2009 California Corporations Code - Section 17650-17656 :: Chapter 14. Miscellaneous Provisions

17650.  (a) If a manager or member required by this title to execute
or file any document fails, after demand, to do so within a
reasonable time or refuses to do so, any other manager or member, or
any person appointed by a court of competent jurisdiction, may
prepare, execute, and file that document with the Secretary of State.
   (b) If there is any dispute concerning the filing of a document,
or the failure to file a document, any manager or member may petition
the superior court to direct the execution of the document.
   (c) If the court finds that it is proper for the document to be
executed and that any person so designated has failed or refused to
execute the document, or if the court determines that any document
should be filed, it shall order a party to file the document, on a
form prescribed by the Secretary of State if appropriate, as ordered
by the court.
   (d) In any action under this section, if the court finds the
failure of the manager or member to comply with the requirement to
file any document to have been without justification, the court may
award an amount sufficient to reimburse the managers or members
bringing the action for the reasonable expenses incurred by them,
including attorneys' fees, in connection with the action or
proceeding.
   (e) Any member who is not a manager, or any person filing any
document under this section, shall state the statutory authority
after the signature on the appropriate document.

17651.  (a) Every limited liability company that neglects, fails, or
refuses to keep or cause to be kept or maintained the documents,
books, and records required by Section 17058 to be kept or maintained
shall be subject to a penalty of twenty-five dollars ($25) for each
day that the failure or refusal continues, beginning 30 days after
receipt of written request by any member that the duty be performed,
up to a maximum of one thousand five hundred dollars ($1,500). The
penalty shall be paid to the member or members jointly making the
request for performance of the duty and damaged by the neglect,
failure, or refusal, if suit therefor is commenced within 90 days
after the written request is made; but the maximum daily penalty
because of failure to comply with any number of separate requests
made on any one day or for the same act shall be two hundred fifty
dollars ($250).
   (b) Upon the failure of a limited liability company, or a foreign
limited liability company registered to transact intrastate business
in this state, to file the statement required by Section 17060, the
Secretary of State shall mail a notice of that delinquency to the
limited liability company or foreign limited liability company. The
notice shall also contain information concerning the application of
this section, advise the limited liability company or foreign limited
liability company of the penalty imposed by this subdivision for
failure to timely file the required statement after notice of
delinquency has been mailed by the Secretary of State, and shall
advise the limited liability company or foreign limited liability
company of its right to request relief from the Secretary of State
because of reasonable cause or unusual circumstances that justify the
failure to file. If, within 60 days after the mailing of the notice
of delinquency, a statement pursuant to Section 17060 has not been
filed by the limited liability company or foreign limited liability
company, the limited liability company or foreign limited liability
company shall be subject to a penalty of two hundred fifty dollars
($250).

17652.  Any penalty prescribed by Section 17651 shall be in addition
to any remedy by injunction or action for damages or by writ of
mandate for the nonperformance of acts and duties enjoined by law
upon the limited liability company or its managers.
   The court in which an action for any penalty is brought may
reduce, remit or suspend the penalty on any terms and conditions as
it may deem reasonable when it is made to appear that the neglect,
failure or refusal was inadvertent or excusable.

17653.  (a) Upon the failure of a limited liability company to file
the statement required by Section 17060, the Secretary of State shall
mail a notice of the delinquency to the limited liability company.
The notice shall also contain information concerning the application
of this section, advise the limited liability company of the penalty
imposed by Section 19141 of the Revenue and Taxation Code for failure
to timely file the required statement after notice of delinquency
has been mailed by the Secretary of State, and shall advise the
limited liability company of its right to request relief from the
Secretary of State because of reasonable cause or unusual
circumstances that justify such failure to file. If, within 60 days
after the mailing of the notice of delinquency, a statement pursuant
to Section 17060 has not been filed by the limited liability company,
the Secretary of State shall certify the name of such limited
liability company to the Franchise Tax Board.
   (b) Upon certification pursuant to subdivision (a), the Franchise
Tax Board shall assess against the limited liability company the
penalty provided in Section 19141 of the Revenue and Taxation Code.
   (c) The penalty provided by Section 19141 shall not apply to a
limited liability company that on or prior to the date of
certification pursuant to subdivision (a) has dissolved or has been
merged into another limited liability company or other business
entity.
   (d) The penalty herein provided shall not apply and the Secretary
of State need not mail a notice of delinquency to a limited liability
company the powers, rights and privileges of which have been
suspended by the Franchise Tax Board pursuant to Section 23301,
23301.5 or 23775 of the Revenue and Taxation Code on or prior to, and
remain suspended on, the last day of the filing period pursuant to
Section 17060. The Secretary of State need not mail a form pursuant
to Section 17060 to a limited liability company the powers, rights
and privileges of which have been so suspended by the Franchise Tax
Board on or prior to, and remain suspended on, the day the Secretary
of State prepares the forms for mailing.
   (e) If, after certification pursuant to subdivision (a) the
Secretary of State finds (1) the required statement was filed or the
required fee was paid before the expiration of the 60-day period
after mailing of the notice of delinquency, or (2) the failure to
provide notice of delinquency was due to an error of the Secretary of
State, the Secretary of State shall promptly decertify the name of
the limited liability company to the Franchise Tax Board. The
Franchise Tax Board shall then promptly abate any penalty assessed
against the limited liability company pursuant to Section 19141 of
the Revenue and Taxation Code.
   (f) If the Secretary of State determines that the failure of a
limited liability company to file the statement required by Section
17060 is excusable because of reasonable cause or unusual
circumstances that justify such failure, the Secretary of State may
waive the penalty imposed by this section and by Section 19141 of the
Revenue and Taxation Code, in which case the Secretary of State
shall not certify the name of the limited liability company to the
Franchise Tax Board, or if already certified, the Secretary of State
shall promptly decertify the name of the limited liability company.

