SECTIONS 17350-17357 - California Statutes

CORPORATIONS CODE

SECTION 17350-17357

17350. A limited liability company shall be dissolved and its
affairs shall be wound up upon the happening of the first to occur of
the following:
(a) At the time specified in the articles of organization, if any,
or upon the happening of the events, if any, specified in the
articles of organization or a written operating agreement.
(b) By the vote of a majority in interest of the members, or a
greater percentage of the voting interests of members as may be
specified in the articles of organization or a written operating
agreement.
(c) Entry of a decree of judicial dissolution pursuant to Section
17351.

17350.5. (a) Notwithstanding any other provision of this division,
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, may execute and acknowledge a certificate
of cancellation of articles of organization, on a form prescribed by
the Secretary of State, stating all of the following:
(1) The name of the domestic limited liability company and the
Secretary of State's file number.
(2) That the certificate of cancellation is being filed within 12
months from the date the articles of organization were filed.
(3) That the limited liability company does not have any debts or
other liabilities, except as provided in paragraph (4).
(4) That a final franchise tax return, as described by Section
23332 of the Revenue and Taxation Code, or a final annual tax return,
as described by Section 17947 of the Revenue and Taxation Code, has
been or will be filed with the Franchise Tax Board, as required under
Part 10.2 (commencing with Section 18401) of Division 2 of the
Revenue and Taxation Code.
(5) That the known assets of the limited liability company
remaining after payment of, or adequately providing for, known debts
and liabilities have been distributed to the persons entitled thereto
or that the limited liability company acquired no known assets, as
the case may be.
(6) That the limited liability company has not conducted any
business from the time of the filing of the articles of organization.
(7) That a majority of the managers or members voted, or, if no
managers or members, the person or a majority of the persons signing
the articles of organization, voted to dissolve the limited liability
company.
(8) If the limited liability company has received payments for
interests from investors, that those payments have been returned to
those investors.
(b) A certificate of cancellation executed and acknowledged
pursuant to subdivision (a) shall be filed with the Secretary of
State within 12 months from the date that the articles of
organization were filed. The Secretary of State shall notify the
Franchise Tax Board of the cancellation.
(c) Upon filing a certificate of cancellation pursuant to
subdivision (a), a limited liability company shall be cancelled and
its powers, rights, and privileges shall cease.
(d) A domestic limited liability company that filed articles of
organization on or after January 1, 2004, and that meets all of the
conditions described in subdivision (a) may file a certificate of
cancellation under this section.

17351. (a) Pursuant to an action filed by any manager or by any
member or members, a court of competent jurisdiction may decree the
dissolution of a limited liability company whenever any of the
following occurs:
(1) It is not reasonably practicable to carry on the business in
conformity with the articles of organization or operating agreement.
(2) Dissolution is reasonably necessary for the protection of the
rights or interests of the complaining members.
(3) The business of the limited liability company has been
abandoned.
(4) The management of the limited liability company is deadlocked
or subject to internal dissention.
(5) Those in control of the company have been guilty of, or have
knowingly countenanced persistent and pervasive fraud, mismanagement,
or abuse of authority.
(b) (1) In any suit for judicial dissolution, the other members
may avoid the dissolution of the limited liability company by
purchasing for cash the membership interests owned by the members so
initiating the proceeding (the "moving parties") at their fair market
value. In fixing the value, the amount of any damages resulting if
the initiation of the dissolution is a breach by any moving party or
parties of an agreement with the purchasing party or parties,
including, without limitation, the operating agreement, may be
deducted from the amount payable to the moving party or parties;
provided, that no member who sues for dissolution on the grounds set
forth in paragraph (3), (4), or (5) of subdivision (a) shall be
liable for damages for breach of contract in bringing that action.
(2) If the purchasing parties (A) elect to purchase the membership
interests owned by the moving parties, (B) are unable to agree with
the moving parties upon the fair market value of the membership
interests, and (C) give bond with sufficient security to pay the
estimated reasonable expenses, including attorneys' fees, of the
moving parties if the expenses are recoverable under paragraph (3),
the court, upon application of the purchasing parties, either in the
pending action or in a proceeding initiated in the superior court of
the proper county by the purchasing parties, shall stay the winding
up and dissolution proceeding and shall proceed to ascertain and fix
the fair market value of the membership interests owned by the moving
parties.
(3) The court shall appoint three disinterested appraisers to
appraise the fair market value of the membership interests owned by
the moving parties, and shall make an order referring the matter to
the appraisers so appointed for the purpose of ascertaining that
value. The order shall prescribe the time and manner of producing
evidence, if evidence is required. The award of the appraisers or a
majority of them, when confirmed by the court, shall be final and
conclusive upon all parties. The court shall enter a decree that
shall provide in the alternative for winding up and dissolution of
the limited liability company unless payment is made for the
membership interests within the time specified by the decree. If the
purchasing parties do not make payment for the membership interests
within the time specified, judgment shall be entered against them and
the surety or sureties on the bond for the amount of the expenses,
including attorneys' fees, of the moving parties. Any member
aggrieved by the action of the court may appeal therefrom.
(4) If the purchasing parties desire to prevent the winding up and
dissolution of the limited liability company, they shall pay to the
moving parties the value of their membership interests ascertained
and decreed within the time specified pursuant to this section, or,
in the case of an appeal, as fixed on appeal. On receiving that
payment or the tender thereof, the moving parties shall transfer
their membership interests to the purchasing parties.
(5) For the purposes of this section, the valuation date shall be
the date upon which the action for judicial dissolution was
commenced. However, the court may, upon the hearing of a motion by
any party, and for good cause shown, designate some other date as the
valuation date.

