BILL NUMBER: AB 1859 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 21, 2014
AMENDED IN ASSEMBLY APRIL 1, 2014
AMENDED IN ASSEMBLY MARCH 20, 2014
INTRODUCED BY Assembly Member Maienschein
FEBRUARY 19, 2014
An act to add Article 7 (commencing with Section 6600) to Chapter
6 of Division 3 of the Business and Professions Code, to amend
Section 13401 of the Corporations Code, and to add Sections
2104.5, 8406, and 15605 to the Probate Code, relating to professional
fiduciaries.
LEGISLATIVE COUNSEL'S DIGEST
AB 1859, as amended, Maienschein. Professional fiduciaries:
professional corporations.
Existing law, the Professional Fiduciaries Act, establishes the
Professional Fiduciaries Bureau within the Department of Consumer
Affairs and requires the bureau to license and regulate professional
fiduciaries, as specified.
The Moscone-Knox Professional Corporation Act provides for the
organization of a corporation under specified provisions of law for
the purposes of qualifying as a professional corporation under that
act and rendering professional services. The act defines professional
services as services that may be lawfully rendered only pursuant to
a license, certification, or registration authorized by the Business
and Professions Code, the Chiropractic Act, or the Osteopathic Act.
This bill would provide for the formation of licensed professional
fiduciary corporations pursuant to the act described above, as
specified. The bill would provide that it is unprofessional conduct
and a violation of the Professional Fiduciaries Act to violate,
attempt to violate, directly or indirectly, or assist in or abet the
violation of, or conspire to violate these provisions, the
Moscone-Knox Professional Corporation Act, or any regulations duly
adopted under those laws. The bill would require the name of a
licensed professional fiduciary corporation and any name or names
under which it may render professional services to contain the words
"professional fiduciary" "licensed
professional fiduciary" and wording or abbreviations denoting
corporate existence. The bill would require each director,
shareholder, and officer of a licensed professional fiduciary
corporation to be a licensed professional fiduciary. The bill would
prohibit the income of a licensed professional fiduciary corporation
attributable to professional services rendered while a shareholder is
a disqualified person, as defined, from accruing, in any manner, to
the benefit of the shareholder or his or her shares in the licensed
professional fiduciary corporation. The bill would authorize
the bureau to adopt and enforce regulations to carry out these
provisions. The bill would require the bylaws of a
licensed professional fiduciary corporation to include a provision
that requires the capital stock of the corporation owned by a
disqualified person, as defined, or a deceased person, to be sold to
the corporation or to the remaining shareholders of the corporation
within 60 days. The bill would require a licensed professional
fiduciary corporation to maintain insurance coverage of at least
$1,000,000 for claims against the corporation, as
specified. The bill would require a licensed fiduciary corporation
that is appointed as a guardian, conservator, personal
representative, or trustee by a court to be liable for any licensed
professional fiduciary who violates the powers and duties of those
appointments while acting on behalf of the corporation.
Existing law governing the administration of estates and trusts
authorizes the appointment of a person as a personal representative
of a decedent's estate, a guardian or conservator of a person or an
estate, or a trustee. Existing law defines "person" to include a
corporation for these purposes.
This bill would provide that if a licensed professional
fiduciary corporation is appointed as a guardian, conservator,
trustee, or personal representative, each shareholder, officer,
director, or employee of the corporation who is a licensed
professional fiduciary may individually exercise the powers and
duties of that appointment.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 7 (commencing with Section 6600) is added to
Chapter 6 of Division 3 of the Business and Professions Code, to
read:
Article 7. Licensed Professional Fiduciary Corporations
6600. (a) A licensed
professional fiduciary corporation is a corporation that is
authorized to render professional services, as defined in Section
13401 of the Corporations Code, if that corporation and its
shareholders, officers, directors, and employees rendering
professional services who are licensed professional fiduciaries are
in compliance with the Moscone-Knox Professional Corporation Act, the
provisions of this article, and all other statutes and regulations
pertaining to the corporation and the conduct of its affairs. With
respect to a licensed professional fiduciary corporation, the
governmental agency referred to in the Moscone-Knox Professional
Corporation Act (Part 4 (commencing with Section 13400) of Division 3
of Title 1 of the Corporations Code) is the Professional Fiduciaries
Bureau.
6601. It is unprofessional conduct and a violation of this
chapter for any person licensed pursuant to this chapter to violate,
attempt to violate, directly or indirectly, or assist in or abet the
violation of, or conspire to violate any provision or term of this
article, the Moscone-Knox Professional Corporation Act, or any
regulations duly adopted under those provisions.
6602. A licensed professional fiduciary corporation shall not
commit or omit any act that, if committed or omitted, would
constitute unprofessional conduct under any statute or regulation. A
licensed professional fiduciary corporation, in the conduct of its
practice, shall observe and be bound by these statutes and
regulations to the same extent as a person holding a license under
this chapter.
