BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 351|
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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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Page 2
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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Page 6
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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