SECTIONS 17100-17107 - California Statutes

CORPORATIONS CODE

SECTION 17100-17107

17100. (a) After formation of a limited liability company, a person
may become a member:
(1) In the case of a person acquiring a membership interest
directly from the limited liability company, at the time provided in
and upon compliance with the articles of organization or the
operating agreement or, if the articles of organization or operating
agreement do not so provide, only upon the vote of a majority in
interest of the members, excluding the vote of the person acquiring
the membership interest, and only when the person becomes a party to
the operating agreement.
(2) In the case of an assignee of a membership interest, upon
compliance with subdivision (a) of Section 17303 and at the time
provided in and upon compliance with the articles of organization or
the operating agreement or, if the articles of organization or
operating agreement do not so provide, when the assignee becomes a
party to the operating agreement.
(b) In each case under subdivision (a), the person acquiring the
membership interest shall be added as a member to the list required
by paragraph (1) of subdivision (a) of Section 17058.
(c) The operating agreement may provide for the termination in
whole or in part of the membership interest or economic interest of a
member in the limited liability company. If a member's economic
interest in the limited liability company is terminated pursuant to
the operating agreement, the member may demand and shall be entitled
to receive a return of that member's contribution. Any provision in
an operating agreement governing the termination of a member's
interest and the return of a member's contribution shall be
enforceable in accordance with its terms unless the member seeking to
invalidate the provision establishes that the provision was
unreasonable under the circumstances existing at the time the
agreement was made. Upon any termination of a membership interest,
the list required by paragraph (1) of subdivision (a) of Section
17058 shall be amended accordingly.
(d) Sections 406 and 407 of the Labor Code shall not apply to
membership interests issued by any foreign or domestic limited
liability company to the following persons:
(1) Any employee of the limited liability company or of any parent
or subsidiary thereof, pursuant to a membership interest purchase
plan or agreement or membership interest option plan or agreement.
(2) In any transaction in connection with securing employment, to
a person, who is or is about to become an officer of the limited
liability company or a manager (as appointed or elected by the
members) of the limited liability company, or of any parent or
subsidiary thereof.

17101. (a) Except as otherwise provided in Section 17254 or in
subdivision (e), no member of a limited liability company shall be
personally liable under any judgment of a court, or in any other
manner, for any debt, obligation, or liability of the limited
liability company, whether that liability or obligation arises in
contract, tort, or otherwise, solely by reason of being a member of
the limited liability company.
(b) A member of a limited liability company shall be subject to
liability under the common law governing alter ego liability, and
shall also be personally liable under a judgment of a court or for
any debt, obligation, or liability of the limited liability company,
whether that liability or obligation arises in contract, tort, or
otherwise, under the same or similar circumstances and to the same
extent as a shareholder of a corporation may be personally liable for
any debt, obligation, or liability of the corporation; except that
the failure to hold meetings of members or managers or the failure to
observe formalities pertaining to the calling or conduct of meetings
shall not be considered a factor tending to establish that a member
or the members have alter ego or personal liability for any debt,
obligation, or liability of the limited liability company where the
articles of organization or operating agreement do not expressly
require the holding of meetings of members or managers.
(c) Nothing in this section shall be construed to affect the
liability of a member of a limited liability company (1) to third
parties for the member's participation in tortious conduct, or (2)
pursuant to the terms of a written guarantee or other contractual
obligation entered into by the member, other than an operating
agreement.
(d) A limited liability company or foreign limited liability
company shall carry insurance or provide an undertaking to the same
extent and in the same amount as is required by any law, rule, or
regulation of this state that would be applicable to the limited
liability company or foreign limited liability company were it a
corporation organized and existing or duly qualified for the
transaction of intrastate business under the General Corporation Law.
(e) Notwithstanding subdivision (a), a member of a limited
liability company may agree to be obligated personally for any or all
of the debts, obligations, and liabilities of the limited liability
company as long as the agreement to be so obligated is set forth in
the articles of organization or in a written operating agreement that
specifically references this subdivision.

