of either of the following shall evidence
record ownership in the surviving limited liability company or
surviving other business entity of all interest of the disappearing
limited liability company or disappearing other business entity in
and to the real property located in that county in which both of the
following occur:
   (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.
   17710.19.  Recording of the certificate of merger in accordance
with Section 17710.18 shall create, in favor of bona fide purchasers
or encumbrancers for value, a conclusive presumption that the merger
was validly completed.
   17710.20.  (a) Upon a 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
17710.01) or 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 this state, the Secretary of State shall
notify the Franchise Tax Board of the merger.

      Article 11.  Dissenters' Rights


   17711.01.  (a) For purposes of this article, "reorganization"
refers to any of the following:
   (1) A conversion pursuant to Article 10 (commencing with Section
17710.01).
   (2) A merger pursuant to Article 10 (commencing with Section
17710.01).
   (3) The acquisition by one limited liability company in exchange,
in whole or in part, for its membership interests, or the membership
interests or equity securities of a limited liability company or
other business entity that is in control of the acquiring limited
liability company, of membership interests or equity securities of
another limited liability company or other business entity if,
immediately after the acquisition, the acquiring limited liability
company has control of the other limited liability company or other
business entity.
   (4) The acquisition by one limited liability company in exchange
 ,  in whole or in part  ,  for its membership
interests, or the membership interests or equity securities of a
limited liability company or other business entity which is in
control of the acquiring limited liability company, or for its debt
securities, or debt securities of a limited liability company or
other business entity which is in control of the acquiring limited
liability company, that are not adequately secured and that 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 liability company 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 liability company or other
business entity.
   17711.02.  (a) If the approval of outstanding membership interests
is required for a limited liability company to participate in a
reorganization, pursuant to the limited liability company agreement,
or otherwise, then each member of the limited liability company
holding those interests may, by complying with this article, require
the limited liability company to purchase for cash, at its fair
market value, the interest owned by the member in the limited
liability company, 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 member 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
instance the limited liability company whose outstanding interests
are so listed provides, in its notice to members requesting their
approval of the proposed reorganization, a summary of the provisions
of this section and Sections 17711.03, 17711.04, 17711.05, and
17711.06.
   (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 members
entitled to vote on the reorganization.
   (3) Either:
   (A) Was not voted in favor of the reorganization.
   (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 subparagraph (A) rather than
this subparagraph applies in any event where the approval for the
proposed reorganization is sought by written consent rather than at a
meeting.
   (4) The member has demanded that the interest be purchased by the
limited liability company at its fair market value in accordance with
Section 17711.03.
   (5) The member has submitted the interest for endorsement, if
applicable, in accordance with Section 17711.04.
   (c) As used in this article, "dissenting member" means the
recordholder of a dissenting interest, and includes an assignee of
record of that interest.
   17711.03.  (a) If members have a right under Section 17711.02,
subject to compliance with paragraphs (4) and (5) of subdivision (b)
of Section 17711.02, to require the limited liability company to
purchase their membership interests for cash, the limited liability
company shall mail to each member a notice of the approval of the
reorganization by the requisite vote or consent of the members,
within 10 days after the date of the approval, accompanied by a copy
of this section and Sections 17711.01, 17711.02, 17711.04, and
17711.05, a statement of the price determined by the limited
liability company to represent the fair market value of its
outstanding interests, and a brief description of the procedure to be
followed if the member desires to exercise the member's rights under
those sections. The statement of price constitutes an offer by the
limited liability company to purchase at the price stated any
dissenting interests as defined in subdivision (b) of Section
17711.02, unless they lose their status as dissenting interests under
Section 17711.11.
   (b) Any member who has a right to require the limited liability
company to purchase the member's interest for cash under Section
17711.02, subject to compliance with paragraphs (4) and (5) of
subdivision (b) of Section 17711.02, and who desires the limited
liability company to purchase that interest, shall make written
demand upon the limited liability company for the purchase of that
interest and the payment to the member in cash of its fair market
value. The demand is not effective for any purpose unless it is
received by the limited liability company 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
17711.02, not later than the date of the members' 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 members is mailed by the
limited liability company to the members.
   (c) The demand shall state the number or amount of the member's
interest in the limited liability company and shall contain a
statement of what the member 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 member to sell the interest at such price.
   17711.04.  Within 30 days after the date on which notice of the
approval of the outstanding interests of the limited liability
company is mailed to the member pursuant to subdivision (a) of
Section 17711.03, the member shall submit to the limited liability
company at its principal office or at the office of any transfer
agent thereof, if the interest is evidenced by a certificate, the
member's certificate representing the interest which the member
demands that the limited liability company 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 if the interest is not evidenced by a
certificate, written notice of the number or amount of interest which
the member demands that the limited liability company purchase. Upon
subsequent transfers of the dissenting interest on the books of the
limited liability company, 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.
   17711.05.  (a) If the limited liability company and the dissenting
member agree that the member's interest is a dissenting interest and
agree upon the price to be paid for the dissenting interest, the
dissenting member 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 member's interest as between the limited liability
company and that member shall be in writing and filed in the records
of the limited liability company.
   (b) Subject to the provisions of Section 17711.08, payment of the
fair market value for a dissenting interest shall be made within 30
days after the amount 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.
   17711.06.  (a) If the limited liability company denies that a
membership interest is a dissenting interest, or the limited
liability company and a dissenting member fail to agree upon the fair
market value of a dissenting interest, then the member or any
interested limited liability company, within six months after the
date when notice of the approval of the reorganization by the
requisite vote or consent of the members was mailed to the member,
but not later, 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 members may join as plaintiffs or be
joined as defendants in any of those actions and two or more of those
actions may be consolidated.
   (c) On the trial of the action, the court shall determine the
issues. If the status of the membership 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.
   17711.07.  (a) If the court appoints an appraiser or appraisers,
they shall proceed forthwith to determine the fair market value per
interest of the outstanding membership interests of the limited
liability company, 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 a 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 membership interests of
the limited liability company, by class if necessary.
