BILL NUMBER: AB 1255 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 12, 2013
AMENDED IN ASSEMBLY MAY 9, 2013
AMENDED IN ASSEMBLY MARCH 18, 2013
INTRODUCED BY Assembly Member Pan
(Coauthors: Assembly Members Bloom and Chesbro)
FEBRUARY 22, 2013
An act to amend Section Sections
12313 , 12330, 12331, 12420, 12422, 12446, 12502, and 12503
of , and to add Sections 12245.2 and 12246.2 to, the
Corporations Code, relating to corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 1255, as amended, Pan. Corporations: consumer cooperatives.
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.
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. authorization for
the board of directors to fix the rights, privileges, preferences,
restrictions, and conditions attaching to any wholly unissued class
of memberships authorized in the bylaws or articles and,
if the bylaws or articles authorize a class of memberships to be
divisible into a series, to any wholly unissued series of a
membership class authorized to be divisible into a series,
and to fix the number of memberships in the series and the
designation of the series, as specified. The bill would require any
amendment to the bylaws or articles of a consumer cooperative to be
approved by the members of a series if the series would be adversely
affected by the action, as specified. The bill would also make other
conforming changes .
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12245.2 is added to the
Corporations Code , to read:
12245.2. "Preferred memberships" means memberships that have a
preference over any other memberships with respect to distribution of
assets on liquidation or with respect to payment of distributions.
SEC. 2. Section 12246.2 is added to the
Corporations Code , to read:
12246.2. "Series" of memberships means memberships within a class
of memberships that have the same rights, privileges, preferences,
restrictions, and conditions, but that differ in one or more rights,
privileges, preferences, restrictions, or conditions from other
memberships within the class. Certificated securities and
uncertificated securities do not constitute a different series if the
only difference is certificated and uncertificated status.
SECTION 1. SEC. 3. Section 12313 of
the Corporations Code is amended to read:
12313. (a) The articles of incorporation may set forth any or all
of the following provisions, which shall not be effective unless
expressly provided in the articles:
(1) A provision limiting the duration of the corporation's
existence to a specified date.
(2) A provision providing for the distribution of the remaining
assets of the corporation, after payment or adequate provision for
all of its debts and liabilities, to a charitable trust.
(b) Nothing contained in subdivision (a) shall affect the
enforceability, as between the parties thereto, of any lawful
agreement not otherwise contrary to public policy.
(c) The articles of incorporation may set forth any or all of the
following provisions:
(1) The names and addresses of the persons appointed to act as
initial directors.
(2) Provisions concerning the transfer of memberships, in
accordance with Section 12410.
(3) The classes of members, if any, and if there are two or more
classes, the rights, privileges, preferences, restrictions, and
conditions attaching to each class.
(4) Any other provision, not in conflict with law, for the
management of the activities and for the conduct of the affairs of
the corporation, including any provision which is required or
permitted by this part to be stated in the bylaws.
(5) A provision conferring upon members the right to determine the
consideration for which memberships shall be issued.
(6) The classes of preferred, nonvoting shares, if any, and
whether the directors may set the number, the series, and the rights,
preferences, privileges, restrictions, and conditions attaching to
each class.
(6) A provision authorizing the board of directors, within any
limits or restrictions stated, to fix the rights, privileges,
preferences, restrictions, and conditions attaching to any wholly
unissued class of memberships authorized in the bylaws or the
articles.
(7) If the bylaws or articles authorize a class of memberships to
be divisible into a series, a provision authorizing the board of
directors, within any limits or restrictions stated, to fix the
rights, privileges, preferences, restrictions, and conditions
attaching to any wholly unissued series of a membership class
authorized to be divisible into a series, and to fix the number of
memberships in the series and the designation of the series. As to
any series, the number of which is authorized to be fixed by the
board, the articles may also authorize the board to increase or
decrease the number of memberships of any series of this type
subsequent to the issuance of that series, but not below the number
of memberships then outstanding. Unless the articles or bylaws
provide otherwise, in case the number of memberships of any series is
decreased, the memberships constituting this decrease shall resume
the status which they had prior to the adoption of the board
resolution originally fixing the number of memberships of this
series.
SEC. 4. Section 12330 of the
Corporations Code is amended to read:
12330. (a) Except as provided in subdivision (c) and Sections
12331, 12360, 12364, 12462, and 12484, bylaws may be adopted,
amended, or repealed by the board unless the action would do any
of the following :
(1) Materially and adversely affect the rights or obligations of
members as to voting, dissolution, redemption, transfer,
distributions, patronage distributions, patronage, property rights,
or rights to repayment of contributed capital;
capital.
(2) Increase or decrease the number or members authorized in total
or for any class; class.
(3) Effect an exchange, reclassification or cancellation of all or
part of the memberships; or memberships.
(4) Authorize a new class of membership.
