BILL ANALYSIS Ó
AB 1722
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1722 (Wagner) - As Amended February 29, 2016
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|Policy |Banking and Finance |Vote:|12 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill changes the conditions under which a limited liability
company (LLC) may dissolve. In summary, this bill:
1)Allows an LLC to voluntarily dissolve by a vote of 50% or more
of the voting interests of the members instead of a majority
of those voting interests.
AB 1722
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2)Allows an LLC to cancel the articles of organization with 50%
or more of the voting interests of the members or managers
instead of a majority of those voting interests. If there are
no members or managers, then an LLC may cancel the articles of
organization with 50% or more of the persons signing the
articles of organization instead of a majority of those
persons.
FISCAL EFFECT:
Minor and absorbable costs to the Secretary of State (SOS) to
update forms and publications.
COMMENTS:
1)Background. Existing law establishes the conditions under
which an LLC may dissolve. One such condition is by a vote of
a majority of the voting interests of the LLC members.
However, in the case of a small LLC with just two members,
there may be a stalemate when one member wants to dissolve the
LLC and the other does not.
2)Purpose. According to the author of AB 1722, this bill will
help avoid unnecessary and costly litigation related to the
dissolution of small LLCs. AB 1722 places in statute
provisions similar to California's corporate voluntary
dissolution statute. Existing law provides that any
corporation may elect voluntarily to wind up and dissolve by
the vote of shareholders holding shares representing 50% or
more of the voting power. This bill is sponsored by the
Conference of California Bar Associations (CCBA). There is no
registered opposition.
AB 1722
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Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081