AB 1187: Limited liability companies.

In 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 the articles required by Section 17702.01. The term includes the articles of organization as amended or restated.

(c)Contribution means any benefit provided by a person to a limited liability company:

(1)In order to become a member upon formation of the limited liability company and in accordance with an agreement between or among the persons that have agreed to become the initial members of the limited liability company.

(2)In order to become a member after formation of the limited liability company and in accordance with an agreement between the person and the limited liability company.

(3)In the persons capacity as a member and in accordance with the operating agreement or an agreement between the member and the limited liability company.

(d)Debtor in bankruptcy means a person that is the subject of either of the following:

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

(2)A comparable order under federal, state, or foreign law governing bankruptcy or insolvency, an assignment for the benefit of creditors, or an order appointing a trustee, receiver, or liquidator of the person or of all or substantially all of the persons property.

(e)Designated office means either of the following:

(1)The office that a limited liability company is required to designate and maintain under Section 17701.13.

(2)The principal office of a foreign limited liability company.

(f)Distribution, except as otherwise provided in subdivision (g) of Section 17704.05, means a transfer of money or other property from a limited liability company to another person on account of a transferable interest.

(g)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.

(h)Effective, with respect to a record required or permitted to be delivered to the Secretary of State for filing under this title, means effective under subdivision (c) of Section 17702.05.

(i)(1)Electronic transmission by the limited liability company means a communication delivered by any of the following means:

(A)Facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, for that recipient on record with the limited liability company.

(B)Posting on an electronic message board or network that the limited liability company has designated for those communications, together with a separate notice to the recipient of the posting, which transmission shall be validly delivered upon the later of the posting or delivery of the separate notice thereof.

(C)Other means of electronic communication to which both of the following apply:

(i)The communication is delivered to a recipient who has provided an unrevoked consent to the use of those means of transmission.

(ii)The communication creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form. However, an electronic transmission by a limited liability company to an individual member is not authorized unless, in addition to satisfying the requirements of this section, the transmission satisfies the requirements applicable to consumer consent to electronic records as set forth in the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)).

(2)Electronic transmission to the limited liability company means a communication delivered by any of the following means:

(A)Facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, that the limited liability company has provided from time to time to members or managers for sending communications to the limited liability company.

(B)Posting on an electronic message board or network that the limited liability company has designated for those communications, which transmission shall be validly delivered upon the posting.

(C)Other means of electronic communication to which both of the following apply:

(i)The limited liability company has placed in effect reasonable measures to verify that the sender is the member or manager, in person or by proxy, purporting to send the transmission.

(ii)The communication creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form.

(j)Foreign limited liability company means an unincorporated entity formed under the law of a jurisdiction other than this state and denominated by that law as a limited liability company.

(k)Limited liability company, except in the phrase foreign limited liability company, means an entity formed under pursuant to this title or an entity that becomes subject to this title pursuant to Article 13 (commencing with Section 17713.01).

(l)Majority of the managers unless otherwise provided in the operating agreement, means more than 50 percent of the managers of the limited liability company.

(m)Majority of the members unless otherwise provided in the operating agreement, means more than 50 percent of the membership interests of members in current profits of the limited liability company.

(n)Manager means a person that under the operating agreement of a manager-managed limited liability company is responsible, alone or in concert with others, for performing the management functions stated in subdivision (c) of Section 17704.07.

(o)Manager-managed limited liability company means a limited liability company that qualifies under subdivision (a) of Section 17704.07.

(p)Member means a person that has become a member of a limited liability company under Section 17704.01 and has not dissociated under Section 17706.02.

(q)Member-managed limited liability company means a limited liability company that is not a manager-managed limited liability company.

(r)Membership interest means a members rights in the limited liability company, including the members transferable 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.

(s)Operating agreement means the agreement, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in subdivision (a) of Section 17701.10. The term operating agreement may include, without more, an agreement of all members to organize a limited liability company pursuant to this title. An operating agreement of a limited liability company having only one member shall not be unenforceable by reason of there being only one person who is a party to the operating agreement. The term includes the agreement as amended or restated.

(t)Organization means, whether domestic or foreign, a partnership whether general or limited, limited liability company, association, corporation, professional corporation, professional association, nonprofit corporation, business trust, or statutory business trust having a governing statute.

(u)Organizer means a person that acts under Section 17702.01 to form a limited liability company.

(v)Person means an individual, partnership, limited partnership, trust, estate, association, corporation, limited liability company, or other entity, whether domestic or foreign. Nothing in this subdivision shall be construed to confer any rights under the California Constitution or the United States Constitution.

(w)Principal office means the principal executive office of a limited liability company or foreign limited liability company, whether or not the office is located in this state.

(x)Record means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(y)State means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(z)Transfer includes an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift, and transfer by operation of law.

(aa)Transferable interest means the right, as originally associated with a persons capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right.

(ab)Transferee means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a member.

(ac)Vote includes authorization by written consent or consent given by electronic transmission to the limited liability company.