BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 657
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          Date of Hearing:   April 11, 2011

                      ASSEMBLY COMMITTEE ON BANKING AND FINANCE
                                   Mike Eng, Chair
                    AB 657 (Gordon) - As Amended:  March 21, 2011
           
          SUBJECT  :   Corporations: statement of information: Secretary of 
          State.

           SUMMARY  :   Revises and recasts filing requirements and notice 
          requirements concerning documents that need to be filed within 
          the Secretary of State's (SOS) office.    Specifically,  this 
          bill  :  

          1)Allows the SOS's office to receive an annual renewal notice by 
            electronic mail.  

          2)Requires foreign corporations to file an initial Statement of 
            Information within 90 days of formation or registration.  

          3)Allows a common interest development corporation to file a 
            "Statement by Common Interest Development" while the common 
            interest development corporation is suspended.  

          4)Provides that the SOS's office may destroy all superseded and 
            outdated Statement by Common Interest Development forms.

          5)Standardizes the Statement of Information requirements for 
            credit union corporations.

          6)Grants a credit union corporation the authority to designate a 
            corporation as agent for service of process.  

          7)Provides that the fee for the initial 90-day Statement of 
            Information for California and foreign limited liability 
            companies (LLCs), credit union corporations and consumer 
            cooperative corporations at $20.  

          8)Makes other technical changes.  

           EXISTING LAW  

          1)Requires California corporations to file their initial 
            Statements of Information within 90 days of formation or 
            registration.  (Corporations Code, Section 2117) 








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          2)Permits a suspended common interest development corporation to 
            file its Statement of Information while still suspended.  
            (Civil Code, Section 1363.6.)

          3)Permits the Secretary of State to destroy Statements of 
            Information once superseded.   (Civil Code, Section 1363.6.)

          4)Specifies the fees required for corporate filings and LLC 
            filings.  (Government Code, Section 12186 and 12190.)

           FISCAL EFFECT  :   Unknown.

           COMMENTS  :   According to the sponsor, Secretary of State, Debra 
          Bowen, "Unfortunately, California statutes have not necessarily 
          kept up to date with the way we do business in the state.  For 
          example, the law requires the SOS to mail paper notices to all 
          corporations and LLCs, reminding the entity to file the required 
          annual or biennial Statement of Information.  Notices to 
          consumer cooperative corporations, credit union corporations and 
          LLCs must also include a paper copy of the Statement of 
          Information form, which is readily available on the Secretary of 
          State website.  As a result, the SOS mails over 1.2 million 
          reminder, delinquency, penalty and suspension notices to 
          businesses at a cost of over $500,000 in printing and postage 
          each fiscal year.  The costs and staff time can be significantly 
          reduced by sending statutory required notices via email to 
          businesses that voluntary opt to receive their notifications in 
          this fashion."

          The Franchise Tax Board concluded that this measure is technical 
          and would not impact the Franchise Tax Board's programs and 
          operations or state income tax revenue.  

          This bill takes into consideration that not all corporations may 
          be interested in electronic mail and if this is the case these 
          corporations do not need to opt-in to electronic mail therefore 
          they will continue to receive notice by mail.  

          Several changes to this measure are intended to provide 
          consistency.  Currently, the law requires California 
          corporations to file their initial Statements of Information 
          within 90 days of formation or registration but foreign 
          corporations are not required to file an initial state of 
          information until one year after the corporation has qualified 








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          to do business in California.  AB 657 applies the 90 day 
          requirement to foreign corporations to provide consistency and 
          ease automation of filing. 

          Existing law permits a suspended common interest development 
          corporation to file its Statement of Information while still 
          suspended, but does not allow the suspended common interest 
          development corporation to file the "Statement by Common 
          Interest Development," which is the most current information 
          about the business.  Correcting the inconsistency, this bill 
          would allow the Statement by Common Interest Development to be 
          filed while the common interest development corporation is 
          suspended.  
           
           Existing law permits the Secretary of State to destroy 
          Statements of Information once superseded, but does not grant 
          similar authority to destroy Statements by Common Interest 
          Development once superseded.  For storage and efficiency 
          purposes, the bill would allow the Secretary of State's office 
          to destroy the superseded and outdated Statement by Common 
          Interest Development forms.  

          Consistent with the authority provided to all other types of 
          corporations, the bill would standardize the Statement of 
          Information requirements for credit union corporations and 
          grants a credit union corporation authority to designate a 
          corporation as an agent for service of process.  

          Existing law specifies the fees required for corporate filings 
          and LLC filings.  This bill would specify the fee for the 
          initial 90-day Statement of Information for California and 
          foreign LLCs, credit union corporations and consumer cooperative 
          corporations at $20, which is consistent with other Statement of 
          Information filings. Unspecified filings would otherwise be 
          charged $30.  

          
          

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Secretary of State (Sponsor)
          California Credit Union League








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           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Kathleen O'Malley / B. & F. / (916) 
          319-3081