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Do Limited Liability Corporations Exist In California Law?

If you skimmed the title of today's post, you might have concluded that it asks a question with an obvious answer: Do limited liability companies exist in California law?  The answer is that they have been statutorily recognized since at least 1994 when the former Beverly-Killea Limited Liability Company Act took effect.  My question, however, related to "limited liability corporations", not "limited liability companies". 

Although no code provides for the formation of limited liability corporations, the term has nonetheless found its way into at least one statute and California case law.   Government Code Section 65863.11(a)(9) & (10) each refer to a "managing member of a limited liability corporation".  The confusion is not limited to the legislature.  In Hotels Nevada, LLC v. Bridge Banc, LLC, 130 Cal. App. 4th 1431, 1434 (2005), for example, the Court of Appeal advises "Defendant is a California limited liability corporation with its office in Los Angeles".  See also Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC, 212 Cal. App. 4th 539, 542 (2012) ("SP is a California limited liability corporation . . . .") and People v. Noori, 136 Cal. App. 4th 964, 971 (2006) ("Mehdipanah's company, Sarafi International, was registered with the California Secretary of State as a limited liability corporation.").  

Because both the legislature and the courts speak of limited liability corporations, it is difficult to gainsay their existence however incorporeal they may be.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...