17352. In the event of a dissolution of a limited liability
company:
(a) The managers who have not wrongfully dissolved the limited
liability company or, if none, the members may wind up the limited
liability company's affairs, unless the dissolution occurs pursuant
to subdivision (c) of Section 17350, in which event the winding up
shall be conducted in accordance with the decree of dissolution. The
persons winding up the affairs of the limited liability company shall
give written notice of the commencement of winding up by mail to all
known creditors and claimants whose addresses appear on the records
of the limited liability company.
(b) Upon the petition of any manager or of any member or members,
or three or more creditors, a court of competent jurisdiction may
enter a decree ordering the winding up of the limited liability
company if that appears necessary for the protection of any parties
in interest. The decree shall designate the managers or members who
are to wind up the limited liability company's affairs.
(c) Except as otherwise provided in the articles of organization
or a written operating agreement, the managers or members winding up
the affairs of the limited liability company pursuant to this section
shall be entitled to reasonable compensation.

17353. (a) Except as otherwise provided in the articles of
organization or the written operating agreement, after determining
that all the known debts and liabilities of a limited liability
company in the process of winding up, including, without limitation,
debts and liabilities to members who are creditors of the limited
liability company, have been paid or adequately provided for, the
remaining assets shall be distributed among the members according to
their respective rights and preferences as follows:
(1) To members in satisfaction of liabilities for distributions
pursuant to Section 17201, 17202, or 17255.
(2) To members of the limited liability company for the return of
their contributions.
(3) To members in the proportions in which those members share in
distributions.
(b) If the winding up is by court proceeding or subject to court
supervision, the distribution shall not be made until after the
expiration of any period for the presentation of claims that has been
prescribed by order of the court.
(c) The payment of a debt or liability, whether the whereabouts of
the creditor is known or unknown, has been adequately provided for
if the payment has been provided for by either of the following
means:
(1) Payment thereof has been assumed or guaranteed in good faith
by one or more financially responsible persons or by the United
States government or any agency thereof, and the provision, including
the financial responsibility of the person, was determined in good
faith and with reasonable care by the members or managers of the
limited liability company to be adequate at the time of any
distribution of the assets pursuant to this section.
(2) The amount of the debt or liability has been deposited as
provided in Section 2008.
This subdivision shall not prescribe the exclusive means of making
adequate provision for debts and liabilities.

17354. (a) A limited liability company that is dissolved
nevertheless continues to exist for the purpose of winding up its
affairs, prosecuting and defending actions by or against it in order
to collect and discharge obligations, disposing of and conveying its
property, and collecting and dividing its assets. A limited liability
company shall not continue business except so far as necessary for
the winding up thereof.
(b) No action or proceeding to which a limited liability company
is a party abates by the dissolution of the limited liability company
or by reason of proceedings for the winding up and dissolution
thereof.
(c) Any assets inadvertently or otherwise omitted from the winding
up continue in the dissolved limited liability company for the
benefit of the persons entitled thereto upon dissolution and on
realization shall be distributed accordingly.

