Relations of LLC Members and Managers

Corporations Code Title 2.6, Article 3 deals with relations of members and managers to persons dealing with a limited liability company in California.

Section 17703.01 provides, unless the articles of organization indicate the limited liability company is a manager-managed LLC, every member is an agent of the LLC for the purpose of its business or affairs, and the act of any member, for the apparent purpose of carrying on in the usual way the business or affairs of the LLC of which that person is a member, binds the limited liability company in the particular matter, unless the member so acting has, in fact, no authority to act for the LLC in the particular matter and the person with whom the member is dealing has actual knowledge of the fact that the member has no such authority.

Section 17703.04 provides that all of the specified items apply to debts, obligations, or other liabilities of a LLC, whether arising in contract, tort, or otherwise. A member of a limited liability company is subject to liability under the common law governing alter ego liability, and also be personally liable under a judgment of a court or for any debt, obligation, or liability of the limited liability company.

A limited liability company or foreign limited liability company must carry insurance or provide an undertaking to the same extent and in the same amount as is required by any law, rule, or regulation of this state that would be applicable to the limited liability company or foreign limited liability company were it a corporation organized and existing or duly qualified for the transaction of intrastate business under the General Corporation Law.