October 17, 2021

Volume XI, Number 290

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October 15, 2021

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Yes, Virginia, There Is A Limited-Liability Corporation (At Least In Case Law And Statute)

Twenty years ago, limited liability companies were a novelty.  Today, they are common, but courts often conflate LLCs with corporations by referring to "limited liability corporations".  For example, the Court of Appeal iHotels Nevada, LLC v. Bridge Banc, LLC, 130 Cal. App. 4th 1431, 1434 (2005) advised "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.").  This is truly an odd construct because one of the hallmarks of the corporate form is limited liability.

Legislatures also suffer from the same confusion.  California Government Code Section 65863.11 refers to a "managing member of a limited liability corporation".  When the Legislative Counsel's office recommended technical corrections to various code provisions, including Section 65863.11, it failed to correct the reference.  See SB 1289.

Nevada's legislature has been similarly confused.  NRS 639.575 and NRS 639.580 each refer to "limited-liability corporations".

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume VIII, Number 290
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About this Author

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

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
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