BILL ANALYSIS Ó
SB 1041
Page 1
SENATE THIRD READING
SB 1041 (Jackson)
As Amended April 21, 2014
Majority vote
SENATE VOTE :35-0
BANKING & FINANCE 12-0 APPROPRIATIONS 17-0
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|Ayes:|Dickinson, Allen, |Ayes:|Gatto, Bigelow, |
| |Achadjian, Bonta, Chau, | |Bocanegra, Bradford, Ian |
| |Gatto, Harkey, Linder, | |Calderon, Campos, |
| |Perea, Rodriguez, Weber, | |Donnelly, Eggman, Gomez, |
| |Williams | |Holden, Jones, Linder, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Wagner, |
| | | |Lowenthal |
| | | | |
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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
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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, an LP, a foreign corporation, a foreign LP,
an LLP, a foreign LLP, a flexible purpose corporation, an LLC,
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 : According to the Assembly Appropriations
Committee, negligible fiscal impact on the SOS; anticipated time
and cost savings to SOS during the design, development,
training, and implementation stages of the California Business
Connect (CBC) project.
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 CBC
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."
This bill streamlines the filing process and eliminates
unnecessary bureaucracy that can burden California businesses
by:
1)Ensuring efficiency and success of the CBC automation project
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by standardizing business filing processes.
2)Reducing costs and time for the design, development, training
and implementation of CBC.
3)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:
1)Automate paper-based processes and allow businesses to file
and request copies of records online 24 hours a day.
2)Provide access to SOS records for the public and government
agencies to perform functions in a more efficient manner.
3)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. "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."
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Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081
FN: 0004325