16951-16962
CORPORATIONS CODE
SECTION 16951-16962
16951. For purposes of this chapter, the only types of limited
liability partnerships that shall be recognized are a registered
limited liability partnership and a foreign limited liability
partnership, as defined in Section 16101. No registered limited
liability partnership or foreign limited liability partnership may
render professional limited liability partnership services in this
state except through licensed persons.
16952. The name of a registered limited liability partnership shall
contain the words "Registered Limited Liability Partnership" or
"Limited Liability Partnership" or one of the abbreviations "L.L.P.,"
"LLP," "R.L.L.P.," or "RLLP" as the last words or letters of its
name.
16953. (a) To become a registered limited liability partnership, a
partnership, other than a limited partnership, shall file with the
Secretary of State a registration, executed by one or more partners
authorized to execute a registration, stating all of the following:
(1) The name of the partnership.
(2) The address of its principal office.
(3) The name and address of the agent for service of process on
the limited liability partnership in California.
(4) A brief statement of the business in which the partnership
engages.
(5) Any other matters that the partnership determines to include.
(6) That the partnership is registering as a registered limited
liability partnership.
(b) The registration shall be accompanied by a fee as set forth in
subdivision (a) of Section 12189 of the Government Code.
(c) The Secretary of State shall register as a registered limited
liability partnership any partnership that submits a completed
registration with the required fee.
(d) The Secretary of State may cancel the filing of the
registration if a check or other remittance accepted in payment of
the filing fee is not paid upon presentation. Upon receiving written
notification that the item presented for payment has not been honored
for payment, the Secretary of State shall give a first written
notice of the applicability of this section to the agent for service
of process or to the person submitting the instrument. Thereafter, if
the amount has not been paid by cashier's check or equivalent, the
Secretary of State shall give a second written notice of cancellation
and the cancellation shall thereupon be effective. The second notice
shall be given 20 days or more after the first notice and 90 days or
less after the date of the original filing.
(e) A partnership becomes a registered limited liability
partnership at the time of the filing of the initial registration
with the Secretary of State or at any later date or time specified in
the registration and the payment of the fee required by subdivision
(b). A partnership continues as a registered limited liability
partnership until a notice that it is no longer a registered limited
liability partnership has been filed pursuant to subdivision (b) of
Section 16954 or, if applicable, until it has been dissolved and
finally wound up. The status of a partnership as a registered limited
liability partnership and the liability of a partner of the
registered limited liability partnership shall not be adversely
affected by errors or subsequent changes in the information stated in
a registration under subdivision (a) or an amended registration or
notice under Section 16954.
(f) The fact that a registration or amended registration pursuant
to this section is on file with the Secretary of State is notice that
the partnership is a registered limited liability partnership and of
those other facts contained therein that are required to be set
forth in the registration or amended registration.
(g) The Secretary of State shall provide a form for a registration
under subdivision (a), which shall include the form for confirming
compliance with the optional security requirement pursuant to
subdivision (c) of Section 16956. The Secretary of State shall
include with instructional materials provided in conjunction with the
form for a registration under subdivision (a) a notice that filing
the registration will obligate the limited liability partnership to
pay an annual tax for that taxable year to the Franchise Tax Board
pursuant to Section 17948 of the Revenue and Taxation Code. That
notice shall be updated annually to specify the dollar amount of the
tax.
(h) A limited liability partnership providing professional limited
liability partnership services in this state shall comply with all
statutory and administrative registration or filing requirements of
the state board, commission, or other agency that prescribes the
rules and regulations governing the particular profession in which
the partnership proposes to engage, pursuant to the applicable
provisions of the Business and Professions Code relating to that
profession. The state board, commission, or other agency shall not
disclose, unless compelled by a subpoena or other order of a court of
competent jurisdiction, any information it receives in the course of
evaluating the compliance of a limited liability partnership with
applicable statutory and administrative registration or filing
requirements, provided that nothing in this section shall be
construed to prevent a state board, commission, or other agency from
disclosing the manner in which the limited liability partnership has
complied with the requirements of Section 16956, or the compliance or
noncompliance by the limited liability partnership with any other
requirements of the state board, commission, or other agency.
16954. (a) The registration of a registered limited liability
partnership may be amended by an amended registration executed by one
or more partners authorized to execute an amended registration and
filed with the Secretary of State, as soon as reasonably practical
after any information set forth in the registration or previously
filed amended registration becomes inaccurate or to add information
to the registration or amended registration.
(b) If a registered limited liability partnership ceases to be a
registered limited liability partnership, it shall file with the
Secretary of State a notice, executed by one or more partners
authorized to execute the notice, that it is no longer a registered
limited liability partnership. The notice shall state that a final
annual tax return, as described by Section 17948.3 of the Revenue and
Taxation Code, has been or will be filed with the Franchise Tax
Board, as required under Part 10.2 (commencing with Section 18401) of
Division 2 of the Revenue and Taxation Code.
(c) An amendment pursuant to subdivision (a) and a notice pursuant
to subdivision (b) shall each be accompanied by a fee as set forth
in subdivision (c) of Section 12189 of the Government Code.
(d) The Secretary of State shall provide forms for an amended
registration under subdivision (a) and a notice under subdivision
(b).
(e) A notice of cessation, signed pursuant to subdivision (b),
shall be filed with the Secretary of State. The Secretary of State
shall notify the Franchise Tax Board of the cessation.
