Amended in Senate June 25, 2015

Amended in Assembly April 14, 2015

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 Sections 201, 1155, 2601, 15911.06, 16906, 17701.09, 17702.03, 17707.08, and 17710.06 of the Corporations Code, relating to business.

LEGISLATIVE COUNSEL’S DIGEST

AB 1471, as amended, Perea. Business entities: filings.

(1) The General Corporation Law, the Social Purpose Corporations Act, and the California Revised Uniform Limited Liability Company Act, authorize 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 change to the cross-reference of the requirement to pay a fee by the applicant in these laws.

(2) The General Corporation Law and the Social Purpose Corporations Act begin delete limits end delete begin insert limit end insert 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.

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

(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.

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.

(4) The General Corporation Law, the Uniform Limited Partnership Act of 2008, and the Uniform Partnership Act of 1994 authorize a business entity formed under its respective provisions to be converted into another business entity under certain conditions, including, among others, that the execution of a statement or certificate of conversion set forth a name and street address, as specified.

This bill would specify that the statement or certificate of conversion set forth the name, mailing address, and street address of the converted entity’s agent for service of process.

(5) The California Revised Uniform Limited Liability Company Act requires a record delivered to the Secretary of State for filing under its provisions to be signed by particular individuals, as specified. The act specifically requires the person who filed a certificate of dissolution to sign a certificate of cancellation of the article of organization upon the completion of the winding up of affairs of the limited liability company, except as specified.

This bill would revise the general provisions relating to the particular individual required to sign a record, and instead require the managers to sign a certificate of cancellation of the article of organization upon the completion of the winding up of affairs of the limited liability company, except as specified.

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 person; nor shall consecutive reservations be made by
or for the use or benefit of the same person; of names so similar
as to fall within the prohibitions of subdivision (b).

SEC. 2.  

Section 1155 of the Corporations Code is amended to
read:

1155.  

(a) To convert a corporation:

(1) If the corporation is converting into a domestic limited
partnership, a statement of conversion shall be completed on the
certificate of limited partnership for the converted entity.

(2) If the corporation is converting into a domestic partnership,
a statement of conversion shall be completed on the statement of
partnership authority for the converted entity, or if no statement
of partnership authority is filed then a certificate of conversion
shall be filed separately.

(3) If the corporation is converting into a domestic limited
liability company, a statement of conversion shall be completed
on the articles of organization for the converted entity.

(b) Any statement or certificate of conversion of a converting
corporation shall be executed and acknowledged by those officers
of the converting corporation as would be required to sign an
officers’ certificate (Section 173), and shall set forth all of the
following:

(1) The name of the converting corporation and the Secretary
of State’s file number of the converting corporation.

(2) A statement of the total number of outstanding shares of
each class entitled to vote on the conversion, that the principal
terms of the plan of conversion were approved by a vote of the
number of shares of each class which equaled or exceeded the vote
required under Section 1152, specifying each class entitled to vote
and the percentage vote required of each class.

(3) The name, form, and jurisdiction of organization of the
converted entity.

(4) The name, mailing address, and street address of the
converted entity’s agent for service of process. If a corporation
qualified under Section 1505 is begin delete designated, end delete begin insert designated as the agent, end insert
no address for it shall be set forth.

(c) For the purposes of this chapter, the certificate of conversion
shall be on a form prescribed by the Secretary of State.

(d) The filing with the Secretary of State of a statement of
conversion on an organizational document or a certificate of
conversion as set forth in subdivision (a) shall have the effect of
the filing of a certificate of dissolution by the converting
corporation and no converting corporation that has made the filing
is required to file a certificate of election under Section 1901 or a
certificate of dissolution under Section 1905 as a result of that
conversion.

(e) Upon the effectiveness of a conversion pursuant to this
chapter, a converted entity that is a domestic partnership, domestic
limited partnership, or domestic limited liability company shall
be deemed to have assumed the liability of the converting
corporation (1) to prepare and file or cause to be prepared and filed
all tax and information returns otherwise required of the converting
corporation under the Corporation Tax Law (Part 11 (commencing
with Section 23001) of Division 2 of the Revenue and Taxation
Code) and (2) to pay any tax liability determined to be due pursuant
to that law.

