BILL NUMBER: SB 469 ENROLLED 08/30/94 BILL TEXT PASSED THE SENATE AUGUST 30, 1994 PASSED THE ASSEMBLY AUGUST 29, 1994 AMENDED IN ASSEMBLY AUGUST 25, 1994 AMENDED IN ASSEMBLY AUGUST 9, 1994 AMENDED IN ASSEMBLY AUGUST 8, 1994 AMENDED IN ASSEMBLY JUNE 13, 1994 AMENDED IN SENATE JANUARY 26, 1994 AMENDED IN SENATE JANUARY 13, 1994 AMENDED IN SENATE JANUARY 3, 1994 AMENDED IN SENATE SEPTEMBER 10, 1993 AMENDED IN SENATE APRIL 12, 1993 INTRODUCED BY Senator Beverly (Coauthor: Senator Killea) FEBRUARY 25, 1993 An act to amend Sections 17900, 17902, 17910.5, 17913, and 17914 of, and to add Sections 16602.5 and 17901.5 to, the Business and Professions Code, to amend Section 3307 of the Commercial Code, to amend Sections 161, 190, 1109, 1113, 1201, 15046, 15611, 15632, 15678.2, 25013, and 25019 of, to add Sections 161.7, 167.3, 167.7, 167.8, 171.03, 171.07, 171.3, 174.5, and 190.7 to, and to add Title 2.5 (commencing with Section 17000) to, the Corporations Code, to amend Section 1220 of the Financial Code, to amend Sections 8670.3 and 12185 of, and to add Section 12164.7 to, the Government Code, to amend Sections 25118 and 25281 of the Health and Safety Code, to amend Sections 387 and 653s of the Penal Code, to amend Section 40170 of the Public Resources Code, to amend Sections 19, 64, 480, 480.1, 480.2, 6005, 6829, 7310, 8606, 11204, 17007, 17220, 18402, 18535, 18621.5, 18637, 18638, 18648, 19002, 19009, 19132, 19254, 23036, 23038, 25141, 30010, 38106, 40004, 41003, 43006, 45006, 46020, and 55002 of, to add Sections 28.5, 17087.6, 18633.5, and 23305.5 to, to add Chapter 1.6 (commencing with Section 23091) to Part 11 of Division 2 of, and to repeal Section 28 of, the Revenue and Taxation Code, and to amend Sections 125.4, 135, 135.1, 610, 1116, 1735, 2071, 2107, 2109, 2110, 2110.3, 2110.5, 2110.7, and 13005 of the Unemployment Insurance Code, and to amend Section 675 of the Vehicle Code, relating to limited liability companies, and making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 469, Beverly. Corporations: limited liability companies. Existing law authorizes and regulates the formation and operation of corporations, partnerships, and associations in this state. Existing law does not provide for limited liability companies. This bill would enact the California Limited Liability Company Act and would authorize a limited liability company to engage in any lawful business activity, as specified. Among other things, this bill would: (1) Govern the formation of limited liability companies, including requiring the members to enter into an operating agreement and to execute and file articles of organization with the Secretary of State. (2) Establish requirements and procedures for membership interests in limited liability companies, including voting, meeting, and inspection rights. (3) Set forth the duties and obligations of the managers of a limited liability company or permit the business and affairs of a limited liability company to be managed by the members, as specified. (4) Establish capital contribution standards and liability of members. (5) Regulate the allocation of profits and losses, distributions of money and property, withdrawal of membership, assignment of interests, and dissolution of limited liability companies. (6) Require the registration of foreign limited liability companies, as defined, with the Secretary of State, and prohibit the transaction of business in this state by an unregistered foreign limited liability company, subject to specified penalties. (7) Permit the bringing of class actions or derivative actions by members of a foreign or domestic limited liability company, subject to specified conditions. (8) Regulate the merger of limited liability companies with other limited liability companies or with one or more other business entities, as specified, including requiring an agreement of merger and protection of the rights and liabilities of limited liability companies, creditors, and dissenting members. (9) This bill would also impose filing and tax requirements on limited liability companies, as specified, and would make conforming changes to existing law. Since the bill would make limited liability companies and certain of their managers subject to certain criminal provisions, it would impose a state-mandated local program by expanding the scope of a crime. (10) This bill would appropriate funds from the Secretary of State's Business Fees Fund to the Secretary of State for specified purposes. (11) The bill would appropriate $350,000 from the General Fund to the Franchise Tax Board to implement the act. (12) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. (13) This bill would incorporate additional amendments to Sections 17220, 18402, and 18621.5 of the Revenue and Taxation Code proposed by SB 1805, contingent upon the prior enactment of that bill. (14) This bill would incorporate additional amendments to Section 23036 of the Revenue and Taxation Code proposed by AB 3316, contingent upon the prior enactment of that bill. (15) This bill would declare that it would take effect immediately as an urgency statute. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 16602.5 is added to the Business and Professions Code, to read: 16602.5. Any member may, upon or in anticipation of a dissolution of a limited liability company or a sale of his or her or its interest in a limited liability company, agree that he or she or it will not carry on a similar business within a specified county or counties, city or cities, or a part thereof, where the limited liability company business has been transacted, so long as any other member of the limited liability company, or any person deriving title to the business or its goodwill from any such other member of the limited liability company, carries on a like business therein. SEC. 2. Section 17900 of the Business and Professions Code is amended to read: 17900. (a) As used in this chapter, "fictitious business name" means: (1) In the case of an individual, a name that does not include the surname of the individual or a name that suggests the existence of additional owners. (2) In the case of a partnership or other association of persons, other than a limited partnership which has filed a certificate of limited partnership with the Secretary of State pursuant to Section 15621 of the Corporations Code or a foreign limited partnership which has filed an application for registration with the Secretary of State pursuant to Section 15692 of the Corporations Code, a name that does not include the surname of each general partner or a name that suggests the existence of additional owners. (3) In the case of a corporation, any name other than the corporate name stated in its articles of incorporation. (4) In the case of a limited partnership which has filed a certificate of limited partnership with the Secretary of State pursuant to Section 15621 of the Corporations Code and in the case of a foreign limited partnership which has filed an application for registration with the Secretary of State pursuant to Section 15692 of the Corporations Code, any name other than the name of the limited partnership as on file with the Secretary of State. (5) In the case of a limited liability company, any name other than the name stated in its articles of organization and in the case of a foreign limited liability company which has filed an application for registration with the Secretary of State pursuant to Section 17451 of the Corporations Code, any name other than the name of the limited liability company as on file with the Secretary of State. (b) A name that suggests the existence of additional owners within the meaning of subdivision (a) is one which includes such words as "Company," "& Company," "& Son," "& Sons," "& Associates," "Brothers," and the like, but not words that merely describe the business being conducted. SEC. 3. Section 17901.5 is added to the Business and Professions Code, to read: 17901.5. As used in this chapter, "manager" means a manager of a limited liability company. SEC. 4. Section 17902 of the Business and Professions Code is amended to read: 17902. As used in this chapter, "person" includes individuals, limited liability companies, partnerships and other associations, and corporations. SEC. 5. Section 17910.5 of the Business and Professions Code is amended to read: 17910.5. (a) No person shall adopt any fictitious business name which includes "Corporation," "Corp.," "Incorporated," or "Inc." unless such person is a corporation organized pursuant to the laws of this state or some other jurisdiction. (b) No person shall adopt any fictitious business name that includes "Limited Liability Company" (whether using the complete words or the abbreviations "Ltd." and "Co." or either of them) or "LLC" or "LC" unless such person is a limited liability company organized pursuant to the laws of this state or some other jurisdiction. (c) A county clerk shall not accept a fictitious business name statement which would be in violation of this section. SEC. 6. Section 17913 of the Business and Professions Code is amended to read: 17913. (a) The fictitious business name statement shall contain all of the information required by this subdivision and shall be substantially in the following form: FICTITIOUS BUSINESS NAME STATEMENT The following person (persons) is (are) doing business as * _______________________________________________________ at ** _________________________________________________: *** ________________________________________ ________________________________________ ________________________________________ ________________________________________ This business is conducted by ****_____________________ The registrant commenced to transact business under the fictitious business name or names listed above on ***** ______________________________________ Signed _______________________________ Statement filed with the County Clerk of _______ County on ______________ NOTICE THIS FICTITIOUS NAME STATEMENT EXPIRES FIVE YEARS FROM THE DATE IT WAS FILED IN THE OFFICE OF THE COUNTY CLERK. A NEW FICTITIOUS BUSINESS NAME STATEMENT MUST BE FILED BEFORE THAT TIME. THE FILING OF THIS STATEMENT DOES NOT OF ITSELF AUTHORIZE THE USE IN THIS STATE OF A FICTITIOUS BUSINESS NAME IN VIOLATION OF THE RIGHTS OF ANOTHER UNDER FEDERAL, STATE, OR COMMON LAW (SEE SECTION 14400 ET SEQ., BUSINESS AND PROFESSIONS CODE). (b) The statement shall contain the following information set forth in the manner indicated in the form provided by subdivision (a): (1) Where the asterisk (*) appears in the form, insert the fictitious business name or names. Only those businesses operated at the same address may be listed on one statement. (2) Where the two asterisks (**) appear in the form: If the registrant has a place of business in this state, insert the street address of his or her principal place of business in this state. If the registrant has no place of business in this state, insert the street address of his or her principal place of business outside this state. (3) Where the three asterisks (***) appear in the form: If the registrant is an individual, insert his or her full name and residence address. If the registrant is a partnership or other association of persons, insert the full name and residence address of each general partner. If the registrant is a limited liability company, insert the name of the limited liability company as set out in its articles of organization and the state of organization. If the registrant is a business trust, insert the full name and address of each trustee. If the registrant is a corporation, insert the name of the corporation as set out in its articles of incorporation and the state of incorporation. (4) Where the four asterisks (****) appear in the form, insert whichever of the following best describes the nature of the business: (i) "an individual," (ii) "a general partnership," (iii) "a limited partnership," (iv) "a limited liability company," (v) "an unincorporated association other than a partnership," (vi) "a corporation," (vii) "a business trust," (viii) "copartners," (ix) "husband and wife," (x) "joint venture," or (xi) "other please specify." (5) Where the five asterisks (*****) appear in the form, insert the date on which the registrant first commenced to transact business under the fictitious business name or names listed, if already transacting business under that name or names. If the registrant has not yet commenced to transact business under the fictitious business name or names listed, insert the statement, "Not applicable." SEC. 7. Section 17914 of the Business and Professions Code is amended to read: 17914. If the registrant is an individual, the statement shall be signed by the individual; if a partnership or other association of persons, by a general partner; if a limited liability company, by a manager or officer; if a business trust, by a trustee; if a corporation, by an officer. SEC. 8. Section 3307 of the Commercial Code is amended to read: 3307. (a) In this section: (1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, limited liability company manager, or other representative owing a fiduciary duty with respect to an instrument. (2) "Represented person" means the principal, beneficiary, partnership, corporation, limited liability company, or other person to whom the duty stated in paragraph (1) is owed. (b) If (i) an instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply: (1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person. (2) In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is (A) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (B) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (C) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person. (3) If an instrument is issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty. (4) If an instrument is issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (A) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (B) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (C) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person. SEC. 9. Section 161 of the Corporations Code is amended to read: 161. "Constituent corporation" means a corporation which is merged with or into one or more other corporations or one or more other business entities and includes a surviving corporation. SEC. 10. Section 161.7 is added to the Corporations Code, to read: 161.7. "Constituent other business entity" means an other business entity that is merged with or into one or more corporations and includes the surviving other business entity. SEC. 11. Section 167.3 is added to the Corporations Code, to read: 167.3. "Domestic limited liability company" means a limited liability company as defined in subdivision (t) of Section 17000. SEC. 12. Section 167.7 is added to the Corporations Code, to read: 167.7. "Domestic other business entity" means an other business entity organized under the laws of this state. SEC. 13. Section 167.8 is added to the Corporations Code, to read: 167.8. "Disappearing other business entity" means a constituent other business entity that is not the surviving other business entity. SEC. 14. Section 171.03 is added to the Corporations Code, to read: 171.03. "Foreign limited liability company" means a foreign limited liability company as defined in subdivision (q) of Section 17001. SEC. 15. Section 171.07 is added to the Corporations Code, to read: 171.07. "Foreign other business entity" means an other business entity organized under the laws of any state, other than this state, or of the District of Columbia or under the laws of a foreign country. SEC. 16. Section 171.3 is added to the Corporations Code, to read: 171.3. "Limited liability company" means a limited liability company as defined in subdivision (t) of Section 17001. SEC. 17. Section 174.5 is added to the Corporations Code, to read: 174.5. "Other business entity" means a limited liability company or a limited partnership. SEC. 18. Section 190 of the Corporations Code is amended to read: 190. "Surviving corporation" means a corporation into which one or more other corporations or one or more other business entities are merged. SEC. 19. Section 190.7 is added to the Corporations Code, to read: 190.7. "Surviving other business entity" means an other business entity into which one or more other business entities or one or more corporations are merged. SEC. 20. Section 1109 of the Corporations Code is amended to read: 1109. Whenever a domestic or foreign corporation or domestic or foreign other business entity having any real property in this state merges or consolidates with another corporation or with an other business entity pursuant to the laws of this state or of the state or place in which any constituent corporation or constituent other business entity was incorporated or organized, and the laws of the state or place of incorporation or organization (including this state) of any disappearing corporation or disappearing other business entity provide substantially that the making and filing of the agreement of merger or consolidation or certificate of ownership or certificate of merger vests in the surviving or consolidated corporation or surviving other business entity all the real property of any disappearing corporation or disappearing other business entity, the filing for record in the office of the county recorder of any county in this state in which any of the real property of such disappearing corporation or disappearing other business entity is located of either (a) a certificate prescribed by the Secretary of State, or (b) a copy of the agreement of merger or consolidation or certificate of ownership or certificate of merger, certified by the Secretary of State or an authorized public official of the state or place pursuant to the laws of which the merger or consolidation is effected, shall evidence record ownership in the surviving or consolidated corporation or surviving other business entity, of all interest of such disappearing corporation or disappearing other business entity in and to the real property located in that county. SEC. 21. Section 1113 of the Corporations Code is amended to read: 1113. (a) Any one or more domestic corporations may merge with one or more domestic other business entities or one or more foreign other business entities. One or more foreign corporations may be parties to the merger. Any corporation or corporations and any one or more other business entities may merge with or into a corporation, which may be any one of the corporations, or they may merge with or into an other business entity, which may be any one of the other business entities. Notwithstanding the provisions of this section, the merger of any number of corporations with any number of other business entities may be effected only if: (1) In a merger in which a domestic other business entity is a party to the merger the domestic other business entity is authorized by the laws under which it is organized to effect the merger. (2) In a merger in which a foreign corporation is a party to the merger the foreign corporation is authorized by the laws under which it is organized to effect that merger. (3) In a merger in which a foreign other business entity is the surviving other business entity the laws of the jurisdiction under which the foreign other business entity is organized authorize the merger. (4) In a merger in which a foreign other business entity is a disappearing other business entity it is not prohibited by the laws under which it is organized from effecting that merger. (b) Each corporation and each other business entity which desires to merge shall approve an agreement of merger. The board of each corporation which desires to merge shall approve the agreement of merger. The agreement of merger shall be approved on behalf of each constituent other business entity by those persons required to approve the merger by the laws under which it is organized. The constituent corporations and constituent other business entities shall be parties to the agreement of merger and other persons, including a parent party corporation (Section 1200), may be parties to the agreement of merger. The agreement of merger shall state: (1) The terms and conditions of the merger. (2) The name and place of incorporation or organization of each constituent corporation and constituent other business entity and the identity of the constituent corporation or constituent other business entity that is the surviving corporation or surviving other business entity. (3) The amendments, if any, subject to Sections 900 and 907, to the articles of the surviving corporation, if applicable, to be effected by the merger. If any amendment changes the name of the surviving corporation, if applicable, the new name may be the same as or similar to the name of a disappearing domestic or foreign corporation, subject to subdivision (b) of Section 201. (4) The manner of converting the shares of each of the constituent corporations into shares, interests or other securities of the surviving corporation or surviving other business entity and, if any shares of any of the constituent corporations are not to be converted solely into shares, interests or other securities of the surviving corporation or surviving other business entity, the cash, property, rights, interests or securities of any corporation or other business entity which the holders of those shares are to receive in exchange for the shares, which cash, property, rights, interests, or securities of any corporation or other business entity may be in addition to or in lieu of shares, interests or other securities of the surviving corporation or surviving other business entity, or that the shares are canceled without consideration. (5) Any other details or provisions as are required by the laws under which any constituent other business entity is organized, including, if a domestic limited partnership is a party to the merger, subdivision (a) of Section 15678.2 or, if a domestic limited liability company is a party to the merger, subdivision (a) of Section 17751. (6) Any other details or provisions as are desired, including, without limitation, a provision for the payment of cash in lieu of fractional shares or for any other arrangement with respect thereto consistent with the provisions of Section 407. (c) Each share of the same class or series of any constituent corporation (other than the cancellation of shares held by a constituent corporation or its parent or a wholly owned subsidiary of either in another constituent corporation) shall, unless all shareholders of the class or series consent and except as provided in Section 407, be treated equally with respect to any distribution of cash, property, rights, interests or securities. Notwithstanding paragraph (4) of subdivision (b), the nonredeemable common shares of a constituent corporation may be converted only into nonredeemable common shares of a surviving corporation or a parent party (Section 1200) if (1) a constituent corporation or a constituent other business entity or its parent owns, directly or indirectly, prior to the merger shares of another constituent corporation representing more than 50 percent of the voting power of the other constituent corporation or membership interests or limited partnership interests of another constituent other business entity representing more than 50 percent of the membership interests or limited partnership interests of the other constituent other business entity entitled to vote with respect to the merger or (2) a constituent corporation or constituent other business entity is a general partner of a constituent limited partnership, unless all of the shareholders of the class consent and except as provided in Section 407. (d) Notwithstanding its prior approval, an agreement of merger may be amended prior to the filing of the agreement of merger or the certificate of merger, as is applicable, if the amendment is approved by the board of any constituent corporation and, if the amendment changes any of the principal terms of the agreement, by the outstanding shares (Section 152), if required by Chapter 12 (commencing with Section 1200), in the same manner as the original agreement of merger. If the agreement of merger so amended is approved by the board and the outstanding shares, if required, of each of the constituent corporations and is approved by each of the constituent other business entities, the agreement of merger so amended shall then constitute the agreement of merger. (e) The board of a constituent corporation may, in its discretion, abandon a merger, subject to the contractual rights, if any, of third parties, including other constituent corporations and constituent other business entities without further approval by the outstanding shares (Section 152), at any time before the merger is effective. (f) Each constituent corporation shall sign the agreement of merger by its chairperson of the board, president or a vice president and secretary or an assistant secretary acting on behalf of their respective corporations. (g) (1) If the surviving entity is a corporation, after approval of a merger by the constituent corporations through approval by the board and any approval of the outstanding shares (Section 152) required by Chapter 12 (commencing with Section 1200) and the constituent other business entities, the surviving corporation shall file a copy of the agreement of merger with an officers' certificate of each constituent corporation attached stating the total number of outstanding shares of each class entitled to vote on the merger, that the principal terms of the agreement in the form attached were approved by that corporation by a vote of a number of shares of each class which equaled or exceeded the vote required, specifying each class entitled to vote and the percentage vote required of each class, or that the merger agreement was entitled to be and was approved by the board alone under the provisions of Section 1201. In lieu of an officers' certificate for any constituent other business entities, a certificate of merger, on a form prescribed by the Secretary of State, shall be filed. The certificate of merger shall be executed and acknowledged by each constituent other business entity by those persons required to execute the certificate of merger by the laws under which the other business entity is organized and, if applicable, on behalf of each constituent corporation by the chairperson of the board, president or a vice president and secretary or an assistant secretary of the respective corporation. The certificate of merger shall set forth, if a vote of the members or limited partners of a constituent other business entity was required, a statement setting forth the total number of outstanding interests of each class entitled to vote on the merger and that the principal terms of the agreement of merger were approved by a vote of the number of interests of each class which equaled or exceeded the vote required, specifying each class entitled to vote and the percentage vote required of each class, and any other information required to be set forth under the laws under which the constituent other business entities are organized, including, if a domestic limited partnership is a party to the merger, subdivision (a) of Section 15678.4 and, if a domestic limited liability company is a party to the merger, subdivision (a) of Section 17552. If equity securities of a parent party (Section 1200) of a constituent corporation are to be issued in the merger, the officers' certificate of that constituent corporation shall state either that no vote of the shareholders of the parent was required or that the required vote was obtained. The merger and any amendment of the articles of the surviving corporation, if applicable, contained in the agreement of merger shall thereupon be effective, subject to subdivision (c) of Section 110 and subject to the provisions of subdivision (j), and the several parties thereto shall be one corporation. The agreement of merger shall not be filed, however, until there has been filed by or on behalf of each corporation taxed under the Bank and Corporation Tax Law (Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code), the existence of which is terminated by the merger, the certificate of satisfaction of the Franchise Tax Board that all taxes imposed by that law have been paid or secured. The Secretary of State may certify a copy of the agreement of merger separate from the officers' certificates and certificates of merger attached thereto. (2) If the surviving entity is an other business entity, after approval of a merger by the constituent corporations through approval by the board and any approval of the outstanding shares (Section 152) required by Chapter 12 (commencing with Section 1200) and the constituent other business entities, the constituent corporations and constituent other business entities shall file a certificate of merger in the office of, and on a form prescribed by, the Secretary of State. The certificate of merger shall be executed and acknowledged by each constituent corporation by the chairperson of the board, president or a vice president and secretary or an assistant secretary of the respective corporation and by each domestic constituent limited liability company by all of the managers of the limited liability company (unless a lesser number is specified in the articles of organization or the operating agreement of the constituent limited liability company) and by each domestic constituent limited partnership by all general partners (unless a lesser number is provided in the certificate of limited partnership of the domestic constituent limited partnership) and by each foreign constituent limited liability company by one or more managers and by each foreign constituent limited partnership by one or more general partners. The certificate of merger shall set forth all of the following: (A) The names and the Secretary of State's file numbers, if any, of each of the constituent corporations and constituent other business entities, separately identifying the disappearing corporations and disappearing other business entities and the surviving other business entity. (B) If the approval of the outstanding shares of a constituent corporation was required by Chapter 12 (commencing with Section 1200), a statement setting forth the total number of outstanding shares of each class entitled to vote on the merger and that the principal terms of the agreement of merger were approved by a vote of the number of shares of each class entitled to vote and the percentage vote required of each class. (C) The future effective date or time, not more than 90 days subsequent to the date of filing of the merger, if the merger is not to be effective upon the filing of the certificate of merger with the office of the Secretary of State. (D) Any other information required to be stated in the certificate of merger by the laws under which each constituent other business entity is organized, including, if a domestic limited liability company is a party to a merger, subdivision (a) of Section 17552 and, if a domestic limited partnership is a party to the merger, subdivision (a) of Section 15678.4. Unless a future effective date or time is provided in a certificate of merger, in which event the merger shall be effective at that future effective date or time, a merger shall be effective upon the filing of the certificate of merger in the office of the Secretary of State and the several parties thereto shall be one entity. The certificate of merger shall not be filed, however, until there has been filed by or on behalf of each corporation taxed under the Bank and Corporation Tax Law (Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code), the existence of which is terminated by the merger, the certificate of satisfaction of the Franchise Tax Board that all taxes imposed by the Bank and Corporation Tax Law have been paid or secured. The surviving other business entity shall keep a copy of the agreement of merger at the office referred to in Section 17057 if a domestic limited liability company, at the business address specified in paragraph (5) of subdivision (a) of Section 17552 if a foreign limited liability company, at the office referred to in subdivision (a) of Section 15614 if a domestic limited partnership or at the business address specified in paragraph (5) of subdivision (a) of Section 15678.4 if a foreign limited partnership. Upon request of a holder of shares of a constituent corporation or a holder of interests of a constituent other business entity, a person with authority to do so on behalf of the surviving other business entity shall promptly deliver to the holder of shares of a constituent corporation or a holder of interests of a constituent other business entity, a copy of the agreement of merger. A waiver by a shareholder, partner, or member of the rights provided in the foregoing sentence shall be unenforceable. (h) (1) A copy of an agreement of merger certified on or after the effective date by an official having custody thereof has the same force in evidence as the original and, except as against the state, is conclusive evidence of the performance of all conditions precedent to the merger, the existence on the effective date of the surviving corporation or surviving other business entity and the performance of the conditions necessary to the adoption of any amendment to the articles, if applicable, contained in the agreement of merger. (2) For all purposes for a merger in which the surviving entity is a domestic other business entity a copy of the certificate of merger duly certified by the Secretary of State is conclusive evidence of the merger of the constituent corporations, either by themselves or together with constituent other business entities, into the surviving other business entity. (i) (1) Upon a merger of corporations and other business entities pursuant to this section the separate existence of the disappearing corporations and disappearing other business entities cease and the surviving corporation or surviving other business entity shall succeed, without other transfer, to all the rights and property of each of the disappearing corporations and disappearing other business entities and shall be subject to all the debts and liabilities of each in the same manner as if the surviving corporation or surviving other business entity had itself incurred them. (2) All rights of creditors and all liens upon the property of each of the constituent corporations and constituent other business entities shall be preserved unimpaired, provided that those liens upon property of a disappearing corporation or disappearing other business entity shall be limited to the property affected thereby immediately prior to the time the merger is effective. (3) Any action or proceeding pending by or against any disappearing corporation or disappearing other business entity may be prosecuted to judgment, which shall bind the surviving corporation or surviving other business entity, or the surviving corporation or surviving other business entity may be proceeded against or substituted in its place. (4) If a limited partnership is a party to the merger, nothing in this section is intended to affect the liability a general partner of a disappearing limited partnership may have in connection with the debts and liabilities of the disappearing limited partnership existing prior to the time the merger is effective. (j) (1) The merger of any number of domestic corporations with any number of foreign corporations or foreign other business entities in a merger in which one or more other business entities is a party shall comply with subdivision (a) and this subdivision. (2) If the surviving corporation or surviving other business entity is a domestic corporation or domestic other business entity, the merger proceedings with respect to that corporation or other business entity and any domestic disappearing corporation shall conform to the provisions of this section, but if the surviving corporation or surviving other business entity is a foreign corporation or foreign other business entity, then, subject to the requirements of paragraph (4) of subdivision (c), and of Section 407 and Chapters 12 (commencing with Section 1200) and 13 (commencing with Section 1300) with respect to any domestic constituent corporations, Chapter 13 (commencing with Section 17600) of Title 2.5 with respect to any domestic constituent limited liability companies, and Article 7.6 (commencing with Section 15679.1) of Chapter 3 of Title 2 with respect to any domestic constituent limited partnerships, the merger proceedings may be in accordance with the laws of the state or place of incorporation of the surviving corporation or the laws of the state or place of organization of the surviving other business entity. (3) If the surviving corporation or surviving other business entity is a domestic corporation or domestic other business entity, the certificate of merger, if the surviving entity is an other business entity, or the agreement of merger with attachments, if the surviving entity is a corporation, shall be filed as provided in subdivision (g) and thereupon, subject to subdivision (c) of Section 110 or paragraph (2) of subdivision (g), as is applicable, the merger shall be effective as to each domestic constituent corporation and domestic constituent other business entity. (4) If the surviving corporation or surviving other business entity is a foreign corporation or foreign other business entity, the merger shall become effective in accordance with the law of the jurisdiction in which the surviving corporation or surviving other business entity is organized, but, except as provided in paragraph (5), the merger shall be effective as to any domestic disappearing corporation as of the time of effectiveness in the foreign jurisdiction upon the filing in this state of a copy of the agreement of merger with an officers' certificate of the surviving foreign corporation and of each constituent domestic corporation and a certificate of merger of each constituent other business entity attached, which officers' certificates and certificates of merger shall conform to the requirements of paragraph (1) of subdivision (g). If one or more domestic other business entities is a disappearing other business entity in a merger pursuant to this subdivision in which a foreign other business entity is the surviving entity, a certificate of merger as required by subdivision (a) of Section 15678.4 or subdivision (a) of Section 17552, as is applicable, shall also be filed at the same time as the filing of the agreement of merger. (5) If the date of the filing in this state pursuant to this subdivision is more than six months after the time of the effectiveness in the foreign jurisdiction, or if the powers of the domestic corporation are suspended at the time of effectiveness in the foreign jurisdiction, the merger shall be effective as to the domestic disappearing corporation or corporations as of the date of filing in this state. (6) In a merger described in paragraphs (3) or (4), each foreign disappearing corporation that is qualified for the transaction of intrastate business shall automatically by the filing pursuant to this subdivision surrender its right to transact intrastate business as of the date of filing in this state regardless of the time of effectiveness as to a domestic disappearing corporation. With respect to each foreign disappearing other business entity previously registered for the transaction of intrastate business in this state, the filing of the agreement of merger or certificate of merger, as is applicable, pursuant to this subdivision automatically has the effect of a cancellation of registration for that foreign other business entity without the necessity of the filing of a certificate of cancellation. (7) A certificate of satisfaction of the Franchise Tax Board for each domestic disappearing corporation shall be filed when required by subdivision (g) or when required by Section 23334 of the Revenue and Taxation Code. SEC. 22. Section 1201 of the Corporations Code is amended to read: 1201. (a) The principal terms of a reorganization shall be approved by the outstanding shares (Section 152) of each class of each corporation the approval of whose board is required under Section 1200, except as provided in subdivision (b) and except that (unless otherwise provided in the articles) no approval of any class of outstanding preferred shares of the surviving or acquiring corporation or parent party shall be required if the rights, preferences, privileges and restrictions granted to or imposed upon such class of shares remain unchanged (subject to the provisions of subdivision (c)). For the purpose of this subdivision, two classes of common shares differing only as to voting rights shall be considered as a single class of shares. (b) No approval of the outstanding shares (Section 152) is required by subdivision (a) in the case of any corporation if such corporation, or its shareholders immediately before the reorganization, or both, shall own (immediately after the reorganization) equity securities, other than any warrant or right to subscribe to or purchase such equity securities, of the surviving or acquiring corporation or a parent party (subdivision (d) of Section 1200) possessing more than five-sixths of the voting power of the surviving or acquiring corporation or parent party. In making the determination of ownership by the shareholders of a corporation, immediately after the reorganization, of equity securities pursuant to the preceding sentence, equity securities which they owned immediately before the reorganization as shareholders of another party to the transaction shall be disregarded. For the purpose of this section only, the voting power of a corporation shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote but not assuming the exercise of any warrant or right to subscribe to or purchase such shares. (c) Notwithstanding the provisions of subdivision (b), a reorganization shall be approved by the outstanding shares (Section 152) of the surviving corporation in a merger reorganization if any amendment is made to its articles which would otherwise require such approval. (d) Notwithstanding the provisions of subdivision (b), a reorganization shall be approved by the outstanding shares (Section 152) of any class of a corporation which is a party to a merger or sale-of-assets reorganization if holders of shares of that class receive shares of the surviving or acquiring corporation or parent party having different rights, preferences, privileges or restrictions than those surrendered. Shares in a foreign corporation received in exchange for shares in a domestic corporation have different rights, preferences, privileges and restrictions within the meaning of the preceding sentence. (e) Notwithstanding the provisions of subdivisions (a) and (b), a reorganization shall be approved by the affirmative vote of at least two-thirds of each class of the outstanding shares of any close corporation if the reorganization would result in their receiving shares of a corporation which is not a close corporation; provided, however, that the articles may provide for a lesser vote, but not less than a majority of the outstanding shares of each class. (f) Notwithstanding the provisions of subdivisions (a) and (b), a reorganization shall be approved by the outstanding shares (Section 152) of any class of a corporation which is a party to a merger reorganization if holders of shares of that class receive interests of a surviving other business entity in the merger. (g) Any approval required by this section may be given before or after the approval by the board. Notwithstanding approval required by this section, the board may abandon the proposed reorganization without further action by the shareholders, subject to the contractual rights, if any, of third parties. SEC. 23. Section 15046 of the Corporations Code is amended to read: 15046. The following entities may be merged pursuant to this article: (a) Any one or more general partnerships into one general partnership, provided the merger is specifically permitted by the partnership agreements and the procedure is detailed in that agreement. That action shall only be effective upon the vote of at least a majority in interest in profits from current operations of all general partners. (b) One or more general partnerships with one or more limited partnerships into one limited partnership, provided the merger is specifically permitted by the general partnership agreements. That action shall only be effective upon the vote of at least a majority in interest in profits from current operations of all general partners. (c) One or more general partnerships with one or more limited partnerships into one general partnership, provided the merger is specifically permitted by the general partnership agreements. That action shall only be effective upon the vote of at least a majority in interest in profits from current operations of all general partners. (d) Any one or more general partnerships into one limited liability company, provided the merger is specifically permitted by the partnership agreements and the procedure is detailed in those agreements. That action shall only be effective upon the vote of at least a majority in interest in profits from current operations of all general partners. (e) One or more general partnerships with one or more limited liability companies into one limited liability company, provided the merger is specifically permitted by the general partnership agreements. That action shall only be effective upon the vote of at least a majority in interest in profits from current operations of all general partners. (f) One or more general partnerships with one or more limited liability companies into one general partnership, provided the merger is specifically permitted by the general partnership agreements. That action shall only be effective upon the vote of at least a majority in interest in profits from current operations of all general partners. SEC. 24. Section 15611 of the Corporations Code is amended to read: 15611. As used in this chapter, unless the context otherwise requires: (a) "Acknowledged" means that an instrument is either of the following: (1) Formally acknowledged as provided in Article 3 (commencing with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of the Civil Code. (2) Executed to include substantially the following wording preceding the signature: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed. Any certificate of acknowledgment taken without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated. (b) "Capital account" of a partner, unless otherwise provided in the partnership agreement, means the amount of the capital interest of that partner in the partnership consisting of that partner's original contribution, as (1) increased by any additional contributions and by that partner's share of the partnership's profits and (2) decreased by any distribution to that partner and by that partner's share of the partnership's losses. (c) "Certificate of limited partnership" or "certificate" means the certificate referred to in Section 15621, including all amendments thereto. (d) "Constituent corporation" means a corporation which is merged with or into one or more limited partnerships or other business entities and includes a surviving corporation. (e) "Constituent limited partnership" means a limited partnership which is merged with or into one or more other limited partnerships or other business entities and includes a surviving limited partnership. (f) "Constituent other business entity" means an other business entity that is merged with or into one or more limited partnerships and includes a surviving other business entity. (g) "Contribution" means any money, property or services rendered, or a promissory note or other binding obligation to contribute money or property, or to render services as permitted in this chapter, which a partner contributes to a limited partnership as capital in that partner's capacity as a partner pursuant to an agreement between the partners, including an agreement as to value. (h) "Disappearing limited partnership" means a constituent limited partnership which is not the surviving limited partnership. (i) "Disappearing other business entity" means a constituent other business entity that is not the surviving other business entity. (j) "Distribution" means the transfer of money or property by a partnership to its partners without consideration. (k) "Domestic corporation" means a corporation formed under the laws of this state. (l) "Foreign limited partnership" means a partnership formed under the laws of any state other than this state or under the laws of a foreign country and having as partners one or more general partners and one or more limited partners (or their equivalents under any name). (m) "Foreign other business entity" means