16955. (a) A domestic partnership, other than a limited
partnership, may convert to a registered limited liability by the
vote of the partners possessing a majority of the interests of its
partners in the current profits of the partnership or by a different
vote as may be required in its partnership agreement.
(b) When such a conversion takes effect, all of the following
apply:
(1) All property, real and personal, tangible and intangible, of
the converting partnership remains vested in the converted registered
limited liability partnership.
(2) All debts, obligations, liabilities, and penalties of the
converting partnership continue as debts, obligations, liabilities,
and penalties of the converted registered limited liability
partnership.
(3) Any action, suit, or proceeding, civil or criminal, then
pending by or against the converting partnership may be continued as
if the conversion had not occurred.
(4) To the extent provided in the agreement of conversion and in
this chapter, the partners of a partnership shall continue as
partners in the converted registered limited liability partnership.
(5) A partnership that has been converted to a registered limited
liability partnership pursuant to this chapter is the same person
that existed prior to the conversion.
16956. (a) At the time of registration pursuant to Section 16953,
in the case of a registered limited liability partnership, and
Section 16959, in the case of a foreign limited liability
partnership, and at all times during which those partnerships shall
transact intrastate business, every registered limited liability
partnership and foreign limited liability partnership, as the case
may be, shall be required to provide security for claims against it
as follows:
(1) For claims based upon acts, errors, or omissions arising out
of the practice of public accountancy, a registered limited liability
partnership or foreign limited liability partnership providing
accountancy services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:
(A) Maintaining a policy or policies of insurance against
liability imposed on or against it by law for damages arising out of
claims; however, the total aggregate limit of liability under the
policy or policies of insurance for partnerships with five or fewer
licensed persons shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of insurance shall
be obtained for each additional licensee; however, the maximum
amount of insurance is not required to exceed five million dollars
($5,000,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. The policy or policies may be issued on a claims-made
or occurrence basis, and shall cover: (i) in the case of a
claims-made policy, claims initially asserted in the designated
period, and (ii) in the case of an occurrence policy, occurrences
during the designated period. For purposes of this subparagraph,
"designated period" means a policy year or any other period
designated in the policy that is not greater than 12 months. The
impairment or exhaustion of the aggregate limit of liability by
amounts paid under the policy in connection with the settlement,
discharge, or defense of claims applicable to a designated period
shall not require the partnership to acquire additional insurance
coverage for that designated period. The policy or policies of
insurance may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this subparagraph may be subject to a deductible or self-insured
retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of all
claims; however, the maximum amount of security for partnerships with
five or fewer licensed persons shall not be less than one million
dollars ($1,000,000), and for partnerships with more than five
licensees rendering professional services on behalf of the
partnership, an additional one hundred thousand dollars ($100,000) of
security shall be obtained for each additional licensee; however,
the maximum amount of security is not required to exceed five million
dollars ($5,000,000). The partnership remains in compliance with
this section during a calendar year notwithstanding amounts paid
during that calendar year from the accounts, funds, Treasury
obligations, letters of credit, or bonds in defending, settling, or
discharging claims of the type described in this paragraph, provided
that the amount of those accounts, funds, Treasury obligations,
letters of credit, or bonds was at least the amount specified in the
preceding sentence as of the first business day of that calendar
year. Notwithstanding the pendency of other claims against the
partnership, a registered limited liability partnership or foreign
limited liability partnership shall be deemed to be in compliance
with this subparagraph as to a claim if within 30 days after the time
that a claim is initially asserted through service of a summons,
complaint, or comparable pleading in a judicial or administrative
proceeding, the partnership has provided the required amount of
security by designating and segregating funds in compliance with the
requirements of this subparagraph.
(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing accountancy services, by
virtue of that person's status as a partner, thereby automatically
guarantees payment of the difference between the maximum amount of
security required for the partnership by this paragraph and the
security otherwise provided in accordance with subparagraphs (A) and
(B), provided that the aggregate amount paid by all partners under
these guarantees shall not exceed the difference. Neither withdrawal
by a partner nor the dissolution and winding up of the partnership
shall affect the rights or obligations of a partner arising prior to
withdrawal or dissolution and winding up, and the guarantee provided
for in this subparagraph shall apply only to conduct that occurred
prior to the withdrawal or dissolution and winding up. Nothing
contained in this subparagraph shall affect or impair the rights or
obligations of the partners among themselves, or the partnership,
including, but not limited to, rights of contribution, subrogation,
or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).
