BILL NUMBER: AB 1355	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Wilk

                        FEBRUARY 22, 2013

   An act to amend Section 17704.08 of the Corporations Code,
relating to limited liability companies.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1355, as introduced, Wilk. Limited liability companies:
indemnification: agents.
   Existing law requires a corporation, nonprofit public benefit
corporation, nonprofit mutual benefit corporation, nonprofit
religious corporation, or consumer cooperative corporation to
indemnify its agent, as defined, in proceedings, as defined, for the
successful defense or settlement of claims brought against the agent
by reason of his or her agent status.
   Existing law, the California Revised Uniform Limited Liability
Company Act, which becomes operative on January 1, 2014, governs the
formation and operation of limited liability companies. The act
requires a limited liability company to indemnify a member of a
member-managed limited liability company or the manager of a
manager-managed limited liability company for any liability incurred
in the course of the member's or manager's activities on behalf of
the limited liability company, if specified conditions are met.
Existing law authorizes a limited liability company to 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.
   This bill would require a limited liability company to indemnify
its agent, as defined, in proceedings, as defined, for the successful
defense or settlement of claims brought against the agent by reason
of his or her agent status.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 17704.08 of the Corporations Code is amended to
read:
   17704.08.  (a) 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 Section 17704.09.
   (b) 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. 
   (c) (1) To the extent that an agent of a limited liability company
has been successful on the merits in defense or settlement of any
claim, issue, or matter in any proceeding in which the agent was or
is a party or is threatened to be made a party by reason of the fact
that the person is or was an agent of the limited liability company,
if the agent acted in good faith, in a manner the agent believed to
be in the best interests of the limited liability company and its
members, the agent shall be indemnified against expenses actually and
reasonably incurred by the agent in connection therewith.  

   (2) For purposes of this subdivision, the following terms have the
following meaning:  
   (A) "Agent" means any person who is or was a member, manager,
employee, or other agent of the limited liability company, or is or
was serving at the request of the limited liability company as a
member, manager, director, officer, employee or agent of another
foreign or domestic corporation, limited liability company or foreign
limited liability company, partnership, joint venture, trust, or
other enterprise, or was a member, manager, director, officer,
employee or agent of a foreign or domestic corporation, limited
liability company or foreign limited liability company, partnership,
joint venture, trust, or other enterprise that was a predecessor of
the limited liability company or of another enterprise at the request
of the predecessor corporation or other enterprise.  
   (B) "Expenses" includes without limitation the attorney's fees and
expenses of establishing a right to indemnification under this
subdivision.  
   (C) "Proceeding" means any threatened, pending, or completed
action or proceeding, whether civil, criminal, administrative, or
investigative.