New California Limited Liability Company (LLC) Act Could Result in the Forfeiture of Certain LLC Member Rights Unless You Act Now California’s new LLC act took effect 1/1/14 and it automatically applies to all existing California LLCs, other than single-member LLCs and husband-and-wife LLCs. LLCs organized in other states that are qualified to do business in California are not affected by the new rules. While the new law doesn’t change the way either the IRS or California taxes limited liability companies, there are other provisions that could significantly impact LLC members, which is why we’re sharing this information. Where you can really get in trouble with the new rules is when you an LLC member dies or there is a transfer or assignment of an economic interest in a LLC for other reasons. The good news here is you can amend the LLC operating agreement so you are not adversely impacted by the new law in unexpected ways. If you don’t want some of the new rules to apply, you are allowed to change your operating agreement to make this clear. We recommend you immediately consult with your business attorney. If you don’t know who you should contact, please feel free to contact us and we can refer you to a knowledgeable attorney who can help you. Please be careful, as it is believed that many attorneys might not yet be aware of the significant potential for harm here for members of existing California LLCs.
Posted on: Wed, 22 Jan 2014 19:56:36 +0000
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