Effective Jan. 1 2014, California's Beverly-Killea Limited Liability Company Act was repealed and replaced with the California Revised Uniform Limited Liability Company Act (RULLCA). RULLCA makes several changes in the law governing California limited liability companies, including significant changes in the law applicable to LLC operating agreements. Many of the default provisions (terms that the law will deem applicable to an LLC in the absence of an express provision in the operating agreement) have changed, including provisions regarding voting requirements and the need for majority as opposed to unanimous member consent for certain actions. As a result, an operating agreement that was prepared with Beverly-Killea's provisions in mind may produce an unintended result under RULLCA. On Oct. 11, 2015, Gov. Jerry Brown signed Assembly Bill 506, making "technical corrections" to RULLCA. Among other things, AB 506 amends RULLCA's transition rules to provide that the term "contracts" include operating agreements. As a result, operating agreements entered into before 2014 are intended to be governed by Beverly-Killea. AB 506 is effective Jan. 1, 2016, and includes other important corrections to address gaps and inconsistencies created by RULLCA. Pre-2014 operating agreements should be reviewed by counsel familiar with RULLCA and LLCs. Please feel free to contact us if you would like more information or to arrange for a consultation.
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