California Legislature—2015–16 Regular Session

Assembly Bill No. 1187

Introduced by Assembly Member Travis Allen

February 27, 2015

An act to amend Section 17701.02 of the Corporations Code, relating to limited liability companies.

LEGISLATIVE COUNSEL’S DIGEST

AB 1187, as introduced, Travis Allen. Limited liability companies.

The California Revised Uniform Limited Liability Company Act governs the formation and operation of limited liability companies. The act defines various terms for the purposes of its provisions.

This bill would make a nonsubstantive change to these definitions.

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 17701.02 of the Corporations Code is
amended to read:

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 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) 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 begin delete under end delete begin insert pursuant
to end insert this title or an entity that becomes subject to this title pursuant
to Article 13 (commencing with Section 17713.01).

(l) “Majority of the managers” unless otherwise provided in the
operating agreement, means more than 50 percent of the managers
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 transferable
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. The
term “operating agreement” may include, without more, an
agreement of all members to organize a limited liability company
pursuant to this title. 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, 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) “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.

(z) “Transfer” includes an assignment, conveyance, deed, bill
of sale, lease, mortgage, security interest, encumbrance, gift, and
transfer by operation of law.

(aa) “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.

(ab) “Transferee” means a person to which all or part of a
transferable interest has been transferred, whether or not the
transferor is a member.

(ac) “Vote” includes authorization by written consent or consent
given by electronic transmission to the limited liability company.