(b) Bylaws may be adopted, amended or repealed by approval of the
members (Section 12224); provided, however, that adoption, amendment,
or repeal also requires approval by the members of a class or
series if that action would do any of the following
:
(1) Materially and adversely affect the rights or obligations of
that class or series as to voting, dissolution,
redemption, transfer, distributions, patronage distributions,
patronage, property rights, or rights to repayment of contributed
capital, in a manner different than such action affects another
class; class or another series within the
same class.
(2) Materially and adversely affect such class or series
as to voting, dissolution, redemption, transfer, distributions,
patronage distributions, patronage, property rights, or rights to
repayment of contributed capital, by changing the rights, privileges,
preferences, restrictions or conditions of another class;
class or another series within the same class.
(3) Increase or decrease the number of memberships authorized for
such class; the class.
(4) Increase the number of memberships authorized for another
class; class.
(5) Effect an exchange, reclassification or cancellation of all or
part of the memberships of such class; or
the cl ass or series.
(6) Authorize a new class of memberships.
(c) The articles or bylaws may restrict or eliminate the power of
the board to adopt, amend or repeal any or all bylaws, subject to
subdivision (e) of Section 12331.
(d) Bylaws may also provide that repeal or amendment of those
bylaws, or the repeal or amendment of specified portions of those
bylaws, may occur only with the approval in writing of a specified
person or persons other than the board or members. However, this
approval requirement, unless the articles or the bylaws specify
otherwise, shall not apply if any of the following circumstances
exist:
(1) The specified person or persons have died or ceased to exist.
(2) If the right of the specified person or persons to approve is
in the capacity of an officer, trustee, or other status and the
office, trust, or status has ceased to exist.
(3) If the corporation has a specific proposal for amendment or
repeal, and the corporation has provided written notice of that
proposal, including a copy of the proposal, to the specified person
or persons at the most recent address for each of them, based on the
corporation's records, and the corporation has not received written
approval or nonapproval within the period specified in the notice,
which shall not be less than 10 nor more than 30 days commencing at
least 20 days after the notice has been provided.
SEC. 5. Section 12331 of the
Corporations Code is amended to read:
12331. (a) The bylaws shall set forth (unless such provision is
contained in the articles, in which case it may only be changed by an
amendment of the articles) the number of directors of the
corporation, or the method of determining the number of directors of
the corporation, or that the number of directors shall be not less
than a stated minimum or more than a stated maximum with the exact
number of directors to be fixed, within the limits specified, by
approval of the board or the members (Sections 12222 and 12224), in
the manner provided in the bylaws, subject to subdivision (e). The
number or minimum number of directors shall not be less than three.
Alternate directors may be permitted, in which event, the bylaws
shall specify the manner and times of their election and the
conditions to their service in place of a director.
(b) Once members have been admitted, a bylaw specifying or
changing a fixed number of directors or the maximum or minimum number
or changing from a fixed to a variable board or vice versa may only
be adopted by approval of the members.
(c) The bylaws may contain any provision, not in conflict with law
or the articles, for the management of the activities and for the
conduct of the affairs of the corporation, including but not limited
to:
(1) Any provision referred to in subdivision (c) of Section 12313.
(2) The time, place and manner of calling, conducting and giving
notice of members', directors', and committee meetings, or of
conducting mail ballots.
(3) The qualifications, duties and compensation of directors; the
time of their election; and the requirements of a quorum for
directors' and committee meetings.
(4) The appointment of committees, composed of directors or
nondirectors or both, by the board or any officer and the authority
of any such these committees.
(5) The appointment, duties, compensation and tenure of officers.
(6) The mode of determination of members of record.
(7) The making of reports and financial statements to members.
(8) Setting, imposing and collecting dues, assessments, and
membership and transfer fees.
(9) The time and manner of patronage distributions consistent with
this part.
(d) The bylaws may provide for eligibility, the manner of
admission, withdrawal, suspension, and expulsion of members, and the
suspension or termination of memberships consistent with the
requirements of Section 12431.
(e) The bylaws may require, for any or all corporate actions, the
vote of a larger proportion of, or all of, the members or the members
of any class, unit, or grouping of members or the vote of a larger
proportion of, or all of, the directors, than is otherwise required
by this part. Such a A provision in the
bylaws requiring such a greater vote
shall not be altered, amended or repealed except by such
the greater vote, unless otherwise provided in
the bylaws.
(f) The bylaws may contain a provision limiting the number of
members, in total or of any class or series , which the
corporation is authorized to admit.
(g) The bylaws may provide for the establishment by the
corporation of a program for the education of its members, officers,
employees and the general public in the principles and techniques of
cooperation.
SEC. 6. Section 12420 of the
Corporations Code is amended to read:
12420. A corporation may issue memberships having different
rights, privileges, preferences, restrictions, or conditions, as
provided in its articles or bylaws. If the articles or bylaws
authorize at least one class of voting memberships, a corporation may
also authorize and issue additional classes of memberships,
preferred or otherwise, that are divisible into a series or are
nonvoting or both.
