Amended in Assembly April 10, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 491


Introduced by Assembly Member Torres

February 19, 2013


An act to amend Sections 207begin delete and 212end deletebegin insert, 212, 5140, 5151, 7140, 7151, 9140, and 9151end insert of the Corporations Code, relating to corporations.

LEGISLATIVE COUNSEL’S DIGEST

AB 491, as amended, Torres. Corporations: bylawsbegin insert: emergency powersend insert.

begin deleteThe General Corporation Law end deletebegin insertExisting law end insertauthorizes and regulates the formation and operation of a corporation,begin insert nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation,end insert including, but not limited to, the adoption and contents of corporate bylaws.

This bill would authorize a corporationbegin insert, nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporationend insert to take actions during an emergency, as defined, to conductbegin delete the corporation’send deletebegin insert these corporationsend insertbegin insertend insert ordinary business operations and affairs, as specified, and provide that any action taken in good faith during an emergency under this authorization would bindbegin delete the corporationend deletebegin insert these corporationsend insert and not be a basis to impose liability on a corporate director, officer, employee, or agent. This bill would also authorize a corporationbegin insert, nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporationend insert to adopt bylaws to further direct the operations ofbegin delete the corporationend deletebegin insert these corporationsend insert during an emergency, as specified.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 207 of the Corporations Code is amended
2to read:

3

207.  

Subject to any limitations contained in the articles and to
4compliance with other provisions of this division and any other
5applicable laws, a corporation shall have all of the powers of a
6natural person in carrying out its business activities, including,
7without limitation, the power to:

8(a) Adopt, use and at will alter a corporate seal, but failure to
9affix a seal does not affect the validity of any instrument.

10(b) Adopt, amend and repeal bylaws.

11(c) Qualify to do business in any other state, territory,
12dependency or foreign country.

13(d) Subject to the provisions of Section 510, issue, purchase,
14redeem, receive, take or otherwise acquire, own, hold, sell, lend,
15exchange, transfer or otherwise dispose of, pledge, use and
16otherwise deal in and with its own shares, bonds, debentures and
17other securities.

18(e) Make donations, regardless of specific corporate benefit, for
19the public welfare or for community fund, hospital, charitable,
20educational, scientific, civic or similar purposes.

21(f) Pay pensions, and establish and carry out pension,
22profit-sharing, share bonus, share purchase, share option, savings,
23thrift and other retirement, incentive and benefit plans, trusts and
24provisions for any or all of the directors, officers and employees
25of the corporation or any of its subsidiary or affiliated corporations,
26and to indemnify and purchase and maintain insurance on behalf
27of any fiduciary of such plans, trusts or provisions.

28(g) Subject to the provisions of Section 315, assume obligations,
29enter into contracts, including contracts of guaranty or suretyship,
30incur liabilities, borrow and lend money and otherwise use its
31credit, and secure any of its obligations, contracts or liabilities by
32mortgage, pledge or other encumbrance of all or any part of its
33property, franchises and income.

34(h) Participate with others in any partnership, joint venture or
35other association, transaction or arrangement of any kind, whether
P3    1or not such participation involves sharing or delegation of control
2with or to others.

3(i) (1) In advancebegin delete of,end deletebegin insert ofend insert or during an emergency, take any or
4all of the following actions necessary to conduct the corporation’s
5ordinary business operations and affairs during an emergency,
6unless emergency bylaws provide otherwise pursuant to subdivision
7(c) of Section 212:

8(A) Modify lines of succession to accommodate the incapacity
9of any director, officer, employee, or agent resulting from the
10emergency.

11(B) Relocate the principal office, designate alternative principal
12offices or regional offices, or authorize the officers to do so.

13(C) Give notice to a director or directors in any practicable
14manner under the circumstances, including, but not limited to, by
15publication and radio, when notice of a meeting of the board cannot
16be given to that director or directors in the manner prescribed by
17the bylaws or Section 307.

18(D) Deem that one or more officers of the corporation present
19at a board meeting is a director, in order of rank and within the
20same rank in order of seniority, as necessary to achieve a quorum
21for that meeting.

22(2) During an emergency, the board may not take any action
23that requires the vote of the shareholders or is not in the
24corporation’s ordinary course of business, unless the required vote
25of the shareholders was obtained prior to the emergency.