(2) For claims based upon acts, errors, or omissions arising out
of the practice of law, a registered limited liability partnership or
foreign limited liability partnership providing legal services shall
comply with one, or pursuant to subdivision (b) some combination, of
the following:
(A) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
a policy or policies of insurance against liability imposed on or
against it by law for damages arising out of claims; however, the
total aggregate limit of liability under the policy or policies of
insurance for partnerships with five or fewer licensed persons shall
not be less than one million dollars ($1,000,000), and for
partnerships with more than five licensees rendering professional
services on behalf of the partnership, an additional one hundred
thousand dollars ($100,000) of insurance shall be obtained for each
additional licensee; however, the maximum amount of insurance is not
required to exceed seven million five hundred thousand dollars
($7,500,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. The policy or policies may be issued on a claims-made
or occurrence basis, and shall cover (i) in the case of a claims-made
policy, claims initially asserted in the designated period, and (ii)
in the case of an occurrence policy, occurrences during the
designated period. For purposes of this subparagraph, "designated
period" means a policy year or any other period designated in the
policy that is not greater than 12 months. The impairment or
exhaustion of the aggregate limit of liability by amounts paid under
the policy in connection with the settlement, discharge, or defense
of claims applicable to a designated period shall not require the
partnership to acquire additional insurance coverage for that
designated period. The policy or policies of insurance may be in a
form reasonably available in the commercial insurance market and may
be subject to those terms, conditions, exclusions, and endorsements
that are typically contained in those policies. A policy or policies
of insurance maintained pursuant to this subparagraph may be subject
to a deductible or self-insured retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
in trust or bank escrow, cash, bank certificates of deposit, United
States Treasury obligations, bank letters of credit, or bonds of
insurance or surety companies as security for payment of liabilities
imposed by law for damages arising out of all claims; however, the
maximum amount of security for partnerships with five or fewer
licensed persons shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of security shall
be obtained for each additional licensee; however, the maximum amount
of security is not required to exceed seven million five hundred
thousand dollars ($7,500,000). The partnership remains in compliance
with this section during a calendar year notwithstanding amounts paid
during that calendar year from the accounts, funds, Treasury
obligations, letters of credit, or bonds in defending, settling, or
discharging claims of the type described in this paragraph, provided
that the amount of those accounts, funds, Treasury obligations,
letters of credit, or bonds was at least the amount specified in the
preceding sentence as of the first business day of that calendar
year. Notwithstanding the pendency of other claims against the
partnership, a registered limited liability partnership or foreign
limited liability partnership shall be deemed to be in compliance
with this subparagraph as to a claim if within 30 days after the time
that a claim is initially asserted through service of a summons,
complaint, or comparable pleading in a judicial or administrative
proceeding, the partnership has provided the required amount of
security by designating and segregating funds in compliance with the
requirement of this subparagraph.
(C) Unless the partnership has satisfied the requirements of
subparagraph (D), each partner of a registered limited liability
partnership or foreign limited liability partnership providing legal
services, by virtue of that person's status as a partner, thereby
automatically guarantees payment of the difference between the
maximum amount of security required for the partnership by this
paragraph and the security otherwise provided in accordance with the
provisions of subparagraphs (A) and (B), provided that the aggregate
amount paid by all partners under these guarantees shall not exceed
the difference. Neither withdrawal by a partner nor the dissolution
and winding up of the partnership shall affect the rights or
obligations of a partner arising prior to withdrawal or dissolution
and winding up, and the guarantee provided for in this subparagraph
shall apply only to conduct that occurred prior to the withdrawal or
dissolution and winding up. Nothing contained in this subparagraph
shall affect or impair the rights or obligations of the partners
among themselves, or the partnership, including, but not limited to,
rights of contribution, subrogation, or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding fifteen million
dollars ($15,000,000).
(3) For claims based upon acts, errors, or omissions arising out
of the practice of architecture, a registered limited liability
partnership or foreign limited liability partnership providing
architectural services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:
(A) Maintaining a policy or policies of insurance against
liability imposed on or against it by law for damages arising out of
claims; however, the total aggregate limit of liability under the
policy or policies of insurance for partnerships with five or fewer
licensees rendering professional services on behalf of the
partnership shall not be less than one million dollars ($1,000,000),
and for partnerships with more than five licensees rendering
professional services on behalf of the partnership, an additional one
hundred thousand dollars ($100,000) of liability coverage shall be
obtained for each additional licensee; however, the total aggregate
limit of liability under the policy or policies of insurance is not
required to exceed five million dollars ($5,000,000). The policy or
policies may be issued on a claims-made or occurrence basis, and
shall cover: (i) in the case of a claims-made policy, claims
initially asserted in the designated period, and (ii) in the case of
an occurrence policy, occurrences during the designated period. For
purposes of this subparagraph, "designated period" means a policy
year or any other period designated in the policy that is not greater
than 12 months. The impairment or exhaustion of the aggregate limit
of liability by amounts paid under the policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the partnership to acquire
additional insurance coverage for that designated period. The policy
or policies of insurance may be in a form reasonably available in the
commercial insurance market and may be subject to those terms,
conditions, exclusions, and endorsements that are typically contained
in those policies. A policy or policies of insurance maintained
pursuant to this subparagraph may be subject to a deductible or
self-insured retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of all
claims; however, the maximum amount of security for partnerships with
five or fewer licensees rendering professional services on behalf of
the partnership shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of security shall
be obtained for each additional licensee; however, the maximum amount
of security is not required to exceed five million dollars
($5,000,000). The partnership remains in compliance with this section
during a calendar year notwithstanding amounts paid during that
calendar year from the accounts, funds, Treasury obligations, letters
of credit, or bonds in defending, settling, or discharging claims of
the type described in this paragraph, provided that the amount of
those accounts, funds, Treasury obligations, letters of credit, or
bonds was at least the amount specified in the preceding sentence as
of the first business day of that calendar year. Notwithstanding the
pendency of other claims against the partnership, a registered
limited liability partnership or foreign limited liability
partnership shall be deemed to be in compliance with this
subparagraph as to a claim if within 30 days after the time that a
claim is initially asserted through service of a summons, complaint,
or comparable pleading in a judicial or administrative proceeding,
the partnership has provided the required amount of security by
designating and segregating funds in compliance with the requirements
of this subparagraph.