17102. The articles of organization or the operating agreement may
provide for the creation of classes of members having those relative
rights, powers, and duties as the articles of organization or
operating agreement may provide, including rights, powers, and duties
senior to other classes of members.

17103. (a) The articles of organization or a written operating
agreement may provide to all or certain identified members or a
specified class or group of members the right to vote separately or
with all or any class or group of members on any matter. Voting by
members may be on a per capita, number, financial interest, class,
group, or any other basis. If no voting provision is contained in the
articles of organization or written operating agreement:
(1) The members of a limited liability company shall vote in
proportion to their interests in current profits of the limited
liability company or, in the case of a member who has assigned his or
her or its entire economic interest in the limited liability company
to a person who has not been admitted as a member, in proportion to
the interest in current profits that the assigning member would have,
had the assignment not been made.
(2) Any amendment of the articles of organization or operating
agreement shall require the unanimous vote of all members.
(3) In all other matters in which a vote is required, a vote of a
majority in interest of the members shall be sufficient.
(b) Notwithstanding any provision to the contrary in the articles
of organization or operating agreement, in no event shall the
articles of organization be amended by a vote of less than a majority
in interest of the members.
(c) Notwithstanding any provision to the contrary in the articles
of organization or operating agreement, members shall have the right
to vote on a dissolution of the limited liability company as provided
in subdivision (b) of Section 17350 and on a merger of the limited
liability company as provided in Section 17551.

