BILL NUMBER: SB 1183 CHAPTERED
BILL TEXT
CHAPTER 57
FILED WITH SECRETARY OF STATE JULY 7, 2006
APPROVED BY GOVERNOR JULY 7, 2006
PASSED THE ASSEMBLY JUNE 26, 2006
PASSED THE SENATE MAY 11, 2006
INTRODUCED BY Senator Ackerman
JANUARY 18, 2006
An act to amend Sections 191 and 710 of the Corporations Code,
relating to corporations.
LEGISLATIVE COUNSEL'S DIGEST
SB 1183, Ackerman Foreign corporations: supermajority vote.
(1) Existing law imposes various requirements on foreign
corporations, as defined, that transact intrastate business, as
defined. Existing law provides that a foreign corporation is not
considered to be transacting intrastate business merely because its
subsidiary transacts intrastate business.
This bill would additionally provide that a foreign corporation is
not transacting intrastate business merely because of its status as
a shareholder, limited partner, or member or manager of a domestic
corporation, limited partnership, or limited liability company or a
foreign corporation, limited partnership, or limited liability
company transacting intrastate business.
(2) Existing law requires, with respect to certain corporations
with outstanding shares of record held by at least 100 persons, that
an amendment to the articles of incorporation or a certificate of
determination that includes a supermajority vote requirement, as
defined, shall be approved by a specified proportion of shares.
Existing law provides that the supermajority vote requirement is
ineffective 2 years after the most recent filing of the amendment or
certificate of determination to adopt or readopt the supermajority
vote requirement, unless it is renewed, as specified.
This bill would eliminate that provision that the supermajority
vote requirement is ineffective 2 years after that specified filing.
The bill would make other technical, nonsubstantive, and conforming
changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 191 of the Corporations Code is amended to
read:
191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated
and successive transactions of its business in this state, other than
interstate or foreign commerce.
(b) A foreign corporation shall not be considered to be
transacting intrastate business merely because its subsidiary
transacts intrastate business or merely because of its status as any
one or more of the following:
(1) A shareholder of a domestic corporation.
(2) A shareholder of a foreign corporation transacting intrastate
business.
(3) A limited partner of a domestic limited partnership.
(4) A limited partner of a foreign limited partnership transacting
intrastate business.
(5) A member or manager of a domestic limited liability company.
(6) A member or manager of a foreign limited liability company
transacting intrastate business.
(c) Without excluding other activities that may not constitute
transacting intrastate business, a foreign corporation shall not be
considered to be transacting intrastate business within the meaning
of subdivision (a) solely by reason of carrying on in this state any
one or more of the following activities:
(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.
(2) Holding meetings of its board or shareholders or carrying on
other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositaries with relation to
its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance outside this state before becoming binding contracts.
(7) Creating evidences of debt or mortgages, liens or security
interests on real or personal property.
(8) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(d) Without excluding other activities that may not constitute
transacting intrastate business, any foreign lending institution,
including, but not limited to: any foreign banking corporation, any
foreign corporation all of the capital stock of which is owned by one
or more foreign banking corporations, any foreign savings and loan
association, any foreign insurance company or any foreign corporation
or association authorized by its charter to invest in loans secured
by real and personal property, whether organized under the laws of
the United States or of any other state, district or territory of the
United States, shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as
a trustee of a pension plan, employee profit sharing or retirement
plan, testamentary or inter vivos trust, or in any other fiduciary
capacity: (1) The acquisition by purchase, by contract to
purchase, by making of advance commitments to purchase or by
assignment of loans, secured or unsecured, or any interest therein,
if those activities are carried on from outside this state by the
lending institution. (2) The making by an officer or employee of
physical inspections and appraisals of real or personal property
securing or proposed to secure any loan, if the officer or employee
making any physical inspection or appraisal is not a resident of and
does not maintain a place of business for that purpose in this state.
(3) The ownership of any loans and the enforcement of any loans
by trustee's sale, judicial process or deed in lieu of foreclosure or
otherwise. (4) The modification, renewal, extension, transfer or
sale of loans or the acceptance of additional or substitute security
therefor or the full or partial release of the security therefor or
the acceptance of substitute or additional obligors thereon, if the
activities are carried on from outside this state by the lending
institution. (5) The engaging by contractural arrangement of a
corporation, firm or association, qualified to do business in this
state, that is not a subsidiary or parent of the lending institution
and that is not under common management with the lending institution,
to make collections and to service loans in any manner whatsoever,
including the payment of ground rents, taxes, assessments, insurance,
and the like and the making, on behalf of the lending institution,
of physical inspections and appraisals of real or personal property
securing any loans or proposed to secure any loans, and the
performance of any such engagement. (6) The acquisition of title
to the real or personal property covered by any mortgage, deed of
trust or other security instrument by trustee's sale, judicial sale,
foreclosure or deed in lieu of foreclosure, or for the purpose of
transferring title to any federal agency or instrumentality as the
insurer or guarantor of any loan, and the retention of title to any
real or personal property so acquired pending the orderly sale or
other disposition thereof. (7) The engaging in activities
necessary or appropriate to carry out any of the foregoing
activities. Nothing contained in this subdivision shall be construed
to permit any foreign banking corporation to maintain an office in
this state otherwise than as provided by the laws of this state or to
limit the powers conferred upon any foreign banking corporation as
set forth in the laws of this state or to permit any foreign lending
institution to maintain an office in this state except as otherwise
permitted under the laws of this state.
SEC. 2. Section 710 of the Corporations Code is amended to read:
710. (a) This section applies to a corporation with outstanding
shares held of record by 100 or more persons (determined as provided
in Section 605) that files an amendment of articles or certificate of
determination containing a "supermajority vote" provision on or
after January 1, 1989. This section shall not apply to a corporation
that files an amendment of articles or certificate of determination
on or after January 1, 1994, if, at the time of filing, the
corporation has (1) outstanding shares of more than one class or
series of stock, (2) no class of equity securities registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and
(3) outstanding shares held of record by fewer than 300 persons
determined as provided by Section 605.
(b) A "supermajority vote" is a requirement set forth in the
articles or in a certificate of determination authorized under any
provision of this division that specified corporate action or actions
be approved by a larger proportion of the outstanding shares than a
majority, or by a larger proportion of the outstanding shares of a
class or series than a majority, but no supermajority vote that is
subject to this section shall require a vote in excess of 66 2/3
percent of the outstanding shares or 662/3 percent of the outstanding
shares of any class or series of those shares.
(c) An amendment of the articles or a certificate of determination
that includes a supermajority vote requirement shall be approved by
at least as large a proportion of the outstanding shares (Section
152) as is required pursuant to that amendment or certificate of
determination for the approval of the specified corporate action or
actions.
(d) The amendments made to this section by the act amending this
section in the 2001-02 Regular Session shall not affect the rights of
minority shareholders existing under law.