AB 792, as introduced, Chiu. Board of directors: investment standards.
The Nonprofit Public Benefit Corporation Law and the Nonprofit Religious Corporation Law each require a board of directors for a corporation formed under its provisions to manage corporate investments in compliance with proscribed investment standards. The laws specify that compliance with its proscribed standards do not preclude the application of a separate investment standard under the Uniform Prudent Management of Institutional Funds Act.
This bill would modify the proscribed investment standard in each law to include the Uniform Prudent Management of Institutional Funds Act, if that act would be applicable.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 5240 of the Corporations Code is
2amended to read:
(a) This section applies to all assets held by the
4corporation for investment. Assets which are directly related to
P2 1the corporation’s public or charitable programs are not subject to
2this section.
3(b) Except as provided in subdivision (c), in investing,
4reinvesting, purchasing, acquiring, exchanging, selling and
5managing the corporation’s investments, the board shall do the
6following:
7(1) Avoid speculation, looking instead to the permanent
8disposition of the funds, considering the probable income, as well
9as the probable safety of the corporation’s capital.
10(2) Comply with additional standards, if
any, imposed by the
11articles, bylaws or express terms of an instrument or agreement
12pursuant to which the assets were contributed to the corporation.
13(c) No investment violates this section where it conforms to
14provisions authorizing the investment contained in an instrument
15or agreement pursuant to which the assets were contributed to the
16corporation. No investment violates this section or Section 5231
17where it conforms to provisions requiring the investment contained
18in an instrument or agreement pursuant to which the assets were
19contributed to the corporation.
20(d) In carrying out duties under this section, each director shall
21act as required by subdivision (a) of Section 5231, may rely upon
22others as permitted by subdivision (b) of Section 5231, and shall
23have the benefit of subdivision (c) of Section 5231, and the board
24may delegate its investment powers as permitted by
Section 5210.
25(e) Nothing in this section shall be construed to preclude the
26application of the Uniform Prudent Management of Institutional
27Funds Act (Part 7 (commencing with Section 18501)
of Division
289 of the Probate Code) if that act would otherwise be applicable,
29but nothing in the Uniform Prudent Management of Institutional
30Funds Act alters the status of governing boards, or the duties and
31liabilities of directors, under this part.
32(e) Compliance with the Uniform Prudent Management of
33Institutional Funds Act (Part 7 (commencing with Section 18501)
34of Division 9 of the Probate Code), if that act would be applicable,
35will be deemed to be compliance with subdivision (b).
Section 9250 of the Corporations Code is amended to
37read:
(a) In investing, reinvesting, purchasing, acquiring,
39exchanging, selling, and managing a corporation’s investments,
40the board shall meet the standards set forth in Section 9241.
P3 1(b) Nothing in this section shall be construed to preclude the
2application of the Uniform Prudent Management of Institutional
3Funds Act, Part 7 (commencing with Section 18501) of Division
49 of the Probate Code, if that act would otherwise be applicable.
5However, nothing in the Uniform Prudent Management of
6Institutional Funds Act alters the status of governing boards, or
7the duties and liabilities of directors, under this part.
8(b) Compliance with the Uniform Prudent Management of
9Institutional Funds Act (Part 7 (commencing with Section 18501)
10of Division 9 of the Probate Code), if that act would be applicable,
11will be deemed to be compliance with subdivision (a).
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