an other business entity formed under the laws of any state other than this state or under the laws of a foreign country. (n) "General partner" means a person who has been admitted to a limited partnership as a general partner in accordance with the partnership agreement or a person who has been admitted as a general partner pursuant to Section 15641. (o) "Interests of all partners" means the aggregate interests of all partners in the current profits derived from business operations of the partnership. (p) "Interests of limited partners" means the aggregate interests of all limited partners in their respective capacities as limited partners in the current profits derived from business operations of the partnership. (q) "Limited partner" means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement, or an assignee of a limited partnership interest who has become a limited partner pursuant to Section 15674, or, to the extent provided in subdivision (b) of Section 15662, a former general partner who has ceased to be a general partner. (r) "Limited partnership" or "domestic limited partnership" means a partnership formed by two or more persons under the laws of this state and having one or more general partners and one or more limited partners. (s) "Mail" means first-class mail, postage prepaid, unless registered mail is specified. Registered mail includes certified mail. (t) "Majority in interest of all partners" means more than 50 percent of the interests of all partners. (u) "Majority in interest of the limited partners" means more than 50 percent of the interests of limited partners. (v) "Other business entity" means a corporation, general partnership, limited liability company, business trust, real estate investment trust, or an unincorporated association (other than a nonprofit association), but excluding a limited partnership. (w) "Parent" of a specified limited partnership means each general partner of the limited partnership, each person possessing, directly or indirectly, the power to direct or cause the direction of the management and policies of a general partner of the limited partnership, and a person owning, directly or indirectly, limited partnership interests possessing more than 50 percent of the aggregate voting power of the specified limited partnership. (x) "Partner" means a limited or general partner. "Partner of record" means a partner named as a partner on the list maintained in accordance with subdivision (a) of Section 15615. (y) "Partnership agreement" means any valid oral or written agreement of the partners as to the affairs of a limited partnership and the conduct of its business, including all amendments thereto. In the event the partnership agreement consists of an oral agreement and a dispute arises concerning what the terms and conditions of the agreement are, the burden of proof shall be on the general partner or partners. (z) "Person" means an individual, partnership, limited partnership (domestic or foreign), trust, estate, association, corporation, limited liability company, or other entity. (aa) "Proxy" means a written authorization signed by a partner or the partner's attorney in fact giving another person the power to vote with respect to the interest of that partner. "Signed," for the purpose of this section, means the placing of the partner's name on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the partner or partner's attorney in fact. (ab) "Return of capital" means any distribution to a partner to the extent that the partner's capital account, immediately after the distribution, is less than the amount of that partner' s contributions to the partnership as reduced by prior distributions which were a return of capital. (ac) "State" means a state, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. (ad) "Surviving limited partnership" means a limited partnership into which one or more other limited partnerships or other business entities are merged. (ae) "Surviving other business entity" means an other business entity into which one or more limited partnerships are merged. (af) "Time a notice is given or sent," unless otherwise expressly provided, means the time a written notice to a partner or the limited partnership is deposited in the United States mails; or the time any other written notice is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or the time any oral notice is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. (ag) (1) "Transact intrastate business" means entering into repeated and successive transactions of business in this state, other than interstate or foreign commerce. (2) A foreign limited partnership shall not be considered to be transacting intrastate business merely because of its status as any one or more of the following: (A) A shareholder of a foreign corporation transacting intrastate business. (B) A shareholder of a domestic corporation. (C) A limited partner of a foreign limited partnership transacting intrastate business. (D) A limited partner of a domestic limited partnership. (E) A member or manager of a foreign limited liability company transacting intrastate business. (F) A member or manager of a domestic limited liability company. (3) Without excluding other activities that may not constitute transacting intrastate business, a foreign limited partnership shall not be considered to be transacting intrastate business within the meaning of paragraph (1) solely by reason of carrying on in this state any one or more of the following activities: (A) Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims and disputes. (B) Holding meetings of its partners or carrying on other activities concerning its internal affairs. (C) Maintaining bank accounts. (D) Maintaining offices or agencies for the transfer, exchange, and registration of its securities or depositaries with relation to its securities. (E) Effecting sales through independent contractors. (F) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance without this state before becoming binding contracts. (G) Creating or acquiring evidences of debt or mortgages, liens, or security interests on real or personal property. (H) Securing or collecting debts or enforcing mortgages and security interests in property securing the debts. (I) Conducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature. (4) A person shall not be deemed to be transacting intrastate business in this state merely because of the person's status as a limited partner of a domestic limited partnership or a foreign limited partnership registered to transact intrastate business in this state. SEC. 25. Section 15632 of the Corporations Code is amended to read: 15632. (a) A limited partner is not liable for any obligation of a limited partnership unless named as a general partner in the certificate or, in addition to the exercise of the rights and powers of a limited partner, the limited partner participates in the control of the business. If a limited partner participates in the control of the business without being named as a general partner, that partner may be held liable as a general partner only to persons who transact business with the limited partnership with actual knowledge of that partner's participation in control and with a reasonable belief, based upon the limited partner's conduct, that the partner is a general partner at the time of the transaction. Nothing in this chapter shall be construed to affect the liability of a limited partner to third parties for the limited partner's participation in tortious conduct. (b) A limited partner does not participate in the control of the business within the meaning of subdivision (a) solely by doing, attempting to do, or having the right or power to do, one or more of the following: (1) Being (A) an independent contractor for or an agent or employee of, or transacting business with, the limited partnership or a general partner of the limited partnership, (B) an officer, director, or shareholder of a corporate general partner of the limited partnership, (C) a member, manager, or officer of a limited liability company that is a general partner of the limited partnership, (D) a limited partner of a partnership that is a general partner of the limited partnership, (E) a trustee, administrator, executor, custodian, or other fiduciary or beneficiary of an estate or trust that is a general partner, or (F) a trustee, officer, advisor, shareholder, or beneficiary of a business trust that is a general partner. (2) Consulting with and advising a general partner with respect to the business of the limited partnership. (3) Acting as surety for the limited partnership or for a general partner, guaranteeing one or more specific debts of the limited partnership, or providing collateral for the limited partnership or general partner, or borrowing money from the limited partnership or a general partner, or lending money to the limited partnership or a general partner. (4) Approving or disapproving an amendment to the partnership agreement. (5) Voting on, proposing, or calling a meeting of the partners for one or more of the matters described in subdivision (f) of Section 15636. (6) Winding up the partnership pursuant to Section 15683. (7) Executing and filing a certificate pursuant to Section 15625 or a certificate of dissolution pursuant to paragraph (3) of subdivision (a) of Section 15624 or a certificate of cancellation of certificate of limited partnership pursuant to paragraph (4) of subdivision (a) of Section 15624. (8) Serving on an audit committee or committee performing the functions of an audit committee. (9) Serving on a committee of the limited partnership or the limited partners for the purpose of approving actions of the general partner. (10) Calling, requesting, attending, or participating at any meeting of the partners or the limited partners. (11) Taking any action required or permitted by law to bring, pursue, settle, or terminate a derivative action on behalf of the limited partnership. (12) Serving on the board of directors or a committee of, consulting with or advising, being or acting as an officer, director, stockholder, partner, member, manager, agent, or employee of, or being or acting as a fiduciary for, any person in which the limited partnership has an interest. (13) Exercising any right or power permitted to limited partners under this chapter and not specifically enumerated in this subdivision. (c) The enumeration in subdivision (b) does not mean that any other conduct or the possession or exercise of any other power by a limited partner constitutes participation by the limited partner in the control of the business of the limited partnership. SEC. 26. Section 15678.2 of the Corporations Code is amended to read: 15678.2. (a) Each limited partnership and other business entity which desires to merge shall approve an agreement of merger. The agreement of merger shall be approved by all general partners of each constituent limited partnership and the principal terms of the merger shall be approved by a majority in interest of each class of limited partners of each constituent limited partnership, unless a greater approval is required by the partnership agreement of the constituent limited partnership. Notwithstanding the previous sentence, if the limited partners of any constituent limited partnership become personally liable for any obligations of a constituent limited partnership or constituent other business entity as a result of the merger, the principal terms of the agreement of merger shall be approved by all of the limited partners of the constituent limited partnership, unless the agreement of merger provides that all limited partners will have the dissenters' rights provided in Article 7.6 (commencing with Section 15679.1). The agreement of merger shall be approved on behalf of each constituent other business entity by those persons required to approve the merger by the laws under which it is organized. Other persons, including a parent of a constituent limited partnership, may be parties to the agreement of merger. The agreement of merger shall state: (1) The terms and conditions of the merger. (2) The name and place of organization of the surviving limited partnership or surviving other business entity, and of each disappearing limited partnership and disappearing other business entity, and the agreement of merger may change the name of the surviving limited partnership, which new name may be the same as or similar to the name of a disappearing domestic or foreign limited partnership, subject to Section 15612. (3) The manner of converting the partnership interests of each of the constituent limited partnerships into interests, shares, or other securities of the surviving limited partnership or surviving other business entity, and if partnership interests of any of the constituent limited partnerships are not to be converted solely into interests, shares, or other securities of the surviving limited partnership or surviving other business entity, the cash, property, rights, interests, or securities which the holders of the partnership interests are to receive in exchange for the partnership interests, which cash, property, rights, interests, or securities may be in addition to or in lieu of interests, shares, or other securities of the surviving limited partnership or surviving other business entity, or that the partnership interests are canceled without consideration. (4) Any other details or provisions as are required by the laws under which any constituent other business entity is organized, including, if a domestic corporation is a party to the merger, subdivision (b) of Section 1113. (5) Any other details or provisions that are desired, including, without limitation, a provision for the treatment of fractional partnership interests. (b) Each limited partnership interest of the same class of any constituent limited partnership (other than a limited partnership interest in another constituent limited partnership that is being canceled and that is held by a constituent limited partnership or its parent or a limited partnership of which the constituent limited partnership is a parent) shall, unless all limited partners of the class consent, be treated equally with respect to any distribution of cash, property, rights, interests, or securities. Notwithstanding this subdivision (b), except in a merger of a limited partnership with a limited partnership in which it controls at least 90 percent of the limited partnership interests entitled to vote with respect to the merger, the nonredeemable limited partnership interests of a constituent limited partnership may be converted only into nonredeemable interests or securities of the surviving limited partnership or other business entity or a parent if a constituent limited partnership or a constituent other business entity or its parent owns, directly or indirectly, prior to the merger, limited partnership interests of another constituent limited partnership or interests or securities of a constituent other business entity representing more than 50 percent of the interests or securities entitled to vote with respect to the merger of the other constituent limited partnership or constituent other business entity or more than 50 percent of the voting power, as defined in Section 194.5, of a constituent other business entity which is a domestic corporation, unless all of the limited partners of the class consent. This subdivision shall apply only to constituent limited partnerships with over 35 limited partners. (c) Notwithstanding its prior approval, an agreement of merger may be amended prior to the filing of the certificate of merger or the agreement of merger, as provided in Section 15678.4, if the amendment is approved by the general partners of each constituent limited partnership in the same manner as required for approval of the original agreement of merger and, if the amendment changes any of the principal terms of the agreement of merger, the amendment is approved by the limited partners of each constituent limited partnership in the same manner and to the same extent as required for the approval of the original agreement of merger, and by each of the constituent other business entities. (d) The general partners of a constituent limited partnership may, in their discretion, abandon a merger, subject to the contractual rights, if any, of third parties, including other constituent limited partnerships and constituent other business entities, without further approval by the limited partnership interests, at any time before the merger is effective. (e) An agreement of merger approved in accordance with subdivision (a) may (1) effect any amendment to the partnership agreement of any constituent limited partnership or (2) effect the adoption of a new partnership agreement for a constituent limited partnership if it is the surviving limited partnership in the merger. Any amendment to a partnership agreement or adoption of a new partnership agreement made pursuant to the foregoing sentence shall be effective at the effective time or date of the merger. Notwithstanding the above provisions of this subdivision, if a greater number of limited partners is required to approve an amendment to the partnership agreement of a constituent limited partnership than is required to approve the agreement of merger pursuant to subdivision (a), and the number of limited partners that approve the agreement of merger is less than the number of limited partners required to approve an amendment to the partnership agreement of the constituent limited partnership, any amendment to the partnership agreement or adoption of a new partnership agreement of that constituent limited partnership made pursuant to the first sentence of this subdivision shall be effective only if the agreement of merger provides that all of the limited partners shall have the dissenter's rights provided in Article 7.6 (commencing with Section 15679.1). (f) The surviving limited partnership or surviving other business entity shall keep the agreement of merger at the office referred to in subdivision (a) of Section 15614 or at the business address specified in paragraph (5) of subdivision (a) of Section 15678.4, as applicable, and, upon the request of a limited partner of a constituent limited partnership or a holder of shares, interests, or other securities of a constituent other business entity, the general partners of the surviving limited partnership or the authorized person of the surviving other business entity shall promptly deliver to the limited partner or the holder of shares, interests, or other securities, at the expense of the surviving limited partnership or surviving other business entity, a copy of the agreement of merger. A waiver by a partner or holder of shares, interests, or other securities of the rights provided in this subdivision shall be unenforceable. SEC. 27. Title 2.5 (commencing with Section 17000) is added to the Corporations Code, to read: TITLE 2.5. LIMITED LIABILITY COMPANIES CHAPTER 1. GENERAL PROVISIONS 17000. This title shall be known and may be cited as the Beverly-Killea Limited Liability Company Act. 17001. Unless the context otherwise indicates, the following definitions govern the construction of this title: (a) "Acknowledged" means that an instrument is either of the following: (1) Formally acknowledged as provided in Article 3 (commencing with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of the Civil Code. (2) Executed to include substantially the following wording preceding the signature: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed. Any certificate of acknowledgment taken without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated. (b) "Articles of organization" means articles of organization filed under Section 17050, including all amendments thereto or restatements thereof, or, in the case of a foreign limited liability company, all documents that serve a like function under the laws of the jurisdiction in which the foreign limited liability company is organized. (c) "Bankrupt" or "bankruptcy" means, with respect to any person, being the subject of an order for relief under Title 11 of the United States Code, or any successor statute or other statute in any foreign jurisdiction having like import or effect. (d) "Capital account" means, unless otherwise provided in the operating agreement, the amount of the capital interest of a member in the limited liability company consisting of that member's original contribution, as (1) increased by any additional contributions and by that member's share of the limited liability company's profits and (2) decreased by any distribution to that member and by that member's share of the limited liability company's losses. (e) "Constituent limited liability company" means a limited liability company that is merged with or into one or more other limited liability companies or other business entities and includes a surviving limited liability company. (f) "Constituent other business entity" means any other business entity that is merged with or into one or more limited liability companies and includes a surviving other business entity. (g) "Contribution" means any money, property, or services rendered, or a promissory note or other binding obligation to contribute money or property, or to render services as permitted in this title, which a member contributes to a limited liability company as capital in that member's capacity as a member pursuant to an agreement between the members, including an agreement as to value. (h) "Disappearing limited liability company" means a constituent limited liability company that is not the surviving limited liability company. (i) "Disappearing other business entity" means a constituent other business entity that is not the surviving other business entity. (j) "Distribution" means the transfer of money or property by a limited liability company to its members without consideration. (k) "Domestic" means organized under the laws of this state when used in relation to any limited liability company, other business entity or person (other than a natural person). (l) "Domestic corporation" means a corporation as defined in Section 162. (m) "Domestic limited partnership" means a partnership formed by two or more persons under the laws of this state and having one or more general partners and one or more limited partners. (n) "Economic interest" means a person's right to share in the income, gains, losses, deductions, credit, or similar items of, and to receive distributions from, the limited liability company, but does not include any other rights of a member including, without limitation, the right to vote or to participate in management, or, except as provided in Section 17106, any right to information concerning the business and affairs of the limited liability company. (o) (RESERVED). (p) "Foreign corporation" means a corporation formed under the laws of any state other than this state or under the laws of the United States or of a foreign country. (q) "Foreign limited liability company" means either (1) an entity formed under the limited liability company laws of any state other than this state, or (2) an entity organized under the laws of any foreign country that is (A) an unincorporated association, (B) organized under a statute pursuant to which an association may be formed that affords each of its members limited liability with respect to the liabilities of the entity, and (C) not an entity that is required to be registered or qualified pursuant to the provisions of Title 1 (commencing with Section 100) or Title 2 (commencing with Section 15001); but the term "foreign limited liability company" does not include a foreign association, as defined in Section 170. (r) "Foreign limited partnership" means a partnership formed under the laws of any state other than this state or under the laws of a foreign country and having as partners one or more general partners and one or more limited partners or their equivalents under any name. (s) "Foreign other business entity" means any other business entity formed under the laws of any state other than this state or under the laws of the United States or of a foreign country. (t) "Limited liability company" or "domestic limited liability company" means an entity having two or more members that is organized under this title, or in the case of a limited liability company that is dissolving pursuant to Section 17350, a limited liability company having only one member. (u) "Mail" unless otherwise provided in the operating agreement, means first-class mail, postage prepaid, unless registered mail is specified. Registered mail includes certified mail. (v) "Majority in interest of the members," unless otherwise provided in the operating agreement, means more than 50 percent of the interests of members in current profits of the limited liability company. (w) "Manager" means a person elected by the members of a limited liability company to manage the limited liability company if the articles of organization contain the statement referred to in subdivision (b) of Section 17151 or, if the articles of organization do not contain that statement, "manager" means each of the members of the limited liability company. (x) "Member" means a person who: (1) Has been admitted to a limited liability company as a member in accordance with the articles of organization or operating agreement, or an assignee of an interest in a limited liability company who has become a member pursuant to Section 17303. (2) Has not resigned, withdrawn, or been expelled as a member or, if other than an individual, been dissolved. (y) "Member of record" means a member named as a member on the list maintained in accordance with paragraph (1) of subdivision (a) of Section 17058. (z) "Membership interest" means a member's rights in the limited liability company, collectively, including the member's economic interest, any right to vote or participate in management, and any right to information concerning the business and affairs of the limited liability company provided by this title. (aa) "Officer" means any person elected or appointed pursuant to Section 17154. (ab) "Operating agreement" means any agreement, written or oral, between all of the members as to the affairs of a limited liability company and the conduct of its business in any manner not inconsistent with law or the articles of organization, including all amendments thereto, or, in the case of a foreign limited liability company, all documents that serve a like function under the laws of the jurisdiction in which the foreign limited liability company is organized. The term "operating agreement" may include, without more, an agreement between all the members to organize a limited liability company pursuant to the provisions of this title. (ac) "Other business entity" means a corporation, limited partnership, general partnership, business trust, real estate investment trust, or an unincorporated association (other than a nonprofit association), but excluding a domestic limited liability company and a foreign limited liability company. (ad) "Parent," when used in relation to a specified limited liability company, means a person who owns, directly or indirectly, membership interests possessing more than 50 percent of the voting power of the specified limited liability company. When used in relation to a specified corporation or limited partnership, the term "parent" shall have the meanings set forth in Section 1200 and subdivision (v) of Section 15611, respectively. (ae) "Person" means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign. (af) RESERVED. (ag) RESERVED. (ah) RESERVED. (ai) "Proxy," unless otherwise provided in the operating agreement, means a written authorization signed or an electronic transmission authorized by a member or the member's attorney in fact giving another person the power to exercise the voting rights of that member. "Signed," for the purpose of this section, means the placing of the member's name on the proxy (whether by manual signature, typewriting, telegraphic or electronic transmission, or otherwise) by the member or member's attorney in fact. A proxy may be transmitted by an oral telephonic transmission if it is submitted with information from which it may be determined that the proxy was authorized by the member, or by the member's attorney in fact. (aj) "Return of capital," unless otherwise provided in the operating agreement, means any distribution to a member to the extent that the member's capital account, immediately after the distribution, is less than the amount of that member's contributions to the limited liability company as reduced by prior distributions that were a return of capital. (ak) "State" means a state, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. (al) "Subsidiary of a specified limited liability company" means a limited liability company or other business entity in which shares, interests, or other securities possessing more than 50 percent of the voting power are owned by the specified limited liability company. (am) "Surviving limited liability company" means a limited liability company into which one or more other limited liability companies or other business entities are merged. (an) "Surviving other business entity" means an other business entity into which one or more limited liability companies are merged. (ao) "Time a notice is given or sent," unless otherwise expressly provided, means the time a written notice is deposited in the United States mails; is personally delivered to the recipient, is delivered to a common carrier for transmission, or is actually transmitted by the person giving the notice by electronic means, to the recipient; or the time any oral notice is communicated, in person or by telephone, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. (ap) "Transact intrastate business" means to enter into repeated and successive transactions of business in this state, other than in interstate or foreign commerce. (1) Without excluding other activities which may not be considered to be transacting intrastate business, a foreign limited liability company shall not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business, or merely because of its status as any one or more of the following: (A) A shareholder of a domestic corporation. (B) A shareholder of a foreign corporation transacting intrastate business. (C) A limited partner of a foreign limited partnership transacting intrastate business. (D) A limited partner of a domestic limited partnership. (E) A member or manager of a foreign limited liability company transacting intrastate business. (F) A member or manager of a domestic limited liability company. (2) Without excluding other activities which may not be considered to be transacting intrastate business, a foreign limited liability company 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: (A) 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. (B) Holding meetings of its managers or members or carrying on any other activities concerning its internal affairs. (C) Maintaining bank accounts. (D) Maintaining offices or agencies for the transfer, exchange, and registration of the foreign limited liability company's securities or maintaining trustees or depositaries with respect to those securities. (E) Effecting sales through independent contractors. (F) 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. (G) Creating or acquiring evidences of debt or mortgages, liens, or security interests in real or personal property. (H) Securing or collecting debts or enforcing mortgages and security interests in property securing the debts. (I) 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. (3) A person shall not be deemed to be transacting intrastate business in this state merely because of its status as a member or manager of a domestic limited liability company or a foreign limited liability company registered to transact intrastate business in this state. (aq) "Vote" includes authorization by written consent. (ar) "Voting power" means the power to vote on any matter at the time any determination of voting power is made and does not include the right to vote upon the happening of some condition or event which has not yet occurred. (as) "Written" or "in writing" includes facsimile and telegraphic communication. 17002. Subject to any limitations contained in the articles of organization and to compliance with any other applicable laws, a limited liability company may engage in any lawful business activity, except the banking, insurance, or trust company business. 17003. Subject to any limitations contained in the articles of organization and to compliance with this title and any other applicable laws, a limited liability company organized under this title shall have all of the powers of a natural person in carrying out its business activities, including, without limitation, the power to: (a) Transact its business, carry on its operations, qualify to do business, and have and exercise the powers granted by this title in any state, territory, district, possession, or dependency of the United States, and in any foreign country. (b) Sue, be sued, complain and defend any action, arbitration, or proceeding, whether judicial, administrative, or otherwise, in its own name. (c) Adopt, use, and at will alter a company seal; but failure to affix a seal does not affect the validity of any instrument. (d) Make contracts and guarantees, incur liabilities, act as surety, and borrow money. (e) Sell, lease, exchange, transfer, convey, mortgage, pledge, and otherwise dispose of all or any part of its property and assets. (f) Purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, or otherwise deal in and with any interest in real or personal property, wherever located. (g) Lend money to and otherwise assist its members and employees. (h) Issue notes, bonds, and other obligations and secure any of them by mortgage or deed of trust or security interest of any or all of its assets. (i) Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, loan, pledge, or otherwise dispose of and otherwise use and deal in and with stock or other interests in and obligations of any person, or direct or indirect obligations of the United States or of any government, state, territory, governmental district, or municipality, or of any instrumentality of any of them. (j) Invest its surplus funds, lend money from time to time in any manner which may be appropriate to enable it to carry on the operations or fulfill the purposes set forth in its articles of organization, and take and hold real property and personal property as security for the payment of funds so loaned or invested. (k) Be a promoter, stockholder, partner, member, manager, associate, or agent of any person. (l) Indemnify or hold harmless any person. (m) Purchase and maintain insurance. (n) Issue, purchase, redeem, receive, take, or otherwise acquire, own, hold, sell, lend, exchange, transfer, or otherwise dispose of, pledge, use, and otherwise deal in and with its own bonds, debentures, and other securities. (o) Pay pensions and establish and carry out pension, profit-sharing, bonus, share purchase, option, savings, thrift, and other retirement, incentive, and benefit plans, trusts, and provisions for all or any of the current or former members, managers, officers, or employees of the limited liability company or any of its subsidiary or affiliated entities, and to indemnify and purchase and maintain insurance on behalf of any fiduciary of such plans, trusts, or provisions. (p) Make donations, regardless of specific benefit to the limited liability company, to the public welfare or for community, civic, religious, charitable, scientific, literary, educational, or similar purposes. (q) Make payments or donations or do any other act, not inconsistent with this title or any other applicable law, that furthers the business and affairs of the limited liability company. (r) Pay compensation, and pay additional compensation, to any or all managers, officers, members, and employees on account of services previously rendered to the limited liability company, whether or not an agreement to pay such compensation was made before such services were rendered. (s) Insure for its benefit the life of any of its members, managers, officers, or employees, insure the life of any member for the purpose of acquiring at his or her death the interest owned by such member, and continue such insurance after the relationship terminates. (t) Do every other act not inconsistent with law that is appropriate to promote and attain the purposes set forth in its articles of organization. 17004. (a) A member may lend money to and transact other business with the limited liability company and, subject to other applicable law, has the same rights and obligations with respect thereto as a person who is not a member. (b) Except as otherwise authorized in, or pursuant to, the operating agreement or other agreement among all the members, no member is entitled to remuneration for acting in the limited liability company business, subject to the entitlement of managers or members winding up the affairs of the limited liability company to reasonable compensation pursuant to subdivision (c) of Section 17352. 17005. (a) Except as provided in subdivisions (b) and (c), relations among members and between the members and the limited liability company are governed by the articles of organization and operating agreement. To the extent the articles of organization or operating agreement do not otherwise provide, this title governs relations among the members and between the members and the limited liability company. (b) The effect of the provisions of this title may be varied as among the members or as between the members and the limited liability company by the articles of organization or operating agreement, provided, however, that the provisions of Sections 17059, 17103, 17104, 17152, 17154, and 17155 may only be varied by the articles of organization or a written operating agreement. Notwithstanding the first sentence of this subdivision, neither the articles of organization nor the operating agreement may: (1) Vary the definitions in Section 17001, except as specifically provided therein. (2) Eliminate the right of a member pursuant to subdivision (c) of Section 17100 to assert that a provision in the operating agreement governing the termination of that member's interest and the return of that member's contribution was unreasonable under the circumstances existing at the time the agreement was made. (3) Vary the voting requirements or voting rights set forth in subdivisions (b) and (c) of Section 17103. (4) Vary a member's rights under Sections 17106 and 17453. (5) Eliminate the right of a member under an obligation to render services to withdraw from the limited liability company pursuant to subdivision (b) of Section 17252. (c) The provisions of Chapter 2 (commencing with Section 17050), Chapter 8 (commencing with Section 17350), Chapter 10 (commencing with Section 17450), Chapter 11 (commencing with Section 17500), Chapter 12 (commencing with Section 17550), and Chapter 13 (commencing with Section 17600) may be varied by the articles of organization or by a written operating agreement only to the extent expressly provided in those chapters. (d) The fiduciary duties of a manager to the limited liability company and to the members of the limited liability company may only be modified in a written operating agreement with the informed consent of the members. (e) The presence in certain provisions of this title of the words "unless otherwise provided in the articles of organization or operating agreement" or words of similar import does not imply that the effect of other provisions may not be varied as among the members by the articles of organization or operating agreement. (f) If any provision of the articles of organization conflicts with one or more provisions of a written operating agreement, the articles of organization shall control. CHAPTER 2. FORMATION 17050. (a) In order to form a limited liability company, one or more persons shall execute and file articles of organization with, and on a form prescribed by, the Secretary of State and, either before or after the filing of articles of organization, the members shall have entered into an operating agreement. The person or persons who execute and file the articles of organization may, but need not, be members of the limited liability company. (b) A limited liability company shall have two or more members. (c) The existence of a limited liability company begins upon the filing of the articles of organization. For all purposes, a copy of the articles of organization duly certified by the Secretary of State is conclusive evidence of the formation of a limited liability company and prima facie evidence of its existence. 17051. (a) The articles of organization shall set forth: (1) The name of the limited liability company. (2) The latest date on which the limited liability company is to dissolve. (3) The following statement: The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea Limited Liability Company Act. (4) RESERVED. (5) The name and address of the initial agent for service of process on the limited liability company meeting the qualifications specified in paragraph (1) of subdivision (d) of Section 17061, unless a corporate agent is designated, in which case only the name of the agent shall be set forth. (6) If the limited liability company is to be managed by one or more managers and not by all its members, the statement referred to in subdivision (b) of Section 17151, including, if the limited liability company is to be managed by only one manager, a statement to that effect. (b) It is not necessary to set out in the articles of organization any of the powers of a limited liability company enumerated in this title. (c) The articles of organization may contain any other provision not inconsistent with law, including, but not limited to: (1) A provision limiting or restricting the business in which the limited liability company may engage or the powers that the limited liability company may exercise or both. (2) Provisions governing the admission of members to the limited liability company. (3) Any events, other than or additional to the events specified in subdivision (d) of Section 17350, that will cause a dissolution of the limited liability company. (4) A statement of whether there are limitations on the authority of managers or members to bind the limited liability company, and, if so, what they are. (d) No limitation upon the business, purposes, or powers of the limited liability company contained in or implied by the articles of organization or by the operating agreement shall be asserted as between the limited liability company or any manager or member and any third person, except in a proceeding (1) by a member or the state to enjoin the doing or continuation of unauthorized business by the limited liability company or its managers or officers, or both, in cases where third parties have not acquired rights thereby, (2) to dissolve the limited liability company, or (3) by the limited liability company or by a member suing in a representative suit on its behalf against the officers or managers of the limited liability company for violation of their authority, unless the person asserting the limitation had actual knowledge of the limitation at the time of the act or event complained of. (e) The Secretary of State may cancel the filing of articles of organization 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. 17052. The name of each limited liability company as set forth in its articles of organization: (a) Shall contain either the words "limited liability company" or the abbreviation "LLC" as the last words in the name of the limited liability company. The words "limited" and "company" may be abbreviated to "Ltd." and "Co.," respectively. (b) May contain the name of one or more members. (c) Shall not be a name that the Secretary of State determines is likely to mislead the public and shall not be the same as, or resemble so closely as to tend to deceive, (1) the name of any limited liability company that has filed articles of organization pursuant to Section 17050, (2) the name of any foreign limited liability company registered to do business in this state pursuant to Section 17451, or (3) any name that is under reservation for another domestic limited liability company or foreign limited liability company pursuant to Section 17053, except that a limited liability company may adopt a name that is substantially the same as that of an existing domestic limited liability company or foreign limited liability company that is registered pursuant to Section 17451 upon proof of consent by that domestic limited liability company or foreign limited liability company and a finding by the Secretary of State that under the circumstances the public is not likely to be misled. (d) Shall not contain the words "bank," "insurance," "trust," "trustee," "incorporated," "inc.," "corporation," or "corp." (e) The use by a limited liability company or a foreign limited liability company of a name in violation of this section may be enjoined notwithstanding the filing of its articles of organization or its registration with the Secretary of State. 17053. Any applicant may, upon payment of the fee prescribed in subdivision (a) of Section 17701, obtain from the Secretary of State a certificate of reservation of any name not prohibited by Section 17052, and upon the issuance of the certificate the name stated therein may be reserved for a period of 60 days. The Secretary of State shall not issue certificates reserving the same name for two or more consecutive 60-day periods to the same applicant or for the use or benefit of the same person; nor shall consecutive reservations be made by or for the use or benefit of the same person for names so similar as to fall within the prohibitions of subdivision (c) of Section 17052. 17054. (a) Subject to subdivision (c) of Section 17103, the articles of organization may be amended at any time and in any manner as the members may determine, as long as the articles of organization as amended contain only those provisions as it would be lawful to insert in original articles of organization filed at the time of the filing of the amendment. The articles of organization may be amended regardless of whether any provision contained in the amendment was permissible at the time of the original organization of the limited liability company. (b) The articles of organization shall be amended by filing a certificate of amendment thereto duly executed by at least one manager, unless a greater number is provided in the articles of organization. The certificate of amendment shall be filed with, and on a form prescribed by, the Secretary of State, and shall set forth all of the following: (1) The name and the Secretary of State's file number of the limited liability company. (2) The text of the amendment to the articles of organization. (c) A certificate of amendment to the articles of organization shall be filed to effect any of the following: (1) A change in the name of the limited liability company. (2) Any change in the statement referred to in subdivision (b) of Section 17151. (3) Any change in the time as stated in the articles of organization for the dissolution of the limited liability company. (4) Any change in the events that will cause a dissolution of the limited liability company. (d) The managers shall cause to be filed a certificate of amendment to the articles of organization within 30 days of the discovery by any of the managers of any false or erroneous material statement contained in the articles of organization or any amendment thereto. (e) Any manager who executes a certificate of amendment shall be liable for any statement materially inconsistent with the operating agreement or any material misstatement of fact contained in the certificate of amendment if the manager knew or should have known that the statement was false when made or that the statement became false and an amendment required by subdivision (d) was not filed, and the person suffering the loss relied on the statement or misstatement. (f) Articles of organization may be restated at any time. Restated articles of organization shall be filed with, and on a form prescribed by, the Secretary of State, shall be specifically designated as restated in the heading, shall set forth the limited liability company's name and the Secretary of State's file number, may set forth the name and address of the agent for service of process required to be maintained by Section 17057, unless a corporate agent is designated, in which case only the name of the agent shall be set forth, shall set forth all the other matters required by Section 17051 to be set forth in the articles of organization, and may set forth any other matters that may be set forth as authorized by Section 17051. If restated articles of organization include the agent for service of process, any previously filed statements pursuant to Section 17060 are superseded as to the agent for service of process until another statement pursuant to Section 17060 is filed subsequent to the filing of the restated articles of organization. If the name of the limited liability company is to be changed by the filing of the restated articles of organization, the old name shall also be set forth in the heading in a manner to indicate the intent to change the name. 17055. (a) If any document filed with the Secretary of State under this title contains any typographical error, error of transcription, or other technical error, or has been defectively executed, the document may be corrected by the filing of a certificate of correction. (b) A certificate of correction shall be filed with, and on a form prescribed by, the Secretary of State, and shall set forth: (1) The name and the Secretary of State's file number of the limited liability company. (2) The title of the document being corrected. (3) The name of each party to the document being corrected. (4) The date that the document being corrected was filed. (5) The provision in the document as previously filed and as corrected and, if execution of the document was defective, the manner in which it was defective. (c) A certificate of correction shall not make any other change or amendment that would not have complied in all respects with the requirements of this title at the time the document being corrected was filed. (d) A certificate of correction shall be executed in the same manner in which the document being corrected was required to be executed. (e) A certificate of correction may not: (1) Change the effective date of the document being corrected. (2) Affect any right or liability accrued or incurred before its filing, except that any right or liability accrued or incurred by reason of the error or defect being corrected shall be extinguished by the filing if the person having the right or to whom the liability is owed has not detrimentally relied on the original document. 