   (c) Subject to Section 17711.08, judgment shall be rendered
against the limited liability company for payment of an amount equal
to the fair market value, as determined by the court, of each
dissenting interest that any dissenting member who is a party, or has
intervened, is entitled to require the limited liability company to
purchase, with interest thereon at the legal rate on judgments from
the date of consummation of the reorganization.
   (d) Any of those judgments shall be payable forthwith, provided,
however, that with respect to membership interests evidenced by
transferable certificates of interest, only upon the endorsement and
delivery to the limited liability company 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 liability company, the
limited liability company 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 liability
company under subdivision (a) of Section 17711.02, attorney's fees
and fees of expert witnesses.
   17711.08.  To the extent that the payment to dissenting members of
the fair market value of their dissenting interests would require
the dissenting members to return payment or a portion of the payment
by reason of Section 17711.09 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 members shall become creditors
of the limited liability company 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 liability
company, such debt to be payable when permissible.
   17711.09.  Any cash distributions made by a limited liability
company to a dissenting member after the date of consummation of the
reorganization, but prior to any payment by the limited liability
company for that dissenting member's interest, shall be credited
against the total amount to be paid by the limited liability company
for such dissenting interest.
   17711.10.  Except as expressly limited by this article, dissenting
members 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 liability
company for their dissenting interests. A dissenting member may not
withdraw a demand for payment unless the limited liability company
consents thereto.
   17711.11.  A dissenting interest loses its status as a dissenting
interest and the holder thereof ceases to be a dissenting member and
ceases to be entitled to require the limited liability company to
purchase the interest upon the happening of any of the following:
   (a) The limited liability company abandons the reorganization.
   Upon abandonment of the reorganization, the limited liability
company shall pay, on demand, to any dissenting member who has
initiated proceeding in good faith under this article, all reasonable
expenses incurred in such proceedings and reasonable attorney's
fees.
   (b) The interest is transferred prior to its submission for
endorsement in accordance with Section 17711.04.
   (c) The dissenting member and the limited liability company 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 17711.06, within six months after the date upon which notice
of the approval of the reorganization by the requisite vote or
consent of members was mailed to the member.
   (d) The dissenting member, with the consent of the limited
liability company, withdraws the member's demand for purchase of the
dissenting interest.
   17711.12.  If litigation is instituted to test the sufficiency or
regularity of the vote or consent of the members in authorizing a
reorganization, any proceedings under Sections 17711.06 and 17711.07
shall be suspended until final determination of that litigation.
   17711.13.  (a) This article applies to the following:
   (1) A domestic limited liability company formed on or after
January 1,  2013   2014  .
   (2) A foreign limited liability company if the foreign limited
liability company was formed on or after January 1,  2013
  2014,  or filed an application to qualify to do
business on or after January 1,  2013   2014
 , and members holding more than 50 percent of the voting power
held by all members of the foreign limited liability company reside
in this state.
   (3) A limited liability company if the operating agreement so
provides or if all managers and a majority of the members, if it is a
manager-managed limited liability company, or a majority, if it is a
member-managed  limited liability company, determine that
this article shall apply.
   (b) This article does not apply to membership interests governed
by operating agreements whose terms and provisions specifically set
forth the amount to be paid in respect of those interests in the
event of a reorganization of the limited liability company, or to any
limited liability company with 35 or fewer members if all the
members have waived the application of this chapter in writing,
whether in an operating agreement or otherwise, provided that if, at
the time of the reorganization, the limited liability company had
more than 35 members, any waiver shall be ineffective as to that
reorganization.
   17711.14.  (a) No member of a limited liability company who has a
right under this article to demand payment of cash for the interest
owned by a member in a limited liability company 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 members required to
authorize or approve the reorganization has been obtained in
accordance with the procedures established therefor by the operating
agreement of the limited liability company.
   (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 member
of the controlled party who has not demanded payment of cash for the
member's interest pursuant to this article; but if the member
institutes any action to attack the validity of the reorganization or
to have the reorganization set aside or rescinded, the member shall
not thereafter have any right to demand payment of cash for the
member'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, both of the following apply:
   (1) A party to a reorganization that controls another party to a
reorganization shall have the burden of proving that the transaction
is just and reasonable as to the members of the controlled party.
   (2) A person that controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and
reasonable as to the members of any party so controlled.
   (d) Subdivisions (b) and (c) shall not apply if a majority of the
members other than members 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 member of a limited liability
company that is a party to a reorganization from bringing an action
against a manager of the limited liability company, the limited
liability company, or any person controlling a manager 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.   Series   Class 
Provisions


   17712.01.   (a)    If a
limited liability company complies with Section 17712.02, an
  The articles of organization or the  operating
agreement may  establish or  provide for the
 establishment of one or more designated series of assets
  that provides either of the following: 
 creation of classes of members having those relative rights,
powers   ,   and duties as the articles of
organization or operating agreement may provide, including rights,
powers   ,   and duties senior to other classes of
members.  
   (1) Separate rights, powers, or duties with respect to specified
property or obligations of the limited liability company or profits
and losses of specified property or obligations.  
   (2) A separate purpose or investment objective.  

   (b) A series established in accordance with subdivision (a) may
carry on any activity, whether or not for profit.  
   17712.02.  (a) Subject to subdivision (b) the following apply:
   (1) The debts, liabilities, obligations, and expenses incurred,
contracted for, or otherwise existing with respect to a series shall
be enforceable against the assets of that series only, and shall not
be enforceable against the assets of the limited liability company
generally or any other series of the limited liability company.
   (2) None of the debts, liabilities, obligations, and expenses
incurred, contracted for, or otherwise existing with respect to the
limited liability company generally or any other series shall be
enforceable against the assets of a series.
   (b) Subdivision (a) applies only if all of the following apply:
   (1) The records maintained for that series account for the assets
of that series separately from the other assets of the limited
liability company or any other series.