(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing architectural services, by
virtue of that person's status as a partner, thereby automatically
guarantees payment of the difference between the maximum amount of
security required for the partnership by this paragraph and the
security otherwise provided in accordance with subparagraphs (A) and
(B), provided that the aggregate amount paid by all partners under
these guarantees shall not exceed the difference. Neither withdrawal
by a partner nor the dissolution and winding up of the partnership
shall affect the rights or obligations of a partner arising prior to
withdrawal or dissolution and winding up, and the guarantee provided
for in this subparagraph shall apply only to conduct that occurred
prior to the withdrawal or dissolution and winding up. Nothing
contained in this subparagraph shall affect or impair the rights or
obligations of the partners among themselves, or the partnership,
including, but not limited to, rights of contribution, subrogation,
or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).
(4) For claims based upon acts, errors, or omissions arising out
of the practice of engineering or the practice of land surveying, a
registered limited liability partnership or foreign limited liability
partnership providing engineering or land surveying services shall
comply with one, or pursuant to subdivision (b) some combination, of
the following:
(A) Maintaining a policy or policies of insurance against
liability imposed on or against it by law for damages arising out of
claims; however, the total aggregate limit of liability under the
policy or policies of insurance for partnerships with five or fewer
licensees rendering professional services on behalf of the
partnership shall not be less than two million dollars ($2,000,000),
and for partnerships with more than five licensees rendering
professional services on behalf of the partnership, an additional one
hundred thousand dollars ($100,000) of liability coverage shall be
obtained for each additional licensee; however, the total aggregate
limit of liability under the policy or policies of insurance is not
required to exceed five million dollars ($5,000,000). The policy or
policies may be issued on a claims-made or occurrence basis, and
shall cover: (i) in the case of a claims-made policy, claims
initially asserted in the designated period, and (ii) in the case of
an occurrence policy, occurrences during the designated period. For
purposes of this subparagraph, "designated period" means a policy
year or any other period designated in the policy that is not greater
than 12 months. The impairment or exhaustion of the aggregate limit
of liability by amounts paid under the policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the partnership to acquire
additional insurance coverage for that designated period. The policy
or policies of insurance may be in a form reasonably available in the
commercial insurance market and may be subject to those terms,
conditions, exclusions, and endorsements that are typically contained
in those policies. A policy or policies of insurance maintained
pursuant to this subparagraph may be subject to a deductible or
self-insured retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of all
claims; however, the maximum amount of security for partnerships with
five or fewer licensees rendering professional services on behalf of
the partnership shall not be less than two million dollars
($2,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of security shall
be obtained for each additional licensee; however, the maximum amount
of security is not required to exceed five million dollars
($5,000,000). The partnership remains in compliance with this section
during a calendar year, notwithstanding amounts paid during that
calendar year from the accounts, funds, Treasury obligations, letters
of credit, or bonds in defending, settling, or discharging claims of
the type described in this paragraph, provided that the amount of
those accounts, funds, Treasury obligations, letters of credit, or
bonds was at least the amount specified in the preceding sentence as
of the first business day of that calendar year. Notwithstanding the
pendency of other claims against the partnership, a registered
limited liability partnership or foreign limited liability
partnership shall be deemed to be in compliance with this
subparagraph as to a claim if, within 30 days after the time that a
claim is initially asserted through service of a summons, complaint,
or comparable pleading in a judicial or administrative proceeding,
the partnership has provided the required amount of security by
designating and segregating funds in compliance with the requirements
of this subparagraph.
(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing engineering services or land
surveying services, by virtue of that person's status as a partner,
thereby automatically guarantees payment of the difference between
the maximum amount of security required for the partnership by this
paragraph and the security otherwise provided in accordance with
subparagraphs (A) and (B), provided that the aggregate amount paid by
all partners under these guarantees shall not exceed the difference.
Neither withdrawal by a partner nor the dissolution and winding up
of the partnership shall affect the rights or obligations of a
partner arising prior to withdrawal or dissolution and winding up,
and the guarantee provided for in this subparagraph shall apply only
to conduct that occurred prior to the withdrawal or dissolution and
winding up. Nothing contained in this subparagraph shall affect or
impair the rights or obligations of the partners among themselves, or
the partnership, including, but not limited to, rights of
contribution, subrogation, or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).
(b) For purposes of satisfying the security requirements of this
section, a registered limited liability partnership or foreign
limited liability partnership may aggregate the security provided by
it pursuant to subparagraphs (A), (B), (C), and (D) of paragraph (1)
of subdivision (a), subparagraphs (A), (B), (C), and (D) of paragraph
(2) of subdivision (a), subparagraphs (A), (B), (C), and (D) of
paragraph (3) of subdivision (a), or subparagraphs (A), (B), (C), and
(D) of paragraph (4) of subdivision (a), as the case may be. Any
registered limited liability partnership or foreign limited liability
partnership intending to comply with the alternative security
provisions set forth in subparagraph (D) of paragraph (1) of
subdivision (a), subparagraph (D) of paragraph (2) of subdivision
(a), subparagraph (D) of paragraph (3) of subdivision (a), or
subparagraph (D) of paragraph (4) of subdivision (a), shall furnish
the following information to the Secretary of State's office, in the
manner prescribed in, and accompanied by all information required by,
the applicable section:
TRANSMITTAL FORM FOR EVIDENCING
COMPLIANCE
WITH SECTION 16956(a)(1)(D), SECTION
16956(a)(2)(D),
SECTION 16956(a)(3)(D), OR SECTION
16956(a)(4)(D) OF THE CALIFORNIA
CORPORATIONS CODE
The undersigned hereby confirms the
following:
_____________________________________
1. Name of registered or foreign limited
______________________
liability partnership
_________________________________
2. Jurisdiction where partnership is
__________
organized
3. ____________________________
Address of principal office
The registered or foreign limited liability
partnership
chooses
to satisfy the requirements of Section
16956 by
confirming,
pursuant to Section 16956(a)(1)(D),
16956(a)(2)(D),
16956(a)(3)(D), or 16956 (a)(4)(D) and
pursuant to Section 16956(c),
that, as of the most recently completed
fiscal year, the partnership
had
a net worth equal to or exceeding ten
4. million
dollars
($10,000,000), in the case of a partnership
providing
accountancy services, fifteen million
dollars
($15,000,000)
in the case of a partnership providing
legal services,
or
ten million dollars ($10,000,000), in the
case of a
partnership
providing architectural services,
engineering services, or land surveying
services.
