Ownership of Passive LLC Interest in Manager-Managed LLC Not “Doing Business” in California

The following is the text of an e-bulletin that I authored and that was published by the Corporations Committee of the Business Law Section of the State Bar of California. In Swart Enterprises, Inc. v. Franchise Tax Board  (Jan. 12, … Continue reading

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Perils of Dissolution, or Hey, FTB, Where’s My Dough?

Sometimes a California limited liability company (LLC) or California corporation dissolves and files a final tax return which shows it has a refund coming, but the refund is $800 short. How could this happen? It’s because the Franchise Tax Board (FTB) … Continue reading

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Don’t go to MyFTB.com. It’s not the official site.

To access your MyFTB account, go to the FTB’s website: www.ftb.ca.gov . Note that the word “my” is NOT part of the URL. MyFTB.com has been reported as a malware site.

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Misleading Certificate of Status Solicitations

The California Secretary of State has issued warnings about misleading certificate of status solicitations. Directors and officers of corporations and managers and members of limited liability companies (LLCs) should be wary of such solicitations. As a public service, the text … Continue reading

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Out-of-State Business Entity Doing Business in California

An out-of-state business entity is a corporation or limited liability company formed under the law of another state (say, Delaware or Nevada). An out-of-state entity is often referred to as a “foreign” corporation or as a “foreign” LLC. An out-of-state … Continue reading

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Forming an Out-of-State Entity To Do Business in California

Sometimes the owner of a business in California believes that forming a business entity (such as a corporation or limited liability company) to do business in California is best done under Delaware law or Nevada law. While this may at … Continue reading

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Breach of Fiduciary Duty by Corporate Insiders Requires Remedy, Even if Damages Unclear

When corporate insiders transferred to a new corporation corporate assets claimed to be worthless, the shareholders had a right to a remedy, even if the damages were unclear. In Meister v. Mensinger (2014) 230 Cal. App. 4th 381, Sesame Technologies, Inc., was … Continue reading

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Changes to California’s LLC Act — Get Ready or Get Skewered

California has a new LLC act, which took effect January 1, 2014. Although the new law has some useful features, most LLCs won’t need them. Unfortunately, the new law automatically applies to existing LLCs, and the new law contains provisions … Continue reading

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Court Permits Assets of Business Entity to Be Used to Satisfy Creditors of Related Entity

In Toho-Towa Co., Ltd., v. Morgan Creek Productions (2013) 217 Cal. App. 4th 1096, the court held that the assets of one business entity could be used to satisfy the obligations of a different, but related, business entity. This case deals … Continue reading

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Supreme Court Decides California Law Does Not Apply to Dissolved Out-of-State Corporation That Did Business in California

In Greb v. Diamond International Corporation (Feb. 21, 2013), the Supreme Court of California held that Delaware law governs the time for bringing an action in California against a dissolved Delaware corporation. In December 2008, plaintiffs Walter Greb (now deceased) … Continue reading

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