BILL NUMBER: AB 2321 AMENDED
AMENDED IN ASSEMBLY APRIL 8, 2010
INTRODUCED BY Assembly Member Nava
FEBRUARY 19, 2010
An act to amend Section 66427.5 of the Government Code,
relating to land use. An act to add Article 3.5
(commencing with Section 84350) to Chapter 4 of Title 9 of the
Government Code, relating to the Political Reform Act of
LEGISLATIVE COUNSEL'S DIGEST
AB 2321, as amended, Nava. Land use: subdivisions:
mobilehome parks. Political Reform Act of 1974:
The Political Reform Act of 1974 provides for the regulation of
political campaign financing, including the reporting and disclosure
of campaign contributions and expenditures. Under the act, elected
officers, candidates for elective office, and campaign committees are
required to file periodic campaign statements that disclose
specified information for specified reporting periods, including the
amount of contributions received, the amount of expenditures made,
and the identities of donors and recipients of expenditures.
This bill would require a corporation that makes a contribution or
expenditure for a political activity in the State of California, as
defined, to prepare a report within 30 days after the close of the
corporation's fiscal year containing specified information regarding
all contributions or expenditures made by the corporation for
political activities in the State of California during that fiscal
year. The bill would further require the corporation to maintain
records of those contributions or expenditures, including the report
described above, for a period of not less than 5 years, and to file a
copy of the report with the Fair Political Practices Commission upon
request of the Commission. In addition, the bill would give
shareholders of a corporation the right to file a notice of objection
to the corporation's use of the shareholder's invested funds for
political activities in the State of California and would require the
corporation, if a shareholder so objects, to return to the
shareholder as a dividend his or her pro rata share of the funds
expended for political activities. The bill would also create a civil
cause of action that may be brought by any shareholder against a
corporation that violates the above provisions or that makes a
political contribution or expenditure that adversely affects the
value of the corporation's stock.
Existing law makes a knowing or willful violation of the Political
Reform Act of 1974 a misdemeanor and subject offenders to criminal
This bill would impose a state-mandated local program by creating
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
This bill would provide that no reimbursement is required by this
act for a specified reason.
The Political Reform Act of 1974, an initiative measure, provides
that the Legislature may amend the act to further the act's purposes
upon a 2/3 vote of each house and compliance with specified
This bill would declare that it furthers the purposes of the act.
The Subdivision Map Act requires a subdivider, at the time of
filing a tentative or parcel map for a subdivision to be created from
the conversion of a rental mobilehome park to resident ownership, to
avoid the economic displacement of nonpurchasing residents, as
This bill would make a technical, nonsubstantive change to that
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no yes .
State-mandated local program: no yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) Corporations make substantial political contributions and
expenditures to support and oppose candidates, ballot measures,
political parties, and political causes. However, decisions to use
corporate funds for political contributions and expenditures are
usually made by corporate boards and executives, rather than the
shareholders who own the corporations.
(b) Shareholders have a right to know how corporations are
spending shareholder funds to make political contributions and
expenditures to support or oppose candidates, ballot measures,
political parties, and political causes.
(c) Most shareholders have no means by which they may learn of,
influence, or object to the political activities of the corporations
in which they have invested. Moreover, most shareholders have no
means by which they may demand reimbursement or demand that their
invested funds not be used to make political contributions or
expenditures to support candidates, ballot measures, political
parties, or political causes to which the shareholders are opposed.
(d) By limiting the extent to which corporate political
contributions and expenditures may be regulated, the United States
Supreme Court, through its decision in Citizens United v. Federal
Election Commission (2010) 130 S.Ct. 876, has increased the need for
greater accountability of corporations to their shareholders with
regard to political contributions and expenditures.
(e) The debate over whether the invested funds of shareholders
should be used for political activities without their consent is not
a new one. In 1905, President Theodore Roosevelt said, "All
contributions by corporations to any political committee or for any
political purpose should be forbidden by law; directors should not be
permitted to use stockholders' money for such purposes."
(f) It is the intent of the Legislature in enacting this act to
protect shareholders from having portions of their investments used
for political activities that the shareholders do not support.