26(3) Any actions taken in good faith during an emergency under
27this subdivision binds the corporation and may not be used to
28impose liability on a corporate director, officer, employee, or agent.

29(4) For purposes of this subdivision, “emergency” means any
30of the following events or circumstances as a result of which a
31quorum of the corporation’s board of directors cannot be readily
32convened for action:

33(A) A natural catastrophe, including, but not limited to, a
34hurricane, tornado, storm, high water, wind-driven water, tidal
35wave, tsunami, earthquake, volcanic eruption, landslide, mudslide,
36snowstorm, or drought, or, regardless of cause, any fire, flood, or
37explosion.

38(B) An attack on this state or nation by an enemy of the United
39States of America, or upon receipt by this state of a warning from
P4    1the federal government indicating that an enemy attack is probable
2or imminent.

3(C) An act of terrorism or other manmade disaster that results
4in extraordinary levels of casualties or damage or disruption
5severely affecting the infrastructure, environment, economy,
6government functions, or population, including, but not limited
7to, mass evacuations.

8(D) A state of emergency proclaimed by the Governor.

9

SEC. 2.  

Section 212 of the Corporations Code is amended to
10read:

11

212.  

(a) The bylaws shall set forth (unless such provision is
12contained in the articles, in which case it may only be changed by
13an amendment of the articles) the number of directors of the
14corporation; or that the number of directors shall be not less than
15a stated minimum nor more than a stated maximum (which in no
16case shall be greater than two times the stated minimum minus
17one), with the exact number of directors to be fixed, within the
18limits specified, by approval of the board or the shareholders
19(Section 153) in the manner provided in the bylaws, subject to
20paragraph (5) of subdivision (a) of Section 204. The number or
21minimum number of directors shall not be less than three; provided,
22however, that (1) before shares are issued, the number may be one,
23(2) before shares are issued, the number may be two, (3) so long
24as the corporation has only one shareholder, the number may be
25one, (4) so long as the corporation has only one shareholder, the
26number may be two, and (5) so long as the corporation has only
27two shareholders, the number may be two. After the issuance of
28shares, a bylaw specifying or changing a fixed number of directors
29or the maximum or minimum number or changing from a fixed to
30a variable board or vice versa may only be adopted by approval
31of the outstanding shares (Section 152); provided, however, that
32a bylaw or amendment of the articles reducing the fixed number
33or the minimum number of directors to a number less than five
34cannot be adopted if the votes cast against its adoption at a meeting
35or the shares not consenting in the case of action by written consent
36are equal to more than 1623 percent of the outstanding shares
37entitled to vote.

38(b) The bylaws may contain any provision, not in conflict with
39law or the articles for the management of the business and for the
P5    1conduct of the affairs of the corporation, including but not limited
2to:

3(1) Any provision referred to in subdivision (b), (c) or (d) of
4Section 204.

5(2) The time, place and manner of calling, conducting and giving
6notice of shareholders’, directors’ and committee meetings.

7(3) The manner of execution, revocation and use of proxies.

8(4) The qualifications, duties and compensation of directors;
9the time of their annual election; and the requirements of a quorum
10for directors’ and committee meetings.

11(5) The appointment and authority of committees of the board.

12(6) The appointment, duties, compensation and tenure of
13officers.

14(7) The mode of determination of holders of record of its shares.

15(8) The making of annual reports and financial statements to
16the shareholders.

17(c) (1) The bylaws may contain any provision, not in conflict
18with the articles, to manage and conduct the ordinary business
19affairs of the corporation effective only in an emergency as defined
20in Section 207, including, but not limited to, procedures for calling
21a board meeting, quorum requirements for a board meeting, and
22designation of additional or substitute directors.

23(2) During an emergency, the board may not take any action
24that requires the vote of the shareholders or otherwise is not in the
25corporation’s ordinary course of business, unless the required vote
26of the shareholders was obtained prior to the emergency.

27(3) All provisions of the regular bylaws consistent with the
28emergency bylaws shall remain effective during the emergency,
29and the emergency bylaws shall not be effective after the
30emergency ends.

31(4) Corporate action taken in good faith in accordance with the
32emergency bylaws binds the corporation, and may not be used to
33impose liability on a corporate director, officer, employee, or agent.

34begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 5140 of the end insertbegin insertCorporations Codeend insertbegin insert is amended to
35read:end insert

36

5140.  

