BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 653|
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THIRD READING
Bill No: SB 653
Author: Correa (D)
Amended: 5/28/09
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 4/28/09
AYES: Corbett, Harman, Florez, Leno, Walters
SENATE APPROPRIATIONS COMMITTEE : 13-0, 5/26/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Runner, Walters, Wolk, Wyland, Yee
SUBJECT : Tribal Business Entities: limited liability
companies
SOURCE : Santa Ynez Band of Chumash Indians
DIGEST : This bill enables limited liability companies
organized and operating under tribal law, to qualify to do
intrastate business by registering a foreign limited
liability company with the Secretary of State.
ANALYSIS : Federally recognized tribes are those Indian
tribes recognized by the United States Secretary of the
Interior for certain federal government purposes. Existing
federal law authorizes a federally recognized tribe to form
a business entity.
Existing law requires every limited liability company (LLC)
and every foreign LLC registered to transact intrastate
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business in California to file certain information with the
Secretary of State and to comply with various other
procedures. Existing law defines "foreign limited
liability company" as either an entity formed under the LLC
laws of any state other than this state or a specified
entity formed under the laws of a foreign country meeting
certain requirements.
This bill revises this definition to provide that a
"foreign limited liability company" also includes an entity
formed under the limited liability laws a federally
recognized Indian tribe.
Existing law provides that the organization and internal
affairs and various other matters relating to a foreign LLC
are generally governed by the laws of the state or foreign
jurisdiction under which the LLC is organized.
This bill also refers to the laws of a federally recognized
Indian tribe under which a limited liability company may be
organized. The bill makes other conforming changes.
Existing law imposes a tax under the Personal Income Tax
Law on a LLC doing business in this state, and defines
"limited liability company" for these purposes to include
LLCs formed under the laws of this state, another state, or
a foreign country.
This bill includes within that definition a LLC formed
under the laws of a federally recognized Indian tribe.
Background
California law allows business entities such as
corporations, LLCs, limited liability partnerships (LLPs),
and limited partnerships that are organized under the law
of another state, to qualify to do intrastate business by
providing relevant information and registering first with
the Secretary of State. California law also allows these
corporations, LLPs, and limited partnerships, when
organized under the law of a "foreign jurisdiction"
(meaning a jurisdiction outside of the United States) to
qualify to do intrastate business in the same manner. The
Corporations Code treats any business entity that is
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organized under the law of a jurisdiction other than the
state of California, as a "foreign corporation," a "foreign
LLC," a "foreign LLP," or a "foreign limited partnership."
(Corporation Code Sections 2100 et seq., 15909.1 et seq.,
16900 et seq., 17001, et seq.)
Indian tribes are treated as sovereign nations under
federal law, and state jurisdiction over civil and criminal
matters involving tribal members or organizations is
limited absent congressional authorization. ( Cherokee
Nation v. Georgia (1831) 30 U.S. (5 Pet.), United States v.
Wheeler (1978) 435 U.S. 313, 323-24.)
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
SOS ---minor, offset by fee revenue---
General
Tax revenue
---unknown, revenue, potentially---
General
$145 annually---
SUPPORT : (Verified 5/27/09)
Santa Ynez Band of Chumash Indians (source)
Elk Valley Rancheria
California Nations Indian Gaming Association
Sysuan Band of the Kumeyaay Nation
ARGUMENTS IN SUPPORT : According to the author's office,
this bill is necessary in order for LLCs formed under
Indian tribal law to be qualified to transact intrastate
business in California.
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RJG:do 5/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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