Statutes of 2011 – Legislative Summary



Following are summaries of bills enacted into law that may directly affect filings made and business conducted with the Secretary of State’s office. Unless otherwise indicated, these measures took effect on January 1, 2012. To research other legislation that does not impact filings made or business conducted with the Secretary of State’s office but that may affect your business, please refer to the Bill Index section of the California Legislative Counsel’s website for a list of all bills introduced in the Assembly and Senate during the 2011–2012 legislative session.

The various California Codes (reflecting laws currently in effect) can be accessed through the California Law section of the California Legislative Counsel’s website.


Business Entities

Chapter 203 (AB 571 Hagman)

This act allows a corporation to make distributions to shareholders if certain specified conditions are met. This act also grants more flexibility to the board of directors to determine the value of the corporation’s assets and liabilities.

This act repeals Corporations Code § 502 regulating corporate distributions and provides that preferred shareholders with cumulative dividends in arrears do not have the right to bring suit with respect to an improper distribution unless the amounts owed those shareholders, as specified, is greater than zero. The act also creates a four–year statute of limitations for lawsuits based on an obligation to return an improper distribution.

Chapter 204 (AB 657 Gordon)

This act allows businesses to choose to receive Statement of Information notices and other notices from the Secretary of State electronically.

This act requires a corporation from another state or country to file an initial Statement of Information within 90 days of registering in California. This makes the law the same for California and non–California corporations.

This act allows credit unions to have corporations as agents for service of process. This act also standardizes the address requirements on the Statements of Information for consumer cooperatives, limited liability companies and credit unions, and provides other technical, standardizing changes related to common interest developments.

Chapter 269 (AB 75 Hill)

This act also affects Notary Public and Special Filings & Trademarks and Service Marks.

Chapter 291 (AB 560 Gorell)

This act extends the time limit for architects to organize as limited liability partnerships from January 1, 2012 to January 1, 2019.

Chapter 381 (SB 146 Wyland)

This act authorizes the formation of professional clinical counselor corporations, subject to specified requirements. It authorizes professional clinical counselors to be shareholders, officers, directors, or professional employees of other professional corporations. This act also makes changes to regulating and establishing the licensed profession of clinical counselors.

Chapter 442 (AB 1211 Silva)

This act applies to nonprofit public benefit corporations that are committees required to file reports with the California Fair Political Practices Commission by the California Political Reform Act ("California FPCC Committees"). These committees are exempt from the supervision of the California Attorney General pursuant to California Government Code §§ 12581 and 12583. Because these committees are not supervised by the Attorney General, this act exempts them from the following requirements related to the Attorney General:

  1. The requirement to give 20 days written notice to the California Attorney General before selling, leasing, conveying, exchanging, transferring or otherwise disposing of all or substantially all of its assets.
  2. The requirement to obtain written permission from the California Attorney General before a merger with any business entity that is not another nonprofit public benefit corporation, nonprofit religious corporation or foreign nonprofit corporation or another committee of this type.
  3. The requirement for a written waiver or written confirmation of no assets from the California Attorney General when voluntarily dissolving.

This act also requires a statement in the Certificate of Dissolution for nonprofit public benefit, nonprofit mutual benefit and nonprofit religious corporations that "all" final returns under the California Revenue and Taxation Code have been or will be filed with the California Franchise Tax Board.

This act also changes the criteria for counting the number of directors present for constituting a quorum, including criteria related to "interested" directors, and adds criteria related to "common" directors. This act incorporates references to filing specific instruments and reports with the Attorney General into various provisions of the nonprofit public benefit, nonprofit mutual benefit and nonprofit religious corporation law.

Chapter 728 (AB 361 Huffman)

This act authorizes the formation of a new type of corporation called the "benefit corporation." A benefit corporation must be formed in accordance with Division 1 of the General Corporation law and must have the purpose of creating a general public benefit (defined as a "material positive impact on society and the environment").

Chapter 740 (SB 201 DeSaulnier)

This act authorizes the formation of a new type of corporation called the "flexible purpose corporation." This entity type is required to list its flexible purposes in the articles of incorporation, which could include charitable purposes.


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Notary Public

Chapter 269 (AB 75 Hill)

This act also affects Business Entities and Special Filings & Trademarks and Service Marks.


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Special Filings & Trademarks and Service Marks

Chapter 269 (AB 75 Hill)

This act gives the Secretary of State the right to refuse a request to perform a service or filing submitted for unlawful, false or fraudulent purposes.

This act also affects Business Entities and Notary Public.


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