Subject to any limitations contained in the articles or
37bylaws and to compliance with other provisions of this division
38and any other applicable laws, a corporation, in carrying out its
39activities, shall have all of the powers of a natural person,
40including, without limitation, the power to:

P6    1(a) Adopt, use, and at will alter a corporate seal, but failure to
2affix a seal does not affect the validity of any instrument.

3(b) Adopt, amend, and repeal bylaws.

4(c) Qualify to conduct its activities in any other state, territory,
5dependency or foreign country.

6(d) Issue, purchase, redeem, receive, take or otherwise acquire,
7own, sell, lend, exchange, transfer or otherwise dispose of, pledge,
8use and otherwise deal in and with its own bonds, debentures,
9notes and debt securities.

10(e) Issue memberships.

11(f) Pay pensions, and establish and carry out pension, deferred
12compensation, saving, thrift and other retirement, incentive and
13benefit plans, trusts and provisions for any or all of its directors,
14officers, employees, and persons providing services to it or any of
15its subsidiary or related or associated corporations, and to
16indemnify and purchase and maintain insurance on behalf of any
17fiduciary of such plans, trusts, or provisions.

18(g) Levy dues, assessments, and admission fees.

19(h) Make donations for the public welfare or for community
20funds, hospital, charitable, educational, scientific, civic, religious
21or similar purposes.

22(i) Assume obligations, enter into contracts, including contracts
23of guarantee or suretyship, incur liabilities, borrow or lend money
24or otherwise use its credit, and secure any of its obligations,
25contracts or liabilities by mortgage, pledge or other encumbrance
26of all or any part of its property and income.

27(j) Participate with others in any partnership, joint venture or
28other association, transaction or arrangement of any kind whether
29or not such participation involves sharing or delegation of control
30with or to others.

31(k) Act as trustee under any trust incidental to the principal
32objects of the corporation, and receive, hold, administer, exchange,
33and expend funds and property subject to such trust.

34(l) Carry on a business at a profit and apply any profit that results
35from the business activity to any activity in which it may lawfully
36engage.

37(m) Pay the reasonable value of services rendered in this state
38to the corporation before January 1, 1975, and not previously paid,
39by any person who performed such services on a full-time basis
40under the direction of a religious organization in connection with
P7    1the religious tenets of the organization. Such person shall have
2relied solely on the religious organization for his or her financial
3support for a minimum of five years. A payment shall not be made
4if such person or religious organization waives the payment or
5receipt of compensation for such services in writing. Payment may
6be made to such religious organization to reimburse it for
7maintenance of any person who rendered such services and to
8 assist it in providing future support and maintenance; however,
9payment shall not be made from any funds or assets acquired with
10funds donated by or traceable to gifts made to the corporation by
11any person, organization or governmental agency other than the
12members, immediate families of members and affiliated religious
13organizations of the religious organization under whose direction
14the services were performed.

begin insert

15(n) (1) In advance of or during an emergency, take any or all
16of the following actions necessary to conduct the corporation’s
17ordinary business operations and affairs during an emergency,
18unless emergency bylaws provide otherwise pursuant to subdivision
19(g) of Section 5151:

end insert
begin insert

20(A) Modify lines of succession to accommodate the incapacity
21of any director, officer, employee, or agent resulting from the
22emergency.

end insert
begin insert

23(B) Relocate the principal office, designate alternative principal
24offices or regional offices, or authorize the officers to do so.

end insert
begin insert

25(C) Give notice to a director or directors in any practicable
26manner under the circumstances, including, but not limited to, by
27publication and radio, when notice of a meeting of the board
28cannot be given to that director or directors in the manner
29prescribed by the bylaws or Section 5211.

end insert
begin insert

30(D) Deem that one or more officers of the corporation present
31at a board meeting is a director, in order of rank and within the
32same rank in order of seniority, as necessary to achieve a quorum
33for that meeting.

end insert
begin insert

34(2) During an emergency, the board may not take any action
35that requires the vote of the shareholders or is not in the
36corporation’s ordinary course of business, unless the required
37vote of the shareholders was obtained prior to the emergency.

end insert
begin insert

38(3) Any actions taken in good faith during an emergency under
39this subdivision binds the corporation and may not be used to
P8    1impose liability on a corporate director, officer, employee, or
2agent.