17056. (a) Unless otherwise specified in any other section of this title, any document required by this title to be executed and filed with the Secretary of State shall be executed: (1) By the person or persons organizing the limited liability company when the limited liability company has not yet been formed. (2) By any manager. (3) If the limited liability company is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary. (4) In the case of a foreign limited liability company, in the manner required by the laws of the state of its organization. (b) Any person may execute any document referred to in subdivision (a) by an attorney in fact. Powers of attorney relating to the signing of those documents by an attorney in fact need not be sworn to, verified, or acknowledged, and need not be filed with the Secretary of State. (c) Any instrument filed with respect to a limited liability company, other than the original articles of organization, may provide that it is to become effective not more than 90 days after its filing date. In case a delayed effective date is specified, the instrument may be prevented from becoming effective by a certificate stating that by appropriate action it has been revoked and is null and void. This certificate shall be executed in the same manner as the original instrument and shall be filed before the specified effective date. In the case of a merger agreement or certificate of merger, a certificate revoking the earlier filing need only be executed on behalf of one of the constituent parties to the merger. If no revocation certificate is filed, the instrument becomes effective on the date specified. (d) If the Secretary of State determines that an instrument submitted for filing or otherwise submitted does not conform to the law and returns it to the person submitting it, the instrument may be resubmitted accompanied by a written opinion of a member of the State Bar of California submitting the instrument or representing the person submitting it, to the effect that the specific provisions of the instrument objected to by the Secretary of State does conform to law and stating the points and authorities upon which the opinion is based. The Secretary of State shall rely, with respect to any disputed point of law, other than the application of Sections 17052, 17053, 17451, and 17452, upon that written opinion in determining whether the instrument conforms to law. The date of filing in that case shall be the date the instrument is received on resubmission. 17057. Each limited liability company shall continuously maintain in this state each of the following: (a) An office at which shall be maintained the records required by Section 17058. (b) An agent in this state for service of process on the limited liability company. 17058. (a) Each limited liability company shall maintain at the office referred to in subdivision (a) of Section 17057 all of the following: (1) A current list of the full name and last known business or residence address of each member and of each holder of an economic interest in the limited liability company set forth in alphabetical order, together with the contribution and the share in profits and losses of each member and holder of an economic interest. (2) If the articles of organization contain the statement described in subdivision (b) of Section 17151, a current list of the full name and business or residence address of each manager. (3) A copy of the articles of organization and all amendments thereto, together with any powers of attorney pursuant to which the articles of organization or any amendments thereto were executed. (4) Copies of the limited liability company's federal, state, and local income tax or information returns and reports, if any, for the six most recent taxable years. (5) A copy of the limited liability company's operating agreement, if in writing, and any amendments thereto, together with any powers of attorney pursuant to which any written operating agreement or any amendments thereto were executed. (6) Copies of the financial statements of the limited liability company, if any, for the six most recent fiscal years. (7) The books and records of the limited liability company as they relate to the internal affairs of the limited liability company for at least the current and past four fiscal years. (b) Upon request of an assessor, a domestic or foreign limited liability company owning, claiming, possessing, or controlling property in this state subject to local assessment shall make available at the limited liability company's principal office in California or at the office required to be kept pursuant to subdivision (a) of Section 17057 or at a place mutually acceptable to the assessor and the limited liability company, a true copy of business records relevant to the amount, cost, and value of all property that it owns, claims, possesses, or controls within the county. 17059. The power to adopt, alter, amend, or repeal the operating agreement of a limited liability company shall be vested in the members. The articles of organization or a written operating agreement may prescribe the manner in which the operating agreement may be altered, amended, or repealed. 17060. (a) Every limited liability company and every foreign limited liability company registered to transact intrastate business in this state shall file within 90 days after the filing of its original articles of organization and annually thereafter during the applicable filing period in each year, on a form prescribed by the Secretary of State, a statement containing: (1) The name of the limited liability company and the Secretary of State's file number and, in the case of a foreign limited liability company, the state under the laws of which it is organized. (2) The name and street address of the agent for service of process required to be maintained pursuant to subdivision (b) of Section 17057. If a corporate agent is designated, only the name of the agent shall be set forth. (3) The street address of its principal executive office and, in the case of a domestic limited liability company, of the office required to be maintained pursuant to Section 17057. (4) The name and complete business or residence addresses of any manager or managers and the chief executive officer, if any, appointed or elected in accordance with the articles of organization or operating agreement or, if no manager has been so elected or appointed, the name and business or residence address of each member. (5) The general type of business that constitutes the principal business activity of the limited liability company (for example, manufacturer of aircraft; wholesale liquor distributor; retail department store). (b) If there has been no change in the information in the last filed statement of the limited liability company on file in the Secretary of State's office, the limited liability company may, in lieu of filing the statement required by subdivision (a), advise the Secretary of State, on a form prescribed by the Secretary of State, that no changes in the required information have occurred during the applicable filing period. (c) For the purposes of this section, the applicable filing period for a limited liability company shall be the calendar month during which its original articles of organization were filed or, in the case of a foreign limited liability company, the month during which its application for registration was filed, and the immediately preceding five calendar months. The Secretary of State shall mail a form for compliance with this section to each limited liability company approximately three months prior to the close of the applicable filing period. The form shall state the due date thereof and shall be mailed to the last address of the limited liability company according to the records of the Secretary of State. The failure of the limited liability company to receive the form shall not exempt the limited liability company from complying with this section. (d) Whenever any of the information required by subdivision (a) changes, other than the name and street address of the agent for service of process, the limited liability company may file a current statement containing all the information required by subdivision (a). When changing its agent for service of process or when the address of the agent changes, the limited liability company shall file a current statement containing all the information required by subdivision (a). Whenever any statement is filed pursuant to this section changing the name and street address of the agent for service of process, that statement supersedes any previously filed statement pursuant to this section, the statement in the original articles of organization, and the statement in any restated articles of organization that have been filed, or in the case of a foreign limited liability company, in the application for registration. Whenever restated articles of organization are filed, the statement therein, if any, of the name and street address of the agent for service of process supersedes any previously filed statement pursuant to this section. (e) The Secretary of State may destroy or otherwise dispose of any statement filed pursuant to this section after it has been superseded by the filing of a new statement. (f) This section shall not be construed to place any person dealing with the limited liability company on notice of, or under any duty to inquire about, the existence or content of a statement filed pursuant to this section. 17061. (a) In addition to Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure, process may be served upon limited liability companies and foreign limited liability companies as provided in this section. (b) Personal service of a copy of any process against the limited liability company or the foreign limited liability company by delivery (1) to any individual designated by it as agent, or (2) if the designated agent is a corporation, to any person named in the latest certificate of the corporate agent filed pursuant to Section 1505 at the office of the corporate agent, shall constitute valid service on the limited liability company or the foreign limited liability company. No change in the address of the agent for service of process or appointment of a new agent for service of process shall be effective until an amendment to the statement described in Section 17060 is filed. In the case of a foreign limited liability company that has appointed the Secretary of State as agent for service of process by reason of subdivision (e) of Section 17456, process shall be delivered by hand to the Secretary of State, or to any person employed in the capacity of assistant or deputy, and shall include one copy of the process for each defendant to be served, together with a copy of the court order authorizing the service and the fee therefor. The order shall set forth the address to which the process shall be sent by the Secretary of State. (c) (1) If an agent for service of process has resigned and has not been replaced or if the designated agent cannot with reasonable diligence be found at the address designated for personal delivery of the process, and it is shown by affidavit to the satisfaction of the court that process against a limited liability company or foreign limited liability company cannot be served with reasonable diligence upon the designated agent by hand in the manner provided in Section 415.10, subdivision (a) of Section 415.20, or subdivision (a) of Section 415.30 of the Code of Civil Procedure, the court may make an order that the service shall be made upon a domestic limited liability company or upon a registered foreign limited liability company by delivering by hand to the Secretary of State, or to any person employed in the Secretary of State's office in the capacity of assistant or deputy, one copy of the process for each defendant to be served, together with a copy of the order authorizing the service. Service in this manner shall be deemed complete on the 10th day after delivery of the process to the Secretary of State. (2) Upon receipt of the copy of process and the fee therefor, the Secretary of State shall give notice of the service of the process to the limited liability company or foreign limited liability company, at its principal executive office, by forwarding to that office, by registered mail with request for return receipt, the copy of the process. (3) The Secretary of State shall keep a record of all process served upon the Secretary of State under this title and shall record therein the time of service and the action taken by the Secretary of State. A certificate under the Secretary of State' s official seal, certifying to the receipt of process, the giving of notice to the limited liability company or foreign limited liability company, and the forwarding of the process pursuant to this section, shall be competent and prima facie evidence of the service of process. (d) (1) The articles of organization of a limited liability company and the application for registration of a foreign limited liability company shall designate, as the agent for service of process, an individual residing in this state or a corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated. If an individual is designated, the statement shall set forth that person's complete business or residence address in this state. (2) An agent designated for service of process may file with the Secretary of State a signed and acknowledged written statement of resignation as an agent. Upon filing of the statement of resignation, the authority of the agent to act in that capacity shall cease and the Secretary of State shall give written notice of the filing of the statement of resignation by mail to the limited liability company or foreign limited liability company addressed to its principal executive office. (3) 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 limited liability company or foreign limited liability company shall promptly file an initial or amended statement described in Section 17060 designating a new agent. (e) In addition to any other discovery rights that may exist, in any case pending in a California court in which a party seeks records from a limited liability company formed under this title, whether or not the limited liability company is a party, the court may order the production in California of the books and records of the limited liability company on those terms and conditions that the court deems appropriate. (f) A member may, in a written operating agreement or other writing, consent to be subject to the nonexclusive jurisdiction of the courts of a specified jurisdiction, or the exclusive jurisdiction of the courts of this state. (g) If a member desires to use the arbitration process, that member may, in a written operating agreement or other writing, consent to be nonexclusively subject to arbitration in a specified state, or to be exclusively subject to arbitration in this state. (h) Along with the consent to the jurisdiction of courts or to be subject to arbitration as provided in subdivisions (f) and (g), a member may consent to be served with legal process in the manner prescribed in a written operating agreement or other writing. 17062. An instrument shall be deemed filed, and the date of filing endorsed thereon, upon receipt by the Secretary of State of any instrument accompanied by the fee prescribed in Chapter 15 (commencing with Section 17700). The date of filing shall be the date the instrument is received by the Secretary of State unless the instrument is withheld from filing for a period of time not to exceed 90 days pursuant to a request by the party submitting it for filing or unless, in the judgment of the Secretary of State, the filing is intended to be coordinated with the filing of some other document that cannot be filed. The Secretary of State shall file a document as of any requested future date not more than 90 days after its receipt, including a Saturday, Sunday, or legal holiday, if that document is received in the Secretary of State's office at least one business day prior to the requested date of filing. Upon receipt and after filing of any document under this title, the Secretary of State may microfilm or reproduce by other techniques any filings or documents and destroy the original filing or document. The microfilm or other reproduction of any document under the provision of this section shall be admissible in any court of law. CHAPTER 3. MEMBERS 17100. (a) After formation of a limited liability company, a person may become a member: (1) In the case of a person acquiring a membership interest directly from the limited liability company, at the time provided in and upon compliance with the articles of organization or the operating agreement or, if the articles of organization or operating agreement do not so provide, only upon the vote of all the members and when the person becomes a party to the operating agreement. (2) In the case of an assignee of a membership interest, upon compliance with subdivision (a) of Section 17303 and at the time provided in and upon compliance with the articles of organization or the operating agreement or, if the articles of organization or operating agreement do not so provide, when the assignee becomes a party to the operating agreement. (b) In each case under subdivision (a), the person acquiring the membership interest shall be added as a member to the list required by paragraph (1) of subdivision (a) of Section 17058. (c) The operating agreement may provide for the termination in whole or in part of the membership interest or economic interest of a member in the limited liability company. If a member's economic interest in the limited liability company is terminated pursuant to the operating agreement, the member may demand and shall be entitled to receive a return of that member' s contribution. Any provision in an operating agreement governing the termination of a member's interest and the return of a member's contribution shall be enforceable in accordance with its terms unless the member seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the agreement was made. Upon any termination of a membership interest, the list required by paragraph (1) of subdivision (a) of Section 17058 shall be amended accordingly. 17101. (a) Except as otherwise provided in Section 17254, no member of a limited liability company shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a member of the limited liability company. (b) A member of a limited liability company shall be personally liable under a judgment of a court or for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, under the same or similar circumstances and to the same extent as a shareholder of a corporation may be personally liable for any debt, obligation, or liability of the corporation; except that the failure to hold meetings of members or managers or the failure to observe formalities pertaining to the calling or conduct of meetings shall not be considered a factor tending to establish that the members have personal liability for any debt, obligation, or liability of the limited liability company where the articles of organization or operating agreement do not expressly require the holding of meetings of members or managers. (c) Nothing in this section shall be construed to affect the liability of a member of a limited liability company to third parties for the member's participation in tortious conduct. (d) A limited liability company or foreign limited liability company shall carry insurance or provide an undertaking to the same extent and in the same amount as is required by any law, rule, or regulation of this state that would be applicable to the limited liability company or foreign limited liability company were it a corporation organized and existing or duly qualified for the transaction of intrastate business under the General Corporation Law. 17102. The articles of organization or the operating agreement may provide for the creation of classes of members having those relative rights, powers, and duties as the articles of organization or operating agreement may provide, including rights, powers, and duties senior to other classes of members. 17103. (a) The articles of organization or a written operating agreement may provide to all or certain identified members or a specified class or group of members the right to vote separately or with all or any class or group of members on any matter. Voting by members may be on a per capita, number, financial interest, class, group, or any other basis. If no voting provision is contained in the articles of organization or written operating agreement: (1) The members of a limited liability company shall vote in proportion to their interests in current profits of the limited liability company or, in the case of a member who has assigned his or her or its entire economic interest in the limited liability company to a person who has not been admitted as a member, in proportion to the interest in current profits that the assigning member would have, had the assignment not been made. (2) The following matters shall require the unanimous vote of all members: (A) A decision to continue the business of the limited liability company after dissolution of the limited liability company pursuant to Section 17350. (B) Approval of the transfer of a membership interest and admission of the assignee as a member of the limited liability company. (C) Any amendment of the articles of organization or operating agreement. (3) In all other matters in which a vote is required, a vote of a majority in interest of the members shall be sufficient. (b) Notwithstanding any provision to the contrary in the articles of organization or operating agreement, in no event shall the articles of organization be amended by a vote of less than a majority in interest of the members. (c) Notwithstanding any provision to the contrary in the articles of organization or operating agreement, members shall have the right to vote on a dissolution of the limited liability company as provided in subdivision (c) of Section 17350 and on a merger of the limited liability company as provided in Section 17551. 17104. (a) Meetings of members may be held at any place, either within or without this state, selected by the person or persons calling the meeting or as may be stated in or fixed in accordance with the articles of organization or a written operating agreement. If no other place is stated or so fixed, all meetings shall be held at the principal executive office of the limited liability company. (b) A meeting of the members may be called by any manager or by any member or members representing more than 10 percent of the interests of members for the purpose of addressing any matters on which the members may vote. (c) (1) Whenever members are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than 10 days nor more than 60 days before the date of the meeting to each member entitled to vote at the meeting. The notice shall state the place, date, and hour of the meeting and the general nature of the business to be transacted. No other business may be transacted at this meeting. (2) Any report or any notice of a members' meeting shall be given either personally or by mail or other means of written communication, addressed to the member at the address of the member appearing on the books of the limited liability company or given by the member to the limited liability company for the purpose of notice, or, if no address appears or is given, at the place where the principal executive office of the limited liability company is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of this article, executed by a manager, shall be prima facie evidence of the giving of the notice or report. If any notice or report addressed to the member at the address of the member appearing on the books of the limited liability company is returned to the limited liability company by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the member at the address, all future notices or reports shall be deemed to have been duly given without further mailing if they are available for the member at the principal executive office of the limited liability company for a period of one year from the date of the giving of the notice or report to all other members. (3) Upon written request to a manager by any person entitled to call a meeting of members, the manager shall immediately cause notice to be given to the members entitled to vote that a meeting will be held at a time requested by the person calling the meeting, not less than 10 days nor more than 60 days after the receipt of the request. If the notice is not given within 20 days after receipt of the request, the person entitled to call the meeting may give the notice or, upon the application of that person, the superior court of the county in which the principal executive office of the limited liability company is located, or if the principal executive office is not in this state, the county in which the limited liability company's address in this state is located, shall summarily order the giving of the notice, after notice to the limited liability company affording it an opportunity to be heard. The procedure provided in subdivision (c) of Section 305 shall apply to the application. The court may issue any order as may be appropriate, including, without limitation, an order designating the time and place of the meeting, the record date for determination of members entitled to vote, and the form of notice. (d) When a members' meeting is adjourned to another time or place, unless the articles of organization or a written operating agreement otherwise require and, except as provided in this subdivision, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the limited liability company may transact any business that may have been transacted at the original meeting. If the adjournment is for more than 45 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each member of record entitled to vote at the meeting. (e) The actions taken at any meeting of members, however called and noticed, and wherever held, have the same validity as if taken at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the members entitled to vote, not present in person or by proxy, signs a written waiver of notice or consents to the holding of the meeting or approves the minutes of the meeting. All waivers, consents, and approvals shall be filed with the limited liability company records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of the meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by this title to be included in the notice but not so included, if the objection is expressly made at the meeting. Neither the business to be transacted nor the purpose of any meeting of members need be specified in any written waiver of notice, unless otherwise provided in the articles of organization or operating agreement, except as provided in subdivision (g). (f) Members may participate in a meeting of the limited liability company through the use of conference telephones or similar communications equipment, as long as all members participating in the meeting can hear one another. Participation in a meeting pursuant to this provision constitutes presence in person at that meeting. (g) Any action approved at a meeting, other than by unanimous approval of those entitled to vote, shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice. (h) (1) A majority in interest of the members represented in person or by proxy shall constitute a quorum at a meeting of members. (2) The members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the loss of a quorum, if any action taken after loss of a quorum, other than adjournment, is approved by the requisite percentage of interests of members specified in this title or in the articles of organization or a written operating agreement. (3) In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the interests represented either in person or by proxy, but no other business may be transacted, except as provided in paragraph (2). (i) (1) Any action that may be taken at any meeting of the members may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed and delivered to the limited liability company within 60 days of the record date for that action by members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all members entitled to vote thereon were present and voted. (2) Unless the consents of all members entitled to vote have been solicited in writing, (A) notice of any member approval of an amendment to the articles of organization or operating agreement, a dissolution of the limited liability company as provided in Section 17350, or a merger of the limited liability company as provided in Section 17551, without a meeting by less than unanimous written consent shall be given at least 10 days before the consummation of the action authorized by such approval, and (B) prompt notice shall be given of the taking of any other action approved by members without a meeting by less than unanimous written consent, to those members entitled to vote who have not consented in writing. (3) Any member giving a written consent, or the member's proxyholder, may revoke the consent by a writing received by the limited liability company prior to the time that written consents of members having the minimum number of votes that would be required to authorize the proposed action have been filed with the limited liability company, but may not do so thereafter. This revocation is effective upon its receipt at the office of the limited liability company required to be maintained pursuant to Section 17057. (j) The use of proxies in connection with this section will be governed in the same manner as in the case of corporations formed under the General Corporation Law. (k) In order that the limited liability company may determine the members of record entitled to notices of any meeting or to vote, or entitled to receive any distribution or to exercise any rights in respect of any other lawful action, a manager, or members representing more than 10 percent of the interests of members, may fix, in advance, a record date, that is not more than 60 days nor less than 10 days prior to the date of the meeting and not more than 60 days prior to any other action. If no record date is fixed: (1) The record date for determining members entitled to notice of or to vote at a meeting of members shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. (2) The record date for determining members entitled to give consent to limited liability company action in writing without a meeting shall be the day on which the first written consent is given. (3) The record date for determining members for any other purpose shall be at the close of business on the day on which the managers adopt the resolution relating thereto, or the 60th day prior to the date of the other action, whichever is later. (4) The determination of members of record entitled to notice of or to vote at a meeting of members shall apply to any adjournment of the meeting unless a manager or the members who called the meeting fix a new record date for the adjourned meeting, but the manager or the members who called the meeting shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. 17105. (a) The operating agreement may provide that the interest of a member or assignee in a limited liability company may be evidenced by a certificate of interest issued by the limited liability company, and may make other provisions not inconsistent with this title with respect to the transfer of interests represented by those certificates or with respect to the form of those certificates. (b) The operating agreement may provide that the certificate may be signed by a manager or officer of the limited liability company, whose signature may be a facsimile. In case any manager or officer of the limited liability company who has signed or whose facsimile signature has been placed upon a certificate has ceased to be a manager or officer before the certificate is issued, it may be issued by the limited liability company with the same effect as if the person were a manager or officer at the date of issue. If a certificate is worn out or lost, it may be renewed on production of the worn out or lost certificate or on satisfactory proof of its loss together with such indemnity as may be required by the manager or managers or a resolution of members. 17106. (a) Upon the request of a member or a holder of an economic interest, for purposes reasonably related to the interest of that person as a member or a holder of an economic interest, a manager shall promptly deliver to the member or holder of an economic interest, at the expense of the limited liability company, a copy of the information required to be maintained by paragraphs (1), (2), and (4) of subdivision (a) of Section 17058, and any written operating agreement of the limited liability company. (b) Each member, manager, and holder of an economic interest has the right upon reasonable request, for purposes reasonably related to the interest of that person as a member, manager, or holder of an economic interest, to each of the following: (1) To inspect and copy during normal business hours any of the records required to be maintained by Section 17058. (2) To obtain from a manager promptly after becoming available, a copy of the limited liability company's federal, state, and local income tax or information returns for each year. (c) In the case of any limited liability company with more than 35 members: (1) A manager shall cause an annual report to be sent to each of the members not later than 120 days after the close of the fiscal year. That report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year. (2) Members representing at least 5 percent of the voting interests of members, or three or more members, may make a written request to a manager for an income statement of the limited liability company for the initial three-month, six-month, or nine-month period of the current fiscal year ended more than 30 days prior to the date of the request, and a balance sheet of the limited liability company as of the end of that period. The statement shall be delivered or mailed to the members within 30 days thereafter. (3) The financial statements referred to in this section shall be accompanied by the report thereon, if any, of the independent accountants engaged by the limited liability company or, if there is no report, the certificate of a manager of the limited liability company that the financial statements were prepared without audit from the books and records of the limited liability company. (d) A manager shall promptly furnish to a member a copy of any amendment to the articles of organization or operating agreement executed by a manager pursuant to a power of attorney from the member. (e) The limited liability company shall send or cause to be sent to each member or holder of an economic interest within 90 days after the end of each taxable year such information as is necessary to complete federal and state income tax or information returns, and, in the case of a limited liability company with 35 or fewer members, a copy of the limited liability company's federal, state, and local income tax or information returns for the year. (f) In addition to any other remedies, a court of competent jurisdiction may enforce the duty of making and mailing or delivering the information and financial statements required by this section and, for good cause shown, may extend the time therefor. (g) In any action under this section, if the court finds the failure of the limited liability company to comply with the requirements of this section is without justification, the court may award an amount sufficient to reimburse the person bringing the action for the reasonable expenses incurred by that person, including attorneys' fees, in connection with the action or proceeding. (h) Any waiver of the rights provided in this section shall be unenforceable. (i) Any request, inspection, or copying by a member or holder of an economic interest may be made by that person or by that person's agent or attorney. 17107. (a) Upon complaint that a limited liability company is failing to comply with the provisions of Section 17106, or to afford to the members rights given to them in the articles of organization or operating agreement, the Attorney General may, in the name of the people of the State of California, send to the office required to be maintained pursuant to Section 17057, notice of the complaint. (b) If the answer of the limited liability company is not received within 30 days of the date the notice was transmitted, or if the answer is not satisfactory, and if the enforcement of the rights of the aggrieved persons by private civil action, by class action, or otherwise, would be so burdensome or expensive as to be impracticable, the Attorney General may institute, maintain, or intervene in any court of competent jurisdiction or before any administrative agency for relief by way of injunction, the dissolution of entities, the appointment of receivers, or any other temporary, preliminary, provisional, or final remedies as may be appropriate to protect the rights of members or to restore the position of the members for the failure to comply with the requirements of Section 17106 or the articles of organization or the operating agreement. In any action, suit, or proceeding, there may be joined as parties all persons and entities responsible for or affected by the activity. CHAPTER 4. MANAGEMENT 17150. Unless the articles of organization include the statement referred to in subdivision (b) of Section 17151 vesting management of the limited liability company in a manager or managers, the business and affairs of a limited liability company shall be managed by the members subject to any provisions of the articles of organization or operating agreement restricting or enlarging the management rights and duties of any member or class of members. If management is vested in the members, each of the members shall have the same rights and be subject to all duties and obligations of managers as set forth in this title. 17151. (a) The articles of organization may provide that the business and affairs of the limited liability company shall be managed by or under the authority of one or more managers who may, but need not, be members. (b) If the limited liability company is to be managed by one or more managers and not by all its members, the articles of organization shall contain a statement to that effect. Neither the names of the managers nor the number of managers need be specified in the articles of organization, but if management is vested in only one manager, the articles of organization shall so state. (c) The articles of organization or operating agreement may prescribe the number and qualifications of managers who may, but need not, be natural persons. 17152. If management of the limited liability company is vested in one or more managers pursuant to a statement in the articles of organization: (a) Election of managers to fill initial positions or vacancies shall be by the affirmative vote of a majority in interest of the members. (b) Any or all managers may be removed, with or without cause, by the vote of a majority in interest of the members at a meeting called expressly for that purpose. Any removal shall be without prejudice to the rights, if any, of the manager under any contract of employment. (c) Any manager may resign as a manager at any time upon written notice to the limited liability company, without prejudice to the rights, if any, of the limited liability company under any contract to which the manager is a party. (d) Unless they have earlier resigned or been removed, managers shall hold office until the expiration of the term for which they were elected or, if no term was provided, until their successors have been elected and qualified. 17153. The fiduciary duties a manager owes to the limited liability company and to its members are those of a partner to a partnership and to the partners of the partnership. 17154. (a) A written operating agreement may provide for the appointment of officers, including, without limitation, a chairperson or a president, or both, a secretary, a chief financial officer, and any other officers with such titles, powers, and duties as shall be specified in the articles of organization or operating agreement, or determined by the managers or members. An officer may, but need not, be a member or manager of the limited liability company, and any number of offices may be held by the same person. (b) Officers, if any, shall be appointed in accordance with the written operating agreement or, if no such provision is made in the operating agreement, any officers shall be appointed by the managers and shall serve at the pleasure of the managers, subject to the rights, if any, of an officer under any contract of employment. Any officer may resign at any time upon written notice to the limited liability company without prejudice to the rights, if any, of the limited liability company under any contract to which the officer is a party. (c) Subject to the provisions of subdivision (d) of Section 17051, any note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any limited liability company and any other person, when signed by the chairman of the board, the president or any vice president and any secretary, any assistant secretary, the chief financial officer, or any assistant treasurer of the limited liability company, is not invalidated as to the limited liability company by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same. 17155. (a) Except for a breach of the duty set forth in Section 17153, the articles of organization or written operating agreement of a limited liability company may provide for indemnification of any person, including, without limitation, any manager, member, officer, employee, or agent of the limited liability company, against judgments, settlements, penalties, fines, or expenses of any kind incurred as a result of acting in that capacity. (b) A limited liability company shall have power to purchase and maintain insurance on behalf of any manager, member, officer, employee, or agent of the limited liability company against any liability asserted against or incurred by the person in that capacity or arising out of the person's status as a manager, member, officer, employee, or agent of the limited liability company. 17156. Except as otherwise provided in the articles of organization or the operating agreement, if the members have appointed more than one manager, decisions of the managers shall be made by majority vote of the managers if at a meeting, or by unanimous written consent. 17157. (a) Unless the statement referred to in subdivision (b) of Section 17151 is included in the articles of organization, every member is an agent of the limited liability company for the purpose of its business or affairs, and the act of any member, including, but not limited to, the execution in the name of the limited liability company of any instrument, for the apparent purpose of carrying on in the usual way the business or affairs of the limited liability company of which that person is a member, binds the limited liability company, unless the member so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the member is dealing has actual knowledge of the fact that the member has no such authority. (b) If the articles of organization contain the statement referred to in subdivision (b) of Section 17151 that management of the limited liability company is vested in a manager or managers, then: (1) No member, acting solely in the capacity of a member, is an agent of the limited liability company nor can any member bind, nor execute any instrument on behalf of, the limited liability company. (2) Every manager is an agent of the limited liability company for the purpose of its business or affairs, and the act of any manager, including, but not limited to, the execution in the name of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company of which the person is the manager, binds the limited liability company, unless the manager so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the manager is dealing has actual knowledge of the fact that the manager has no such authority. (c) No act of a manager or member in contravention of a restriction on authority shall bind the limited liability company to persons having actual knowledge of the restriction. (d) Notwithstanding the provisions of subdivision (c) of this section, and subject to the provisions of subdivision (d) of Section 17051, any note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any limited liability company and any other person, when signed by at least two managers (or by one manager in the case of a limited liability company whose articles of organization state that it is managed by only one manager), is not invalidated as to the limited liability company by any lack of authority of the signing managers or manager in the absence of actual knowledge on the part of the other person that the signing managers or manager had no authority to execute the same. 17158. No person who is a manager or officer or both a manager and officer of a limited liability company shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a manager or officer or both a manager and officer of the limited liability company. CHAPTER 5. FINANCE 17200. (a) The articles of organization or the operating agreement may provide for capital contributions of members. The contribution of a person may be in money, property, or services, or other obligation to contribute money or property or to render services. (b) Unless the articles of organization or operating agreement provide otherwise, no member shall be required to make any additional contribution to the limited liability company. 