BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          Bill No:             SB 351         Hearing Date:    April 15,  
          2015
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          |Author:    |Committee on Banking and Financial Institutions      |
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          |Version:   |April 6, 2015                                        |
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          |Urgency:   |No                     |Fiscal:    |No               |
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          |Consultant:|Eileen Newhall                                       |
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                         Subject:  Corporations:  management


           SUMMARY       Enacts technical, clean-up language in various provisions  
          of the Corporations Code to correct drafting errors in prior  
          legislation and clarify the intent of existing law.

           DESCRIPTION
             
            1.  Amends the Corporations Code to provide that a corporation  
              shall have a "chairperson of the board," who may be given  
              the title of chair, chairperson, chairman, chairwoman, chair  
              of the board, chairperson of the board, chairman of the  
              board, or chairwoman of the board.  Makes conforming changes  
              throughout the Corporations Code to standardize the manner  
              in which a chairperson of the board is referenced.  

           2.  Adds provisions to the Consumer Cooperative Corporation Law  
              (Corporations Code Section 12200 et seq.) to allow a  
              consumer cooperative corporation to take specified actions  
              to conduct the corporation's ordinary business operations  
              and affairs, as specified, in anticipation of or during an  
              emergency.   Further authorizes the bylaws of a consumer  
              cooperative corporation to contain any provision, not in  
              conflict with the corporation's articles of incorporation,  
              to manage and conduct the ordinary business affairs of the  
              corporation, as specified.  The language being added to the  
              Consumer Cooperative Corporation Law is identical to the  
              language added to other areas of the Corporations Code last  







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              year (AB 491, Torres, Chapter 255, Statutes of 2013).

           3.  Amends the Corporations Code to expressly authorize the  
              incorporation of a Registered Dental Hygienist in  
              Alternative Practice Corporation (RDHAP), and authorizes an  
              RDHAP to include the following licensed persons as  
              shareholders, officers, directors, or professional employees  
              of the professional corporation:  dental assistants,  
              licensed dentists, registered dental hygienists, and  
              registered dental hygienists in extended function.

           EXISTING LAW
           
           4.  Is inconsistent in the manner in which the Corporations  
              Code refers to the titles of chair, chairperson, chairman,  
              chairwoman, chair of the board, chairperson of the board,  
              chairman of the board, and chairwoman of the board.  

           5.  Authorizes for-profit, public benefit, mutual benefit, and  
              religious corporations to take specified actions in good  
              faith to further their corporations' ordinary business  
              operations, in anticipation of or during an emergency.  

           6.  Within the Business and Professions Code, establishes the  
              Dental Hygiene Committee of California under the  
              jurisdiction of the Dental Board of California, and  
              establishes criteria for licensure of a registered dental  
              hygienist, registered dental hygienist in alternative  
              practive, or a registered dental hygienist in extended  
              functions (Business and Professinos Code Section 1900 et  
              seq.).  Refers to an association, partnership, corporation,  
              or group of three or more registered dental hygienists in  
              alternative practice as allowable (Business and Professions  
              Code Section 1962), but lacks any express authorization  
              within the Corporations Code allowing registered dental  
              hygienists in alternative practice to incorporate.

           COMMENTS
         
          1.  Purpose:   This is a technical, cleanup measure intended to  
              correct drafting errors in prior legislation and clarify the  
              intent of existing law.

           2.  Background and Discussion:   SB 351 includes three separate  








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              Corporations Code cleanup proposals, all three of which are  
              intended to be technical and noncontroversial.  The first  
              two proposals are sponsored by the Nonprofit Organizations  
              Committee and Corporations Committee of the Business Law  
              Section of the California State Bar.  The third proposal is  
              sponsored by the California Dental Hygienists' Association.   
              Each of the three proposals is discussed below.

                a.     Add emergency powers and bylaw provisions to the  
                 California Consumer Cooperative Corporation Law (Sponsor:  
                  Nonprofit Organizations Committee and Corporations  
                 Committee of the Business Law Section of the California  
                 State Bar)  

               In 2013, the Nonprofit Organizations Committee and the  
                 Corporations Committee of the Business Law Section of the  
                 California State Bar jointly sponsored AB 491 (Torres),  
                 Chapter 255, Statutes of 2013.  AB 491 amended the  
                 sections of the Corporations Code applicable to  
                 for-profit, public benefit, mutual benefit, and religious  
                 corporations to help ensure that these corporations did  
                 not incur liability for specified actions taken in good  
                 faith to further the corporations' ordinary business  
                 operations, in anticipation of or during an emergency.  

               Examples of actions that were authorized under AB 491  
                 include:  modification of lines of succession to  
                 accommodate the incapacity of any director, officer,  
                 employee, or agent resulting from an emergency;  
                 relocating the principal office, designating alternative  
                 principal offices or regional offices, or authorizing the  
                 officers to do so; giving notice to a director or  
                 directors in any practicable manner under the  
                 circumstances, when notice of a meeting of the board  
                 cannot be given to that director or directors in the  
                 manner ordinarily required; and deeming that one or more  
                 officers of the corporation that are present at a board  
                 meeting is a director, as necessary to achieve a quorum  
                 for that meeting.