end insert
begin insert

3(4) For purposes of this subdivision, “emergency” means any
4of the following events or circumstances as a result of which a
5quorum of the corporation’s board of directors cannot be readily
6convened for action:

end insert
begin insert

7(A) A natural catastrophe, including, but not limited to, a
8hurricane, tornado, storm, high water, wind-driven water, tidal
9wave, tsunami, earthquake, volcanic eruption, landslide, mudslide,
10snowstorm, or drought, or, regardless of cause, any fire, flood, or
11explosion.

end insert
begin insert

12(B) An attack on this state or nation by an enemy of the United
13States of America, or upon receipt by this state of a warning from
14the federal government indicating that an enemy attack is probable
15or imminent.

end insert
begin insert

16(C) An act of terrorism or other man-made disaster that results
17in extraordinary levels of casualties or damage or disruption
18severely affecting the infrastructure, environment, economy,
19government functions, or population, including, but not limited to,
20mass evacuations.

end insert
begin insert

21(D) A state of emergency proclaimed by the Governor.

end insert
22begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 5151 of the end insertbegin insertCorporations Codeend insertbegin insert is amended to
23read:end insert

24

5151.  

(a) The bylaws shall set forth (unless that provision is
25contained in the articles, in which case it may only be changed by
26an amendment of the articles) the number of directors of the
27corporation, or the method of determining the number of directors
28of the corporation, or that the number of directors shall be not less
29than a stated minimum nor more than a stated maximum with the
30exact number of directors to be fixed, within the limits specified,
31by approval of the board or the members (Section 5034), in the
32manner provided in the bylaws, subject to subdivision (e). The
33number or minimum number of directors may be one or more.

34(b) Once members have been admitted, a bylaw specifying or
35changing a fixed number of directors or the maximum or minimum
36number or changing from a fixed to a variable board or vice versa
37may only be adopted by approval of the members (Section 5034).

38(c) The bylaws may contain any provision, not in conflict with
39law or the articles, for the management of the activities and for
P9    1the conduct of the affairs of the corporation, including but not
2limited to:

3(1) Any provision referred to in subdivision (c) of Section 5132.

4(2) The time, place and manner of calling, conducting and giving
5notice of members’, directors’ and committee meetings, or of
6conducting mail ballots.

7(3) The qualifications, duties and compensation of directors;
8the time of their election; and the requirements of a quorum for
9directors’ and committee meetings.

10(4) The appointment and authority of committees.

11(5) The appointment, duties, compensation and tenure of
12officers.

13(6) The mode of determination of members of record.

14(7) The making of reports and financial statements to members.

15(8) Setting, imposing and collecting dues, assessments and
16admission fees.

17(d) The bylaws may provide for the manner of admission,
18withdrawal, suspension, and expulsion of members, consistent
19with the requirements of Section 5341.

20(e) The bylaws may require, for any or all corporate actions
21(except as provided in paragraphs (1) and (2) of subdivision (a) of
22Section 5222, subdivision (c) of Section 5616, and Section 6610),
23the vote of a larger proportion of, or all of, the members or the
24members of any class, unit, or grouping of members, or the vote
25of a larger proportion of, or all of, the directors, than is otherwise
26required by this part. Such a provision in the bylaws requiring such
27greater vote shall not be altered, amended or repealed except by
28such greater vote, unless otherwise provided in the bylaws.

29(f) The bylaws may contain a provision limiting the number of
30members, in total or of any class, which the corporation is
31authorized to admit.

begin insert

32(g) (1) The bylaws may contain any provision, not in conflict
33with the articles, to manage and conduct the ordinary business
34affairs of the corporation effective only in an emergency as defined
35in Section 5140, including, but not limited to, procedures for
36calling a board meeting, quorum requirements for a board meeting,
37and designation of additional or substitute directors.

end insert
begin insert

38(2) During an emergency, the board may not take any action
39that requires the vote of the shareholders or otherwise is not in
P10   1the corporation’s ordinary course of business, unless the required
2vote of the shareholders was obtained prior to the emergency.

end insert
begin insert

3(3) All provisions of the regular bylaws consistent with the
4emergency bylaws shall remain effective during the emergency,
5and the emergency bylaws shall not be effective after the emergency
6ends.

end insert
begin insert

7(4) Corporate action taken in good faith in accordance with the
8emergency bylaws binds the corporation, and may not be used to
9impose liability on a corporate director, officer, employee, or
10agent.

end insert
11begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 7140 of the end insertbegin insertCorporations Codeend insertbegin insert is amended to
12read:end insert

13

7140.  