6603. The name of a licensed professional fiduciary corporation
and any name or names under which it may render professional services
shall contain the words "professional fiduciary"
"licensed professional fiduciary" and wording or
abbreviations denoting corporate existence.
6604. Except as provided in Section 13403 of the Corporations
Code, each director, shareholder, and officer of a licensed
professional fiduciary corporation shall be a licensed professional
fiduciary.
6605. The income of a licensed professional fiduciary corporation
attributable to professional services rendered while a shareholder
is a disqualified person, as defined in Section 13401 of the
Corporations Code, shall not in any manner accrue to the benefit of
the shareholder or his or her shares in the licensed professional
fiduciary corporation.
6606. The bureau may adopt and enforce regulations to carry out
the purposes and objectives of this article, including the following:
(a) A regulation that requires the
6606. (a) The bylaws
of a licensed professional fiduciary corporation to
shall include a provision that requires the
capital stock of the corporation owned by a disqualified person, as
defined in Section 13401 of the Corporations Code, or a deceased
person, to be sold to the corporation or to the remaining
shareholders of the corporation within the timeframe
provided by the regulation 60 days .
(b) A regulation that requires a licensed
professional fiduciary corporation to provide
shall maintain adequate security by
insurance or otherwise at a minimum amount of
one million dollars ($1,000,000) for claims against the
corporation by its customers arising out of the rendering of
professional services.
6607. (a) A licensed professional fiduciary corporation that is
appointed as a guardian, conservator, personal representative, or
trustee by a court shall be liable for any licensed professional
fiduciary who violates the powers and duties of those appointments
while acting on behalf of the corporation.
(b) Nothing in subdivision (a) shall be interpreted to prevent the
bureau from individual enforcement and disciplinary action against a
licensed professional fiduciary who has violated any of the
provisions of this chapter.
SEC. 2. Section 13401 of the
Corporations Code is amended to read:
13401. As used in this part:
(a) "Professional services" means any type of professional
services that may be lawfully rendered only pursuant to a license,
certification, or registration authorized by the Business and
Professions Code, the Chiropractic Act, or the Osteopathic Act.
(b) "Professional corporation" means a corporation organized under
the General Corporation Law or pursuant to subdivision (b) of
Section 13406 that is engaged in rendering professional services in a
single profession, except as otherwise authorized in Section
13401.5, pursuant to a certificate of registration issued by the
governmental agency regulating the profession as herein provided and
that in its practice or business designates itself as a professional
or other corporation as may be required by statute. However, any
professional corporation or foreign professional corporation
rendering professional services by persons duly licensed by the
Medical Board of California or any examining committee under the
jurisdiction of the board, the Osteopathic Medical Board of
California, the Dental Board of California, the California State
Board of Pharmacy, the Veterinary Medical Board, the California
Architects Board, the Court Reporters Board of California, the Board
of Behavioral Sciences, the Speech-Language Pathology and Audiology
Board, the Board of Registered Nursing, the Professional
Fiduciaries Bureau, or the State Board of Optometry shall not
be required to obtain a certificate of registration in order to
render those professional services.
(c) "Foreign professional corporation" means a corporation
organized under the laws of a state of the United States other than
this state that is engaged in a profession of a type for which there
is authorization in the Business and Professions Code for the
performance of professional services by a foreign professional
corporation.
(d) "Licensed person" means any natural person who is duly
licensed under the provisions of the Business and Professions Code,
the Chiropractic Act, or the Osteopathic Act to render the same
professional services as are or will be rendered by the professional
corporation or foreign professional corporation of which he or she is
or intends to become, an officer, director, shareholder, or
employee.
(e) "Disqualified person" means a licensed person who for any
reason becomes legally disqualified (temporarily or permanently) to
render the professional services that the particular professional
corporation or foreign professional corporation of which he or she is
an officer, director, shareholder, or employee is or was rendering.
SEC. 2. SEC. 3. Section 2104.5 is
added to the Probate Code, to read:
2104.5. If a licensed professional fiduciary
corporation is appointed as a guardian or conservator, each
shareholder, officer, director, or employee of the corporation who is
a licensed professional fiduciary may individually
exercise the powers and duties of the guardian or conservator.
SEC. 3. SEC. 4. Section 8406 is
added to the Probate Code, to read:
8406. If a licensed professional fiduciary corporation
is appointed as a personal representative, each shareholder,
officer, director, or employee of the corporation who is a
licensed professional fiduciary may individually exercise the
powers and duties of the personal representative.
SEC. 4. SEC. 5. Section 15605 is
added to the Probate Code, to read:
15605. If a licensed professional fiduciary
corporation is appointed as a trustee, each shareholder, officer,
director, or employee of the corporation who is a licensed
professional fiduciary may individually exercise the powers and
duties of the trustee.