Bill Text: CA AB161 | 2009-2010 | Regular Session | Amended
Bill Title: Corporations: notices and reports.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2009-06-15 - In committee: Set, second hearing. Hearing canceled at the request of author. [AB161 Detail]
Download: California-2009-AB161-Amended.html
BILL NUMBER: AB 161 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 25, 2009
INTRODUCED BY Assembly Member Adams
JANUARY 27, 2009
An act to amend Sections 601 and 1501 of the Corporations Code,
relating to corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 161, as amended, Adams. Corporations: notices and reports.
Existing law, the General Corporation Law, requires a corporation
to give each shareholder a written notice prior to a shareholders'
meeting. Existing law requires a corporate board to send a specified
annual report to shareholders no later than 120 days after the close
of the fiscal year, except as specified.
This bill would provide that, where 2 or more shareholders have
the same address on the books of the corporation, these requirements
would be satisfied if, after receiving the consent of, or being
requested by, the those shareholders,
the corporation sends a single written notice or report to the
address of the those shareholders.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 601 of the Corporations Code is amended to
read:
601. (a) Whenever shareholders are required or permitted to take
any action at a meeting a written notice of the meeting shall be
given not less than 10 (or, if sent by third-class mail, 30) nor more
than 60 days before the date of the meeting to each shareholder
entitled to vote thereat. That notice shall state the place, date and
hour of the meeting, the means of electronic transmission by and to
the corporation (Sections 20 and 21) or electronic video screen
communication, if any, by which shareholders may participate in that
meeting, and (1) in the case of a special meeting, the general nature
of the business to be transacted, and no other business may be
transacted, or (2) in the case of the annual meeting, those matters
that the board, at the time of the mailing of the notice, intends to
present for action by the shareholders, but subject to the provisions
of subdivision (f) any proper matter may be presented at the meeting
for that action. The notice of any meeting at which directors are to
be elected shall include the names of nominees intended at the time
of the notice to be presented by the board for election.
(b) Notice of a shareholders' meeting or any report shall be given
personally, by electronic transmission by the corporation, or by
first-class mail, or, in the case of a corporation with outstanding
shares held of record by 500 or more persons (determined as provided
in Section 605) on the record date for the shareholders' meeting,
notice may also be sent third-class mail, or other means of written
communication, addressed to the shareholder at the address of that
shareholder appearing on the books of the corporation or given by the
shareholder to the corporation for the purpose of notice; or if no
address appears or is given, at the place where the principal
executive office of the corporation is located or by publication at
least once in a newspaper of general circulation in the county in
which the principal executive office is located. Without limiting the
manner by which notices of a shareholders' meeting and any other
required reports may be given, notices or reports to two or more
shareholders that have the same address on the books of the
corporation may be given by the corporation by means of a single
notice or report delivered to the shareholders at that address if
consented to or requested by the those
shareholders. A shareholder who affirmatively consents in writing, or
who fails to object in writing or by telephone to the corporation
within 60 days of having been given written notice by the corporation
of its intention to send a single notice or report, shall be deemed
to have consented to receiving a single notice or report. A consent
or request shall be revocable by a shareholder by written or
telephonic notice to the corporation in the manner provided by the
corporation for the revocation. The notice or report shall be deemed
to have been given at the time when delivered personally, sent by
electronic transmission by the corporation, deposited in the mail, or
sent by other means of written communication. An affidavit of
mailing or electronic transmission by the corporation of any notice
or report in accordance with the provisions of this division,
executed by the secretary, assistant secretary or any transfer agent,
shall be prima facie evidence of the giving of the notice or report.
If any notice or report addressed to the shareholder at the
address of that shareholder appearing on the books of the corporation
is returned to the corporation by the United States Postal Service
marked to indicate that the United States Postal Service is unable to
deliver the notice or report to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given
without further mailing if the same shall be available for the
shareholder upon written demand of the shareholder at the principal
executive office of the corporation for a period of one year from the
date of the giving of the notice or report to all other
shareholders.
Notice given by electronic transmission by the corporation under
this subdivision shall be valid only if it complies with Section 20.
Notwithstanding the foregoing, notice shall not be given by
electronic transmission by the corporation under this subdivision
after either of the following:
(1) The corporation is unable to deliver two consecutive notices
to the shareholder by that means.