17201. (a) (1) Subject to the terms of the articles of organization or the operating agreement, a member is not excused from an obligation to the limited liability company to perform any promise to contribute cash or property or to perform services because of death, disability, dissolution, or any other reason. (2) If a member does not make the required contribution of property or services, that member is obligated, at the option of the limited liability company, to contribute cash equal to that portion of the fair market value (or agreed value if stated in writing and signed by the limited liability company and the member) of the contribution that has not been made. The foregoing option shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the limited liability company may have against the member under the articles of organization, operating agreement, or applicable law. (3) An operating agreement may provide that the interest of a member who fails to make any contribution or other payment that the member is required to make shall be subject to specific remedies for, or specific consequences of, the failure. Any such provision shall be enforceable in accordance with its terms unless the member seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the agreement was made. The specific remedies or consequences may include loss of voting, approval, or other rights, loss of the ability, by a member, to actively participate in the management and operations of the limited liability company, liquidated damages, or a reduction of the defaulting member's economic rights. The reduction of the defaulting member's economic rights may include one or more provisions: (A) Diluting, reducing, or eliminating the defaulting member' s proportionate interest in the limited liability company. (B) Subordinating the defaulting member's interest in the limited liability company to that of nondefaulting members. (C) Permitting a forced sale of the membership interest. (D) Permitting the lending or contribution by other members of the amount necessary to meet the defaulting member's commitment. (E) Providing for the adjustment of interest rates or other rates of return, preferred, priority, or otherwise, with respect to contributions by or capital accounts of the other members. (F) Providing for a fixing of the value of the defaulting member's interest in the limited liability company by appraisal or by formula and redemption or sale of the defaulting member's interest in the limited liability company at a percentage of that value. (b) (1) Unless otherwise provided in the articles of organization or the operating agreement, the obligation of a member to make a contribution or return money or property paid or distributed in violation of this article shall be compromised only by the unanimous vote of the members. (2) Notwithstanding the compromise of an obligation referred to in paragraph (1), a person whose claim against a limited liability company arises before the receipt of notice of the compromise may enforce the original obligation of a member to make a contribution to the limited liability company or to return a distribution if the person had knowledge of the original obligation prior to the time the claim arose and if the compromise occurred after the time the claim arose. Any other person with a claim against a limited liability company may enforce only the existing obligation of a member to make a contribution to the limited liability company or to return to the limited liability company money or other property paid or distributed. (c) A person with a claim against a limited liability company may not enforce a conditional obligation of a member unless the conditions have been satisfied or waived. Conditional obligations include, without limitation, a capital contribution payable upon a discretionary call of the limited liability company prior to the time the call occurs. (d) Nothing in this section shall be construed to affect the rights of third-party creditors of the limited liability company to seek equitable remedies nor any rights existing under the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). 17202. The profits and losses of a limited liability company shall be allocated among the members, and among classes of members, in the manner provided in the operating agreement. If the operating agreement does not otherwise provide, profits and losses shall be allocated in proportion to the contributions of each member. CHAPTER 6. DISTRIBUTIONS AND WITHDRAWALS 17250. Distributions of the money or property of a limited liability company shall be made to the members and to any classes of members in the manner provided in the operating agreement. If the operating agreement does not otherwise provide, distributions that are a return of capital shall be made in proportion to the contributions made by each member and distributions that are not a return of capital shall be made in proportion to the allocation of profits. 17251. Except as provided in this article, a member is entitled to receive distributions from a limited liability company before the withdrawal of that member from the limited liability company and before the dissolution and winding up thereof, subject to the limitations contained in Section 17254, to the extent and at the times or upon the happening of the events specified in the operating agreement. 17252. (a) A member may withdraw from a limited liability company at the time or upon the happening of events specified in the articles of organization or operating agreement. A written operating agreement may provide that a member may not withdraw the member's contribution from the limited liability company, or may provide specific remedies in the event of a wrongful withdrawal of a member's contribution, prior to the dissolution and winding up of the limited liability company. If the articles of organization or a written operating agreement do not specify the time or the events upon the happening of which a member may withdraw, a member may withdraw from the limited liability company either: (1) Upon not less than six months' prior written notice to each member at the addresses set forth in the list required to be kept pursuant to paragraph (1) of subdivision (a) of Section 17058. (2) If any amendment to the articles of organization or operating agreement that is adopted over the member's written dissent adversely affects the rights or preferences of the dissenting member's membership interest in any of the ways described in subparagraph (A), (B), (C), (D), or (E), in which event the withdrawal shall be deemed to have occurred as of the effective date of the amendment, if the member gives notice to the limited liability company not more than 60 days after the date of the amendment. In valuing the member's distribution pursuant to subdivision (c), there shall be excluded any depreciation in anticipation of the amendment. An amendment that does any of the following is subject to this paragraph: (A) Altering or amending that member's right to receive a distribution. (B) Altering or abolishing that member's right to voluntarily withdraw or retire. (C) Altering or abolishing that member's right to vote on any matter, except as the rights may be altered or abolished through the acceptance of contributions or the making of contribution agreements. (D) Altering or abolishing that member's preemptive right to make contributions. (E) Establishing or changing the conditions for or consequences of expulsion. No member withdrawing under this paragraph shall be liable for damages for the breach of any agreement not to withdraw. (b) Notwithstanding the provisions of subdivision (a), any member who is under an obligation to render services to the limited liability company may withdraw as a member at any time upon written notice to the limited liability company, without prejudice to the rights, if any, of the limited liability company or the other members under any contract to which the withdrawing member is a party. Any provision in an operating agreement governing the withdrawal of services by a member shall be enforceable in accordance with its terms unless the member seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the agreement was made. (c) Upon a permitted withdrawal that does not cause dissolution of the limited liability company, any withdrawing member is entitled to receive any distribution to which that member is entitled under the operating agreement and, if not otherwise provided in the operating agreement, the member is entitled to receive, within a reasonable time after withdrawal, the fair market value of the member's interest in the limited liability company as of the date of withdrawal based upon the member's right to share in distributions from the limited liability company. (d) Subject to Sections 17254 and 17353, at the time a member becomes entitled to receive a distribution, the member has the status of, and is entitled to all remedies available to, a creditor of the limited liability company with respect to the distribution. An operating agreement may provide for the establishment of a record date with respect to sharing of profits and distributions from a limited liability company. (e) Upon the withdrawal of a member, the list required to be kept pursuant to paragraph (1) of subdivision (a) of Section 17058 shall be amended accordingly. 17253. (a) A member, regardless of the nature of the member' s contribution, has no right to demand and receive any distribution from a limited liability company in any form other than money. (b) No member may be compelled to accept from a limited liability company a distribution of any asset in kind in lieu of a proportionate distribution of money being made to other members. (c) Except upon a dissolution and winding up of a limited liability company, no member may be compelled to accept a distribution of any asset in kind. 17254. (a) No distribution shall be made if, after giving effect to the distribution: (1) The limited liability company would not be able to pay its debts as they become due in the usual course of business. (2) The limited liability company's total assets would be less than the sum of its total liabilities plus, unless the operating agreement provides otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights of other members upon dissolution that are superior to the rights of the member receiving the distribution. (b) The limited liability company may base a determination that a distribution is not prohibited under subdivision (a) on any of the following: (1) Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances. (2) A fair valuation. (3) Any other method that is reasonable in the circumstances. (c) Except as provided in subdivision (e), the effect of a distribution under subdivision (a) is measured as of (1) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization, or (2) the date payment is made if it occurs more than 120 days after the date of authorization. (d) (1) If terms of the indebtedness provide that payment of principal and interest is to be made only if, and to the extent that, payment of a distribution to members could then be made under this section, indebtedness of a limited liability company, including indebtedness issued as a distribution, is not a liability for purposes of determinations made under subdivision (b). (2) If the indebtedness is issued as a distribution, each payment of principal or interest on the indebtedness is treated as a distribution, the effect of which is measured on the date the payment is actually made. (e) A member or assignee of a member is obligated to return a distribution from a limited liability company to the extent that (1) the member or assignee had actual knowledge of facts indicating the impropriety of the distribution, and (2) immediately after giving effect to the distribution, and notwithstanding the compromise of an obligation referred to in subdivision (b) of Section 17201, all liabilities of the limited liability company, other than liabilities to members or assignees on account of their interest in the limited liability company and liabilities as to which recourse of creditors is limited to specified property of the limited liability company, exceed the fair market value of the limited liability company's assets, provided that the fair market value of any property that is subject to a liability as to which recourse of creditors is so limited shall be included in the limited liability company assets only to the extent that the fair market value of the property exceeds this liability. (f) A cause of action with respect to an obligation to return a distribution pursuant to subdivision (e) is extinguished unless the action is brought within four years after the distribution is made. 17255. (a) A member or manager who votes for a distribution in violation of the operating agreement or Section 17254 or 17353 is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating Section 17254 or 17353 or the operating agreement if it is established that the member or manager did not act in compliance with Section 17254 or 17353. (b) Each member or manager held liable under subdivision (a) for an unlawful distribution is entitled to compel contribution: (1) From each other member or manager who could be held liable under subdivision (a) for the unlawful distribution. (2) From each member for the amount the member received with knowledge of facts indicating that the distribution was made in violation of Section 17254 or 17353 or the operating agreement. (c) A proceeding under this section is barred unless it is commenced within four years after the date on which the effect of the distribution is measured under Section 17254 or 17353. CHAPTER 7. INTEREST IN LIMITED LIABILITY COMPANY: ASSIGNMENT OF INTERESTS 17300. A membership interest and an economic interest in a limited liability company constitute personal property of the member or assignee. A member or assignee has no interest in specific limited liability company property. 17301. (a) Except as provided in the articles of organization or the operating agreement: (1) A membership interest or an economic interest is assignable in whole or in part, provided, however, that no membership interest may be assigned without the unanimous vote of members required pursuant to Section 17303. (2) An assignment of an economic interest does not of itself dissolve the limited liability company or, other than as set forth in the articles of organization or operating agreement, entitle the assignee to vote or participate in the management and affairs of the limited liability company or to become or exercise any rights of a member. (3) An assignment of an economic interest merely entitles the assignee to receive, to the extent assigned, the distributions and the allocations of income, gains, losses, deductions, credit, or similar items to which the assignor would be entitled. (4) Upon the assignment of all or part of an economic interest, the assignor shall provide the manager or member of the limited liability company responsible for maintaining its books and records with the name and address of the assignee, together with details of the interest assigned. Upon receipt of that notice, the limited liability company shall amend the list required by paragraph (1) of subdivision (a) of Section 17058 accordingly. Until the assignee of that interest becomes a member, the assignor continues to be a member and to have the power to exercise any rights and powers of a member, including the right to vote which, in the case of a member who has assigned his or her or its entire economic interest in the limited liability company, shall include the right to vote in proportion to the interest in current profits that the assigning member would have, had the assignment not been made. (b) Except to the extent assumed by agreement, until an assignee of an economic interest in a limited liability company becomes a member, the assignee shall have no liability to the limited liability company under Chapter 5 (commencing with Section 17200) and Chapter 6 (commencing with Section 17250) solely as a result of the assignment. The assignor of a membership interest is not released from liability as a member solely as a result of the assignment. (c) The pledge of, or granting of, a security interest, lien, or other encumbrance in or against any or all of the membership interest of a member shall not cause the member to cease to be a member or to grant to anyone else the power to exercise any rights or powers of a member. 17302. On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the membership interest. This section does not deprive any member of the benefit of any exemption laws applicable to the member's membership interest. 17303. (a) Except as otherwise provided in the articles of organization or the operating agreement, an assignee of an interest in a limited liability company may become a member only if the other members unanimously vote in favor of the assignee' s admission to the limited liability company as a member. (b) An assignee who has become a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under the articles of organization, any operating agreement, and this title. An assignee who becomes a member also is liable for the obligations of the assignor to make contributions as provided in Chapter 5 (commencing with Section 17200), and to return any unlawful distributions made to the assignee under Chapter 6 (commencing with Section 17250) or Chapter 8 (commencing with Section 17350). However, the assignee is not obligated for liabilities unknown to the assignee at the time the assignee became a member and that could not be ascertained from the articles of organization or operating agreement. (c) Whether or not an assignee of a membership interest becomes a member, the assignor is not released from the assignor' s liability to the limited liability company under Chapter 5 (commencing with Section 17200) and Chapter 6 (commencing with Section 17250). 17304. (a) If a member who is an individual dies or is adjudged by a court of competent jurisdiction to be incompetent to manage the member's person or property, the member's executor, administrator, guardian, conservator, or other legal representative may exercise all of the member's rights for the purpose of settling the member's estate or administering the member's property, including any power the member had under the articles of organization or an operating agreement to give an assignee the right to become a member. (b) If a member is a corporation, trust, or other entity and is dissolved or terminated, the powers of that member may be exercised by its legal representative or successor. CHAPTER 8. DISSOLUTION 17350. A limited liability company shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following: (a) At the time specified in the articles of organization. (b) Upon the happening of events specified in the articles of organization or a written operating agreement. (c) By the vote of a majority in interest of the members, or such greater percentage of the voting interests of members as may be specified in the articles of organization or a written operating agreement. (d) Except as otherwise provided in the articles of organization or a written operating agreement, upon the death, withdrawal, resignation, expulsion, bankruptcy, or dissolution of a member, unless the business of the limited liability company is continued by a vote of all the remaining members within 90 days of the happening of that event. (e) Entry of a decree of judicial dissolution pursuant to Section 17351. 17351. (a) Pursuant to an action filed by any manager or by any member or members, a court of competent jurisdiction may decree the dissolution of a limited liability company whenever any of the following occurs: (1) It is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. (2) Dissolution is reasonably necessary for the protection of the rights or interests of the complaining members. (3) The business of the limited liability company has been abandoned. (4) The management of the limited liability company is deadlocked or subject to internal dissention. (5) Those in control of the company have been guilty of, or have knowingly countenanced persistent and pervasive fraud, mismanagement, or abuse of authority. (b) (1) In any suit for judicial dissolution, the other members may avoid the dissolution of the limited liability company by purchasing for cash the membership interests owned by the members so initiating the proceeding (the "moving parties" ) at their fair market value. In fixing the value, the amount of any damages resulting if the initiation of the dissolution is a breach by any moving party or parties of an agreement with the purchasing party or parties, including, without limitation, the operating agreement, may be deducted from the amount payable to the moving party or parties; provided, that no member who sues for dissolution on the grounds set forth in paragraph (3), (4), or (5) of subdivision (a) shall be liable for damages for breach of contract in bringing that action. (2) If the purchasing parties (A) elect to purchase the membership interests owned by the moving parties, (B) are unable to agree with the moving parties upon the fair market value of the membership interests, and (C) give bond with sufficient security to pay the estimated reasonable expenses, including attorneys' fees, of the moving parties if the expenses are recoverable under paragraph (3), the court, upon application of the purchasing parties, either in the pending action or in a proceeding initiated in the superior court of the proper county by the purchasing parties, shall stay the winding up and dissolution proceeding and shall proceed to ascertain and fix the fair market value of the membership interests owned by the moving parties. (3) The court shall appoint three disinterested appraisers to appraise the fair market value of the membership interests owned by the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining that value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers or a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree that shall provide in the alternative for winding up and dissolution of the limited liability company unless payment is made for the membership interests within the time specified by the decree. If the purchasing parties do not make payment for the membership interests within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses, including attorneys' fees, of the moving parties. Any member aggrieved by the action of the court may appeal therefrom. (4) If the purchasing parties desire to prevent the winding up and dissolution of the limited liability company, they shall pay to the moving parties the value of their membership interests ascertained and decreed within the time specified pursuant to this section, or, in the case of an appeal, as fixed on appeal. On receiving that payment or the tender thereof, the moving parties shall transfer their membership interests to the purchasing parties. (5) For the purposes of this section, the valuation date shall be the date upon which the action for judicial dissolution was commenced. However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date. 17352. In the event of a dissolution of a limited liability company: (a) The managers who have not wrongfully dissolved the limited liability company or, if none, the members may wind up the limited liability company's affairs, unless the dissolution occurs pursuant to subdivision (e) of Section 17350, in which event the winding up shall be conducted in accordance with the decree of dissolution. The persons winding up the affairs of the limited liability company shall give written notice of the commencement of winding up by mail to all known creditors and claimants whose addresses appear on the records of the limited liability company. (b) Upon the petition of any manager or of any member or members, or three or more creditors, a court of competent jurisdiction may enter a decree ordering the winding up of the limited liability company if that appears necessary for the protection of any parties in interest. The decree shall designate the managers or members who are to wind up the limited liability company's affairs. (c) The managers or members winding up the affairs of the limited liability company pursuant to this section shall be entitled to reasonable compensation. 17353. (a) Except as otherwise provided in the articles of organization or the written operating agreement, after determining that all the known debts and liabilities of a limited liability company in the process of winding up, including, without limitation, debts and liabilities to members who are creditors of the limited liability company, have been paid or adequately provided for, the remaining assets shall be distributed among the members according to their respective rights and preferences as follows: (1) To members in satisfaction of liabilities for distributions pursuant to Section 17201, 17202, or 17255. (2) To members of the limited liability company for the return of their contributions. (3) To members in the proportions in which those members share in distributions. (b) If the winding up is by court proceeding or subject to court supervision, the distribution shall not be made until after the expiration of any period for the presentation of claims that has been prescribed by order of the court. (c) The payment of a debt or liability, whether the whereabouts of the creditor is known or unknown, has been adequately provided for if the payment has been provided for by either of the following means: (1) Payment thereof has been assumed or guaranteed in good faith by one or more financially responsible persons or by the United States government or any agency thereof, and the provision, including the financial responsibility of the person, was determined in good faith and with reasonable care by the members or managers of the limited liability company to be adequate at the time of any distribution of the assets pursuant to this section. (2) The amount of the debt or liability has been deposited as provided in Section 2008. This subdivision shall not prescribe the exclusive means of making adequate provision for debts and liabilities. 17354. (a) A limited liability company that is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it in order to collect and discharge obligations, disposing of and conveying its property, and collecting and dividing its assets. A limited liability company shall not continue business except so far as necessary for the winding up thereof. (b) No action or proceeding to which a limited liability company is a party abates by the dissolution of the limited liability company or by reason of proceedings for the winding up and dissolution thereof. (c) Any assets inadvertently or otherwise omitted from the winding up continue in the dissolved limited liability company for the benefit of the persons entitled thereto upon dissolution and on realization shall be distributed accordingly. 17355. (a) (1) Causes of action against a dissolved limited liability company, whether arising before or after the dissolution of the limited liability company, may be enforced against any of the following: (A) Against the dissolved limited liability company, to the extent of its undistributed assets, including, without limitation, any insurance assets held by the limited liability company that may be available to satisfy claims. (B) If any of the assets of the dissolved limited liability company have been distributed to members, against members of the dissolved limited liability company to the extent of the limited liability company assets distributed to them upon dissolution of the limited liability company. Any member compelled to return distributed assets in an amount that exceeds the sum of the member's pro rata share of the claim and the amount for which the member could otherwise be held liable under Section 17254 or 17255 may seek contribution for the excess from any other member or manager, up to the sum of that other person's pro rata share of the claim and that other person's liabilities under Section 17254 or 17255. (2) Except as set forth in subdivision (c), all causes of action against a member of a dissolved limited liability company arising under this section are extinguished unless the claimant commences a proceeding to enforce the cause of action against that member of a dissolved limited liability company prior to the earlier of the following: (A) The expiration of the statute of limitations applicable to the cause of action. (B) Four years after the effective date of the dissolution of the limited liability company. (3) As a matter of procedure only, and not for purposes of determining liability, members of the dissolved limited liability company may be sued in the name of the limited liability company upon any cause of action against the limited liability company. This section does not affect the rights of the limited liability company or its creditors under Sections 17254 and 17255, or the rights, if any, of creditors under the Uniform Fraudulent Transfer Act, that may arise against the member of a limited liability company. (b) Summons or other process against a limited liability company may be served by delivering a copy thereof to a manager, member, officer, or person having charge of its assets or, if no such person can be found, to any agent upon whom process might be served at the time of dissolution. If none of those persons can be found with due diligence and it is so shown by affidavit to the satisfaction of the court, then the court may make an order that summons or other process be served upon the dissolved limited liability company by personally delivering a copy thereof, together with a copy of the order, to the Secretary of State or an assistant or deputy Secretary of State. Service in this manner is deemed complete on the 10th day after delivery of the process to the Secretary of State. Upon receipt of process and the fee therefor, the Secretary of State shall give notice to the limited liability company as provided in Section 1702. (c) Every limited liability company shall survive and continue to exist indefinitely for the purpose of being sued in any quiet title action. Any judgment rendered in any such action shall bind each and all of its members or other persons having any equity or other interest in the limited liability company, to the extent of their interest therein, and the action shall have the same force and effect as an action brought under the provisions of Sections 410.50 and 410.60 of the Code of Civil Procedure. Service of summons or other process in any action may be made as provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure or as provided in subdivision (b). 17356. (a) (1) The managers shall cause to be filed in the office of, and on a form prescribed by, the Secretary of State, a certificate of dissolution upon the dissolution of the limited liability company pursuant to Chapter 8 (commencing with Section 17350), unless the event causing the dissolution is that specified in subdivision (e) of Section 17350, in which case the managers or members conducting the winding up of the limited liability company's affairs pursuant to Section 17352 shall have the obligation to file the certificate of dissolution. (2) The certificate of dissolution shall set forth all of the following: (A) The name of the limited liability company and the Secretary of State's file number. (B) The event causing, and the date of, the dissolution. (C) The effective date (which shall be a date certain) of the certificate of dissolution if it is not to be effective upon the filing. (D) A statement that a person, limited liability company, or other business entity assumes the tax liability, if any, of the dissolving limited liability company as security for the issuance of a tax clearance certificate from the Franchise Tax Board and is responsible for additional taxes or fees, if any, that are assessed under the Revenue and Taxation Code and become due after the date of the assumption of tax liability. (E) Any other information the managers or members filing the certificate of dissolution determine to include. (3) The Secretary of State shall notify the Franchise Tax Board of the filing and shall forward to the Franchise Tax Board any statement of assumption of tax liability accompanying the certificate of dissolution. The Franchise Tax Board shall determine from the available evidence whether or not all taxes and fees imposed on the limited liability company under the Revenue and Taxation Code have been paid or secured and shall notify the taxpayer of any outstanding tax or fee liability and the necessity of satisfying that liability. (b) (1) The managers or members who filed the certificate of dissolution shall cause to be filed in the office of, and on a form prescribed by, the Secretary of State, a certificate of cancellation of articles of organization upon the completion of the winding up of the affairs of the limited liability company pursuant to Chapter 8 (commencing with Section 17350), unless the event causing the dissolution is that specified in subdivision (e) of Section 17350, in which case the managers or members conducting the winding up of the limited liability company's affairs pursuant to Section 17352 shall have the obligation to file the certificate of cancellation of articles of organization. (2) The certificate of cancellation of articles of organization shall set forth all of the following: (A) The name of the limited liability company and the Secretary of State's file number. (B) Any other information the managers or members filing the certificate of cancellation of articles of organization determine to include. (3) The Franchise Tax Board shall notify the Secretary of State when all taxes and fees imposed on the limited liability company under the Revenue and Taxation Code have been paid or secured, at which time the limited liability company shall cease to exist as of the date of filing its certificate of cancellation of articles of organization. 17357. (a) Notwithstanding the filing of a certificate of dissolution, a majority in interest of the members may cause to be filed, in the office of, and on a form prescribed by, the Secretary of State, a certificate of continuation, in any of the following circumstances: (1) The business of the limited liability company is to be continued pursuant to a unanimous vote of the remaining members. (2) The dissolution of the limited liability company was by vote of the members pursuant to subdivision (c) of Section 17350 and each member who consented to the dissolution has agreed in writing to revoke his or her vote in favor of or consent to the dissolution. (3) The limited liability company was not, in fact, dissolved. (b) The certificate of continuation shall set forth all of the following: (1) The name of the limited liability company and the Secretary of State's file number. (2) The grounds provided by subdivision (a) that are the basis for filing the certificate of continuation. (c) Upon the filing of a certificate of continuation, the certificate of dissolution shall be of no effect from the time of the filing of the certificate of dissolution. CHAPTER 9. PROFESSIONAL LIMITED LIABILITY COMPANIES: RESERVED CHAPTER 10. FOREIGN LIMITED LIABILITY COMPANIES 17450. Subject to the provisions of Section 17453: (a) The laws of the state under which a foreign limited liability company is organized shall govern its organization and internal affairs and the liability and authority of its managers and members. (b) A foreign limited liability company may not be denied registration by reason of any difference between those laws and the laws of this state. 17451. (a) Before transacting intrastate business in this state, a foreign limited liability company shall register with the Secretary of State. In order to register, a foreign limited liability company shall submit to the Secretary of State an application for registration as a foreign limited liability company, signed by a person with authority to do so under the laws of the state of its organization, on a form prescribed by the Secretary of State and setting forth: (1) The name of the foreign limited liability company and, if different, the name under which it proposes to transact business in this state. (2) The state and date of its organization and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state. (3) The name and address of an agent for service of process on the foreign limited liability company meeting the qualifications specified in paragraph (1) of subdivision (d) of Section 17061, unless a corporate agent is designated, in which case only the name of the agent shall be set forth. (4) A statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence. (5) The address of the principal executive office of the foreign limited liability company and of its principal office in this state, if any. (b) Annexed to the application for registration shall be a certificate from an authorized public official of the foreign limited liability company's jurisdiction of organization to the effect that the foreign limited liability company 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 company that the laws of its jurisdiction of organization do not permit the issuance of those certificates. (c) The Secretary of State may cancel the application and certificate of registration of a foreign limited liability company 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. 17452. (a) 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, subject, however, to any licensing requirements imposed by the laws of this state. However, no certificate of registration shall be issued for a foreign limited liability company to transact intrastate business in this state under a name that falls within the prohibitions of subdivision (c) of Section 17052. (b) If the name of a foreign limited liability company does not satisfy the requirements of Section 17052, to obtain or maintain a certificate of registration, a foreign limited liability company may either: (1) Add the words "limited liability company" or the abbreviation "LLC" to its name for use in this state. (2) Use an assumed name that is available, and that satisfies the requirements of Section 17052, provided the foreign limited liability company agrees that it will use the assumed name in all its dealings with the Secretary of State and in the conduct of its affairs in this state. The assumed name may be the name of the foreign limited liability company with the addition of some distinguishing word or words acceptable to the Secretary of State or a name available for the name of a domestic limited liability company pursuant to Section 17052. Any foreign limited liability company that has made such an agreement with the Secretary of State shall not do business in this state except under the name agreed upon, as long as the agreement remains in effect. 17453. If the members of a foreign limited liability company residing in this state represent 25 percent or more of the voting interests of members of that limited liability company, those members shall be entitled to all information and inspection rights provided in Section 17106. 17454. If any statement in the application for registration of a foreign limited liability company was false when made or any statements made have become erroneous, the foreign limited liability company shall promptly file in the office of the Secretary of State an amendment to the application for registration, signed by a person with authority to do so under the laws of the state of its organization, amending the statement. 17455. A foreign limited liability company may cancel its registration by filing with the Secretary of State a certificate of cancellation signed by a person with authority to do so under the laws of the state of its organization. A cancellation does not terminate the authority of the Secretary of State to accept service of process on the foreign limited liability company with respect to causes of action arising out of the transaction of business in this state. 17456. (a) A foreign limited liability company 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. (b) Any foreign limited liability company 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). An action to recover this penalty may be brought, and any recovery shall be paid, as provided in Section 2258. (c) A member of a foreign limited liability company is not liable for the debts and obligations of the foreign limited liability company solely by reason of its having transacted business in this state without registration. (d) A foreign limited liability company, 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. 17457. The Attorney General may bring an action to restrain a foreign limited liability company from transacting intrastate business in this state in violation of this chapter. CHAPTER 11. CLASS ACTIONS AND DERIVATIVE ACTIONS 17500. Any member of a foreign or domestic limited liability company may bring a class action on behalf of all or a class of members to enforce any claim common to those members and any such action shall be governed by the law governing class actions generally, provided that in order to maintain the class action there shall be no requirement that the class be so numerous that joinder of all members of the class is impracticable. 17501. (a) No action shall be instituted or maintained in right of any domestic or foreign limited liability company by any member of the limited liability company unless both of the following conditions exist: (1) The plaintiff alleges in the complaint that plaintiff was a member of record, or beneficiary, at the time of the transaction or any part thereof of which plaintiff complains, or that plaintiff's interest thereafter devolved upon plaintiff by operation of law from a member who was a member at the time of the transaction or any part thereof complained of. Any member who does not meet these requirements may nevertheless be allowed in the discretion of the court to maintain the action on a preliminary showing to and determination by the court, by motion and after a hearing at which the court shall consider any evidence, by affidavit or testimony, as it deems material, of all of the following: (A) There is a strong prima facie case in favor of the claim asserted on behalf of the limited liability company. (B) No other similar action has been or is likely to be instituted. (C) The plaintiff acquired the interest before there was disclosure to the public or to the plaintiff of the wrongdoing of which plaintiff complains. (D) Unless the action can be maintained, the defendant may retain a gain derived from defendant's willful breach of a fiduciary duty. (E) The requested relief will not result in unjust enrichment of the limited liability company or any member of the limited liability company. (2) The plaintiff alleges in the complaint with particularity plaintiff's efforts to secure from the managers the action plaintiff desires or the reasons for not making that effort, and alleges further that plaintiff has either informed the limited liability company or the managers in writing of the ultimate facts of each cause of action against each defendant or delivered to the limited liability company or the managers a true copy of the complaint that plaintiff proposes to file. (b) In any action referred to in subdivision (a), at any time within 30 days after service of summons upon the limited liability company or upon any defendant who is a manager of the limited liability company or held that position at the time of the acts complained of, the limited liability company or the defendant may move the court for an order, upon notice and hearing, requiring the plaintiff to furnish security as hereinafter provided. The motion shall be based upon one or both of the following grounds: (1) That there is no reasonable possibility that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the limited liability company or its members. (2) That the moving party, if other than the limited liability company, did not participate in the transaction complained of in any capacity. The court, on application of the limited liability company or any defendant, may, for good cause shown, extend the 30-day period for an additional period not exceeding 60 days. (c) At the hearing upon any motion pursuant to subdivision (b), the court shall consider evidence, written or oral, by witnesses or affidavit, as may be material (1) to the ground upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys' fees, of the limited liability company and the moving party that will be incurred in the defense of the action. If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the nature and amount of security, not to exceed fifty thousand dollars ($50,000), to be furnished by the plaintiff for reasonable expenses, including attorneys' fees, that may be incurred by the moving party and the limited liability company in connection with the action. A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. The amount of the security may thereafter be increased or decreased in the discretion of the court upon a showing that the security provided has or may become inadequate or is excessive, but the court may not in any event increase the total amount of the security beyond fifty thousand dollars ($50,000) in the aggregate for all defendants. If the court, upon a motion, makes a determination that security shall be furnished by the plaintiff as to any one or more defendants, the action shall be dismissed as to that defendant or defendants, unless the security required by the court has been furnished within any reasonable time as may be fixed by the court. The limited liability company and the moving party shall have recourse to the security in the amount that the court determines upon the termination of the action. (d) If the plaintiff, either before or after a motion is made pursuant to subdivision (b), or any order or determination pursuant to that motion, posts good and sufficient bond or bonds in the aggregate amount of fifty thousand dollars ($50,000) to secure the reasonable expenses of the parties entitled to make the motion, the plaintiff shall be deemed to have complied with the requirements of this section and with any order for security made pursuant to this section. Any motion then pending shall be dismissed and no further or additional bond or other security shall be required. (e) If a motion is filed pursuant to subdivision (b), no pleadings need be filed by the limited liability company or any other defendant and the prosecution of the action shall be stayed until 10 days after the motion has been disposed of. CHAPTER 12. MERGER 17550. (a) The following entities may be merged pursuant to this chapter: (1) Two or more limited liability companies into one limited liability company. (2) One or more limited liability companies and one or more other business entities into one of those other business entities. (3) One or more limited liability companies and one or more other business entities into one limited liability company. (b) Notwithstanding this section, the merger of any number of limited liability companies with any number of other business entities may be effected only if the other business entities that are organized in California are authorized by the laws under which they are organized to effect the merger, and: (1) If a limited liability company is the surviving limited liability company, the foreign other business entities are not prohibited by the laws under which they are organized from effecting that merger. (2) If a foreign limited liability company or foreign other business entity is the survivor of the merger, the laws of the jurisdiction under which the survivor is organized authorize that merger. Notwithstanding the foregoing sentence, if one or more domestic corporations is also a party to the merger, the merger may be effected only if, with respect to any foreign other business entity that is a corporation, the foreign corporation is authorized by the laws under which it is organized to effect that merger. 