In an effort to establish rules that allow limited liability members in a limited liability company to disassociate from the company by express will, newly enacted legislation imposes mandatory recordkeeping on limited liability companies.
Aside from offering new exit strategy opportunities for members, the new amendments to the California Revised Uniform Limited Liability Company Act require limited liability companies to:
- Designate and continuously maintain in California an office, which need not be a place of its activity in this state, and an agent for service of process. In addition, limited liability companies must now maintain in writing at their designated office in the State:
- A current list of the full name and last known business or residence address of each member and of each transferee set forth in alphabetical order, together with the contribution and the share in profits and losses of each member and transferee.
- If the limited liability company is a manager-managed limited liability company, a current list of the full name and business or residence address of each manager.
- A copy of the articles of organization and all amendments thereto, together with any powers of attorney pursuant to which the articles of organization or any amendments thereto were executed.
- Copies of the limited liability company’s federal, state, and local income tax or information returns and reports, if any, for the six most recent fiscal years.
- A copy of the limited liability company’s operating agreement, if in writing, and any amendments thereto, together with any powers of attorney pursuant to which any written operating agreement or any amendments thereto were executed.
- Copies of the financial statement of the limited liability company, if any, for the six most recent fiscal years.
- The books and records of the limited liability company as they relate to the internal affairs of the limited liability company for at least the current and past four fiscal years.
And that is not all there is in the new amendments. Among other things, one gives tax assessors the right to access all of these documents upon request. Another regulates distribution of company assets. A third provides rules for amendments to Operating Agreements. Others describe acceptable and
prohibited provisions in Operating Agreements.
If you own, operate or are a member of a limited liability company, now is the time to assure your limited liability company is in compliance. In addition, you should take careful note should a member consider leaving or closing the doors of the company.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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