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
SB 351 (Committee on Banking and Financial Institutions) Page 2
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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
SB 351 (Committee on Banking and Financial Institutions) Page 3
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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.
SB 351 (Committee on Banking and Financial Institutions) Page 4
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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.
SB 351 (Committee on Banking and Financial Institutions) Page 5
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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
SB 351 (Committee on Banking and Financial Institutions) Page 6
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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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