Subject to any limitations contained in the articles or
14bylaws and to compliance with other provisions of this division
15and any other applicable laws, a corporation, in carrying out its
16activities, shall have all of the powers of a natural person,
17including, without limitation, the power to:

18(a) Adopt, use, and at will alter a corporate seal, but failure to
19affix a seal does not affect the validity of any instrument.

20(b) Adopt, amend, and repeal bylaws.

21(c) Qualify to conduct its activities in any other state, territory,
22dependency or foreign country.

23(d) Issue, purchase, redeem, receive, take or otherwise acquire,
24own, sell, lend, exchange, transfer or otherwise dispose of, pledge,
25use and otherwise deal in and with its own memberships, bonds,
26debentures, notes and debt securities.

27(e) Pay pensions, and establish and carry out pension, deferred
28compensation, saving, thrift and other retirement, incentive and
29benefit plans, trusts and provisions for any or all of its directors,
30officers, employees, and persons providing services to it or any of
31its subsidiary or related or associated corporations, and to
32indemnify and purchase and maintain insurance on behalf of any
33fiduciary of such plans, trusts, or provisions.

34(f) Issue certificates evidencing membership in accordance with
35the provisions of Section 7313 and issue identity cards.

36(g) Levy dues, assessments, and admission and transfer fees.

37(h) Make donations for the public welfare or for community
38funds, hospital, charitable, educational, scientific, civic, religious
39or similar purposes.

P11   1(i) Assume obligations, enter into contracts, including contracts
2of guarantee or suretyship, incur liabilities, borrow or lend money
3or otherwise use its credit, and secure any of its obligations,
4contracts or liabilities by mortgage, pledge or other encumbrance
5of all or any part of its property and income.

6(j) Participate with others in any partnership, joint venture or
7other association, transaction or arrangement of any kind whether
8or not such participation involves sharing or delegation of control
9with or to others.

10(k) Act as trustee under any trust incidental to the principal
11objects of the corporation, and receive, hold, administer, exchange,
12and expend funds and property subject to such trust.

13(l) Carry on a business at a profit and apply any profit that results
14from the business activity to any activity in which it may lawfully
15engage.

begin insert

16(m) (1) In advance of, or during an emergency, take any or all
17of the following actions necessary to conduct the corporation’s
18ordinary business operations and affairs during an emergency,
19unless emergency bylaws provide otherwise pursuant to subdivision
20(g) of Section 7151:

end insert
begin insert

21(A) Modify lines of succession to accommodate the incapacity
22of any director, officer, employee, or agent resulting from the
23emergency.

end insert
begin insert

24(B) Relocate the principal office, designate alternative principal
25offices or regional offices, or authorize the officers to do so.

end insert
begin insert

26(C) Give notice to a director or directors in any practicable
27manner under the circumstances, including, but not limited to, by
28publication and radio, when notice of a meeting of the board
29cannot be given to that director or directors in the manner
30prescribed by the bylaws or Section 7211.

end insert
begin insert

31(D) Deem that one or more officers of the corporation present
32 at a board meeting is a director, in order of rank and within the
33same rank in order of seniority, as necessary to achieve a quorum
34for that meeting.

end insert
begin insert

35(2) During an emergency, the board may not take any action
36that requires the vote of the shareholders or is not in the
37corporation’s ordinary course of business, unless the required
38vote of the shareholders was obtained prior to the emergency.

end insert
begin insert

39(3) Any actions taken in good faith during an emergency under
40this subdivision binds the corporation and may not be used to
P12   1impose liability on a corporate director, officer, employee, or
2agent.

end insert
begin insert

3(4) For purposes of this subdivision, “emergency” means any
4of the following events or circumstances as a result of which a
5quorum of the corporation’s board of directors cannot be readily
6convened for action:

end insert
begin insert

7(A) A natural catastrophe, including, but not limited to, a
8hurricane, tornado, storm, high water, wind-driven water, tidal
9wave, tsunami, earthquake, volcanic eruption, landslide, mudslide,
10snowstorm, or drought, or, regardless of cause, any fire, flood, or
11explosion.