   (2) The operating agreement contains a statement regarding the
effect of the limitations provided in subdivision (a).
   (3) The limited liability company's articles of organization
contains a statement that the limited liability company may have one
or more series of assets subject to the limitations provided in
subdivision (a).  
   17712.03.  (a) Assets of a series may be held directly or
indirectly, including being held in the name of the series, in the
name of the limited liability company, through a nominee, or
otherwise.
   (b) If the records of a series are maintained in a manner so that
the assets of the series can be reasonably identified by specific
listing, category, type, quantity, or computational or allocational
formula or procedure, including a percentage or share of any assets,
or by any other method in which the identity of the assets can be
objectively determined, the records are considered to satisfy the
requirements of Section 17712.02.  
   17712.04.  The statement of limitation on liabilities of a series
required by Section 17712.02 is sufficient even if neither of the
following apply at the time the statement is made:
   (a) The limited liability company has established any series under
this title when the statement of limitations is contained in the
articles of organization.
   (b) The statement of limitations makes reference to a specific
series of the limited liability company.  
   17712.05.  (a) Except to the extent the operating agreement
specifically provides otherwise, a member or manager associated with
a series or a member or manager of the limited liability company is
not liable for a debt, obligation, or liability of a series,
including a debt, obligation, or liability under a judgment, decree,
or court order.
   (b) As provided in Section 17701.10, the operating agreement may
expand or restrict any duties, including fiduciary duties, and
related liabilities that a member, manager, officer, or other person
of a series has with respect to any of the following:
   (1) The series or the limited liability company.
   (2) A member or manager of the series.
   (3) A member or manager of the limited liability company.
 
   17712.06.  (a) An event that under this article or the operating
agreement causes a manager to cease to be a manager with respect to a
series does not, in and of itself, cause the manager to cease to be
a manager of the limited liability company or with respect to any
other series of the limited liability company.
   (b) An event that under this article or the operating agreement
causes a member to dissociate as a member of a series does not, in
and of itself, cause the member to cease to be a member of any other
series or terminate the continued membership of a member in the
limited liability company or require the winding up of the series,
regardless of whether the member was the last remaining member of the
series.  
   17712.07.  (a) A person has the power to dissociate as a member of
a series at any time, rightfully or wrongfully, by withdrawing as a
member of a series by express will under Section 17712.08.
   (b) A person's dissociation from a series is wrongful only if
subdivision (a) of at least one of the following applies:
   (1) The dissociation is in breach of an express provision of the
operating agreement.
   (2) The dissociation occurs before the termination of the series
and at least one of the following applies:
   (A) The person withdraws as a member of a series by express will.
   (B) The person is expelled as a member of the series by judicial
determination under Section 17712.04.
   (C) The person is dissociated as a member of a series under
subdivision (h) of Section 17712.08 by being a debtor in bankruptcy.
   (D) In the case of a person that is not a trust other than a
business trust, an estate or an individual, the person is expelled or
otherwise dissociated as a member because it dissolved or
terminated.
   (c) A person that wrongfully dissociates as a member of a series
is liable to the series and, subject to Section 17706.01, to the
other members of that series for damages caused by the dissociation.
   The liability is in addition to any other debt, obligation, or
liability of the member of a series to the series or the other
members of that series.  
   17712.08.  A person is dissociated as a member of a series when
any of the following occur:
   (a) The series has notice of the person's express will to
dissociate from the series, except if the person specifies a
dissociation date later than the date the series had notice, the
person is dissociated from the series on that later date.
   (b) An event stated in the operating agreement as causing the
person's dissociation from the series occurs.
   (c) The person is dissociated as a member of the limited liability
company pursuant to Section 17706.02.
   (d) The person is expelled as a member of that series pursuant to
the operating agreement.
   (e) The person is expelled as a member of the series by the
unanimous consent of the other members of that series if any of the
following applies:
   (1) It is unlawful to carry on the series' activities with the
person as a member of that series.
   (2) There has been a transfer of all of the person's transferrable
interest other than a transfer for security purposes, or a charging
order in effect under Section 17705.03 that has not been foreclosed.
   (3) The person is a corporation and, within 90 days after the
series notifies the person that it will be expelled as a member of
that series because the person has filed a certificate of dissolution
or the equivalent, or its right to conduct activities has been
suspended by its jurisdiction of formation, the certificate of
dissolution or the equivalent has not been revoked or its right to
conduct activities has not been reinstated.
   (4) The person is a limited liability company or partnership that
has been dissolved and its business is being wound up.
   (f) On application by the series, the person is expelled as a
member of that series by judicial order because the person has done
any of the following:
   (1) Has engaged in, or is engaging in, wrongful conduct that has
adversely and materially affected, or will adversely and materially
affect, that series' activities.
   (2) Has willfully or persistently committed, or is willfully and
persistently committing, a material breach of the operating agreement
or the person's duty or obligation under this title or other
applicable law.
   (3) Has engaged in, or is engaging in, conduct relating to that
series' activities that makes it not reasonably practicable to carry
on the activities with the person as a member of that series.
   (g) In the case of a person who is an individual, one of the
following applies:
   (1) The person dies.
   (2) In a member-managed limited liability company either a
guardian or general conservator is appointed, or there is a judicial
order that the person has otherwise become incapable of performing
the person's duties as a member of a series under this title or the
operating agreement.
   (h) The person becomes a debtor in bankruptcy.
   (i) In the case of a person that is a trust or is acting as a
member by virtue of being a trustee of a trust, the trust's entire
transferrable interest is distributed, but not solely by reason of
the substitution of a successor trustee.
   (j) In the case of a person that is an estate or is acting as a
member by virtue of being a personal representative of an estate, the
estate's entire transferrable interest, but not solely by reason of
the substitution of a successor personal representative.
   (k) In the case of a member of a series that is not an individual,
the legal existence of the member otherwise terminates.
   (l) The series terminates.  
