Amended in Senate May 5, 2015

Amended in Senate April 22, 2015

Senate Bill No. 284

Introduced by Senator Cannella

begin insert

(Coauthor: Senator Bates)

end insert

February 19, 2015

An act to amend begin delete and repeal end delete Sections 6738 and 8729 of the Business and Professions Code, and to amend begin delete and repeal end delete Sections 16101, 16956, and 16959 of the Corporations Code, relating to the practice of engineering and land surveying.

LEGISLATIVE COUNSEL’S DIGEST

SB 284, as amended, Cannella. Engineering and land surveying: limited liability partnerships.

The Professional Engineers Act provides for the licensure and regulation of engineers and the Professional Land Surveyors’ Act provides for the licensure and regulation of land surveyors by the Board for Professional Engineers, Land Surveyors, and Geologists. The Uniform Partnership Act of 1994 authorizes the formation of registered limited liability partnerships and foreign limited liability partnerships as specified.

Existing law, until January 1, 2016, authorizes persons licensed to engage in the practice of engineering or land surveying to form registered limited liability partnerships and foreign limited liability partnerships and requires those partnerships to provide security of no less than $2,000,000 for claims arising out of the partnership’s professional practice. Existing law, until January 1, 2016, also provides that engineers or land surveyors are not prohibited from practicing or offering to practice, within the scope of their licensure, as a limited liability partnership if specified requirements are met, including, among others, that any offer, promotion, or advertisement by the business that contains the name of any individual in the business must clearly and specifically designate the license or registration discipline of the individual named. Existing law repeals these provisions on January 1, 2016.

This bill would extend the operation of these provisions until January 1, begin delete 2021. end delete begin insert 2019. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 6738 of the Business and Professions
Code, as amended by Section 1 of Chapter 634 of the Statutes of
2010, is amended to read:

6738.  

(a) This chapter does not prohibit one or more civil,
electrical, or mechanical engineers from practicing or offering to
practice, within the scope of their license, civil (including
geotechnical and structural), electrical, or mechanical engineering
as a sole proprietorship, partnership, limited liability partnership,
firm, or corporation (hereinafter called business), if all of the
following requirements are met:

(1) A civil, electrical, or mechanical engineer currently licensed
in this state is an owner, partner, or officer in charge of the
engineering practice of the business.

(2) All civil, electrical, or mechanical engineering services are
performed by, or under the responsible charge of, a professional
engineer licensed in the appropriate branch of professional
engineering.

(3) If the business name of a California engineering business
contains the name of any person, then that person shall be licensed
as a professional engineer, a licensed land surveyor, a licensed
architect, or a geologist registered under the Geologist and
Geophysicist Act (Chapter 12.5 (commencing with Section 7800)).
Any offer, promotion, or advertisement by the business that
contains the name of any individual in the business, other than by
use of the name of an individual in the business name, shall clearly
and specifically designate the license or registration discipline of
each individual named.

(b) An out-of-state business with a branch office in this state
shall meet the requirements of subdivision (a) and shall have an
owner, partner, or officer who is in charge of the engineering work
in the branch in this state, who is licensed in this state, and who is
physically present at the branch office in this state on a regular
basis. However, the name of the business may contain the name
of any person not licensed in this state if that person is
appropriately registered or licensed in another state. Any offer,
promotion, or advertisement that contains the name of any
individual in the business, other than by use of the names of the
individuals in the business name, shall clearly and specifically
designate the license or registration discipline of each individual
named.

(c) The business name of a California engineering business may
be a fictitious name. However, if the fictitious name includes the
name of any person, the requirements of paragraph (3) of
subdivision (a) shall be met.

(d) A person not licensed under this chapter may also be a
partner or an officer of a civil, electrical, or mechanical engineering
business if the requirements of subdivision (a) are met. Nothing
in this section shall be construed to permit a person who is not
licensed under this chapter to be the sole owner of a civil, electrical,
or mechanical engineering business, unless otherwise exempt under
this chapter.

(e) This chapter does not prevent an individual or business
engaged in any line of endeavor other than the practice of civil,
electrical, or mechanical engineering from employing or
contracting with a licensed civil, electrical, or mechanical engineer
to perform the respective engineering services incidental to the
conduct of business.

(f) This section shall not prevent the use of the name of any
business engaged in rendering civil, electrical, or mechanical
engineering services, including the use by any lawful successor
or survivor, that lawfully was in existence on December 31, 1987.
However, the business is subject to paragraphs (1) and (2) of
subdivision (a).

(g) A business engaged in rendering civil, electrical, or
mechanical engineering services may use in its name the name of
a deceased or retired person provided all of the following
conditions are satisfied:

(1) The person’s name had been used in the name of the
business, or a predecessor in interest of the business, prior to and
after the death or retirement of the person.

(2) The person shall have been an owner, partner, or officer of
the business, or an owner, partner, or officer of the predecessor in
interest of the business.

(3) The person shall have been licensed as a professional
engineer, or a land surveyor, or an architect, or a geologist, (A) by
the appropriate licensing board if that person is operating a place
of business or practice in this state, or (B) by the applicable state
board if no place of business existed in this state.

(4) The person, if retired, has consented to the use of the name
and does not permit the use of the name in the title of another
professional engineering business in this state during the period
of the consent. However, the retired person may use his or her
name as the name of a new or purchased business if it is not
identical in every respect to that person’s name as used in the
former business.

(5) The business shall be subject to the provisions of paragraphs
(1) and (2) of subdivision (a).

(h) This section does not affect the provisions of Sections 6731.2
and 8726.1.

(i) A current organization record form shall be filed with the
board for all businesses engaged in rendering civil, electrical, or
mechanical engineering services.

(j) This section shall remain in effect only until January 1, begin delete 2021, end delete
begin insert 2019, end insert and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, begin delete 2021, end delete begin insert 2019, end insert deletes or extends
that date.

SEC. 2.  

Section 6738 of the Business and Professions Code,
as added by Section 2 of Chapter 634 of the Statutes of 2010, is
amended to read:

6738.  

(a) This chapter does not prohibit one or more civil,
electrical, or mechanical engineers from practicing or offering to
practice within the scope of their license civil (including
geotechnical and structural), electrical, or mechanical engineering
as a sole proprietorship, partnership, firm, or corporation
(hereinafter called business), if all of the following requirements
are met:

(1) A civil, electrical, or mechanical engineer currently licensed
in this state is an owner, partner, or officer in charge of the
engineering practice of the business.

(2) All civil, electrical, or mechanical engineering services are
performed by, or under the responsible charge of, a professional
engineer licensed in the appropriate branch of professional
engineering.

(3) If the business name of a California engineering business
contains the name of any person, then that person shall be licensed
as a professional engineer, a licensed land surveyor, a licensed
architect, or a geologist registered under the Geologist and
Geophysicist Act (Chapter 12.5 (commencing with Section 7800)).
Any offer, promotion, or advertisement by the business that
contains the name of any individual in the business, other than by
use of the name of an individual in the business name, shall clearly
and specifically designate the license or registration discipline of
each individual named.

(b) An out-of-state business with a branch office in this state
shall meet the requirements of subdivision (a) and shall have an
owner, partner, or officer who is in charge of the engineering work
in the branch in this state, who is licensed in this state, and who is
physically present at the branch office in this state on a regular
basis. However, the name of the business may contain the name
of any person not licensed in this state if that person is
appropriately registered or licensed in another state. Any offer,
promotion, or advertisement that contains the name of any
individual in the business, other than by use of the names of the
individuals in the business name, shall clearly and specifically
designate the license or registration discipline of each individual
named.

(c) The business name of a California engineering business may
be a fictitious name. However, if the fictitious name includes the
name of any person, the requirements of paragraph (3) of
subdivision (a) shall be met.

(d) A person not licensed under this chapter may also be a
partner or an officer of a civil, electrical, or mechanical engineering
business if the requirements of subdivision (a) are met. Nothing
in this section shall be construed to permit a person who is not
licensed under this chapter to be the sole owner of a civil, electrical,
or mechanical engineering business, unless otherwise exempt under
this chapter.

(e) This chapter does not prevent an individual or business
engaged in any line of endeavor other than the practice of civil,
electrical, or mechanical engineering from employing or
contracting with a licensed civil, electrical, or mechanical engineer
to perform the respective engineering services incidental to the
conduct of business.

(f) This section shall not prevent the use of the name of any
business engaged in rendering civil, electrical, or mechanical
engineering services, including the use by any lawful successor
or survivor, that lawfully was in existence on December 31, 1987.
However, the business is subject to paragraphs (1) and (2) of
subdivision (a).

(g) A business engaged in rendering civil, electrical, or
mechanical engineering services may use in its name the name of
a deceased or retired person provided all of the following
conditions are satisfied:

(1) The person’s name had been used in the name of the
business, or a predecessor in interest of the business, prior to and
after the death or retirement of the person.

(2) The person shall have been an owner, partner, or officer of
the business, or an owner, partner, or officer of the predecessor in
interest of the business.

(3) The person shall have been licensed as a professional
engineer, or a land surveyor, or an architect, or a geologist, (A) by
the appropriate licensing board if that person is operating a place
of business or practice in this state, or (B) by the applicable state
board if no place of business existed in this state.

(4) The person, if retired, has consented to the use of the name
and does not permit the use of the name in the title of another
professional engineering business in this state during the period
of the consent. However, the retired person may use his or her
name as the name of a new or purchased business if it is not
identical in every respect to that person’s name as used in the
former business.

(5) The business shall be subject to the provisions of paragraphs
(1) and (2) of subdivision (a).

(h) This section does not affect the provisions of Sections 6731.2
and 8726.1.

(i) A current organization record form shall be filed with the
board for all businesses engaged in rendering civil, electrical, or
mechanical engineering services.

(j) This section shall become operative on January 1, begin delete 2021. end delete
begin insert 2019. end insert

SEC. 3.  

Section 8729 of the Business and Professions Code,
as amended by Section 3 of Chapter 634 of the Statutes of 2010,
is amended to read:

8729.  

