BILL ANALYSIS Ó
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