BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 871


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          Date of Hearing:  April 20, 2015


                      ASSEMBLY COMMITTEE ON BANKING AND FINANCE


                               Matthew Dababneh, Chair


          AB 871  
          (Brown) - As Introduced February 26, 2015


          SUBJECT:  Business filings:  statement of information


          SUMMARY:  Changes the filing period when a corporation, a  
          nonprofit public benefit corporation, a nonprofit mutual benefit  
          corporation, a consumer cooperative corporation, a limited  
          liability company (LLC) and a foreign LLC files a statement of  
          information (SOI) with the Secretary of State (SOS).     
          Specifically, this bill:  


          1)Requires all corporations to file the SOI by March 15th of  
            each year with the SOS rather than during the calendar month  
            of which the original articles of incorporation (AOI) was  
            filed. 


          2)Requires all LLCs to file the SOI by April 15th biennially  
            with the SOS rather than during the calendar month of which  
            the original AOI was filed. 


          3)Requires all nonprofit corporations to file the SOI by May  
            15th biennially with the SOS rather than during the calendar  
            month of which the original AOI was filed.  









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          4)Requires the SOS to provide notice to the above listed  
            entities 3 months prior to the applicable filing date.  


          EXISTING LAW:  


          1)Requires every corporation to file, within 90 days after the  
            filing of its original articles and annually thereafter during  
            the applicable filing period, on a form prescribed by the SOS,  
            a statement.  Specifies the filing period for a corporation  
            shall be the calendar month which its original articles were  
            filed and the immediately preceding five calendar months.  The  
            SOS provides a notice to each corporation to comply with this  
            section approximately three months prior to the close of the  
            applicable filing period.  [Corporations Code, Section 1502]

          2)Requires every nonprofit public benefit corporation, nonprofit  
            mutual benefit corporation, limited liability company and  
            foreign limited liability company to within 90 days after the  
            filing of its original articles and biennially thereafter  
            during the applicable filing period to file with the SOS.   
            [Corporations Code, Sections 6210, 8210, and 17702.09]

          3)Requires every consumer cooperative corporation to file within  
            90 days after its original articles and annually thereafter  
            during the applicable filing period each year a form  
            prescribed by the SOS. [Corporations Code, Section 12570]

          FISCAL EFFECT:  Unknown.


          COMMENTS:  


          Need for the Bill:










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          According to the author, "streamlining the SOI filing dates and  
          allowing businesses to file at the same time every year would  
          eliminate confusion as to when a business entity's SOI is due.   
          This change would also have a positive impact on small  
          businesses and improve compliance with the SOI filing mandate.   
          In addition, the natural staggering of due dates if filed with  
          the Franchise Tax Board (FTB) filing over a 3 month period would  
          help prevent the SOS from becoming overwhelmed with a large  
          volume of SOIs coming in at one time of year."


          Background:


          Under existing law, the SOS provides filing periods, for  
          example, corporations are required to file annually during the  
          filing period of the calendar month during which its original  
          AOI was filed and provides a flexibility period of 5 months from  
          that date to file.  The SOS is required to notify corporations  
          of the filing period 3 months prior to the close of the  
          applicable filing period.  


          AB 871 changes the filing periods to filing dates.  Corporations  
          and consumer cooperative corporations who file on an annual  
          basis would be required to file a SOI on March 15th of each year  
          with the SOS.  Nonprofits who file on a biennial basis would be  
          required to file a SOI on May 15th every other year.  LLCs who  
          also file biennially would be required to file a SOI on April  
          15th every other year.  The SOS would be required to provide  
          notice of this filling date 3 months prior to the date.  


          As of April, 2015, according to the SOS, California has almost a  
          million active corporations and close to 600,000 active LLCs.  


          California Business Connect (CBC)









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          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. 


          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.

           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.

          Previous Legislation


          AB 2180 (Brown) would have changed the filing period when a  
          corporation, a nonprofit public benefit corporation, a nonprofit  
          mutual benefit corporation, a consumer cooperative corporation a  
          limited liability company, foreign limited liability company,  
          and a credit union files a SOI with the SOS.  Died in the  
          Assembly Appropriations Committee.  


          SB 1041 (Jackson, Chapter 834, Statutes of 2014) makes various  
          technical, non-substantive, and clarifying changes throughout  
          the Corporations Code in preparation for the SOS automated  
          filing system.  These changes include, among other things:  
          requiring that the SOS prescribe forms for the resignation of  
          agents for service of process; harmonizing statutes relating to  
          the resignation of agents for service of process to provide  








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          consistency across different types of business entities;  
          authorizing the SOS to remove and destroy records relating to  
          agent resignations if a new agent for service of process is  
          designated, as specified; clarifying the necessary signatures  
          for various business filings; clarifying when foreign limited  
          liability company registration cancellations are effective;   
          clarifying situations wherein a penalty for otherwise delinquent  
          annual statements would not be applied; striking requirements  
          for the provision of additional copies of specified filings; and  
          correcting various internal cross references. 


          SB 1532 (Pavley, Chapter 494, Statutes of 2012) was enacted to  
          implement changes necessary for the California Business Connect  
          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:




          Support


          California Society of Enrolled Agents (CSEA) (Sponsor)


          California Chamber of Commerce










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          Opposition


          None on file.




          Analysis Prepared by:Kathleen O'Malley / B. & F. / (916)  
          319-3081