_________________________________________
5. Title of authorized person executing this
_____
form
____________________________________
6. Signature of authorized person
____________________
executing this form
(c) Pursuant to subparagraph (D) of paragraph (1) of subdivision
(a), subparagraph (D) of paragraph (2) of subdivision (a),
subparagraph (D) of paragraph (3) of subdivision (a), or subparagraph
(D) of paragraph (4) of subdivision (a), a registered limited
liability partnership or foreign limited liability partnership may
satisfy the requirements of this section by confirming that, as of
the last day of its most recently completed fiscal year, it had a net
worth equal to or exceeding the amount required. In order to comply
with this alternative method of meeting the requirements established
in this section, a registered limited liability partnership or
foreign limited liability partnership shall file an annual
confirmation with the Secretary of State's office, signed by an
authorized member of the registered limited liability partnership or
foreign limited liability partnership, accompanied by a transmittal
form as prescribed by subdivision (b). In order to be current in a
given year, the partnership form for confirming compliance with the
optional security requirement shall be on file within four months of
the completion of the fiscal year and, upon being filed, shall
constitute full compliance with the financial security requirements
for purposes of this section as of the beginning of the fiscal year.
A confirmation filed during any particular fiscal year shall continue
to be effective for the first four months of the next succeeding
fiscal year.
(d) Neither the existence of the requirements of subdivision (a)
nor the extent of the registered limited liability partnership's or
foreign limited liability partnership's compliance with the
alternative requirements in this section shall be admissible in court
or in any way be made known to a jury or other trier of fact in
determining an issue of liability for, or to the extent of, the
damages in question.
(e) Notwithstanding any other provision of this section, if a
registered limited liability partnership or foreign limited liability
partnership is otherwise in compliance with the terms of this
section at the time that a bankruptcy or other insolvency proceeding
is commenced with respect to the registered limited liability
partnership or foreign limited liability partnership, it shall be
deemed to be in compliance with this section during the pendency of
the proceeding. A registered limited liability partnership that has
been the subject of a proceeding and that conducts business after the
proceeding ends shall thereafter comply with paragraph (1), (2),
(3), or (4) of subdivision (a), in order to obtain the limitations on
liability afforded by subdivision (c) of Section 16306.
(f) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
16956. (a) At the time of registration pursuant to Section 16953,
in the case of a registered limited liability partnership, and
Section 16959, in the case of a foreign limited liability
partnership, and at all times during which those partnerships shall
transact intrastate business, every registered limited liability
partnership and foreign limited liability partnership, as the case
may be, shall be required to provide security for claims against it
as follows:
(1) For claims based upon acts, errors, or omissions arising out
of the practice of public accountancy, a registered limited liability
partnership or foreign limited liability partnership providing
accountancy services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:
(A) Maintaining a policy or policies of insurance against
liability imposed on or against it by law for damages arising out of
claims; however, the total aggregate limit of liability under the
policy or policies of insurance for partnerships with five or fewer
licensed persons shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of insurance shall
be obtained for each additional licensee; however, the maximum
amount of insurance is not required to exceed five million dollars
($5,000,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. The policy or policies may be issued on a claims-made
or occurrence basis, and shall cover: (i) in the case of a
claims-made policy, claims initially asserted in the designated
period, and (ii) in the case of an occurrence policy, occurrences
during the designated period. For purposes of this subparagraph,
"designated period" means a policy year or any other period
designated in the policy that is not greater than 12 months. The
impairment or exhaustion of the aggregate limit of liability by
amounts paid under the policy in connection with the settlement,
discharge, or defense of claims applicable to a designated period
shall not require the partnership to acquire additional insurance
coverage for that designated period. The policy or policies of
insurance may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this subparagraph may be subject to a deductible or self-insured
retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of all
claims; however, the maximum amount of security for partnerships with
five or fewer licensed persons shall not be less than one million
dollars ($1,000,000), and for partnerships with more than five
licensees rendering professional services on behalf of the
partnership, an additional one hundred thousand dollars ($100,000) of
security shall be obtained for each additional licensee; however,
the maximum amount of security is not required to exceed five million
dollars ($5,000,000). The partnership remains in compliance with
this section during a calendar year notwithstanding amounts paid
during that calendar year from the accounts, funds, Treasury
obligations, letters of credit, or bonds in defending, settling, or
discharging claims of the type described in this paragraph, provided
that the amount of those accounts, funds, Treasury obligations,
letters of credit, or bonds was at least the amount specified in the
preceding sentence as of the first business day of that calendar
year. Notwithstanding the pendency of other claims against the
partnership, a registered limited liability partnership or foreign
limited liability partnership shall be deemed to be in compliance
with this subparagraph as to a claim if within 30 days after the time
that a claim is initially asserted through service of a summons,
complaint, or comparable pleading in a judicial or administrative
proceeding, the partnership has provided the required amount of
security by designating and segregating funds in compliance with the
requirements of this subparagraph.
