BILL ANALYSIS Ó
SB 1041
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Date of Hearing: June 23, 2014
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Roger Dickinson, Chair
SB 1041 (Jackson) - As Amended: April 21, 2014
SENATE VOTE : 35-0
SUBJECT : Business: filings.
SUMMARY : Makes various technical, non-substantive, and
clarifying changes throughout the Corporations Code in
preparation for the Secretary of State (SOS) automated filing
system. Specifically, this bill :
1)Requires a written statement of resignation to be made on a
form prescribed by the SOS for filing, and allows the SOS to
destroy or otherwise dispose of a resignation after a new form
is filed, replacing the agent.
2)Allows a person to cancel the registration of the name of
specified business entities by delivering to the SOS a
certificate of cancellation of the entity's name on a form
prescribed by the SOS.
3)Requires a foreign limited liability company (LLC) that adopts
a new name to relinquish an alternate name, and additionally
conditions reinstatement of a fraudulently terminated business
entity upon the business entity concurrently submitting for
filing an amendment to change its name to eliminate conflict,
if there is a conflict with the entity name.
4)Specifies the process by which a foreign limited partnership
(LP) and foreign limited liability partnership (LLP) can
change its name with the SOS.
5)Corrects cross-references.
6)Makes technical, non-substantive, and clarifying changes.
EXISTING LAW
1)Requires certain business entities, including, but not limited
to, a corporation, a LP, a foreign corporation, a foreign LP,
a LLP, a foreign LLP, a flexible purpose corporation, a LLC,
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an unincorporated association, and a credit union, to make
various filings with the SOS.
2)Authorizes agents designated for service of process for
specified entities to file a written statement of resignation
as that agent with the SOS.
3)Allows a person to apply for and reserve a name for a business
entity and to reinstate a fraudulently terminated business
entity upon court order with the SOS.
FISCAL EFFECT : Unknown.
COMMENTS :
According to the Sponsor, Secretary of State, Debra Bowen, this
bill "seeks to standardize the business filing process to make
it more efficient upon completion of the California Business
Connect (CBC) automation project. The bill makes minor and
clarifying changes to achieve two main goals: 1) Standardize
filing processes to alleviate unnecessary confusion and
inconsistencies for business filers and other SOS customers;
and, 2) Avoid unnecessary CBC design and development costs by
eliminating technical deficiencies in current law that would add
unnecessary complexities to the project."
SB 1041 streamlines the filing process and eliminates
unnecessary bureaucracy that can burden California businesses
by:
Ensuring efficiency and success of the CBC automation project
by standardizing business filing processes.
Reducing costs and time for the design, development, training
and implementation of CBC.
Removing unnecessary costs and complexities for businesses by
simplifying and clarifying filing processes.
CBC
By June 30, 2016, the SOS must launch CBC. CBC will:
Automate paper-based processes and allow businesses to file
and request copies of records online 24 hours a day.
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Provide access to SOS records for the public and government
agencies to perform functions in a more efficient manner.
Allow fee payments to be processed within one business day.
CBC is a six-year project that aims to increase efficiency by
eliminating paper-based manual transactions and associated risk
of loss to vital state records. CBC will also minimize
processing delays through the creation of a uniform data entry
platform. Businesses that use CBC will be able to do many of
their transactions online, without delay and without paying an
additional fee.
The CBC Feasibility Study Report, approved by the California
Technology Agency in April of 2011, provides an overview of the
problem faced by California with respect to its current business
filings system. The reliance on manual labor and hard copies
makes it not only increasingly difficult to comply with current
mandates and new mandates that are created by law, but it also
makes these vital business records prone to human error and at
risk of irreparable destruction. (CBC Feasibility Study Report,
March 2011) "SOS staff pointed out that the filing systems are
so archaic, that in many cases, there is no backup. The systems
contain only a single paper copy of each recording for LLCs,
LPs, and general partnerships for the generations of filings
that make up much of the state's legally organized small
businesses. This means that in the event of a disaster, such as
a fire, the permanent records of hundreds of thousands of
California businesses may be wiped out."
Previous Legislation
SB 1532 (Pavley, Chapter 494, Statutes of 2012) implemented
changes necessary for the CBC automated system. Specifically,
the bill specified that the required address information in
business filings is the street address and required business
entities to provide a mailing address if not the same as the
street address. SB 1532 also revised requirements with respect
to the maintenance of forms filed with the SOS, revised
provisions relating to the assignment of filing dates and fees
by the SOS, repealed specified provisions relating to special
purpose corporations, and made other technical changes.
REGISTERED SUPPORT / OPPOSITION :
SB 1041
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Support
California Secretary of State (Sponsor)
California Chamber of Commerce
Opposition
None on file.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081