The California Uniform Limited Liability Company Act (California Corporations Code Sections 17701.01, et seq.) governs the existence of all foreign and domestic limited liability companies in California. California Corporations Code Section 17701.02(j)defines a foreign limited liability company as: “an unincorporated entity formed under the law of a jurisdiction other than this state and denominated by that law as a limited liability company.” Simply put, a properly formed and existing Delaware LLC is a “foreign” limited liability company for purposes of California law.

As a foreign limited liability company, a Delaware LLC is entitled to apply for a certificate of registration to transact business in California pursuant to California Corporation Code Section 17708.02(a) by filing an application containing at least:

• The name or, in certain instances an alternate name, of the foreign limited liability company
• The name of the state “under whose law the foreign limited liability company is organized and the date of its organization…and a statement that the foreign limited liability company is authorized to exercise its powers and privileges in that state…”
• The street address of the foreign limited liability company’s principal office and its office in California
• The name and address of the limited liability company’s agent for service of process, and a “statement that the Secretary of State is appointed the agent of the foreign limited liability company for service of process if the agent has resigned and has not been replaced or if the agent cannot be found or served with the exercise of reasonable diligence”
• If the mailing address for the limited liability company is different from the street address of its principal office, the limited liability company’s mailing address

Although a Delaware LLC may not be required to apply for a certificate of registration, if it is engaging in “intrastate business” (defined as engaging in “repeated and successive transactions of business in California, other than in interstate or foreign commerce (see California Corporations Code Section 17708.03) it may want to seriously consider doing so. While applying for a certificate of registration will subject the limited liability company to payment of the annual franchise tax due under California Revenue and Taxation Code Section 17941, failing to obtain a certificate of registration may prevent the entity from bringing actions to enforce its rights under California law against others. California Corporations Code Section 17708.07(a). While unable to bring actions against others under California law, foreign limited liability companies may still defend actions brought against them in California. California Corporations Code Section 17708.07(b).

Each business and business entity is unique. To understand the different options and which direction will be best for your situation, you need to consult with an experienced corporate attorney. Michael Leonard, Esq. of San Diego Corporate Law, named “Best of the Bar” by the San Diego Business Journal in 2016, has the expertise to guide you through everything from forming your business, to creating buy-sell agreements, to executing contracts, and anything in between. To schedule a consultation to discuss any business-related matter, please contact Mr. Leonard by visiting San Diego Corporate Law or by telephone at (858) 483‑9200.