BILL NUMBER: AB 55 CHAPTERED
BILL TEXT
CHAPTER 1015
FILED WITH SECRETARY OF STATE SEPTEMBER 28, 2002
APPROVED BY GOVERNOR SEPTEMBER 28, 2002
PASSED THE SENATE AUGUST 31, 2002
PASSED THE ASSEMBLY AUGUST 31, 2002
AMENDED IN SENATE AUGUST 30, 2002
AMENDED IN SENATE AUGUST 22, 2002
AMENDED IN SENATE AUGUST 21, 2002
AMENDED IN SENATE AUGUST 28, 2001
AMENDED IN SENATE JULY 9, 2001
AMENDED IN ASSEMBLY MAY 31, 2001
AMENDED IN ASSEMBLY MAY 16, 2001
AMENDED IN ASSEMBLY MAY 1, 2001
AMENDED IN ASSEMBLY APRIL 17, 2001
INTRODUCED BY Assembly Members Shelley and Matthews
(Principal coauthor: Senator Dunn)
(Coauthor: Senator Machado)
DECEMBER 4, 2000
An act to amend Sections 1502 and 2117 of, and to add Section
1502.5 to, the Corporations Code, relating to corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 55, Shelley. Corporations: disclosure statements.
Existing law, the General Corporation Law, requires a domestic
corporation and a foreign corporation to file statements with the
Secretary of State disclosing specified information concerning its
operation biennially.
This bill would require the statement to instead be filed
annually. The bill would specify additional information that a
publicly traded corporation is required to include in these
statements. The bill would make the information contained in the
statements open to public inspection and would require the Secretary
of State, prior to December 31, 2004, to make this information
available on an online database. The bill would also require a
corporation to pay a $5 disclosure fee when filing the statement in
addition to any other fees required. The bill would specify the use
of this fee, including the deposit of one-half of the fee revenue
into the Victims of Corporate Fraud Compensation Fund, which would be
established by the bill. The bill would require the Secretary of
State to administer the fund and to adopt regulations regarding its
administration and the eligibility of victims to receive
compensation.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This act shall be known and may be cited as the
California Corporate Disclosure Act.
SEC. 2. Section 1502 of the Corporations Code is amended to read:
1502. (a) (1) Every corporation shall file, within 90 days after
the filing of its original articles and annually thereafter during
the applicable filing period, on a form prescribed by the Secretary
of State, a statement containing all of the following:
(A) The names and complete business or residence addresses of its
incumbent directors.
(B) The number of vacancies on the board, if any.
(C) The names and complete business or residence addresses of its
chief executive officer, secretary, and chief financial officer.
(D) The street address of its principal executive office.
(E) If the address of its principal executive office is not in
this state, the street address of its principal business office in
this state, if any.
(F) A statement of the general type of business that constitutes
the principal business activity of the corporation (for example,
manufacturer of aircraft; wholesale liquor distributor; or retail
department store).
(2) In addition to all of the information required by paragraph
(1), every publicly traded company shall also include the following
information in the statement:
(A) The name of the independent auditor used by the corporation
and a description of any other services, if any, performed for the
corporation during the previous 24 months by the independent auditor,
by its parent corporation, or by a subsidiary or corporate affiliate
of the independent auditor or its parent corporation.
(B) The date of the last report prepared for the corporation by
the independent auditor. The corporation shall attach a copy of the
report to the statement.
(C) The annual compensation paid to each member of the board of
directors and each executive officer, including the number of any
shares or options for shares that were not available to other
employees of the corporation.
(D) A description of any loans made to a member of the board of
directors by the corporation at a preferential loan rate during the
previous 24 months, including the amount and terms of the loans.
(E) A statement indicating whether any bankruptcy was filed by the
corporation, its executive officers, or members of the board of
directors within the previous 10 years.
(F) A statement indicating whether any member of the board of
directors or executive officer of the corporation was convicted of
fraud during the previous 10 years.