(a) This chapter does not prohibit one or more licensed
land surveyors or civil engineers licensed in this state prior to 1982
(hereinafter called civil engineers) from practicing or offering to
practice, within the scope of their licensure, land surveying as a
sole proprietorship, partnership, limited liability partnership, firm,
or corporation (hereinafter called business), if the following
conditions are satisfied:

(1) A land surveyor or civil engineer currently licensed in the
state is an owner, partner, or officer in charge of the land surveying
practice of the business.

(2) All land surveying services are performed by or under the
responsible charge of a land surveyor or civil engineer.

(3) If the business name of a California land surveying business
contains the name of a person, then that person shall be licensed
by the board as a land surveyor or licensed by the board in any
year as a civil engineer. Any offer, promotion, or advertisement
by the business that contains the name of any individual in the
business, other than by use of the name of the individual in the
business name, shall clearly and specifically designate the license
discipline of each individual named.

(b) An out-of-state business with a branch office in this state
shall meet the requirements of subdivision (a) and shall have an
owner, partner, or officer who is in charge of the land surveying
work in this state, who is licensed in this state, and who is
physically present at the branch office in this state on a regular
basis. However, the name of the business may contain the name
of a person not licensed in this state, if that person is appropriately
licensed or registered in another state. Any offer, promotion, or
advertisement that contains the name of any individual in the
business, other than by use of the name of the individual in the
business name, shall clearly and specifically designate the license
or registration discipline of each individual named.

(c) The business name of a California land surveying business
may be a fictitious name. However, if the fictitious name includes
the names of any person, the requirements of paragraph (3) of
subdivision (a) shall be met.

(d) A person not licensed under this chapter or licensed as a
civil engineer in this state prior to 1982 may also be a partner or
an officer of a land surveying business if the conditions of
subdivision (a) are satisfied. Nothing in this section shall be
construed to permit a person who is not licensed under this chapter
or licensed as a civil engineer in this state prior to 1982 to be the
sole owner or office of a land surveying business, unless otherwise
exempt under this chapter.

(e) This chapter does not prevent an individual or business
engaged in any line of endeavor, other than the practice of land
surveying, from employing or contracting with a licensed land
surveyor or a licensed civil engineer to perform the respective land
surveying services incidental to the conduct of business.

(f) This section shall not prevent the use of the name of any
business engaged in rendering land surveying services, including
the use by any lawful successor or survivor, that lawfully was in
existence on June 1, 1941. However, the business is subject to the
provisions of paragraphs (1) and (2) of subdivision (a).

(g) A business engaged in rendering land surveying services
may use in its name the name of a deceased or retired person if
the following conditions are satisfied:

(1) The person’s name had been used in the name of the
business, or a predecessor in interest of the business, prior to the
death or retirement of the person.

(2) The person shall have been an owner, partner, or officer of
the business, or an owner, partner, or officer of the predecessor in
interest of the business.

(3) The person shall have been licensed as a land surveyor or a
civil engineer by the board, if operating a place of business or
practice in this state, or by an applicable state board in the event
no place of business existed in this state.

(4) The person, if retired, has consented to the use of the name
and does not permit the use of the name in the title of another land
surveying business in this state during the period of that consent,
except that a retired person may use his or her name as the name
of a new or purchased business, if that business is not identical in
every respect to that person’s name as used in the former business.

(5) The business shall be subject to paragraphs (1) and (2) of
subdivision (a).

(h) This section does not affect Sections 6731.2 and 8726.1.

(i) A current organization record form shall be filed with the
board for all businesses engaged in rendering professional land
surveying services.

(j) This section shall remain in effect only until January 1, begin delete 2021, end delete
begin insert 2019, end insert and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, begin delete 2021, end delete begin insert 2019, end insert deletes or extends
that date.

SEC. 4.  

Section 8729 of the Business and Professions Code,
as added by Section 4 of Chapter 634 of the Statutes of 2010, is
amended to read:

8729.  

(a) This chapter does not prohibit one or more licensed
land surveyors or civil engineers licensed in this state prior to 1982
(hereinafter called civil engineers) from practicing or offering to
practice within the scope of their licensure, land surveying as a
sole proprietorship, partnership, firm, or corporation (hereinafter
called business), if the following conditions are satisfied:

(1) A land surveyor or civil engineer currently licensed in the
state is an owner, partner, or officer in charge of the land surveying
practice of the business.

(2) All land surveying services are performed by or under the
responsible charge of a land surveyor or civil engineer.

(3) If the business name of a California land surveying business
contains the name of a person, then that person shall be licensed
by the board as a land surveyor or licensed by the board in any
year as a civil engineer. Any offer, promotion, or advertisement
by the business that contains the name of any individual in the
business, other than by use of the name of the individual in the
business name, shall clearly and specifically designate the license
discipline of each individual named.

(b) An out-of-state business with a branch office in this state
shall meet the requirements of subdivision (a) and shall have an
owner, partner, or officer who is in charge of the land surveying
work in this state, who is licensed in this state, and who is
physically present at the branch office in this state on a regular
basis. However, the name of the business may contain the name
of a person not licensed in this state, if that person is appropriately
licensed or registered in another state. Any offer, promotion, or
advertisement that contains the name of any individual in the
business, other than by use of the name of the individual in the
business name, shall clearly and specifically designate the license
or registration discipline of each individual named.

(c) The business name of a California land surveying business
may be a fictitious name. However, if the fictitious name includes
the names of any person, the requirements of paragraph (3) of
subdivision (a) shall be met.

(d) A person not licensed under this chapter or licensed as a
civil engineer in this state prior to 1982 may also be a partner or
an officer of a land surveying business if the conditions of
subdivision (a) are satisfied. Nothing in this section shall be
construed to permit a person who is not licensed under this chapter
or licensed as a civil engineer in this state prior to 1982 to be the
sole owner or office of a land surveying business, unless otherwise
exempt under this chapter.

(e) This chapter does not prevent an individual or business
engaged in any line of endeavor, other than the practice of land
surveying, from employing or contracting with a licensed land
surveyor or a licensed civil engineer to perform the respective land
surveying services incidental to the conduct of business.

(f) This section shall not prevent the use of the name of any
business engaged in rendering land surveying services, including
the use by any lawful successor or survivor, that lawfully was in
existence on June 1, 1941. However, the business is subject to the
provisions of paragraphs (1) and (2) of subdivision (a).

(g) A business engaged in rendering land surveying services
may use in its name the name of a deceased or retired person if
the following conditions are satisfied:

(1) The person’s name had been used in the name of the
business, or a predecessor in interest of the business, prior to the
death or retirement of the person.

(2) The person shall have been an owner, partner, or officer of
the business, or an owner, partner, or officer of the predecessor in
interest of the business.

(3) The person shall have been licensed as a land surveyor or a
civil engineer by the board, if operating a place of business or
practice in this state, or by an applicable state board in the event
no place of business existed in this state.

(4) The person, if retired, has consented to the use of the name
and does not permit the use of the name in the title of another land
surveying business in this state during the period of that consent,
except that a retired person may use his or her name as the name
of a new or purchased business, if that business is not identical in
every respect to that person’s name as used in the former business.

(5) The business shall be subject to paragraphs (1) and (2) of
subdivision (a).

(h) This section does not affect Sections 6731.2 and 8726.1.

(i) A current organization record form shall be filed with the
board for all businesses engaged in rendering professional land
surveying services.

(j) This section shall become operative on January 1, begin delete 2021. end delete
begin insert 2019. end insert

SEC. 5.  

Section 16101 of the Corporations Code, as amended
by Section 1 of Chapter 291 of the Statutes of 2011, is amended
to read:

16101.  

As used in this chapter, the following terms and phrases
have the following meanings:

(1) “Business” includes every trade, occupation, and profession.

(2) “Debtor in bankruptcy” means a person who is the subject
of either of the following:

(A) An order for relief under Title 11 of the United States Code
or a comparable order under a successor statute of general
application.

(B) A comparable order under federal, state, or foreign law
governing insolvency.

(3) “Distribution” means a transfer of money or other property
from a partnership to a partner in the partner’s capacity as a partner
or to the partner’s transferee.

(4) “Electronic transmission by the partnership” means a
communication (a) delivered by (1) facsimile telecommunication
or electronic mail when directed to the facsimile number or
electronic mail address, respectively, for that recipient on record
with the partnership, (2) posting on an electronic message board
or network that the partnership 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,
or (3) other means of electronic communication, (b) to a recipient
who has provided an unrevoked consent to the use of those means
of transmission, and (c) that 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 partnership to an individual partner 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 Electronic
Signatures in Global and National Commerce Act (15 U.S.C. Sec.
7001(c)(1)).

(5) “Electronic transmission to the partnership” means a
communication (a) delivered by (1) facsimile telecommunication
or electronic mail when directed to the facsimile number or
electronic mail address, respectively, which the partnership has
provided from time to time to partners for sending communications
to the partnership, (2) posting on an electronic message board or
network that the partnership has designated for those
communications, and which transmission shall be validly delivered
upon the posting, or (3) other means of electronic communication,
(b) as to which the partnership has placed in effect reasonable
measures to verify that the sender is the partner (in person or by
proxy) purporting to send the transmission, and (c) that creates a
record that is capable of retention, retrieval, and review, and that
may thereafter be rendered into clearly legible tangible form.

(6) (A) “Foreign limited liability partnership” means a
partnership, other than a limited partnership, formed pursuant to
an agreement governed by the laws of another jurisdiction and
denominated or registered as a limited liability partnership or
registered limited liability partnership under the laws of that
jurisdiction (i) in which each partner is a licensed person or a
person licensed or authorized to provide professional limited
liability partnership services in a jurisdiction or jurisdictions other
than this state, (ii) which is licensed under the laws of the state to
engage in the practice of architecture, the practice of public
accountancy, the practice of engineering, the practice of land
surveying, or the practice of law, or (iii) which (I) is related to a
registered limited liability partnership that practices public
accountancy or, to the extent permitted by the State Bar, practices
law or is related to a foreign limited liability partnership and (II)
provides services related or complementary to the professional
limited liability partnership services provided by, or provides
services or facilities to, that registered limited liability partnership
or foreign limited liability partnership.

