BILL NUMBER: AB 1722	CHAPTERED
	BILL TEXT

	CHAPTER  66
	FILED WITH SECRETARY OF STATE  JULY 22, 2016
	APPROVED BY GOVERNOR  JULY 22, 2016
	PASSED THE SENATE  JUNE 30, 2016
	PASSED THE ASSEMBLY  APRIL 14, 2016
	AMENDED IN ASSEMBLY  FEBRUARY 29, 2016

INTRODUCED BY   Assembly Member Wagner

                        JANUARY 28, 2016

   An act to amend Sections 17707.01 and 17707.02 of the Corporations
Code, relating to business.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1722, 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% or more 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% or more of the voting interests of
the members or managers, or 50% or more of the persons signing the
articles of incorporation, as applicable.


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

  SECTION 1.  Section 17707.01 of the Corporations Code is amended to
read:
   17707.01.  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 50 percent or more of the voting interests of
the members of the 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 has no members, except that, on the death of a
natural person who is the sole member of a limited liability company,
the status of the member, including a membership interest, may pass
to one or more heirs, successors, and assigns of the member by will
or applicable law. An heir, successor, or assign of the member's
interest becomes a substituted member pursuant to paragraph (4) of
subdivision (c) 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.
  SEC. 2.  Section 17707.02 of the Corporations Code is amended to
read:
   17707.02.  (a) Notwithstanding any other provision of this title,
if a domestic limited liability company has not conducted any
business, 50 percent or more of the voting interests of the members,
or, if there are no members, 50 percent or more of the voting
interests of the managers, if any, or if no members or managers, the
person or 50 percent or more 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 50 percent or more of the voting interests of the
managers or members voted, or, if no managers or members, the person
or 50 percent or more 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.