AB 1722, as amended, Wagner. Limited liability companies: dissolution: cancellation of articles of organization.
Existing law, the California Revised Uniform Limited Liability Company Act, authorizes a limited liability company to have any lawful purpose, except as specified. A limited liability company is an entity distinct from its members. Existing law authorizes one or more persons to form a limited liability company by, among other things, signing and delivering articles of organization to the Secretary of State. Under existing law, a limited liability company is a member-managed limited liability company unless the articles of organization contain a statement that the limited liability company is to be manager managed. Under existing law, the operating agreement governs, among other things, relations among the members as members and between the members and the limited liability company and the activities of the limited liability company.
Under existing law, a limited liability company is dissolved, and its activities are required to be wound up, if, among other things, a majority of the members of the limited liability company votes to dissolve.
This bill would instead require the vote of 50%begin insert or moreend insert of the voting interests of the members of the limited liability company to dissolve.
Under existing law, 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, are authorized to execute and acknowledge a certificate of cancellation of articles of organization, on a specified form prescribed by the Secretary of State.
This bill would replace that majority requirement to cancel the articles of organization with 50%begin insert or moreend insert of the voting interests of the members or managers, or 50%begin insert or moreend insert of the persons signing the articles of incorporation, as applicable.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 17707.01 of the Corporations Code is
2amended to read:
A limited liability company is dissolved, and its
4activities shall be wound up, upon the happening of the first to
5occur of the following:
6(a) On the happening of an event set forth in a written operating
7agreement or the articles of organization.
8(b) By the vote of 50 percentbegin insert or moreend insert of the voting interests of
9the members of the limited liability company or a greater
10percentage of the voting interests of members as may be specified
11in the articles of organization, or a written operating agreement.
12(c) The passage of 90 consecutive days during which the limited
13liability company has no members, except that, on the death of a
14natural person who is the sole member of a limited liability
15company, the status of the member, including a membership
16interest, may pass to one or more heirs, successors, and assigns of
17the member by will or applicable law. An heir, successor, or assign
18of the member’s interest becomes a substituted member pursuant
19to paragraph (4) of subdivision (c) of Section 17704.01, subject
20to administration as provided by applicable law, without the
21permission or consent of the heirs, successors, or assigns or those
22administering the estate of the deceased member.
23(d) Entry of a decree of judicial dissolution pursuant to Section
2417707.03.
Section 17707.02 of the Corporations Code is amended
2to read:
(a) Notwithstanding any other provision of this title,
4if a domestic limited liability company has not conducted any
5business, 50 percentbegin insert or moreend insert of the voting interests of the members,
6or, if there are no members, 50 percentbegin insert or moreend insert of the voting
7interests of the managers, if any, or if no members or managers,
8the person or 50 percentbegin insert or moreend insert of the persons signing the articles
9of organization, may execute and acknowledge a certificate of
10cancellation of
articles of organization, on a form prescribed by
11the Secretary of State, stating all of the following:
12(1) The name of the domestic limited liability company and the
13Secretary of State’s file number.
14(2) That the certificate of cancellation is being filed within 12
15months from the date the articles of organization was filed.
16(3) That the limited liability company does not have any debts
17or other liabilities, except as provided in paragraph (4).
18(4) That a final franchise tax return, as described by Section
1923332 of the Revenue and Taxation Code, or a final annual tax
20return, as described by Section 17947 of the Revenue and Taxation
21Code, has been or will be filed
with the Franchise Tax Board, as
22required under Part 10.2 (commencing with Section 18401) of
23Division 2 of the Revenue and Taxation Code.
24(5) That the known assets of the limited liability company
25remaining after payment of, or adequately providing for, known
26debts and liabilities have been distributed to the persons entitled
27thereto or that the limited liability company acquired no known
28assets, as the case may be.
29(6) That the limited liability company has not conducted any
30business from the time of the filing of the articles of organization.
31(7) That 50 percentbegin insert or moreend insert of the voting interests of the
32managers or members
voted, or, if no managers or members, the
33person or 50 percentbegin insert or moreend insert of the persons signing the articles of
34organization, voted to dissolve the limited liability company.
35(8) If the limited liability company has received payments for
36interests from investors, that those payments have been returned
37to those investors.
38(b) A certificate of cancellation executed and acknowledged
39pursuant to subdivision (a) shall be filed with the Secretary of State
40within 12 months from the date that the articles of organization
P4 1was filed. The Secretary of State shall notify the Franchise Tax
2Board of the cancellation.
3(c) Upon filing a
certificate of cancellation pursuant to
4subdivision (a), a limited liability company shall be canceled and
5its powers, rights, and privileges shall cease.
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