Legal Question in Business Law in California

There are basically three categories of things that need to be done. The first and simplest is to file the proper form(s) with the Secretary of State. Ordinarily this will be only Form LLC-2, for making amendments to the Articles of Organization originally filed on Form LLC-1 when the company was first organized. Be careful to compare your LLC-2 with the LLC-1 already on file and any previously-filed LLC-2 to be sure of compatibility and continuity. Also, look at the other forms in the LLC series to see if any of them needs to be filed as well, such as, perhaps, the RA-100 or LLC-12 forms. See the forms and instructions for each on the S/S' web site at www.ss.ca.gov.

The second category is cleanup of the withdrawing members' relationships with the LLC, and this would include things like getting them released from personal guarantees of LLC debts (if possible and intended), cashing them out, getting releases showing that the LLC has settled up with them, notifying customers and suppliers of their withdrawal, re-printing stationery, making sure they remove their personal belongings from company offices and hand in their keys, credit cards, etc., changing locks and passwords, new bank signature cards, etc. etc. Be sure your bankers, lenders, accountant and insurance agent all know.

Third, the LLC needs to revise its Operating Agreement and other aspects of its organizational structure to reflect the changes in ownership and/or management.