end insert
begin insert

12(B) An attack on this state or nation by an enemy of the United
13States of America, or upon receipt by this state of a warning from
14the federal government indicating that an enemy attack is probable
15or imminent.

end insert
begin insert

16(C) An act of terrorism or other man-made disaster that results
17in extraordinary levels of casualties or damage or disruption
18severely affecting the infrastructure, environment, economy,
19government functions, or population, including, but not limited to,
20mass evacuations.

end insert
begin insert

21(D) A state of emergency proclaimed by the Governor.

end insert
22begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 7151 of the end insertbegin insertCorporations Codeend insertbegin insert is amended to
23read:end insert

24

7151.  

(a) The bylaws shall set forth (unless such provision is
25contained in the articles, in which case it may only be changed by
26an amendment of the articles) the number of directors of the
27corporation, or the method of determining the number of directors
28of the corporation, or that the number of directors shall be not less
29than a stated minimum nor more than a stated maximum with the
30exact number of directors to be fixed, within the limits specified,
31by approval of the board or the members (Section 5034), in the
32manner provided in the bylaws, subject to subdivision (e). The
33number or minimum number of directors may be one or more.

34(b) Once members have been admitted, a bylaw specifying or
35changing a fixed number of directors or the maximum or minimum
36number or changing from a fixed to a variable board or vice versa
37may only be adopted by approval of the members (Section 5034).

38(c) The bylaws may contain any provision, not in conflict with
39law or the articles, for the management of the activities and for
P13   1the conduct of the affairs of the corporation, including but not
2limited to:

3(1) Any provision referred to in subdivision (c) of Section 7132.

4(2) The time, place and manner of calling, conducting and giving
5notice of members’, directors’ and committee meetings, or of
6conducting mail ballots.

7(3) The qualifications, duties and compensation of directors;
8the time of their election; and the requirements of a quorum for
9directors’ and committee meetings.

10(4) The appointment of committees, composed of directors or
11nondirectors or both, by the board or any officer and the authority
12of any such committees.

13(5) The appointment, duties, compensation and tenure of
14officers.

15(6) The mode of determination of members of record.

16(7) The making of reports and financial statements to members.

17(8) Setting, imposing and collecting dues, assessments, and
18admission and transfer fees.

19(d) The bylaws may provide for the manner of admission,
20withdrawal, suspension, and expulsion of members, consistent
21with the requirements of Section 7341.

22(e) The bylaws may require, for any or all corporate actions
23(except as provided in paragraphs (1) and (2) of subdivision (a) of
24Section 7222, subdivision (c) of Section 7615, and Section 8610)
25the vote of a larger proportion of, or all of, the members or the
26members of any class, unit, or grouping of members or the vote
27of a larger proportion of, or all of, the directors, than is otherwise
28required by this part. Such a provision in the bylaws requiring such
29greater vote shall not be altered, amended or repealed except by
30such greater vote, unless otherwise provided in the bylaws.

31(f) The bylaws may contain a provision limiting the number of
32members, in total or of any class, which the corporation is
33authorized to admit.

begin insert

34(g) (1) The bylaws may contain any provision, not in conflict
35with the articles, to manage and conduct the ordinary business
36affairs of the corporation effective only in an emergency as defined
37in Section 7140, including, but not limited to, procedures for
38calling a board meeting, quorum requirements for a board meeting,
39and designation of additional or substitute directors.

end insert
begin insert

P14   1(2) During an emergency, the board may not take any action
2that requires the vote of the shareholders or otherwise is not in
3the corporation’s ordinary course of business, unless the required
4vote of the shareholders was obtained prior to the emergency.

end insert
begin insert

5(3) All provisions of the regular bylaws consistent with the
6emergency bylaws shall remain effective during the emergency,
7and the emergency bylaws shall not be effective after the emergency
8ends.

end insert
begin insert

9(4) Corporate action taken in good faith in accordance with the
10emergency bylaws binds the corporation, and may not be used to
11impose liability on a corporate director, officer, employee, or
12agent.

end insert
13begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 9140 of the end insertbegin insertCorporations Codeend insertbegin insert is amended to
14read:end insert

15

9140.  