(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing accountancy services, by
virtue of that person's status as a partner, thereby automatically
guarantees payment of the difference between the maximum amount of
security required for the partnership by this paragraph and the
security otherwise provided in accordance with subparagraphs (A) and
(B), provided that the aggregate amount paid by all partners under
these guarantees shall not exceed the difference. Neither withdrawal
by a partner nor the dissolution and winding up of the partnership
shall affect the rights or obligations of a partner arising prior to
withdrawal or dissolution and winding up, and the guarantee provided
for in this subparagraph shall apply only to conduct that occurred
prior to the withdrawal or dissolution and winding up. Nothing
contained in this subparagraph shall affect or impair the rights or
obligations of the partners among themselves, or the partnership,
including, but not limited to, rights of contribution, subrogation,
or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).
(2) For claims based upon acts, errors, or omissions arising out
of the practice of law, a registered limited liability partnership or
foreign limited liability partnership providing legal services shall
comply with one, or pursuant to subdivision (b) some combination, of
the following:
(A) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
a policy or policies of insurance against liability imposed on or
against it by law for damages arising out of claims; however, the
total aggregate limit of liability under the policy or policies of
insurance for partnerships with five or fewer licensed persons shall
not be less than one million dollars ($1,000,000), and for
partnerships with more than five licensees rendering professional
services on behalf of the partnership, an additional one hundred
thousand dollars ($100,000) of insurance shall be obtained for each
additional licensee; however, the maximum amount of insurance is not
required to exceed seven million five hundred thousand dollars
($7,500,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. The policy or policies may be issued on a claims-made
or occurrence basis, and shall cover (i) in the case of a claims-made
policy, claims initially asserted in the designated period, and (ii)
in the case of an occurrence policy, occurrences during the
designated period. For purposes of this subparagraph, "designated
period" means a policy year or any other period designated in the
policy that is not greater than 12 months. The impairment or
exhaustion of the aggregate limit of liability by amounts paid under
the policy in connection with the settlement, discharge, or defense
of claims applicable to a designated period shall not require the
partnership to acquire additional insurance coverage for that
designated period. The policy or policies of insurance may be in a
form reasonably available in the commercial insurance market and may
be subject to those terms, conditions, exclusions, and endorsements
that are typically contained in those policies. A policy or policies
of insurance maintained pursuant to this subparagraph may be subject
to a deductible or self-insured retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Each registered limited liability partnership or foreign
limited liability partnership providing legal services shall maintain
in trust or bank escrow, cash, bank certificates of deposit, United
States Treasury obligations, bank letters of credit, or bonds of
insurance or surety companies as security for payment of liabilities
imposed by law for damages arising out of all claims; however, the
maximum amount of security for partnerships with five or fewer
licensed persons shall not be less than one million dollars
($1,000,000), and for partnerships with more than five licensees
rendering professional services on behalf of the partnership, an
additional one hundred thousand dollars ($100,000) of security shall
be obtained for each additional licensee; however, the maximum amount
of security is not required to exceed seven million five hundred
thousand dollars ($7,500,000). The partnership remains in compliance
with this section during a calendar year notwithstanding amounts paid
during that calendar year from the accounts, funds, Treasury
obligations, letters of credit, or bonds in defending, settling, or
discharging claims of the type described in this paragraph, provided
that the amount of those accounts, funds, Treasury obligations,
letters of credit, or bonds was at least the amount specified in the
preceding sentence as of the first business day of that calendar
year. Notwithstanding the pendency of other claims against the
partnership, a registered limited liability partnership or foreign
limited liability partnership shall be deemed to be in compliance
with this subparagraph as to a claim if within 30 days after the time
that a claim is initially asserted through service of a summons,
complaint, or comparable pleading in a judicial or administrative
proceeding, the partnership has provided the required amount of
security by designating and segregating funds in compliance with the
requirement of this subparagraph.
(C) Unless the partnership has satisfied the requirements of
subparagraph (D), each partner of a registered limited liability
partnership or foreign limited liability partnership providing legal
services, by virtue of that person's status as a partner, thereby
automatically guarantees payment of the difference between the
maximum amount of security required for the partnership by this
paragraph and the security otherwise provided in accordance with the
provisions of subparagraphs (A) and (B), provided that the aggregate
amount paid by all partners under these guarantees shall not exceed
the difference. Neither withdrawal by a partner nor the dissolution
and winding up of the partnership shall affect the rights or
obligations of a partner arising prior to withdrawal or dissolution
and winding up, and the guarantee provided for in this subparagraph
shall apply only to conduct that occurred prior to the withdrawal or
dissolution and winding up. Nothing contained in this subparagraph
shall affect or impair the rights or obligations of the partners
among themselves, or the partnership, including, but not limited to,
rights of contribution, subrogation, or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding fifteen million
dollars ($15,000,000).
