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Must An LLC Have At Least Two Members?

Although without a peradventure a general partnership requires at least two persons, is the same true of a California limited liability company?  My answer is "no".  In fact, Section 17704.01(a) of the California Corporations Code expressly contemplates that an LLC may have only a single member:

"If a limited liability company is to have only one member upon formation, the person becomes a member as agreed by that person and the organizer of the limited liability company. That person and the organizer may be, but need not be, different persons. If different, the organizer acts on behalf of the initial member."

See also Section 17701.02(s) ("An operating agreement of a limited liability company having only one member shall not be unenforceable by reason of there being only one person who is a party to the operating agreement.").

Thus, I was surprised to read that the Court of Appeal believes otherwise:

"And limited liability companies are not corporations. . . . It consists of at least two members who own membership interests."

Ontiveros v. Constable, 2018 Cal. App. LEXIS 827 (emphasis added).  While I agree that LLCs are not corporations, I believe that the Court's asseveration that LLCs must have at least two members was a slip of the pen that in any event should be regarded as dicta.

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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...