AB 1722: Limited liability companies: dissolution: cancellation of articles of organization.

Existing law, the California Revised Uniform Limited Liability Company Act, authorizes a limited liability company to have any lawful purpose, except as specified. A limited liability company is an entity distinct from its members. Existing law authorizes one or more persons to form a limited liability company by, among other things, signing and delivering articles of organization to the Secretary of State. Under existing law, a limited liability company is a member-managed limited liability company unless the articles of organization contain a statement that the limited liability company is to be manager managed. Under existing law, the operating agreement governs, among other things, relations among the members as members and between the members and the limited liability company and the activities of the limited liability company.

Under existing law, a limited liability company is dissolved, and its activities are required to be wound up, if, among other things, a majority of the members of the limited liability company votes to dissolve.

This bill would instead require the vote of 50% or more of the voting interests of the members of the limited liability company to dissolve.

Under existing law, if a domestic limited liability company has not conducted any business, only a majority of the members, or, if there are no members, the majority of the managers, if any, or if no members or managers, the person or a majority of the persons signing the articles of organization, are authorized to execute and acknowledge a certificate of cancellation of articles of organization, on a specified form prescribed by the Secretary of State.

This bill would replace that majority requirement to cancel the articles of organization with 50% or more of the voting interests of the members or managers, or 50% or more of the persons signing the articles of incorporation, as applicable.