Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1471

Introduced by Assembly Member Perea

February 27, 2015

An act to amend begin delete Section end delete begin insert Sections end insert 201 begin insert , 2601, and 17701.09 end insert of the Corporations Code, relating to corporations.

LEGISLATIVE COUNSEL’S DIGEST

AB 1471, as amended, Perea. Business entity name reservations.

begin delete

Existing

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begin insert (1) end insert begin insert   end insert begin insert Existing end insert law, the General Corporations begin delete law, authorizes end delete begin insert Law, the Social Purpose Corporations Act, and the California Revised Uniform Limited Liability Company Act, authorize end insert the Secretary of State, upon payment of a fee by the applicant, to issue a certificate of reservation of any name, not otherwise prohibited.

The bill would make a nonsubstantive begin delete change. end delete begin insert change to the cross-reference of the requirement to pay a fee by the applicant in these laws. end insert

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(2) The General Corporation Law and the Social Purpose Corporations Act limits the Secretary of State from issuing a certificate reserving any name that is likely to mislead the public or the same name for 2 or more consecutive 60-day periods to the same applicant or for the use or benefit of the same person, partnership, firm, corporation, or social purpose corporation, as applicable.

end insert begin insert

This bill would specify that the Secretary of State may reserve that name to the use or benefit of a person, as provided.

end insert begin insert

(3) The Social Purpose Corporations Act does not prohibit the Secretary of State from filing articles for a social purpose corporation subject to the Banking Law setting forth a name in which “bank,” “trust,” “trustee,” or related words appear, if the articles are endorsed with the approval of the Commissioner of Financial Institutions. Existing law reorganized the Department of Financial Institutions and the Commissioner of Financial Institutions into the Department of Business Oversight headed by a Commissioner of Business Oversight.

end insert begin insert

This bill would add another basis under which the Secretary of State is not prohibited from filing articles for a social purpose corporation subject to the Banking Law setting forth a name in which “bank,” “trust,” “trustee,” or related words appear, and would change the name of the Commissioner of Financial Institutions to the Commissioner of Business Oversight.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 201 of the Corporations Code is amended
to read:

201.  

(a) The Secretary of State shall not file articles setting
forth a name in which “bank,” “ trust,” “trustee,” or related words
appear, unless the certificate of approval of the Commissioner of
Business Oversight is attached thereto. This subdivision does not
apply to the articles of any corporation subject to the Banking Law
on which is endorsed the approval of the Commissioner of Business
Oversight.

(b) The Secretary of State shall not file articles which set forth
a name which is likely to mislead the public or which is the same
as, or resembles so closely as to tend to deceive, the name of a
domestic corporation, the name of a foreign corporation which is
authorized to transact intrastate business or has registered its name
pursuant to Section 2101, a name which a foreign corporation has
assumed under subdivision (b) of Section 2106, a name which will
become the record name of a domestic or foreign corporation upon
the effective date of a filed corporate instrument where there is a
delayed effective date pursuant to subdivision (c) of Section 110
or subdivision (c) of Section 5008, or a name which is under
reservation for another corporation pursuant to this title, except
that a corporation may adopt a name that is substantially the same
as an existing domestic corporation or foreign corporation which
is authorized to transact intrastate business or has registered its
name pursuant to Section 2101, upon proof of consent by such
domestic or foreign corporation and a finding by the Secretary of
State that under the circumstances the public is not likely to be
misled.

(c) The use by a corporation of a name in violation of this
section may be enjoined notwithstanding the filing of its articles
by the Secretary of State.

(d) Any applicant may, upon payment of the fee prescribed
therefor in Article 3 (commencing with Section 12180) of Chapter
3 of Part 2 of Division 3 of Title 2 of the Government Code, obtain
from the Secretary of State a certificate of reservation of any name
not prohibited by subdivision (b), and upon the issuance of the
certificate the name stated therein shall be reserved for a period
of 60 days. The Secretary of State shall not, however, issue
certificates reserving the same name for two or more consecutive
60-day periods to the same applicant or for the use or benefit of
the same begin delete person, partnership, firm or corporation; end delete begin insert person; end insert nor shall
consecutive reservations be made by or for the use or benefit of
the same begin delete person, partnership, firm or corporation end delete begin insert person; end insert of names
so similar as to fall within the prohibitions of subdivision (b).

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 2601 of the end insert begin insert Corporations Code end insert begin insert is amended to
read: end insert

2601.  

