2009 California Corporations Code - Section 17000-17005 :: Chapter 1. General Provisions

17000.  This title shall be known and may be cited as the
Beverly-Killea Limited Liability Company Act.

17001.  Unless the context otherwise indicates, the following
definitions govern the construction of this title:
   (a) "Acknowledged" means that an instrument is either of the
following:
   (1) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code.
   (2) Executed to include substantially the following wording
preceding the signature: It is hereby declared that I am the person
who executed this instrument, which execution is my act and deed.
   Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.
   (b) "Articles of organization" means articles of organization
filed under Section 17050, including all amendments thereto or
restatements thereof, or, in the case of a foreign limited liability
company, all documents that serve a like function under the laws of
the jurisdiction in which the foreign limited liability company is
organized.
   (c) "Bankrupt" or "bankruptcy" means, with respect to any person,
being the subject of an order for relief under Title 11 of the United
States Code, or any successor statute or other statute in any
foreign jurisdiction having like import or effect.
   (d) "Capital account" means, unless otherwise provided in the
operating agreement, the amount of the capital interest of a member
in the limited liability company consisting of that member's original
contribution, as (1) increased by any additional contributions and
by that member's share of the limited liability company's profits,
and (2) decreased by any distribution to that member and by that
member's share of the limited liability company's losses.
   (e) "Constituent limited liability company" means a limited
liability company that is merged with or into one or more other
limited liability companies or other business entities and includes a
surviving limited liability company.
   (f) "Constituent other business entity" means any other business
entity that is merged with or into one or more limited liability
companies and includes a surviving other business entity.
   (g) "Contribution" means any money, property, or services
rendered, or a promissory note or other binding obligation to
contribute money or property, or to render services as permitted in
this title, which a member contributes to a limited liability company
as capital in that member's capacity as a member pursuant to an
agreement between the members, including an agreement as to value.
   (h) "Disappearing limited liability company" means a constituent
limited liability company that is not the surviving limited liability
company.
   (i) "Disappearing other business entity" means a constituent other
business entity that is not the surviving other business entity.
   (j) "Distribution" means the transfer of money or property by a
limited liability company to its members without consideration.
   (k) "Domestic" means organized under the laws of this state when
used in relation to any limited liability company, other business
entity or person (other than a natural person).
   (l) "Domestic corporation" means a corporation as defined in
Section 162.
   (m) "Domestic limited partnership" means a partnership formed by
two or more persons under the laws of this state and having one or
more general partners and one or more limited partners.
   (n) "Economic interest" means a person's right to share in the
income, gains, losses, deductions, credit, or similar items of, and
to receive distributions from, the limited liability company, but
does not include any other rights of a member, including, without
limitation, the right to vote or to participate in management, or,
except as provided in Section 17106, any right to information
concerning the business and affairs of the limited liability company.
   (o) (1) "Electronic transmission by the limited liability company"
means a communication (a) delivered by (1) facsimile
telecommunication or electronic mail when directed to the facsimile
number or electronic mail address, respectively, for that recipient
on record with the limited liability company, (2) posting on an
electronic message board or network that the limited liability
company has designated for those communications, together with a
separate notice to the recipient of the posting, which transmission
shall be validly delivered upon the later of the posting or delivery
of the separate notice thereof, or (3) other means of electronic
communication, (b) to a recipient who has provided an unrevoked
consent to the use of those means of transmission, and (c) that
creates a record that is capable of retention, retrieval, and review,
and that may thereafter be rendered into clearly legible tangible
form. However, an electronic transmission by a limited liability
company to an individual member is not authorized unless, in addition
to satisfying the requirements of this section, the transmission
satisfies the requirements applicable to consumer consent to
electronic records as set forth in the Electronic Signatures in
Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)).
   (2) "Electronic transmission to the limited liability company"
means a communication (a) delivered by (1) facsimile
telecommunication or electronic mail when directed to the facsimile
number or electronic mail address, respectively, which the limited
liability company has provided from time to time to members or
managers for sending communications to the limited liability company,
(2) posting on an electronic message board or network that the
limited liability company has designated for those communications,
and which transmission shall be validly delivered upon the posting,
or (3) other means of electronic communication, (b) as to which the
limited liability company has placed in effect reasonable measures to
verify that the sender is the member or manager (in person or by
proxy) purporting to send the transmission, and (c) that creates a
record that is capable of retention, retrieval, and review, and that
may thereafter be rendered into clearly legible tangible form.
   (p) "Foreign corporation" means a corporation formed under the
laws of any state other than this state or under the laws of the
United States or of a foreign country.