17104. (a) Meetings of members may be held at any place, by
electronic video screen communication or by electronic transmission
by and to the limited liability company pursuant to paragraphs (1)
and (2) of subdivision (o) of Section 17001, either within or without
this state, selected by the person or persons calling the meeting or
as may be stated in or fixed in accordance with the articles of
organization or a written operating agreement. If no other place is
stated or so fixed, all meetings shall be held at the principal
executive office of the limited liability company. Unless prohibited
by the articles of organization of the limited liability company, if
authorized by the operating agreement, members not physically present
in person or by proxy at a meeting of members may, by electronic
transmission by and to the limited liability company pursuant to
paragraphs (1) and (2) of subdivision (o) of Section 17001 or by
electronic video screen communication, participate in a meeting of
members, be deemed present in person or by proxy, and vote at a
meeting of members whether that meeting is to be held at a designated
place or in whole or in part by means of electronic transmission by
and to the limited liability company or by electronic video screen
communication, in accordance with subdivision (l).
(b) A meeting of the members may be called by any manager or by
any member or members representing more than 10 percent of the
interests of members for the purpose of addressing any matters on
which the members may vote.
(c) (1) Whenever members are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given
not less than 10 days nor more than 60 days before the date of the
meeting to each member entitled to vote at the meeting. The notice
shall state the place, date, and hour of the meeting, the means of
electronic transmission by and to the limited liability company or
electronic video screen communication, if any, and the general nature
of the business to be transacted. No other business may be
transacted at this meeting.
(2) Any report or any notice of a members' meeting shall be given
personally, by electronic transmission by the limited liability
company, or by mail or other means of written communication,
addressed to the member at the address of the member appearing on the
books of the limited liability company or given by the member to the
limited liability company for the purpose of notice, or, if no
address appears or is given, at the place where the principal
executive office of the limited liability company is located or by
publication at least once in a newspaper of general circulation in
the county in which the principal executive office is located. The
notice or report shall be deemed to have been given at the time when
delivered personally, delivered by electronic transmission by the
limited liability company, deposited in the mail, or sent by other
means of written communication. An affidavit of mailing or delivered
by electronic transmission by the limited liability company of any
notice or report in accordance with this article, executed by a
manager, shall be prima facie evidence of the giving of the notice or
report.
(3) If any notice or report addressed to the member at the address
of the member appearing on the books of the limited liability
company is returned to the limited liability company by the United
States Postal Service marked to indicate that the United States
Postal Service is unable to deliver the notice or report to the
member at the address, all future notices or reports shall be deemed
to have been duly given without further mailing if they are available
for the member at the principal executive office of the limited
liability company for a period of one year from the date of the
giving of the notice or report to all other members.
(4) Notice given by electronic transmission by the limited
liability company under this subdivision shall be valid only if it
complies with paragraph (1) of subdivision (o) of Section 17001.
Notwithstanding this condition, notice shall not be given by
electronic transmission by the limited liability company under this
subdivision after either of the following:
(A) The limited liability company is unable to deliver two
consecutive notices to the member by that means.
(B) The inability to so deliver the notices to the member becomes
known to the secretary, any assistant secretary, the transfer agent,
or any other person responsible for the giving of the notice.
(5) Upon written request to a manager by any person entitled to
call a meeting of members, the manager shall immediately cause notice
to be given to the members entitled to vote that a meeting will be
held at a time requested by the person calling the meeting, not less
than 10 days nor more than 60 days after the receipt of the request.
If the notice is not given within 20 days after receipt of the
request, the person entitled to call the meeting may give the notice
or, upon the application of that person, the superior court of the
county in which the principal executive office of the limited
liability company is located, or if the principal executive office is
not in this state, the county in which the limited liability company'
s address in this state is located, shall summarily order the giving
of the notice, after notice to the limited liability company
affording it an opportunity to be heard. The procedure provided in
subdivision (c) of Section 305 shall apply to the application. The
court may issue any order as may be appropriate, including, without
limitation, an order designating the time and place of the meeting,
the record date for determination of members entitled to vote, and
the form of notice.
(d) When a members' meeting is adjourned to another time or place,
unless the articles of organization or a written operating agreement
otherwise require and, except as provided in this subdivision,
notice need not be given of the adjourned meeting if the time and
place thereof or the means of electronic transmission by and to the
limited liability company or electronic video screen communication,
if any, are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the limited liability company may
transact any business that may have been transacted at the original
meeting. If the adjournment is for more than 45 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each member of
record entitled to vote at the meeting.
(e) The actions taken at any meeting of members, however called
and noticed, and wherever held, have the same validity as if taken at
a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after
the meeting, each of the members entitled to vote, not present in
person or by proxy, provides a waiver of notice or consents to the