SEC. 7. Section 12422 of the
Corporations Code is amended to read:
12422. (a) Unless the corporation's articles or bylaws so
provide, memberships are not redeemable. A corporation may provide in
its articles or bylaws for one or more classes or
series of memberships which are redeemable, in whole or in
part, for such consideration within such time or upon the happening
of one or more specified events and upon such
the terms and conditions as are stated in
the articles or bylaws . However, no membership shall
actually be redeemed if prohibited by Chapter 4 (commencing with
Section 12450).
(b) Nothing in this section shall prevent a corporation from
creating a sinking fund or similar provision for, or entering into an
agreement for, the redemption or purchase of its memberships to the
extent permitted by Chapter 4 (commencing with Section 12450).
SEC. 8. Section 12446 of the
Corporations Code is amended to read:
12446. (a) Subject to the provisions of
subdivision (b), the provisions of Chapter 7
(commencing with Section 1500) of Title 10 of Part 3 of the Code of
Civil Procedure shall not apply to any proprietary interest in a
consumer cooperative corporation. Any proprietary interest that would
otherwise escheat to the state pursuant to Chapter 7 (commencing
with Section 1500) of Title 10 of Part 3 of the Code of Civil
Procedure shall instead become the property of the corporation.
(b) Notwithstanding the provisions of
subdivision (a), no proprietary interest shall become the property of
the corporation under this section unless the following requirements
are satisfied:
(1) The articles or bylaws shall specifically provide for the
transfer of ownership of the otherwise escheated proprietary
interests to the corporation.
(2) At least 60 days prior notice of the proposed transfer of the
proprietary interest to the corporation is given to the affected
member by first-class or second-class mail to the last address of the
member shown on the corporation's records, and by publication in a
newspaper of general circulation in the county in which the
corporation has its principal office. Notice given in the foregoing
manner shall be deemed actual notice.
(3) No proprietary interest shall become the property of the
corporation under this section if written notice objecting thereto is
received by the corporation from the affected member prior to the
date of the proposed transfer.
(c) For purposes of this section, a "proprietary interest" shall
mean and include any membership, membership certificate, membership
share, or share certificate of any class or series
representing a proprietary interest in, and issued by, the
corporation together with all accrued and unpaid dividends and
patronage distributions relating thereto.
SEC. 9. Section 12502 of the
Corporations Code is amended to read:
12502. (a) Except as provided in this section or Section 12503,
amendments may be adopted if approved by the board and approved by
the members before or after the approval by the board.
(b) Notwithstanding subdivision (a), the following amendments may
be adopted by approval of the board alone:
(1) An amendment extending the corporate existence or making the
corporate existence perpetual, if the corporation was organized prior
to August 14, 1929.
(2) An amendment deleting the initial street address and initial
mailing address of the corporation, the names and addresses of the
first directors, or the name and address of the initial agent.
(3) Any amendment, at a time the corporation has no members.
(4) Any amendment authorized in the articles pursuant to
subdivision (c) of Section 12313 fixing the rights, privileges,
preferences, restrictions, and conditions attaching to any wholly
unissued class of memberships.
(5) Any amendment authorized in the articles pursuant to
subdivision (c) of Section 12313 fixing the designation, number of
memberships and the rights, privileges, preferences, restrictions,
and conditions attaching to any wholly unissued series of
memberships, or an increase or decrease in the number of memberships
of any series.
(c) Whenever the articles require for corporate action the
approval of a particular class of members or of a larger proportion
of, or all of, the votes of any class, or of a larger proportion of,
or all of, the directors, than is otherwise required by this part,
the provision in the articles requiring such
a greater vote shall not be altered, amended or repealed except
by such the class or such
the greater vote, unless otherwise provided in
the articles.
SEC. 10. Section 12503 of the
Corporations Code is amended to read:
12503. (a) An amendment must
shall also be approved by the members (Section
12224) of a class, whether or not such the
class is entitled to vote thereon by the provisions of the
articles, if the amendment would do any of the following :
(a)
(1) Materially and adversely affect the rights,
privileges, preferences, restrictions or conditions of that class as
to voting, dissolution, redemption or transfer, or the obligations of
that class, in a manner different than such action affects another
class; class.
(b)
(2) Materially and adversely affect such class as to
voting, dissolution, redemption or transfer by changing the rights,
privileges, preferences, restrictions or conditions of another
class; class.
(c)
(3) Increase the number of memberships authorized for
such class; the class.
(d)
(4) Increase the number of memberships authorized for
another class; class.
(e)
(5) Effect an exchange, reclassification or
cancellation of all or part of the memberships of such
class; or the class.
(f)
(6) Authorize a new class of memberships.
(b) An amendment shall also be approved by the members of a series
whether or not the series is entitled to vote thereon by the
articles or bylaws if the series is adversely affected by the
amendment in a different manner than other shares of the same class.