(3) For claims based upon acts, errors, or omissions arising out
of the practice of architecture, a registered limited liability
partnership or foreign limited liability partnership providing
architectural services shall comply with one, or pursuant to
subdivision (b) some combination, of the following:
(A) Maintaining a policy or policies of insurance against
liability imposed on or against it by law for damages arising out of
claims in an amount for each claim of at least one hundred thousand
dollars ($100,000) multiplied by the number of licensed persons
rendering professional services on behalf of the partnership;
however, the total aggregate limit of liability under the policy or
policies of insurance for partnerships with five or fewer licensees
rendering professional services on behalf of the partnership shall
not be less than five hundred thousand dollars ($500,000), and for
all other partnerships is not required to exceed five million dollars
($5,000,000) in any one designated period, less amounts paid in
defending, settling, or discharging claims as set forth in this
subparagraph. On and after January 1, 2008, the total aggregate limit
of liability under the policy or policies of insurance for
partnerships with five or fewer licensees rendering professional
services on behalf of the partnership shall not be less than one
million dollars ($1,000,000), and for partnerships with more than
five licensees rendering professional services on behalf of the
partnership, an additional one hundred thousand dollars ($100,000) of
liability coverage shall be obtained for each additional licensee;
however, the total aggregate limit of liability under the policy or
policies of insurance is not required to exceed five million dollars
($5,000,000). The policy or policies may be issued on a claims-made
or occurrence basis, and shall cover: (i) in the case of a
claims-made policy, claims initially asserted in the designated
period, and (ii) in the case of an occurrence policy, occurrences
during the designated period. For purposes of this subparagraph,
"designated period" means a policy year or any other period
designated in the policy that is not greater than 12 months. The
impairment or exhaustion of the aggregate limit of liability by
amounts paid under the policy in connection with the settlement,
discharge, or defense of claims applicable to a designated period
shall not require the partnership to acquire additional insurance
coverage for that designated period. The policy or policies of
insurance may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this subparagraph may be subject to a deductible or self-insured
retention.
Upon the dissolution and winding up of the partnership, the
partnership shall, with respect to any insurance policy or policies
then maintained pursuant to this subparagraph, maintain or obtain an
extended reporting period endorsement or equivalent provision in the
maximum total aggregate limit of liability required to comply with
this subparagraph for a minimum of three years if reasonably
available from the insurer.
(B) Maintaining in trust or bank escrow, cash, bank certificates
of deposit, United States Treasury obligations, bank letters of
credit, or bonds of insurance or surety companies as security for
payment of liabilities imposed by law for damages arising out of all
claims in an amount of at least one hundred thousand dollars
($100,000) multiplied by the number of licensed persons rendering
professional services on behalf of the partnership; however, the
maximum amount of security for partnerships with five or fewer
licensees rendering professional services on behalf of the
partnership shall not be less than five hundred thousand dollars
($500,000), and for all other partnerships is not required to exceed
five million dollars ($5,000,000). On and after January 1, 2008, the
maximum amount of security for partnerships with five or fewer
licensees rendering professional services on behalf of the
partnership shall not be less than one million dollars ($1,000,000),
and for partnerships with more than five licensees rendering
professional services on behalf of the partnership, an additional one
hundred thousand dollars ($100,000) of security shall be obtained
for each additional licensee; however, the maximum amount of security
is not required to exceed five million dollars ($5,000,000). The
partnership remains in compliance with this section during a calendar
year notwithstanding amounts paid during that calendar year from the
accounts, funds, Treasury obligations, letters of credit, or bonds
in defending, settling, or discharging claims of the type described
in this paragraph, provided that the amount of those accounts, funds,
Treasury obligations, letters of credit, or bonds was at least the
amount specified in the preceding sentence as of the first business
day of that calendar year. Notwithstanding the pendency of other
claims against the partnership, a registered limited liability
partnership or foreign limited liability partnership shall be deemed
to be in compliance with this subparagraph as to a claim if within 30
days after the time that a claim is initially asserted through
service of a summons, complaint, or comparable pleading in a judicial
or administrative proceeding, the partnership has provided the
required amount of security by designating and segregating funds in
compliance with the requirements of this subparagraph.
(C) Unless the partnership has satisfied subparagraph (D), each
partner of a registered limited liability partnership or foreign
limited liability partnership providing architectural services, by
virtue of that person's status as a partner, thereby automatically
guarantees payment of the difference between the maximum amount of
security required for the partnership by this paragraph and the
security otherwise provided in accordance with subparagraphs (A) and
(B), provided that the aggregate amount paid by all partners under
these guarantees shall not exceed the difference. Neither withdrawal
by a partner nor the dissolution and winding up of the partnership
shall affect the rights or obligations of a partner arising prior to
withdrawal or dissolution and winding up, and the guarantee provided
for in this subparagraph shall apply only to conduct that occurred
prior to the withdrawal or dissolution and winding up. Nothing
contained in this subparagraph shall affect or impair the rights or
obligations of the partners among themselves, or the partnership,
including, but not limited to, rights of contribution, subrogation,
or indemnification.
(D) Confirming, pursuant to the procedure in subdivision (c),
that, as of the most recently completed fiscal year of the
partnership, it had a net worth equal to or exceeding ten million
dollars ($10,000,000).