holding of the meeting or approves the minutes of the meeting in
writing. All waivers, consents, and approvals shall be filed with the
limited liability company records or made a part of the minutes of
the meeting after conversion to the form in which those records or
minutes are kept. Attendance of a person at a meeting shall
constitute a waiver of notice of the meeting, except when the person
objects, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Attendance at a meeting is not a waiver of any right to object to the
consideration of matters required by this title to be included in
the notice but not so included, if the objection is expressly made at
the meeting. Neither the business to be transacted nor the purpose
of any meeting of members need be specified in any written waiver of
notice, unless otherwise provided in the articles of organization or
operating agreement, except as provided in subdivision (g).
(f) Members may participate in a meeting of the limited liability
company through the use of conference telephones or electronic video
screen communication, as long as all members participating in the
meeting can hear one another, or by electronic transmission by and to
the limited liability company pursuant to paragraphs (1) and (2) of
subdivision (o) of Section 17001. Participation in a meeting pursuant
to this provision constitutes presence in person at that meeting.
(g) Any action approved at a meeting, other than by unanimous
approval of those entitled to vote, shall be valid only if the
general nature of the proposal so approved was stated in the notice
of meeting or in any written waiver of notice.
(h) (1) A majority in interest of the members represented in
person or by proxy shall constitute a quorum at a meeting of members.
(2) The members present at a duly called or held meeting at which
a quorum is present may continue to transact business until
adjournment, notwithstanding the loss of a quorum, if any action
taken after loss of a quorum, other than adjournment, is approved by
the requisite percentage of interests of members specified in this
title or in the articles of organization or a written operating
agreement.
(3) In the absence of a quorum, any meeting of members may be
adjourned from time to time by the vote of a majority of the
interests represented either in person or by proxy, but no other
business may be transacted, except as provided in paragraph (2).
(i) (1) Any action that may be taken at any meeting of the members
may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed and delivered to the limited
liability company within 60 days of the record date for that action
by members having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at
which all members entitled to vote thereon were present and voted.
(2) Unless the consents of all members entitled to vote have been
solicited in writing, (A) notice of any member approval of an
amendment to the articles of organization or operating agreement, a
dissolution of the limited liability company as provided in Section
17350, or a merger of the limited liability company as provided in
Section 17551, without a meeting by less than unanimous written
consent shall be given at least 10 days before the consummation of
the action authorized by the approval, and (B) prompt notice shall be
given of the taking of any other action approved by members without
a meeting by less than unanimous written consent, to those members
entitled to vote who have not consented in writing.
(3) Any member giving a written consent, or the member's
proxyholder, may revoke the consent personally or by proxy by a
writing received by the limited liability company prior to the time
that written consents of members having the minimum number of votes
that would be required to authorize the proposed action have been
filed with the limited liability company, but may not do so
thereafter. This revocation is effective upon its receipt at the
office of the limited liability company required to be maintained
pursuant to Section 17057.
(j) The use of proxies in connection with this section will be
governed in the same manner as in the case of corporations formed
under the General Corporation Law.
(k) In order that the limited liability company may determine the
members of record entitled to notices of any meeting or to vote, or
entitled to receive any distribution or to exercise any rights in
respect of any other lawful action, a manager, or members
representing more than 10 percent of the interests of members, may
fix, in advance, a record date, that is not more than 60 days nor
less than 10 days prior to the date of the meeting and not more than
60 days prior to any other action. If no record date is fixed the
following shall apply:
(1) The record date for determining members entitled to notice of
or to vote at a meeting of members shall be at the close of business
on the business day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the business day
next preceding the day on which the meeting is held.
(2) The record date for determining members entitled to give
consent to limited liability company action in writing without a
meeting shall be the day on which the first written consent is given.
(3) The record date for determining members for any other purpose
shall be at the close of business on the day on which the managers
adopt the resolution relating thereto, or the 60th day prior to the
date of the other action, whichever is later.
(4) The determination of members of record entitled to notice of
or to vote at a meeting of members shall apply to any adjournment of
the meeting unless a manager or the members who called the meeting
fix a new record date for the adjourned meeting, but the manager or
the members who called the meeting shall fix a new record date if the
meeting is adjourned for more than 45 days from the date set for the
original meeting.
(l) A meeting of the members may be conducted, in whole or in
part, by electronic transmission by and to the limited liability
company or by electronic video screen communication if both of the
following requirements are met:
(1) The limited liability company implements reasonable measures
to provide members, in person or by proxy, a reasonable opportunity
to participate in the meeting and to vote on matters submitted to the
members, including an opportunity to read or hear the proceedings of
the meeting substantially concurrently with those proceedings.
(2) When any member votes or takes other action at the meeting by
means of electronic transmission to the limited liability company or
electronic video screen communication, a record of that vote or
action is maintained by the limited liability company.