(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority of
the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each partnership
hold interests in or are members of another person, except an
individual, and each partnership renders services pursuant to an
agreement with that other person, or (iii) one partnership, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the other
partnership.

(7) “Licensed person” means any person who is duly licensed,
authorized, or registered under the provisions of the Business and
Professions Code to provide professional limited liability
partnership services or who is lawfully able to render professional
limited liability partnership services in this state.

(8) (A) “Registered limited liability partnership” means a
partnership, other than a limited partnership, formed pursuant to
an agreement governed by Article 10 (commencing with Section
16951), that is registered under Section 16953 and (i) each of the
partners of which is a licensed person or a person licensed or
authorized to provide professional limited liability partnership
services in a jurisdiction or jurisdictions other than this state, (ii)
is licensed under the laws of the state to engage in the practice of
architecture, the practice of public accountancy, the practice of
engineering, the practice of land surveying, or the practice of law,
or (iii)(I) is related to a registered limited liability partnership that
practices public accountancy or, to the extent permitted by the
State Bar, practices law or is related to a foreign limited liability
partnership and (II) provides services related or complementary
to the professional limited liability partnership services provided
by, or provides services or facilities to, that registered limited
liability partnership or foreign limited liability partnership.

(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority of
the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each partnership
hold interests in or are members of another person, other than an
individual, and each partnership renders services pursuant to an
agreement with that other person, or (iii) one partnership, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the other
partnership.

(9) “Partnership” means an association of two or more persons
to carry on as coowners a business for profit formed under Section
16202, predecessor law, or comparable law of another jurisdiction,
and includes, for all purposes of the laws of this state, a registered
limited liability partnership, and excludes any partnership formed
under Chapter 4.5 (commencing with Section 15900).

(10) “Partnership agreement” means the agreement, whether
written, oral, or implied, among the partners concerning the
partnership, including amendments to the partnership agreement.

(11) “Partnership at will” means a partnership in which the
partners have not agreed to remain partners until the expiration of
a definite term or the completion of a particular undertaking.

(12) “Partnership interest” or “partner’s interest in the
partnership” means all of a partner’s interests in the partnership,
including the partner’s transferable interest and all management
and other rights.

(13) “Person” means an individual, corporation, business trust,
estate, trust, partnership, limited partnership, limited liability
partnership, limited liability company, association, joint venture,
government, governmental subdivision, agency, or instrumentality,
or any other legal or commercial entity.

(14) “Professional limited liability partnership services” means
the practice of architecture, the practice of public accountancy,
the practice of engineering, the practice of land surveying, or the
practice of law.

(15) “Property” means all property, real, personal, or mixed,
tangible or intangible, or any interest therein.

(16) “State” means a state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
insular possession subject to the jurisdiction of the United States.

(17) “Statement” means a statement of partnership authority
under Section 16303, a statement of denial under Section 16304,
a statement of dissociation under Section 16704, a statement of
dissolution under Section 16805, a statement of conversion or a
certificate of conversion under Section 16906, a statement of
merger under Section 16915, or an amendment or cancellation of
any of the foregoing.

(18) “Transfer” includes an assignment, conveyance, lease,
mortgage, deed, and encumbrance.

(19) The inclusion of the practice of architecture as a
professional limited liability partnership service permitted by this
section shall extend only until January 1, 2019.

(20) This section shall remain in effect only until January 1,
begin delete 2021, end delete begin insert 2019, end insert and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, begin delete 2021, end delete begin insert 2019, end insert deletes or
extends that date.

SEC. 6.  

Section 16101 of the Corporations Code, as amended
by Section 2 of Chapter 291 of the Statutes of 2011, is amended
to read:

16101.  

As used in this chapter, the following terms and phrases
have the following meanings:

(1) “Business” includes every trade, occupation, and profession.

(2) “Debtor in bankruptcy” means a person who is the subject
of either of the following:

(A) An order for relief under Title 11 of the United States Code
or a comparable order under a successor statute of general
application.

(B) A comparable order under federal, state, or foreign law
governing insolvency.

(3) “Distribution” means a transfer of money or other property
from a partnership to a partner in the partner’s capacity as a partner
or to the partner’s transferee.

(4) “Electronic transmission by the partnership” means a
communication (a) delivered by (1) facsimile telecommunication
or electronic mail when directed to the facsimile number or
electronic mail address, respectively, for that recipient on record
with the partnership, (2) posting on an electronic message board
or network that the partnership 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,
or (3) other means of electronic communication, (b) to a recipient
who has provided an unrevoked consent to the use of those means
of transmission, and (c) that 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 partnership to an individual partner 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 Electronic
Signatures in Global and National Commerce Act (15 U.S.C. Sec.
7001(c)(1)).

(5) “Electronic transmission to the partnership” means a
communication (a) delivered by (1) facsimile telecommunication
or electronic mail when directed to the facsimile number or
electronic mail address, respectively, which the partnership has
provided from time to time to partners for sending communications
to the partnership, (2) posting on an electronic message board or
network that the partnership has designated for those
communications, and which transmission shall be validly delivered
upon the posting, or (3) other means of electronic communication,
(b) as to which the partnership has placed in effect reasonable
measures to verify that the sender is the partner (in person or by
proxy) purporting to send the transmission, and (c) that creates a
record that is capable of retention, retrieval, and review, and that
may thereafter be rendered into clearly legible tangible form.

(6) (A) “Foreign limited liability partnership” means a
partnership, other than a limited partnership, formed pursuant to
an agreement governed by the laws of another jurisdiction and
denominated or registered as a limited liability partnership or
registered limited liability partnership under the laws of that
jurisdiction (i) in which each partner is a licensed person or a
person licensed or authorized to provide professional limited
liability partnership services in a jurisdiction or jurisdictions other
than this state, (ii) which is licensed under the laws of the state to
engage in the practice of architecture, the practice of public
accountancy, or the practice of law, or (iii) which (I) is related to
a registered limited liability partnership that practices public
accountancy or, to the extent permitted by the State Bar, practices
law or is related to a foreign limited liability partnership and (II)
provides services related or complementary to the professional
limited liability partnership services provided by, or provides
services or facilities to, that registered limited liability partnership
or foreign limited liability partnership.

(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority of
the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each partnership
hold interests in or are members of another person, except an
individual, and each partnership renders services pursuant to an
agreement with that other person, or (iii) one partnership, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the other
partnership.

(7) “Licensed person” means any person who is duly licensed,
authorized, or registered under the provisions of the Business and
Professions Code to provide professional limited liability
partnership services or who is lawfully able to render professional
limited liability partnership services in this state.

(8) (A) “Registered limited liability partnership” means a
partnership, other than a limited partnership, formed pursuant to
an agreement governed by Article 10 (commencing with Section
16951), that is registered under Section 16953 and (i) each of the
partners of which is a licensed person or a person licensed or
authorized to provide professional limited liability partnership
services in a jurisdiction or jurisdictions other than this state, (ii)
is licensed under the laws of the state to engage in the practice of
architecture, practice of public accountancy, or the practice of law,
or (iii)(I) is related to a registered limited liability partnership that
practices public accountancy or, to the extent permitted by the
State Bar, practices law or is related to a foreign limited liability
partnership and (II) provides services related or complementary
to the professional limited liability partnership services provided
by, or provides services or facilities to, that registered limited
liability partnership or foreign limited liability partnership.

(B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority of
the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each partnership
hold interests in or are members of another person, other than an
individual, and each partnership renders services pursuant to an
agreement with that other person, or (iii) one partnership, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the other
partnership.

(9) “Partnership” means an association of two or more persons
to carry on as coowners a business for profit formed under Section
16202, predecessor law, or comparable law of another jurisdiction,
and includes, for all purposes of the laws of this state, a registered
limited liability partnership, and excludes any partnership formed
under Chapter 4.5 (commencing with Section 15900).

(10) “Partnership agreement” means the agreement, whether
written, oral, or implied, among the partners concerning the
partnership, including amendments to the partnership agreement.

(11) “Partnership at will” means a partnership in which the
partners have not agreed to remain partners until the expiration of
a definite term or the completion of a particular undertaking.

(12) “Partnership interest” or “partner’s interest in the
partnership” means all of a partner’s interests in the partnership,
including the partner’s transferable interest and all management
and other rights.

(13) “Person” means an individual, corporation, business trust,
estate, trust, partnership, limited partnership, limited liability
partnership, limited liability company, association, joint venture,
government, governmental subdivision, agency, or instrumentality,
or any other legal or commercial entity.

(14) “Professional limited liability partnership services” means
the practice of architecture, the practice of public accountancy, or
the practice of law.

(15) “Property” means all property, real, personal, or mixed,
tangible or intangible, or any interest therein.

(16) “State” means a state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
insular possession subject to the jurisdiction of the United States.

(17) “Statement” means a statement of partnership authority
under Section 16303, a statement of denial under Section 16304,
a statement of dissociation under Section 16704, a statement of
dissolution under Section 16805, a statement of conversion or a
certificate of conversion under Section 16906, a statement of
merger under Section 16915, or an amendment or cancellation of
any of the foregoing.

(18) “Transfer” includes an assignment, conveyance, lease,
mortgage, deed, and encumbrance.

(19) The inclusion of the practice of architecture as a
professional limited liability partnership service permitted by this
section shall extend only until January 1, 2019.

(20) This section shall become operative on January 1, begin delete 2021. end delete
begin insert 2019. end insert

SEC. 7.  

Section 16956 of the Corporations Code, as amended
by Section 7 of Chapter 634 of the Statutes of 2010, is amended
to read:

16956.  