   (q) "Foreign limited liability company" means either (1) an entity
formed under the limited liability company laws of any state other
than this state, or (2) an entity organized under the laws of any
foreign country that is (A) an unincorporated association, (B)
organized under a statute pursuant to which an association may be
formed that affords each of its members limited liability with
respect to the liabilities of the entity, and (C) not an entity that
is required to be registered or qualified pursuant to the provisions
of Title 1 (commencing with Section 100) or Title 2 (commencing with
Section 15001); but the term "foreign limited liability company" does
not include a foreign association, as defined in Section 170.
   (r) "Foreign limited partnership" means a partnership formed under
the laws of any state other than this state or under the laws of a
foreign country, including a limited liability limited partnership,
and having as partners one or more general partners and one or more
limited partners or their equivalents under any name.
   (s) "Foreign other business entity" means any other business
entity formed under the laws of any state other than this state or
under the laws of the United States or of a foreign country.
   (t) "Limited liability company" or "domestic limited liability
company" means an entity having one or more members that is organized
under this title and is subject to the provisions of Section 17101.
   (u) "Mail" unless otherwise provided in the operating agreement,
means first-class mail, postage prepaid, unless registered mail is
specified. Registered mail includes certified mail.
   (v) "Majority in interest of the members," unless otherwise
provided in the operating agreement, means more than 50 percent of
the interests of members in current profits of the limited liability
company.
   (w) "Manager" means a person elected by the members of a limited
liability company to manage the limited liability company if the
articles of organization contain the statement referred to in
subdivision (b) of Section 17151 or, if the articles of organization
do not contain that statement, "manager" means each of the members of
the limited liability company.
   (x) "Member" means a person who:
   (1) Has been admitted to a limited liability company as a member
in accordance with the articles of organization or operating
agreement, or an assignee of an interest in a limited liability
company who has become a member pursuant to Section 17303.
   (2) Has not resigned, withdrawn, or been expelled as a member or,
if other than an individual, been dissolved.
   (y) "Member of record" means a member named as a member on the
list maintained in accordance with paragraph (1) of subdivision (a)
of Section 17058.
   (z) "Membership interest" means a member's rights in the limited
liability company, collectively, including the member's economic
interest, any right to vote or participate in management, and any
right to information concerning the business and affairs of the
limited liability company provided by this title.
   (aa) "Officer" means any person elected or appointed pursuant to
Section 17154.
   (ab) "Operating agreement" means any agreement, written or oral,
between all of the members as to the affairs of a limited liability
company and the conduct of its business in any manner not
inconsistent with law or the articles of organization, including all
amendments thereto, or, in the case of a foreign limited liability
company, all documents that serve a like function under the laws of
the jurisdiction in which the foreign limited liability company is
organized. The term "operating agreement" may include, without more,
an agreement between all the members to organize a limited liability
company pursuant to the provisions of this title.
   (ac) "Other business entity" means a corporation, limited
partnership, general partnership, business trust, real estate
investment trust, or an unincorporated association (other than a
nonprofit association), but excluding a domestic limited liability
company and a foreign limited liability company.
   (ad) "Parent," when used in relation to a specified limited
liability company, means a person who owns, directly or indirectly,
membership interests possessing more than 50 percent of the voting
power of the specified limited liability company. When used in
relation to a specified corporation or limited partnership, the term
"parent" shall have the meanings set forth in Section 175 and
subdivision (w) of Section 15611 or subdivision (v) of Section
15901.02 respectively.
   (ae) "Person" means an individual, partnership, limited
partnership, trust, estate, association, corporation, limited
liability company, or other entity, whether domestic or foreign.
   (af) [RESERVED]
   (ag) [RESERVED]
   (ah) [RESERVED]
   (ai) "Proxy," unless otherwise provided in the operating
agreement, means a written authorization signed or an electronic
transmission authorized by a member or the member's attorney-in-fact
giving another person the power to exercise the voting rights of that
member. "Signed," for the purpose of this section, means the placing
of the member's name on the proxy (whether by manual signature,
typewriting, telegraphic or electronic transmission, or otherwise) by
the member or member's attorney-in-fact.
   A proxy may be transmitted by an oral telephonic transmission if
it is submitted with information from which it may be determined that
the proxy was authorized by the member, or by the member's
attorney-in-fact.
   (aj) "Return of capital," unless otherwise provided in the
operating agreement, means any distribution to a member to the extent
that the member's capital account, immediately after the
distribution, is less than the amount of that member's contributions
to the limited liability company as reduced by prior distributions
that were a return of capital.
   (ak) "State" means a state, territory, or possession of the United
States, the District of Columbia, or the Commonwealth of Puerto
Rico.
   (al) "Subsidiary of a specified limited liability company" means a
limited liability company or other business entity in which shares,
interests, or other securities possessing more than 50 percent of the
voting power are owned by the specified limited liability company.
   (am) "Surviving limited liability company" means a limited
liability company into which one or more other limited liability
companies or other business entities are merged.