(G) A statement indicating whether the corporation violated any
federal security laws or any security or banking provision of
California law during the previous 10 years for which the corporation
was found liable in an action before a federal or state court or
regulatory agency or a self-regulatory organization in which a
judgment over ten thousand dollars ($10,000) was entered.
(3) For purposes of this section, the following definitions apply:
(A) "Publicly traded company" means a company with securities that
are either listed or admitted to trading on a national or foreign
exchange, or is the subject of two-way quotations, such as both bid
and asked prices, that is regularly published by one or more
broker-dealers in the National Daily Quotation Service or a similar
service.
(B) "Executive officer" means the five most highly compensated
officers of the company, excluding any officer who is also a member
of the board of directors.
(b) The statement required by subdivision (a) shall also
designate, as the agent of the corporation for the purpose of service
of process, a natural person residing in this state or a corporation
that has complied with Section 1505 and whose capacity to act as an
agent has not terminated. If a natural person is designated, the
statement shall set forth that person's complete business or
residence address. If a corporate agent is designated, no address
for it shall be set forth.
(c) If there has been no change in the information in the last
filed statement of the corporation on file in the Secretary of State'
s office, the corporation may, in lieu of filing the statement
required by subdivisions (a) and (b), advise the Secretary of State,
on a form prescribed by the Secretary of State, that no changes in
the required information have occurred during the applicable filing
period.
(d) For the purposes of this section, the applicable filing period
for a corporation shall be the calendar month during which its
original articles were filed and the immediately preceding five
calendar months. The Secretary of State shall mail a form for
compliance with this section to each corporation approximately three
months prior to the close of the applicable filing period. The form
shall state the due date thereof and shall be mailed to the last
address of the corporation according to the records of the Secretary
of State. The failure of the corporation to receive the form is not
an excuse for failure to comply with this section.
(e) Whenever any of the information required by subdivision (a) is
changed, the corporation may file a current statement containing all
the information required by subdivisions (a) and (b). In order to
change its agent for service of process or the address of the agent,
the corporation must file a current statement containing all the
information required by subdivisions (a) and (b). Whenever any
statement is filed pursuant to this section, it supersedes any
previously filed statement and the statement in the articles as to
the agent for service of process and the address of the agent.
(f) The Secretary of State may destroy or otherwise dispose of any
statement filed pursuant to this section after it has been
superseded by the filing of a new statement.
(g) This section shall not be construed to place any person
dealing with the corporation on notice of, or under any duty to
inquire about, the existence or content of a statement filed pursuant
to this section.
(h) The statement required by subdivision (a) shall be available
and open to the public for inspection. The Secretary of State, no
later than December 31, 2004, shall provide access to all information
contained in this statement by means of an online database.
(i) In addition to any other fees required, a corporation shall
pay a five-dollar ($5) disclosure fee when filing the statement
required by subdivision (a). One-half of the fee shall be utilized
to further the provisions of this section, including the development
and maintenance of the online database required by subdivision (h),
and one-half shall be deposited into the Victims of Corporate Fraud
Compensation Fund established in Section 1502.5.
(j) A corporation shall certify that the information it provides
pursuant to subdivisions (a) and (b) is true and correct. No claim
may be made against the state for inaccurate information contained in
the statements.
SEC. 3. Section 1502.5 is added to the Corporations Code, to read:
1502.5. The Victims of Corporate Fraud Compensation Fund is
hereby established in the State Treasury. The fund shall be
administered by the Secretary of State who shall adopt regulations
regarding the administration of the fund and the eligibility of
victims to receive compensation from the fund. The revenue in the
fund shall be used for the sole purpose of providing restitution to
the victims of a corporate fraud.
SEC. 4. Section 2117 of the Corporations Code is amended to read:
2117. (a) (1) Every foreign corporation (other than a foreign
association) qualified to transact intrastate business shall file,
annually during the applicable filing period, on a form prescribed by
the Secretary of State, a statement containing:
(A) The names and complete business or residence addresses of its
chief executive officer, secretary, and chief financial officer.
