BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1471| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 1471 Author: Perea (D) Amended: 6/25/15 in Senate Vote: 21 SENATE BANKING & F.I. COMMITTEE: 7-0, 6/17/15 AYES: Block, Vidak, Galgiani, Hall, Hueso, Lara, Morrell SENATE JUDICIARY COMMITTEE: 7-0, 6/23/15 AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski ASSEMBLY FLOOR: 78-0, 5/4/15 (Consent) - See last page for vote SUBJECT: Business entities: filings SOURCE: Secretary of State DIGEST: This bill makes technical changes to provisions of the Corporations Code administered by the Secretary of State (SOS). ANALYSIS: 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, limited liability company (LLC), unincorporated association, and credit union, to make various filings with the SOS. AB 1471 Page 2 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. This bill: 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 an LLC, except as specified. 3)Updates, corrects, clarifies, and makes other nonsubstantive changes to the Corporations Code. 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. This 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 the SOS, "these small but meaningful changes will pave the way for improving the overall SOS filing experience." AB 1471 Page 3 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, 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, seven days a week. Comments 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 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified6/25/15) Secretary of State (source) California Chamber of Commerce OPPOSITION: (Verified6/25/15) None received ARGUMENTS IN SUPPORT: The SOS, source of this bill, states "California Corporations Code contains filing requirements for several different business entity types, such as domestic stock AB 1471 Page 4 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. AB 1471 simplifies filing processes for businesses in-state and nationwide by creating consistency and efficiency in the existing filing system." The California Chamber of Commerce believes that this 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." ASSEMBLY FLOOR: 78-0, 5/4/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Campos, Dahle Prepared by:Eileen Newhall / B. & F.I. / (916) 651-4102 6/26/15 13:29:07 **** END **** AB 1471 Page 5