   17712.09.  (a) A person who has dissociated as a member of a
series shall have no right to participate in the activities and
affairs of that series and is entitled only to receive the
distributions to which that member would have been entitled if the
member had not dissociated from that series.
   (b) A person's dissociation as a member of a series does not of
itself discharge the person from any debt, obligation, or liability
to that series, the limited liability company or the other members
that the person incurred while a member of that series.
   (c) A member's dissociation from a series does not, in itself,
cause the member to dissociate from any other series or require the
winding up of the series unless the dissociated member was the last
remaining member of the series.
   (d) A member's dissociation from a series does not, in itself,
cause the member to dissociate from the limited liability company.
 
   17712.10.  Except to the extent otherwise provided in the
operating agreement, a series and its business and affairs may be
wound up and terminated without causing the winding up of the limited
liability company.  
   17712.11.  (a) Except as otherwise provided, the series terminates
on the completion of the winding up of the business and affairs of
the series in accordance with Sections 17707.03, 17707.04, 17707.05,
and 17707.08.
   (b) The limited liability company shall provide notice of the
termination of a series in the manner provided in the operating
agreement for notice of termination, if any.
   (c) The termination of the series does not affect the limitation
on liabilities of the series provided by Section 17712.06. 

   17712.12.  (a) To the extent not inconsistent with this article,
this article applies to a series and its associated members and
managers.
   (b) For purposes of the application of any other provision of this
title to a provision of this article, and as the context requires:
   (1) A reference to a "limited liability company" or a "company"
means the series.
   (2) A reference to "member" means member of a series.
   (3) A reference to "manager" means manager of a series. 

      Article 13.  Miscellaneous Provisions


   17713.01.  In applying and construing this uniform act,
consideration shall be given to the need to promote uniformity of the
law with respect to its subject matter among states that enact it.
   17713.02.  This title modifies, limits, and supersedes the federal
Electronic Signatures in Global and National Commerce Act (15 U.S.C.
Sec. 7001 et seq.), but does not modify, limit, or supersede Section
101(c) of that act (15 U.S.C. Sec. 7001(c)), or authorize electronic
delivery of any of the notices described in Section 103(b) of that
act (15 U.S.C. Sec. 7003(b)).
   17713.03.  This title does not affect an action commenced,
proceeding brought, or right accrued before this title takes effect.
   17713.04.  (a) Before January 1,  2015   2016
 , this title governs only the following:
   (1) A limited liability company formed on or after January 1,
 2013   2014  .
   (2) Except as otherwise provided in  subdivision (c)
  this article  , a limited liability company
formed before January 1,  2013   2014  ,
that elects, in the manner provided in its articles of organization
and operating agreement or  bylaw   by law 
for amending the articles of organization and operating agreement,
to be subject to this title.  An amendment to the articles of
organization shall be required to elect to apply this title. Unless
elected pursuant to this paragraph, this title shall   not
  apply to a limited liability company formed before January
1, 2014. 
   (b)  Except as otherwise provided in subdivision (c), on
  On  and after January 1,  2015 
 2016  , this title governs all limited liability companies.

   17713.06.  (a) If a manager or member required by this title to
execute or file any document fails, after demand, to do so within a
reasonable time or refuses to do so, any other manager or member, or
any person appointed by a court of competent jurisdiction, may
prepare, execute, and file that document with the Secretary of State.

   (b) If there is any dispute concerning the filing of a document,
or the failure to file a document, any manager or member may petition
the superior court to direct the execution of the document.
   (c) If the court finds that it is proper for the document to be
executed and that any person so designated has failed or refused to
execute the document, or if the court determines that any document
should be filed, it shall order a party to file the document, on a
form prescribed by the Secretary of State if appropriate, as ordered
by the court.
   (d) In any action under this section, if the court finds the
failure of the manager or member to comply with the requirement to
file any document to have been without justification, the court may
award an amount sufficient to reimburse the managers or members
bringing the action for the reasonable expenses incurred by them,
including attorneys' fees, in connection with the action or
proceeding.
   (e) Any member who is not a manager, or any person filing any
document under this section, shall state the statutory authority
after the signature on the appropriate document.
   17713.07.  (a) Every limited liability company that neglects,
fails, or refuses to keep or cause to be kept or maintained the
documents, books, and records required by Section  17704.11
  17704.10  to be kept or maintained shall be
subject to a penalty of twenty-five dollars ($25) for each day that
the failure or refusal continues, beginning 30 days after receipt of
written request by any member that the duty be performed, up to a
maximum of one thousand five hundred dollars ($1,500). The penalty
shall be paid to the member or members jointly making the request for
performance of the duty and damaged by the neglect, failure, or
refusal, if suit therefor is commenced within 90 days after the
written request is made; but the maximum daily penalty because of
failure to comply with any number of separate requests made on any
one day or for the same act shall be two hundred fifty dollars
($250).
   (b) Upon the failure of a limited liability company, or a foreign
limited liability company registered to transact intrastate business
in this state, to file the statement required by Section 17702.09,
the Secretary of State shall provide a notice of that delinquency to
the limited liability company or foreign limited liability company.
The notice shall also contain information concerning the application
of this section, advise the limited liability company or foreign
limited liability company of the penalty imposed by this subdivision
for failure to timely file the required statement after notice of
delinquency has been provided by the Secretary of State, and shall
advise the limited liability company or foreign limited liability
company of its right to request relief from the Secretary of State
because of reasonable cause or unusual circumstances that justify the
failure to file. If, within 60 days after providing notice of the
delinquency, a statement pursuant to Section 17060 has not been filed
by the limited liability company or foreign limited liability
company, the limited liability company or foreign limited liability
company shall be subject to a penalty of two hundred fifty dollars
($250).