   (an) "Surviving other business entity" means an other business
entity into which one or more limited liability companies are merged.
   (ao) "Time a notice is given or sent," unless otherwise expressly
provided, means the time a written notice is deposited in the United
States mail; is personally delivered to the recipient, is delivered
to a common carrier for transmission, or is actually transmitted by
the person giving the notice by electronic transmission, to the
recipient; or the time any oral notice is communicated, in person or
by telephone, to the recipient or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.
   (ap) "Transact intrastate business" means to enter into repeated
and successive transactions of business in this state, other than in
interstate or foreign commerce.
   (1) Without excluding other activities which may not be considered
to be transacting intrastate business, a foreign limited liability
company shall not be considered to be transacting intrastate business
merely because its subsidiary transacts intrastate business, or
merely because of its status as any one or more of the following:
   (A) A shareholder of a domestic corporation.
   (B) A shareholder of a foreign corporation transacting intrastate
business.
   (C) A limited partner of a foreign limited partnership transacting
intrastate business.
   (D) A limited partner of a domestic limited partnership.
   (E) A member or manager of a foreign limited liability company
transacting intrastate business.
   (F) A member or manager of a domestic limited liability company.
   (2) Without excluding other activities which may not be considered
to be transacting intrastate business, a foreign limited liability
company shall not be considered to be transacting intrastate business
within the meaning of this subdivision solely by reason of carrying
on in this state any one or more of the following activities:
   (A) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof, or the settlement of claims or disputes.
   (B) Holding meetings of its managers or members or carrying on any
other activities concerning its internal affairs.
   (C) Maintaining bank accounts.
   (D) Maintaining offices or agencies for the transfer, exchange,
and registration of the foreign limited liability company's
securities or maintaining trustees or depositaries with respect to
those securities.
   (E) Effecting sales through independent contractors.
   (F) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance without this state before becoming binding contracts.
   (G) Creating or acquiring evidences of debt or mortgages, liens,
or security interests in real or personal property.
   (H) Securing or collecting debts or enforcing mortgages and
security interests in property securing the debts.
   (I) Conducting an isolated transaction that is completed within
180 days and not in the course of a number of repeated transactions
of a like nature.
   (3) A person shall not be deemed to be transacting intrastate
business in this state merely because of its status as a member or
manager of a domestic limited liability company or a foreign limited
liability company registered to transact intrastate business in this
state.
   (aq) "Vote" includes authorization by written consent.
   (ar) "Voting power" means the power to vote on any matter at the
time any determination of voting power is made and does not include
the right to vote upon the happening of some condition or event which
has not yet occurred.
   (as) "Withdrawal" includes the resignation or retirement of a
member as a member.
   (at) "Written" or "in writing" includes facsimile, telegraphic,
and other electronic communication as authorized by this code.

17002.  (a) Subject to any limitations contained in the articles of
organization and to compliance with any other applicable laws, a
limited liability company may engage in any lawful business activity,
whether or not for profit, except the banking business, the business
of issuing policies of insurance and assuming insurance risks, or
the trust company business.
   (b) Notwithstanding subdivision (a) and as specifically provided
in this subdivision, a limited liability company may operate as a
health care service plan licensed pursuant to Chapter 2.2 (commencing
with Section 1340) of Division 2 of the Health and Safety Code if
the limited liability company is a subsidiary of a health care
service plan licensed pursuant to those provisions and the limited
liability company is established to serve an existing line of
business of the parent health care service plan. Notwithstanding any
other provision of law, the tort or contract liability of a limited
liability company created to operate as a health care service plan
under this subdivision and its members is not limited or restricted
in any manner because of the limited liability company status of the
health care service plan.

17003.  Subject to any limitations contained in the articles of
organization and to compliance with this title and any other
applicable laws, a limited liability company organized under this
title shall have all of the powers of a natural person in carrying
out its business activities, including, without limitation, the power
to:
   (a) Transact its business, carry on its operations, qualify to do
business, and have and exercise the powers granted by this title in
any state, territory, district, possession, or dependency of the
United States, and in any foreign country.
   (b) Sue, be sued, complain and defend any action, arbitration, or
proceeding, whether judicial, administrative, or otherwise, in its
own name.
   (c) Adopt, use, and at will alter a company seal; but failure to
affix a seal does not affect the validity of any instrument.
   (d) Make contracts and guarantees, incur liabilities, act as
surety, and borrow money.
   (e) Sell, lease, exchange, transfer, convey, mortgage, pledge, and
otherwise dispose of all or any part of its property and assets.
   (f) Purchase, take, receive, lease, or otherwise acquire, own,
hold, improve, use, or otherwise deal in and with any interest in
real or personal property, wherever located.
   (g) Lend money to and otherwise assist its members and employees.
   (h) Issue notes, bonds, and other obligations and secure any of
them by mortgage or deed of trust or security interest of any or all
of its assets.
