BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 285|
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THIRD READING
Bill No: AB 285
Author: Tran (R)
Amended: 5/12/09 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 6/9/09
AYES: Corbett, Harman, Florez, Leno, Walters
ASSEMBLY FLOOR : 78-0, 4/13/09 (Consent) - See last page
for vote
SUBJECT : Corporations: electronic transmissions to
shareholder
or member
SOURCE : Nonprofit & Unincorporated Organizations
Committee of the
Business Law Section of the State Bar of
California
DIGEST : This bill prohibits an electronic transmission
by a corporation to an individual shareholder or member who
is a natural person unless, in addition to current
requirements for electronic transmissions, the consent
given by the shareholder or member to receipt of an
electronic transmission was preceded by or includes a clear
written statement to the recipient of: (1) a right to have
the record provided or made available on paper or in
nonelectronic form; (2) whether the consent applies only to
that specific transmission, to specified categories of
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communications, or to all communications from the
corporation; and (3) the procedures the recipient must use
to withdraw consent.
ANALYSIS :
Existing law establishes the Uniform Electronic
Transactions Act (UETA) that establishes procedures and
safeguards for the use of electronic records and electronic
signatures in business and governmental activities. (Civil
Code Section 1633.1 et seq.)
Existing federal law establishes the E-SIGN Act (15 U.S.C.
Section 7001 et seq.), that makes electronic signatures and
records valid for all types of transactions that occur in
interstate and foreign commerce, unless the transactions
are specifically exempted. The E-SIGN Act also establishes
specific standards for any electronic communication that is
sent to a consumer relating to a commercial transaction.
Existing state law defines "electronic transmission" by a
corporation as a communication that meets the requirements
applicable to consumer consent to electronic records as set
forth in the federal E-SIGN Act and that is all of the
following:
1. It is delivered by facsimile or other electronic means,
or is posted on an electronic message board or network
designated by the corporation for those communications,
together with a separate notice to the recipient of the
posting; or other means of electronic communication.
2. It is sent to a recipient who has provided an unrevoked
consent to the use of those means of transmission for
communications.
3. It creates a record that is capable of retention,
retrieval, and review, and that may thereafter be
rendered into clearly legible, tangible form.
This bill eliminates the requirement that an electronic
transmission by a corporation to an individual shareholder
or member satisfy the requirements applicable to consumer
consent to electronic records as set forth in the federal
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E-SIGN Act.
This bill instead provides that such an electronic
transmission is not authorized unless, in addition to
meeting the other requirements specified above (delivered
by electronic means, unrevoked consent by recipient, and
creates a record capable of retention, review, or
retrieval), the consent given by the recipient was preceded
by or includes a clear written statement regarding: (1)
the recipient's right to receive a paper copy or
nonelectronic form of the document; (2) whether the consent
applies to only that specific transmission, to which
categories of communication, or to all communication; and
(3) the procedure for the withdrawal of consent by the
recipient.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/10/09)
Nonprofit & Unincorporated Organizations Committee of the
(source)
Business Law Section of the State Bar of California
California Association of NonProfits
California Society of Association Executives
ARGUMENTS IN SUPPORT : The sponsor of this bill states,
the problem [with having to satisfy the E-SIGN Act
requirements] is [that] the constraints of the federal
E-SIGN Act are not quite appropriate for electronic
transmissions by corporations under the [Corporations]
Code. In fact, even if they were, it would be better if
the actual requirements were in the [Corporations] Code
rather than requiring people to go and find and then apply
the federal law. The bill has been amended to clearly
state in the statute what requirements must be met
regarding consent by a recipient of electronic
transmissions prior to or concurrent with the transmission.
According to proponents of this bill, these changes to
Section 20 of the Corporations Code would facilitate the
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use of electronic communications by corporations. First,
there would be no need to consult and interpret the E-SIGN
Act, since the requirements would be expressly delineated
in the statute. Second, the new standards would be more
workable for communications by corporations with their
shareholders or members, since the E-SIGN Act was designed
to apply to consumer commercial transactions for goods or
services for personal or household use. Third, it would be
very clear that the consent requirements must be met prior
to or at the same time as when the communication is
electronically sent. And fourth, it would be clear that
the consent requirements apply only to communications
between the corporation and its shareholders or members,
even if sent to a director who is also a shareholder or
member.
ASSEMBLY FLOOR : 78-0, 04/13/09
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De Leon, DeVore,
Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava,
Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: De La Torre, Harkey
RJG:do 6/10/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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