BILL ANALYSIS Ó
AB 816
Page 1
Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
816 (Bonta) - As Amended April 30, 2015
-----------------------------------------------------------------
|Policy |Banking and Finance |Vote:|9 - 3 |
|Committee: | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill reforms and expands the consumer cooperative
corporation law to allow general worker cooperatives, and
establishes a regulatory framework for the formation and
operation of cooperative corporations. In summary, this bill:
1)Requires at least 51% of cooperative corporation workers be
worker-members or eligible for membership within 2 years of
becoming a worker;
2)Authorizes a worker cooperative to apportion and distribute
AB 816
Page 2
earnings and losses in the manner specified in its articles of
incorporation or bylaws, but requires any patronage
distributions (measured by work performed or personal services
contributed) only be made to worker-members;
3)Authorizes a worker cooperative to create an indivisible
reserves account that may not be distributed to the members,
and may be used to fund capital projects for the company;
4)Prescribes certain rules of corporate governance and
accounting for the various types of worker cooperatives;
5)Increases the aggregate single member investment limit that is
exempt from qualification under state securities laws from
$300 to $1,000; and
6)Defines relevant terms and makes various other technical
changes.
FISCAL EFFECT:
Minor and absorbable costs to the Secretary of State, though
these costs could increase if the number of cooperative
corporations increases significantly; minor and absorbable costs
to the Department of Business Oversight.
COMMENTS:
1)Purpose. According to the author, worker cooperatives create
and maintain sustainable jobs, generate wealth to improve the
quality of life of their worker-members, allow workers to
AB 816
Page 3
democratically self-manage, and promote community and local
development. The author believes California's worker
cooperative law is outdated and lacks a framework applicable
to general worker cooperatives. AB 816 is intended to amend
the Consumer Cooperative Corporation Law to clarify the law
applies to all worker cooperatives, not just consumer
cooperatives, provide contours to the governance rules for
worker cooperatives, and increase the maximum community
investor amount from $300 to $1,000.
2)Worker Cooperatives. Worker cooperatives are businesses
democratically owned and governed by their workers. Worker
cooperatives are distinct from other kinds of cooperatives
(such as consumer, housing, financial, and others) in that its
members are its workers, and are common throughout Europe and
Latin America. The US Federation of Worker Cooperatives
estimates there are about 350 worker cooperatives in this
country, employing approximately 5,000 people and collectively
generating approximately $500 million in annual revenue.
Many types of businesses can be organized as cooperatives,
ranging from very small businesses to very large multinational
companies, in industries from agriculture to finance. Basic
standards for worker cooperatives were established in the
World Declaration on Cooperative Worker Ownership, adopted by
the International Organization of Industrial, Artisanal and
Service Producers' Cooperatives in Norway in 2003.
3)The Rochdale Society of Equitable Pioneers. One of most
influential early cooperatives began as a response to
industrialization in Lancashire, England in 1844, when a group
of weavers and other tradesmen formed the Rochdale Society of
Equitable Pioneers. Learning from the failures of previous
cooperatives, the society developed the Rochdale Principles to
govern their society. The core principles were voluntary and
open membership; democratic member control (one member, one
AB 816
Page 4
vote); distribution of surplus in proportion to trade; payment
of limited interest on capital; political and religious
neutrality; cash trading (and no credit); and promotion of
education. Though they have been refined over the years,
these principles still guide the worker cooperative movement,
and were formally adopted by the International Co-operative
Alliance in 1937 and amended in 1966 and 1995.
Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081