   17713.08.  Any penalty prescribed by Section 17713.07 shall be in
addition to any remedy by injunction or action for damages or by writ
of mandate for the nonperformance of acts and duties enjoined by law
upon the limited liability company or its managers. The court in
which an action for any penalty is brought may reduce, remit  ,
 or suspend the penalty on any terms and conditions as it may
deem reasonable when it is made to appear that the neglect, failure
 ,  or refusal was inadvertent or excusable.

17713.09.  (a) Upon the failure of a limited liability company to
file the statement required by Section 17702.09, the Secretary of
State shall provide a notice of the delinquency to the limited
liability company. The notice shall also contain information
concerning the application of this section, advise the limited
liability company of the penalty imposed by Section 19141 of the
Revenue and Taxation Code for failure to timely file the required
statement after notice of delinquency has been mailed by the
Secretary of State, and shall advise the limited liability company of
its right to request relief from the Secretary of State because of
reasonable cause or unusual circumstances that justify such failure
to file. If, within 60 days after providing notice of the
delinquency, a statement pursuant to Section 17702.09 has not been
filed by the limited liability company, the Secretary of State shall
certify the name of such limited liability company to the Franchise
Tax Board.
   (b) Upon certification pursuant to subdivision (a), the Franchise
Tax Board shall assess against the limited liability company the
penalty provided in Section 19141 of the Revenue and Taxation Code.
   (c) The penalty provided by Section 19141 of the Revenue and
Taxation Code shall not apply to a limited liability company that on
or prior to the date of certification pursuant to subdivision (a) has
dissolved or has been merged into another limited liability company
or other business entity.
   (d) The penalty herein provided shall not apply and the Secretary
of State need not provide notice of the delinquency to a limited
liability company the powers, rights and privileges of which have
been suspended by the Franchise Tax Board pursuant to Section 23301,
23301.5, or 23775 of the Revenue and Taxation Code on or prior to,
and remain suspended on, the last day of the filing period pursuant
to Section 17702.09. The Secretary of State need not provide notice
of the filing requirement pursuant to Section 17702.09 to a limited
liability company the powers, rights and privileges of which have
been so suspended by the Franchise Tax Board on or prior to, and
remain suspended on, the day the Secretary of State prepares the
notice for sending.
   (e) If, after certification pursuant to subdivision (a) the
Secretary of State finds (1) the required statement was filed or the
required fee was paid before the expiration of the 60-day period
after providing notice of the delinquency, or (2) the failure to
provide notice of delinquency was due to an error of the Secretary of
State, the Secretary of State shall promptly decertify the name of
the limited liability company to the Franchise Tax Board. The
Franchise Tax Board shall then promptly abate any penalty assessed
against the limited liability company pursuant to Section 19141 of
the Revenue and Taxation Code.
   (f) If the Secretary of State determines that the failure of a
limited liability company to file the statement required by Section
17702.09 is excusable because of reasonable cause or unusual
circumstances that justify such failure, the Secretary of State may
waive the penalty imposed by this section and by Section 19141 of the
Revenue and Taxation Code, in which case the Secretary of State
shall not certify the name of the limited liability company to the
Franchise Tax Board, or if already certified, the Secretary of State
shall promptly decertify the name of the limited liability company.
   17713.10.  (a) A limited liability company that (1) fails to file
a statement pursuant to Section 17702.09 for an applicable filing
period, (2) has not filed a statement pursuant to Section 17702.09
during the preceding 24 months, and (3) was certified for penalty
pursuant to Section 17713.09 for the same filing period, shall be
subject to suspension pursuant to this section rather than to penalty
pursuant to Section 17713.09.
   (b) When subdivision (a) is applicable, the Secretary of State
shall notify the limited liability company that its powers, rights,
and privileges will be suspended after 60 days if it fails to file a
statement pursuant to Section 17702.09.
   (c) After the expiration of the 60-day period without any
statement filed pursuant to Section 17702.09, the Secretary of State
shall notify the Franchise Tax Board of the suspension, and mail a
notice of the suspension to the limited liability company and
thereupon, except for the purpose of amending the articles of
organization to set forth a new name, the powers, rights, and
privileges of the limited liability company are suspended.
   (d) A statement pursuant to Section 17702.09 may be filed
notwithstanding suspension of the powers, rights, and privileges
pursuant to this section or Section 23301 or 23301.5 of the Revenue
and Taxation Code. Upon the filing of a statement pursuant to Section
17702.09 by a limited liability company that has suffered suspension
pursuant to this section, the Secretary of State shall certify that
fact to the Franchise Tax Board and the limited liability company may
thereupon be relieved from suspension unless the limited liability
company is held in suspension by the Franchise Tax Board by reason of
Section 23301 or 23301.5 of the Revenue and Taxation Code.
   17713.11.  (a) Sections 17713.09 and 17713.10 apply to foreign
limited liability companies with respect to the statements required
to be filed by Section 17702.09. For this purpose, the suspension of
the powers, rights, and privileges of a domestic limited liability
company shall mean the forfeiture of the exercise of the powers,
rights, and privileges of a foreign limited liability company in this
state.
   (b) The forfeiture of the exercise of the powers, rights, and
privileges of a foreign limited liability company in this state as
used in subdivision (a) does not prohibit the transaction of business
in this state by a foreign limited liability company if the business
transacted subsequent to the forfeiture would not, considered as an
entirety, require the foreign limited liability company to obtain a
certificate of registration pursuant to Section 17708.02.
   17713.12.  (a) A limited liability company is liable for a civil
penalty in an amount not exceeding one million dollars ($1,000,000)
if the limited liability company does both of the following:
   (1) Has actual knowledge that a member, officer, manager, or agent
of the limited liability company does any of the following:
   (A) Makes, publishes, or posts, or has made, published, or posted,
either generally or privately to the shareholders or other persons,
either of the following:
   (i) An oral, written, or electronically transmitted report,
exhibit, notice, or statement of its affairs or pecuniary condition
that contains a material statement or omission that is false and
intended to give membership shares in the limited liability company a
materially greater or a materially less apparent market value than
they really possess.