(b) For purposes of satisfying the security requirements of this
section, a registered limited liability partnership or foreign
limited liability partnership may aggregate the security provided by
it pursuant to subparagraphs (A), (B), (C), and (D) of paragraph (1)
of subdivision (a), subparagraphs (A), (B), (C), and (D) of paragraph
(2) of subdivision (a), or subparagraphs (A), (B), (C), and (D) of
paragraph (3) of subdivision (a), as the case may be. Any registered
limited liability partnership or foreign limited liability
partnership intending to comply with the alternative security
provisions set forth in subparagraph (D) of paragraph (1) of
subdivision (a), subparagraph (D) of paragraph (2) of subdivision
(a), or subparagraph (D) of paragraph (3) of subdivision (a) shall
furnish the following information to the Secretary of State's office,
in the manner prescribed in, and accompanied by all information
required by, the applicable section:
TRANSMITTAL FORM FOR EVIDENCING
COMPLIANCE
WITH SECTION 16956(a)(1)(D), SECTION
16956(a)(2)(D),
OR
SECTION 16956(a)(3)(D) OF THE
CALIFORNIA
CORPORATIONS CODE
The undersigned hereby confirms the
following:
_____________________________________
1. Name of registered or foreign limited
______________________
liability partnership
_________________________________
2. Jurisdiction where partnership is
__________
organized
3. ____________________________
Address of principal office
The registered or foreign limited liability
partnership
chooses
to satisfy the requirements of Section
16956 by
confirming,
pursuant to Section 16956(a)(1)(D),
16956(a)(2)(D),
or
16956(a)(3)(D) and pursuant to Section
16956(c), that, as
of
the most recently completed fiscal year,
the partnership
4. had
a net worth equal to or exceeding ten
million
dollars
($10,000,000), in the case of a partnership
providing
accountancy services, fifteen million
dollars
($15,000,000)
in the case of a partnership
providing legal services,
or
ten million dollars ($10,000,000), in the
case of a
partnership
providing architectural services.
_________________________________________
5. Title of authorized person executing this
_____
form
________________________________________
6. Signature of authorized person executing
__________
this form
(c) Pursuant to subparagraph (D) of paragraph (1) of subdivision
(a), subparagraph (D) of paragraph (2) of subdivision (a), or
subparagraph (D) of paragraph (3) of subdivision (a), a registered
limited liability partnership or foreign limited liability
partnership may satisfy the requirements of this section by
confirming that, as of the last day of its most recently completed
fiscal year, it had a net worth equal to or exceeding the amount
required. In order to comply with this alternative method of meeting
the requirements established in this section, a registered limited
liability partnership or foreign limited liability partnership shall
file an annual confirmation with the Secretary of State's office,
signed by an authorized member of the registered limited liability
partnership or foreign limited liability partnership, accompanied by
a transmittal form as prescribed by subdivision (b). In order to be
current in a given year, the partnership form for confirming
compliance with the optional security requirement shall be on file
within four months of the completion of the fiscal year and, upon
being filed, shall constitute full compliance with the financial
security requirements for purposes of this section as of the
beginning of the fiscal year. A confirmation filed during any
particular fiscal year shall continue to be effective for the first
four months of the next succeeding fiscal year.
(d) Neither the existence of the requirements of subdivision (a)
nor the extent of the registered limited liability partnership's or
foreign limited liability partnership's compliance with the
alternative requirements in this section shall be admissible in court
or in any way be made known to a jury or other trier of fact in
determining an issue of liability for, or to the extent of, the
damages in question.
(e) Notwithstanding any other provision of this section, if a
registered limited liability partnership or foreign limited liability
partnership is otherwise in compliance with the terms of this
section at the time that a bankruptcy or other insolvency proceeding
is commenced with respect to the registered limited liability
partnership or foreign limited liability partnership, it shall be
deemed to be in compliance with this section during the pendency of
the proceeding. A registered limited liability partnership that has
been the subject of a proceeding and that conducts business after the
proceeding ends shall thereafter comply with paragraph (1), (2), or
(3) of subdivision (a), in order to obtain the limitations on
liability afforded by subdivision (c) of Section 16306.
(f) This section shall become operative on January 1, 2016.
16957. (a) No distribution shall be made by a registered limited
liability partnership if, after giving effect to the distribution:
(1) The registered limited liability partnership would not be able
to pay its debts as they become due in the usual course of business.
(2) The registered limited liability partnership's total assets
would be less than the sum of its total liabilities plus the amount
that would be needed, if the registered limited liability partnership
were to be dissolved at the time of the distribution, to satisfy the
preferential rights of other partners upon dissolution that are
superior to the rights of the partners receiving the distribution.
(b) A cause of action with respect to an obligation to return a
distribution is extinguished unless the action is brought within four
years after the distribution is made.
(c) A distribution for purposes of this section means the transfer
of money or property by a registered limited liability partnership
to its partners without consideration.
16958. (a) (1) The laws of the jurisdiction under which a foreign
limited liability partnership is organized shall govern its
organization and internal affairs and the liability and authority of
its partners, subject to compliance with Section 16956, and (2) a
foreign limited liability partnership may not be denied registration
by reason of any difference between those laws and the laws of this
state.
(b) The name of a foreign limited liability partnership
transacting intrastate business in this state shall contain the words
"Registered Limited Liability Partnership" or "Limited Liability
Partnership" or one of the abbreviations "L.L.P.," "LLP," "R.L.L.P.,"
or "RLLP," or such other similar wor