(a) At the time of registration pursuant to Section
16953, in the case of a registered limited liability partnership, and
Section 16959, in the case of a foreign limited liability partnership,
and at all times during which those partnerships shall transact
intrastate business, every registered limited liability partnership
and foreign limited liability partnership, as the case may be, shall
be required to provide security for claims against it as follows:

(1) For claims based upon acts, errors, or omissions arising out
of the practice of public accountancy, a registered limited liability
partnership or foreign limited liability partnership providing
accountancy services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:

(A) Maintaining a policy or policies of insurance against liability
imposed on or against it by law for damages arising out of claims;
however, the total aggregate limit of liability under the policy or
policies of insurance for partnerships with five or fewer licensed
persons shall not be less than one million dollars ($1,000,000),
and for partnerships with more than five licensees rendering
professional services on behalf of the partnership, an additional
one hundred thousand dollars ($100,000) of insurance shall be
obtained for each additional licensee; however, the maximum
amount of insurance is not required to exceed five million dollars
($5,000,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. The policy or policies may be issued on a
claims-made or occurrence basis, and shall cover: (i) in the case
of a claims-made policy, claims initially asserted in the designated
period, and (ii) in the case of an occurrence policy, occurrences
during the designated period. For purposes of this subparagraph,
“designated period” means a policy year or any other period
designated in the policy that is not greater than 12 months. The
impairment or exhaustion of the aggregate limit of liability by
amounts paid under the policy in connection with the settlement,
discharge, or defense of claims applicable to a designated period
shall not require the partnership to acquire additional insurance
coverage for that designated period. The policy or policies of
insurance may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this subparagraph may be subject to a deductible or self-insured
retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of
all claims; however, the maximum amount of security for
partnerships with five or fewer licensed persons shall not be less
than one million dollars ($1,000,000), and for partnerships with
more than five licensees rendering professional services on behalf
of the partnership, an additional one hundred thousand dollars
($100,000) of security shall be obtained for each additional
licensee; however, the maximum amount of security is not required
to exceed five million dollars ($5,000,000). The partnership
remains in compliance with this section during a calendar year
notwithstanding amounts paid during that calendar year from the
accounts, funds, Treasury obligations, letters of credit, or bonds
in defending, settling, or discharging claims of the type described
in this paragraph, provided that the amount of those accounts,
funds, Treasury obligations, letters of credit, or bonds was at least
the amount specified in the preceding sentence as of the first
business day of that calendar year. Notwithstanding the pendency
of other claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if within
30 days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the partnership has provided
the required amount of security by designating and segregating
funds in compliance with the requirements of this subparagraph.

(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing accountancy services, by
virtue of that person’s status as a partner, thereby automatically
guarantees payment of the difference between the maximum
amount of security required for the partnership by this paragraph
and the security otherwise provided in accordance with
subparagraphs (A) and (B), provided that the aggregate amount
paid by all partners under these guarantees shall not exceed the
difference. Neither withdrawal by a partner nor the dissolution and
winding up of the partnership shall affect the rights or obligations
of a partner arising prior to withdrawal or dissolution and winding
up, and the guarantee provided for in this subparagraph shall apply
only to conduct that occurred prior to the withdrawal or dissolution
and winding up. Nothing contained in this subparagraph shall
affect or impair the rights or obligations of the partners among
themselves, or the partnership, including, but not limited to, rights
of contribution, subrogation, or indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).

(2) For claims based upon acts, errors, or omissions arising out
of the practice of law, a registered limited liability partnership or
foreign limited liability partnership providing legal services shall
comply with one, or pursuant to subdivision (b) some combination,
of the following:

(A) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
a policy or policies of insurance against liability imposed on or
against it by law for damages arising out of claims; however, the
total aggregate limit of liability under the policy or policies of
insurance for partnerships with five or fewer licensed persons shall
not be less than one million dollars ($1,000,000), and for
partnerships with more than five licensees rendering professional
services on behalf of the partnership, an additional one hundred
thousand dollars ($100,000) of insurance shall be obtained for
each additional licensee; however, the maximum amount of
insurance is not required to exceed seven million five hundred
thousand dollars ($7,500,000) in any one designated period, less
amounts paid in defending, settling, or discharging claims as set
forth in this subparagraph. The policy or policies may be issued
on a claims-made or occurrence basis, and shall cover (i) in the
case of a claims-made policy, claims initially asserted in the
designated period, and (ii) in the case of an occurrence policy,
occurrences during the designated period. For purposes of this
subparagraph, “designated period” means a policy year or any
other period designated in the policy that is not greater than 12
months. The impairment or exhaustion of the aggregate limit of
liability by amounts paid under the policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the partnership to acquire
additional insurance coverage for that designated period. The policy
or policies of insurance may be in a form reasonably available in
the commercial insurance market and may be subject to those
terms, conditions, exclusions, and endorsements that are typically
contained in those policies. A policy or policies of insurance
maintained pursuant to this subparagraph may be subject to a
deductible or self-insured retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
in trust or bank escrow, cash, bank certificates of deposit, United
States Treasury obligations, bank letters of credit, or bonds of
insurance or surety companies as security for payment of liabilities
imposed by law for damages arising out of all claims; however,
the maximum amount of security for partnerships with five or
fewer licensed persons shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of security
shall be obtained for each additional licensee; however, the
maximum amount of security is not required to exceed seven
million five hundred thousand dollars ($7,500,000). The partnership
remains in compliance with this section during a calendar year
notwithstanding amounts paid during that calendar year from the
accounts, funds, Treasury obligations, letters of credit, or bonds
in defending, settling, or discharging claims of the type described
in this paragraph, provided that the amount of those accounts,
funds, Treasury obligations, letters of credit, or bonds was at least
the amount specified in the preceding sentence as of the first
business day of that calendar year. Notwithstanding the pendency
of other claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if within
30 days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the partnership has provided
the required amount of security by designating and segregating
funds in compliance with the requirement of this subparagraph.

(C) Unless the partnership has satisfied the requirements of
subparagraph (D), each partner of a registered limited liability
partnership or foreign limited liability partnership providing legal
services, by virtue of that person’s status as a partner, thereby
automatically guarantees payment of the difference between the
maximum amount of security required for the partnership by this
paragraph and the security otherwise provided in accordance with
the provisions of subparagraphs (A) and (B), provided that the
aggregate amount paid by all partners under these guarantees shall
not exceed the difference. Neither withdrawal by a partner nor the
dissolution and winding up of the partnership shall affect the rights
or obligations of a partner arising prior to withdrawal or dissolution
and winding up, and the guarantee provided for in this
subparagraph shall apply only to conduct that occurred prior to
the withdrawal or dissolution and winding up. Nothing contained
in this subparagraph shall affect or impair the rights or obligations
of the partners among themselves, or the partnership, including,
but not limited to, rights of contribution, subrogation, or
indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding fifteen million
dollars ($15,000,000).

(3) For claims based upon acts, errors, or omissions arising out
of the practice of architecture, a registered limited liability
partnership or foreign limited liability partnership providing
architectural services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:

(A) Maintaining a policy or policies of insurance against liability
imposed on or against it by law for damages arising out of claims;
however, the total aggregate limit of liability under the policy or
policies of insurance for partnerships with five or fewer licensees
rendering professional services on behalf of the partnership shall
not be less than one million dollars ($1,000,000), and for
partnerships with more than five licensees rendering professional
services on behalf of the partnership, an additional one hundred
thousand dollars ($100,000) of liability coverage shall be obtained
for each additional licensee; however, the total aggregate limit of
liability under the policy or policies of insurance is not required
to exceed five million dollars ($5,000,000). The policy or policies
may be issued on a claims-made or occurrence basis, and shall
cover: (i) in the case of a claims-made policy, claims initially
asserted in the designated period, and (ii) in the case of an
occurrence policy, occurrences during the designated period. For
purposes of this subparagraph, “designated period” means a policy
year or any other period designated in the policy that is not greater
than 12 months. The impairment or exhaustion of the aggregate
limit of liability by amounts paid under the policy in connection
with the settlement, discharge, or defense of claims applicable to
a designated period shall not require the partnership to acquire
additional insurance coverage for that designated period. The policy
or policies of insurance may be in a form reasonably available in
the commercial insurance market and may be subject to those
terms, conditions, exclusions, and endorsements that are typically
contained in those policies. A policy or policies of insurance
maintained pursuant to this subparagraph may be subject to a
deductible or self-insured retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of
all claims; however, the maximum amount of security for
partnerships with five or fewer licensees rendering professional
services on behalf of the partnership shall not be less than one
million dollars ($1,000,000), and for partnerships with more than
five licensees rendering professional services on behalf of the
partnership, an additional one hundred thousand dollars ($100,000)
of security shall be obtained for each additional licensee; however,
the maximum amount of security is not required to exceed five
million dollars ($5,000,000). The partnership remains in
compliance with this section during a calendar year notwithstanding
amounts paid during that calendar year from the accounts, funds,
Treasury obligations, letters of credit, or bonds in defending,
settling, or discharging claims of the type described in this
paragraph, provided that the amount of those accounts, funds,
Treasury obligations, letters of credit, or bonds was at least the
amount specified in the preceding sentence as of the first business
day of that calendar year. Notwithstanding the pendency of other
claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if within
30 days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the partnership has provided
the required amount of security by designating and segregating
funds in compliance with the requirements of this subparagraph.

(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing architectural services, by
virtue of that person’s status as a partner, thereby automatically
guarantees payment of the difference between the maximum
amount of security required for the partnership by this paragraph
and the security otherwise provided in accordance with
subparagraphs (A) and (B), provided that the aggregate amount
paid by all partners under these guarantees shall not exceed the
difference. Neither withdrawal by a partner nor the dissolution and
winding up of the partnership shall affect the rights or obligations
of a partner arising prior to withdrawal or dissolution and winding
up, and the guarantee provided for in this subparagraph shall apply
only to conduct that occurred prior to the withdrawal or dissolution
and winding up. Nothing contained in this subparagraph shall
affect or impair the rights or obligations of the partners among
themselves, or the partnership, including, but not limited to, rights
of contribution, subrogation, or indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).