   (i) Purchase, take, receive, subscribe for, or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, loan, pledge, or
otherwise dispose of and otherwise use and deal in and with stock or
other interests in and obligations of any person, or direct or
indirect obligations of the United States or of any government,
state, territory, governmental district, or municipality, or of any
instrumentality of any of them.
   (j) Invest its surplus funds, lend money from time to time in any
manner which may be appropriate to enable it to carry on the
operations or fulfill the purposes set forth in its articles of
organization, and take and hold real property and personal property
as security for the payment of funds so loaned or invested.
   (k) Be a promoter, stockholder, partner, member, manager,
associate, or agent of any person.
   (l) Indemnify or hold harmless any person.
   (m) Purchase and maintain insurance.
   (n) Issue, purchase, redeem, receive, take, or otherwise acquire,
own, hold, sell, lend, exchange, transfer, or otherwise dispose of,
pledge, use, and otherwise deal in and with its own bonds,
debentures, and other securities.
   (o) Pay pensions and establish and carry out pension,
profit-sharing, bonus, share purchase, option, savings, thrift, and
other retirement, incentive, and benefit plans, trusts, and
provisions for all or any of the current or former members, managers,
officers, or employees of the limited liability company or any of
its subsidiary or affiliated entities, and to indemnify and purchase
and maintain insurance on behalf of any fiduciary of such plans,
trusts, or provisions.
   (p) Make donations, regardless of specific benefit to the limited
liability company, to the public welfare or for community, civic,
religious, charitable, scientific, literary, educational, or similar
purposes.
   (q) Make payments or donations or do any other act, not
inconsistent with this title or any other applicable law, that
furthers the business and affairs of the limited liability company.
   (r) Pay compensation, and pay additional compensation, to any or
all managers, officers, members, and employees on account of services
previously rendered to the limited liability company, whether or not
an agreement to pay such compensation was made before such services
were rendered.
   (s) Insure for its benefit the life of any of its members,
managers, officers, or employees, insure the life of any member for
the purpose of acquiring at his or her death the interest owned by
such member, and continue such insurance after the relationship
terminates.
   (t) Do every other act not inconsistent with law that is
appropriate to promote and attain the purposes set forth in its
articles of organization.

17004.  (a) A member may lend money to and transact other business
with the limited liability company and, subject to other applicable
law, has the same rights and obligations with respect thereto as a
person who is not a member.
   (b) Except as otherwise authorized in, or pursuant to, the
operating agreement or other agreement among all the members, no
member is entitled to remuneration for acting in the limited
liability company business, subject to the entitlement of managers or
members winding up the affairs of the limited liability company to
reasonable compensation pursuant to subdivision (c) of Section 17352.

17005.  (a) Except as provided in subdivisions (b) and (c),
relations among members and between the members and the limited
liability company are governed by the articles of organization and
operating agreement. To the extent the articles of organization or
operating agreement do not otherwise provide, this title governs
relations among the members and between the members and the limited
liability company.
   (b) The effect of the provisions of this title may be varied as
among the members or as between the members and the limited liability
company by the articles of organization or operating agreement,
provided, however, that the provisions of Sections 17059, 17103,
17104, 17152, 17154, and 17155 may only be varied by the articles of
organization or a written operating agreement. Notwithstanding the
first sentence of this subdivision, neither the articles of
organization nor the operating agreement may:
   (1) Vary the definitions in Section 17001, except as specifically
provided therein.
   (2) Eliminate the right of a member pursuant to subdivision (c) of
Section 17100 to assert that a provision in the operating agreement
governing the termination of that member's interest and the return of
that member's contribution was unreasonable under the circumstances
existing at the time the agreement was made.
   (3) Vary the voting requirements or voting rights set forth in
subdivisions (b) and (c) of Section 17103.
   (4) Vary a member's rights under Sections 17106 and 17453.
   (c) The provisions of Chapter 2 (commencing with Section 17050),
Chapter 8 (commencing with Section 17350), Chapter 10 (commencing
with Section 17450), Chapter 11 (commencing with Section 17500),
Chapter 12 (commencing with Section 17550), and Chapter 13
(commencing with Section 17600) may be varied by the articles of
organization or by a written operating agreement only to the extent
expressly provided in those chapters.
   (d) The fiduciary duties of a manager to the limited liability
company and to the members of the limited liability company may only
be modified in a written operating agreement with the informed
consent of the members.
   (e) The presence in certain provisions of this title of the words
"unless otherwise provided in the articles of organization or
operating agreement" or words of similar import does not imply that
the effect of other provisions may not be varied as among the members
by the articles of organization or operating agreement.
   (f) If any provision of the articles of organization conflicts
with one or more provisions of a written operating agreement, the
articles of organization shall control.