The Corporate Transparency Act (31 USC §5336) goes into effect January 1, 2024.
Under the Act, most LLCs (and other entities) will need to supply basic personal identification data regarding their “beneficial owners” to...more
1/23/2023
/ Beneficial Owner ,
Corporate Transparency Act ,
Counterfeiting ,
Drug Trafficking ,
Financial Fraud ,
Financial Institutions ,
FinCEN ,
Human Trafficking ,
Limited Liability Company (LLC) ,
National Security ,
Penalties ,
Personal Information ,
Piracy ,
Regulatory Agencies ,
Reporting Requirements ,
Securities Fraud ,
Tax Fraud ,
Terrorism Funding
California’s statutes governing LLCs and general partnerships include “safe harbor” provisions making it easier for third parties to rely on the apparent authority of an LLC’s manager or a partnership’s partner. The statutes...more
LLC operating agreements frequently provide for indemnity to the LLC’s manager. This is consistent with the statutory default rule embodied by California Corporations Code section 17704.08(a), which provides for indemnity...more
11/21/2022
/ Appeals ,
Arbitration ,
Attorney's Fees ,
Breach of Duty ,
Capital Contributions ,
Fiduciary Duty ,
Indemnity ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Private Equity ,
Reconciliation
California’s anti-SLAPP statute (Code of Civil Procedure section 425.16) aims to protect defendants from meritless lawsuits designed to chill “protected activity” — i.e., the exercise of rights of petition or free speech on...more
10/17/2022
/ Anti-SLAPP ,
Appeals ,
Breach of Duty ,
Cal Code of Civil Procedure ,
California ,
Cross-Complaints ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Motion To Strike ,
Operating Agreements ,
Protected Activity ,
Real Estate Investments ,
Reversal
Most forms of California business entities have statutory buyout procedures allowing the company or its owners to avoid claims by a disgruntled owner for judicial dissolution by purchasing the disgruntled owner’s interest....more
Several prior LLC Jungle posts have explored the statutory buyout procedures established by California Corporations Code section 17703.03 and related statutes:
a botched buyout -
“fair value” vs. “fair market value”...more
When an LLC suffers primary harm that also indirectly harms the LLC’s members, the cause of action generally belongs to the LLC, not its members. Only if the LLC (through its duly authorized management) fails to pursue the...more
If an LLC’s Operating Agreement contains a sufficiently broad arbitration clause, most disputes raised by the LLC’s members relating to the LLC will be sent to arbitration (instead of the court system) for resolution.
But...more
The statutory right to judicial dissolution in California comes with a hook — the defendants can avoid dissolution by exercising a “buyout” procedure. This is true in both LLCs (Corporations Code section 17703.03) and...more
A charging order is a device used by a judgment creditor to collect on a judgment against an LLC member. The charging order imposes a lien on the judgment debtor’s economic (or “transferable”) interest in the LLC — the order...more
Normally, a business entity is considered a legal person separate and apart from its individual owners. But when the entity is used by an owner to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful...more
Under California law, LLCs can either be managed by all of the members (member-managed) or by a designated manager (manager-managed). Manager-managed LLCs are more common for complex, multi-party ventures. The basic idea is...more
LLC managers owe fiduciary duties of loyalty, care, and good faith and fair dealing to both the LLC and the LLC’s members. (Corp Code §17704.09.) One of the most common claims in LLC litigation is “breach of fiduciary duty”...more
Under section 17707.03 of California’s Revised Uniform Limited Liability Company Act, when a member sues the other members for dissolution of the LLC, the other members can exercise a statutory buyout of the suing member’s...more
Business divorce can be messy, as reflected by many of the cases covered here at The LLC Jungle. Two issues that frequently arise during the dissolution of an LLC are: 1. the statutory buyout procedure, and 2. claims for...more
10/25/2021
/ Appraisal ,
Breach of Duty ,
Business Divorce ,
Buyouts ,
Damages ,
Derivative Suit ,
Dissolution ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Membership Interest ,
Misappropriation ,
Standing
LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership. (Corp Code §17704.09.) These include the duty of loyalty, care, and...more
9/30/2021
/ Bankruptcy Court ,
Breach of Duty ,
Business Disputes ,
Business Litigation ,
Commercial Bankruptcy ,
Contract Terms ,
Exculpatory Clauses ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Malfeasance ,
Operating Agreements ,
Personal Liability ,
Summary Judgment
An LLC Jungle post from last year addressed the issue of whether derivative claims can be pursued for a dissolved LLC. See: Can Derivative Claims be Pursued for a Dissolved or Cancelled LLC? The short answer is “yes.”...more
8/23/2021
/ Attorney's Fees ,
Breach of Contract ,
Business Litigation ,
Contract Terms ,
Corporate Dissolution ,
Derivative Suit ,
Disclosure ,
Fee Awards ,
Limited Liability Company (LLC) ,
Prevailing Party ,
Purchase Agreement ,
Real Estate Development ,
Real Estate Transactions
In California, all LLCs are required to periodically file a Statement of Information with the Secretary of State. The Statement of Information is posted to the Secretary of State’s website, and can be accessed by the public...more
One of the essential purposes of forming an entity and conducting business through that entity is to limit the owners’ personal liability. California law generally views the entity and its owners as separate and legally...more
When LLC membership interests suffer harm at the hands of wrongful conduct by another member or the LLC’s manager, the litigation claims are usually based on fiduciary duties, including the duty of good faith and fair dealing...more
A DAO is a Decentralized Autonomous Organization. It’s a blockchain thing. How do DAOs relate to LLCs? And why are DAOs the subject of this post on The LLC Jungle blog? Read on…...more
LLC disputes frequently lead to the court’s appointment of a receiver under California Code of Civil Procedure section 564. The receiver effectively steps into the shoes of the LLC’s manager, and calls the shots regarding...more
Title insurance is inexpensive for a reason -
Unlike other insurance policies, it is not prospective in nature. It does not cover title defects or liens that come into being after the effective date of the policy. ...more
The “alter ego” doctrine allows a creditor of a business entity to “pierce the corporate veil” and enforce the debt against the company’s individual owners. The standards for proving alter ego liability are high, and the...more
One substantial LLC membership right in California (and most other states) is the ability of members to file a “derivative” lawsuit. If the LLC has suffered harm, but the LLC fails to sue (due to managerial inaction,...more