California Corporations Code

§ 17704.05

CORP § 17704.05 Effective Jan 1, 2013Title 2.6 · Art. 4

Statute text

(a)A limited liability company shall not make a distribution if after the distribution either of the following applies:

(1)The limited liability company would not be able to pay its debts as they become due in the ordinary course of the limited liability company’s activities.

(2)The limited liability company’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the limited liability company were to be dissolved, wound up, and terminated at the time of the distribution, to satisfy the preferential rights upon dissolution, winding up, and termination of members whose preferential rights are superior to those of persons receiving the distribution.

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Legislative history

Added by Stats. 2012, Ch. 419, Sec. 20. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.