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 ----------------------------------------------------------------- |Author: |Committee on Banking and Financial Institutions | |-----------+-----------------------------------------------------| |Version: |April 6, 2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Eileen Newhall | | | | ----------------------------------------------------------------- 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 SB 351 (Committee on Banking and Financial Institutions) Page 2 of ? 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 SB 351 (Committee on Banking and Financial Institutions) Page 3 of ? 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. SB 351 (Committee on Banking and Financial Institutions) Page 4 of ? 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. SB 351 (Committee on Banking and Financial Institutions) Page 5 of ? 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 SB 351 (Committee on Banking and Financial Institutions) Page 6 of ? 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 -- END --