17551. (a) Each limited liability company and other business entity that desires to merge shall approve an agreement of merger. The agreement of merger shall be approved by the vote of a majority in interest of the members of each constituent limited liability company, or such greater percentage of the voting interests of members as may be specified in the articles of organization or written operating agreement of that constituent limited liability company. Notwithstanding the previous sentence, if the members of any constituent limited liability company become personally liable for any obligations of a constituent limited liability company or constituent other business entity as a result of the merger, the principal terms of the agreement of merger shall be approved by all of the members of the constituent limited liability company, unless the agreement of merger provides that all members will have the dissenters' rights provided in Chapter 13 (commencing with Section 17600). The agreement of merger shall be approved on behalf of each constituent other business entity by those persons required to approve the merger by the laws under which it is organized. Other persons, including a parent of a constituent limited liability company, may be parties to the agreement of merger. The agreement of merger shall state: (1) The terms and conditions of the merger. (2) The name and place of organization of the surviving limited liability company or surviving other business entity, and of each disappearing limited liability company and disappearing other business entity. The agreement of merger may change the name of the surviving limited liability company, which new name may be the same as or similar to the name of a disappearing domestic or foreign limited liability company, subject to Section 17052. (3) The manner of converting the interests of each of the constituent limited liability companies into interests, shares, or other securities of the surviving limited liability company or surviving other business entity. If interests of any of the constituent limited liability companies are not to be converted solely into interests, shares, or other securities of the surviving limited liability company or surviving other business entity, the agreement of merger shall state the cash, property, rights, interests, or securities that the holders of the interests are to receive in exchange for the interests, that cash, property, rights, interests, or securities may be in addition to or in lieu of interests, shares, or other securities of the surviving limited liability company or surviving other business entity, or that the interests are canceled without consideration. (4) The amendments to the articles of organization of the surviving limited liability company, if applicable, to be effected by the merger, if any. (5) Any other details or provisions as are required by the laws under which any constituent other business entity is organized, including, if a domestic corporation is a party to the merger, subdivision (b) of Section 1113. (6) Any other details or provisions that are desired, including, without limitation, a provision for the treatment of fractional interests. (b) Each interest of the same class of any constituent limited liability company, other than an interest in another constituent limited liability company, that is being canceled and that is held by a constituent limited liability company or its parent or a limited liability company of which the constituent limited liability company is a parent, unless all members of the class consent, shall be treated equally with respect to any distribution of cash, property, rights, interests, or securities. Notwithstanding this subdivision, except in a merger of a limited liability company with a limited liability company in which it controls at least 90 percent of the membership interests entitled to vote with respect to the merger, the nonredeemable interests of a constituent limited liability company may be converted only into nonredeemable interests or securities of the surviving limited liability company or other business entity or a parent if a constituent limited liability company or a constituent other business entity or its parent owns, directly or indirectly, prior to the merger, interests of another constituent limited liability company or interests or securities of a constituent other business entity representing more than 50 percent of the interests or securities entitled to vote with respect to the merger of the other constituent limited liability company or constituent other business entity, or more than 50 percent of the voting power, as defined in Section 194.5, of a constituent other business entity that is a domestic corporation unless all of the members of the class consent. The provisions of this subdivision do not apply to any transaction if the commissioner has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142. (c) Notwithstanding its prior approval, an agreement of merger may be amended prior to the filing of the certificate of merger or the agreement of merger as provided in Section 17552 if the amendment is approved by the members of each constituent limited liability company in the same manner as required for approval of the original agreement of merger and, if the amendment changes any of the principal terms of the agreement of merger, the amendment is approved by each of the constituent other business entities in the same manner as required for approval of the original agreement of merger. (d) A merger may be abandoned by the members of a constituent limited liability company in the same manner as required for approval of the agreement of merger, subject to the contractual rights, if any, of third parties, including other constituent limited liability companies and constituent other business entities, at any time before the merger is effective. (e) An agreement of merger approved in accordance with subdivision (a) may effect any amendment to the operating agreement of any constituent limited liability company or effect the adoption of a new operating agreement for a constituent limited liability company if it is the surviving limited liability company in the merger. Any amendment to an operating agreement or adoption of a new operating agreement made pursuant to the foregoing sentence shall be effective at the effective time or date of the merger. Notwithstanding the above provisions of this subdivision, if a greater number of members is required to approve an amendment to the operating agreement of the constituent limited liability company than is required to approve the agreement of merger pursuant to subdivision (a), and the number of members that approve the agreement of merger is less than the number of members required to approve an amendment to the operating agreement of the constituent limited liability company, any amendment to the operating agreement or adoption of a new operating agreement of the surviving limited liability company made pursuant to the first sentence of this subdivision shall be effective only if the agreement of merger is approved by the number of members required to approve an amendment to the operating agreement of the constituent limited liability company. (f) The surviving limited liability company or surviving other business entity shall keep the agreement of merger at the office referred to in subdivision (a) of Section 17057 or at the business address specified in paragraph (5) of subdivision (a) of Section 17552, as applicable. Upon the request of a member of a constituent limited liability company or a holder of shares, interests, or other securities of a constituent other business entity, a manager or, if no managers have been elected, any member of the surviving limited liability company or a person with authority to do so on behalf of the surviving other business entity shall promptly deliver to the member or the holder of shares, interests, or other securities, at the expense of the surviving limited liability company or surviving other business entity, a copy of the agreement of merger. A waiver by a member or holder of shares, interests, or other securities of the rights provided in this subdivision shall be unenforceable. 17552. (a) If the surviving entity is a limited liability company or an other business entity (other than a corporation in a merger in which a domestic corporation is a constituent party), after approval of a merger by the constituent limited liability companies and any constituent other business entities, the constituent limited liability companies or constituent other business entities shall file a certificate of merger in the office of, and on a form prescribed by, the Secretary of State. The certificate of merger shall be executed and acknowledged by each domestic constituent limited liability company by all of the managers of the limited liability company, unless a lesser number is specified in the articles of organization or the operating agreement of the constituent limited liability company, and by each constituent foreign limited liability company and each constituent other business entity by those persons required to execute the certificate or agreement of merger by the laws under which the constituent foreign limited liability company or other business entity is organized. The certificate of merger shall set forth all of the following: (1) The names and the Secretary of State's file numbers, if any, of each of the constituent limited liability companies and constituent other business entities, separately identifying the disappearing limited liability companies and disappearing other business entities and the surviving limited liability company or surviving other business entity. (2) If a vote of the members was required under Section 17551, a statement setting forth the total number of outstanding interests of each class entitled to vote on the merger and that the principal terms of the agreement of merger were approved by a vote of the number of interests of each class that equaled or exceeded the vote required, specifying each class entitled to vote and the percentage vote required of each class. (3) If the surviving entity is a limited liability company and not an other business entity, any change required to the information set forth in the articles of organization of the surviving limited liability company resulting from the merger, including any change in the name of the surviving limited liability company resulting from the merger. The filing of a certificate of merger setting forth any changes to the articles of organization of the surviving limited liability company shall have the effect of the filing of an amendment to the articles of organization by the surviving limited liability company, and the surviving limited liability company need not file a certificate of amendment under Section 17054 to reflect those changes. (4) The future effective date or time (which shall be a date or time certain not more than 90 days subsequent to the date of filing) of the merger, if the merger is not to be effective upon the filing of the certificate of merger with the office of the Secretary of State. (5) If the surviving entity is an other business entity or a foreign limited liability company, the full name, type of entity, legal jurisdiction in which the entity was organized and by whose laws its internal affairs are governed, and the address of the principal place of business of the entity. (6) Any other information required to be stated in the certificate of merger by the laws under which each constituent other business entity is organized, including, if a domestic corporation is a party to the merger, paragraph (2) of subdivision (g) of Section 1113. If the surviving entity is a foreign limited liability company in a merger in which a domestic corporation is a disappearing other business entity, a copy of the agreement of merger and attachments as required under paragraph (1) of subdivision (g) of Section 1113 shall be filed at the same time as the filing of the certificate of merger. (b) If the surviving entity is a domestic corporation or a foreign corporation in a merger in which a domestic corporation is a constituent party, after approval of the merger by the constituent limited liability companies and constituent other business entities, the surviving corporation shall file in the office of the Secretary of State a copy of the agreement of merger and attachments required under paragraph (1) of subdivision (g) of Section 1113. The certificate of merger shall be executed and acknowledged by each domestic constituent limited liability company by all of the managers of the limited liability company unless a lesser number is specified in the articles of organization or the operating agreement of the domestic constituent limited liability company. (c) A certificate of merger, or the agreement of merger, as is applicable under subdivisions (a) or (b), shall have the effect of the filing of a certificate of cancellation of articles of organization for each disappearing limited liability company and no disappearing limited liability company need file a certificate of cancellation of articles of organization under Section 17356 as a result of the merger. (d) If a disappearing other business entity is a foreign corporation qualified to transact intrastate business in this state, a certificate of satisfaction of the Franchise Tax Board as required by Section 23334 of the Revenue and Taxation Code shall be filed with the certificate of merger or the agreement of merger, as is applicable under subdivision (a) or (b). By the filing of the certificate of merger or the agreement of merger, the foreign corporation shall automatically surrender its right to transact intrastate business. (e) No certificate of merger shall be filed, however, until there has been filed on behalf of each constituent entity that is taxed under the Bank and Corporation Tax Law, the existence of which is terminated by the merger, the certificate of satisfaction of the Franchise Tax Board that all taxes imposed by that law have been paid or secured. 17553. (a) Unless a future effective date or time is provided in the certificate of merger or in any agreement of merger required to be filed under Section 17552, in which event the merger shall be effective at that future effective date or time (which shall be a date or time certain not more than 90 days subsequent to the date of filing), a merger shall be effective upon the filing of the certificate of merger, or the agreement of merger, as is applicable under subdivision (a) or (b), in the office of the Secretary of State. (b) (1) For all purposes, a copy of the certificate of merger duly certified by the Secretary of State is conclusive evidence of the merger of (A) the constituent limited liability companies (either by themselves or together with constituent other business entities) into the surviving other business entity, or (B) the constituent limited liability companies or the constituent other business entities, or both, into the surviving limited liability company. (2) In a merger in which the surviving entity is a corporation in a merger in which a domestic corporation and a domestic limited liability company are parties to the merger, a copy of an agreement of merger certified on or after the effective date by an official having custody thereof has the same force in evidence as the original and, except as against the state, is conclusive evidence of the performance of all conditions precedent to the merger, the existence on the effective date of the surviving corporation, and the performance of the conditions necessary to the adoption of any amendment to the articles of incorporation of the surviving corporation, if applicable, contained in the agreement of merger. 17554. (a) Upon a merger of limited liability companies or limited liability companies and other business entities pursuant to this chapter, the separate existence of the disappearing limited liability companies and disappearing other business entities ceases and the surviving limited liability company or surviving other business entity shall succeed, without other transfer, act, or deed, to all the rights and property, whether real, personal, or mixed, of each of the disappearing limited liability companies and disappearing other business entities and shall be subject to all the debts and liabilities of each in the same manner as if the surviving limited liability company or surviving other business entity had itself incurred them. (b) All rights of creditors and all liens upon the property of each of the constituent limited liability companies and constituent other business entities shall be preserved unimpaired and may be enforced against the surviving limited liability company or the surviving other business entity to the same extent as if the debt, liability, or duty that gave rise to that lien had been incurred or contracted by it, provided that such liens upon the property of a disappearing limited liability company or disappearing other business entity shall be limited to the property affected thereby immediately prior to the time the merger is effective. (c) Any action or proceeding pending by or against any disappearing limited liability company or disappearing other business entity may be prosecuted to judgment, that shall bind the surviving limited liability company or surviving other business entity, or the surviving limited liability company or surviving other business entity may be proceeded against or be substituted in the disappearing limited liability company's or disappearing other business entity's place. (d) If a partnership is a party to a merger nothing in this chapter is intended to affect the liability a general partner of a disappearing partnership may have in connection with the debts and liabilities of the disappearing partnership existing prior to the time the merger is effective. 17555. (a) The merger of any number of domestic limited liability companies with any number of foreign limited liability companies or foreign other business entities shall be required to comply with Section 17550. (b) If the surviving entity is a domestic limited liability company or a domestic other business entity, the merger proceedings with respect to that limited liability company or other business entity and any domestic disappearing limited liability company shall conform to the provisions of this chapter governing the merger of domestic limited liability companies, but if the surviving entity is a foreign limited liability company or a foreign other business entity, then, subject to the requirements of subdivision (d) and Chapter 13 (commencing with Section 17600), with respect to any domestic constituent corporation, Section 1113 and Chapters 12 (commencing with Section 1200) and 13 (commencing with Section 1300) of Division 1 of Title 1, and with respect to any domestic constituent limited partnership, Article 7.6 (commencing with Section 15679.1) of Chapter 3 of Title 2, the merger proceedings may be in accordance with the laws of the state or place of organization of the surviving limited liability company or surviving other business entity. (c) If the surviving entity is a domestic limited liability company or domestic other business entity, other than a domestic corporation, a certificate of merger shall be filed as provided in subdivision (a) of Section 17552 and thereupon, subject to subdivision (a) of Section 17553, the merger shall be effective as to each domestic constituent limited liability company and domestic constituent other business entity. If the surviving entity is a domestic corporation, the agreement of merger with attachments shall be filed as provided in subdivision (b) of Section 17552, and thereupon, subject to subdivision (a) of Section 17553, the merger shall be effective as to each domestic constituent limited liability company and domestic constituent other business entity unless another effective date is provided for in Chapter 11 (commencing with Section 1100) of Division 1 of Title 1, with respect to any constituent corporation or any constituent other business entity. (d) If the surviving entity is a foreign limited liability company or foreign other business entity, the merger shall become effective in accordance with the laws of the jurisdiction in which the surviving limited liability company or surviving other business entity is organized; but the merger shall be effective as to any domestic disappearing limited liability company as of the time of effectiveness in the foreign jurisdiction upon the filing in this state of a certificate of merger or agreement of merger as provided in Section 17552. (e) If a merger described in subdivision (c) or (d) also includes a foreign disappearing limited liability company previously registered for the transaction of intrastate business in this state pursuant to Section 17451, the filing of the certificate of merger or agreement of merger, as applicable, automatically has the effect of a cancellation of registration for that foreign limited liability company pursuant to Section 17456 without the necessity of the filing of a certificate of cancellation. (f) The provisions of subdivision (b) of Section 17551 and Chapter 13 (commencing with Section 17600) apply to the rights of the members of any of the constituent limited liability companies that are domestic limited liability companies and of any domestic limited liability company that is a parent of any foreign constituent limited liability company. (g) If the surviving entity is a foreign limited liability company or foreign other business entity, the surviving entity shall file the following with the Secretary of State: (1) An agreement that it may be served in this state in a proceeding for the enforcement of an obligation of any constituent entity and in a proceeding to enforce the rights of any holder of a dissenting interest or dissenting shares in a constituent domestic limited liability company or domestic other business entity. (2) An irrevocable appointment of the Secretary of State as its agent for service of process, and an address to which process may be forwarded. (3) An agreement that it will promptly pay the holder of any dissenting interest or dissenting share in a constituent domestic limited liability company or domestic other business entity the amount to which that person is entitled under California law. 17556. Whenever a domestic or foreign limited liability company or other business entity having any real property in this state merges with another limited liability company or other business entity pursuant to the laws of this state or of the state or place in which any constituent limited liability company or constituent other business entity was organized, and the laws of the state or place of organization (including this state) of any disappearing limited liability company or disappearing other business entity provide substantially that the making and filing of the agreement of merger or certificate of merger vests in the surviving limited liability company or surviving other business entity all the real property of any disappearing limited liability company and disappearing other business entity, the filing for record in the office of the county recorder of any county in this state in which any of the real property of the disappearing limited liability company or disappearing other business entity is located of either of the documents specified in subdivision (a) or (b) shall evidence record ownership in the surviving limited liability company or surviving other business entity of all interest of the disappearing limited liability company or disappearing other business entity in and to the real property located in that county. (a) A certificate of merger certified by the Secretary of State, or any other certificate as may be prescribed by the Secretary of State. (b) A copy of the agreement of merger or certificate of merger, certified by the Secretary of State or an authorized public official of the state or place pursuant to the laws of which the merger is effected. CHAPTER 13. DISSENTING MEMBERS' RIGHTS 17600. (a) For purposes of this chapter, "reorganization" refers to any of the following: (1) A merger pursuant to Chapter 12 (commencing with Section 17550). (2) The acquisition by one limited liability company, in exchange in whole or part for its membership interests (or the membership interests or equity securities of a limited liability company or other business entity that is in control of the acquiring limited liability company), of membership interests of another limited liability company or other business entity if, immediately after the acquisition, the acquiring limited liability company has control of the other limited liability company or other business entity. (3) The acquisition by one limited liability company in exchange in whole or in part for its membership interests (or the membership interests or equity securities of a limited liability company or other business entity that is in control of the acquiring limited liability company) or for its debt securities (or debt securities of a limited liability company or other business entity that is in control of the acquiring limited liability company) that are not adequately secured and that have a maturity date in excess of five years after the consummation of the acquisition, or both, of all or substantially all of the assets of another limited liability company or other business entity. (b) For purposes of this chapter, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a limited liability company or other business entity. 17601. (a) If the approval of outstanding membership interests is required for a limited liability company to participate in a reorganization, pursuant to the operating agreement of the limited liability company, or otherwise, then each member of the limited liability company holding those membership interests may, by complying with this chapter, require the limited liability company to purchase for cash, at its fair market value, the interest owned by the member in the limited liability company, if the interest is a dissenting interest as defined in subdivision (b). The fair market value shall be determined as of the day before the first announcement of the terms of the proposed reorganization, excluding any appreciation or depreciation in consequence of the proposed reorganization unless exclusion would be inequitable. (b) As used in this chapter, "dissenting interest" means a membership interest that satisfies all of the following conditions: (1) The membership interest was outstanding on the date for the determination of members entitled to vote on the reorganization. (2) (A) The membership interest was not voted in favor of the reorganization, or (B) the membership interest was voted against the reorganization; provided, however, that subparagraph (A) rather than subparagraph (B) of this paragraph applies in any event where the approval for the proposed reorganization is sought by written consent rather than at a meeting. (3) That the member has demanded that the limited liability company purchase at its fair market value in accordance with Section 17602. (4) That the member submits for endorsement, if applicable, in accordance with Section 17603. (c) As used in this chapter, "dissenting member" means the recordholder of a dissenting interest, and includes an assignee of record of that interest. 17602. (a) If members have a right under Section 17601, subject to compliance with paragraphs (4) and (5) of subdivision (b) thereof, to require the limited liability company to purchase their membership interests for cash, that limited liability company shall mail to each member a notice of the approval of the reorganization by the requisite vote or consent of the members. This notice shall be mailed within 10 days after the date of the approval, accompanied by a copy of this section and Sections 17601, 17603, 17604, and 17605, a statement of the price determined by the limited liability company to represent the fair market value of its outstanding interests, a statement of the method of valuation employed, the latest available balance sheet of the limited liability company, the latest available income statement of the limited liability company, and a brief description of the procedure to be followed if the member desires to exercise the member's rights under those sections. The statement of price constitutes an offer by the limited liability company to purchase at the price stated any dissenting interests as defined in subdivision (b) of Section 17601, unless they lose their status as dissenting interests under Section 17610. (b) Any member who has a right to require the limited liability company to purchase the member's interest for cash under Section 17601, subject to compliance with paragraphs (4) and (5) of subdivision (b) thereof, and who desires the limited liability company to purchase that interest, shall make written demand upon the limited liability company for the purchase of the interest and the payment to the member in cash of its fair market value. The demand is not effective for any purpose unless it is received by the limited liability company or any transfer agent thereof within 30 days after the date on which notice of the approval of the reorganization by the requisite vote or consent of the members is mailed by the limited liability company to the members. (c) The demand shall state the number or amount of the dissenting member's interest in the limited liability company and shall contain a statement of what that member claims to be the fair market value of that interest on the day before the announcement of the proposed reorganization. The statement of fair market value constitutes an offer by the dissenting member to sell the interest at that price. 17603. Within 30 days after the date on which notice of the approval of the outstanding interests of the limited liability company is mailed to the dissenting member pursuant to subdivision (a) of Section 17602, the member shall submit to the limited liability company at its principal office or at the office of any transfer agent thereof, the following: (a) If the interest is evidenced by a certificate, the dissenting member's certificate representing the interest that the member demands that the limited liability company purchase, to be stamped or endorsed with a statement that the interest is a dissenting interest, or to be exchanged for certificates of appropriate denominations so stamped or endorsed. (b) If the interest is not evidenced by a certificate, written notice of the number or amount of interest that the dissenting member demands that the limited liability company purchase. Upon subsequent transfers of the dissenting interest on the books of the limited liability company, the new certificates or other written statement issued therefor shall bear a like statement, together with the name of the original holder of the dissenting interest. 17604. (a) If the limited liability company and the dissenting member agree that the member's interest is a dissenting interest and agree upon the price to be paid for the dissenting interest, the dissenting member is entitled to the agreed price with interest thereon at the legal rate on judgments from the date of consummation of the reorganization. All agreements fixing the fair market value of any dissenting member's interest as between the limited liability company and the member shall be in writing and filed in the records of the limited liability company. (b) Subject to the provisions of Section 17607, payment of the fair market value for a dissenting interest shall be made within 30 days after the amount thereof has been agreed upon or within 30 days after any statutory or contractual conditions to the reorganization are satisfied, whichever is later. In the case of dissenting interests evidenced by certificates of interest, payment shall be subject to surrender of the certificates of interest, unless provided otherwise by agreement. 17605. (a) If the limited liability company denies that a membership interest is a dissenting interest, or the limited liability company and a dissenting member fail to agree upon the fair market value of a dissenting interest, then the member or any interested limited liability company, within six months after the date on which notice of the approval of the reorganization by the requisite vote or consent of the members was mailed to the member, but not thereafter, may file a complaint in the superior court of the proper county to determine whether the interest is a dissenting interest, or the fair market value of the dissenting interest, or both, or to intervene in any action pending on such a complaint. (b) Two or more dissenting members may join as plaintiffs or be joined as defendants in any action and two or more actions may be consolidated. (c) On the trial of the action, the court shall determine the issues. If the status of the membership interest as a dissenting interest is an issue, the court shall first determine that issue. If the fair market value of the dissenting interest is an issue, the court shall determine, or shall appoint one or more impartial appraisers to determine, the fair market value of the dissenting interest. 17606. (a) If the court appoints an appraiser or appraisers, they shall determine the fair market value per interest of the outstanding membership interests of the limited liability company, by class if necessary. Within the time fixed by the court, the appraisers, or a majority of them, shall make and file a report in the office of the clerk of the court. On the motion of any party, the report shall be submitted to the court and considered along with any additional evidence as the court considers relevant. If the court finds the report reasonable, the court may confirm it. (b) If a majority of the appraisers appointed fail to make and file a report within 30 days from the date of their appointment, or within such further time as may be allowed by the court, or the report is not confirmed by the court, the court shall determine the fair market value per interest of the outstanding membership interests of the limited liability company, by class if necessary. (c) Subject to Section 17607, judgment shall be rendered against the limited liability company for payment of an amount equal to the fair market value, as determined by the court, of each dissenting interest that any dissenting member who is a party, or has intervened, is entitled to require the limited liability company to purchase, with interest thereon at the legal rate on judgments from the date of consummation of the reorganization. (d) Any judgment shall be payable forthwith, provided, however, that with respect to membership interests evidenced by transferable certificates of interest, only upon the endorsement and delivery to the limited liability company of those certificates representing the interest described in the judgment. Any party may appeal from the judgment. (e) The costs of the action, including reasonable compensation for the appraisers, to be fixed by the court, shall be assessed or apportioned as the court considers equitable, but, if the appraisal exceeds the price offered by the limited liability company, the limited liability company shall pay the costs, including, in the discretion of the court, if the value awarded by the court for the dissenting interest is more than 125 percent of the price offered by the limited liability company under subdivision (a) of Section 17602, attorneys' fees and fees of expert witnesses. 17607. To the extent that the payment to dissenting members of the fair market value of their dissenting interests would require the dissenting members to return that payment or a portion thereof by reason of subdivision (f) of Section 17254 or the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code), then that payment or portion thereof shall not be made and the dissenting members shall become creditors of the limited liability company for the amount not paid, together with interest thereon at the legal rate on judgments until the date of payment. The dissenting members shall be subordinate to all other creditors in any proceeding relating to the winding up and dissolution of the limited liability company. 17608. Any cash distributions made by a limited liability company to a dissenting member after the date of consummation of the reorganization, but prior to any payment by the limited liability company for the dissenting member's interest, shall be credited against the total amount to be paid by the limited liability company for that dissenting interest. 17609. Except as expressly limited by this chapter, dissenting members shall continue to have all the rights and privileges incident to their interests immediately prior to the reorganization, including limited liability, until payment by the limited liability company for their dissenting interests. A dissenting member may not withdraw a demand for payment unless the limited liability company consents thereto. 17610. A dissenting interest loses its status as a dissenting interest and the holder thereof ceases to be a dissenting member and ceases to be entitled to require the limited liability company to purchase the interest upon the occurrence of any of the following: (a) The limited liability company abandons the reorganization. Upon abandonment of the reorganization, the limited liability company shall pay, on demand, to any dissenting member who has initiated proceedings in good faith under this chapter, all reasonable expenses incurred in those proceedings and reasonable attorneys' fees. (b) The interest is transferred prior to its submission for endorsement in accordance with Section 17603. (c) The dissenting member and the limited liability company do not agree upon the status of the interest as a dissenting interest or upon the purchase price of the dissenting interest, and neither files a complaint nor intervenes in a pending action, as provided in Section 17605, within six months after the date upon which notice of the approval of the reorganization by the requisite vote or consent of members was mailed to the member. (d) The dissenting member, with the consent of the limited liability company, withdraws that member's demand for purchase of the dissenting interest. 17611. If litigation is instituted to test the sufficiency or regularity of the vote of the members in authorizing a reorganization, any proceedings under Sections 17605 and 17606 shall be suspended until final determination of that litigation. 17612. (a) Subject to subdivisions (b) and (c), this chapter applies to the following: (1) A domestic limited liability company. (2) A foreign limited liability company if members holding more than 50 percent of the voting interests of the foreign limited liability company reside in this state. (b) This chapter does not apply to membership interests governed by operating agreements whose terms and provisions specifically set forth the amount to be paid in respect of those interests in the event of a reorganization of the limited liability company. (c) This chapter shall not apply to any limited liability company with 35 or fewer members if all the members have waived the application of this chapter in writing, whether in an operating agreement or otherwise, provided that if, at the time of the reorganization, the limited liability company had more than 35 members, any waiver shall be ineffective as to that reorganization. 17613. (a) No member of a limited liability company who has a right under this chapter to demand payment of cash for the interest owned by that member in a limited liability company shall have any right at law or in equity to attack the validity of the reorganization, or to have the reorganization set aside or rescinded, except (1) in an action to test whether the vote or consent of members required to authorize or approve the reorganization has been obtained in accordance with the procedures established therefor by the operating agreement of the limited liability company, or if there is no written operating agreement, this chapter, or (2) when the limited liability company action is fraudulent with respect to the complaining member or the limited liability company. (b) If one of the parties to a reorganization is directly or indirectly controlled by, or under common control with, another party to the reorganization, subdivision (a) shall not apply to any member of the controlled party who has not demanded payment of cash for the member's interest pursuant to this chapter; but if the member institutes any action to attack the validity of the reorganization or to have the reorganization set aside or rescinded, the member shall not thereafter have any right to demand payment of cash for that member's interest pursuant to this chapter. (c) If one of the parties to a reorganization is directly or indirectly controlled by, or under common control with, another party to the reorganization, then, in any action to attack the validity of the reorganization or to have the reorganization set aside or rescinded, (1) a party to a reorganization that controls another party to a reorganization shall have the burden of proving that the transaction is just and reasonable as to the members of the controlled party, and (2) a person who controls two or more parties to a reorganization shall have the burden of proving that the transaction is just and reasonable as to the members of any party so controlled. (d) Subdivisions (b) and (c) shall not apply if a majority in interest of the members other than members who are directly or indirectly controlled by, or under common control with, another party to the reorganization approve or consent to the reorganization. (e) This section shall not prevent a member of a limited liability company that is a party to a reorganization from bringing an action against the limited liability company or any manager, officer, employee, or agent of the limited liability company, at law or in equity, as to any matters, including, without limitation, an action for breach of fiduciary obligation or fraud, other than to attack the validity of the reorganization or to have the reorganization set aside or rescinded. CHAPTER 14. MISCELLANEOUS PROVISIONS 17650. (a) If a manager or member required by this title to execute or file any document fails, after demand, to do so within a reasonable time or refuses to do so, any other manager or member, or any person appointed by a court of competent jurisdiction, may prepare, execute, and file that document with the Secretary of State. (b) If there is any dispute concerning the filing of a document, or the failure to file a document, any manager or member may petition the superior court to direct the execution of the document. (c) If the court finds that it is proper for the document to be executed and that any person so designated has failed or refused to execute the document, or if the court determines that any document should be filed, it shall order a party to file the document, on a form prescribed by the Secretary of State if appropriate, as ordered by the court. (d) In any action under this section, if the court finds the failure of the manager or member to comply with the requirement to file any document to have been without justification, the court may award an amount sufficient to reimburse the managers or members bringing the action for the reasonable expenses incurred by them, including attorneys' fees, in connection with the action or proceeding. (e) Any member who is not a manager, or any person filing any document under this section, shall state the statutory authority after the signature on the appropriate document. 17651. (a) Every limited liability company that neglects, fails, or refuses to keep or cause to be kept or maintained the documents, books, and records required by Section 17058 to be kept or maintained shall be subject to a penalty of twenty-five dollars ($25) for each day that the failure or refusal continues, beginning 30 days after receipt of written request by any member that the duty be performed, up to a maximum of one thousand five hundred dollars ($1,500). The penalty shall be paid to the member or members jointly making the request for performance of the duty and damaged by the neglect, failure, or refusal, if suit therefor is commenced within 90 days after the written request is made; but the maximum daily penalty because of failure to comply with any number of separate requests made on any one day or for the same act shall be two hundred fifty dollars ($250). (b) Upon the failure of a limited liability company, or a foreign limited liability company registered to transact intrastate business in this state, to file the statement required by Section 17060, the Secretary of State shall mail a notice of that delinquency to the limited liability company or foreign limited liability company. The notice shall also contain information concerning the application of this section, advise the limited liability company or foreign limited liability company of the penalty imposed by this subdivision for failure to timely file the required statement after notice of delinquency has been mailed by the Secretary of State, and shall advise the limited liability company or foreign limited liability company of its right to request relief from the Secretary of State because of reasonable cause or unusual circumstances that justify the failure to file. If, within 60 days after the mailing of the notice of delinquency, a statement pursuant to Section 17060 has not been filed by the limited liability company or foreign limited liability company, the limited liability company or foreign limited liability company shall be subject to a penalty of two hundred fifty dollars ($250). 17652. Any penalty prescribed by Section 17651 shall be in addition to any remedy by injunction or action for damages or by writ of mandate for the nonperformance of acts and duties enjoined by law upon the limited liability company or its managers. The court in which an action for any penalty is brought may reduce, remit or suspend the penalty on any terms and conditions as it may deem reasonable when it is made to appear that the neglect, failure or refusal was inadvertent or excusable. 17653. (a) Upon the failure of a limited liability company to file the statement required by Section 17060, the Secretary of State shall mail a notice of the delinquency to the limited liability company. The notice shall also contain information concerning the application of this section, advise the limited liability company of the penalty imposed by Section 19141 of the Revenue and Taxation Code for failure to timely file the required statement after notice of delinquency has been mailed by the Secretary of State, and shall advise the limited liability company of its right to request relief from the Secretary of State because of reasonable cause or unusual circumstances that justify such failure to file. If, within 60 days after the mailing of the notice of delinquency, a statement pursuant to Section 17060 has not been filed by the limited liability company, the Secretary of State shall certify the name of such limited liability company to the Franchise Tax Board. (b) Upon certification pursuant to subdivision (a), the Franchise Tax Board shall assess against the limited liability company the penalty provided in Section 19141 of the Revenue and Taxation Code. (c) The penalty provided by Section 19141 shall not apply to a limited liability company that on or prior to the date of certification pursuant to subdivision (a) has dissolved or has been merged into another limited liability company or other business entity. (d) The penalty herein provided shall not apply and the Secretary of State need not mail a notice of delinquency to a limited liability company the powers, rights and privileges of which have been suspended by the Franchise Tax Board pursuant to Section 23301, 23301.5 or 23775 of the Revenue and Taxation Code on or prior to, and remain suspended on, the last day of the filing period pursuant to Section 17060. The Secretary of State need not mail a form pursuant to Section 17060 to a limited liability company the powers, rights and privileges of which have been so suspended by the Franchise Tax Board on or prior to, and remain suspended on, the day the Secretary of State prepares the forms for mailing. (e) If, after certification pursuant to subdivision (a) the Secretary of State finds (1) the required statement was filed or the required fee was paid before the expiration of the 60-day period after mailing of the notice of delinquency, or (2) the failure to provide notice of delinquency was due to an error of the Secretary of State, the Secretary of State shall promptly decertify the name of the limited liability company to the Franchise Tax Board. The Franchise Tax Board shall then promptly abate any penalty assessed against the limited liability company pursuant to Section 19141 of the Revenue and Taxation Code. (f) If the Secretary of State determines that the failure of a limited liability company to file the statement required by Section 17060, or to pay the fee imposed by Section 23092 of the Revenue and Taxation Code, is excusable because of reasonable cause or unusual circumstances that justify such failure, the Secretary of State may waive the penalty imposed by this section and by Section 19141 of the Revenue and Taxation Code, in which case the Secretary of State shall not certify the name of the limited liability company to the Franchise Tax Board, or if already certified, the Secretary of State shall promptly decertify the name of the limited liability company. 