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California updates RLLP requirements and will begin procedures to administratively dissolve suspended domestic corporations and LLCs

Submitted by UCS on January 10, 2019

Effective January 1, 2019, the California Secretary of State implemented a couple of changes that will affect some existing entities in their state.

Assembly Bill 920:
This bill extends until January 1, 2026, persons licensed to engage in the practice of engineering, land surveying or architecture to form registered limited liability partnerships and foreign limited liability partnerships if specified conditions are met. Existing law requires those partnerships to provide security of no less than $2,000,000 for claims arising out of the partnership’s professional practice. Existing law would have repealed these provisions on January 1, 2019.

Assembly Bill 2503:
This bill authorizes the California Franchise Tax Board (FTB) to administratively dissolve a domestic corporation or limited liability company if, as of January 1, 2019, or any time thereafter, the corporation’s corporate powers, rights and privileges have been suspended by the FTB for at least 60 continuous months. Additionally, the bill requires the FTB to transmit to the Secretary of State the file number of each corporation subject to administrative dissolution. Upon administrative dissolution, the corporation’s liabilities for qualified taxes, interest, and penalties accrued while it was not doing business, as specified, are abated.

Will my company receive notification prior to being administratively dissolved?
Prior to the administrative dissolution or administrative cancellation of the corporation or company, the bill would require the FTB to provide written notice to the last known address of the corporation or limited liability company of the pending administrative dissolution or administrative cancellation.

The bill would also require the Secretary of State to provide 60 days’ notice of the pending administrative dissolution or administrative cancellation on its Internet Web site, as specified.

What if the FTB has the wrong address for the notice?
If the corporation does not have a valid address in the records of the FTB, the notice provided in subdivision (d) shall be deemed sufficient notice prior to administrative dissolution.

Can my company object to the pending dissolution?
The Secretary of State shall provide instructions for a corporation to submit a written objection of the pending administrative dissolution to the FTB, before the expiration of the 60 day notice. The bill authorizes a corporation or company to provide the FTB with a written objection to the administrative dissolution or administrative cancellation.

What happens after I submit an objection?

  1. The FTB shall notify the Secretary of State if a written objection has been received;
  2. That corporation shall have an additional 90 days from the date the written objection is received by the FTB to file returns, pay or otherwise satisfy all accrued taxes, penalties, and interest;

What steps do I need to take after filing my objection?

  1. File a current Statement of Information with the Secretary of State;
  2. Fulfill any other requirements to be eligible, and apply for revivor.

What happens if my written objection fails or I don’t provide one?
If there is no written objection or the written objection fails, the bill would require the corporation or company to be administratively dissolved or administratively canceled and would provide that the certificate of the Secretary of State is prima facie evidence of the administrative dissolution or administrative cancellation.

Can a company be revived after being administratively dissolved?
No administrative appeal, writ, or other judicial action may be taken based on the Franchise Tax Board’s or the Secretary of State’s actions pursuant to this section, except pursuant to subdivision (h) if related to repayment of amounts erroneously received after administrative dissolution has occurred.  Upon administrative dissolution, the corporate rights, powers, and privileges of the corporation shall cease.

UCS works hard to keep you informed! Contact us at info@unitedcorporate.com or your CSR if there are any questions regarding these changes.

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Gale Smith-Camp, who provided this information, is the Branch Manager for our Sacramento, CA Office. Gale has extensive corporate and UCC filing and searching experience is happy to assist you! Contact Gale at (855) 855.1350.

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