BILL NUMBER: AB 1548 CHAPTERED
BILL TEXT
CHAPTER 377
FILED WITH SECRETARY OF STATE AUGUST 26, 1997
APPROVED BY GOVERNOR AUGUST 26, 1997
PASSED THE ASSEMBLY AUGUST 7, 1997
PASSED THE SENATE AUGUST 4, 1997
AMENDED IN SENATE JUNE 16, 1997
AMENDED IN ASSEMBLY APRIL 10, 1997
INTRODUCED BY Committee on Consumer Protection, Governmental
Efficiency and Economic Development (Assembly Members Davis (Chair),
Campbell (Vice Chair), Alquist, Figueroa, Firestone, Machado,
Morrissey, Napolitano, Ortiz, and Strom-Martin)
MARCH 5, 1997
An act to amend Section 1812.206 of the Civil Code, relating to
business regulation.
LEGISLATIVE COUNSEL'S DIGEST
AB 1548, Committee on Consumer Protection, Governmental Efficiency
and Economic Development. Seller assisted marketing plans.
(1) Existing law governing seller assisted marketing plans
requires a seller to provide, prior to the execution of the plan
contract or the receipt of any consideration, a prospective purchaser
of this plan with prescribed information. A seller must give
information regarding the criminal background and civil liability of
the seller's officers, directors, trustees, and general or limited
partners and individuals who have management responsibilities in
connection with the seller's business activities. Existing law
provides that it is a crime for a person to willfully violate these
provisions.
This bill would require this disclosure to include information
regarding the criminal background and civil liability of the seller
and any other company managed by the above-described persons. By
changing the definition of a crime, this bill would impose a
state-mandated local program.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1812.206 of the Civil Code is amended to read:
1812.206. At least 48 hours prior to the execution of a seller
assisted marketing plan contract or agreement or at least 48 hours
prior to the receipt of any consideration, whichever occurs first,
the seller or his or her representative shall provide to the
prospective purchaser in writing a document entitled "SELLER ASSISTED
MARKETING PLAN INFORMATION SHEET." The seller may combine the
information required under this section with the information required
under Section 1812.205 and, if done, shall utilize the single title
"DISCLOSURES REQUIRED BY CALIFORNIA LAW," and the title page required
by Section 1812.205. If a combined document is used, it shall be
given at the time required by Section 1812.205, provided that this
time meets the 48-hour test of this section. The information sheet
required by this section shall contain the following:
(a) The name of and the office held by the seller's officers,
directors, trustees and general or limited partners, as the case may
be, and the names of those individuals who have management
responsibilities in connection with the seller's business activities.
(b) A statement whether the seller, any person identified in
subdivision (a), and any other company managed by a person identified
in subdivision (a):
(1) Has been convicted of a felony or misdemeanor or pleaded nolo
contendere to a felony or misdemeanor charge if the felony or
misdemeanor involved an alleged violation of this title, fraud,
embezzlement, fraudulent conversion or misappropriation of property.
(2) Has been held liable in a civil action by final judgment or
consented to the entry of a stipulated judgment if the civil action
alleged a violation of this title, fraud, embezzlement, fraudulent
conversion or misappropriation of property or the use of untrue or
misleading representations in an attempt to sell or dispose of real
or personal property or the use of unfair, unlawful or deceptive
business practices.
(3) Is subject to any currently effective injunction or
restrictive order relating to business activity as the result of an
action brought by a public agency or department, including, but not
limited to, action affecting any vocational license.
The statements required by paragraphs (1), (2) and (3) of this
subdivision shall set forth the court, the docket number of the
matter, the date of the conviction or of the judgment and, when
involved, the name of the governmental agency that brought the action
resulting in the conviction or judgment.
(4) Has at any time during the previous seven fiscal years filed
in bankruptcy, been adjudged a bankrupt, been reorganized due to
insolvency, or been a principal, director, officer, trustee, general
or limited partner, or had management responsibilities of any other
person, as defined in subdivision (b) of Section 1812.201, that has
so filed or was so adjudicated or reorganized, during or within one
year after the period that the individual held such position. If so,
the name and location of the person having so filed, or having been
so adjudged or reorganized, the date thereof, the court which
exercised jurisdiction, and the docket number of the matter shall be
set forth.
(c) The length of time the seller:
(1) Has sold seller assisted marketing plans.
(2) Has sold the specific seller assisted marketing plan being
offered to the purchaser.
(d) If the seller is required to secure a bond or establish a
trust account pursuant to the requirements of Section 1812.204, the
information sheet shall state either:
(1) "Seller has secured a bond issued by
______________________________________________________________,
(name and address of surety company)
a surety company admitted to do business in this state. Before
signing a contract to purchase this seller assisted marketing plan,
you should check with the surety company to determine the bond's
current status," or
(2) "Seller has deposited with the office of the Attorney General
information regarding its trust account. Before signing a contract
to purchase this seller assisted marketing plan, you should check
with the Attorney General to determine the current status of the
trust account."
(e) A copy of a recent, not more than 12 months old, financial
statement of the seller, together with a statement of any material
changes in the financial condition of the seller from the date
thereof. Such financial statement shall either be audited or be
under penalty of perjury signed by one of the seller's officers,
directors, trustees or general or limited partners. The declaration
under penalty of perjury shall indicate that to the best of the
signatory's knowledge and belief the information in the financial
statement is true and accurate; the date of signature and the
location where signed shall also be indicated. Provided, however,
that where a seller is a subsidiary of another corporation which is
permitted by generally accepted accounting standards to prepare
financial statements on a consolidated basis, the above information
may be submitted in the same manner for the parent if the
corresponding financial statement of the seller is also provided and
the parent absolutely and irrevocably has agreed to guarantee all
obligations of the seller.
(f) An unexecuted copy of the entire seller assisted marketing
plan contract.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
Notwithstanding Section 17580 of the Government Code, unless
otherwise specified, the provisions of this act shall become
operative on the same date that the act takes effect pursuant to the
California Constitution.