Bill Text: CA SB1208 | 2011-2012 | Regular Session | Amended
Bill Title: Publicly traded corporations: compensation: disclosure.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2012-09-01 - Motion to reconsider lapsed. [SB1208 Detail]
Download: California-2011-SB1208-Amended.html
BILL NUMBER: SB 1208 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 7, 2012
AMENDED IN SENATE MAY 1, 2012
AMENDED IN SENATE MARCH 29, 2012
INTRODUCED BY Senator Leno
FEBRUARY 22, 2012
An act to amend Sections 1502.1 , 2204, 2205, 2206,
and 2117.1 of the Corporations Code, relating to publicly
traded corporations.
LEGISLATIVE COUNSEL'S DIGEST
SB 1208, as amended, Leno. Publicly traded corporations:
retiree compensation: disclosure.
(1) Existing
Existing law provides for the formation and regulation
of corporations. Existing law requires that domestic and foreign
publicly traded corporations file annually with the Secretary of
State an information statement. Existing law also requires
those corporations to file a compensation
statement disclosing , among other things,
the compensation, as specified, paid to each of the members of
the corporation's board of directors and its 5 most highly
compensated executive officers who are not members of the board, and
the chief executive officer, if he or she is not among those
executive officers. Existing law requires the Secretary of State to
make information required to be included in the information
statement and the compensation that statement
publicly available, as specified.
This bill would, instead, require that a publicly traded
corporation include in the compensation statement
described above the total compensation, as defined, paid to each
member of the board of directors, the principal executive officer,
principal financial officer, and each of the 3 most highly
compensated executive officers , other than the principal
executive officer or principal financial officer , who are not
members of the board .
This
The bill would also require a publicly traded
corporation to include in the compensation
that statement filed with the Secretary of State
total compensation information with respect to each of the
corporation's 5 most highly compensated retirees, and the names of
those retirees.
(2) Existing law provides that if a publicly traded corporation
fails to file the annual information statement as required, the
Secretary of State shall provide a notice of that delinquency to the
corporation, as specified, and that if the corporation fails to file
the delinquent statement within 60 days following that notice, the
Secretary of State shall certify the corporation's name to the
Franchise Tax Board. Existing law requires the Franchise Tax Board to
then impose upon the corporation a $250 fee, to be collected as
specified. Existing law also provides that a corporation that fails
to file an information statement and has not filed an information
statement during the preceding 24 months, and was certified for
penalty as described for the same filing period, is subject to
suspension rather than the $250 penalty, and the Secretary of State
shall provide a notice to the corporation informing the corporation
that its corporate powers, rights, and privileges will be suspended
after 60 days if the corporation fails to file an information
statement as required and as specified.
This bill would impose the sanctions described above for a
corporation that fails to timely file its annual information
statement to a corporation that fails to timely file its compensation
statement.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1502.1 of the Corporations Code is amended to
read:
1502.1. (a) In addition to the statement required pursuant to
Section 1502, every publicly traded corporation shall file annually,
within 150 days after the end of its fiscal year, a statement, on a
form prescribed by the Secretary of State, that includes all of the
following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the corporation's annual financial
statements.
(2) A description of other services, if any, performed for the
corporation during its two most recent fiscal years and the period
between the end of its most recent fiscal year and the date of the
statement by the foregoing independent auditor, by its parent
corporation, or by a subsidiary or corporate affiliate of the
independent auditor or its parent corporation.
(3) The name of the independent auditor employed by the
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The total compensation for the most recent fiscal year of the
corporation paid to (A) each member of the board of directors, (B)
the principal executive officer, (C) the principal financial officer,
and (D) each of the three most highly compensated executive
officers, other than the principal executive officer and principal
financial officer, of the corporation who are not members of the
board of directors.
(5) A description of any loan, including the amount and terms of
the loan, made to any member of the board of directors by the
corporation during the corporation's two most recent fiscal years at
an interest rate lower than the interest rate available from
unaffiliated commercial lenders generally to a similarly situated
borrower.