Subject to any limitations contained in the articles or
16bylaws and to compliance with other provisions of this division
17and any other applicable laws, a corporation, in carrying out its
18activities, shall have all of the powers of a natural person,
19including, without limitation, the power to:

20(a) Adopt, use, and at will alter a corporate seal, but failure to
21affix a seal does not affect the validity of any instrument.

22(b) Adopt, amend, and repeal bylaws.

23(c) Qualify to conduct its activities in any other state, territory,
24dependency or foreign country.

25(d) Issue, purchase, redeem, receive, take or otherwise acquire,
26own, sell, lend, exchange, transfer or otherwise dispose of, pledge,
27use and otherwise deal in and with its own bonds, debentures,
28notes and debt securities.

29(e) Issue memberships.

30(f) Pay pensions, and establish and carry out pension, deferred
31compensation, saving, thrift and other retirement, incentive and
32benefit plans, trusts, and provisions for any or all of its directors,
33officers, employees, and persons providing services to it or any of
34its subsidiary or related or associated corporations, and to
35indemnify and purchase and maintain insurance on behalf of any
36fiduciary of such plans, trusts, or provisions.

37(g) Levy dues, assessments, and fees.

38(h) Make donations for the public welfare or for community
39funds, hospital, charitable, educational, scientific, civic, religious
40or similar purposes.

P15   1(i) Assume obligations, enter into contracts, including contracts
2of guarantee or suretyship, incur liabilities, borrow or lend money
3or otherwise use its credit, and secure any of its obligations,
4contracts or liabilities by mortgage, pledge or other encumbrance
5of all or any part of its property and income.

6(j) Participate with others in any partnership, joint venture or
7other association, transaction or arrangement of any kind whether
8or not such participation involves sharing or delegation of control
9with or to others.

10(k) Act as trustee under any trust incidental to the principal
11objects of the corporation, and receive, hold, administer, exchange,
12and expend funds and property subject to such trust.

13(l) Carry on a business at a profit and apply any profit that results
14from the business activity to any activity in which it may lawfully
15engage.

16(m) Pay the reasonable value of services rendered in this state
17to the corporation before January 1, 1975, and not previously paid,
18by any person who performed such services on a full-time basis
19under the direction of a religious organization in connection with
20the religious tenets of the organization. Such person shall have
21relied solely on the religious organization for his or her financial
22support for a minimum of five years. A payment shall not be made
23if such person or religious organization waives the payment or
24receipt of compensation for such services in writing. Payment may
25be made to such religious organization to reimburse it for
26maintenance of any person who rendered such services and to
27assist it in providing future support and maintenance; however,
28payment shall not be made from any funds or assets acquired with
29funds donated by or traceable to gifts made to the corporation by
30any person, organization or governmental agency other than the
31members, immediate families of members and affiliated religious
32organizations of the religious organization under whose direction
33the services were performed.

begin insert

34(n) (1) In advance of or during an emergency, take any or all
35of the following actions necessary to conduct the corporation’s
36ordinary business operations and affairs during an emergency,
37unless emergency bylaws provide otherwise pursuant to subdivision
38(g) of Section 9151:

end insert
begin insert

P16   1(A) Modify lines of succession to accommodate the incapacity
2of any director, officer, employee, or agent resulting from the
3emergency.

end insert
begin insert

4(B) Relocate the principal office, designate alternative principal
5offices or regional offices, or authorize the officers to do so.

end insert
begin insert

6(C) Give notice to a director or directors in any practicable
7manner under the circumstances, including, but not limited to, by
8publication and radio, when notice of a meeting of the board
9cannot be given to that director or directors in the manner
10prescribed by the bylaws or Section 9211.

end insert
begin insert

11(D) Deem that one or more officers of the corporation present
12at a board meeting is a director, in order of rank and within the
13same rank in order of seniority, as necessary to achieve a quorum
14for that meeting.

end insert
begin insert

15(2) During an emergency, the board may not take any action
16that requires the vote of the shareholders or is not in the
17corporation’s ordinary course of business, unless the required
18vote of the shareholders was obtained prior to the emergency.

end insert
begin insert

19(3) Any actions taken in good faith during an emergency under
20this subdivision binds the corporation and may not be used to
21impose liability on a corporate director, officer, employee, or
22agent.