SEC. 3.  

Section 2601 of the Corporations Code is amended to
read:

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
Business Oversight 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 Business Oversight or to which a certificate
of approval of the Commissioner of Business Oversight is attached
to the articles.

(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
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 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 person. No consecutive reservations shall be
made by or for the use or benefit of the same person of names so
similar as to fall within the prohibitions of subdivision (b).

SEC. 4.  

Section 15911.06 of the Corporations Code is amended
to read:

15911.06.  

(a) Upon conversion of a limited partnership, one
of the following applies:

(1) If the limited partnership is converting into a domestic
limited liability company, a statement of conversion shall be
completed on the articles of organization for the converted entity
and shall be filed with the Secretary of State.

(2) If the limited partnership is converting into a domestic
partnership, a statement of conversion shall be completed on the
statement of partnership authority for the converted entity. If no
statement of partnership authority is filed, a certificate of
conversion shall be filed separately with the Secretary of State.

(3) If the limited partnership is converting into a domestic
corporation, a statement of conversion shall be completed on the
articles of incorporation for the converted entity and shall be filed
with the Secretary of State.

(4) If the limited partnership is converting to a foreign limited
partnership or foreign other business entity, a certificate of
conversion shall be filed with the Secretary of State.

(b) Any certificate or statement of conversion shall be executed
and acknowledged by all general partners and shall set forth all of
the following:

(1) The name of the converting limited partnership and the
Secretary of State’s file number of the converting limited
partnership.

(2) A statement that the principal terms of the plan of conversion
were approved by a vote of the partners, that equaled or exceeded
the vote required under Section 15911.03, specifying each class
entitled to vote and the percentage vote required of each class.

(3) The form of organization of the converted entity.

(4) The name, mailing address, and street address of the
converted entity’s agent for service of process and the mailing
address of the chief executive office of the converted entity. If a
corporation begin delete that has complied with end delete begin insert qualified under end insert Section 1505
is designated as the agent, no address for it shall be set forth.

(c) The filing with the Secretary of State of a certificate of
conversion or a statement of partnership authority, articles of
organization, or articles of incorporation containing a statement
of conversion as set forth in subdivision (a) shall have the effect
of the filing of a certificate of cancellation by the converting limited
partnership, and no converting limited partnership that has made
the filing is required to file a certificate of cancellation under
Section 15902.03 as a result of that conversion.

SEC. 5.  

Section 16906 of the Corporations Code is amended
to read:

16906.  

(a) If the converting partnership has filed a statement
of partnership authority under Section 16303 that is effective at
the time of the conversion, then upon conversion to a domestic
limited partnership, limited liability company, or corporation, the
certificate of limited partnership, articles of organization, or articles
of incorporation filed by the converted entity, as applicable, shall
contain a statement of conversion, in that form as may be
prescribed by the Secretary of State. If the converting partnership
has not filed a statement of partnership authority under Section
16303 that is effective at the time of the conversion, upon
conversion to a domestic limited partnership, limited liability
company, or corporation, the converted entity may, but is not
required to file, on its certificate of limited partnership, articles of
organization, or articles of incorporation, a statement of conversion.
A statement of conversion shall set forth all of the following:

(1) The name of the converting partnership and the Secretary
of State’s file number, if any, of the converting partnership.

(2) A statement that the principal terms of the plan of conversion
were approved by a vote of the partners, which equaled or exceeded
the vote required under Section 16903.

(3) The name, mailing address, and street address of the
converted entity’s agent for service of process. If a corporation
qualified under Section 1505 is begin delete designated, end delete begin insert designated as the agent, end insert
no address for it shall be set forth.

(b) A partnership converting to a foreign other business entity
that has filed a statement of partnership authority under Section
16303 that is effective at the time of conversion may file a
certificate of conversion with the Secretary of State. The certificate
of conversion shall contain the following:

(1) The names of the converting partnership and the converted
entity.

(2) The street address of the converted entity’s chief executive
office and of an office in this state, if any.