17654. (a) A limited liability company that (1) fails to file a statement pursuant to Section 17060 for an applicable filing period, (2) has not filed a statement pursuant to Section 17060 during the preceding 24 months, and (3) was certified for penalty pursuant to Section 17653 for the same filing period of the prior year, shall be subject to suspension pursuant to this section rather than to penalty pursuant to Section 17653. (b) When subdivision (a) is applicable, the Secretary of State shall mail a notice to the limited liability company informing the limited liability company that its powers, rights, and privileges will be suspended after 60 days if it fails to file a statement pursuant to Section 17060. (c) After the expiration of the 60-day period without any statement filed pursuant to Section 17060, the Secretary of State shall notify the Franchise Tax Board of the suspension, and mail a notice of the suspension to the limited liability company and thereupon, except for the purpose of amending the articles of organization to set forth a new name, the powers, rights, and privileges of the limited liability company are suspended. (d) A statement pursuant to Section 17060 may be filed notwithstanding suspension of the powers, rights, and privileges pursuant to this section or Section 23301 or 23301.5 of the Revenue and Taxation Code. Upon the filing of a statement pursuant to Section 17060 by a limited liability company that has suffered suspension pursuant to this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the limited liability company may thereupon, in accordance with Section 23305a of the Revenue and Taxation Code, be relieved from suspension unless the limited liability company is held in suspension by the Franchise Tax Board by reason of Section 23301 or 23301.5 of the Revenue and Taxation Code. 17655. (a) Sections 17653 and 17654 apply to foreign limited liability companies with respect to the statements required to be filed by Section 17060. For this purpose, the suspension of the powers, rights, and privileges of a domestic limited liability company shall mean the forfeiture of the exercise of the powers, rights, and privileges of a foreign limited liability company in this state. (b) The forfeiture of the exercise of the powers, rights, and privileges of a foreign limited liability company in this state as used in subdivision (a) does not prohibit the transaction of business in this state by a foreign limited liability company if the business transacted subsequent to the forfeiture would not, considered as an entirety, require the foreign limited liability company to obtain a certificate of registration pursuant to subdivision (ao) of Section 17001 and Section 17452. CHAPTER 15. FEE PROVISIONS 17700. For services performed, the Secretary of State shall charge and collect the fees fixed in this chapter. 17701. (a) The fee for issuing a certificate of reservation of limited liability company name is ten dollars ($10). (b) The fee for filing articles of organization of a limited liability company is eighty dollars ($80). (c) The fee for filing an application for registration as a foreign limited liability company is eighty dollars ($80). (d) The fee for filing a certificate of amendment to the articles of organization of a limited liability company is thirty dollars ($30). (e) The fee for filing restated articles of organization of a limited liability company is thirty dollars ($30). (f) The fee for filing an amendment to the application for registration as a foreign limited liability company is thirty dollars ($30). (g) The fee for filing a certificate of correction for a limited liability company pursuant to Section 17055 is thirty dollars ($30). (h) The fee for filing a certificate of continuation for a limited liability company after a certificate of dissolution has been filed is thirty dollars ($30). (i) For purposes of the merger of a limited liability company solely with one or more other limited liability companies (not including the merger of one or more limited liability companies with one or more other business entities), the fee for filing a certificate of merger pursuant to Section 17552 is eighty dollars ($80) for each merger transaction, regardless of the number of constituent limited liability companies. (j) For purposes of the merger of one or more limited liability companies with one or more other business entities, the fee for filing all merger documents required by the Corporations Code is one hundred fifty dollars ($150) for any or all of the filings for each merger transaction, regardless of the number of constituent limited liability companies and constituent other business entities. (k) The fee for filing the annual or current statement of information of a limited liability company or of a foreign limited liability company pursuant to Section 17060 is five dollars ($5). (l) There is no fee for filing a certificate of dissolution or a certificate of cancellation of articles of organization for purposes of the dissolution of a limited liability company. (m) There is no fee for filing a certificate of cancellation for purposes of the cancellation of registration of a foreign limited liability company. (n) Unless another fee is specified by law or the law specifies that no fee is to be charged, the fee for filing any instrument by or on behalf of a limited liability company is thirty dollars ($30). 17702. There is no fee for filing a statement of resignation as an agent pursuant to paragraph (2) of subdivision (d) of Section 17061 for an individual or entity previously designated as an agent for service of process by a limited liability company. 17703. The fee for furnishing a copy of an annual or current statement filed by a limited liability company or a foreign limited liability company pursuant to Section 17060 is five dollars ($5). 17704. Unless another fee is specified by law or the law specifies that no fee is to be charged, the fee for acceptance of copies of process against a limited liability company is fifty dollars ($50) for each limited liability company upon whom service is sought. 17705. The sum of two hundred thirty-four thousand dollars ($234,000) is hereby appropriated to the Secretary of State from the Secretary of State's Business Fees Fund for expenditure in the 1994-95 fiscal year, to be expended on the initial program costs and to initiate the development of an automated system to support the program. SEC. 28. Section 25013 of the Corporations Code is amended to read: 25013. "Person" means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government, or a political subdivision of a government. SEC. 29. Section 25019 of the Corporations Code is amended to read: 25019. "Security" means any note; stock; treasury stock; membership in an incorporated or unincorporated association; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; collateral trust certificate; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; interest in a limited liability company and any class or series of such interests (including any fractional or other interest in such interest), except a membership interest in a limited liability company in which the person claiming this exception can prove that all of the members are actively engaged in the management of the limited liability company; provided that evidence that members vote or have the right to vote, or the right to information concerning the business and affairs of the limited liability company, or the right to participate in management, shall not establish, without more, that all members are actively engaged in the management of the limited liability company; certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under such a title or lease; put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof); or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; any beneficial interest or other security issued in connection with a funded employees' pension, profit sharing, stock bonus, or similar benefit plan; or, in general, any interest or instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. All of the foregoing are securities whether or not evidenced by a written document. "Security" does not include: (1) any beneficial interest in any voluntary inter vivos trust which is not created for the purpose of carrying on any business or solely for the purpose of voting, or (2) any beneficial interest in any testamentary trust, or (3) any insurance or endowment policy or annuity contract under which an insurance company admitted in this state promises to pay a sum of money (whether or not based upon the investment performance of a segregated fund) either in a lump sum or periodically for life or some other specified period, or (4) any franchise subject to registration under the Franchise Investment Law, or exempted from such registration by Section 31100 or 31101 of that law. SEC. 30. Section 1220 of the Financial Code is amended to read: 1220. For the purpose of this article: (a) "Obligations" means the total sums for the payment of which a person is obligated, primarily or secondarily, to a commercial bank. (b) Obligations of a person include obligations of others to a commercial bank arising out of loans made by the bank for the benefit of the person. (c) Obligations of an individual include the obligations of a partnership or association for which obligations the individual is liable. (d) Obligations of a partnership include the obligations of its members who are liable for its obligations. (e) Obligations of a corporation include the obligations of all subsidiaries in which it owns or controls a majority interest, except to the extent and under such restrictions as the superintendent may prescribe in specific instances upon special application made by any bank prior to the creation of the obligations. (f) Obligations of a sovereign government or agency include the obligations of instrumentalities or political subdivisions of the government or agency, except to the extent and under such restrictions as the superintendent may prescribe in specific instances upon special application made by any bank prior to the creation of the obligations. (g) Obligations of a limited liability company include the obligations of all subsidiaries in which it owns or controls a majority interest, except to the extent and under any restrictions the superintendent may prescribe in specific instances upon special application made by any bank prior to the creation of the obligations. SEC. 31. Section 8670.3 of the Government Code is amended to read: 8670.3. Unless the context requires otherwise, the following definitions shall govern the construction of this chapter: (a) "Administrator" means the administrator for oil spill response appointed by the Governor pursuant to Section 8670.4. (b) "Barges" means any vessel that carries oil in commercial quantities as cargo but is not equipped with a means of self-propulsion. (c) (1) "Best achievable protection" means that the highest level of protection which can be achieved through both the use of the best achievable technology and those manpower levels, training procedures, and operational methods which provide the greatest degree of protection achievable. The administrator's determination of best achievable protection shall be guided by the critical need to protect valuable coastal resources and marine waters, while also considering (1) the protection provided by the measures, (2) the technological achievability of the measures, and (3) the cost of the measures. (2) It is not the intent of the Legislature that the administrator use a cost-benefit or cost-effectiveness analysis or any particular method of analysis in determining which measures to require. Instead, it is the intent of the Legislature that the administrator give reasonable consideration to the protection provided by the measures, the technological achievability of the measures, and the cost of the measures when establishing the requirements to provide the best achievable protection for coastal and marine resources. (d) "Best achievable technology" means that technology which provides the greatest degree of protection taking into consideration (1) processes which are being developed, or could feasibly be developed anywhere in the world, given overall reasonable expenditures on research and development, and (2) processes which are currently in use anywhere in the world. In determining what is best achievable technology, the administrator shall consider the effectiveness and engineering feasibility of the technology. (e) "Local government" means any chartered or general law city, chartered or general law county, or any city and county. (f) "Marine facility" means any facility of any kind, other than a vessel, which is or was used for the purposes of exploring for, drilling for, producing, storing, handling, transferring, processing, refining, or transporting oil and is located in marine waters, or is located where a discharge could impact marine waters unless the facility (1) is subject to Chapter 6.67 (commencing with Section 25270) or Chapter 6.75 (commencing with Section 25299.10) of Division 20 of the Health and Safety Code or (2) is placed on a farm, nursery, logging site, or construction site and does not exceed 20,000 gallons in a single storage tank. For the purposes of this chapter, a drill ship, semisubmersible drilling platform, jack-up type drilling rig, or any other floating or temporary drilling platform is a "marine facility." For the purposes of this chapter, a small craft refueling dock is not a "marine facility." (g) "Marine terminal" means any marine facility used for transferring oil to or from tankers or barges. For the purposes of this section, a marine terminal includes all piping not integrally connected to a tank facility as defined in subdivision (k) of Section 25270.2 of the Health and Safety Code. (h) "Marine waters" means those waters subject to tidal influence, except for waters in the Sacramento-San Joaquin Delta upstream from a line running north and south through the point where Contra Costa, Sacramento, and Solano Counties meet. (i) "Nonpersistent oil" means a petroleum-based oil, such as gasoline, diesel, or jet fuel, which evaporates relatively quickly. Specifically, it is an oil with hydrocarbon fractions, at least 50 percent of which, by volume, distills at a temperature of 645( Fahrenheit, and at least 95 percent of which, by volume, distills at a temperature of 700( Fahrenheit. (j) "Oil" means any kind of petroleum, liquid hydrocarbons, or petroleum products or any fraction or residues therefrom, including, but not limited to, crude oil, bunker fuel, gasoline, diesel fuel, aviation fuel, oil sludge, oil refuse, oil mixed with waste, and liquid distillates from unprocessed natural gas. (k) "Onshore facility" means any facility of any kind which is located entirely on lands not covered by marine waters. (l) (1) "Owner" or "operator" means any of the following: (A) In the case of a vessel, any person who owns, has an ownership interest in, operates, charters by demise, or leases, the vessel. (B) In the case of a marine facility, any person who owns, has an ownership interest in, or operates the marine facility. (C) Except as provided in subparagraph (D), in the case of any vessel or marine facility, title or control of which was conveyed due to bankruptcy, foreclosure, tax delinquency, abandonment, or similar means to an entity of state or local government, any person who owned, held an ownership interest in, operated, or otherwise controlled activities concerning the vessel or facility immediately beforehand. (D) An entity of the state or local government which acquired ownership or control of a vessel or marine facility, when the entity of the state or local government has caused or contributed to a spill or discharge of oil into marine waters. (2) "Owner" or "operator" does not include a person who, without participating in the management of a vessel or marine facility, holds indicia of ownership primarily to protect his or her security interest in the vessel or marine facility. (3) "Operator" does not include any person who owns the land underlying a marine facility or the facility itself if the person is not involved in the operations of the facility. (m) "Person" means any individual, trust, firm, joint stock company, or corporation, including, but not limited to, a government corporation, partnership, limited liability company, and association. "Person" also includes any city, county, city and county, district, and the state or any department or agency thereof, and the federal government, or any department or agency thereof, to the extent permitted by law. (n) "Pipeline" means any pipeline used at any time to transport oil. (o) "Responsible party" or "party responsible" means any of the following: (1) The owner or transporter of oil or a person or entity accepting responsibility for the oil. (2) The owner, operator, or lessee of, or person who charters by demise, any vessel or marine facility, or a person or entity accepting responsibility for the vessel or marine facility. (p) "Small craft refueling dock" means a facility that dispenses nonpersistent oil to small craft having tank storage capacity not exceeding 20,000 gallons in any single storage tank. (q) "Spill" or "discharge" means any release of at least one barrel (42 gallons) of oil into marine waters which is not authorized by any federal, state, or local government entity. (r) "State Interagency Oil Spill Committee" means the committee established pursuant to Article 3.5 (commencing with Section 8574.1) of Chapter 7. (s) "State oil spill contingency plan" means the state oil spill contingency plan prepared pursuant to Article 3.5 (commencing with Section 8574.1) of Chapter 7. (t) "Tanker" means any self-propelled, waterborne vessel, constructed or adapted for the carriage of oil in bulk or in commercial quantities as cargo. (u) "Vessel" means a tanker or barge as defined in this section. SEC. 32. Section 12164.7 is added to the Government Code, to read: 12164.7. The Secretary of State may cause to be returned to the limited liability company to which they relate, or to be destroyed, the articles of organization and other limited liability company records filed in his or her office by any limited liability company, domestic or foreign, if the Secretary of State complies with both of the following requirements: (a) He or she maintains for the use of the public a microphotographic film print or copy of each document, record, instrument, or paper so returned or destroyed, prepared in accordance with the procedure specified in Sections 1531 and 1551 of the Evidence Code. (b) He or she promptly seals and stores at least one original negative of each microphotographic film in the manner and place as reasonably to ensure its preservation indefinitely against loss, theft, defacement, or destruction. SEC. 33. Section 12185 of the Government Code is amended to read: 12185. The fee for filing a designation of agent for or on behalf of any person, partnership, or firm, but not including a corporation or a limited liability company, is twenty-five dollars ($25). SEC. 34. Section 25118 of the Health and Safety Code is amended to read: 25118. "Person" means an individual, trust, firm, joint stock company, business concern, partnership, limited liability company, association, and corporation, including, but not limited to, a government corporation. "Person" also includes any city, county, district, commission, the state or any department, agency, or political subdivision thereof, any interstate body, and the federal government or any department or agency thereof to the extent permitted by law. SEC. 35. Section 25281 of the Health and Safety Code, as amended by Chapter 432 of the Statutes of 1993, is amended to read: 25281. For purposes of this chapter, the following definitions apply: (a) "Automatic line leak detector" means any method of leak detection, as determined in regulations adopted by the board, which alerts the owner or operator of an underground storage tank to the presence of a leak. "Automatic line leak detector" includes, but is not limited to, any device or mechanism which alerts the owner or operator of an underground storage tank to the presence of a leak by restricting or shutting off the flow of hazardous substance through piping, or by triggering an audible or visual alarm, and which detects leaks of three gallons or more per hour at 10 pounds per square inch line pressure within one hour. (b) "Board" means the State Water Resources Control Board. "Regional board" means a California regional water quality control board. (c) "Department" means the Department of Toxic Substances Control. (d) "Facility" means any one, or combination of, underground storage tanks used by a single business entity at a single location or site. (e) "Federal act" means Subchapter IX (commencing with Section 6991) of Chapter 82 of Title 42 of the United States Code, as added by the Hazardous and Solid Waste Amendments of 1984 (P.L. 98-616), or as it may subsequently be amended or supplemented. (f) "Hazardous substance" means both of the following: (1) All of the following liquid and solid substances, unless the department, in consultation with the board, determines that the substance could not adversely affect the quality of the waters of the state: (A) Substances on the list prepared by the Director of Industrial Relations pursuant to Section 6382 of the Labor Code. (B) Hazardous substances, as defined in Section 25316. (C) Any substance or material which is classified by the National Fire Protection Association (NFPA) as a flammable liquid, a class II combustible liquid, or a class III-A combustible liquid. (2) Any regulated substance, as defined in subsection (2) of Section 6991 of Title 42 of the United States Code, as that section reads on January 1, 1989, or as it may subsequently be amended or supplemented. (g) "Local agency" means the department, office, or other agency of a county or city designated pursuant to Section 25283. (h) "Operator" means any person in control of, or having daily responsibility for, the daily operation of an underground storage tank system. (i) "Owner" means the owner of an underground storage tank. (j) "Person" means an individual, trust, firm, joint stock company, corporation, including a government corporation, partnership, limited liability company, or association. "Person" also includes any city, county, district, the state, any department or agency thereof, or the United States to the extent authorized by federal law. (k) "Pipe" means any pipeline or system of pipelines which is used in connection with the storage of hazardous substances and which is not intended to transport hazardous substances in interstate or intrastate commerce or to transfer hazardous materials in bulk to or from a marine vessel. (l) "Primary containment" means the first level of containment, such as the portion of a tank which comes into immediate contact on its inner surface with the hazardous substance being contained. (m) "Product tight" means impervious to the substance which is contained, or is to be contained, so as to prevent the seepage of the substance from the primary containment. To be product tight, the tank shall not be subject to physical or chemical deterioration by the substance which it contains over the useful life of the tank. (n) "Release" means any spilling, leaking, emitting, discharging, escaping, leaching, or disposing from an underground storage tank into or on the waters of the state, the land, or the subsurface soils. (o) "Secondary containment" means the level of containment external to, and separate from, the primary containment. (p) "Single walled" means construction with walls made of only one thickness of material. For the purposes of this chapter, laminated, coated, or clad materials are considered single walled. (q) "Special inspector" means a professional engineer, registered pursuant to Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code, who is qualified to attest, at a minimum, to structural soundness, seismic safety, the compatibility of construction materials with contents, cathodic protection, and the mechanical compatibility of the structural elements of underground storage tanks. (r) "Storage" or "store" means the containment, handling, or treatment of hazardous substances, either on a temporary basis or for a period of years. "Storage" or "store" does not mean the storage of hazardous wastes in an underground storage tank if the person operating the tank has been issued a hazardous waste facilities permit by the department pursuant to Section 25200 or granted interim status under Section 25200.5. (s) "SWEEPS" means the Statewide Environmental Evaluation and Planning System administered by the California Association of Environmental Health Administrators. (t) "Tank" means a stationary device designed to contain an accumulation of hazardous substances which is constructed primarily of nonearthen materials (e.g. wood, concrete, steel, plastic) which provides structural support. (u) "Tank integrity test" means a test method capable of detecting an unauthorized release from an underground storage tank consistent with the minimum standards adopted by the board. (v) "Tank tester" means an individual who performs tank integrity tests on underground storage tanks. (w) "Unauthorized release" means any release of any hazardous substance which does not conform to this chapter, including, but not limited to, an unauthorized release specified in Section 25295.5, unless this release is authorized by the board or a regional board pursuant to Division 7 (commencing with Section 13000) of the Water Code. (x) (1) "Underground storage tank" means any one or combination of tanks, including pipes connected thereto, which is used for the storage of hazardous substances and which is substantially or totally beneath the surface of the ground. "Underground storage tank" does not include any of the following: (A) A tank with a capacity of 1,100 gallons or less which is located on a farm and which stores motor vehicle fuel used primarily for agricultural purposes and not for resale. (B) A tank which is located on a farm or at the residence of a person, which has a capacity of 1,100 gallons or less, and which stores home heating oil for consumptive use on the premises where stored. (C) Structures, such as sumps, separators, storm drains, catch basins, oil field gathering lines, refinery pipelines, lagoons, evaporation ponds, well cellars, separation sumps, lined and unlined pits, sumps and lagoons. Sumps which are a part of a monitoring system required under Section 25291 or 25292 and sumps or other structures defined as underground storage tanks under the federal act are not exempted by this subparagraph. (D) Until January 1, 1996, a tank holding hydraulic fluid for a closed loop mechanical system that uses compressed air or hydraulic fluid to operate lifts, elevators, and other similar devices. (2) Structures identified in subparagraphs (C) and (D) of paragraph (1) may be regulated by the board and any regional board pursuant to the Porter-Cologne Water Quality Control Act (Division 7 (commencing with Section 13000) of the Water Code) to ensure that they do not pose a threat to water quality. (y) "Underground tank system" or "tank system" means an underground storage tank, connected piping, ancillary equipment, and containment system, if any. SEC. 36. Section 387 of the Penal Code is amended to read: 387. (a) Any corporation, limited liability company, or person who is a manager with respect to a product, facility, equipment, process, place of employment, or business practice, is guilty of a public offense punishable by imprisonment in the county jail for a term not exceeding one year, or by a fine not exceeding ten thousand dollars ($10,000), or by both that fine and imprisonment; or by imprisonment in the state prison for 16 months, two, or three years, or by a fine not exceeding twenty-five thousand dollars ($25,000); or by both that fine and imprisonment, but if the defendant is a corporation or a limited liability company the fine shall not exceed one million dollars ($1,000,000), if that corporation, limited liability company, or person does all of the following: (1) Has actual knowledge of a serious concealed danger that is subject to the regulatory authority of an appropriate agency and is associated with that product or a component of that product or business practice. (2) Knowingly fails during the period ending 15 days after the actual knowledge is acquired, or if there is imminent risk of great bodily harm or death, immediately, to do both of the following: (A) Inform the Division of Occupational Safety and Health in the Department of Industrial Relations in writing, unless the corporation, limited liability company, or manager has actual knowledge that the division has been so informed. Where the concealed danger reported pursuant to this paragraph is subject to the regulatory authority of an agency other than the Division of Occupational Safety and Health in the Department of Industrial Relations, it shall be the responsibility of the Division of Occupational Safety and Health in the Department of Industrial Relations, within 24 hours of receipt of the information, to telephonically notify the appropriate government agency of the hazard, and promptly forward any written notification received. (B) Warn its affected employees in writing, unless the corporation, limited liability company, or manager has actual knowledge that the employees have been so warned. The requirement for disclosure is not applicable if the hazard is abated within the time prescribed for reporting, unless the appropriate regulatory agency nonetheless requires disclosure by regulation. Where the Division of Occupational Safety and Health in the Department of Industrial Relations was not notified, but the corporation, limited liability company, or manager reasonably and in good faith believed that they were complying with the notification requirements of this section by notifying another government agency, as listed in paragraph (8) of subdivision (d), no penalties shall apply. (b) As used in this section: (1) "Manager" means a person having both of the following: (A) Management authority in or as a business entity. (B) Significant responsibility for any aspect of a business that includes actual authority for the safety of a product or business practice or for the conduct of research or testing in connection with a product or business practice. (2) "Product" means an article of trade or commerce or other item of merchandise that is a tangible or an intangible good, and includes services. (3) "Actual knowledge," used with respect to a serious concealed danger, means has information that would convince a reasonable person in the circumstances in which the manager is situated that the serious concealed danger exists. (4) "Serious concealed danger," used with respect to a product or business practice, means that the normal or reasonably foreseeable use of, or the exposure of an individual to, the product or business practice creates a substantial probability of death, great bodily harm, or serious exposure to an individual, and the danger is not readily apparent to an individual who is likely to be exposed. (5) "Great bodily harm" means a significant or substantial physical injury. (6) "Serious exposure" means any exposure to a hazardous substance, when the exposure occurs as a result of an incident or exposure over time and to a degree or in an amount sufficient to create a substantial probability that death or great bodily harm in the future would result from the exposure. (7) "Warn its affected employees" means give sufficient description of the serious concealed danger to all individuals working for or in the business entity who are likely to be subject to the serious concealed danger in the course of that work to make those individuals aware of that danger. (8) "Appropriate government agency" means an agency on the following list that has regulatory authority with respect to the product or business practice and serious concealed dangers of the sort discovered: (A) The Division of Occupational Safety and Health in the Department of Industrial Relations. (B) State Department of Health Services. (C) Department of Agriculture. (D) County departments of health. (E) The United States Food and Drug Administration. (F) The United States Environmental Protection Agency. (G) The National Highway Traffic Safety Administration. (H) The Federal Occupation Safety and Health Administration. (I) The Nuclear Regulatory Commission. (J) The Consumer Product Safety Commission. (K) The Federal Aviation Administration. (L) The Federal Mine Safety and Health Review Commission. (c) Notification received pursuant to this section shall not be used against any manager in any criminal case, except a prosecution for perjury or for giving a false statement. (d) No person who is a manager of a limited liability company shall be personally liable for acts or omissions for which the limited liability company is liable under subdivision (a) solely by reason of being a manager of the limited liability company. A person who is a manager of a limited liability company may be held liable under subdivision (a) if that person is also a "manager" within the meaning of paragraph (1) of subdivision (b). SEC. 37. Section 653s of the Penal Code is amended to read: 653s. (a) Any person who transports or causes to be transported for monetary or other consideration within this state, any article containing sounds of a live performance with the knowledge that the sounds thereon have been recorded or mastered without the consent of the owner of the sounds of the live performance is guilty of a public offense punishable as provided in subdivision (g) or (h). (b) As used in this section and Section 653u: (1) "Live performance" means the recitation, rendering, or playing of a series of musical, spoken, or other sounds in any audible sequence thereof. (2) "Article" means the original disc, wire, tape, film, phonograph record, or other recording device used to record or master the sounds of the live performance and any copy or reproduction thereof which duplicates, in whole or in part, the original. (3) "Person" means any individual, partnership, partnership member or employee, corporation, association, or corporation or association employee, officer, or director, limited liability company, or limited liability company manager or officer. (c) In the absence of a written agreement or operation of law to the contrary, the performer or performers of the sounds of a live performance shall be presumed to own the right to record or master those sounds. (d) For purposes of this section, a person who is authorized to maintain custody and control over business records reflecting the consent of the owner to the recordation or master recording of a live performance shall be a proper witness in any proceeding regarding the issue of consent. Any witness called pursuant to this section shall be subject to all rules of evidence relating to the competency of a witness to testify and the relevance and admissibility of the testimony offered. (e) This section shall neither enlarge nor diminish the rights and remedies of parties to a recording or master recording which they might otherwise possess by law. (f) This section shall not apply to persons engaged in radio or television broadcasting or cablecasting who record or fix the sounds of a live performance for, or in connection with, broadcast or cable transmission and related uses in educational television or radio programs, for archival purposes, or for news programs or purposes if the recordation or master recording is not commercially distributed independent of the broadcast or cablecast by or through the broadcasting or cablecasting entity to subscribers or the general public. (g) Any person who has been convicted of a violation of subdivision (a), shall be punished by imprisonment in the county jail not to exceed one year, or by imprisonment in the state prison for two, three, or five years, or by a fine not to exceed two hundred fifty thousand dollars ($250,000), or by both, if the offense involves the transportation or causing to be transported of not less than 1,000 articles described in subdivision (a). (h) Any person who has been convicted of any other violation of subdivision (a) not described in subdivision (g) shall be punished by imprisonment in the county jail not to exceed one year, or by a fine not to exceed twenty-five thousand dollars ($25,000), or both. A second or subsequent conviction under subdivision (a) not described in subdivision (g) shall be punished by imprisonment in the county jail not to exceed one year or in the state prison, or by a fine not to exceed one hundred thousand dollars ($100,000), or by both. (i) Every person who offers for sale or resale, or sells or resells, or causes the sale or resale, or rents, or possesses for these purposes, any article described in subdivision (a) with knowledge that the sounds thereon have been so recorded or mastered without the consent of the owner of the sounds of a live performance is guilty of a public offense. (1) A violation of subdivision (i) involving not less than 100 of those articles shall be punishable by imprisonment in a county jail not to exceed one year or by a fine not to exceed ten thousand dollars ($10,000), or by both. A second or subsequent conviction for the conduct described in this paragraph shall be punishable by imprisonment in the county jail not to exceed one year or in the state prison, or by a fine not to exceed twenty-five thousand dollars ($25,000), or by both. (2) A person who has been convicted of any violation of this subdivision not described in paragraph (1) shall be punished by imprisonment in the county jail not to exceed six months or by a fine not to exceed five thousand dollars ($5,000), or by both. A second conviction for the conduct described in this paragraph shall be punishable by imprisonment in the county jail not to exceed one year or by a fine not to exceed ten thousand dollars ($10,000), or by both. A third or subsequent conviction for the conduct described in this paragraph shall be punishable by imprisonment in the county jail not to exceed one year or in the state prison, or by a fine not to exceed twenty-five thousand dollars ($25,000), or by both. SEC. 38. Section 40170 of the Public Resources Code is amended to read: 40170. "Person" includes an individual, firm, limited liability company, association, partnership, political subdivision, government agency, municipality, industry, public or private corporation, or any other entity whatsoever. SEC. 39. Section 19 of the Revenue and Taxation Code, as amended by Chapter 1187 of the Statutes of 1993, is amended to read: 19. "Person" includes any person, firm, partnership, general partner of a partnership, limited liability company, association, corporation, company, syndicate, estate, trust, business trust, or organization of any kind. As used in Division 2 (commencing with Section 6001), "person" shall include, in addition to the items of definition contained in the first sentence, trustee, trustee in bankruptcy, receiver, executor, administrator, or assignee. SEC. 40. Section 28 of the Revenue and Taxation Code is repealed. SEC. 41. Section 28.5 is added to the Revenue and Taxation Code, to read: 28.5. As used in Division 1 of this code, "partnership" shall include limited liability company, except where the context or the specific provisions of this division otherwise require. SEC. 42. Section 64 of the Revenue and Taxation Code is amended to read: 64. (a) Except as provided in subdivision (h) of Section 61 and subdivisions (c) and (d) of this section, the purchase or transfer of ownership interests in legal entities, such as corporate stock or partnership or limited liability company interests, shall not be deemed to constitute a transfer of the real property of the legal entity. (b) Any corporate reorganization, where all of the corporations involved are members of an affiliated group, and which qualifies as a reorganization under Section 368 of the United States Internal Revenue Code and which is accepted as a nontaxable event by similar California statutes, or any transfer of real property among members of an affiliated group, or any reorganization of farm credit institutions pursuant to the federal Farm Credit Act of 1971 (Public Law 92-181), as amended, shall not be a change of ownership. The taxpayer shall furnish proof, under penalty of perjury, to the assessor that the transfer meets the requirements of this subdivision. For purposes of this subdivision "affiliated group" means one or more chains of corporations connected through stock ownership with a common parent corporation if: (1) One hundred percent of the voting stock, exclusive of any share owned by directors, of each of the corporations, except the parent corporation, is owned by one or more of the other corporations; and (2) The common parent corporation owns, directly, 100 percent of the voting stock, exclusive of any shares owned by directors, of at least one of the other corporations. (c) When a corporation, partnership, limited liability company, other legal entity, or any other person obtains control, as defined in Section 25105 (as enacted by Chapter 938 of the Statutes of 1955), in any corporation, or obtains a majority ownership interest in any partnership, limited liability company, or other legal entity through the purchase or transfer of corporate stock, partnership, or limited liability company interest, or ownership interests in other legal entities, such purchase or transfer of such stock or other interest shall be a change of ownership of property owned by the corporation, partnership, limited liability company, or other legal entity in which the controlling interest is obtained. (d) If property is transferred on or after March 1, 1975, to a legal entity in a transaction excluded from change in ownership by paragraph (2) of subdivision (a) of Section 62, then the persons holding ownership interests in such legal entity immediately after the transfer shall be considered the "original coowners." Whenever shares or other ownership interests representing cumulatively more than 50 percent of the total interests in the entity are transferred by any of the original coowners in one or more transactions, a change in ownership of that real property owned by the legal entity shall have occurred, and the property which was previously excluded from change in ownership under the provisions of paragraph (2) of subdivision (a) of Section 62 shall be reappraised. The date of reappraisal shall be the date of the transfer of the ownership interest representing individually or cumulatively more than 50 percent of the interests in the entity. A transfer of shares or other ownership interests which results in a change in control of a corporation, partnership, limited liability company, or any other legal entity is subject to reappraisal as provided in subdivision (c) rather than this subdivision. (e) In order to assist in the determination of whether a change of ownership has occurred under subdivisions (c) and (d), the Franchise Tax Board shall include a question in substantially the following form on returns for partnerships, banks and corporations (except tax-exempt organizations): If the corporation (or partnership or limited liability company) owns real property in California, has cumulatively more than 50 percent of the voting stock (or more than 50 percent of total interest in both partnership or limited liability company capital and partnership or limited liability company profits) (1) been transferred by the corporation (or partnership or limited liability company) since March 1, 1975, or (2) been acquired by another legal entity or person during the year? (See instructions.) If the entity answers "yes" to (1) or (2) in the above question, then the Franchise Tax Board shall furnish the names and addresses of that entity and of the stock or partnership or limited liability company ownership interest transferees to the State Board of Equalization. SEC. 43. Section 480 of the Revenue and Taxation Code is amended to read: 480. (a) Whenever any change in ownership of real property or of a mobilehome subject to local property taxation, and which is assessed by the county assessor, occurs, the transferee shall file a signed change in ownership statement in the county where the real property or mobilehome is located, as provided for in subdivision (c). In the case of a change in ownership where the transferee is not locally assessed, no change in ownership statement is required. (b) The personal representative shall file a change in ownership statement with the county recorder or assessor in each county where the decedent owned real property at the time of death. The statement shall be filed at the time the inventory and appraisal is filed with the court clerk. (c) Except as provided in subdivision (d), the change in ownership statement as required pursuant to subdivision (a) shall be declared to be true under penalty of perjury and shall give such information relative to the real property or mobilehome acquisition transaction as the board shall prescribe after consultation with the California Assessors' Association. The information shall include, but not be limited to, a description of the property, the parties to the transaction, the date of acquisition, the amount, if any, of the consideration paid for the property, whether paid in money or otherwise, and the terms of the transaction. The change in ownership statement shall not include any question which is not germane to the assessment function. The statement shall contain a notice informing the transferee of the property tax relief available under Section 69.5. The statement shall contain a notice that is printed, with the title in at least 12-point boldface type and the body in at least 8-point boldface type, in the following form: "Important Notice" "The law requires any transferee acquiring an interest in real property or mobilehome subject to local property taxation, and which is assessed by the county assessor, to file a change in ownership statement with the county recorder or assessor. The change in ownership statement must be filed at the time of recording or, if the transfer is not recorded, within 45 days of the date of the change in ownership. The failure to file a change in ownership statement within 45 days from the date of a written request by the assessor results in a penalty of either: (1) one hundred dollars ($100), or (2) 10 percent of the taxes applicable to the new base year value reflecting the change in ownership of the real property or mobilehome, whichever is greater, but not to exceed two thousand five hundred dollars ($2,500) if such failure to file was not willful. This penalty will be added to the assessment roll and shall be collected like any other delinquent property taxes, and be subject to the same penalties for nonpayment." (d) The change in ownership statement may be attached to or accompany the deed or other document evidencing a change in ownership filed for recording, in which case such notice, declaration under penalty of perjury, and any information contained in the deed or other transfer document otherwise required by subdivision (c) may be omitted. (e) If the document evidencing a change in ownership is recorded in the county recorder's office, then the statement shall be filed with the recorder at the time of recordation. However, the recordation of the deed or other document evidencing a change in ownership shall not be denied or delayed because of the failure to file a change of ownership statement, or filing of an incomplete statement, in accordance with this subdivision. If the document evidencing a change in ownership is not recorded or is recorded without the concurrent filing of a change in ownership statement, then the statement shall be filed with the assessor no later than 45 days from the date the change in ownership occurs. (f) Whenever a change in ownership statement is filed with the county recorder's office, the recorder shall transmit, as soon as possible, the original statement or a true copy thereof to the assessor along with a copy of every recorded document as required by Section 255.7. (g) The change in ownership statement may be filed with the assessor through the United States mail, properly addressed with the postage prepaid. (h) In the case of a corporation, the change in ownership statement shall be signed either by an officer of the corporation or an employee or agent who has been designated in writing by the board of directors to sign such statements on behalf of the corporation. In the case of a partnership, limited liability company, or other legal entity, the statement shall be signed by an officer, partner, manager, or an employee or agent who has been designated in writing by the partnership, limited liability company, or legal entity. (i) No person or entity acting for or on behalf of the parties to a transfer of real property shall incur liability for the consequences of assistance rendered to the transferee in preparation of any change in ownership statement, and no action may be brought or maintained against any such person or entity as a result of such assistance. Nothing in this section shall create a duty, either directly or by implication, that such assistance be rendered by any person or entity acting for or on behalf of parties to a transfer of real property. SEC. 44. Section 480.1 of the Revenue and Taxation Code is amended to read: 480.1. (a) Whenever there is a change in control of any corporation, partnership, limited liability company, or other legal entity, as defined in subdivision (c) of Section 64, a signed change in ownership statement as provided for in subdivision (b), shall be filed by the person or legal entity acquiring ownership control of such