(2) The inability to so deliver the notices to the shareholder
becomes known to the secretary, any assistant secretary, the transfer
agent, or other person responsible for the giving of the notice.
(c) Upon request in writing to the corporation addressed to the
attention of the chairperson of the board, president, vice president
or secretary by any person (other than the board) entitled to call a
special meeting of shareholders, the officer forthwith shall cause
notice to be given to the shareholders entitled to vote that a
meeting will be held at a time requested by the person or persons
calling the meeting, not less than 35 nor more than 60 days after the
receipt of the request. If the notice is not given within 20 days
after receipt of the request, the persons entitled to call the
meeting may give the notice or the superior court of the proper
county shall summarily order the giving of the notice, after notice
to the corporation giving it an opportunity to be heard. The
procedure provided in subdivision (c) of Section 305 shall apply to
that application. The court may issue orders as may be appropriate,
including, without limitation, orders designating the time and place
of the meeting, the record date for determination of shareholders
entitled to vote and the form of notice.
(d) When a shareholders' meeting is adjourned to another time or
place, unless the bylaws otherwise require and except as provided in
this subdivision, notice need not be given of the adjourned meeting
if the time and place thereof (or the means of electronic
transmission by and to the corporation or electronic video screen
communication, if any, by which the shareholders may participate) are
announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the
adjournment is for more than 45 days or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting.
(e) The transactions of any meeting of shareholders, however
called and noticed, and wherever held, are as valid as though had at
a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after
the meeting, each of the persons entitled to vote, not present in
person or by proxy, provides a waiver of notice or consent to the
holding of the meeting or an approval of the minutes thereof in
writing. All those waivers, consents and approvals shall be filed
with the corporate records or made a part of the minutes of the
meeting. Attendance of a person at a meeting shall constitute a
waiver of notice of and presence at the meeting, except when the
person objects, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or
convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by this
division to be included in the notice but not so included, if the
objection is expressly made at the meeting. Neither the business to
be transacted at nor the purpose of any regular or special meeting of
shareholders need be specified in any written waiver of notice,
consent to the holding of the meeting or approval of the minutes
thereof, unless otherwise provided in the articles or bylaws, except
as provided in subdivision (f).
(f) Any shareholder approval at a meeting, other than unanimous
approval by those entitled to vote, pursuant to Section 310, 902,
1152, 1201, 1900 or 2007 shall be valid only if the general nature of
the proposal so approved was stated in the notice of meeting or in
any written waiver of notice.
SEC. 2. Section 1501 of the Corporations Code is amended to read:
1501. (a) (1) The board shall cause an annual report to be sent
to the shareholders not later than 120 days after the close of the
fiscal year, unless in the case of a corporation with less than 100
holders of record of its shares (determined as provided in Section
605) this requirement is expressly waived in the bylaws. Unless
otherwise provided by the articles or bylaws and if approved by the
board of directors, that report and any accompanying material sent
pursuant to this section may be sent by electronic transmission by
the corporation (Section 20). Without limiting the manner by which
annual reports otherwise may be sent, the obligation to send an
annual report to two or more shareholders that have the same address
on the books of the corporation shall be satisfied if the corporation
sends a single annual report to that address if consented to or
requested by the those shareholders. A
shareholder who affirmatively consents in writing, or who fails to
object in writing or by telephone to the corporation within 60 days
of having been given written notice by the corporation of its
intention to send a single annual report, shall be deemed to have
consented to receiving a single report. A consent or request shall be
revocable by a shareholder by written or telephonic notice to the
corporation in the manner provided by the corporation for the
revocation. This report shall contain a balance sheet as of the end
of that fiscal year and an income statement and a statement of
cashflows for that fiscal year, accompanied by any report thereon of
independent accountants or, if there is no report, the certificate of
an authorized officer of the corporation that the statements were
prepared without audit from the books and records of the corporation.
(2) Unless so waived, the report specified in paragraph (1) shall
be sent to the shareholders at least 15 (or, if sent by third-class
mail, 35) days prior to the annual meeting of shareholders to be held
during the next fiscal year, but this requirement shall not limit
the requirement for holding an annual meeting as required by Section
600.
