Pillsbury Winthrop Shaw Pittman

California’s new LLC law: next steps for California LLCs

By Riaz A Karamali and Didi S Chow

On 1 January 2014, California’s Beverly-Killea Limited Liability Company Act (‘old act’) was superseded by the California Revised Uniform Limited Liability Company Act (‘new act’). The new act includes a number of substantive changes that may adversely affect existing California limited liability companies (LLCs) unless they amend their operating agreements.

The new act took effect on 1 January 2014 and is codified at section 17701.01 et seq. of the California Corporations Code. It is based on the Revised Uniform Limited Liability Company Act (RULLCA) first promulgated in 2006 by the National Conference of Commissioners on Uniform State Laws. The new act contains significant differences from both the old act and the RULLCA. The new act applies automatically — there is no procedure to opt in or opt out — and affects all existing California LLCs as well as all LLCs formed under the laws of California after 1 January 2014.

The basic concepts under the new act are similar to the old act. However, the new act includes a number of substantive changes that may require the members of California LLCs to review and modify their LLC operating agreements. A few of these changes are highlighted below…

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