(B) The street address of its principal executive office.
(C) The street address of its principal business office in this
state, if any.
(D) A statement of the general type of business that constitutes
the principal business activity of the corporation (for example,
manufacturer of aircraft; wholesale liquor distributor; or retail
department store).
(2) In addition to all of the information required by paragraph
(1) every publicly traded company shall also include the following
information in the statement:
(A) The name of the independent auditor used by the corporation
and a description of any other services, if any, performed for the
corporation during the previous 24 months by the independent auditor,
by its parent corporation, or by an agent, subsidiary, corporate
partner, or corporate affiliate of the independent auditor or its
parent corporation.
(B) The date of the last report prepared for the corporation by
the independent auditor. The corporation shall attach a copy of the
report to the statement.
(C) The annual compensation paid to each member of the board of
directors and each executive officer, including the number of any
shares or options for shares that were not available to other
employees of the corporation.
(D) A description of any loans made to a member of the board of
directors by the corporation at a preferential loan rate during the
previous 24 months, including the amount and terms of the loans.
(E) A statement indicating whether any bankruptcy was filed by the
corporation, its executive officers, or members of the board of
directors within the previous 10 years.
(F) A statement indicating whether any member of the board of
directors or executive officer of the corporation was convicted of
fraud during the previous 10 years.
(G) A statement indicating whether the corporation violated any
federal security laws or any banking or security provision of
California law during the previous 10 years for which the corporation
was found liable in an action before a federal or state court or
regulatory agency or a self-regulatory agency in which a judgment
over ten thousand dollars ($10,000) was entered.
If the executive officers of the corporation use other titles, the
statement shall include the officers performing comparable duties
under other titles. If the corporation has no executive officers, or
has no executive officers who are natural persons, the statement
shall include the names of natural persons performing comparable
duties for the corporation pursuant to a management contract or other
arrangement.
(3) For purposes of this section, the following definitions apply:
(4) "Publicly traded company" means a company with securities that
are either listed or admitted to trading on a national or foreign
exchange, or is the subject of two-way quotations, such as both bid
and asked prices, that is regularly published by one or more
broker-dealers in the National Daily Quotation Service or a similar
service.
(B) "Executive officer" means the five most highly compensated
officers of the company, excluding any officer that is also a member
of the board of directors.
(b) The statement required by subdivision (a) shall also
designate, as the agent of the corporation for the purpose of service
of process, a natural person residing in this state or a corporation
that has complied with Section 1505 and whose capacity to act as the
agent has not terminated. If a natural person is designated, the
statement shall set forth the person's complete business or residence
address. If a corporate agent is designated, no address for it
shall be set forth.
(c) The statement and designation required by subdivision (a)
shall be available and open to the public for inspection. The
Secretary of State, no later than December 31, 2004, shall provide
access to all information contained in the statement and designation
by means of an online database.
(d) In addition to any other fees required, a foreign corporation
shall pay a five-dollar ($5) disclosure fee upon filing the statement
and designation required by subdivision (a). One-half of the fee
shall be utilized to further the provisions of this section,
including the development and maintenance of the online database
required by subdivision (d), and one-half shall be deposited into the
Victims of Corporate Fraud Compensation Fund established in Section
1502.5.
(e) Whenever any of the information required by subdivision (a) is
changed, the corporation may file a current statement containing all
the information required by subdivisions (a) and (b). In order to
change its agent for service of process or the address of the agent,
the corporation shall file a current statement containing all the
information required by subdivisions (a) and (b). Whenever any
statement is filed pursuant to this section, it supersedes any
previously filed statement and the statement in the filing pursuant
to Section 2105.
(f) Subdivisions (c), (d), (f), and (g) of Section 1502 apply to
statements filed pursuant to this section except that "articles"
shall mean the filing pursuant to Section 2105.