(3) The form of organization of the converted entity.

(4) The name, mailing address, and street address of the
converted entity’s agent for service of process. If a corporation
qualified under Section 1505 is designated as the agent, no address
for it shall be set forth.

(c) The filing with the Secretary of State of a certificate of
limited partnership, articles of organization, or articles of
incorporation containing a statement of conversion as set forth in
subdivision (a) or a certificate of conversion filed pursuant to
subdivision (b) shall have the effect of the filing of a cancellation
by the converting partnership of any statement of partnership
authority filed by it.

SEC. 6.  

Section 17701.09 of the Corporations Code is amended
to read:

17701.09.  

(a) Upon payment of the fee prescribed in Article
3 (commencing with Section 12180) of Chapter 3 of Part 2 of
Division 3 of Title 2 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.

SEC. 7.  

Section 17702.03 of the Corporations Code is amended
to read:

17702.03.  

(a) A record delivered to the Secretary of State for
filing pursuant to this title shall be signed as follows:

(1) Except as otherwise expressly provided in this title and in
this subdivision, a record signed on behalf of a limited liability
company shall be signed by a person authorized by the limited
liability company.

(2) A limited liability company’s initial articles of organization
shall be signed by at least one person acting as an organizer.

(3) A record filed on behalf of a dissolved limited liability
company that has no members shall be signed by the person
winding up the limited liability company’s activities or a person
appointed under Section 17707.04 to wind up those activities.

(4) A certificate of cancellation under Section 17707.02 shall
be signed by each organizer that signed the initial articles of
organization, but a personal representative of a deceased or
incompetent organizer may sign in the place of the decedent or
incompetent.

(5) A certificate of cancellation under Section 17707.08 shall
be signed in accordance with paragraph (1) of subdivision (b) of
Section 17707.08.

(6) A certificate of correction shall be executed in the same
manner in which the record being corrected was required to be
executed.

(b) Except as otherwise expressly provided in this title and in
subdivision (a), any record filed under this title may be signed by
an agent.

(c) A limited liability company may record in the office of the
county recorder of any county in this state, and county recorders,
on request, shall record a certified copy of the limited liability
company articles of organization and any exhibit or attachment,
or any amendment or correction thereto, that has been filed in the
office of the Secretary of State. A foreign limited liability company
may record in the office of the county recorder of any county in
the state a certified copy of the application for registration of the
foreign limited liability company, or any amendment thereto, that
has been filed in the office of the Secretary of State. The recording
shall create a conclusive presumption in favor of any bona fide
purchaser or encumbrancer for value of the limited liability
company real property located in the county in which the certified
copy has been recorded, of the statements contained therein.

(d) If the Secretary of State determines that an instrument
submitted for filing or otherwise submitted does not conform to
the law and returns it to the person submitting it, the instrument
may be resubmitted accompanied by a written opinion of a member
of the State Bar of California submitting the instrument or
representing the person submitting it, to the effect that the specific
provisions of the instrument objected to by the Secretary of State
do conform to law and stating the points and authorities upon
which the opinion is based. The Secretary of State shall rely, with
respect to any disputed point of law, other than the application of
Sections 17701.08, 17701.09, 17708.02, and 17708.03, upon that
written opinion in determining whether the instrument conforms
to law. The date of filing in that case shall be the date the
instrument is received on resubmission.

SEC. 8.  

Section 17707.08 of the Corporations Code is amended
to read:

17707.08.  

(a) (1) The managers shall sign and cause to be
filed in the office of, and on a form prescribed by, the Secretary
of State, a certificate of dissolution upon the dissolution of the
limited liability company pursuant to Article 7 (commencing with
Section 17707.01), unless the event causing the dissolution is that
specified in subdivision (c) of Section 17707.01, in which case the
persons conducting the winding up of the limited liability
company’s affairs pursuant to Section 17707.04 shall have the
obligation to sign and cause to be filed the certificate of dissolution.

(2) The certificate of dissolution shall set forth all of the
following:

(A) The name of the limited liability company and the Secretary
of State’s file number.