SEC. 2. Article 3.5 (commencing with Section
84350) is added to Chapter 4 of Title 9 of the Government
Code , to read:
Article 3.5. Corporations
84350. For purposes of this article, the following terms have the
(a) "Ballot measure" means a constitutional amendment or other
proposition that is submitted to a popular vote at an election by
action of a legislative body, or that is submitted or is intended to
be submitted to a popular vote at an election by initiative,
referendum, or recall procedure, whether or not it qualifies for the
(b) "Corporation" means any of the following:
(1) A publicly held corporation with shareholders.
(2) An entity in which a corporation with shareholders has an
(3) The parent corporation of a subsidiary or affiliate of a
(c) "Objecting shareholder" means a shareholder who informs the
corporation that he or she does not wish the proportional share of
the value of his or her equity in the corporation to be contributed,
expended, or used in any way for political activities.
(d) "Political activity" means a contribution or expenditure made
to, or in support of or opposition to, a candidate, ballot measure
campaign, signature-gathering effort on behalf of a ballot measure,
political party, political action committee, issue advocacy campaign,
voter registration campaign, or any other political or legislative
(e) "Public corporation" means a corporation that files reports
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (15 U.S.C. Secs. 78m(a), 78o(d)).
(f) "Shareholder" has the same meaning as set forth in Section 185
of the Corporations Code.
84351. A corporation that makes a contribution or expenditure,
directly or indirectly, for a political activity in the State of
California shall do all of the following:
(a) (1) Within 30 days after the close of the corporation's fiscal
year, the corporation shall prepare a report entitled "Political
Contributions and Expenditures" describing all contributions and
expenditures made by the corporation for political activities in the
State of California during that fiscal year and provide a written
copy of the report to the corporation's shareholders. The report
shall include all of the following:
(A) An explanation of why the corporation made contributions or
expenditures for political activities, the intended results of those
contributions or expenditures, and the anticipated benefits of those
contributions or expenditures to the corporation's shareholders.
(B) The date of each contribution or expenditure.
(C) The amount of each contribution or expenditure.
(D) The name of the person, candidate, committee, or political
party, or a description of the political or legislative cause, to
which each contribution or expenditure was made.
(E) If a contribution or expenditure was made for or against a
candidate, the office sought by the candidate and the political party
affiliation of the candidate.
(F) If a contribution or expenditure was made for or against a
ballot measure, a description of the ballot measure and an
explanation of whether the contribution or expenditure was made in
support of or opposition to the ballot measure.
(2) A public corporation is deemed to have complied with this
subdivision if it includes the report required by paragraph (1) in
its annual report to shareholders under a separate caption entitled
"Political Contributions and Expenditures."
(3) If the corporation maintains an Internet Web site, the
corporation shall post the report required by this subdivision on its
Internet Web site.
(b) Within 90 days after the close of the corporation's fiscal
year, the corporation shall notify each of its shareholders, in
writing, that the shareholder has the right to object to the use of
corporate funds equaling the proportional share of the value of his
or her equity in the corporation that were expended for political
activities in the State of California. The written notification shall
further inform the shareholder of the appropriate procedure for
registering an objection.
(c) The corporation shall give each shareholder not less than 60
days following receipt of the notification required by subdivision
(b) to file a notice that he or she is an objecting shareholder. A
shareholder who fails to file a notice of objection within the
timeframe established by the corporation is deemed to have consented
to the use of corporate funds equaling the proportional share of the
value of his or her equity in the corporation for political
activities in the State of California.
(d) Upon receipt of a notice of objection filed pursuant to
subdivision (c), the corporation shall calculate the objecting
shareholder's pro rata share of the contributions or expenditures
made for political activities in the State of California in the
previous fiscal year and shall return that amount to the shareholder
in the form of a dividend. The objecting shareholder's pro rata share
shall be determined by dividing the total amount of contributions
and expenditures made in the previous fiscal year by the number of
outstanding shares, and multiplying the result by the number of
shares held by the shareholder.
