In its operating agreement, a Limited Liability Company, or LLC, may specify a termination date or other event that will result in the dissolution of the LLC. On the termination date or occurrence of another specified event, the LLC is “dissolved” (Corporations Code section 17707.01(e)), with only limited powers to “wind up” its affairs (Corporations Code section 17707.04).
Generally, after the dissolution has occurred, a certificate of dissolution must be filed with the California Secretary...
Recently, the United States Supreme Court denied certiorari in 616 Croft Ave., LLC v. City of West Hollywood (2016) 3 Cal.App.5th 621, in which the issue for review was whether the City of West Hollywood’s in-lieu housing fee was an exaction. While the Supreme Court did not rule for or against the homebuilder claiming city fees were invalid, the decision not to hear the case affirms precedent. Just five months earlier, the Supreme Court...
Even if your business is not based in California, you may be held to certain California filing obligations and tax liabilities if your business meets the legal definition of “doing business” in California.
There are two definitions for doing business in California. One is from the Franchise Tax Board, and determines whether an individual or business will have tax liabilities in California. The other is established by the California Corporations Code, and it determines what corporate...
It is prudent for parties to a contract to include a clause that addresses “changed conditions.” A provision in a contract discussing changed conditions should broadly identify altered circumstances from the time the contract was signed and how these new circumstances will be addressed.
A changed conditions clause is frequently found in construction contracts. This is because construction projects rely on so many variables, including weather, labor, and materials, that can be subject to unpredictable...
Previously on our blog, we discussed what a joint venture actually is and how to create one. Now we will share a few tips for making a joint venture relationship more successful.
Have a Written Agreement
By its very nature, a joint venture is a commitment by two or more different individuals or entities to work together on one single goal. Much like any relationship, this set up leaves a joint venture vulnerable to management...
A sole proprietorship is the most common business form because it is simple to establish and easy to maintain. For the same reasons that it is easy to start a sole proprietorship, and dissolving a sole proprietorship is relatively simple as well. If you own your own business and run it as a sole proprietorship, you can close your business in a few simple steps.
Because only one person can own a sole proprietorship, dissolving one is...
The procedures for compensating a corporate officer and setting corporate officer compensation will depend on the type of business entity in operation, the industry, the entity’s profitability, and the corporate bylaws and/or operating agreement. In general, corporate officer compensation is permitted so long as it is “reasonable” for their efforts in carrying on a trade or business. In such cases, a corporate officer is often considered an employee of a corporation, and is paid as...
If a party was dishonest about a material fact during the drafting process of a contract, the other party may be able to take the contract to court and argue that it should be rescinded, or cancelled, due to misrepresentation. Moreover, if the honest party performed the contract because he, she, or it justifiably relied on the misrepresentation in a contract of material fact, he, she, or it may be able to collect damages...
“Economic” Shareholder Rights
Shareholders invest in corporations primarily for economic gain or profit. The two main ways shareholders can profit from a corporation are by receiving distributions of the company’s profits and by selling all or part of their interest in the corporation. These correspond with the two main “economic” shareholder rights: the right to receive dividends and the right to sell shares. Notably, shareholders only have the right to receive dividends as they are declared...
An adhesion contract is also referred to as a contract of adhesion or a standard form contract. Often times this type of contractual agreement is drafted by one party, and usually looks like a template contract used in all agreements with that party. Adhesion contracts are commonly used for car purchases, cell phone and cable contracts, insurance matters, rental agreements, mortgages, and deeds.
In an adhesion contract, the drafting party is usually a business (typically...