17355. (a) (1) Causes of action against a dissolved limited
liability company, whether arising before or after the dissolution of
the limited liability company, may be enforced against any of the
following:
(A) Against the dissolved limited liability company, to the extent
of its undistributed assets, including, without limitation, any
insurance assets held by the limited liability company that may be
available to satisfy claims.
(B) If any of the assets of the dissolved limited liability
company have been distributed to members, against members of the
dissolved limited liability company to the extent of the limited
liability company assets distributed to them upon dissolution of the
limited liability company.
Any member compelled to return distributed assets in an amount
that exceeds the sum of the member's pro rata share of the claim and
the amount for which the member could otherwise be held liable under
Section 17254 or 17255 may seek contribution for the excess from any
other member or manager, up to the sum of that other person's pro
rata share of the claim and that other person's liabilities under
Section 17254 or 17255.
(2) Except as set forth in subdivision (c), all causes of action
against a member of a dissolved limited liability company arising
under this section are extinguished unless the claimant commences a
proceeding to enforce the cause of action against that member of a
dissolved limited liability company prior to the earlier of the
following:
(A) The expiration of the statute of limitations applicable to the
cause of action.
(B) Four years after the effective date of the dissolution of the
limited liability company.
(3) As a matter of procedure only, and not for purposes of
determining liability, members of the dissolved limited liability
company may be sued in the name of the limited liability company upon
any cause of action against the limited liability company. This
section does not affect the rights of the limited liability company
or its creditors under Sections 17254 and 17255, or the rights, if
any, of creditors under the Uniform Fraudulent Transfer Act, that may
arise against the member of a limited liability company.
(b) Summons or other process against a limited liability company
may be served by delivering a copy thereof to a manager, member,
officer, or person having charge of its assets or, if no such person
can be found, to any agent upon whom process might be served at the
time of dissolution. If none of those persons can be found with due
diligence and it is so shown by affidavit to the satisfaction of the
court, then the court may make an order that summons or other process
be served upon the dissolved limited liability company by personally
delivering a copy thereof, together with a copy of the order, to the
Secretary of State or an assistant or deputy Secretary of State.
Service in this manner is deemed complete on the 10th day after
delivery of the process to the Secretary of State. Upon receipt of
process and the fee therefor, the Secretary of State shall give
notice to the limited liability company as provided in Section 1702.
(c) Every limited liability company shall survive and continue to
exist indefinitely for the purpose of being sued in any quiet title
action. Any judgment rendered in any such action shall bind each and
all of its members or other persons having any equity or other
interest in the limited liability company, to the extent of their
interest therein, and the action shall have the same force and effect
as an action brought under the provisions of Sections 410.50 and
410.60 of the Code of Civil Procedure. Service of summons or other
process in any action may be made as provided in Chapter 4
(commencing with Section 413.10) of Title 5 of Part 2 of the Code of
Civil Procedure or as provided in subdivision (b).
(d) For purposes of Article 4 (commencing with Section 19071) of
Chapter 4 of Part 10.2 of Division 2 of the Revenue and Taxation
Code, the liability described in this section shall be considered a
liability at law within respect to a dissolved limited liability
company.

17356. (a) (1) The managers shall cause to be filed in the office
of, and on a form prescribed by, the Secretary of State, a
certificate of dissolution upon the dissolution of the limited
liability company pursuant to Chapter 8 (commencing with Section
17350), unless the event causing the dissolution is that specified in
subdivision (c) of Section 17350, in which case the managers or
members conducting the winding up of the limited liability company's
affairs pursuant to Section 17352 shall have the obligation to file
the certificate of dissolution.
(2) The certificate of dissolution shall set forth all of the
following:
(A) The name of the limited liability company and the Secretary of
State's file number.
(B) Any other information the managers or members filing the
certificate of dissolution determine to include.
(3) If a dissolution pursuant to subdivision (b) of Section 17350
is made by the vote of all of the members and a statement to that
effect is added to the certificate of cancellation of articles of
organization pursuant to subdivision (b), the separate filing of a
certificate of dissolution pursuant to this subdivision is not
required.
(b) (1) The managers or members who filed the certificate of
dissolution shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State, a certificate of cancellation
of articles of organization upon the completion of the winding up of
the affairs of the limited liability company pursuant to Chapter 8
(commencing with Section 17350), unless the event causing the
dissolution is that specified in subdivision (c) of Section 17350, in
which case the managers or members conducting the winding up of the
limited liability company's affairs pursuant to Section 17352 shall
have the obligation to file the certificate of cancellation of
articles of organization.
(2) The certificate of cancellation of articles of organization
shall set forth all of the following:
(A) The name of the limited liability company and the Secretary of
State's file number.
(B) That a final franchise tax return, as described by Section
23332 of the Revenue and Taxation Code, or a final annual tax return,
as described by Section 17947 of the Revenue and Taxation Code, has
been or will be filed with the Franchise Tax board, as required under
Part 10.2 (commencing with Section 18401) of Division 2 of the
Revenue and Taxation Code.
(C) Any other information the managers or members filing the
certificate of cancellation of articles of organization determine to
include.
(3) The Secretary of State shall notify the Franchise Tax Board of
the filing.

17357. (a) Notwithstanding the filing of a certificate of
dissolution, a majority in interest of the members may cause to be
filed, in the office of, and on a form prescribed by, the Secretary
of State, a certificate of continuation, in any of the following
circumstances:
(1) The business of the limited liability company is to be
continued pursuant to a unanimous vote of the remaining members.
(2) The dissolution of the limited liability company was by vote
of the members pursuant to subdivision (b) of Section 17350 and each
member who consented to the dissolution has agreed in writing to
revoke his or her vote in favor of or consent to the dissolution.
(3) The limited liability company was not, in fact, dissolved.
(b) The certificate of continuation shall set forth all of the
following:
(1) The name of the limited liability company and the Secretary of
State's file number.
(2) The grounds provided by subdivision (a) that are the basis for
filing the certificate of continuation.
(c) Upon the filing of a certificate of continuation, the
certificate of dissolution shall be of no effect from the time of the
filing of the certificate of dissolution.