   (ii) An oral, written, or electronically transmitted report,
prospectus, account, or statement of operations, values, business,
profits, or expenditures that includes a material false statement or
omission intended to give membership shares in the limited liability
company a materially greater or a materially less apparent market
value than they really possess.
   (B) Refuses or has refused to make any book entry or post any
notice required by law in the manner required by law.
   (C) Misstates or conceals or has misstated or concealed from a
regulatory body a material fact in order to deceive a regulatory body
to avoid a statutory or regulatory duty, or to avoid a statutory or
regulatory limit or prohibition.
   (2) Within 30 days after actual knowledge is acquired of the
actions described in paragraph (1), the limited liability company
knowingly fails to do both of the following:
   (A) Notify the Attorney General or appropriate government agency
in writing, unless the limited liability company has actual knowledge
that the Attorney General or appropriate government agency has been
notified.
   (B) Notify its members and investors in writing, unless the
limited liability company has actual knowledge that the members and
investors have been notified.
   (b) The requirement for notification under this section is not
applicable if the action taken or about to be taken by the limited
liability company, or by a member, officer, manager, or agent of the
limited liability company under paragraph (1) of subdivision (a), is
abated within the time prescribed for reporting, unless the
appropriate government agency requires disclosure by regulation.
   (c) If the action reported to the Attorney General pursuant to
this section implicates the government authority of an agency other
than the Attorney General, the Attorney General shall promptly
forward the written notice to that agency.
   (d) If the Attorney General was not notified pursuant to
subparagraph (A) of paragraph (2) of subdivision (a), but the limited
liability company reasonably and in good faith believed that it had
complied with the notification requirements of this section by
notifying a government agency listed in paragraph (5) of subdivision
(e), no penalties shall apply.
   (e) For purposes of this section:
   (1) "Manager" means a person defined by subdivision (m) of Section
17701.01 having both of the following:
   (A) Management authority over the limited liability company.
   (B) Significant responsibility for an aspect of the limited
liability company that includes actual authority for the financial
operations or financial transactions of the limited liability
company.
   (2) "Agent" means a person or entity authorized by the limited
liability company to make representations to the public about the
limited liability company's financial condition and who is acting
within the scope of the agency when the representations are made.
   (3) "Member" means a person as defined by subdivision (o) of
Section 17701.01 that is a member of the limited liability company at
the time the disclosure is required pursuant to subparagraph (B) of
paragraph (2) of subdivision (a).
   (4) "Notify its members" means to give sufficient description of
an action taken or about to be taken that would constitute acts or
omissions as described in paragraph (1) of subdivision (a). A notice
or report filed by a limited liability company with the United States
Securities and Exchange Commission that relates to the facts and
circumstances giving rise to an obligation under paragraph (1) of
subdivision (a) shall satisfy all notice requirements arising under
paragraph (2) of subdivision (a) but shall not be the exclusive means
of satisfying the notice requirements, provided that the Attorney
General or appropriate agency is informed in writing that the filing
has been made together with a copy of the filing or an electronic
link where it is available online without charge.
   (5) "Appropriate government agency" means an agency on the
following list that has regulatory authority with respect to the
financial operations of a limited liability company:
   (A) Department of Corporations.
   (B) Department of Insurance.
   (C) Department of Financial Institutions.
   (D) Department of Managed Health Care.
   (E) United States Securities and Exchange Commission.
   (6) "Actual knowledge of the limited liability company" means the
knowledge a member, officer, or manager of a limited liability
company actually possesses or does not consciously avoid possessing,
based on an evaluation of information provided pursuant to the
limited liability company's disclosure controls and procedures.
   (7) "Refuse to make a book entry" means the intentional decision
not to record an accounting transaction when all of the following
conditions are satisfied:
   (A) The independent auditors required recordation of an accounting
transaction during the course of an audit.
   (B) The audit committee of the limited liability company has not
approved the independent auditor's recommendation.
   (C) The decision is made for the primary purpose of rendering the
financial statements materially false or misleading.
   (8) "Refuse to post any notice required by law" means an
intentional decision not to post a notice required by law when all of
the following conditions exist:
   (A) The decision not to post the notice has not been approved by
the limited liability company's audit committee.
   (B) The decision is intended to give the membership shares in the
limited liability company a materially greater or a materially less
apparent market value than they really possess.
   (9) "Misstate or conceal material facts from a regulatory body"
means an intentional decision not to disclose material facts when all
of the following conditions exist:
   (A) The decision not to disclose material facts has not been
approved by the limited liability company's audit committee.
   (B) The decision is intended to give the membership shares in the
limited liability company a  materially  greater or a 
materially  less apparent market value than they really possess.

   (10) "Material false statement or omission" means an untrue
statement of material fact or an omission to state a material fact
necessary in order to make the statements made under the
circumstances under which they were made not misleading.
   (11) "Officer" means a person appointed pursuant to Section
17703.02, except an officer of a specified subsidiary limited
liability company who is not also an officer of the parent limited
liability company.
   (f) This section only applies to limited liability companies that
are issuers, as defined in Section 2 of the  federal 
Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec. 7201 et seq.).
   (g) An action to enforce this section may only be brought by the
Attorney General or a district attorney or city attorney in the name
of the people of the State of California.
   17713.13.  This title shall become operative on January 1,
 2013   2014  .
   SEC. 21.    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,   17710.02, or
17710.08  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. 22.    Section 12262 of the  
Government Code   is amended to read: 
   12262.  If the Secretary of State determines that the name of a
business entity that has been ordered by a court to be reinstated
creates a conflict under subdivision (b) of Section 201, subdivision
(b) of Section 5122, subdivision (c) of Section 7122, subdivision (b)
of Section 9122, subdivision (b) of Section 12302, subdivision (c)
of Section 15612, or subdivision  (c)   (b)
 of Section  17052   17701.08  of the
Corporations Code or any related statute, the reinstatement shall be
subject to the business entity filing an amendment to change its name
to eliminate the conflict.