(4) For claims based upon acts, errors, or omissions arising out
of the practice of engineering or the practice of land surveying, a
registered limited liability partnership or foreign limited liability
partnership providing engineering or land surveying services shall
comply with one, or pursuant to subdivision (b) some combination,
of the following:

(A) Maintaining a policy or policies of insurance against liability
imposed on or against it by law for damages arising out of claims;
however, the total aggregate limit of liability under the policy or
policies of insurance for partnerships with five or fewer licensees
rendering professional services on behalf of the partnership shall
not be less than two million dollars ($2,000,000), and for
partnerships with more than five licensees rendering professional
services on behalf of the partnership, an additional one hundred
thousand dollars ($100,000) of liability coverage shall be obtained
for each additional licensee; however, the total aggregate limit of
liability under the policy or policies of insurance is not required
to exceed five million dollars ($5,000,000). The policy or policies
may be issued on a claims-made or occurrence basis, and shall
cover: (i) in the case of a claims-made policy, claims initially
asserted in the designated period, and (ii) in the case of an
occurrence policy, occurrences during the designated period. For
purposes of this subparagraph, “designated period” means a policy
year or any other period designated in the policy that is not greater
than 12 months. The impairment or exhaustion of the aggregate
limit of liability by amounts paid under the policy in connection
with the settlement, discharge, or defense of claims applicable to
a designated period shall not require the partnership to acquire
additional insurance coverage for that designated period. The policy
or policies of insurance may be in a form reasonably available in
the commercial insurance market and may be subject to those
terms, conditions, exclusions, and endorsements that are typically
contained in those policies. A policy or policies of insurance
maintained pursuant to this subparagraph may be subject to a
deductible or self-insured retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of
all claims; however, the maximum amount of security for
partnerships with five or fewer licensees rendering professional
services on behalf of the partnership shall not be less than two
million dollars ($2,000,000), and for partnerships with more than
five licensees rendering professional services on behalf of the
partnership, an additional one hundred thousand dollars ($100,000)
of security shall be obtained for each additional licensee; however,
the maximum amount of security is not required to exceed five
million dollars ($5,000,000). The partnership remains in
compliance with this section during a calendar year,
notwithstanding amounts paid during that calendar year from the
accounts, funds, Treasury obligations, letters of credit, or bonds
in defending, settling, or discharging claims of the type described
in this paragraph, provided that the amount of those accounts,
funds, Treasury obligations, letters of credit, or bonds was at least
the amount specified in the preceding sentence as of the first
business day of that calendar year. Notwithstanding the pendency
of other claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if, within
30 days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the partnership has provided
the required amount of security by designating and segregating
funds in compliance with the requirements of this subparagraph.

(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing engineering services or land
surveying services, by virtue of that person’s status as a partner,
thereby automatically guarantees payment of the difference
between the maximum amount of security required for the
partnership by this paragraph and the security otherwise provided
in accordance with subparagraphs (A) and (B), provided that the
aggregate amount paid by all partners under these guarantees shall
not exceed the difference. Neither withdrawal by a partner nor the
dissolution and winding up of the partnership shall affect the rights
or obligations of a partner arising prior to withdrawal or dissolution
and winding up, and the guarantee provided for in this
subparagraph shall apply only to conduct that occurred prior to
the withdrawal or dissolution and winding up. Nothing contained
in this subparagraph shall affect or impair the rights or obligations
of the partners among themselves, or the partnership, including,
but not limited to, rights of contribution, subrogation, or
indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).

(b) For purposes of satisfying the security requirements of this
section, a registered limited liability partnership or foreign limited
liability partnership may aggregate the security provided by it
pursuant to subparagraphs (A), (B), (C), and (D) of paragraph (1)
of subdivision (a), subparagraphs (A), (B), (C), and (D) of
paragraph (2) of subdivision (a), subparagraphs (A), (B), (C), and
(D) of paragraph (3) of subdivision (a), or subparagraphs (A), (B),
(C), and (D) of paragraph (4) of subdivision (a), as the case may
be. Any registered limited liability partnership or foreign limited
liability partnership intending to comply with the alternative
security provisions set forth in subparagraph (D) of paragraph (1)
of subdivision (a), subparagraph (D) of paragraph (2) of subdivision
(a), subparagraph (D) of paragraph (3) of subdivision (a), or
subparagraph (D) of paragraph (4) of subdivision (a), shall furnish
the following information to the Secretary of State’s office, in the
manner prescribed in, and accompanied by all information required
by, the applicable section:

 

	TRANSMITTAL FORM FOR EVIDENCING COMPLIANCE WITH SECTION 16956(a)(1)(D), SECTION 16956(a)(2)(D), SECTION 16956(a)(3)(D), OR SECTION 16956(a)(4)(D) OF THE CALIFORNIA CORPORATIONS CODE
	The undersigned hereby confirms the following:
1.	Name of registered or foreign limited liability partnership
2.	Jurisdiction where partnership is organized
3.	Address of principal office
4.	The registered or foreign limited liability partnership chooses to satisfy the requirements of Section 16956 by confirming, pursuant to Section 16956(a)(1)(D), 16956(a)(2)(D), 16956(a)(3)(D), or 16956 (a)(4)(D) and pursuant to Section 16956(c), that, as of the most recently completed fiscal year, the partnership had a net worth equal to or exceeding ten million dollars ($10,000,000), in the case of a partnership providing accountancy services, fifteen million dollars ($15,000,000) in the case of a partnership providing legal services, or ten million dollars ($10,000,000), in the case of a partnership providing architectural services, engineering services, or land surveying services.
5.	Title of authorized person executing this form
6.	Signature of authorized person executing this form

 

(c) Pursuant to subparagraph (D) of paragraph (1) of subdivision
(a), subparagraph (D) of paragraph (2) of subdivision (a),
subparagraph (D) of paragraph (3) of subdivision (a), or
subparagraph (D) of paragraph (4) of subdivision (a), a registered
limited liability partnership or foreign limited liability partnership
may satisfy the requirements of this section by confirming that, as
of the last day of its most recently completed fiscal year, it had a
net worth equal to or exceeding the amount required. In order to
comply with this alternative method of meeting the requirements
established in this section, a registered limited liability partnership
or foreign limited liability partnership shall file an annual
confirmation with the Secretary of State’s office, signed by an
authorized member of the registered limited liability partnership
or foreign limited liability partnership, accompanied by a
transmittal form as prescribed by subdivision (b). In order to be
current in a given year, the partnership form for confirming
compliance with the optional security requirement shall be on file
within four months of the completion of the fiscal year and, upon
being filed, shall constitute full compliance with the financial
security requirements for purposes of this section as of the
beginning of the fiscal year. A confirmation filed during any
particular fiscal year shall continue to be effective for the first four
months of the next succeeding fiscal year.

(d) Neither the existence of the requirements of subdivision (a)
nor the extent of the registered limited liability partnership’s or
foreign limited liability partnership’s compliance with the
alternative requirements in this section shall be admissible in court
or in any way be made known to a jury or other trier of fact in
determining an issue of liability for, or to the extent of, the damages
in question.

(e) Notwithstanding any other provision of this section, if a
registered limited liability partnership or foreign limited liability
partnership is otherwise in compliance with the terms of this section
at the time that a bankruptcy or other insolvency proceeding is
commenced with respect to the registered limited liability
partnership or foreign limited liability partnership, it shall be
deemed to be in compliance with this section during the pendency
of the proceeding. A registered limited liability partnership that
has been the subject of a proceeding and that conducts business
after the proceeding ends shall thereafter comply with paragraph
(1), (2), (3), or (4) of subdivision (a), in order to obtain the
limitations on liability afforded by subdivision (c) of Section
16306.

(f) This section shall remain in effect only until January 1, begin delete 2021, end delete
begin insert 2019, end insert and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, begin delete 2021, end delete begin insert 2019, end insert deletes or extends
that date.

SEC. 8.  

Section 16956 of the Corporations Code, as added by
Section 8 of Chapter 634 of the Statutes of 2010, is amended to
read:

16956.  

(a) At the time of registration pursuant to Section
16953, in the case of a registered limited liability partnership, and
Section 16959, in the case of a foreign limited liability partnership,
and at all times during which those partnerships shall transact
intrastate business, every registered limited liability partnership
and foreign limited liability partnership, as the case may be, shall
be required to provide security for claims against it as follows:

(1) For claims based upon acts, errors, or omissions arising out
of the practice of public accountancy, a registered limited liability
partnership or foreign limited liability partnership providing
accountancy services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:

(A) Maintaining a policy or policies of insurance against liability
imposed on or against it by law for damages arising out of claims;
however, the total aggregate limit of liability under the policy or
policies of insurance for partnerships with five or fewer licensed
persons shall not be less than one million dollars ($1,000,000),
and for partnerships with more than five licensees rendering
professional services on behalf of the partnership, an additional
one hundred thousand dollars ($100,000) of insurance shall be
obtained for each additional licensee; however, the maximum
amount of insurance is not required to exceed five million dollars
($5,000,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. The policy or policies may be issued on a
claims-made or occurrence basis, and shall cover: (i) in the case
of a claims-made policy, claims initially asserted in the designated
period, and (ii) in the case of an occurrence policy, occurrences
during the designated period. For purposes of this subparagraph,
“designated period” means a policy year or any other period
designated in the policy that is not greater than 12 months. The
impairment or exhaustion of the aggregate limit of liability by
amounts paid under the policy in connection with the settlement,
discharge, or defense of claims applicable to a designated period
shall not require the partnership to acquire additional insurance
coverage for that designated period. The policy or policies of
insurance may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this subparagraph may be subject to a deductible or self-insured
retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of
all claims; however, the maximum amount of security for
partnerships with five or fewer licensed persons shall not be less
than one million dollars ($1,000,000), and for partnerships with
more than five licensees rendering professional services on behalf
of the partnership, an additional one hundred thousand dollars
($100,000) of security shall be obtained for each additional
licensee; however, the maximum amount of security is not required
to exceed five million dollars ($5,000,000). The partnership
remains in compliance with this section during a calendar year
notwithstanding amounts paid during that calendar year from the
accounts, funds, Treasury obligations, letters of credit, or bonds
in defending, settling, or discharging claims of the type described
in this paragraph, provided that the amount of those accounts,
funds, Treasury obligations, letters of credit, or bonds was at least
the amount specified in the preceding sentence as of the first
business day of that calendar year. Notwithstanding the pendency
of other claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if within
30 days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the partnership has provided
the required amount of security by designating and segregating
funds in compliance with the requirements of this subparagraph.

