BILL ANALYSIS �
SENATE BANKING & FINANCIAL INSTITUTIONS COMMITTEE
Senator Juan Vargas, Chair
AB 657 (Gordon) Hearing Date: June 15,
2011
As Amended: March 21, 2011
Fiscal: Yes
Urgency: No
SUMMARY Would allow businesses to elect to receive electronic
notices, in lieu of hard copy notices, from the Secretary of
State; standardize the filing requirements imposed on different
types of business entities by the Secretary of State; and make
other technical changes intended to improve the Secretary of
State's ability to administer the laws under her jurisdiction.
DESCRIPTION
1. Would authorize, but not require, business entities to
elect to receive notices from the Secretary of State via
electronic mail.
2. Would require foreign corporations to submit an initial
Statement of Information within 90 days after filing their
original statements of designation.
3. Would permit a suspended common interest development
corporation to file its Statement by Common Interest
Development while it is suspended.
4. Would authorize the Secretary of State to destroy
superseded Statements of Common Interest Development.
5. Would standardize the Statement of Information requirements
imposed on credit union corporations with those imposed on
all other types of corporations, and would permit these
corporations to designate a registered corporation as an
agent for service of process.
6. Would set the filing fees for the initial 90-day Statement
of Information for California and foreign LLCs, credit union
corporations, and consumer cooperative corporations at $20.
AB 657 (Gordon), Page 2
7. Would make other conforming technical changes and correct
incorrect code references.
EXISTING LAW Relevant sections of existing law, which are
amended by AB 657, are described in further detail in the
section immediately below.
AB 657 (Gordon), Page 3
COMMENTS
1. Background and Discussion: This bill is sponsored by
Secretary of State Debra Bowen, as part of her ongoing
efforts to update and modernize the Secretary of State's
office. The Business Entities Section of the Secretary of
State's office processes, files, and maintains records
related to corporations, limited liability companies (LLCs),
limited partnerships (LPs), and other business entities that
wish to do business in California.
According to information provided by the sponsor, AB 657
contains seven changes, as follows.
a. Under existing law, the Secretary of State is
required to mail paper notices to all corporations and
LLCs, reminding those entities to file required annual or
biennial Statements of Information. Notices to
cooperative corporations, credit union corporations, and
LLCs must also include a paper copy of the Statement of
Information form, which is already available for download
on the Secretary of State's web site. As a result, the
Secretary of State mails over 1.2 million reminder,
delinquency, penalty, and suspension notice to
businesses, at a cost of over $500,000 in printing and
postage each fiscal year.
The first of this bill's provisions authorizes businesses
to provide a valid electronic address to the Secretary of
State, for the purpose of receiving future notices, thus
reducing the costs related to paper postal mailings.
These changes are contained in Corporations Code Sections
1502, 2203, 2205, 6210, 6810, 8210, 8810, 12570, 12670,
17060, 17651, 17653, and 17654.
b. Existing law requires California corporations and
foreign LLCs to file their initial Statements of
Information within 90 days of formation or registration.
Foreign corporations are not required to file an initial
Statement of Information until one year after the
corporation has qualified to do business in California.
To ensure consistency among business entities and ease
the automation of Statement of Information filing, AB 657
imposes the same 90-day filing requirement on foreign
corporations as is imposed on all other corporations and
LLCs. This change is contained in Corporations Code
AB 657 (Gordon), Page 4
Section 2117.
c. Existing law permits a suspended common interest
development corporation to file its Statement of
Information while suspended, but does not allow it to
file the Statement by Common Interest Development, which
is the most current information about the business. AB
657 would amend Corporations Code Section 1363.6 to allow
the Statement of Common Interest Development to be filed
while a common interest development corporation is
suspended. However, this bill would not grant the
suspended corporation any other powers it currently
lacks.
d. Existing law allows the Secretary of State to
destroy Statements of Information once they have been
superseded, but does not grant the Secretary of State
similar authority to destroy superseded Statements of
Common Interest Development. This bill provides such
authorization through another amendment to Civil Code
Section 1363.6.
e. AB 657 would also standardize the Statement of
Information requirements imposed on credit union
corporations with those imposed on all other types of
corporations and would permit these corporations to
designate a registered corporation as an agent for
service of process (Financial Code Section 14101.6).
f. Existing law specifies the fees to file certain
documents at various levels, and states that filings
whose fees are unspecified are charged at a rate of $30
per filing. AB 657 specifies the filing fees for the
initial 90-day Statement of Information for California
and foreign LLCs, credit union corporations, and consumer
cooperative corporations at $20, which has the effect of
reducing the cost to file these forms by $10 (Government
Code Section 12186 and 12190).
2. Summary of Arguments in Support: Secretary of State Debra
Bowen is sponsoring AB 657 as an efficiency measure, which
will provide businesses the option of providing an e-mail
address to receive paperless reminders and notifications
from the Secretary of State's office. The bill's changes
are also intended to conform several of the document filing
requirements for different corporate types, to make the
AB 657 (Gordon), Page 5
creation of an automated filing system less complex and less
expensive.
The California Credit Union League supports the provision of AB
657 that allows credit unions to elect to receive annual
renewal notices and other notifications from the Secretary
of State in electronic form. CCUL believes that this is a
smart, effective measure that provides expedient delivery of
notifications.
3. Summary of Arguments in Opposition: None received.
LIST OF REGISTERED SUPPORT/OPPOSITION
Support
Secretary of State Debra Bowen (sponsor)
California Credit Union League
Opposition
None received
Consultant: Eileen Newhall (916) 651-4102