Corp. Code, § 17704.06 · Article 4. Relations of Members to Each Other and to the Limited Liability Company
Corp. Code, § 17704.06
Text — As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
(a) Except as otherwise provided in subdivision (b), if a member of a member-managed limited liability company or manager of a manager-managed limited liability company consents to a distribution made in violation of Section 17704.05, the member or manager is personally liable to the limited liability company for the amount of the distribution that exceeds the amount that could have been distributed without the violation of Section 17704.05.
(b) To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other members, the liability stated in subdivision (a) applies to the other members and not the member that the operating agreement relieves of authority and responsibility.
(c) A person that receives a distribution knowing that the distribution to that person was made in violation of Section 17704.05 is personally liable to the limited liability company but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under Section 17704.05.
(d) A person against which an action is commenced because the person is liable under subdivision (a) may do all of the following:
(1) Implead any other person that is subject to liability under subdivision (a) and seek to compel contribution from the person.
(2) Implead any person that received a distribution in violation of subdivision (c) and seek to compel contribution from the person in the amount the person received in violation of subdivision (c).
(e) An action under this section is barred if not commenced within four years after the distribution.
Notes and commentary — not statutory text
History
Added by Stats. 2012, Ch. 419, Sec. 20. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.
Source of truth
- Edition
- As published in the Legislative Counsel's database, tables dated October 18, 2026 (pubinfo_2025.zip)
- Official file
- https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP§ionNum=17704.06.
- Text hash
- sha256 35da057fbc607ba3ac47f04e074ef7f814b0abc253666e4a0d70c549235f4016
- Composed by
- compose_ca.py 2026-10-22: the Legislative Counsel's CAML content files read by a tokenizer (caml_readers.reader_a); an independent xml.etree reading (caml_readers.reader_b) agrees on every section
This section cites
Provisions in this library that the text above cites, as it prints each citation. A range cited as “ss. 61.13-61.16” links its first and last provisions.
Corporations Code
Cited by 4 provisions
Provisions in this library whose text cites Corp. Code, § 17704.06. Each shows the citation as that text prints it.
Procedural information only. Not legal advice and not a substitute for the advice of an attorney. Confirm the current text with the official publisher before relying on it.