17105. (a) The operating agreement may provide that the interest of
a member or assignee in a limited liability company may be evidenced
by a certificate of interest issued by the limited liability
company, and may make other provisions not inconsistent with this
title with respect to the transfer of interests represented by those
certificates or with respect to the form of those certificates.
(b) The operating agreement may provide that the certificate may
be signed by a manager or officer of the limited liability company,
whose signature may be a facsimile. In case any manager or officer of
the limited liability company who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be a
manager or officer before the certificate is issued, it may be issued
by the limited liability company with the same effect as if the
person were a manager or officer at the date of issue. If a
certificate is worn out or lost, it may be renewed on production of
the worn out or lost certificate or on satisfactory proof of its loss
together with such indemnity as may be required by the manager or
managers or a resolution of members.

17106. (a) Upon the request of a member or a holder of an economic
interest, for purposes reasonably related to the interest of that
person as a member or a holder of an economic interest, a manager
shall promptly deliver, in writing, to the member or holder of an
economic interest, at the expense of the limited liability company, a
copy of the information required to be maintained by paragraphs (1),
(2), and (4) of subdivision (a) of Section 17058, and any written
operating agreement of the limited liability company.
(b) Each member, manager, and holder of an economic interest has
the right upon reasonable request, for purposes reasonably related to
the interest of that person as a member, manager, or holder of an
economic interest, to each of the following:
(1) To inspect and copy during normal business hours any of the
records required to be maintained by Section 17058.
(2) To obtain in writing from the limited liability company
promptly after becoming available, a copy of the limited liability
company's federal, state, and local income tax or information returns
for each year.
(c) In the case of any limited liability company with more than 35
members:
(1) A manager shall cause an annual report to be sent to each of
the members not later than 120 days after the close of the fiscal
year. That report, which may be sent by electronic transmission by
the limited liability company (paragraph (1) of subdivision (o) of
Section 17001), shall contain a balance sheet as of the end of the
fiscal year and an income statement and a statement of cashflows for
the fiscal year.
(2) Members representing at least 5 percent of the voting
interests of members, or three or more members, may make a written
request to a manager for an income statement of the limited liability
company for the initial three-month, six-month, or nine-month period
of the current fiscal year ended more than 30 days prior to the date
of the request, and a balance sheet of the limited liability company
as of the end of that period. The statement shall be delivered or
mailed to the members within 30 days thereafter.
(3) The financial statements referred to in this section shall be
accompanied by the report thereon, if any, of the independent
accountants engaged by the limited liability company or, if there is
no report, the certificate of a manager of the limited liability
company that the financial statements were prepared without audit
from the books and records of the limited liability company.
(d) A manager shall promptly furnish to a member a copy of any
amendment to the articles of organization or operating agreement
executed by a manager pursuant to a power of attorney from the
member. The articles of organization or operating agreement may be
sent by electronic transmission by the limited liability company.
(e) The limited liability company shall send or cause information
to be sent in writing to each member or holder of an economic
interest within 90 days after the end of each taxable year the
information necessary to complete federal and state income tax or
information returns, and, in the case of a limited liability company
with 35 or fewer members, a copy of the limited liability company's
federal, state, and local income tax or information returns for the
year.
(f) In addition to any other remedies, a court of competent
jurisdiction may enforce the duty of making and mailing or delivering
the information and financial statements required by this section
and, for good cause shown, may extend the time therefor.
(g) In any action under this section, if the court finds the
failure of the limited liability company to comply with the
requirements of this section is without justification, the court may
award an amount sufficient to reimburse the person bringing the
action for the reasonable expenses incurred by that person, including
attorneys' fees, in connection with the action or proceeding.
(h) Any waiver of the rights provided in this section shall be
unenforceable.
(i) Any request, inspection, or copying by a member or holder of
an economic interest may be made by that person or by that person's
agent or attorney.

17107. (a) Upon complaint that a limited liability company is
failing to comply with the provisions of Section 17106, or to afford
to the members rights given to them in the articles of organization
or operating agreement, the Attorney General may, in the name of the
people of the State of California, send to the office required to be
maintained pursuant to Section 17057, notice of the complaint.
(b) If the answer of the limited liability company is not received
within 30 days of the date the notice was transmitted, or if the
answer is not satisfactory, and if the enforcement of the rights of
the aggrieved persons by private civil action, by class action, or
otherwise, would be so burdensome or expensive as to be
impracticable, the Attorney General may institute, maintain, or
intervene in any court of competent jurisdiction or before any
administrative agency for relief by way of injunction, the
dissolution of entities, the appointment of receivers, or any other
temporary, preliminary, provisional, or final remedies as may be
appropriate to protect the rights of members or to restore the
position of the members for the failure to comply with the
requirements of Section 17106 or the articles of organization or the
operating agreement. In any action, suit, or proceeding, there may be
joined as parties all persons and entities responsible for or
affected by the activity.