               Due to a drafting oversight, AB 491 did not amend the  
                 Consumer Cooperative Law.  SB 351 would correct that  
                 drafting oversight by adding the language contained in AB  
                 491 to the Consumer Cooperative Law.  








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                b.     Update and correct sections of the Corporations Code  
                 which refer to Chair, Chairperson, Chairman, Chairwoman,  
                 and Chair of the Board (Sponsor:  Nonprofit Organizations  
                 Committee and Corporations Committee of the Business Law  
                 Section of the California State Bar)  

               At various places within the Corporations Code,  
                 corporations are authorized to have a chair of the board,  
                 who may be given the title chair of the board,  
                 chairperson of the board, chairman of the board, or  
                 chairwoman of the board.  However, existing law does not  
                 expressly authorize use of the titles "chair,"  
                 "chairperson," "chairman," or "chairwoman."  Because  
                 these titles are not expressly authorized in statute,  
                 corporate filings submitted to the California Secretary  
                 of State's office are returned to the filer if the term  
                 "chair" (rather than "chair of the board") or "chairman"  
                 (rather than chairman of the board) is used for a  
                 signatory for the filing.  Updating and clarifying the  
                 Corporations Code to allow chairs to be referenced in  
                 multiple ways will eliminate these sorts of returned  
                 filings.

                c.     Authorize Registered Dental Hygienists in  
                 Alternative Practice to Form Corporations (Sponsor:   
                 California Dental Hygienists' Association)  

               In 2008, the Legislature enacted SB 853 (Perata), Chapter  
                 31, Statutes of 2008, a measure that created the Dental  
                 Hygiene Committee of California and was intended to allow  
                 Registered Dental Hygienists in Alternative Practice  
                 (RDHAPs) to incorporate.  RDHAPs are registered dental  
                 hygienists who practice independently throughout  
                 California.  They were established to provide care to  
                 patients who lack access to a dental office, either  
                 because there is not an office in their area or because  
                 they have health conditions which limit their ability to  
                 travel to a dental office or cope with dental treatment  
                 in a dental office setting.  RDHAPs patients are  
                 typically the homebound elderly, developmentally  
                 disabled, and those in skilled nursing facilities.   
                 RDHAPs also establish mobile dental hygiene clinics as a  
                 way to reach populations in underserved areas.  








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               The liability associated with RDHAP practice is quite high,  
                 given the physical and emotional fragility of many of  
                 their patients.  RDHAPs often want to incorporate to help  
                 avoid incurring personal liability for their professional  
                 actions. As noted above, SB 853 was intended to allow  
                 RDHAPs to incorporate.  However, because the authority  
                 for such incorporation was placed only in the Business  
                 and Professions Code (Section 1962) and not in the  
                 Corporations Code, the Dental Hygiene Committee of  
                 California cannot allow RDHAPs to incorporate.  The  
                 Dental Hygiene Committee has reviewed the proposed  
                 language and is comfortable with it; if this bill is  
                 enacted, RDHAPs will be allowed to incorporate, as was  
                 originally envisioned under the 2008 legislation.  

           3.  Summary of Arguments in Support:   The Nonprofit  
              Organizations Committee of the Business Law Section of the  
              California State Bar and the California Dental Hygienists  
              Association are sponsoring this bill for the reasons stated  
              above.

           4.  Summary of Arguments in Opposition:    None received.

           5.  Prior and Related Legislation:   

               a.     AB 491 (Torres), Chapter 255, Statutes of 2013:   
                 Sponsored by the Corporations Committee of the Business  
                 Law Section of the California State Bar.  Amended the  
                 sections of the Corporations Code applicable to  
                 for-profit, public benefit, mutual benefit, and religious  
                 corporations to help ensure that these corporations did  
                 not incur liability for specified actions taken in good  
                 faith to further the corporations' ordinary business  
                 operations, in anticipation of or during an emergency.  

               b.     SB 853 (Perata), Chapter 31, Statutes of 2008:   
                 Sponsored by the California Dental Hygienists  
                 Association.  Abolished the Committee on Dental  
                 Auxiliaries within the Dental Board of California,  
                 transferred the regulation of dental hygienists to a  
                 newly created Dental Hygiene Committee, transferred the  
                 regulation of Registered Dental Assistants to the Dental  
                 Board of California, and was intended to allow Registered  








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                 Dental Hygienists in Alternative Practice to incorporate.  
                  

           LIST OF REGISTERED SUPPORT/OPPOSITION
            
          Support
           
          Nonprofit Organizations Committee of the Business Law Section of  
          the California State Bar (co-sponsor)
          Corporations Committee of the Business Law Section of the  
          California State Bar (co-sponsor)
          California Dental Hygienists Association (co-sponsor)
           
          Opposition
               
          None received


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