(B) Any other information the persons filing the certificate of
dissolution determine to include.

(C) The event listed in Section 17707.01 causing dissolution.

(3) If a dissolution pursuant to subdivision (b) of Section
17707.01 is made by the vote of all of the members and a statement
to that effect is added to the certificate of cancellation of articles
of organization pursuant to subdivision (b), the separate filing of
a certificate of dissolution pursuant to this subdivision is not
required.

(b) (1) The managers shall sign and cause to be filed in the
office of, and on a form prescribed by, the Secretary of State, a
certificate of cancellation of articles of organization upon the
completion of the winding up of the affairs of the limited liability
company pursuant to Section 17707.06, unless the event causing
the dissolution is that specified in subdivision (c) of Section
17707.01, in that case the persons conducting the winding up of
the limited liability company’s affairs pursuant to Section 17707.04
shall have the obligation to sign and cause to be filed the certificate
of cancellation of articles of organization.

(2) The certificate of cancellation of articles of organization
shall set forth all of the following:

(A) The name of the limited liability company and the Secretary
of State’s file number.

(B) That a final franchise tax return, as described by Section
23332 of the Revenue and Taxation Code, or a final annual tax
return, as described by Section 17947 of the Revenue and Taxation
Code, has been or will be filed with the Franchise Tax Board, as
required under Part 10.2 (commencing with Section 18401) of
Division 2 of the Revenue and Taxation Code.

(C) That upon the filing of the certificate of cancellation, the
limited liability company shall be canceled and its powers, rights,
and privileges shall cease.

(D) Any other information the persons filing the certificate of
cancellation of articles of organization determine to include.

(3) The Secretary of State shall notify the Franchise Tax Board
of the filing.

(c) Upon filing a certificate of cancellation pursuant to
subdivision (b), a limited liability company shall be canceled and
its powers, rights, and privileges shall cease.

SEC. 9.  

Section 17710.06 of the Corporations Code is amended
to read:

17710.06.  

(a) Upon conversion of a limited liability company,
one of the following applies:

(1) If the limited liability company is converting into a domestic
limited partnership, a statement of conversion shall be completed
on a certificate of limited partnership for the converted entity and
shall be filed with the Secretary of State.

(2) If the limited liability company is converting into a domestic
partnership, a statement of conversion shall be completed on the
statement of partnership authority for the converted entity. If no
statement of partnership authority is filed, a certificate of
conversion shall be filed separately with the Secretary of State.

(3) If the limited liability company is converting into a domestic
corporation, a statement of conversion shall be completed on the
articles of incorporation for the converted entity and shall be filed
with the Secretary of State.

(4) If the limited liability company is converting to a foreign
limited liability company or foreign other business entity, a
certificate of conversion shall be filed with the Secretary of State.

(b) Any certificate or statement of conversion shall be executed
and acknowledged by all members, unless a lesser number is
provided in the articles of organization or operating agreement,
and shall set forth all of the following:

(1) The name of the converting limited liability company and
the Secretary of State’s file number of the converting limited
liability company.

(2) A statement that the principal terms of the plan of conversion
were approved by a vote of the members, that equaled or exceeded
the vote required under Section 17710.03, specifying each class
entitled to vote and the percentage vote required of each class.

(c) A certificate of conversion shall set forth all of the following:

(1) The name, form, and jurisdiction of organization of the
converted entity.

(2) The name, street address, and mailing address of the
converted entity’s agent for service of process. If a corporation
qualified under Section 1505 is designated as the agent, no address
for it shall be set forth.

(3) The street address of the converted entity’s chief executive
office.

(d) The filing with the Secretary of State of a certificate of
conversion, a certificate of limited partnership, a statement of
partnership authority, or articles of incorporation containing a
statement of conversion as set forth in subdivision (a) shall have
the effect of the filing of a certificate of cancellation by the
converting limited liability company, and no converting limited
liability company that has made the filing is required to take any
action under Article 7 (commencing with Section 17707.01) as a
result of that conversion.

(e) For the purposes of this title, the certificate of conversion
shall be on a form prescribed by the Secretary of State.