BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 351|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                      CONSENT 


          Bill No:  SB 351
          Author:   Committee on Banking and Financial Institutions  
          AmendedAmended:5/4/15  
          Vote:     21  

           SENATE BANKING & F.I. COMMITTEE:  7-0, 4/15/15
           AYES:  Block, Vidak, Galgiani, Hall, Hueso, Lara, Morrell

           SENATE JUDICIARY COMMITTEE:  7-0, 4/21/15
           AYES:  Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,  
            Wieckowski

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           SUBJECT:   CorporationsCorporations.


           SOURCE:    California Dental Hygienists Association 
                     Corporations Committee of the Business Law Section of  
                      the California State Bar
                     Nonprofit Organizations Committee of the Business Law  
                      Section of the California State Bar 

          
          DIGEST:  This bill cleans up various provisions of the  
          Corporations Code to correct drafting errors in prior  
          legislation and clarify the intent of existing law.


          ANALYSIS:


          Existing law:

          1)Is inconsistent in the manner in which the Corporations Code  








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            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.  

          2)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.  

          3)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  
            practice, and a registered dental hygienist in extended  
            functions.  Refers to an association, partnership,  
            corporation, or group of three or more registered dental  
            hygienists in alternative practice as allowable, but lacks any  
            express authorization within the Corporations Code allowing  
            registered dental hygienists in alternative practice to  
            incorporate.

          This bill:

          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.  









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          3)Amends the Corporations Code to expressly authorize the  
            incorporation of a Registered Dental Hygienist in Alternative  
            Practice (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.

          Comments
          
          This bill includes three separate Corporations Code cleanup  
          proposals, all three of which are intended to be technical and  
          noncontroversial.  

          1)Add emergency powers and bylaw provisions to the California  
            Consumer Cooperative Corporation Law (Source:  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.









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

          2)Update and correct sections of the Corporations Code which  
            refer to chair, chairperson, chairman, chairwoman, and chair  
            of the board (Source:  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 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.

          3)Authorize RDHAPs to form corporations (Source:  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 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.  

          The liability associated with RDHAP practice is quite high,  








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            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.  

          Prior and Related Legislation
          
          AB 491 (Torres, Chapter 255, Statutes of 2013) 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.  

          SB 853 (Perata, Chapter 31, Statutes of 2008) 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 RDHAPs to incorporate.   


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified5/15/15)


          California Dental Hygienists Association (co-source)
           Corporations Committee of the Business Law Section of the  
            California State Bar (co-source)
           Nonprofit Organizations Committee of the Business Law Section  








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            of the California State Bar (co-source)


          OPPOSITION:   (Verified5/15/15)


          None received


          ARGUMENTS IN SUPPORT:     >


           


          Prepared by:Eileen Newhall / B. & F.I. / (916) 651-4102
          5/19/15 12:43:31


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