(a) The Secretary of State shall not file articles setting
forth a name in which “bank,” “trust,” “trustee,” or related words
appear, unless the certificate of approval of the Commissioner of
begin delete Financial Institutions end delete begin insert Business Oversight end insert is attached to the articles.
This subdivision does not apply to the articles of any social purpose
corporation subject to the Banking Law on which is endorsed the
approval of the Commissioner of begin delete Financial Institutions. end delete begin insert Business
Oversight or to which a certificate of approval of the Commissioner
of Business Oversight is attached to the articles. end insert

(b) (1) The Secretary of State shall not file articles that set forth
a name that is likely to mislead the public or that is the same as,
or resembles so closely as to tend to deceive, the name of a
domestic corporation, the name of a domestic social purpose
corporation, or the name of a foreign corporation that is authorized
to transact intrastate business or has registered its name pursuant
to Section 2101, a name that a foreign corporation has assumed
under subdivision (b) of Section 2106, a name that will become
the record name of a corporation or social purpose corporation or
a foreign corporation upon the effective date of a filed corporate
instrument where there is a delayed effective date pursuant to
subdivision (c) of Section 110 or subdivision (c) of Section 5008,
or a name that is under reservation for another corporation or social
purpose corporation pursuant to this title, except that a social
purpose corporation may adopt a name that is substantially the
same as an existing corporation or social purpose corporation,
foreign or domestic, which is authorized to transact intrastate
business or has registered its name pursuant to Section 2101, upon
proof of consent by the domestic or foreign corporation or social
purpose corporation and a finding by the Secretary of State that
under the circumstances the public is not likely to be misled. The
use by a social purpose corporation of a name in violation of this
section may be enjoined notwithstanding the filing of its articles
by the Secretary of State.

(2) A corporation formed pursuant to this division before
January 1, 2015, may elect to change its status from a flexible
purpose corporation to a social purpose corporation by amending
its articles of incorporation to change its name to replace “flexible
purpose corporation” with “social purpose corporation” and to
replace the term “flexible purpose corporation” with “social
purpose corporation” as applicable in any statements contained in
the articles. For any flexible purpose corporation formed prior to
January 1, 2015, that has not amended its articles of incorporation
to change its status to a social purpose corporation, any reference
in this division to social purpose corporation shall be deemed a
reference to “flexible purpose corporation.”

(c) Any applicant may, upon payment of the fee prescribed in
begin insert Article 3 (commencing with Section 12180) of Chapter 3 of Part
2 of Division 3 of Title 2 of end insert the Government Code, obtain from the
Secretary of State a certificate of reservation of any name not
prohibited by subdivision (b), and upon the issuance of the
certificate the name stated in the certificate shall be reserved for
a period of 60 days. The Secretary of State shall not, however,
issue certificates reserving the same name for two or more
consecutive 60-day periods to the same applicant or for the use or
benefit of the same begin delete person, partnership, firm, corporation, or social
purpose corporation. end delete begin insert person. end insert No consecutive reservations shall be
made by or for the use or benefit of the same begin delete person, partnership,
firm, corporation, or social purpose corporation end delete begin insert person end insert of names
so similar as to fall within the prohibitions of subdivision (b).

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 17701.09 of the end insert begin insert Corporations Code end insert begin insert is amended
to read: end insert

17701.09.  

(a) Upon payment of the fee prescribed begin delete by Section
12190 end delete begin insert in end insert begin insert Article 3 (commencing with Section 12180) of Chapter
3 of Part 2 of Division 3 of Title 2 end insert of the Government Code, a
person may apply to reserve the exclusive use of the name of a
limited liability company or foreign limited liability company,
including an alternative name for a foreign limited liability
company whose name is not available. If the Secretary of State
finds that the name applied for is available, it shall reserve the
name for the applicant’s exclusive use for up to 60 days and issue
a certificate of reservation. The Secretary of State shall not issue
certificates reserving the same name for two or more consecutive
60-day periods to the same applicant or for the use or benefit of
the same person; nor shall consecutive reservations be made by
or for the use or benefit of the same person for a name so similar
as to fall within the prohibitions of subdivision (b) of Section
17701.08.

(b) The owner of a name reserved for a limited liability company
or foreign limited liability company may transfer the reservation
to another person by delivering to the Secretary of State a signed
notice of the transfer which states the reserved name and the name
and address of the transferee.