(6) The total compensation for the most recent fiscal year of the
publicly traded corporation paid to each of the five persons retired
from the corporation who received from the corporation the highest
amounts of total compensation that the corporation paid to retirees,
and the name of each of those retirees.
(7) A statement indicating whether an order for relief has been
entered in a bankruptcy case with respect to the corporation, its
executive officers, or members of the board of directors of the
corporation during the 10 years preceding the date of the statement.
(8) A statement indicating whether any member of the board of
directors or executive officer of the corporation was convicted of
fraud during the 10 years preceding the date of the statement, if the
conviction has not been overturned or expunged.
(9) A description of any material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the corporation or any of its subsidiaries is a party or of
which any of their property is the subject, as specified by Item 103
of Regulation S-K of the Securities and Exchange Commission (Section
229.103 of Title 12 of the Code of Federal Regulations). A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the five years
preceding the date of the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded corporation" means a corporation, as defined
in Section 162, that is an issuer as defined in Section 3 of the
Securities Exchange Act of 1934, as amended (15 U.S.C. Sec. 78c), and
has at least one class of securities listed or admitted for trading
on a national securities exchange, on the OTC Bulletin Board, or on
the electronic service operated by OTC Markets Group Inc.
(2) "Executive officer" means the principal executive officer,
principal financial officer, president, any vice president in charge
of a principal business unit, division, or function, any other
officer of the corporation who performs a policymaking function, or
any other person who performs similar policymaking functions for the
corporation.
(3) (A) "Total compensation" as used in paragraph (4) of
subdivision (a) means all plan and nonplan compensation, including
the number of any shares issued, options for shares granted, and
similar equity-based compensation, and all perquisite and other
personal benefits, granted or awarded to, earned by, or paid to the
person for all services rendered in all capacities to the corporation
and to its subsidiaries, in each case, within the meaning of those
terms pursuant to Item 402 of Regulation S-K of the Securities and
Exchange Commission (Section 229.402 of Title 17 of the Code of
Federal Regulations).
(B) "Total compensation" as used in paragraph (6) of subdivision
(a) has the same meaning given in subparagraph (A), except that the
compensation is granted, awarded, or paid to the person after the
person's retirement from the corporation for services rendered in all
capacities to the corporation and to its subsidiaries prior to his
or her retirement.
(4) "Loan" as used in paragraph (5) of subdivision (a) excludes an
advance for expenses permitted under subdivision (d) of Section 315,
the corporation's payment of life insurance premiums permitted under
subdivision (e) of Section 315, and an advance of expenses permitted
under Section 317.
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A corporation shall certify that the information it provides
pursuant to this section is true and correct. No claim may be made
against the state for inaccurate information contained in statements
filed under this section with the Secretary of State.
SEC. 2. Section 2204 of the Corporations Code
is amended to read:
2204. (a) Upon the failure of a corporation to file the statement
required by Section 1502 or Section 1502.1, the Secretary of State
shall provide a notice of that delinquency to the corporation. The
notice shall also contain information concerning the application of
this section, advise the corporation of the penalty imposed by
Section 19141 of the Revenue and Taxation Code for failure to timely
file the required statement after notice of the delinquency has been
provided by the Secretary of State, and shall advise the corporation
of its right to request relief from the Secretary of State because of
reasonable cause or unusual circumstances that justify the failure
to file. If, within 60 days of providing notice of the delinquency, a
statement pursuant to Section 1502 has not been filed by the
corporation, the Secretary of State shall certify the name of the
corporation to the Franchise Tax Board.
(b) Upon certification pursuant to subdivision (a), the Franchise
Tax Board shall assess against the corporation the penalty provided
in Section 19141 of the Revenue and Taxation Code.
(c) The penalty herein provided shall not apply to a corporation
that on or prior to the date of certification pursuant to subdivision
(a) has dissolved or has been merged into another corporation.
(d) The penalty herein provided shall not apply and the Secretary
of State need not provide a notice of the delinquency to a
corporation if the corporate powers, rights, and privileges have been
suspended by the Franchise Tax Board pursuant to Section 23301,
23301.5, or 23775 of the Revenue and Taxation Code on or prior to,
and remain suspended on, the last day of the filing period pursuant
to Section 1502 or Section 1502.1. The Secretary of State need not
provide notice of the filing requirement pursuant to Section 1502 or
Section 1502.1 to a corporation if the corporate powers, rights, and
privileges have been so suspended by the Franchise Tax Board on or
prior to, and remain suspended on, the day the Secretary of State
prepares the notice for sending.
