BILL ANALYSIS Ó
SENATE COMMITTEE ON
BANKING AND FINANCIAL INSTITUTIONS
Senator Marty Block, Chair
2015 - 2016 Regular
Bill No: AB 1471 Hearing Date: June 17,
2015
-----------------------------------------------------------------
|Author: |Perea |
|-----------+-----------------------------------------------------|
|Version: |April 14, 2015 Amended |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Urgency: |No |Fiscal: |No |
-----------------------------------------------------------------
-----------------------------------------------------------------
|Consultant:|Eileen Newhall |
| | |
-----------------------------------------------------------------
Subject: Business entities: filings.
SUMMARY Makes technical changes to provisions of the Corporations
Code administered by the Secretary of State (SOS).
DESCRIPTION
1. Requires paperwork filed with the SOS related to the
conversion of one business entity into another business
entity to include the name, mailing address, and street
address of the converted entity's agent for service of
process.
2. Clarifies that the managers of an LLC are responsible for
signing and causing to be filed a certificate of
cancellation of articles of organization upon the completion
of the winding up of the affairs of a limited liability
company (LLC), except as specified.
3. Updates, corrects, clarifies, and makes other
nonsubstantive changes to the Corporations Code.
EXISTING LAW
1. Requires certain business entities, including, but not
limited to, a corporation, limited partnership (LP), foreign
corporation, foreign LP, limited liability partnership
(LLP), foreign LLP, flexible purpose corporation, LLC,
AB 1471 (Perea) Page 2
of ?
unincorporated association, and credit union, to make
various filings with the SOS.
2. Is inconsistent in what it requires to be included on the
paperwork that must be filed with the SOS when one business
entity converts to a different business entity.
3. Contains confusing and inconsistent language regarding
which persons are responsible for signing and causing to be
filed a certificate of cancellation of articles of
organization upon the completion of the winding up of the
affairs of an LLC.
COMMENTS
1. Purpose: AB 1471 is sponsored by the SOS to improve the
efficiency of existing business filing procedures and help
facilitate the implementation of an online document filing
system.
2. Background: AB 1471 continues a multi-year effort
spearheaded by the SOS to standardize business filing
procedures and update the provisions of the Corporations
Code administered by the SOS. The bill reduces statutory
inconsistency within the Corporations Code, updates the
codes to reflect changes made by recent legislation, and
standardizes the processing and handling of specified SOS
business customer transactions. According to this bill's
sponsor, "these small but meaningful changes will pave the
way for improving the overall SOS filing experience."
By removing statutory inconsistencies and standardizing filing
procedures, AB 1471 will also help smooth the way for the
SOS's California Business Connect (CBC) online filing
project, scheduled to be completed in 2016. Once
implemented, the CBC will modernize and streamline the SOS's
paper-based business filing processes, and allow customers
to file documents and request records online, 24 hours a
day, 7 days a week.
3. Discussion: According to the SOS, CBC is a six-year
project, scheduled to be online by June 30, 2016, that aims
to increase efficiency by eliminating paper-based manual
transactions and their associated risk of loss to vital
AB 1471 (Perea) Page 3
of ?
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. Once operational, the network will automate
paper-based processes, allow businesses to file and request
copies of records online, provide the public and government
agencies access to SOS records, and allow the SOS to process
fee payments within one business day.
4. Summary of Arguments in Support:
a. The SOS is sponsoring this bill for the reasons
stated above. "California Corporations Code contains
filing requirements for several different business entity
types, such as domestic stock corporations, nonprofit
corporations, partnerships and LLCs. Occasionally,
omnibus legislation will be enacted for each of the
individual types of entities. As a result, statute often
contains different or disjointed policies for the
different entities which can create confusion for SOS
business customers attempting to file documents in the
most expeditious manner. SB 1471 simplifies filing
processes for businesses in-state and nationwide by
creating consistency and efficiency in the existing
filing system."
b. The California Chamber of Commerce believes that the
bill will provide much needed clarity for certain filing
procedures and, in doing so, will help ensure that paper
or online filing forms will be consistently user friendly
for all types of businesses. "In this respect, we are
also supportive of AB 1471's attempt to reduce costs and
time for the implementation of the California Business
Connect project, which will automate the Secretary of
State's paper-based business filing system by 2016."
5. Summary of Arguments in Opposition: None received.
6. Prior and Related Legislation:
a. SB 1041 (Jackson), Chapter 834, Statutes of 2014:
Sponsored by the SOS. Made various technical,
nonsubstantive, and clarifying changes to the
AB 1471 (Perea) Page 4
of ?
Corporations Code in preparation for the CBC online
filing project.
b. SB 1532 (Pavley), Chapter 494, Statutes of 2012:
Sponsored by the SOS. Made legislative findings stating
that the manual business filing system used by the SOS is
very-time consuming and paper-intensive for both the SOS
and businesses, and that the law must be updated and
standardized to more efficiently facilitate the
development of CBC. Made several technical,
nonsubstantive, and clarifying changes to the
Corporations Code in preparation for the CBC project.
LIST OF REGISTERED SUPPORT/OPPOSITION
Support
Secretary of State (sponsor)
California Chamber of Commerce
Opposition
None received
-- END --