California Lawyers Association

Business Law Partnerships and Limited Companies Committee

Updates from the BLS Partnerships and Limited Companies Committee

The Securities and Exchange Commission (“SEC)”) has amended to Rules 501(a), 215, and 144A from the Securities Act of 1933, to update the accredited investors definition, one of the principal tests to determine eligibility for participation in private capital markets. Read more
In its opinion in The Matter of the Appeal of Aroya Investments I, LLC, issued on July 7, 2020, the California Office of Tax Appeals (OTA) held that an out-of-state limited liability company (LLC) was “doing business” in California, and therefore subject to the $800 annual minimum franchise tax charged LLCs, based solely on the LLC’s ownership of a 0.78% membership interest in another manager-managed LLC. Read more
The Partnership and LLCs Committee (“PLLC”) will propose amendments to two sections of the California Revised Uniform Limited Liability Company Act ("RULLCA"). The proposed amendments will clarify how an otherwise dissolved (canceled) LLC may continue to exist for purposes of distributing its assets and paying off its liabilities, if needed, after a certificate of cancellation has been filed. Read more
Why is the dissolution of a limited liability company such a big deal? Or is it? Read more
A new online CLE program packed with practice tips and engaging discussions, presented by the Partnerships and Limited Liability Companies Committee (“PLLC”), is now available for download through the California Lawyers Association online catalog. Read more
From October 10 to 12, the California Lawyers Association hosted its 2019 Annual Meeting in Monterey. As part of the three-day, multi-disciplinary, state-wide calendar of events, the Partnerships and Limited Liability Companies Committee organized an event reviewing the past year. Chris Chediak, Soyeun D. Choi and Katie O’Neil Tran prepared content and Nina Hong acted as moderator. Read more
The seller in commercial real estate transactions is commonly a single-purpose LLC (limited liability company) set up to hold only one property.  After the property is sold, the owners (members) of the LLC usually take the proceeds (via distribution from the LLC) and dissolve the LLC.  Later when the buyer discovers a potential claim against the seller, say, for fraud and misrepresentation, the LLC has already been dissolved with no assets left. Fraud and misrepresentation is probably the most common… Read more
Background: Limited liability company (“LLC”) operating agreements commonly contain a clause on “Tax Matters Partner” (“TMP”). A TMP represents a partnership before the Internal Revenue Service (“IRS”) in all tax matters under the former Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”). The TEFRA audit rules apply to LLCs that are treated as partnerships for federal income tax purposes. LLCs with 10 or fewer members are exempt from these rules. Read more
When a client requests the preparation of a purchase or sale agreement for limited liability company (LLC) interests, counsel should always gather additional information prior to the preparation of such an agreement to obtain a complete picture of the exchange. Read more
A single member Limited Liability Company is dissolved when its sole member dies unless either of the following two exceptions apply:
(1) The operating agreement allows the continuation of the LLC and provides a method for determining the successor to the deceased member; or
(2) The heirs, successors, and assigns of the deceased member’s interest elect to continue the LLC within 90 days of the sole member’s death. Read more

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