(e) If, after certification pursuant to subdivision (a), the
Secretary of State finds (1) the required statement was filed before
the expiration of the 60-day period after providing notice of the
delinquency, or (2) the failure to provide notice of delinquency was
due to an error of the Secretary of State, the Secretary of State
shall promptly decertify the name of the corporation to the Franchise
Tax Board. The Franchise Tax Board shall then promptly abate any
penalty assessed against the corporation pursuant to Section 19141 of
the Revenue and Taxation Code.
(f) If the Secretary of State determines that the failure of a
corporation to file the statement required by Section 1502 or Section
1502.1 is excusable because of reasonable cause or unusual
circumstances that justify the failure, the Secretary of State may
waive the penalty imposed by this section and by Section 19141 of the
Revenue and Taxation Code, in which case the Secretary of State
shall not certify the name of the corporation to the Franchise Tax
Board, or if already certified, the Secretary of State shall promptly
decertify the name of the corporation.
SEC. 3. Section 2205 of the Corporations Code
is amended to read:
2205. (a) A corporation that (1) fails to file a statement
pursuant to Section 1502 or Section 1502.1 for an applicable filing
period, (2) has not filed a statement pursuant to Section 1502 or
Section 1502.1 during the preceding 24 months, and (3) was certified
for penalty pursuant to Section 2204 for the same filing period, is
subject to suspension pursuant to this section rather than to penalty
pursuant to Section 2204.
(b) When subdivision (a) is applicable, the Secretary of State
shall provide a notice to the corporation informing the corporation
that its corporate powers, rights, and privileges will be suspended
after 60 days if it fails to file a statement pursuant to Section
1502 or Section 1502.1.
(c) After the expiration of the 60-day period without any
statement filed pursuant to Section 1502 or Section 1502.1, the
Secretary of State shall notify the Franchise Tax Board of the
suspension and provide a notice of the suspension to the corporation,
and thereupon, the corporate powers, rights, and privileges of the
corporation are suspended, except for the purpose of filing an
application for exempt status or amending the articles of
incorporation as necessary either to perfect that application or to
set forth a new name.
(d) A statement pursuant to Section 1502 or Section 1502.1 may be
filed notwithstanding suspension of the corporate powers, rights, and
privileges pursuant to this section or Section 23301, 23301.5, or
23775 of the Revenue and Taxation Code. Upon the filing of a
statement pursuant to Section 1502 or Section 1502.1 by a corporation
that has suffered suspension pursuant to this section, the Secretary
of State shall certify that fact to the Franchise Tax Board and the
corporation may thereupon be relieved from suspension unless the
corporation is held in suspension by the Franchise Tax Board by
reason of Section 23301, 23301.5, or 23775 of the Revenue and
Taxation Code.
SEC. 4. Section 2206 of the Corporations Code
is amended to read:
2206. (a) Sections 2204 and 2205 apply to foreign corporations
with respect to the statements required to be filed by Section 2117
and Section 2117.1. For this purpose, the suspension of the corporate
powers, rights, and privileges of a domestic corporation shall mean
the forfeiture of the exercise of the corporate powers, rights, and
privileges of a foreign corporation in this state.
(b) A foreign nonprofit corporation which has suffered the
forfeiture of the exercise of the corporate powers, rights, and
privileges in this state may nevertheless file an application for
exempt status as specified in Section 23301 of the Revenue and
Taxation Code.
(c) The forfeiture of the exercise of the corporate powers,
rights, and privileges of a foreign corporation in this state as used
in subdivision (a) does not prohibit the transaction of business in
this state by a foreign corporation if the business transacted
subsequent to the forfeiture would not, considered as an entirety,
require the foreign corporation to obtain a certificate of
qualification pursuant to Sections 191 and 2105.
