Amended in Assembly March 18, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 1255


Introduced by Assembly Member Pan

February 22, 2013


An act to amend Sectionbegin delete 25502.5end deletebegin insert 12313end insert of the Corporations Code, relating to corporations.

LEGISLATIVE COUNSEL’S DIGEST

AB 1255, as amended, Pan. begin deleteCorporations. end deletebegin insertCorporations: consumer cooperatives.end insert

begin insert

Existing law, the Consumer Cooperative Corporation Law, governs the organization and operation of consumer cooperative corporations. The law specifies the provisions that may be set forth in the articles of incorporation of a consumer cooperative.

end insert
begin insert

This bill would include among these provisions the classes of preferred, nonvoting shares, if any, and whether the directors of the consumer cooperative corporation may set the number, series, and rights, preferences, privileges, restrictions, and conditions attaching to each class.

end insert
begin delete

The Corporate Securities Law of 1968 provides for the regulation of the issuance of corporate securities and includes a civil remedy for specified issuers of securities for a specified violation of its provisions.

end delete
begin delete

This bill would make technical, nonsubstantive changes to this provision.

end delete

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

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

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 12313 of the end insertbegin insertCorporations Codeend insertbegin insert is
2amended to read:end insert

3

12313.  

(a) The articles of incorporation may set forth any or
4all of the following provisions, which shall not be effective unless
5expressly provided in the articles:

6(1) A provision limiting the duration of the corporation’s
7existence to a specified date.

8(2) A provision providing for the distribution of the remaining
9assets of the corporation, after payment or adequate provision for
10all of its debts and liabilities, to a charitable trust.

11(b) Nothing contained in subdivision (a) shall affect the
12enforceability, as between the parties thereto, of any lawful
13agreement not otherwise contrary to public policy.

14(c) The articles of incorporation may set forth any or all of the
15following provisions:

16(1) The names and addresses of the persons appointed to act as
17initial directors.

18(2) Provisions concerning the transfer of memberships, in
19accordance with Section 12410.

20(3) The classes of members, if any, and if there are two or more
21classes, the rights, privileges, preferences, restrictions and
22conditions attaching to each class.

23(4) Any other provision, not in conflict with law, for the
24management of the activities and for the conduct of the affairs of
25the corporation, including any provision which is required or
26permitted by this part to be stated in the bylaws.

27(5) A provision conferring upon members the right to determine
28the consideration for which memberships shall be issued.

begin insert

29(6) The classes of preferred, nonvoting shares, if any, and
30whether the directors may set the number, the series, and the rights,
31preferences, privileges, restrictions, and conditions attaching to
32each class.

end insert
begin delete
33

SECTION 1.  

Section 25502.5 of the Corporations Code is
34amended to read:

35

25502.5.  

(a)  A person, other than the issuer, who violates
36Section 25402 shall be liable to the issuer of the security purchased
37or sold in violation of Section 25402 for damages in an amount
38up to three times the difference between the price at which the
P3    1security was purchased or sold and the market value which the
2security would have had at the time of the purchase or sale if the
3 information known to the defendant had been publicly disseminated
4prior to that time and a reasonable time had elapsed for the market
5to absorb the information and shall be liable to the issuer of the
6security or to a person who institutes an action under this section
7in the right of the issuer of the security for reasonable costs and
8attorney’s fees.

9(b) The amounts recoverable under this section by the issuer
10shall be reduced by any amount paid by the defendant in a
11proceeding brought by the Securities and Exchange Commission
12with respect to the same transaction or transactions under the
13federal Insider Trading Sanctions Act of 1984 (15 U.S.C. Secs.
1478a, 78c, 78o, 78t, 78u, and 78ff) or any other act, regardless of
15whether the amount was paid pursuant to a judgment or settlement
16or paid before or after the filing of an action by the plaintiff against
17the defendant. If a proceeding has been commenced by the
18Securities and Exchange Commission, but has not been finally
19resolved, the court shall delay entering a judgment for the plaintiff
20under this section until that proceeding is resolved.

21(c) If any shareholder of an issuer alleges to the board that there
22has been a violation of this section, the board shall consider the
23allegation in good faith, and if the allegation involves misconduct
24by any director, that director shall not be entitled to vote on any
25matter involving the allegation. However, that director may be
26counted in determining the presence of a quorum at a meeting of
27the board or a committee of the board.

28(d) This section shall only apply to issuers who have total assets
29in excess of one million dollars ($1,000,000) and have a class of
30equity security held of record by 500 or more persons.

end delete


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