BILL ANALYSIS �
SB 323
Page 1
SENATE THIRD READING
SB 323 (Vargas)
As Amended August 14, 2012
Majority vote
SENATE VOTE :37-0
JUDICIARY 10-0 APPROPRIATIONS 17-0
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|Ayes:|Feuer, Wagner, Atkins, |Ayes:|Fuentes, Harkey, |
| |Dickinson, Gorell, Huber, | |Blumenfield, Bradford, |
| |Jones, Monning, | |Charles Calderon, Campos, |
| |Wieckowski, Bonnie | |Davis, Donnelly, Gatto, |
| |Lowenthal | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Enacts, as of January 1, 2014, the California Revised
Uniform Limited Liability Company Act (CRULLCA) in place of the
Beverly-Killea Limited Liability Company Act. Specifically,
this bill :
1)Repeals, as of January 1, 2014, the Beverly-Killea Limited
Liability Company Act and enacts the CRULLCA which recasts
provisions governing the formation and operation of limited
liability companies (LLCs).
2)Distinguishes between a manager-managed limited liability
company and a member-managed limited liability company for
purposes of defining the scope of a member's agency and
limiting fiduciary duties of members who are not in control of
an LLC.
3)Authorizes the Secretary of State to issue a certificate of
registration with respect to a foreign limited liability
company. Provides for the filing of specified records and
provides that an individual who signs such a record affirms
under penalty of perjury that the information in the record is
accurate.
4)Allows an LLC to be subject to the nonexclusive jurisdiction
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of courts in another state and California or the exclusive
jurisdiction of California courts. Allows a member to consent
to arbitration, as specified.
5)Specifies when a member may be dissociated from an LLC and the
effects of dissociation on the member.
6)Revises and recasts provisions relating to capital
contribution standards and liability of members, and regulates
the allocation of profits and losses, distributions of money
and property, withdrawal of membership, assignment of
interests, and dissolution of LLCs.
7)Provides that the CRULLCA applies to acts and transactions by
an LLC occurring on or after January 1, 2014. Provides that
the Beverly-Killea Limited Liability Company Act applies to
acts or transactions occurring before that date.
8)Provides that the CRULLCA may, at any time, be amended or
repealed.
EXISTING LAW authorizes, under the Beverly-Killea Limited
Liability Company Act, the creation of, and governs the
activities of, LLCs having one or more members.
FISCAL EFFECT : According to the Assembly Appropriations, the
Secretary of State will incur one-time special fund costs of
around $90,000 to revise forms and materials on its Web site and
for staff training regarding the revised provisions governing
LLCs (Business Fees Fund).
COMMENTS : This bill, sponsored by the Partnerships and Limited
Liability Companies Committee of the Business Law Section of the
State Bar, repeals the Beverly-Killea Limited Liability Company
Act and, taking into account California's particular LLC
protections, replaces it with a modified version of the Revised
Uniform Limited Liability Company, which recasts provisions
governing the formation and operations of LLCs.
An LLC is a hybrid between a corporation and a partnership. An
LLC generally has the beneficial characteristics of a
partnership for operational and taxation purposes, but its
members enjoy the immunity provided by a corporation to its
shareholders for contract debts or tort liability. The interest
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of a member in an LLC is an economic interest, in the same
manner that a partnership interest or a corporate share is an
economic interest, that may be transferred under terms and
conditions provided by the LLC agreement, the partnership
agreement, or the corporate structure.
California first recognized LLCs in 1994 with the enactment of
the Beverly-Killea Limited Liability Company Act, which provided
comprehensive provisions for the organization, management, and
dissolution of LLCs. (SB 469 (Beverly), Chapter 1200, Statutes
of 1994.) That same year, the National Conference of
Commissioners on Uniform State Laws approved the use of the
Uniform Limited Liability Company Act. In 2006, after reviewing
the development of LLC laws across the states, the National
Conference of Commissioners on Uniform State Laws adopted the
Revised Uniform Limited Liability Company Act, which has since
been enacted in five states (Idaho, Iowa, Nebraska, Utah, and
Wyoming) and the District of Colombia. This bill enacts a
modified Revised Uniform Limited Liability Company Act, taking
in account particular provisions and protections already
existing in California law.
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334
FN: 0005242