(3) Notwithstanding Section 114, the financial statements of any
corporation with fewer than 100 holders of record of its shares
(determined as provided in Section 605) required to be furnished by
this subdivision and subdivision (c) are not required to be prepared
in conformity with generally accepted accounting principles if they
reasonably set forth the assets and liabilities and the income and
expense of the corporation and disclose the accounting basis used in
their preparation.
(4) The requirements described in paragraphs (1) and (2) shall be
satisfied if a corporation with an outstanding class of securities
registered under Section 12 of the Securities Exchange Act of 1934
complies with Section 240.14a-16 of Title 17 of the Code of Federal
Regulations, as it may be amended from time to time, with respect to
the obligation of a corporation to furnish an annual report to
shareholders pursuant to Section 240.14a-3(b) of Title 17 of the Code
of Federal Regulations.
(b) In addition to the financial statements required by
subdivision (a), the annual report of any corporation having 100 or
more holders of record of its shares (determined as provided in
Section 605) either not subject to the reporting requirements of
Section 13 of the Securities Exchange Act of 1934, or exempted from
those reporting requirements by Section 12(g)(2) of that act, shall
also describe briefly both of the following:
(1) Any transaction (excluding compensation of officers and
directors) during the previous fiscal year involving an amount in
excess of forty thousand dollars ($40,000) (other than contracts let
at competitive bid or services rendered at prices regulated by law)
to which the corporation or its parent or subsidiary was a party and
in which any director or officer of the corporation or of a
subsidiary or (if known to the corporation or its parent or
subsidiary) any holder of more than 10 percent of the outstanding
voting shares of the corporation had a direct or indirect material
interest, naming the person and stating the person's relationship to
the corporation, the nature of the person's interest in the
transaction and, where practicable, the amount of the interest;
provided that in the case of a transaction with a partnership of
which the person is a partner, only the interest of the partnership
need be stated; and provided further that no report need be made in
the case of any transaction approved by the shareholders (Section
153).
(2) The amount and circumstances of any indemnification or
advances aggregating more than ten thousand dollars ($10,000) paid
during the fiscal year to any officer or director of the corporation
pursuant to Section 317; provided that no report need be made in the
case of indemnification approved by the shareholders (Section 153)
under paragraph (2) of subdivision (e) of Section 317.
(c) If no annual report for the last fiscal year has been sent to
shareholders, the corporation shall, upon the written request of any
shareholder made more than 120 days after the close of that fiscal
year, deliver or mail to the person making the request within 30 days
thereafter the financial statements required by subdivision (a) for
that year. A shareholder or shareholders holding at least 5 percent
of the outstanding shares of any class of a corporation may make a
written request to the corporation for an income statement of the
corporation for the three-month, six-month, or nine-month period of
the current fiscal year ended more than 30 days prior to the date of
the request and a balance sheet of the corporation as of the end of
the period and, in addition, if no annual report for the last fiscal
year has been sent to shareholders, the statements referred to in
subdivision (a) for the last fiscal year. The statements shall be
delivered or mailed to the person making the request within 30 days
thereafter. A copy of the statements shall be kept on file in the
principal office of the corporation for 12 months and it shall be
exhibited at all reasonable times to any shareholder demanding an
examination of the statements or a copy shall be mailed to the
shareholder.
(d) The quarterly income statements and balance sheets referred to
in this section shall be accompanied by the report thereon, if any,
of any independent accountants engaged by the corporation or the
certificate of an authorized officer of the corporation that the
financial statements were prepared without audit from the books and
records of the corporation.
(e) In addition to the penalties provided for in Section 2200, the
superior court of the proper county shall enforce the duty of making
and mailing or delivering the information and financial statements
required by this section and, for good cause shown, may extend the
time therefor.
(f) In any action or proceeding under this section, if the court
finds the failure of the corporation to comply with the requirements
of this section to have been without justification, the court may
award an amount sufficient to reimburse the shareholder for the
reasonable expenses incurred by the shareholder, including attorney's
fees, in connection with the action or proceeding.
(g) This section applies to any domestic corporation and also to a
foreign corporation having its principal executive office in this
state or customarily holding meetings of its board in this state.
