SB 904: Alarm companies: business conditions: limited liability companies.

The Alarm Company Act provides for the licensure, registration, and regulation of alarm company operators and alarm agents by the Bureau of Security and Investigative Services within the Department of Consumer Affairs and makes a violation of the act a crime. The act authorizes the bureau, until January 1, 2019, to issue an alarm company operator license to a limited liability company (LLC). The act also requires an LLC to maintain an insurance policy or policies against liability arising out of claims based on acts, errors, or omissions in regard to the alarm company services it provides.

The California Revised Uniform Limited Liability Company Act provides for the authorization of LLCs for any lawful purpose, except as specified, and further authorizes an LLC to be member-managed or manager-managed, in accordance with certain provisions. Under existing law, in a member-managed LLC, the management and conduct of the LLC are vested in the members, subject to other conditions and rights. Under existing law, if an LLC is to be manager-managed, the articles of organization are required to contain a statement to that effect.

This bill would extend the authorization of the Bureau of Security and Investigative Services to issue an alarm company operator license to an LLC until January 1, 2024. The bill would also define within the Alarm Company Act who is a member of an LLC and who is a manager under the operating agreement of a manager-managed LLC company, as specified. The bill would require a licensee organized as an LLC, on and after January 1, 2019, to report annually to the bureau specified information about claims paid from any general liability insurance policy held on a form provided by the bureau. The bill would additionally require the bureau, on or before January 1, 2023, to share with the appropriate policy committees of the Legislature relevant information regarding the renewal of licenses granted to LLCs, including information about insurance claims. The bill would make related, conforming changes to the existing definitions of the Alarm Company Act and would repeal various duplicate provisions. Because a violation of the Alarm Company Act by an LLC would be a crime, the bill would impose a state-mandated local program.

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.