   SEC. 23.    Section 1192.95 of the  
Insurance Code   is amended to read: 
   1192.95.  (a) Notwithstanding Section 1100, an insurer may make
excess funds investments in investment pools and cash management
pools established pursuant to this section. The pools shall meet all
of the following standards:
   (1) All participants in a pool shall each be affiliated with one
another within the meaning of subdivision (a) of Section 1215 and
shall all be insurers, or a pension plan or profit-sharing plan of a
participant or affiliate.
   (2) The pools shall be a corporation, partnership, trust, limited
liability company, or business trust domiciled in the United States
with all assets held in accordance with Section 1104.9 and shall be
maintained in one or more accounts in the name of or on behalf of the
investment pool. Pool assets shall be held under a bank custody
agreement that states and recognizes the claims and rights of each
participant, acknowledges that the pool assets are held solely for
the benefit of each participant in proportion to the aggregate amount
of its pool investments, and states that the investments shall not
be commingled with the general assets of the custodian or any other
person. The pool manager shall be an insurer as defined by Section
826 or a business entity registered as an investment adviser under
the federal Investment Act of 1940. The fiduciary duties a manager
owes to the limited liability company and its members are those of a
partner to a partnership. This duty may not be restricted by
agreement.
   (3) Any management fee shall be subject to disapproval by the
commissioner. Costs directly incurred in acquiring or selling assets,
such as commissions, transaction fees, or custodial fees, are not
management fees and may be charged by the pool to the participants as
long as these fees are on a direct cost reimbursement basis. All
costs shall be apportioned to each participant in proportion to its
interest in the pool.
   (4) All shares of the pool shall be of the same class with equal
rights, preferences, and privileges. Each share shall participate
equally in dividends and distributions declared by the pool on
liquidation in proportion to each participant's interest. When
issued, the shares shall be fully paid and nonassessable and shall
have no preemptive, conversion, or exchange rights.
   (5) Each participant shall be entitled to require the pool to
redeem all or any portion of the shares held by the participant on
demand without penalty or assessment on any business day.
   (6) All assets of a cash management pool shall be assets that
participant insurers may lawfully acquire individually and shall be:
(A) debt obligations issued by or on behalf of the United States, its
territories and possessions, the District of Columbia, and states or
their political subdivisions, agencies, and instrumentalities,
including industrial development obligations, having a maturity not
exceeding one year; (B) corporate debt obligations, other than debt
obligations issued, assumed, guaranteed, or insured by a participant
or by any affiliate of a participant, having a maturity not exceeding
one year and that are rated One or Two by the Securities Valuation
Office of the National Association of Insurance Commissioners; or (C)
accounts, deposits, or obligations of banks or savings and loan
associations insured by an agency or instrumentality of the federal
government.
   (7) All assets of an investment pool shall be: (A) investments
that are authorized under Section 1191, other than stock issued,
assumed, guaranteed, or insured by a participant or any affiliate of
a participant; (B) accounts, deposits, or obligations of banks or
savings and loan associations insured by an agency or instrumentality
of the federal government; or (C) investments that are authorized
under Section 1192, other than securities or notes issued, assumed,
guaranteed, or insured by a participant or any affiliate of a
participant, or under Section 1194.5 or 1241.
   (8) The assets of pools shall be required to meet the requirements
of and be authorized for investment by a domestic incorporated
insurer under Article 3 (commencing with Section 1170) or this
article.
   (9) No pool shall make investments in purchases of, or loans upon,
more than 30 percent of the total in par value or more than 30
percent of the total number of outstanding shares of the capital
stock of any one corporation.
   (10) Transactions between the pool and its participants shall not
be deemed to be material for purposes of subdivision (d) of Section
1215.4 or subdivision (b) of Section 1215.5. Investment activity of
pools and transactions between pools and participants shall be
reported in the annual registration statement required by Section
1215.4 and pursuant to Section 1215.5.
   (11) Participation in an investment pool shall be subject to a
written pooling agreement that shall be approved by the participant's
board of directors and shall provide that (A) the underlying assets
of the pool shall not be commingled with the general assets of the
pool manager or any other person; (B) each participant must own an
undivided interest in the underlying assets of the pool; (C) the
underlying assets of the investment pool are held solely for the
benefit of each participant; and (D) the pool manager shall make the
records of the investment pool available for inspection by the
commissioner. Pool agreements shall also specify what type of share
participants hold to evidence their beneficial interest in the pool's
assets. Prior to the execution of a pool agreement, a participating
insurer's board of directors must approve the agreement only after
having received a written opinion from an independent outside counsel
explaining the ramifications and possible effects that a declaration
of insolvency by a participant will have on the insurer's share of
the investment pool.
   (12) No participant insurer may invest more than 10 percent of
admitted assets in a single pool or more than 25 percent of admitted
assets in all pools combined.
   (13) Each participant's proportionate share of the assets of a
pool shall be deemed to be the direct holdings of that participant
for purposes of determining compliance with the investment
requirements of this code and shall be reported as such on required
quarterly and annual reports. Pools operated as limited liability
companies pursuant to Title  2.5   2.6 
(commencing with Section  17000)   17701.01)
 of the Corporations Code shall conform their investments to
this paragraph and the requirements of Sections 1200 and 1201.
   (14) The pool manager shall compile and maintain detailed
accounting records setting forth (A) the cash received and
disbursements reflecting each participant's proportional investment
in the investment pool; (B) a complete description of all underlying
assets of the investment pool including amount, interest rate, and
maturity date, if any, and other appropriate designations; and (C)
other records that, on a daily basis, will allow the commissioner and
the participants to verify each participant's investments in the
pool.
   (15) Pools shall not borrow or loan assets, except for
securities-lending arrangements that are otherwise lawful for insurer
participants of the pool.
   (b) As used in this section, "share" means stock, participation
unit, certificate of interest, or other evidence of beneficial
ownership in the pool, whether evidenced by an instrument or by a
book entry maintained by the pool.