84352. For purposes of Section 84351, a corporation is deemed to
make a contribution directly or indirectly for a political activity
only if the corporation knew or had reason to know that its funds
would be used to make a contribution or expenditure for a political
84353. (a) A corporation that makes a contribution or expenditure
for a political activity in the State of California shall maintain
records of that contribution or expenditure, including the report
required by subdivision (a) of Section 84351, for a period of not
less than five years.
(b) Upon request of the Commission, a corporation shall file with
the Commission a copy of each report produced pursuant to subdivision
(a) of Section 84351.
84354. No provision of Section 84351 shall be construed to
relieve a corporation of its obligations under any of the following:
(a) Section 604 of the Corporations Code, or a successor statute
(b) Any statute or regulation from another jurisdiction that
regulates the solicitation of proxies.
(c) In the case of a corporation with an outstanding class of
securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (15 U.S.C. Sec. 78l ), the
proxy rules promulgated under that act.
84355. (a) (1) A violation of Section 84351 by a corporation
creates a civil cause of action against the corporation that may be
brought by any shareholder of the corporation.
(2) Notwithstanding Section 91000, a violation of Section 84351 is
not a misdemeanor.
(b) A contribution or expenditure made by a corporation for a
political activity in the State of California that adversely affects
the value of the corporation's stock creates a civil cause of action
against the corporation that may be brought by any shareholder of the
(c) Reasonable attorney's fees and costs may be recovered for any
action brought pursuant to this section.
(d) The remedies provided in this section are in addition to any
other rights or remedies available under any other provision of law.
84356. The provisions of this article are severable. If any
provision of this article or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SEC. 3. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
SEC. 4. The Legislature finds and declares that
this bill furthers the purposes of the Political Reform Act of 1974
within the meaning of subdivision (a) of Section 81012 of the
SECTION 1. Section 66427.5 of the Government
Code is amended to read:
66427.5. At the time of filing a tentative or parcel map for a
subdivision to be created from the conversion of a rental mobilehome
park to resident ownership, the subdivider shall avoid the economic
displacement of all nonpurchasing residents in the following manner:
(a) The subdivider shall offer each existing tenant an option to
either purchase his or her condominium or subdivided unit, which is
to be created by the conversion of the park to resident ownership, or
to continue residency as a tenant.
(b) The subdivider shall file a report on the impact of the
conversion upon residents of the mobilehome park to be converted to
resident-owned subdivided interest.
(c) The subdivider shall make a copy of the report available to
each resident of the mobilehome park at least 15 days prior to the
hearing on the map by the advisory agency, if there is no advisory
agency, by the legislative body.
(d) (1) The subdivider shall obtain a survey of support of the
residents of the mobilehome park for the proposed conversion.
(2) The survey of support shall be conducted in accordance with an
agreement between the subdivider and a resident homeowners'
association, if any, that is independent of the subdivider or
mobilehome park owner.
(3) The survey shall be obtained pursuant to a written ballot.
(4) The survey shall be conducted so that each occupied mobilehome
space has one vote.
(5) The results of the survey shall be submitted to the local
agency upon the filing of the tentative or parcel map, to be
considered as part of the subdivision map hearing prescribed by
(e) The subdivider shall be subject to a hearing by a legislative
body or advisory agency, which is authorized by local ordinance to
approve, conditionally approve, or disapprove the map. The scope of
the hearing shall be limited to the issue of compliance with this
(f) The subdivider shall be required to avoid the economic
displacement of all nonpurchasing residents in accordance with the
(1) As to nonpurchasing residents who are not lower income
households, as defined in Section 50079.5 of the Health and Safety
Code, the monthly rent, including any applicable fees or charges for
use of any preconversion amenities, may increase from the
preconversion rent to market levels, as defined in an appraisal
conducted in accordance with nationally recognized professional
appraisal standards, in equal annual increases over a four-year
(2) As to nonpurchasing residents who are lower income households,
as defined in Section 50079.5 of the Health and Safety Code, the
monthly rent, including any applicable fees or charges for use of any
preconversion amenities, may increase from the preconversion rent by
an amount equal to the average monthly increase in rent in the four
years immediately preceding the conversion, except that in no event
shall the monthly rent be increased by an amount greater than the
average monthly percentage increase in the Consumer Price Index for
the most recently reported period.