Q: What if a San Francisco LLC's management breached California COMPANY ACT17701.01 - 17713.13? What does a member can do?
I am member of a California LLC. I am asking the manager for the company's financial information. But the manager keeps not answering me. I know that his action is against California company act. But what can I do to presure him for the documents? Can I sue him for breaking the law and withdraw my membership from the company for his action?
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A:
Under California Corporations Code Section 17704.10, you have the right to inspect and copy LLC records upon reasonable request, including financial statements and tax returns.
If the manager continues refusing your requests, you can take legal action by filing a petition with the Superior Court to compel access to these records. The court can order the manager to provide the requested information and may hold them personally liable for any damages caused by their wrongful refusal. Additionally, you might be able to recover attorney fees if you prevail in court.
Regarding withdrawal, California law allows you to withdraw from an LLC if there's a serious breach of fiduciary duty by management, which could include wrongfully withholding financial information. However, before taking this step, consider sending a formal written demand letter through an attorney, as this often motivates compliance without the need for litigation. If you do decide to withdraw, make sure to follow the procedures outlined in your operating agreement and document all communications with management.
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