   (c) The commissioner shall have the authority to review any pool
agreement and to disapprove any agreement that does not comply with
this section. The commissioner shall have the authority to review the
operation of any pool and to order compliance with this section. The
commissioner shall have the authority to disallow, as an admitted
asset, any pool investment not in compliance with this section. The
commissioner may impose a fee upon any pool to recoup the actual cost
of review under this section.
   SEC. 24.    Section 19141 of the   Revenue
and Taxation Code   is amended to read: 
   19141.  Upon certification by the Secretary of State pursuant to
subdivision (a) of Section 2204 or subdivision (a) of Section
 17653   17713.09  of the Corporations
Code, the Franchise Tax Board shall assess a penalty of two hundred
fifty dollars ($250). Upon certification by the Secretary of State
pursuant to subdivision (a) of Section 6810 or subdivision (a) of
Section 8810 of the Corporations Code, the Franchise Tax Board shall
assess a penalty of fifty dollars ($50). Any penalty assessed under
this section shall be a final assessment due and payable at the time
of assessment but no interest shall accrue thereon. The assessment
shall be collected as other taxes, interest, and penalties are
collected by the Franchise Tax Board unless the Secretary of State
decertifies the name of the corporation as provided in subdivision
(e) or (f) of Section 2204, subdivision (e) of Section 6810, or
subdivision (e) of Section 8810 of the Corporations Code.
   SEC. 25.    Section 23332 of the   Revenue
and Taxation Code   is amended to read: 
   23332.  (a) Except in the case of a taxpayer subject to the
provisions of Section 23222a, any taxpayer which is dissolved or
withdraws from the state during any taxable year shall pay a tax only
for the months of the taxable year which precede the effective date
of the dissolution or withdrawal, according to or measured by (1) the
net income of the preceding income year or (2) a percentage of net
income determined by ascertaining the ratio which the months of the
taxable year, preceding the effective date of dissolution or
withdrawal, bears to the months of the income year, whichever is the
lesser amount. The taxes levied under this chapter shall not be
subject to abatement or refund because of the cessation of business
or corporate existence of any taxpayer pursuant to a reorganization,
consolidation, or merger (as defined by Section 23251). In any event,
each corporation shall pay a tax not subject to offset for the
period in an amount equal to the minimum tax prescribed by Section
23153.
   (b) The provisions of subdivision (a) shall be applied only with
respect to taxpayers which dissolve or withdraw before January 1,
1973. On and after that date, the tax for the taxable year in which
the taxpayer ceases doing business, dissolves or withdraws shall be
determined under the appropriate provisions of Section 23151.1,
23153, 23181, or 23183, whichever is applicable.
   (c) (1) A corporation shall not be subject to the minimum
franchise tax imposed by this chapter for a taxable year if the
corporation does all of the following:
   (A) Files a timely final franchise tax return for a taxable year
with the Franchise Tax Board.
   (B) Does not do business in this state after the end of the
taxable year for which the final franchise tax return was filed.
   (C) (i) In the case of a corporation other than a corporation
described in clause (ii), files a certificate of dissolution or
surrender with the Secretary of State, in accordance with Sections
1809, 1905, 2112, 6615, 8615, and 12635 of the Corporations Code and
Section 3126 of the Financial Code, before the end of the 12-month
period beginning with the date the final franchise tax return was
                                       filed.
   (ii) In the case of a limited liability company that is a
corporation pursuant to subdivision (c) of Section 23038, files a
certificate of cancellation with the Secretary of State, in
accordance with Section  17356 or 17455  
17707.02 or 17708.07  of the Corporations Code, before the end
of the 12-month period beginning with the date the final franchise
tax return was filed.
   (2) For purposes of this subdivision, a "final franchise tax
return" is a return filed pursuant to Section 18601 on or before the
due date of the return, as extended, that the taxpayer designates in
the manner prescribed by the Franchise Tax Board as the taxpayer's
final franchise tax return for purposes of the tax imposed under this
chapter. A final franchise tax return for purposes of the tax
imposed under this chapter is a return filed pursuant to Section
18601 where the taxpayer is not required to file a subsequent return
to reflect the imposition of tax under this chapter.
   SEC. 26.    Section 1116 of the  
Unemployment Insurance Code   is amended to read: 
   1116.  (a) (1) Every employing unit except a domestic or foreign
corporation or a domestic or foreign limited liability company shall,
within 10 days of quitting business, file with the director a final
return and report of wages of its workers, in such form and
containing such information as the director prescribes.
   (2) Every domestic corporation and domestic limited liability
company shall, within 10 days of quitting business or within 10 days
of the commencement of proceedings to wind up its affairs and
voluntarily dissolve, whichever expires the earlier, file with the
director a return and a report of wages of its workers, in such form
and containing such information as the director prescribes.
   (3) Every foreign corporation and foreign limited liability
company shall, within 10 days of quitting business or within 10 days
of the surrender of its right to engage in business of this state in
accordance with Section 2112 and subdivision (d) of Section 2114 of
the Corporations Code for foreign corporations or Section 
17455   17708.08  of the Corporations Code for
foreign limited liability companies, whichever expires the earlier,
file with the director a final return and report of wages of its
workers, in such form and containing such information as the director
prescribes.
   (4) As used in this section, "quitting business" does not include
any change in the form or membership of an employing unit if before
and after such change 50 percent or more of the control of management
is held by the same individual, or is held by an individual before
death and after the individual's death by the individual's estate or
heirs.
   (b) Contributions with respect to a return required under
subdivision (a) are due and payable on the first day of the
applicable 10-day period established pursuant to subdivision (a) and
shall become delinquent if not paid within 10 days of the due date.
   (c) The director for good cause may extend for not to exceed 30
days the time for making a return or paying without penalty or
interest any amount required to be paid under this section.
   SEC. 3.   SEC. 27.   No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.
                           ____ CORRECTIONS  Text--Pages 11, 46, 91,
102, 148 and 171.
          ____