Statutes of 2006 – 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, 2007. 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 2005–2006 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 773 (AB 2341 Villines)
Effective September 29, 2006

This act, effective September 29, 2006 as a tax levy, amended California law relating to the filing requirements of a terminating or merging corporation, limited liability company and limited liability partnership. This act:

Questions regarding franchise tax requirements must be directed to the Franchise Tax Board, or call the Franchise Tax Board at (800) 852–5711 (from within the U.S.) or (916) 845–6500 (from outside the U.S.).

Chapter 426 (AB 2914 Leno)

This act extends the sunset date of January 1, 2007 on licensed architects' ability to organize as limited liability partnerships (LLPs) to January 1, 2012. This act provides that, on and after January 1, 2008, the total aggregate limit of liability under the policy or policies of insurance or the amount of security for those partnerships providing architectural services with 5 or fewer licensed persons shall be $1,000,000, and for partnerships with more than 5 licensees, shall be an additional $100,000 for each additional licensee, up to the $5,000,000 maximum. This act also incorporates additional changes to § 16101 of the Corporations Code, proposed by AB 339.

Chapter 495 (AB 339 Harman)
Effective January 1, 2008

This act established the Uniform Limited Partnership Act of 2008 (the Act of 2008), which provides the organization and governing provisions for a domestic (California) limited partnership (LP) and foreign (out–of–state or out–of–country) LP. Limited partnerships filed prior to January 1, 2008 will continue to be governed under the Uniform Limited Partnership Act and the California Revised Limited Partnership Act, unless the limited partnership elects to be governed by the new act or until January 1, 2010 when the Act of 2008 will govern all limited partnerships. The Act of 2008 can be found in the California Corporations Code commencing with § 15900.

Chapter 324 (AB 2588 Runner)

This act requires the Secretary of State to reinstate a terminated business entity to active status upon a court finding that factual representations in support of the termination document are materially false or the submission of the termination document for filing with the Secretary of State is fraudulent or upon other grounds warranting reinstatement. As defined by this bill, the term "termination document" means: "the certificate or other document required by the Corporations Code that is the last certificate or document filed with the Secretary of State to effect the final dissolution, surrender, or cancellation of the business entity." The Secretary of State shall notify the Franchise Tax Board of the reinstatement of the business entity.

Chapter 57 (SB 1183 Ackerman)

This act eliminates a two–year sunset provision for a filed amendment to articles of incorporation that imposes a "supermajority vote." This act also provides that a foreign corporation shall not be considered to be transacting intrastate business merely because of its status as an owner of various types of interests in business entities, which are transacting intrastate business.

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Special Filings

Chapter 605 (AB 630 Chu)

This act requires the Secretary of State to conduct background checks on immigration consultants and to disqualify those who have been convicted of a felony, certain misdemeanor offenses, or who have failed to disclose certain arrests or convictions on a form filed with the Secretary of State. The background check is required for every person engaged in the business or acting in the capacity of an immigration consultant who was bonded and qualified as such on or before December 31, 2006 and from all new immigration consultants. This act requires that the photograph of the immigration consultant who has complied with all requirements be posted on the Secretary of State’s website. This act also requires the Secretary of State to issue a cease and desist order to a person who fails to comply with the bonding requirements of the law or who does not satisfactorily pass the back ground check and to notify the Attorney General of the person’s noncompliance.

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