(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing accountancy services, by
virtue of that person’s status as a partner, thereby automatically
guarantees payment of the difference between the maximum
amount of security required for the partnership by this paragraph
and the security otherwise provided in accordance with
subparagraphs (A) and (B), provided that the aggregate amount
paid by all partners under these guarantees shall not exceed the
difference. Neither withdrawal by a partner nor the dissolution and
winding up of the partnership shall affect the rights or obligations
of a partner arising prior to withdrawal or dissolution and winding
up, and the guarantee provided for in this subparagraph shall apply
only to conduct that occurred prior to the withdrawal or dissolution
and winding up. Nothing contained in this subparagraph shall
affect or impair the rights or obligations of the partners among
themselves, or the partnership, including, but not limited to, rights
of contribution, subrogation, or indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).

(2) For claims based upon acts, errors, or omissions arising out
of the practice of law, a registered limited liability partnership or
foreign limited liability partnership providing legal services shall
comply with one, or pursuant to subdivision (b) some combination,
of the following:

(A) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
a policy or policies of insurance against liability imposed on or
against it by law for damages arising out of claims; however, the
total aggregate limit of liability under the policy or policies of
insurance for partnerships with five or fewer licensed persons shall
not be less than one million dollars ($1,000,000), and for
partnerships with more than five licensees rendering professional
services on behalf of the partnership, an additional one hundred
thousand dollars ($100,000) of insurance shall be obtained for
each additional licensee; however, the maximum amount of
insurance is not required to exceed seven million five hundred
thousand dollars ($7,500,000) in any one designated period, less
amounts paid in defending, settling, or discharging claims as set
forth in this subparagraph. The policy or policies may be issued
on a claims-made or occurrence basis, and shall cover (i) in the
case of a claims-made policy, claims initially asserted in the
designated period, and (ii) in the case of an occurrence policy,
occurrences during the designated period. For purposes of this
subparagraph, “designated period” means a policy year or any
other period designated in the policy that is not greater than 12
months. The impairment or exhaustion of the aggregate limit of
liability by amounts paid under the policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the partnership to acquire
additional insurance coverage for that designated period. The policy
or policies of insurance may be in a form reasonably available in
the commercial insurance market and may be subject to those
terms, conditions, exclusions, and endorsements that are typically
contained in those policies. A policy or policies of insurance
maintained pursuant to this subparagraph may be subject to a
deductible or self-insured retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
in trust or bank escrow, cash, bank certificates of deposit, United
States Treasury obligations, bank letters of credit, or bonds of
insurance or surety companies as security for payment of liabilities
imposed by law for damages arising out of all claims; however,
the maximum amount of security for partnerships with five or
fewer licensed persons shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of security
shall be obtained for each additional licensee; however, the
maximum amount of security is not required to exceed seven
million five hundred thousand dollars ($7,500,000). The partnership
remains in compliance with this section during a calendar year
notwithstanding amounts paid during that calendar year from the
accounts, funds, Treasury obligations, letters of credit, or bonds
in defending, settling, or discharging claims of the type described
in this paragraph, provided that the amount of those accounts,
funds, Treasury obligations, letters of credit, or bonds was at least
the amount specified in the preceding sentence as of the first
business day of that calendar year. Notwithstanding the pendency
of other claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if within
30 days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a
judicial or administrative proceeding, the partnership has provided
the required amount of security by designating and segregating
funds in compliance with the requirement of this subparagraph.

(C) Unless the partnership has satisfied the requirements of
subparagraph (D), each partner of a registered limited liability
partnership or foreign limited liability partnership providing legal
services, by virtue of that person’s status as a partner, thereby
automatically guarantees payment of the difference between the
maximum amount of security required for the partnership by this
paragraph and the security otherwise provided in accordance with
the provisions of subparagraphs (A) and (B), provided that the
aggregate amount paid by all partners under these guarantees shall
not exceed the difference. Neither withdrawal by a partner nor the
dissolution and winding up of the partnership shall affect the rights
or obligations of a partner arising prior to withdrawal or dissolution
and winding up, and the guarantee provided for in this
subparagraph shall apply only to conduct that occurred prior to
the withdrawal or dissolution and winding up. Nothing contained
in this subparagraph shall affect or impair the rights or obligations
of the partners among themselves, or the partnership, including,
but not limited to, rights of contribution, subrogation, or
indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding fifteen million
dollars ($15,000,000).

(3) For claims based upon acts, errors, or omissions arising out
of the practice of architecture, a registered limited liability
partnership or foreign limited liability partnership providing
architectural services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:

(A) Maintaining a policy or policies of insurance against liability
imposed on or against it by law for damages arising out of claims
in an amount for each claim of at least one hundred thousand
dollars ($100,000) multiplied by the number of licensed persons
rendering professional services on behalf of the partnership;
however, the total aggregate limit of liability under the policy or
policies of insurance for partnerships with five or fewer licensees
rendering professional services on behalf of the partnership shall
not be less than five hundred thousand dollars ($500,000), and for
all other partnerships is not required to exceed five million dollars
($5,000,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. On and after January 1, 2008, the total aggregate
limit of liability under the policy or policies of insurance for
partnerships with five or fewer licensees rendering professional
services on behalf of the partnership shall not be less than one
million dollars ($1,000,000), and for partnerships with more than
five licensees rendering professional services on behalf of the
partnership, an additional one hundred thousand dollars ($100,000)
of liability coverage shall be obtained for each additional licensee;
however, the total aggregate limit of liability under the policy or
policies of insurance is not required to exceed five million dollars
($5,000,000). The policy or policies may be issued on a
claims-made or occurrence basis, and shall cover: (i) in the case
of a claims-made policy, claims initially asserted in the designated
period, and (ii) in the case of an occurrence policy, occurrences
during the designated period. For purposes of this subparagraph,
“designated period” means a policy year or any other period
designated in the policy that is not greater than 12 months. The
impairment or exhaustion of the aggregate limit of liability by
amounts paid under the policy in connection with the settlement,
discharge, or defense of claims applicable to a designated period
shall not require the partnership to acquire additional insurance
coverage for that designated period. The policy or policies of
insurance may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this subparagraph may be subject to a deductible or self-insured
retention.

Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain
an extended reporting period endorsement or equivalent provision
in the maximum total aggregate limit of liability required to comply
with this subparagraph for a minimum of three years if reasonably
available from the insurer.

(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of
all claims in an amount of at least one hundred thousand dollars
($100,000) multiplied by the number of licensed persons rendering
professional services on behalf of the partnership; however, the
maximum amount of security for partnerships with five or fewer
licensees rendering professional services on behalf of the
partnership shall not be less than five hundred thousand dollars
($500,000), and for all other partnerships is not required to exceed
five million dollars ($5,000,000). On and after January 1, 2008,
the maximum amount of security for partnerships with five or
fewer licensees rendering professional services on behalf of the
partnership shall not be less than one million dollars ($1,000,000),
and for partnerships with more than five licensees rendering
professional services on behalf of the partnership, an additional
one hundred thousand dollars ($100,000) of security shall be
obtained for each additional licensee; however, the maximum
amount of security is not required to exceed five million dollars
($5,000,000). The partnership remains in compliance with this
section during a calendar year notwithstanding amounts paid during
that calendar year from the accounts, funds, Treasury obligations,
letters of credit, or bonds in defending, settling, or discharging
claims of the type described in this paragraph, provided that the
amount of those accounts, funds, Treasury obligations, letters of
credit, or bonds was at least the amount specified in the preceding
sentence as of the first business day of that calendar year.
Notwithstanding the pendency of other claims against the
partnership, a registered limited liability partnership or foreign
limited liability partnership shall be deemed to be in compliance
with this subparagraph as to a claim if within 30 days after the
time that a claim is initially asserted through service of a summons,
complaint, or comparable pleading in a judicial or administrative
proceeding, the partnership has provided the required amount of
security by designating and segregating funds in compliance with
the requirements of this subparagraph.

(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing architectural services, by
virtue of that person’s status as a partner, thereby automatically
guarantees payment of the difference between the maximum
amount of security required for the partnership by this paragraph
and the security otherwise provided in accordance with
subparagraphs (A) and (B), provided that the aggregate amount
paid by all partners under these guarantees shall not exceed the
difference. Neither withdrawal by a partner nor the dissolution and
winding up of the partnership shall affect the rights or obligations
of a partner arising prior to withdrawal or dissolution and winding
up, and the guarantee provided for in this subparagraph shall apply
only to conduct that occurred prior to the withdrawal or dissolution
and winding up. Nothing contained in this subparagraph shall
affect or impair the rights or obligations of the partners among
themselves, or the partnership, including, but not limited to, rights
of contribution, subrogation, or indemnification.

(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).

