Several months ago, I wrote “Which Financial Information Must a Corporation Provide to its Shareholders? “ This post – prompted by a client’s question – discusses the financial information that a California limited liability company must provide to its members. It also explains that such information cannot be waived by any member.
Section references below have been updated to reflect California’s new LLC law that took effect on January 1, 2014 (see RULLCA Brings New LLC Laws to California in 2014).
Corporations Code Section 17704.10(b) provides a broad set of rights to LLC members, managers and holders of transferable interests. These include, among others, the right to inspect and copy, during normal business hours and for purposes reasonably related to the person’s interest as a member, manager or holder of a transferable interest, the following records (specified in greater detail in Corporations Code Section 17701.13(d)):
- A list of members and holders of transferable interests
- A list of managers
- The articles of organization
- Federal, state and local tax returns
- The operating agreement
- Financial statements for the past six fiscal years
- Books and records for the current and past four fiscal years
Furthermore, Corporations Code Section 17704.10(h) states that “Any waiver of the rights provided in this section shall be unenforceable.” This means that any provision in an operating agreement that purports to limit any of the foregoing information that an LLC must provide to its members will be void as a matter of law.
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Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
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