17654.  (a) A limited liability company that (1) fails to file a
statement pursuant to Section 17060 for an applicable filing period,
(2) has not filed a statement pursuant to Section 17060 during the
preceding 24 months, and (3) was certified for penalty pursuant to
Section 17653 for the same filing period, shall be subject to
suspension pursuant to this section rather than to penalty pursuant
to Section 17653.
   (b) When subdivision (a) is applicable, the Secretary of State
shall mail a notice to the limited liability company informing the
limited liability company that its powers, rights, and privileges
will be suspended after 60 days if it fails to file a statement
pursuant to Section 17060.
   (c) After the expiration of the 60-day period without any
statement filed pursuant to Section 17060, the Secretary of State
shall notify the Franchise Tax Board of the suspension, and mail a
notice of the suspension to the limited liability company and
thereupon, except for the purpose of amending the articles of
organization to set forth a new name, the powers, rights, and
privileges of the limited liability company are suspended.
   (d) A statement pursuant to Section 17060 may be filed
notwithstanding suspension of the powers, rights, and privileges
pursuant to this section or Section 23301 or 23301.5 of the Revenue
and Taxation Code. Upon the filing of a statement pursuant to Section
17060 by a limited liability company that has suffered suspension
pursuant to this section, the Secretary of State shall certify that
fact to the Franchise Tax Board and the limited liability company may
thereupon be relieved from suspension unless the limited liability
company is held in suspension by the Franchise Tax Board by reason of
Section 23301 or 23301.5 of the Revenue and Taxation Code.

17655.  (a) Sections 17653 and 17654 apply to foreign limited
liability companies with respect to the statements required to be
filed by Section 17060. For this purpose, the suspension of the
powers, rights, and privileges of a domestic limited liability
company shall mean the forfeiture of the exercise of the powers,
rights, and privileges of a foreign limited liability company in this
state.
   (b) The forfeiture of the exercise of the powers, rights, and
privileges of a foreign limited liability company in this state as
used in subdivision (a) does not prohibit the transaction of business
in this state by a foreign limited liability company if the business
transacted subsequent to the forfeiture would not, considered as an
entirety, require the foreign limited liability company to obtain a
certificate of registration pursuant to subdivision (ao) of Section
17001 and Section 17452.