(b) For purposes of satisfying the security requirements of this
section, a registered limited liability partnership or foreign limited
liability partnership may aggregate the security provided by it
pursuant to subparagraphs (A), (B), (C), and (D) of paragraph (1)
of subdivision (a), subparagraphs (A), (B), (C), and (D) of
paragraph (2) of subdivision (a), or subparagraphs (A), (B), (C),
and (D) of paragraph (3) of subdivision (a), as the case may be.
Any registered limited liability partnership or foreign limited
liability partnership intending to comply with the alternative
security provisions set forth in subparagraph (D) of paragraph (1)
of subdivision (a), subparagraph (D) of paragraph (2) of subdivision
(a), or subparagraph (D) of paragraph (3) of subdivision (a) shall
furnish the following information to the Secretary of State’s office,
in the manner prescribed in, and accompanied by all information
required by, the applicable section:

 

	TRANSMITTAL FORM FOR EVIDENCING COMPLIANCE WITH SECTION 16956(a)(1)(D), SECTION 16956(a)(2)(D), OR SECTION 16956(a)(3)(D) OF THE CALIFORNIA CORPORATIONS CODE
	The undersigned hereby confirms the following:
1.	Name of registered or foreign limited liability partnership
2.	Jurisdiction where partnership is organized
3.	Address of principal office
4.	The registered or foreign limited liability partnership chooses to satisfy the requirements of Section 16956 by confirming, pursuant to Section 16956(a)(1)(D), 16956(a)(2)(D), or 16956(a)(3)(D) and pursuant to Section 16956(c), that, as of the most recently completed fiscal year, the partnership had a net worth equal to or exceeding ten million dollars ($10,000,000), in the case of a partnership providing accountancy services, fifteen million dollars ($15,000,000) in the case of a partnership providing legal services, or ten million dollars ($10,000,000), in the case of a partnership providing architectural services.
5.	Title of authorized person executing this form
6.	Signature of authorized person executing this form

 

(c) Pursuant to subparagraph (D) of paragraph (1) of subdivision
(a), subparagraph (D) of paragraph (2) of subdivision (a), or
subparagraph (D) of paragraph (3) of subdivision (a), a registered
limited liability partnership or foreign limited liability partnership
may satisfy the requirements of this section by confirming that, as
of the last day of its most recently completed fiscal year, it had a
net worth equal to or exceeding the amount required. In order to
comply with this alternative method of meeting the requirements
established in this section, a registered limited liability partnership
or foreign limited liability partnership shall file an annual
confirmation with the Secretary of State’s office, signed by an
authorized member of the registered limited liability partnership
or foreign limited liability partnership, accompanied by a
transmittal form as prescribed by subdivision (b). In order to be
current in a given year, the partnership form for confirming
compliance with the optional security requirement shall be on file
within four months of the completion of the fiscal year and, upon
being filed, shall constitute full compliance with the financial
security requirements for purposes of this section as of the
beginning of the fiscal year. A confirmation filed during any
particular fiscal year shall continue to be effective for the first four
months of the next succeeding fiscal year.

(d) Neither the existence of the requirements of subdivision (a)
nor the extent of the registered limited liability partnership’s or
foreign limited liability partnership’s compliance with the
alternative requirements in this section shall be admissible in court
or in any way be made known to a jury or other trier of fact in
determining an issue of liability for, or to the extent of, the damages
in question.

(e) Notwithstanding any other provision of this section, if a
registered limited liability partnership or foreign limited liability
partnership is otherwise in compliance with the terms of this section
at the time that a bankruptcy or other insolvency proceeding is
commenced with respect to the registered limited liability
partnership or foreign limited liability partnership, it shall be
deemed to be in compliance with this section during the pendency
of the proceeding. A registered limited liability partnership that
has been the subject of a proceeding and that conducts business
after the proceeding ends shall thereafter comply with paragraph
(1), (2), or (3) of subdivision (a), in order to obtain the limitations
on liability afforded by subdivision (c) of Section 16306.

(f) This section shall become operative on January 1, begin delete 2021. end delete
begin insert 2019. end insert

SEC. 9.  

Section 16959 of the Corporations Code, as amended
by Section 35 of Chapter 834 of the Statutes of 2014, is amended
to read:

16959.  

(a) (1) Before transacting intrastate business in this
state, a foreign limited liability partnership shall comply with all
statutory and administrative registration or filing requirements of
the state board, commission, or agency that prescribes the rules
and regulations governing a particular profession in which the
partnership proposes to be engaged, pursuant to the applicable
provisions of the Business and Professions Code relating to the
profession or applicable rules adopted by the governing board. A
foreign limited liability partnership that transacts intrastate business
in this state shall within 30 days after the effective date of the act
enacting this section or the date on which the foreign limited
liability partnership first transacts intrastate business in this state,
whichever is later, register with the Secretary of State by submitting
to the Secretary of State an application for registration as a foreign
limited liability partnership, signed by a person with authority to
do so under the laws of the jurisdiction of formation of the foreign
limited liability partnership, stating the name of the partnership,
the street address of its principal office, the mailing address of the
principal office if different from the street address, the name and
street address of its agent for service of process in this state in
accordance with subdivision (a) of Section 16309, a brief statement
of the business in which the partnership engages, and any other
matters that the partnership determines to include.

(2) Annexed to the application for registration shall be a
certificate from an authorized public official of the foreign limited
liability partnership’s jurisdiction of organization to the effect that
the foreign limited liability partnership is in good standing in that
jurisdiction, if the laws of that jurisdiction permit the issuance of
those certificates, or, in the alternative, a statement by the foreign
limited liability partnership that the laws of its jurisdiction of
organization do not permit the issuance of those certificates.

(b) The registration shall be accompanied by a fee as set forth
in subdivision (b) of Section 12189 of the Government Code.

(c) If the Secretary of State finds that an application for
registration conforms to law and all requisite fees have been paid,
the Secretary of State shall issue a certificate of registration to
transact intrastate business in this state.

(d) The Secretary of State may cancel the filing of the
registration if a check or other remittance accepted in payment of
the filing fee is not paid upon presentation. Upon receiving written
notification that the item presented for payment has not been
honored for payment, the Secretary of State shall give a first written
notice of the applicability of this section to the agent for service
of process or to the person submitting the instrument. Thereafter,
if the amount has not been paid by cashier’s check or equivalent,
the Secretary of State shall give a second written notice of
cancellation and the cancellation shall thereupon be effective. The
second notice shall be given 20 days or more after the first notice
and 90 days or less after the original filing.

(e) A partnership becomes registered as a foreign limited liability
partnership at the time of the filing of the initial registration with
the Secretary of State or at any later date or time specified in the
registration and the payment of the fee required by subdivision
(b). A partnership continues to be registered as a foreign limited
liability partnership until a notice that it is no longer so registered
as a foreign limited liability partnership has been filed pursuant to
Section 16960 or, if applicable, once it has been dissolved and
finally wound up. The status of a partnership registered as a foreign
limited liability partnership and the liability of a partner of that
foreign limited liability partnership shall not be adversely affected
by errors or subsequent changes in the information stated in an
application for registration under subdivision (a) or an amended
registration or notice under Section 16960.

(f) The fact that a registration or amended registration pursuant
to Section 16960 is on file with the Secretary of State is notice that
the partnership is a foreign limited liability partnership and of those
other facts contained therein that are required to be set forth in the
registration or amended registration.

(g) The Secretary of State shall provide a form for a registration
under subdivision (a), which shall include the form for confirming
compliance with the optional security requirement pursuant to
subdivision (c) of Section 16956. The Secretary of State shall
include with instructional materials, provided in conjunction with
the form for registration under subdivision (a), a notice that filing
the registration will obligate the limited liability partnership to pay
an annual tax for that taxable year to the Franchise Tax Board
pursuant to Section 17948 of the Revenue and Taxation Code.
That notice shall be updated annually to specify the dollar amount
of this tax.

(h) A foreign limited liability partnership transacting intrastate
business in this state shall not maintain any action, suit, or
proceeding in any court of this state until it has registered in this
state pursuant to this section.

(i) Any foreign limited liability partnership that transacts
intrastate business in this state without registration is subject to a
penalty of twenty dollars ($20) for each day that unauthorized
intrastate business is transacted, up to a maximum of ten thousand
dollars ($10,000).

(j) A partner of a foreign limited liability partnership is not liable
for the debts or obligations of the foreign limited liability
partnership solely by reason of its having transacted business in
this state without registration.

(k) A foreign limited liability partnership, transacting business
in this state without registration, appoints the Secretary of State
as its agent for service of process with respect to causes of action
arising out of the transaction of business in this state.

(l) “Transact intrastate business” as used in this section means
to repeatedly and successively provide professional limited liability
partnership services in this state, other than in interstate or foreign
commerce.

(m) Without excluding other activities that may not be
considered to be transacting intrastate business, a foreign limited
liability partnership shall not be considered to be transacting
intrastate business merely because its subsidiary or affiliate
transacts intrastate business, or merely because of its status as any
one or more of the following:

(1) A shareholder of a domestic corporation.

(2) A shareholder of a foreign corporation transacting intrastate
business.

(3) A limited partner of a foreign limited partnership transacting
intrastate business.

(4) A limited partner of a domestic limited partnership.

(5) A member or manager of a foreign limited liability company
transacting intrastate business.

(6) A member or manager of a domestic limited liability
company.

(n) Without excluding other activities that may not be considered
to be transacting intrastate business, a foreign limited liability
partnership shall not be considered to be transacting intrastate
business within the meaning of this subdivision solely by reason
of carrying on in this state any one or more of the following
activities:

(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.

(2) Holding meetings of its partners or carrying on any other
activities concerning its internal affairs.

(3) Maintaining bank accounts.

(4) Maintaining offices or agencies for the transfer, exchange,
and registration of the foreign limited liability partnership’s
securities or maintaining trustees or depositories with respect to
those securities.

(5) Effecting sales through independent contractors.

(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance without this state before becoming binding contracts.

(7) Creating or acquiring evidences of debt or mortgages, liens,
or security interest in real or personal property.

(8) Securing or collecting debts or enforcing mortgages and
security interests in property securing the debts.

(9) Conducting an isolated transaction that is completed within
180 days and not in the course of a number of repeated transactions
of a like nature.

(o) A person shall not be deemed to be transacting intrastate
business in this state merely because of its status as a partner of a
registered limited liability partnership or a foreign limited liability
company whether or not registered to transact intrastate business
in this state.

(p) The Attorney General may bring an action to restrain a
foreign limited liability partnership from transacting intrastate
business in this state in violation of this chapter.

(q) Nothing in this section is intended to, or shall, augment,
diminish, or otherwise alter existing provisions of law, statutes,
or court rules relating to services by a California architect,
California public accountant, California engineer, California land
surveyor, or California attorney in another jurisdiction, or services
by an out-of-state architect, out-of-state public accountant,
out-of-state engineer, out-of-state land surveyor, or out-of-state
attorney in California.

