Under California’s new Revised Uniform Limited Liability Act, an LLC is formed when the California Secretary of State’s Office files the articles of organization. Cal. Corp. Code § 17702.01(d). Only five items of information are required to be disclosed in the articles. Cal. Corp. Code § 17702.01(b) These five items are included on the Secretary of State’s form of articles of organization, known as Form LLC-1.
One of these disclosures is whether one manager, more than one manager or the member(s) manage the LLC. On the Form LLC-1, this is disclosed simply by checking the appropriate box. One would expect to be able to determine whether an LLC is manager-managed or member-managed simply by looking at which box is checked. However, simply checking the box will not be sufficient to make an LLC manager managed. Corporations Code Section 17704.07(a) provides that an LLC is a member-managed LLC unless the articles of organization and the operating agreement do either of the following:
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Expressly provide that:
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The LLC is or will be “manager-managed”;
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The LLC is or will be “managed by managers”; or
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Management of the LLC is or will be “vested in managers.”
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Include words of similar import.
It was much simpler under the former Beverly-Killea Act because box on the Form LLC-1 alone determined whether the LLC was manager-managed or member-managed.