corporation, partnership, limited liability company, or other legal entity with the board at its office in Sacramento. The statement shall list all counties in which the corporation, partnership, limited liability company, or legal entity owns real property. (b) The change in ownership statement as required pursuant to subdivision (a), shall be declared to be true under penalty of perjury and shall give such information relative to the ownership control acquisition transaction as the board shall prescribe after consultation with the California Assessors' Association. The information shall include, but not be limited to, a description of the property owned by the corporation, partnership, limited liability company, or other legal entity, the parties to the transaction, and the date of the ownership control acquisition. The change in ownership statement shall not include any question which is not germane to the assessment function. The statement shall contain a notice that is printed, with the title at least 12-point boldface type and the body in at least 8-point boldface type, in the following form: "Important Notice" "The law requires any person or legal entity acquiring ownership control in any corporation, partnership, limited liability company, or other legal entity owning real property in California subject to local property taxation to complete and file a change in ownership statement with the State Board of Equalization at its office in Sacramento. The change in ownership statement must be filed within 45 days from the date of the change in control of a corporation, partnership, limited liability company, or other legal entity. The law further requires that a change in ownership statement be completed and filed whenever a written request is made therefor by the State Board of Equalization, regardless of whether a change in control of the legal entity has occurred. The failure to file a change in ownership statement within 45 days from the date of a written request by the State Board of Equalization results in a penalty of 10 percent of the taxes applicable to the new base year value reflecting the change in control of the real property owned by the corporation, partnership, limited liability company, or legal entity (or 10 percent of the current year's taxes on that property if no change in control occurred). This penalty will be added to the assessment roll and shall be collected like any other delinquent property taxes, and be subject to the same penalties for nonpayment." (c) In the case of a corporation, the change in ownership statement shall be signed either by an officer of the corporation or an employee or agent who has been designated in writing by the board of directors to sign such statements on behalf of the corporation. In the case of a partnership, limited liability company, or other legal entity, the statement shall be signed by an officer, partner, manager, or an employee or agent who has been designated in writing by the partnership, limited liability company, or legal entity. (d) No person or entity acting for or on behalf of the parties to a transfer of real property shall incur liability for the consequences of assistance rendered to the transferee in preparation of any change in ownership statement, and no action may be brought or maintained against any such person or entity as a result of such assistance. Nothing in this section shall create a duty, either directly or by implication, that such assistance be rendered by any person or entity acting for or on behalf of parties to a transfer of real property. (e) The board or assessors may inspect any and all records and documents of a corporation, partnership, limited liability company, or legal entity to ascertain whether a change in control as defined in subdivision (c) of Section 64 has occurred. The corporation, partnership, limited liability company, or legal entity shall upon request, make such documents available to the board during normal business hours. SEC. 45. Section 480.2 of the Revenue and Taxation Code is amended to read: 480.2. (a) Whenever there is a change in ownership of any corporation, partnership, limited liability company, or other legal entity, as defined in subdivision (d) of Section 64, a signed change in ownership statement as provided in subdivision (b) shall be filed by such corporation, partnership, limited liability company, or other legal entity with the board at its office in Sacramento. The statement shall list all counties in which the corporation, partnership, limited liability company, or legal entity owns real property. (b) The change in ownership statement required pursuant to subdivision (a) shall be declared to be true and under penalty of perjury and shall give such information relative to the ownership interest acquisition transaction as the board shall prescribe after consultation with the California Assessors' Association. The information shall include, but not be limited to, a description of the property owned by the corporation, partnership, limited liability company, or other legal entity, the parties to the transaction, the date of the ownership interest acquisition, and a listing of the "original coowners" of the corporation, partnership, limited liability company, or other legal entity prior to the transaction. The change in ownership statement shall not include any question which is not germane to the assessment function. The statement shall contain a notice that is printed, with the title in at least 12-point boldface type and the body in at least 8-point boldface type, in the following form: "Important Notice" "The law requires any corporation, partnership, limited liability company, or other legal entity owning real property in California subject to local property taxation and transferring shares or other ownership interest in such legal entity which constitute a change in ownership pursuant to subdivision (d) of Section 64 of the Revenue and Taxation Code to complete and file a change in ownership statement with the State Board of Equalization at its office in Sacramento. The change in ownership statement must be filed within 45 days from the date that shares or other ownership interests representing cumulatively more than 50 percent of the total control or ownership interests in the entity are transferred by any of the original coowners in one or more transactions. The law further requires that a change in ownership statement be completed and filed whenever a written request is made therefor by the State Board of Equalization, regardless of whether a change in ownership of the legal entity has occurred. The failure to file a change in ownership statement within 45 days from the date of a written request by the Board of Equalization results in a penalty of 10 percent of the taxes applicable to the new base year value reflecting the change in ownership of the real property owned by the corporation, partnership, limited liability company, or legal entity (or 10 percent of the current year's taxes on that real property if no change in ownership occurred). This penalty will be added to the assessment roll and shall be collected like any other delinquent property taxes, and be subject to the same penalties for nonpayment." (c) In the case of a corporation, the change in ownership statement shall be signed either by an officer of the corporation or an employee or agent who has been designated in writing by the board of directors to sign such statements on behalf of the corporation. In the case of a partnership, limited liability company, or other legal entity, the statement shall be signed by an officer, partner, manager, or an employee or agent who has been designated in writing by the partnership, limited liability company, or legal entity. (d) No person or entity acting for or on behalf of the parties to a transfer of real property shall incur liability for the consequences of assistance rendered to the transferee in preparation of any change in ownership statement, and no action may be brought or maintained against any such person or entity as a result of such assistance. Nothing in this section shall create a duty, either directly or by implication, that such assistance be rendered by any person or entity acting for or on behalf of parties to a transfer of real property. (e) The board or assessors may inspect any and all records and documents of a corporation, partnership, limited liability company, or legal entity to ascertain whether a change in ownership as defined in subdivision (d) of Section 64 has occurred. The corporation, partnership, limited liability company, or legal entity shall upon request, make such documents available to the board during normal business hours. SEC. 46. Section 6005 of the Revenue and Taxation Code is amended to read: 6005. "Person" includes any individual, firm, partnership, joint venture, limited liability company, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, assignee for the benefit of creditors, trustee, trustee in bankruptcy, syndicate, the United States, this state, any county, city and county, municipality, district, or other political subdivision of the state, or any other group or combination acting as a unit. SEC. 47. Section 6829 of the Revenue and Taxation Code is amended to read: 6829. (a) Notwithstanding Section 17101, 17158, 17355, 17450, or 17456 of the Corporations Code, upon termination, dissolution, or abandonment of a domestic or foreign corporate or limited liability company business, any officer, member, manager, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax, or who is under a duty to act for the corporation or limited liability company in complying with any requirement of this part, shall be personally liable for any unpaid taxes and interest and penalties on those taxes, if the officer, member, manager, or other person willfully fails to pay or to cause to be paid any taxes due from the corporation or limited liability company pursuant to this part. (b) The officer, member, manager, or other person shall be liable only for taxes that became due during the period he or she had the control, supervision, responsibility, or duty to act for the corporation or limited liability company described in subdivision (a), plus interest and penalties on those taxes. (c) Personal liability may be imposed pursuant to this section, only if the board can establish that the corporation or limited liability company had included tax reimbursement in the selling price of, or added tax reimbursement to the selling price of, tangible personal property sold in the conduct of its business, or when it can be established that the corporation or limited liability company consumed tangible personal property and failed to pay the tax to the seller or has included use tax on the billing and collected the use tax or has issued a receipt for the use tax and failed to report and pay use tax. (d) For purposes of this section "willfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action. (e) The sum due for the liability under this section may be collected by determination and collection in the manner provided in Chapter 5 (commencing with Section 6451) and Chapter 6 (commencing with Section 6701). SEC. 48. Section 7310 of the Revenue and Taxation Code is amended to read: 7310. "Person" includes any individual, firm, partnership, joint venture, limited liability company, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, trustee, syndicate, the United States, this state, any county, city and county, municipality, district, or other political subdivision of the state, or any other group or combination acting as a unit. SEC. 49. Section 8606 of the Revenue and Taxation Code is amended to read: 8606. "Person" includes any individual, firm, partnership, joint venture, limited liability company, association, corporation, estate, trust, business trust, receiver, syndicate, this state, any county, city and county, municipality, district, or other political subdivision thereof, or any other group or combination acting as a unit. SEC. 50. Section 11204 of the Revenue and Taxation Code is amended to read: 11204. "Person" includes any individual, firm, partnership, joint venture, limited liability company, association, corporation, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit. SEC. 51. Section 17007 of the Revenue and Taxation Code is amended to read: 17007. "Person" includes individuals, fiduciaries, partnerships, limited liability companies, and corporations. SEC. 52. Section 17087.6 is added to the Revenue and Taxation Code, to read: 17087.6. If a limited liability company is classified as a partnership for California tax purposes, a person with a membership or economic interest shall take into account amounts required to be recognized under Chapter 10 (commencing with Section 17851). SEC. 53. Section 17220 of the Revenue and Taxation Code is amended to read: 17220. (a) Section 164(a)(3) of the Internal Revenue Code, relating to the deductibility of state, local, and foreign income, war profits, and excess profits taxes, shall not apply. (b) In addition to the provisions of Section 164(c) of the Internal Revenue Code relating to the deduction denied in the case of certain taxes, no deduction shall be allowed for any of the following: (1) Taxes paid under Chapter 1.5 (commencing with Section 23081) of Part 11 (relating to tax on limited partnerships). (2) Taxes paid under Chapter 4.5 (commencing with Section 23800) of Part 11 (relating to tax treatment of S corporations and their shareholders). (3) Taxes paid under Chapter 1.6 (commencing with Section 23091) of Part 11 (relating to tax on limited liability companies). SEC. 53.5. Section 17220 of the Revenue and Taxation Code is amended to read: 17220. (a) Section 164(a)(3) of the Internal Revenue Code, relating to the deductibility of state, local, and foreign income, war profits, and excess profits taxes, shall not apply. (b) In addition to the provisions of Section 164(c) of the Internal Revenue Code relating to deduction denied in case of certain taxes, no deduction shall be allowed for any tax imposed under Part 11 (commencing with Section 23001). SEC. 54. Section 18402 of the Revenue and Taxation Code is amended to read: 18402. (a) Except where the context otherwise requires, the general provisions and definitions provided in Chapter 1 (commencing with Section 17001) of Part 10 and in Chapter 1 (commencing with Section 23001) of Part 11 shall apply to this part. (b) For purposes of this part, "person" includes an individual, fiduciary, partnership, limited liability company, bank, corporation, or organization exempt from taxation under Section 23701. (c) (1) Whenever provisions of this part are applied in connection with Part 10 (commencing with Section 17001), the terms "taxpayer," "corporation" and "taxable year" have the same meaning as defined in Chapter 1 (commencing with Section 17001) of Part 10. (2) Whenever provisions of this part are applied in connection with Part 11 (commencing with Section 23001), the terms "taxpayer," "corporation" and "taxable year" have the same meaning as defined in Article 2 (commencing with Section 23030) of Chapter 1 of Part 11. SEC. 54.5. Section 18402 of the Revenue and Taxation Code is amended to read: 18402. (a) Except where the context otherwise requires, the general provisions and definitions provided in Chapter 1 (commencing with Section 17001) of Part 10 and in Chapter 1 (commencing with Section 23001) of Part 11 shall apply to this part. (b) For purposes of this part, "person" includes an individual, fiduciary, partnership, limited liability company, bank, corporation, or organization exempt from taxation under Section 23701. (c) (1) Whenever provisions of this part are applied in connection with Part 10 (commencing with Section 17001), the terms "taxpayer," "corporation," "income year," and "taxable year" have the same meaning as defined in Chapter 1 (commencing with Section 17001) of Part 10. (2) Whenever provisions of this part are applied in connection with Part 11 (commencing with Section 23001), the terms "taxpayer," "corporation" and "taxable year" have the same meaning as defined in Article 2 (commencing with Section 23030) of Chapter 1 of Part 11. SEC. 55. Section 18535 of the Revenue and Taxation Code is amended to read: 18535. (a) In lieu of electing nonresident partners filing a return pursuant to Section 18501 or 18507, the Franchise Tax Board may, pursuant to requirements and conditions set forth in forms and instructions, provide for the filing of a group return for electing nonresident partners by a partnership doing business in, or deriving income from, sources in California. The tax rate or rates applicable to each electing partner's distributive share shall be the highest marginal rate or rates provided by Part 10 (commencing with Section 17001). Except as provided in subdivision (b), no deductions shall be allowed except those necessary to determine each partner's distributive share, and no credits shall be allowed except those directly attributable to the partnership. As required by the Franchise Tax Board, the partnership as agent for the electing partners shall make the payments of tax, additions to tax, interest, and penalties otherwise required to be paid by the electing partners. (b) Deductions provided by Chapter 5 (commencing with Section 17501) of Part 10, attributable to earned income of a partner derived from a partnership filing a group return on behalf of electing nonresident partners under subdivision (a), shall be allowed if the partner certifies, in the form and manner as the Franchise Tax Board may prescribe, that he or she has no earned income from any other source. (c) This section shall also be applicable to nonresident shareholders of a corporation which is treated as an "S corporation" under Chapter 4.5 (commencing with Section 23800) of Part 11. In that case, the provisions of subdivisions (a) and (b) are modified to refer to "shareholders" in lieu of "partners" and to "S corporation" in lieu of "partnership." (d) This section shall also be applicable to a nonresident person with a membership or economic interest in a limited liability company which is classified as a partnership for California tax purposes. In that case, the provisions of subdivisions (a) and (b) are modified to refer to "holders of a membership or economic interest" in lieu of "partners" and to "limited liability companies" in lieu of "partnerships." SEC. 56. Section 18621.5 of the Revenue and Taxation Code, as added by Chapter 31 of the Statutes of 1993, is amended to read: 18621.5. (a) Any return, declaration, statement, or other document required to be made under this part that is filed using electronic technology shall be in a form as the Franchise Tax Board may prescribe and shall be accompanied by a transmittal document signed in accordance with Section 18621 in the case of individuals, banks, or corporations, or limited liability companies classified as corporations for California income tax purposes, or subdivision (a) of Section 18633 in the case of a partnership, or Section 18633.5 in the case of limited liability companies classified as partnerships for California income tax purposes. (b) Notwithstanding any other provision of law, any return, declaration, statement, or other document otherwise required to be signed that is filed in a traditional medium and captured using electronic imaging technology shall be deemed to be a valid original document upon reproduction to paper form by the Franchise Tax Board. (c) "Electronic imaging technology" means a system of microphotography, optical disk, or reproduction by other technique that does not permit additions, deletions, or changes to the original document. The system may include, but is not limited to, any magnetic media or other machine readable form. (d) "Traditional medium" means any return, declaration, statement, or other document required to be made pursuant to this article other than those made using electronic imaging technology. SEC. 56.5. Section 18621.5 of the Revenue and Taxation Code is amended to read: 18621.5. (a) Any return, declaration, statement, or other document required to be made under this part that is filed using electronic technology shall be in a form as the Franchise Tax Board may prescribe and is not complete, and therefore not filed, unless an electronic filing declaration is signed by the taxpayer, in accordance with Section 18621 in the case of individuals, or subdivision (a) of Section 18505 in the case of estates or trusts, banks, corporations, or limited liability companies classified as corporations for California income tax purposes, or subdivision (a) of Section 18633 in the case of a partnership, or Section 18633.5 in the case of limited liability companies classified as partnerships for California income tax purposes. The Franchise Tax Board may prescribe forms and instructions for requiring the electronic filing declaration to be retained by the preparer or taxpayer and may require the declaration to be furnished to the Franchise Tax Board upon request. (b) Notwithstanding any other provision of law, any return, declaration, statement, or other document otherwise required to be signed that is filed in a traditional medium and captured using electronic imaging technology shall be deemed to be a valid original document upon reproduction to paper form by the Franchise Tax Board. (c) Notwithstanding any other law, any return, declaration, statement, or other document otherwise required to be signed that is filed by the taxpayer using electronic technology in a form as required by the Franchise Tax Board shall be deemed to be a signed, valid original document, including upon reproduction to paper form by the Franchise Tax Board. (d) "Electronic imaging technology" means a system of microphotography, optical disk, or reproduction by other technique that does not permit additions, deletions, or changes to the original document. The system may include, but is not limited to, any magnetic media or other machine readable form. (e) "Traditional medium" means any return, declaration, statement, or other document required to be made pursuant to this article other than those made using electronic technology or electronic imaging technology. (f) "Electronic technology" includes, but is not limited to, computer modem, magnetic media, optical disk, facsimile machine, or telephone. SEC. 57. Section 18633.5 is added to the Revenue and Taxation Code, to read: 18633.5. (a) Every limited liability company which is classified as a partnership for California tax purposes that is doing business in this state, organized in this state, or registered with the Secretary of State shall file its return within three months and 15 days after the close of its taxable or income year, shall make a return for that taxable year, stating specifically the items of gross income and the deductions allowed by Part 10 (commencing with Section 17001). The return shall include the names, addresses, and taxpayer identification numbers of the persons, whether residents or nonresidents, who would be entitled to share in the net income if distributed and the amount of the distributive share of each person. The return shall contain or be verified by a written declaration that it is made under the penalties of perjury, signed by one of the limited liability company members. (b) Each limited liability company required to file a return under subdivision (a) for any limited liability company taxable or income year shall, on or before the day on which the return for that taxable or income year was required to be filed, furnish to each person who holds an interest in that limited liability company at any time during that taxable year a copy of that information required to be shown on that return as may be required by forms and instructions prescribed by the Franchise Tax Board. (c) Any person who holds an interest in a limited liability company as a nominee for another person shall do both of the following: (1) Furnish to the limited liability company, in the manner prescribed by the Franchise Tax Board, the name, address, and taxpayer identification number of that person, and any other information for that taxable or income year as the Franchise Tax Board may prescribe by forms and instructions. (2) Furnish to that other person, in the manner prescribed by the Franchise Tax Board, the information provided by that limited liability company under subdivision (b). (d) The provisions of Section 6031(d) of the Internal Revenue Code, relating to the separate statement of items of unrelated business taxable income, shall apply. (e) A limited liability company shall file with its return required under subdivision (a), in the form required by the Franchise Tax Board, the agreement of each nonresident member to file a return pursuant to Section 18501, to make timely payment of all taxes imposed on the member by this state with respect to the income of the limited liability company, and to be subject to personal jurisdiction in this state for purposes of the collection of income taxes, together with related interest and penalties, imposed on the member by this state with respect to the income of the limited liability company. If the limited liability company fails timely to file said agreements on behalf of each of its nonresident members, then the limited liability company shall, at the time set forth in subdivision (f), pay to this state on behalf of each nonresident member of whom an agreement has not been timely filed an amount equal to the highest marginal tax rate in effect under Section 17041 in the case of members which are individuals, estates, or trusts, and Section 23151 in the case of members which are corporations, multiplied by the amount of the member's distributive share of the income source to the state reflected on the limited liability company's return for the taxable period. A limited liability company shall be entitled to recover the payment made from the member on whose behalf the payment was made. (f) Any agreement of a nonresident member required to be filed pursuant to subdivision (e) shall be filed at either of the following times: (1) The time the annual return is required to be filed pursuant to this section for the first taxable period for which the limited liability company became subject to tax pursuant to Chapter 1.6 (commencing with Section 23091). (2) The time the annual return is required to be filed pursuant to this section for any taxable period in which the limited liability company had a nonresident member on whose behalf such an agreement has not been previously filed. (g) Any amount paid by the limited liability company to this state pursuant to subdivision (e) shall be considered to be a payment by the member on account of the income tax imposed by this state on the member for the taxable period. (h) Every limited liability company that is classified as a corporation for California tax purposes shall be subject to the requirement to file a tax return under the provisions of Part 10.2 (commencing with Section 18401) and the applicable taxes imposed by Part 11 (commencing with Section 23001) including Section 23221 relating to the prepayment of the minimum tax to the Secretary of State. SEC. 58. Section 18637 of the Revenue and Taxation Code, as added by Chapter 31 of the Statutes of 1993, is amended to read: 18637. (a) Every individual, partnership, limited liability company, bank, corporation, joint stock company or association, insurance company, business trust, or so-called Massachusetts trust, engaged in a trade or business in this state and making payment in the course of the trade or business to another person, including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of this state or any political subdivision of this state, or any city organized under a freeholder's charter, or any political body not a subdivision or agency of the state, having the control, receipt, custody, disposal, or payment of interest (other than interest coupons payable to bearer), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income amounting to six hundred dollars ($600) or over, paid or payable during any year to any taxpayer, shall make a complete return to the Franchise Tax Board, which shall contain or be verified by a written declaration that it is made under the penalties of perjury, under the regulations and in the form and manner and to the extent as may be prescribed by it. (b) For purposes of subdivision (a), "trade or business" includes the activities of nonprofit organizations. (c) In lieu of an information return required by subdivision (a), the Franchise Tax Board may require that a copy of the federal information return be filed with the Franchise Tax Board. (d) Every entity required to make a return under subdivision (a) shall furnish to each person whose name is required to be set forth in the return a written statement showing both of the following: (1) The name, address, and identification number of the entity required to make the return. (2) The aggregate amount of payments to the person required to be shown on the return. The written statement required under this subdivision shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subdivision (a) was required to be made. (e) This section shall not apply to tips with respect to which Section 13055 of the Unemployment Insurance Code applies. The only records which an employer shall be required to keep under this section in connection with charged tips shall be charge receipts and copies of statements furnished by employees under Section 13055 of the Unemployment Insurance Code. SEC. 59. Section 18638 of the Revenue and Taxation Code, as added by Chapter 31 of the Statutes of 1993, is amended to read: 18638. Every individual, partnership, limited liability company, bank, corporation, joint stock company or association, insurance company, business trust, or so-called Massachusetts trust, shall be required to file a return for certain payments of remuneration for services and furnish a written statement to the person whose name is required to be set forth on the return in accordance with the provisions of Section 6041A of the Internal Revenue Code, except that no return or statement shall be required if a statement with respect to the services is required to be furnished under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code (relating to withholding tax on wages) or Section 18647, and no return or statement shall be required with respect to direct sales pursuant to Section 6041A(b) of the Internal Revenue Code. SEC. 60. Section 18648 of the Revenue and Taxation Code is amended to read: 18648. (a) Any person who is a promoter of tax shelters, as defined in subdivision (c), shall, within 60 days of a request, make a complete return to the Franchise Tax Board containing the full identification of each investment sold during the reporting period. For each investment, all of the following information shall be provided: (1) Name of investment. (2) Description of the business activities of the investment. (3) Form of investment, such as limited partnership, limited liability company, investment plan, or arrangement. (4) A list of investors showing full name, address, social security number, and the amount invested by each investor in the investment during the reporting period. (5) The total amount invested by all investors during the reporting period in the investment. (6) Any other related information which the Franchise Tax Board may request. The return shall be verified by a written declaration that it is made under penalty of perjury. (b) Every person making a return under subdivision (a) shall furnish, within 60 days of the request, to each investor whose name is set forth in the return a written statement showing all of the following: (1) The name and address of the person making the return. (2) The aggregate amount of investments of each investor as shown on that return for each reporting period. (c) For purposes of this section, the term "a promoter of tax shelters" shall mean any person who: (1) (A) Organizes (or assists in the organization of) any entity, any investment plan or arrangement, or any other plan or arrangement which generates a loss for any investor in excess of his or her cash investment from an activity described in Section 465(c) of the Internal Revenue Code. (B) Participates in the sale of any interest in any entity or plan or arrangement referred to in subparagraph (A). (2) Makes or furnishes (in connection with that organization or sale): (A) A statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit by reason of holding an interest in the entity or participating in the plan or arrangement. (B) A statement as to the value of any property or services. (d) A promoter of tax shelters shall keep records necessary to substantiate the information required to be contained on a return. (e) "Reporting period," as used in subdivision (a), shall mean each calendar year specified on the request from the Franchise Tax Board. (f) A return filed by a partnership or limited liability company classified as a partnership for California income tax purposes under this part shall be deemed to have satisfied the reporting requirement of this section for the reporting period covered by the partnership or limited liability company return with respect to the investors in the partnership. (g) The Franchise Tax Board shall establish a review process for all requests for information under this section comparable to the process of obtaining an administrative subpoena, including the requirement that a member of the Franchise Tax Board shall approve each request. SEC. 61. Section 19002 of the Revenue and Taxation Code is amended to read: 19002. (a) The amount withheld under Article 5 (commencing with Section 18661) of Chapter 2 or Section 13020 of the Unemployment Insurance Code during any calendar year shall be allowed to the recipient of the income as a credit against the tax for the taxable year with respect to which the amount was withheld. (b) In the case of a partnership, limited liability company classified as a partnership for California income tax purposes, or S corporation filing a group return as agent for electing nonresident partners or shareholders in accordance with Section 18535, for purposes of this part, the amount withheld under Article 5 (commencing with Section 18661) of Chapter 2 during any taxable year shall be allowed as a credit attributable to the partnership, limited liability company, or S corporation on the group return for the taxable year with respect to which that amount was withheld. (c) (1) For purposes of Section 19306, any tax actually deducted and withheld during any calendar year under Article 5 (commencing with Section 18661) of Chapter 2 or Section 13020 of the Unemployment Insurance Code shall, in respect of the recipient of the income, be deemed to have been paid on the last day prescribed for filing the return under Article 1 (commencing with Section 18501) or Article 2 (commencing with Section 18601) of Chapter 2 (without regard to any extension of time for filing the return), with respect to which the tax is allowable as a credit under subdivision (a) or (b). (2) For purposes of Sections 19306 and 19340, any amount paid as estimated tax under Section 19025 or 19136 of this code or Section 13043 of the Unemployment Insurance Code for any taxable year shall be deemed to have been paid on the last day prescribed for filing the return under Article 1 (commencing with Section 18501) or Article 2 (commencing with Section 18601) of Chapter 2 (without regard to any extension of time for filing the return). (d) Notwithstanding subdivision (b) or (c), for purposes of Section 19306 with respect to any tax deducted and withheld under Article 5 (commencing with Section 18661) of Chapter 2 or Section 13020 of the Unemployment Insurance Code both of the following shall apply: (1) If a return is filed before the due date for that return, the return shall be considered filed on the due date. (2) If a tax with respect to an amount paid is paid before the due date for that return, the tax shall be considered paid on the due date. (e) If any overpayment of income tax is claimed as a credit against estimated tax for the succeeding taxable year, that amount shall be considered as a payment of estimated tax in accordance with Section 19007, for the succeeding taxable year, and no claim for credit or refund of the overpayment shall be allowed for the taxable year in which the overpayment arises. SEC. 62. Section 19009 of the Revenue and Taxation Code, as added by Chapter 31 of the Statutes of 1993, is amended to read: 19009. (a) Whenever any person or employer who is required to collect, account for, and pay over any tax (1) At the time and in the manner prescribed by law or regulations (A) fails to collect, truthfully account for, or pay over the tax, or (B) fails to make deposits, payments, or returns of the tax, and (2) Is notified, by notice delivered in hand or by registered mail of any such failure, then all the requirements of subdivision (b) shall be complied with. In the case of a bank, corporation, partnership, limited liability company, or trust, notice to an officer, partner, manager, member, or trustee, shall, for purposes of this section, be deemed to be sufficient notice to the bank, corporation, partnership, limited liability company, or trust and to all officers, partners, managers, members, trustees, and employees thereof. (b) Any person or employer who is required to collect, account for, and pay over any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), if notice has been delivered to that person or employer in accordance with subdivision (a), shall collect the taxes, which become collectible after delivery of the notice, shall (not later than the end of the second banking day after any amount of the taxes is collected) deposit that amount in a separate account in a bank located within the limits of this state, and shall keep the amount of those taxes in that account until payment over to the Franchise Tax Board. Any such account shall be designated as a special fund in trust for the Franchise Tax Board, payable to the Franchise Tax Board by that person or employer as trustee. (c) Whenever the Franchise Tax Board is satisfied, with respect to any notification made under subdivision (a), that all requirements of law and regulations with respect to the taxes, will henceforth be complied with, it may cancel the notification. The cancellation shall take effect at the time as is specified in the notice of the cancellation. SEC. 63. Section 19132 of the Revenue and Taxation Code is amended to read: 19132. (a) (1) Unless it is shown that the failure is due to reasonable cause and not due to willful neglect, a penalty computed in accordance with paragraph (2) is hereby imposed in the case of failure to pay any of the following: (A) The amount shown as tax on any return on or before the date prescribed for payment of that tax determined with regard to any extension of time for payment. (B) Any amount in respect of any tax required to be shown on a return which is not so shown including an assessment made pursuant to Section 19051 within 10 days of the date of the notice and demand therefor. (C) The amount required to be paid by Section 19021, if applicable, that is not paid. (D) The amount required to be paid by Section 23091, if applicable, that is not paid. (2) The penalty imposed under paragraph (1) shall consist of both of the following: (A) Five percent of the total tax unpaid as defined in subdivision (c). (B) An amount computed at the rate of 0.5 percent per month of the "remaining tax" as defined in subdivision (d) for each additional month or fraction thereof not to exceed 40 months during which the "remaining tax" is greater than zero. (3) The aggregate amount of penalty imposed by this subdivision shall not exceed 25 percent of the total unpaid tax and shall be due and payable upon notice and demand by the Franchise Tax Board. The tender of a check or money order does not constitute payment of the tax for purposes of this section unless the check or money order is paid on presentment. (b) The penalty prescribed by subdivision (a) shall not be assessed if, for the same taxable year, the sum of any penalties imposed under Section 19131 relating to failure to file return and Section 19133 relating to failure to file return after demand is equal to or greater than the subdivision (a) penalty. In the event the penalty imposed under subdivision (a) is greater that the sum of any penalties imposed under Sections 19131 and 19133, the penalty imposed under subdivision (a) shall be the amount which exceeds the sum of any penalties imposed under Sections 19131 and 19133. (c) For purposes of this section, total tax unpaid means the amount of tax shown on the return reduced by both of the following: (1) The amount of any part of the tax which is paid on or before the date prescribed for payment of the tax. (2) The amount of any credit against the tax which may be claimed upon the return. (d) For purposes of this section, "remaining tax" means total tax unpaid reduced by the amount of any payment of the tax. (e) If the amount required to be shown as a tax on a return is less than the amount shown as tax on that return, subdivisions (a), (c), and (d) shall be applied by substituting that lower amount. (f) No interest shall accrue on the portion of the penalty prescribed in subparagraph (B) of paragraph (2) of subdivision (a). SEC. 64. Section 19254 of the Revenue and Taxation Code is amended to read: 19254. (a) (1) If any person, other than an organization exempt from taxation under Section 23701, fails to pay any amount of tax, penalty, addition to tax, interest, or other liability imposed and delinquent under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, a collection cost recovery fee shall be imposed if the Franchise Tax Board has mailed notice to that person for payment that advises that continued failure to pay the amount due may result in collection action, including the imposition of a collection cost recovery fee. The collection cost recovery fee shall be in the amount of: (A) In the case of an individual, partnership, limited liability company classified as a partnership for California income tax purposes, or fiduciary, eighty-eight dollars ($88) or an amount as adjusted under subdivision (b). (B) In the case of a bank, corporation, or limited liability company classified as a corporation for California income tax purposes, one hundred sixty-six dollars ($166) or an amount as adjusted under subdivision (b). (2) If any person, other than an organization exempt from taxation under Section 23701, fails or refuses to make and file a tax return required by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, within 25 days after formal legal demand to file the tax return is mailed to that person by the Franchise Tax Board, the Franchise Tax Board shall impose a filing enforcement cost recovery fee in the amount of: (A) In the case of an individual, partnership, limited liability company classified as a partnership for California income tax purposes, or fiduciary, fifty-one dollars ($51) or an amount as adjusted under subdivision (b). (B) In the case of a bank, corporation, or limited liability company classified as a corporation for California income tax purposes, one hundred nineteen dollars ($119) or an amount as adjusted under subdivision (b). (b) For fees imposed under this section during the fiscal year 1993-94 and fiscal years thereafter, the amount of those fees shall be set to reflect actual costs and shall be specified in the annual Budget Act. (c) Interest shall not accrue with respect to the cost recovery fees provided by this section. (d) The amounts provided by this section are obligations imposed by this part and may be collected in any manner provided under this part for the collection of a tax. (e) Subdivision (a) is operative with respect to the notices for payment or formal legal demands to file, either of which is mailed on or after September 15, 1992. (f) The Franchise Tax Board shall determine the total amount of the cost recovery fees collected or accrued through June 30, 1993, and shall notify the Controller of that amount. The Controller shall transfer that amount to the Franchise Tax Board, and that amount is hereby appropriated to the board for the 1992-93 fiscal year for reimbursement of its collection and filing enforcement efforts. SEC. 65. Section 23036 of the Revenue and Taxation Code is amended to read: 23036. (a) (1) The term "tax" includes any of the following: (A) The tax imposed under Chapter 2 (commencing with Section 23101). (B) The tax imposed under Chapter 3 (commencing with Section 23501). (C) The tax on unrelated business taxable income, imposed under Section 23731. (D) The tax on S corporations imposed under Section 23802. (2) The term "tax" does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667. (b) For purposes of Article 5 (commencing with Section 18661) of Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4, Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7 (commencing with Section 19501) of Part 10.2, and for purposes of Sections 18601, 19001, and 19005, the term "tax" shall also include all of the following: (1) The tax on limited partnerships, imposed under Section 23081 and the tax on limited liability companies, imposed under Section 23091. (2) The alternative minimum tax imposed under Chapter 2.5 (commencing with Section 23400). (3) The tax on built-in gains of S corporations, imposed under Section 23809. (4) The tax on excess passive investment income of S corporations, imposed under Section 23811. (c) Notwithstanding any other provision of this part, credits shall be allowed against the "tax" in the following order: (1) Credits which do not contain carryover provisions. (2) Credits which, when the credit exceeds the "tax," allow the excess to be carried over to offset the "tax" in succeeding taxable years. The order of credits within this paragraph shall be determined by the Franchise Tax Board. (3) The minimum tax credit allowed by Section 23453. (4) Credits for taxes withheld under Section 18662. (d) Notwithstanding any other provision of this part, each of the following shall be applicable: (1) No credit shall reduce the "tax" below the tentative minimum tax (as defined by paragraph (1) of subdivision (a) of Section 23455), except the following credits, but only after allowance of the credit allowed by Section 23453: (A) The credit allowed by former Section 23601 (relating to solar energy). (B) The credit allowed by former Section 23601.4 (relating to solar energy). (C) The credit allowed by Section 23601.5 (relating to solar energy). (D) The credit allowed by Section 23609 (relating to research expenditures). (E) The credit allowed by Section 23609.5 (relating to clinical testing expenses). (F) The credit allowed by Section 23610.5 (relating to low-income housing). (G) The credit allowed by Section 23612 (relating to sales and use tax credit). (H) The credit allowed by Section 23612.6 (relating to Los Angeles Revitalization Zone sales tax credit). (I) The credit allowed by Section 23622 (relating to enterprise zone hiring credit). (J) The credit allowed by Section 23623 (relating to program area hiring credit). (K) The credit allowed by Section 23625 (relating to Los Angeles Revitalization Zone hiring credit). (L) The credit allowed by Section 23649 (relating to qualified property). (2) No credit against the tax shall reduce the minimum franchise tax imposed under Chapter 2 (commencing with Section 23101). (e) Any credit which is partially or totally denied under subdivision (d) shall be allowed to be carried over to reduce the "tax" in the following year, and succeeding years if necessary, if the provisions relating to that credit include a provision to allow a carryover of the unused portion of that credit. (f) Unless otherwise provided, any remaining carryover from a credit which has been repealed or made inoperative shall continue to be allowed to be carried over and applied against the "tax" until the credit has been exhausted. (g) Unless otherwise provided, if two or more taxpayers share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to its respective share of the costs paid or incurred. SEC. 65.5. Section 23036 of the Revenue and Taxation Code is amended to read: 23036. (a) (1) The term "tax" includes any of the following: (A) The tax imposed under Chapter 2 (commencing with Section 23101). (B) The tax imposed under Chapter 3 (commencing with Section 23501). (C) The tax on unrelated business taxable income, imposed under Section 23731. (D) The tax on S corporations imposed under Section 23802. (2) The term "tax" does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667. (b) For purposes of Article 5 (commencing with Section 18661) of Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4, Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7 (commencing with Section 19501) of Part 10.2, and for purposes of Sections 18601, 19001, and 19005, the term "tax" shall also include all of the following: (1) The tax on limited partnerships, imposed under Section 23081 and the tax on limited liability companies, imposed under Section 23091. (2) The alternative minimum tax imposed under Chapter 2.5 (commencing with Section 23400). (3) The tax on built-in gains of S corporations, imposed under Section 23809. (4) The tax on excess passive investment income of S corporations, imposed under Section 23811. (c) Notwithstanding any other provision of this part, credits shall be allowed against the "tax" in the following order: (1) Credits which do not contain carryover provisions. (2) Credits which, when the credit exceeds the "tax," allow the excess to be carried over to offset the "tax" in succeeding taxable years. The order of credits within this paragraph shall be determined by the Franchise Tax Board. (3) The minimum tax credit allowed by Section 23453. (4) Credits for taxes withheld under Section 18662. (d) Notwithstanding any other provision of this part, each of the following shall be applicable: (1) No credit shall reduce the "tax" below the tentative minimum tax (as defined by paragraph (1) of subdivision (a) of Section 23455), except the following credits, but only after allowance of the credit allowed by Section 23453: (A) The credit allowed by former Section 23601 (relating to solar energy). (B) The credit allowed by former Section 23601.4 (relating to solar energy). (C) The credit allowed by Section 23601.5 (relating to solar energy). (D) The credit allowed by Section 23609 (relating to research expenditures). (E) The credit allowed by Section 23609.5 (relating to clinical testing expenses). (F) The credit allowed by Section 23610.5 (relating to low-income housing). (G) The credit allowed by Section 23612 (relating to sales and use tax credit). (H) The credit allowed by Section 23612.6 (relating to Los Angeles Revitalization Zone sales tax credit). (I) The credit allowed by Section 23622 (relating to enterprise zone hiring credit). (J) The credit allowed by Section 23623 (relating to program area hiring credit). (K) For each income year beginning on or after January 1, 1994, the credit allowed by Section 23623.5 (relating to Los Angeles Revitalization Zone hiring credit). (L) The credit allowed by Section 23625 (relating to Los Angeles Revitalization Zone hiring credit). (M) The credit allowed by Section 23649 (relating to qualified property). (2) No credit against the tax shall reduce the minimum franchise tax imposed under Chapter 2 (commencing with Section 23101). (e) Any credit which is partially or totally denied under subdivision (d) shall be allowed to be carried over to reduce the "tax" in the following year, and succeeding years if necessary, if the provisions relating to that credit include a provision to allow a carryover of the unused portion of that credit. (f) Unless otherwise provided, any remaining carryover from a credit that has been repealed or made inoperative shall continue to be allowed to be carried over under the provisions of that section as it read immediately prior to being repealed or becoming inoperative. (g) Unless otherwise provided, if two or more taxpayers share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to its respective share of the costs paid or incurred. SEC. 66. Section 23038 of the Revenue and Taxation Code is amended to read: 23038. "Corporation" includes every corporation except: (a) Banks. (b) Corporations expressly exempt from the tax by this part or the Constitution of this state. For the purposes of the tax imposed under Chapter 3 (commencing with Section 23501) of Part 11 of Division 2, "corporation" also includes associations (including nonprofit associations that perform services, borrow money or own property), other than banking associations, and Massachusetts or business trusts. For the purposes of this part, a Massachusetts or business trust includes every business organization consisting essentially of an arrangement whereby property is conveyed to one, or more than one, trustee for purposes other than the mere conservation of assets, collecting and disbursing of fixed or periodic income, or the securing of an obligation. In addition to the above, for purposes of the tax imposed under Chapter 2 (commencing with Section 23101) of Part 11 of Division 2 for the purpose of exercising its franchise within this state, "corporation" also includes any limited liability company that is classified as an association for California tax purposes. "Corporation" includes any "corporation" operated by any receiver, liquidator, referee, trustee or other officers or agents appointed by any court, or an assignee for the benefit of creditors. "Corporation" includes any professional corporation incorporated pursuant to Part 4 (commencing with Section 13400) of Division 3 of Title 1 of the Corporations Code. Notwithstanding the above, "corporation" also includes a trust organized and operated exclusively for purposes contained in Section 23701d. SEC. 67. Chapter 1.6 (commencing with Section 23091) is added to Part 11 of Division 2 of the Revenue and Taxation Code, to read: CHAPTER 1.6. TAX AND FEES ON LIMITED LIABILITY COMPANIES 23091. (a) For each taxable year beginning on or after January 1, 1994, every limited liability company doing business in this state (as defined in Section 23101) and required to file a return under Section 18633.5, shall pay annually to this state a tax for the privilege of doing business in this state in an amount equal to the applicable amount specified in paragraph (1) of subdivision (d) of Section 23153 for the taxable year. (b) In addition to any limited liability company which is doing business in this state and is therefore subject to the tax imposed by subdivision (a), for each taxable year beginning on or after January 1, 1994, a limited liability company shall pay annually the tax prescribed in subdivision (a) if articles of organization have been accepted, or a certificate of registration has been issued, by the office of the Secretary of State. The tax shall be paid for each taxable year, or part thereof, until a certificate of dissolution or certificate of cancellation of registration or of articles of organization is filed on behalf of the limited liability company with the office of the Secretary of State. (c) The tax assessed under this section shall be due and payable on or before the 15th day of the fourth month of the taxable year. Notwithstanding the preceding sentence, no penalty under Section 19131 shall be imposed for failure to pay this tax prior to January 3, 1995. (d) For purposes of this section, "limited liability company" means any organization formed by one or more persons under the law of this state, any other country, or any other state, as a "limited liability company" and which is classified as a partnership for California tax purposes. 