(r) An agent designated for service of process may deliver to
the Secretary of State, on a form prescribed by the Secretary of
State for filing, a signed and acknowledged written statement of
resignation as an agent for service of process containing the name
of the foreign limited liability partnership and Secretary of State’s
file number of the foreign limited liability partnership, the name
of the resigning agent for service of process, and a statement that
the agent is resigning. On filing of the statement of resignation,
the authority of the agent to act in that capacity shall cease and the
Secretary of State shall mail or otherwise provide written notice
of the filing of the statement of resignation to the foreign limited
liability partnership at its principal office.

(s) The resignation of an agent may be effective if, on a form
prescribed by the Secretary of State containing the name of the
foreign limited liability partnership and Secretary of State’s file
number for the foreign limited liability partnership and the name
of the agent for service of process, the agent disclaims having been
properly appointed as the agent.

(t) If an individual who has been designated agent for service
of process dies or resigns or no longer resides in the state, or if the
corporate agent for that purpose resigns, dissolves, withdraws from
the state, forfeits its right to transact intrastate business, has its
corporate rights, powers, and privileges suspended, or ceases to
exist, the foreign limited liability partnership shall promptly file
an amended application for registration as a foreign limited liability
partnership designating a new agent.

(u) The Secretary of State may destroy or otherwise dispose of
any resignation filed pursuant to this section after a new application
for registration as a foreign limited liability partnership is filed
pursuant to this section replacing the agent for service of process
that has resigned.

(v) This section shall remain in effect only until January 1, begin delete 2021, end delete
begin insert 2019, end insert and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, begin delete 2021, end delete begin insert 2019, end insert deletes or extends
that date.

SEC. 10.  

Section 16959 of the Corporations Code, as amended
by Section 36 of Chapter 834 of the Statutes of 2014, is amended
to read:

16959.  

(a) (1) Before transacting intrastate business in this
state, a foreign limited liability partnership shall comply with all
statutory and administrative registration or filing requirements of
the state board, commission, or agency that prescribes the rules
and regulations governing a particular profession in which the
partnership proposes to be engaged, pursuant to the applicable
provisions of the Business and Professions Code relating to the
profession or applicable rules adopted by the governing board. A
foreign limited liability partnership that transacts intrastate business
in this state shall within 30 days after the effective date of the act
enacting this section or the date on which the foreign limited
liability partnership first transacts intrastate business in this state,
whichever is later, register with the Secretary of State by submitting
to the Secretary of State an application for registration as a foreign
limited liability partnership, signed by a person with authority to
do so under the laws of the jurisdiction of formation of the foreign
limited liability partnership, stating the name of the partnership,
the street address of its principal office, the mailing address of the
principal office if different from the street address, the name and
street address of its agent for service of process in this state in
accordance with subdivision (a) of Section 16309, a brief statement
of the business in which the partnership engages, and any other
matters that the partnership determines to include.

(2) Annexed to the application for registration shall be a
certificate from an authorized public official of the foreign limited
liability partnership’s jurisdiction of organization to the effect that
the foreign limited liability partnership is in good standing in that
jurisdiction, if the laws of that jurisdiction permit the issuance of
those certificates, or, in the alternative, a statement by the foreign
limited liability partnership that the laws of its jurisdiction of
organization do not permit the issuance of those certificates.

(b) The registration shall be accompanied by a fee as set forth
in subdivision (b) of Section 12189 of the Government Code.

(c) If the Secretary of State finds that an application for
registration conforms to law and all requisite fees have been paid,
the Secretary of State shall issue a certificate of registration to
transact intrastate business in this state.

(d) The Secretary of State may cancel the filing of the
registration if a check or other remittance accepted in payment of
the filing fee is not paid upon presentation. Upon receiving written
notification that the item presented for payment has not been
honored for payment, the Secretary of State shall give a first written
notice of the applicability of this section to the agent for service
of process or to the person submitting the instrument. Thereafter,
if the amount has not been paid by cashier’s check or equivalent,
the Secretary of State shall give a second written notice of
cancellation and the cancellation shall thereupon be effective. The
second notice shall be given 20 days or more after the first notice
and 90 days or less after the original filing.

(e) A partnership becomes registered as a foreign limited liability
partnership at the time of the filing of the initial registration with
the Secretary of State or at any later date or time specified in the
registration and the payment of the fee required by subdivision
(b). A partnership continues to be registered as a foreign limited
liability partnership until a notice that it is no longer so registered
as a foreign limited liability partnership has been filed pursuant to
Section 16960 or, if applicable, once it has been dissolved and
finally wound up. The status of a partnership registered as a foreign
limited liability partnership and the liability of a partner of that
foreign limited liability partnership shall not be adversely affected
by errors or subsequent changes in the information stated in an
application for registration under subdivision (a) or an amended
registration or notice under Section 16960.

(f) The fact that a registration or amended registration pursuant
to Section 16960 is on file with the Secretary of State is notice that
the partnership is a foreign limited liability partnership and of those
other facts contained therein that are required to be set forth in the
registration or amended registration.

(g) The Secretary of State shall provide a form for a registration
under subdivision (a), which shall include the form for confirming
compliance with the optional security requirement pursuant to
subdivision (c) of Section 16956. The Secretary of State shall
include with instructional materials, provided in conjunction with
the form for registration under subdivision (a), a notice that filing
the registration will obligate the limited liability partnership to pay
an annual tax for that taxable year to the Franchise Tax Board
pursuant to Section 17948 of the Revenue and Taxation Code.
That notice shall be updated annually to specify the dollar amount
of this tax.

(h) A foreign limited liability partnership transacting intrastate
business in this state shall not maintain any action, suit, or
proceeding in any court of this state until it has registered in this
state pursuant to this section.

(i) Any foreign limited liability partnership that transacts
intrastate business in this state without registration is subject to a
penalty of twenty dollars ($20) for each day that unauthorized
intrastate business is transacted, up to a maximum of ten thousand
dollars ($10,000).

(j) A partner of a foreign limited liability partnership is not liable
for the debts or obligations of the foreign limited liability
partnership solely by reason of its having transacted business in
this state without registration.

(k) A foreign limited liability partnership, transacting business
in this state without registration, appoints the Secretary of State
as its agent for service of process with respect to causes of action
arising out of the transaction of business in this state.

(l) “Transact intrastate business” as used in this section means
to repeatedly and successively provide professional limited liability
partnership services in this state, other than in interstate or foreign
commerce.

(m) Without excluding other activities that may not be
considered to be transacting intrastate business, a foreign limited
liability partnership shall not be considered to be transacting
intrastate business merely because its subsidiary or affiliate
transacts intrastate business, or merely because of its status as any
one or more of the following:

(1) A shareholder of a domestic corporation.

(2) A shareholder of a foreign corporation transacting intrastate
business.

(3) A limited partner of a foreign limited partnership transacting
intrastate business.

(4) A limited partner of a domestic limited partnership.

(5) A member or manager of a foreign limited liability company
transacting intrastate business.

(6) A member or manager of a domestic limited liability
company.

(n) Without excluding other activities that may not be considered
to be transacting intrastate business, a foreign limited liability
partnership shall not be considered to be transacting intrastate
business within the meaning of this subdivision solely by reason
of carrying on in this state any one or more of the following
activities:

(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.

(2) Holding meetings of its partners or carrying on any other
activities concerning its internal affairs.

(3) Maintaining bank accounts.

(4) Maintaining offices or agencies for the transfer, exchange,
and registration of the foreign limited liability partnership’s
securities or maintaining trustees or depositories with respect to
those securities.

(5) Effecting sales through independent contractors.

(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance without this state before becoming binding contracts.

(7) Creating or acquiring evidences of debt or mortgages, liens,
or security interest in real or personal property.

(8) Securing or collecting debts or enforcing mortgages and
security interests in property securing the debts.

(9) Conducting an isolated transaction that is completed within
180 days and not in the course of a number of repeated transactions
of a like nature.

(o) A person shall not be deemed to be transacting intrastate
business in this state merely because of its status as a partner of a
registered limited liability partnership or a foreign limited liability
company whether or not registered to transact intrastate business
in this state.

(p) The Attorney General may bring an action to restrain a
foreign limited liability partnership from transacting intrastate
business in this state in violation of this chapter.

(q) Nothing in this section is intended to, or shall, augment,
diminish, or otherwise alter existing provisions of law, statutes,
or court rules relating to services by a California architect,
California public accountant, or California attorney in another
jurisdiction, or services by an out-of-state architect, out-of-state
public accountant, or out-of-state attorney in California.

(r) An agent designated for service of process may deliver to
the Secretary of State, on a form prescribed by the Secretary of
State for filing, a signed and acknowledged written statement of
resignation as an agent for service of process containing the name
of the foreign limited liability partnership and Secretary of State’s
file number of the foreign limited liability partnership, the name
of the resigning agent for service of process, and a statement that
the agent is resigning. On filing of the statement of resignation,
the authority of the agent to act in that capacity shall cease and the
Secretary of State shall mail or otherwise provide written notice
of the filing of the statement of resignation to the foreign limited
liability partnership at its principal office.

(s) The resignation of an agent may be effective if, on a form
prescribed by the Secretary of State containing the name and
Secretary of State’s file number for the foreign limited liability
partnership and the name of the agent for service of process, the
agent disclaims having been properly appointed as the agent.

(t) If an individual who has been designated agent for service
of process dies or resigns or no longer resides in the state, or if the
corporate agent for that purpose resigns, dissolves, withdraws from
the state, forfeits its right to transact intrastate business, has its
corporate rights, powers, and privileges suspended, or ceases to
exist, the foreign limited liability partnership shall promptly file
an amended application for registration as a foreign limited liability
partnership designating a new agent.

(u) The Secretary of State may destroy or otherwise dispose of
any resignation filed pursuant to this section after a new application
for registration as a foreign limited liability partnership is filed
pursuant to this section replacing the agent for service of process
that has resigned.

(v) This section shall become operative on January 1, begin delete 2021. end delete
begin insert 2019. end insert