BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
                         BANKING AND FINANCIAL INSTITUTIONS
                             Senator Marty Block, Chair
                                2015 - 2016  Regular 

          Bill No:             AB 1471        Hearing Date:    June 17,  
          2015
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          |Author:    |Perea                                                |
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          |Version:   |April 14, 2015    Amended                            |
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          |Urgency:   |No                     |Fiscal:    |No               |
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          |Consultant:|Eileen Newhall                                       |
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                        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,  







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              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  








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              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  








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                 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


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