17656.  (a) A limited liability company is liable for a civil
penalty in an amount not exceeding one million dollars ($1,000,000)
if the limited liability company does both of the following:
   (1) Has actual knowledge that a member, officer, manager, or agent
of the limited liability company does any of the following:
   (A) Makes, publishes, or posts, or has made, published, or posted,
either generally or privately to the shareholders or other persons,
either of the following:
   (i) An oral, written, or electronically transmitted report,
exhibit, notice, or statement of its affairs or pecuniary condition
that contains a material statement or omission that is false and
intended to give membership shares in the limited liability company a
materially greater or a materially less apparent market value than
they really possess.
   (ii) An oral, written, or electronically transmitted report,
prospectus, account, or statement of operations, values, business,
profits, or expenditures that includes a material false statement or
omission intended to give membership shares in the limited liability
company a materially greater or a materially less apparent market
value than they really possess.
   (B) Refuses or has refused to make any book entry or post any
notice required by law in the manner required by law.
   (C) Misstates or conceals or has misstated or concealed from a
regulatory body a material fact in order to deceive a regulatory body
to avoid a statutory or regulatory duty, or to avoid a statutory or
regulatory limit or prohibition.
   (2) Within 30 days after actual knowledge is acquired of the
actions described in paragraph (1), the limited liability company
knowingly fails to do both of the following:
   (A) Notify the Attorney General or appropriate government agency
in writing, unless the limited liability company has actual knowledge
that the Attorney General or appropriate government agency has been
notified.
   (B) Notify its members and investors in writing, unless the
limited liability company has actual knowledge that the members and
investors have been notified.
   (b) The requirement for notification under this section is not
applicable if the action taken or about to be taken by the limited
liability company, or by a member, officer, manager, or agent of the
limited liability company under paragraph (1) of subdivision (a), is
abated within the time prescribed for reporting, unless the
appropriate government agency requires disclosure by regulation.
   (c) If the action reported to the Attorney General pursuant to
this section implicates the government authority of an agency other
than the Attorney General, the Attorney General shall promptly
forward the written notice to that agency.
   (d) If the Attorney General was not notified pursuant to
subparagraph (A) of paragraph (2) of subdivision (a), but the limited
liability company reasonably and in good faith believed that it had
complied with the notification requirements of this section by
notifying a government agency listed in paragraph (5) of subdivision
(e), no penalties shall apply.
   (e) For purposes of this section:
   (1) "Manager" means a person defined by subdivision (w) of Section
17001 having both of the following:
   (A) Management authority over the limited liability company.
   (B) Significant responsibility for an aspect of the limited
liability company that includes actual authority for the financial
operations or financial transactions of the limited liability
company.
   (2) "Agent" means a person or entity authorized by the limited
liability company to make representations to the public about the
limited liability company's financial condition and who is acting
within the scope of the agency when the representations are made.
   (3) "Member" means a person as defined by subdivision (x) of
Section 17001 that is a member of the limited liability company at
the time the disclosure is required pursuant to subparagraph (B) of
paragraph (2) of subdivision (a).
   (4) "Notify its members" means to give sufficient description of
an action taken or about to be taken that would constitute acts or
omissions as described in paragraph (1) of subdivision (a). A notice
or report filed by a limited liability company with the United States
Securities and Exchange Commission that relates to the facts and
circumstances giving rise to an obligation under paragraph (1) of
subdivision (a) shall satisfy all notice requirements arising under
paragraph (2) of subdivision (a) but shall not be the exclusive means
of satisfying the notice requirements, provided that the Attorney
General or appropriate agency is informed in writing that the filing
has been made together with a copy of the filing or an electronic
link where it is available online without charge.
   (5) "Appropriate government agency" means an agency on the
following list that has regulatory authority with respect to the
financial operations of a limited liability company:
   (A) Department of Corporations.
   (B) Department of Insurance.
   (C) Department of Financial Institutions.
   (D) Department of Managed Health Care.
   (E) United States Securities and Exchange Commission.
   (6) "Actual knowledge of the limited liability company" means the
knowledge a member, officer, or manager of a limited liability
company actually possesses or does not consciously avoid possessing,
based on an evaluation of information provided pursuant to the
limited liability company's disclosure controls and procedures.
   (7) "Refuse to make a book entry" means the intentional decision
not to record an accounting transaction when all of the following
conditions are satisfied:
   (A) The independent auditors required recordation of an accounting
transaction during the course of an audit.
   (B) The audit committee of the limited liability company has not
approved the independent auditor's recommendation.
   (C) The decision is made for the primary purpose of rendering the
financial statements materially false or misleading.
   (8) "Refuse to post any notice required by law" means an
intentional decision not to post a notice required by law when all of
the following conditions exist:
   (A) The decision not to post the notice has not been approved by
the limited liability company's audit committee.
   (B) The decision is intended to give the membership shares in the
limited liability company a materially greater or a materially less
apparent market value than they really possess.
   (9) "Misstate or conceal material facts from a regulatory body"
means an intentional decision not to disclose material facts when all
of the following conditions exist:
   (A) The decision not to disclose material facts has not been
approved by the limited liability company's audit committee.
   (B) The decision is intended to give the membership shares in the
limited liability company a greater or a less apparent market value
than they really possess.
   (10) "Material false statement or omission" means an untrue
statement of material fact or an omission to state a material fact
necessary in order to make the statements made under the
circumstances under which they were made not misleading.
   (11) "Officer" means a person appointed pursuant to Section 17154,
except an officer of a specified subsidiary limited liability
company who is not also an officer of the parent limited liability
company.
   (f) This section only applies to limited liability companies that
are issuers, as defined in Section 2 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. Sec. 7201 and following).
   (g) An action to enforce this section may only be brought by the
Attorney General or a district attorney or city attorney in the name
of the people of the State of California.