SEC. 5. SEC. 2. Section 2117.1 of
the Corporations Code is amended to read:
2117.1. (a) In addition to the statement required pursuant to
Section 2117, every publicly traded foreign corporation shall file
annually, within 150 days after the end of its fiscal year, on a form
prescribed by the Secretary of State, a statement that includes all
of the following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the publicly traded foreign corporation's
annual financial statements.
(2) A description of other services, if any, performed for the
publicly traded foreign corporation during its two most recent fiscal
years and the period between the end of its most recent fiscal year
and the date of the statement by the foregoing independent auditor,
by its parent corporation, or by a subsidiary or corporate affiliate
of the independent auditor or its parent corporation.
(3) The name of the independent auditor employed by the foreign
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The total compensation for the most recent fiscal year of the
publicly traded foreign corporation paid to (A) each member of the
board of directors, (B) the principal executive officer, (C) the
principal financial officer, and (D) each of the three most highly
compensated executive officers, other than the principal executive
officer or principal financial officer, of the foreign corporation
who are not members of the board of directors.
(5) A description of any loan, including the amount and terms of
the loan, made to any member of the board of directors by the
publicly traded foreign corporation during the foreign corporation's
two most recent fiscal years at an interest rate lower than the
interest rate available from unaffiliated commercial lenders
generally to a similarly situated borrower.
(6) The total compensation for the most recent fiscal year of the
publicly traded foreign corporation paid to each of the five persons
retired from the corporation who received from the corporation the
highest amounts of total compensation that the corporation paid to
retirees, and the name of each of those retirees.
(7) A statement indicating whether an order for relief has been
entered in a bankruptcy case with respect to the foreign corporation,
its executive officers, or members of the board of directors of the
foreign corporation during the 10 years preceding the date of the
statement.
(8) A statement indicating whether any member of the board of
directors or executive officer of the publicly traded foreign
corporation was convicted of fraud during the 10 years preceding the
date of the statement, which conviction has not been overturned or
expunged.
(9) A description of any material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the corporation or any of its subsidiaries is a party or of
which any of their property is the subject, as specified by Item 103
of Regulation S-K of the Securities and Exchange Commission (Section
229.103 of Title 12 of the Code of Federal Regulations). A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the five years
preceding the date of the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded foreign corporation" means a foreign
corporation, as defined in Section 171, that is an issuer as defined
in Section 3 of the Securities Exchange Act of 1934, as amended (15
U.S.C. Sec. 78c), and has at least one class of securities listed or
admitted for trading on a national securities exchange, on the OTC
Bulletin Board, or on the electronic service operated by OTC Markets
Group Inc.
(2) "Executive officer" means the principal executive officer,
principal financial officer, president, any vice president in charge
of a principal business unit, division, or function, any other
officer of the corporation who performs a policymaking function, or
any other person who performs similar policymaking functions for the
corporation.
(3) (A) "Total compensation" as used in paragraph (4) of
subdivision (a) means all plan and nonplan compensation, including
the number of any shares issued, options for shares granted, and
similar equity-based compensation, and all perquisites and other
personal benefits granted or awarded to, earned by, or paid to the
person for all services rendered in all capacities to the corporation
and to its subsidiaries, in each case, within the meaning of those
terms pursuant to Item 402 of Regulation S-K of the Securities and
Exchange Commission (Section 229.402 of Title 17 of the Code of
Federal Regulations).
(B) "Total compensation" as used in paragraph (6) of subdivision
(a) has the same meaning given in subparagraph (A), except that the
compensation is granted, awarded, or paid to the person after the
person's retirement from the corporation for services rendered in all
capacities to the corporation and to its subsidiaries prior to his
or her retirement.
(4) "Loan" as used in paragraph (5) of subdivision (a) excludes an
advance for expenses, the foreign corporation's payment of life
insurance premiums, and an advance of litigation expenses, in each
instance as permitted according to the applicable law of the state or
place of incorporation or organization of the foreign corporation.
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A foreign corporation shall certify that the information it
provides pursuant to this section is true and correct. No claim may
be made against the state for inaccurate information contained in
statements filed under this section with the Secretary of State.