23092. (a) In addition to the tax imposed under Section 23091, every limited liability company subject to tax under Section 23091 shall pay annually to this state a fee equal to: (1) Five hundred dollars ($500), if the total income from all sources reportable to this state for the taxable year is two hundred fifty thousand dollars ($250,000) or more, but less than five hundred thousand dollars ($500,000). (2) One thousand dollars ($1,000), if the total income from all sources reportable to this state for the taxable year is five hundred thousand dollars ($500,000) or more, but less than one million dollars ($1,000,000). (3) Two thousand dollars ($2,000), if the total income from all sources reportable to this state for the taxable year is one million dollars ($1,000,000) or more, but less than five million dollars ($5,000,000). (4) Four thousand dollars ($4,000), if the total income from all sources reportable to this state for the taxable year is five million dollars ($5,000,000) or more. (5) This subdivision shall be operative for taxable years beginning on or before December 31, 1995. (b) In addition to the tax imposed under Section 23091, every limited liability company subject to tax under subdivision (b) of Section 23091 shall pay annually to this state a fee equal to: (1) Five hundred dollars ($500), if the total income from all sources reportable for the taxable year is two hundred fifty thousand dollars ($250,000) or more, but less than five hundred thousand ($500,000). (2) One thousand five hundred dollars ($1,500), if the total income from all sources reportable to this state for the taxable year is five hundred thousand dollars ($500,000) or more, but less than one million dollars ($1,000,000). (3) Three thousand dollars ($3,000), if the total income from all sources reportable to this state for the taxable year is one million dollars ($1,000,000) or more, but less than five million dollars ($5,000,000). (4) Four thousand five hundred dollars ($4,500), if the total income from all sources reportable to this state for the taxable year is five million dollars ($5,000,000) or more. (5) This subdivision shall apply to taxable years beginning on or after January 1, 1996. (c) (1) For purposes of this section, "total income" means gross income, as defined in Section 24271, plus the cost of goods sold that are paid or incurred in connection with the trade or business of the taxpayer. (2) For purposes of determining the total income from all sources reportable to this state of the taxpayer under this section, the aggregate total income of all commonly controlled entities, as defined in Section 25105, taking into account any election under Section 25110, shall be considered the total income of the taxpayer. (d) The fee assessed under this section shall be due and payable on the date the return of the limited liability company is required to be filed under Section 18633.5. 23093. (a) On or before January 1, 1999, and annually thereafter, the Franchise Tax Board shall conduct a study using the methodology and assumptions set forth in the report dated August 9, 1994, and titled "Methodology for the Limited Liability Company Fee Adjustment Calculation," which is hereby incorporated by reference into this section. The study shall be submitted to the Joint Legislative Budget Committee and made available, upon request, to any Member of the Legislature. If the Franchise Tax Board determines, in accordance with the methodology and assumptions set forth in the study referenced in this subdivision that the act that added this section results in a net gain or reduction in state income and franchise tax revenues, the Franchise Tax Board annually shall, after a public hearing, increase or decrease the amounts of the fees imposed under Section 23092 in a manner that offsets the computed revenue gain or loss. Notwithstanding the above, in no case shall the amount of the fees be less than one dollar ($1). (b) Limited liability companies shall provide, upon request, any information that the Secretary of State or the Franchise Tax Board determines to be necessary to complete the revenue analysis pursuant to this section. (c) The annual increase or decrease in the amounts of the fees as determined by the Franchise Tax Board in accordance with this section shall apply to each taxable year beginning on or after January 1, 1999. (d) The Secretary of State shall provide the Franchise Tax Board with an annual listing, in a form and manner agreed upon by the Franchise Tax Board and the Secretary of State, of the limited liability companies registered with the Secretary of State during the previous calendar year, including, but not limited to, the following information: (1) The name and the mailing address of the limited liability company. (2) The name of the state or foreign country in which the limited liability company has filed articles of organization. (3) The intent of the limited liability company to be treated as a corporation or as a partnership for tax purposes in this state. 23094. (a) The effective date of dissolution, withdrawal, or cancellation of a limited liability company is the date on which the certified copy of the court decree, judgment, or order declaring the limited liability company duly wound up and dissolved is filed in the office of the Secretary of State or the date on which the certificate of winding up and dissolution is filed in the office of the Secretary of State. For the purposes of this chapter, the effective date of cancellation of registration of a foreign limited liability company is the date on which the certificate of cancellation of registration is filed in the office of the Secretary of State. (b) The Secretary of State shall, through an information program and by forms and instructions, recommend that all required documents filed with the Secretary of State be sent, if mailed, by certified mail with return receipt requested. The Secretary of State shall also notify persons that receipt of documents by the Secretary of State will be acknowledged within 21 days of receipt. (c) On or before 21 days after their receipt, the Secretary of State shall provide a payer with acknowledgment of the receipt of documents submitted by a limited liability company pursuant to this chapter. 23095. No decree of dissolution, withdrawal, or cancellation shall be made and entered by any court, nor shall the county clerk of any county or the Secretary of State file any such decree, withdrawal, or cancellation or any other document by which the term of existence of the limited liability company shall be reduced or terminated, nor shall the Secretary of State file any certificate of the surrender or cancellation by a foreign limited liability company of its rights to do intrastate business in this state unless the limited liability company obtains from the Franchise Tax Board and files from the court, county clerk, or Secretary of State as the case may be, a tax clearance certificate indicating that the Franchise Tax Board is satisfied from the available evidence that all taxes and fees imposed by this chapter have been paid or are secured by bond, deposit, or otherwise. Within 30 days after receiving a request for a certificate, the Franchise Tax Board shall either issue the certificate or notify the person requesting the certificate of the amount of tax or fees that must be paid or the amount of bond, deposit, or other security that must be furnished as a condition of issuing the certificate. The issuance of the certificate shall not relieve the taxpayer or any individual, bank, or corporation from liability for any taxes, fees, penalties, or interest imposed by this code. The Franchise Tax Board shall furnish a copy of the tax clearance certificate to the Secretary of State. 23096. A limited liability company shall not be subject to the taxes and fees imposed by this chapter if the limited liability company did no business in this state during the taxable or income year and the taxable or income year was 15 days or less. SEC. 68. Section 23305.5 is added to the Revenue and Taxation Code, to read: 23305.5. (a) For the purposes of this article, "taxpayer" shall include any limited liability company, foreign or domestic, that is organized in this state or registered with the Secretary of State. (b) For purposes of this article, in the case of a limited liability company: (1) "Articles of incorporation" shall include a limited liability company's articles of organization. (2) "Tax" shall include the tax and fee imposed by Sections 23091 and 23092, respectively, with respect to a limited liability company classified as a partnership for California tax purposes. SEC. 69. Section 25141 of the Revenue and Taxation Code is amended to read: 25141. (a) For purposes of this section, the following definitions shall apply: (1) "Entity" means an individual, corporation, association, partnership, limited liability company, estate, trust, or any combination thereof. (2) "Person" means an individual or corporation. (3) "Professional athletic team" means any entity which has all of the following characteristics: (A) Employs concurrently during the income year five or more persons, who are compensated for being participating members of an athletic team engaging in public contests. (B) Is a member of a league composed of at least five entities which are engaged in the operation of an athletic team and which are located in this and other states or in other countries. (C) Has total minimum paid attendance in the aggregate for all contests wherever played during the income year of 40,000 persons. (D) Has minimum gross income in the income year of one hundred thousand dollars ($100,000). (b) For purposes of this chapter, a team shall be considered to have its operations based in the state or country in which the team derives its territorial rights under the rules of the league of which it is a member. (c) The business income of a professional athletic team derived directly or indirectly from its operations as a professional athletic team shall be allocated to this state pursuant to the following three-factor formula: (1) Computation of the property factor under Section 25129: (A) For a team that has its operations based in this state, the average value of all real and tangible personal property, wherever located, and owned or rented and used during the income year, shall be deemed to have been owned or rented and used in this state during the income year. (B) For a team that has its operations based outside of this state, the average value of all real and tangible personal property, wherever located, and owned or rented and used during the income year, shall be deemed to have been owned or rented and used outside this state during the income year. (2) Computation of the payroll factor under Section 25132: (A) For a team that has its operations based in this state, the total compensation paid everywhere during the income year shall be deemed to have been paid in this state during the income year. (B) For a team that has its operations based outside of this state, the total compensation paid everywhere during the income year shall be deemed to have been paid outside this state during the income year. (3) Computation of the sales factor under Section 25134: (A) For a team that has its operations based in this state, the total sales everywhere during the income year shall be deemed to have been made in this state during the income year. (B) For a team that has its operations based outside of this state, the total sales everywhere during the income year shall be deemed to have been made outside this state during the income year. (d) If any team that has its operations based in this state is required to allocate or apportion a part of its business income derived directly or indirectly from its operations as a professional athletic team to another state or country by the laws, regulations, or requirements of the other state or country and pays an income or franchise tax measured by income thereon as a result of the allocation or apportionment, then all of the following shall apply: (1) The business income of the team otherwise subject to this section shall be reduced for purposes of this section by the amount of the business income which is allocated or apportioned to and taxed by the other state or country. (2) This section shall not apply to any team in the same league that has its operations based in the other state or country, and the business income of any such team derived directly or indirectly from its operations as a professional athletic team shall be allocated or apportioned to this state in a manner consistent with the method of allocation or apportionment imposed by the other state or country on the business income of the team that has its operations based in this state. (e) For purposes of the minimum tax imposed under Sections 23151 and 23151.1, an entity which operates a professional athletic team shall be treated as a corporation. The liability under Sections 23151 and 23151.1 of any corporation owning any portion or share of an entity shall be satisfied by payment of the minimum tax by that entity, if the corporation is not otherwise doing business in this state. SEC. 70. Section 30010 of the Revenue and Taxation Code is amended to read: 30010. "Person" includes any individual, firm, partnership, joint venture, limited liability company, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, trustee, syndicate, this state, any county, city and county, municipality, district, or other political subdivision of the state, or any other group or combination acting as a unit. SEC. 71. Section 38106 of the Revenue and Taxation Code is amended to read: 38106. "Person" includes any individual, firm, partnership, joint venture, association, social club, fraternal organization, corporation, limited liability company, estate, trust, business trust, receiver, trustee, syndicate, this state, any county, city and county, municipality, district, or other political subdivision of the state, or any other group or combination acting as a unit. SEC. 72. Section 40004 of the Revenue and Taxation Code is amended to read: 40004. "Person" includes any individual, firm, cooperative organization, fraternal organization, corporation, limited liability company, estate, trust, business trust, receiver, trustee, syndicate, this state, any county, city and county, municipality, district, public agency or subdivision of this state or any other group or combination acting as a unit. SEC. 73. Section 41003 of the Revenue and Taxation Code is amended to read: 41003. "Person" includes an individual, firm, partnership, joint venture, limited liability company, association, cooperative organization, fraternal organization, nonprofit organization, corporation, estate, trust, business or common law trust, receiver, assignee for the benefit of creditors, trustee or trustee in bankruptcy. "Person" does not include a nonprofit hospital, nonprofit educational organization, or a public agency. SEC. 74. Section 43006 of the Revenue and Taxation Code is amended to read: 43006. "Person" means an individual, trust, firm, joint stock company, business concern, corporation, including, but not limited to, a government corporation, partnership, limited liability company, and association. "Person" also includes any city, county, city and county, district, commission, the state or any department, agency, or political subdivision thereof, any interstate body, and the United States and its agencies and instrumentalities to the extent permitted by law. SEC. 75. Section 45006 of the Revenue and Taxation Code is amended to read: 45006. "Person" includes any individual, firm, cooperative organization, fraternal organization, corporation, limited liability company, estate, trust, business trust receiver, trustee, syndicate, this state, any county, city and county, municipality, district, public agency, or subdivision of this state or any other group or combination acting as a unit. SEC. 76. Section 46020 of the Revenue and Taxation Code is amended to read: 46020. "Person" means any individual, trust, firm, joint stock company, or corporation, including, but not limited to, a government corporation, partnership, limited liability company, and association. "Person" also includes any city, county, city and county, district, and the state or any department or agency thereof, and the federal government, or any department or agency thereof, to the extent permitted by law. SEC. 77. Section 55002 of the Revenue and Taxation Code is amended to read: 55002. "Person" means an individual, trust firm, joint stock company, business concern, corporation, including, but not limited to, a government corporation, partnership, limited liability company, and association. "Person" also includes any city, county, city and county, district, commission, the state or any department, agency, or political subdivision thereof, any interstate body, and the United States and its agencies and instrumentalities to the extent permitted by law. SEC. 78. Section 125.4 of the Unemployment Insurance Code is amended to read: 125.4. "American employer" means a person who is any of the following: (a) An individual who is a resident of the United States. (b) A partnership, if two-thirds or more of the partners are residents of the United States. (c) A trust, if all of the trustees are residents of the United States. (d) A corporation organized under the laws of the United States or of any state. (e) A limited liability company organized under the laws of the United States or of any state. SEC. 79. Section 135 of the Unemployment Insurance Code is amended to read: 135. (a) "Employing unit" means any individual or type of organization that has in its employ one or more individuals performing services for it within this state, and includes but is not limited to, the following individuals and organizations: (1) Any individual or type of organization or public entity that elects coverage pursuant to any provision of this division. (2) Any joint venture, partnership, association, trust, estate, joint stock company, insurance company, corporation whether domestic or foreign, limited liability company, whether domestic or foreign, community chest, fund, or foundation. (3) Any public entity. As used in this section, "public entity" means the State of California (including the Trustees of the California State University), any instrumentality of this state (including the Regents of the University of California), any political subdivision of this state or any of its instrumentalities, a county, city, district (including the governing board of any school district or community college district, any county board of education, any county superintendent of schools, or any personnel commission of a school district or community college district that has a merit system pursuant to any provision of the Education Code), entities receiving state money to conduct county fairs and agricultural fairs pursuant to Sections 25905 and 25906 of the Government Code and that perform no other functions, any public authority, public agency, or public corporation of this state, any instrumentality of more than one of the foregoing, and any instrumentality of any of the foregoing and one or more other states or political subdivisions. (4) Any instrumentality of the United States required to make payments under this division. (5) The receiver, trustee in bankruptcy, trustee or successor thereof, and the legal representative of a deceased person. (b) All individuals performing services within this state for any employing unit that maintains two or more separate establishments within this state shall be deemed to be employed by a single employing unit for all the purposes of this division. SEC. 80. Section 135.1 of the Unemployment Insurance Code is amended to read: 135.1. (a) A new employing unit shall not be created when there is an acquisition or change in the form or organization of an existing business enterprise, or severable portion thereof, and there is a continuity of control of the business enterprise. (b) Control of a business enterprise may occur by means of ownership of the organization conducting the business enterprise, ownership of assets necessary to conduct the business enterprise, security arrangements or lease arrangements covering assets necessary to conduct the business enterprise, or a contract when the ownership, stated arrangements or contract provide for or allow direction of the internal affairs or conduct of the business enterprise. (c) A continuity of control will exist if one or more persons, entities, or other organizations controlling the business enterprise remains in control of the business enterprise after an acquisition or change in form. Evidence of continuity of control shall include, but not be limited to, changes of an individual proprietorship to a corporation, partnership, limited liability company, association, or estate; a partnership to an individual proprietorship, corporation, limited liability company, association, estate, or the addition, deletion, or change of partners; a limited liability company to an individual proprietorship, partnership, corporation, association, estate, or to another limited liability company; a corporation to an individual proprietorship partnership, limited liability company, association, estate, or to another corporation or from any form to another form. (d) An employing unit described in subdivision (a) shall continue to be the same employer for the purposes of this code as before the acquisition or change in form. (e) This section shall not modify the provisions of Article 2 (commencing with Section 1731) of Chapter 7. (f) This section shall be subject to subdivision (e) of Section 982 and subdivision (d) of Section 1127.5. SEC. 81. Section 610 of the Unemployment Insurance Code is amended to read: 610. "Employment" shall include the service of an individual who is a citizen of the United States, performed outside the United States (except in Canada), after December 31, 1971, in the employ of an American employer as defined in Section 125.4 other than service that is deemed "employment" under Section 602 or 603 or the equivalent provisions of another state's unemployment compensation law, if: (a) The employer's principal place of business in the United States is located in this state; or (b) The employer has no place of business in the United States, but: (1) The employer is an individual who is a resident of this state; or (2) The employer is a corporation or limited liability company that is organized under the laws of this state; or (3) The employer is a partnership or a trust and the number of the partners or trustees who are residents of this state is greater than the number who are residents of any one other state; or (c) None of the criteria of subdivisions (a) and (b) of this section is met but the employer has elected coverage in this state or, the employer having failed to elect coverage in any state, the individual has filed a claim for benefits, based on such service, under this division. SEC. 82. Section 1116 of the Unemployment Insurance Code is amended to read: 1116. (a) (1) Every employing unit except a domestic or foreign corporation or a domestic or foreign limited liability company shall, within 10 days of quitting business, file with the director a final return and report of wages of its workers, in such form and containing such information as the director prescribes. (2) Every domestic corporation and domestic limited liability company shall, within 10 days of quitting business or within 10 days of the commencement of proceedings to windup its affairs and voluntarily dissolve, whichever expires the earlier, file with the director a return and a report of wages of its workers, in such form and containing such information as the director prescribes. (3) Every foreign corporation and foreign limited liability company shall, within 10 days of quitting business or within 10 days of the surrender of its right to engage in business of this state in accordance with Section 2112 and subdivision (d) of Section 2114 of the Corporations Code for foreign corporations or Section 17455 of the Corporations Code for foreign limited liability companies, whichever expires the earlier, file with the director a final return and report of wages of its workers, in such form and containing such information as the director prescribes. (4) As used in this section, "quitting business" does not include any change in the form or membership of an employing unit if before and after such change 50 percent or more of the control of management is held by the same individual, or is held by an individual before death and after the individual's death by the individual's estate or heirs. (b) Contributions with respect to a return required under subdivision (a) are due and payable on the first day of the applicable 10-day period established pursuant to subdivision (a) and shall become delinquent if not paid within 10 days of the due date. (c) The director for good cause may extend for not to exceed 30 days the time for making a return or paying without penalty or interest any amount required to be paid under this section. SEC. 83. Section 1735 of the Unemployment Insurance Code is amended to read: 1735. Any officer, major stockholder, or other person, having charge of the affairs of a corporate, association, or limited liability company employing unit, who willfully fails to pay contributions required by this division or withholdings required by Division 6 (commencing with Section 13000) on the date on which they become delinquent, shall be personally liable for the amount of the contributions, withholdings, penalties, and interest due and unpaid by such employing unit. The director may assess such officer, stockholder, or other person for the amount of such contributions, withholdings, penalties, and interest. The provisions of Article 8 (commencing with Section 1126) and Article 9 (commencing with Section 1176) of Chapter 4 of Part 1 apply to assessments made pursuant to this section. Sections 1221, 1222, 1223, and 1224 shall apply to assessments made pursuant to this section. With respect to such officer, stockholder, or other person, the director shall have all the collection remedies set forth in this chapter. SEC. 84. Section 2071 of the Unemployment Insurance Code is amended to read: 2071. As used in this chapter: (a) "Employee" does not include any individual employed by his parents, spouse or child or in the domestic service of any person. (b) "Employer" does not include any employer with less than six persons in his employ. It does include any employer with six or more employees. It also includes the State of California and any political subdivision thereof. (c) "Employment agency" includes any person undertaking to procure employees or opportunities to work. (d) "Labor organization" includes any organization that is constituted for the purpose, in whole or in part, of collective bargaining or in dealing with employers concerning grievances, terms or conditions of employment or of other mutual aid or protection in connection with employees. (e) "Person" includes one or more individuals, partnerships, associations, corporations, limited liability companies, legal representatives, trustees, trustees in bankruptcy or receivers. SEC. 85. Section 2107 of the Unemployment Insurance Code is amended to read: 2107. It is a violation of this chapter for any employing unit, including a manager or managing member of a limited liability company, or any officer or agent of an employing unit or any individual to connive or conspire to aid such individual to obtain benefits to which he or she is not entitled by the willful withholding of information or by the willful failure to report any relevant information. SEC. 86. Section 2109 of the Unemployment Insurance Code is amended to read: 2109. The executive officer, general manager, or any other person having charge of the affairs of a corporation, association, or limited liability company who willfully fails to register such corporation, association, or limited liability company as an employing unit, or willfully fails to submit contribution returns, earning reports, or other returns and reports required by this division, or by authorized regulations, is in violation of this chapter. SEC. 87. Section 2110 of the Unemployment Insurance Code is amended to read: 2110. Any employing unit, including any individual member of a partnership employing unit, any officer of a corporate or association employing unit, any manager or managing member of a limited liability company, or any other person having charge of the affairs of a corporate, association, or limited liability company employing unit, that knowingly withholds the deductions required by this division from remuneration paid to its workers, and willfully fails or is willfully financially unable to pay such deductions to the department on the date on which they become delinquent is in violation of this chapter. SEC. 88. Section 2110.3 of the Unemployment Insurance Code is amended to read: 2110.3. Any employing unit, including any individual member of a partnership employing unit, any officer of a corporate or association employing unit, any manager or managing member of a limited liability company, or any other person having charge of the affairs of a corporate, association, or limited liability company employing unit, that knowingly undertakes or agrees to pay without deduction from remuneration paid to its workers the amount of any contributions to the Disability Fund required of the workers under this division and that willfully fails or is willfully financially unable to pay the amount to the department on the date on which the contributions become delinquent is in violation of this chapter. SEC. 89. Section 2110.5 of the Unemployment Insurance Code is amended to read: 2110.5. Any employing unit, including any individual member of a partnership employing unit, any officer of a corporate or association employing unit, any manager or managing member of a limited liability company, or any other person having charge of the affairs of a corporate, association, or limited liability company employing unit, that willfully fails to withhold in trust the deductions required by this division from remuneration paid to its workers, except where such employing unit undertakes or agrees to pay without deduction from the wages of its workers the amount of worker contributions required of its workers under this division, is in violation of this chapter. SEC. 90. Section 2110.7 of the Unemployment Insurance Code is amended to read: 2110.7. Any employing unit, including any individual member of a partnership employing unit, any officer of a corporate or association employing unit, any manager or managing member of a limited liability company, or any other person having charge of the affairs of a corporate, association, or limited liability company employing unit, that knowingly undertakes or agrees to pay without deduction from remuneration paid to its workers the amount of any contributions to the Disability Fund required of such workers under this division and that willfully fails to hold in trust the amount of worker contributions required of such workers under this division is in violation of this chapter. SEC. 91. Section 13005 of the Unemployment Insurance Code is amended to read: 13005. (a) "Employer" means any individual, person, corporation, association, partnership, or limited liability company, or any agent thereof, doing business in this state, deriving income from sources within this state, or in any manner whatsoever subject to the laws of this state, the State of California or any political subdivision or agency thereof, including the Regents of the University of California, any city organized under a freeholders' charter, or any political body not a subdivision or agency of the state, and any person, officer, employee, department, or agency thereof, making payment of wages to employees for services performed within this state, except as provided in subdivision (b). (b) If the employer, as defined in subdivision (a), for whom the employee performs or performed the service does not have control of the payment of wages for such services, "employer" (except for purposes of Section 13009) means the person having control of the payment of such wages, whether or not the person having control of the payment of such wages is subject to the jurisdiction of the laws of this state. SEC. 92. Section 675 of the Vehicle Code is amended to read: 675. (a) "Vehicle salesperson" is a person not otherwise expressly excluded by this section, who does one or a combination of the following: (1) Is employed as a salesperson by a dealer, as defined in Section 285, or who, under any form of contract, agreement, or arrangement with a dealer, for commission, money, profit, or other thing of value, sells, exchanges, buys, or offers for sale, negotiates, or attempts to negotiate, a sale, or exchange of an interest in a vehicle required to be registered under this code. (2) Induces or attempts to induce any person to buy or exchange an interest in a vehicle required to be registered, and who receives or expects to receive a commission, money, brokerage fees, profit, or any other thing of value, from either the seller or purchaser of the vehicle. (3) Exercises managerial control over the business of a licensed vehicle dealer or who supervises vehicle salespersons employed by a licensed dealer, whether compensated by salary or commission, including, but not limited to, any person who is employed by the dealer as a general manager, assistant general manager, or sales manager, or any employee of a licensed vehicle dealer who negotiates with or induces a customer to enter into a security agreement or purchase agreement or purchase order for the sale of a vehicle on behalf of the licensed vehicle dealer. (b) The term "vehicle salesperson" does not include any of the following: (1) Representatives of insurance companies, finance companies, or public officials, who in the regular course of business, are required to dispose of or sell vehicles under a contractual right or obligation of the employer, or in the performance of an official duty, or under the authority of any court of law, if the sale is for the purpose of saving the seller from any loss or pursuant to the authority of a court of competent jurisdiction. (2) Persons who are licensed as a manufacturer, remanufacturer, transporter, distributor, or representative. (3) Persons exclusively employed in a bona fide business of exporting vehicles, or of soliciting orders for the sale and delivery of vehicles outside the territorial limits of the United States. (4) Persons not engaged in the purchase or sale of vehicles as a business, disposing of vehicles acquired for their own use, or for use in their business when the vehicles have been so acquired and used in good faith, and not for the purpose of avoiding the provisions of this code. (5) Persons regularly employed as salespersons by persons who are engaged in a business involving the purchase, sale, or exchange of boat trailers. (6) Persons regularly employed as salespersons by persons who are engaged in a business activity which does not involve the purchase, sale, or exchange of vehicles, except incidentally in connection with the purchase, sale, or exchange of vehicles of a type not subject to registration under this code, boat trailers, or midget autos or racers advertised as being built exclusively for use by children. (7) Persons licensed as a vehicle dealer under this code doing business as a sole ownership or member of a partnership or a stockholder and director of a corporation or a member and manager of a limited liability company licensed as a vehicle dealer under this code. However, those persons shall engage in the activities of a salesperson, as defined in this section, exclusively on behalf of the sole ownership or partnership or corporation or limited liability company in which they own an interest or stock, and those persons owning stock shall be directors of the corporation; otherwise, they are vehicle salespersons and subject to Article 2 (commencing with Section 11800) of Chapter 4 of Division 5. (8) Persons regularly employed as salespersons by a vehicle dealer authorized to do business in California under Section 11700.1 of the Vehicle Code. SEC. 93. Nothing in this act shall be construed to permit a domestic or foreign limited liability company to render professional services, as defined in subdivision (a) of Section 13401 of the Corporations Code, in this state unless expressly authorized under applicable provisions of the Business and Professions Code or the Chiropractic Act. SEC. 94. For purposes of implementing and administering this act in the 1994-95 fiscal year, the sum of three hundred fifty thousand dollars ($350,000) is hereby appropriated from the General Fund to the Franchise Tax Board, in augmentation of Item 1730-001-001 of the Budget Act of 1994. It is the intent of the Legislature that the funds required to administer this act for the 1995-96 fiscal year and each fiscal year thereafter, shall be provided for in the annual Budget Act. SEC. 95. It is a concern of the Legislature that, while this act is designed to assist the formation and operation of small or closely held or controlled business arrangements, limited liability companies may become a format for a publicly held business entity to transact business without adequate provision for governance standards, including rights of securities holders. The Legislature is mindful, also, of the severe financial damage caused to investors in publicly held limited partnerships whose securities were either listed on, or involved in rollup transactions resulting in the issuance of securities to be listed on, a national securities exchange or interdealer quotation system, that had not adopted or imposed standards relating to these securities or transactions. Therefore, it is the intent of the Legislature that a national securities exchange or interdealer quotation system, certified by the Commissioner of Corporations under subdivision (o) of Section 25100 of the Corporations Code, shall adopt, subject to the review and approval of the Commissioner of Corporations, listing standards or designation criteria for the securities of limited liability companies prior to the listing or designation of any such securities on the exchange or system. The Commissioner of Corporations shall withdraw the exemption under subdivision (o) of Section 25100 of the Corporations Code for securities of a limited liability company on an exchange or system if an exchange or system fails to adopt such standards or criteria. SEC. 96. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs which may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, changes the definition of a crime or infraction, changes the penalty for a crime or infraction, or eliminates a crime or infraction. Notwithstanding Section 17580 of the Government Code, unless otherwise specified in this act, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution. SEC. 96.5. Section 65.5 of this bill incorporates amendments to Section 23036 of the Revenue and Taxation Code proposed by both this bill and AB 3316. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1995, (2) each bill amends Section 23036 of the Revenue and Taxation Code, and (3) this bill is enacted after AB 3316, in which case Section 23036 of the Revenue and Taxation Code, as amended by AB 3316, shall remain operative only until the operative date of this bill, at which time Section 65.5 of this bill shall become operative, and Section 65 of this bill shall not become operative. SEC. 97. Section 53.5 of this bill incorporates amendments to Section 17220 of the Revenue and Taxation Code proposed by both this bill and SB 1805. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1995, (2) each bill amends Section 17220 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1805, in which case Section 17220 of the Revenue and Taxation Code, as amended by SB 1805, shall remain operative only until the operative date of this bill, at which time Section 53.5 of this bill shall become operative, and Section 53 of this bill shall not become operative. SEC. 98. Section 54.5 of this bill incorporates amendments to Section 18402 of the Revenue and Taxation Code proposed by both this bill and SB 1805. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1995, (2) each bill amends Section 18402 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1805, in which case Section 18402 of the Revenue and Taxation Code, as amended by SB 1805, shall remain operative only until the operative date of this bill, at which time Section 54.5 of this bill shall become operative, and Section 54 of this bill shall not become operative. SEC. 99. Section 56.5 of this bill incorporates amendments to Section 18621.5 of the Revenue and Taxation Code proposed by both this bill and SB 1805. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1995, (2) each bill amends Section 18621.5 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 1805, in which case Section 18621.5 of the Revenue and Taxation Code, as amended by SB 1805, shall remain operative only until the operative date of this bill, at which time Section 56.5 of this bill shall become operative, and Section 56 of this bill shall not become operative. SEC. 100. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: Limited liability companies may presently do business in at least 43 of the United States. It is essential to the California economy that the state provide an attractive business environment, which includes provision for limited liability companies. In order to help stem the flow of business and jobs from California, protect the rights of Californians dealing with limited liability companies, and improve California's business climate and tax base, it is necessary that this act go into effect immediately.