end insert
begin insert

23(4) For purposes of this subdivision, “emergency” means any
24of the following events or circumstances as a result of which a
25quorum of the corporation’s board of directors cannot be readily
26convened for action:

end insert
begin insert

27(A) A natural catastrophe, including, but not limited to, a
28hurricane, tornado, storm, high water, wind-driven water, tidal
29wave, tsunami, earthquake, volcanic eruption, landslide, mudslide,
30snowstorm, or drought, or, regardless of cause, any fire, flood, or
31explosion.

end insert
begin insert

32(B) An attack on this state or nation by an enemy of the United
33States of America, or upon receipt by this state of a warning from
34the federal government indicating that an enemy attack is probable
35or imminent.

end insert
begin insert

36(C) An act of terrorism or other man-made disaster that results
37in extraordinary levels of casualties or damage or disruption
38severely affecting the infrastructure, environment, economy,
39government functions, or population, including, but not limited to,
40mass evacuations.

end insert
begin insert

P17   1(D) A state of emergency proclaimed by the Governor.

end insert
2begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 9151 of the end insertbegin insertCorporations Codeend insertbegin insert is amended to
3read:end insert

4

9151.  

(a) The bylaws shall set forth (unless such provision is
5contained in the articles, in which case it may only be changed by
6an amendment of the articles) the number of directors of the
7corporation, or the method of determining the number of directors
8of the corporation, or that the number of directors shall be not less
9than a stated minimum nor more than a stated maximum with the
10exact number of directors to be fixed, within the limits specified,
11by approval of the board or the members (Section 5034), in the
12manner provided in the bylaws, subject to subdivision (e) of
13Section 9151. The number or minimum number of directors may
14be one or more.

15(b) Except as otherwise provided in the articles or bylaws, once
16members have been admitted, a bylaw specifying or changing a
17 fixed number of directors or the maximum or minimum number
18or changing from a fixed to a variable board or vice versa may
19only be adopted by approval of the members (Section 5034).

20(c) The bylaws may contain any provision, not in conflict with
21law or the articles, for the management of the activities and for
22the conduct of the affairs of the corporation, including but not
23limited to:

24(1) Any provision referred to in subdivision (c) of Section 9132.

25(2) The time, place and manner of calling, conducting and giving
26notice of members’, directors’ and committee meetings, or of
27conducting mail ballots.

28(3) The qualifications, duties and compensation of directors;
29the time of their election; and the requirements of a quorum for
30directors’ and committee meetings.

31(4) The appointment of committees, composed of directors or
32nondirectors or both, by the board or any officer and the authority
33of any such committees.

34(5) The appointment, duties, compensation and tenure of
35officers.

36(6) The mode of determination of members of record.

37(7) The making of reports and financial statements to members.

38(8) Setting, imposing and collecting dues, assessments, and
39admissions and transfer fees.

P18   1(d) The bylaws may provide for the manner of admission,
2withdrawal, suspension, and expulsion of members.

3(e) The bylaws may require, for any or all corporate actions
4(except as provided in Section 9222 and subdivision (b) of Section
59680), the vote of a larger proportion of, or all of, the members or
6the members of any class, unit, or grouping of members, or the
7vote of a larger proportion of, or all of, the directors than is
8otherwise required by this part. Such a provision in the bylaws
9requiring such greater vote shall not be altered, amended or
10repealed except by such greater vote, unless otherwise provided
11in the bylaws.

12(f) The bylaws may contain a provision limiting the number of
13members, in total or of any class, which the corporation is
14authorized to admit.

begin insert

15(g) (1) The bylaws may contain any provision, not in conflict
16with the articles, to manage and conduct the ordinary business
17affairs of the corporation effective only in an emergency as defined
18in Section 9140, including, but not limited to, procedures for
19calling a board meeting, quorum requirements for a board meeting,
20and designation of additional or substitute directors.

end insert
begin insert

21(2) During an emergency, the board may not take any action
22that requires the vote of the shareholders or otherwise is not in
23the corporation’s ordinary course of business, unless the required
24vote of the shareholders was obtained prior to the emergency.

end insert
begin insert

25(3) All provisions of the regular bylaws consistent with the
26emergency bylaws shall remain effective during the emergency,
27and the emergency bylaws shall not be effective after the emergency
28ends.

end insert
begin insert

29(4) Corporate action taken in good faith in accordance with the
30emergency bylaws binds the corporation, and may not be used to
31impose liability on a corporate director, officer, employee, or
32agent.

end insert


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