BILL NUMBER: SB 633 CHAPTERED
BILL TEXT
CHAPTER 598
FILED WITH SECRETARY OF STATE OCTOBER 3, 1997
APPROVED BY GOVERNOR OCTOBER 1, 1997
PASSED THE SENATE SEPTEMBER 5, 1997
PASSED THE ASSEMBLY SEPTEMBER 3, 1997
AMENDED IN ASSEMBLY JULY 16, 1997
AMENDED IN ASSEMBLY JUNE 30, 1997
AMENDED IN SENATE APRIL 3, 1997
INTRODUCED BY Senator Ayala
FEBRUARY 25, 1997
An act to repeal Part 4 (commencing with Section 330.24) of
Division 1 of the Civil Code, to amend Sections 7312 and 25100 of,
and to add Part 7 (commencing with Section 14300), Part 8 (commencing
with Section 14350), Part 9 (commencing with Section 14400), Part 10
(commencing with Section 14450), Part 11 (commencing with Section
14500), and Part 12 (commencing with Section 14550) to Division 3 of
Title 1 of, the Corporations Code, to amend Section 25988 of the
Health and Safety Code, and to amend Sections 597d, 597z, 11105,
11165.16, 12031, and 12583 of the Penal Code, relating to
corporations.
LEGISLATIVE COUNSEL'S DIGEST
SB 633, Ayala. Mutual water companies.
(1) Existing law authorizes any corporation organized for or
engaged in the business of selling, distributing, supplying, or
delivering water for irrigation purposes, or for domestic use, to
provide in its articles or bylaws that water shall be sold,
distributed, supplied, or delivered only to owners of its shares and
that these shares shall be appurtenant to certain lands described in
the certificate issued therefor.
This bill would require a corporation organized for or engaged in
the business of selling, distributing, supplying, or delivering water
for domestic use to have these provisions in its articles or bylaws.
This bill would require a mutual water company formed on and after
January 1, 1998, in connection with the offering for sale or lease,
or with the sale or lease, of lots within a subdivision, as defined,
and organized to sell, distribute, supply, or deliver water for
domestic use to owners of the lots to meet the specified requirements
of the bill regarding, among other things, supply and distribution
system design standards and water service standards. The bill would
provide that such a mutual water company formed before January 1,
1998, may elect to meet all of these requirements.
This bill would require any person who intends to offer for sale
or lease lots within a subdivision in this state and to provide water
for domestic use to purchasers of the lots through the formation of
this mutual water company to attach to an application for a public
report a document with prescribed information. This bill would
require the Real Estate Commissioner to prescribe the form and
content of this document.
(2) Existing law exempts certain securities from requirements in
existing law regarding the issuance of securities. These exempt
securities include securities consisting of any interest in all or
portions of a parcel or parcels of real property that are subdivided
or in a real estate development, except as specified.
This bill would also exempt any security of a mutual water company
issued in connection with subdivided lands pursuant to the
provisions of this bill.
(3) Existing provisions of the Civil Code pertain to various types
of corporations, including bridge, ferry, wharf, chute, and pier
corporations, water and canal corporations, cable television
corporations, societies for the prevention of cruelty to animals, and
agricultural marketing associations.
This bill would delete these provisions and reenact them in the
Corporations Code and would make related changes.
(4) The bill would also incorporate additional changes to Section
25100 of the Corporations Code proposed by AB 721, contingent upon
prior enactment of that bill.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 4 (commencing with Section 330.24) of Division 1
of the Civil Code is repealed.
SEC. 2. Section 7312 of the Corporations Code is amended to read:
7312. No person may hold more than one membership, and no
fractional memberships may be held, provided, however, that:
(a) Two or more persons may have an indivisible interest in a
single membership when authorized by, and in a manner or under the
circumstances prescribed by, the articles or bylaws subject to
Section 7612.
(b) If the articles or bylaws provide for classes of membership
and if the articles or bylaws permit a person to be a member of more
than one class, a person may hold a membership in one or more
classes.
(c) Any branch, division, or office of any person, which is not
formed primarily to be a member, may hold a separate membership.
(d) In the case of membership in an owners association, (as
defined in Section 11003.1 of the Business and Professions Code, and
created in connection with any of the forms of development referred
to in Section 11004.5 of the Business and Professions Code) the
articles or bylaws may permit a person who owns an interest, or who
has a right of exclusive occupancy, in more than one lot, parcel,
area, apartment, or unit to hold a separate membership in the owners'
association for each lot, parcel, area, apartment, or unit.
(e) In the case of membership in a mutual water company, as
defined in Section 14300 of the Corporations Code, the articles or
bylaws may permit a person entitled to membership by reason of the
ownership, lease, or right of occupancy of more than one lot, parcel,
or other service unit to hold a separate membership in the mutual
water company for each such lot, parcel, or other service unit.
(f) In the case of membership in a mobilehome park acquisition
corporation, as described in Section 11010.8 of the Business and
Professions Code, a bona fide secured party who has, pursuant to a
security interest in a membership, taken title to the membership by
way of foreclosure, repossession or voluntary repossession, and who
is actively attempting to resell the membership to a prospective
homeowner or resident of the mobilehome park, may own more than one
membership.
SEC. 3. Part 7 (commencing with Section 14300) is added to
Division 3 of Title 1 of the Corporations Code, to read:
PART 7. GENERAL PROVISIONS APPLICABLE TO CERTAIN CORPORATIONS
CHAPTER 1. WATER COMPANIES
14300. Any corporation organized for or engaged in the business
of selling, distributing, supplying or delivering water for
irrigation purposes may provide, and any corporation organized for or
engaged in the business of selling, distributing, supplying, or
delivering water for domestic use shall provide, in its articles or
bylaws that water shall be sold, distributed, supplied or delivered
only to owners of its shares and that the shares shall be appurtenant
to certain lands when the same are described in the certificate
issued therefor; and when the certificate is so issued and a
certified copy of the articles or bylaws recorded in the office of
the county recorder in the county where the lands are situated the
shares of stock shall become appurtenant to the lands and shall only
be transferred therewith, except after sale or forfeiture for
delinquent assessments thereon as provided in Section 14303.
Notwithstanding this provision in its articles or bylaws, any such
corporation may sell water to the state, or any department or agency
thereof, or to any school district, or to any public agency, or, to
any other mutual water company or, during any emergency resulting
from fire or other disaster involving danger to public health or
safety, to any person at the same rates as to holders of shares of
the corporations; and provided further, that any corporation may
enter into a contract with a county fire protection district to
furnish water to fire hydrants and for fire suppression or fire
prevention purposes at a flat rate per hydrant or other connection.
In the event lands to which any stock is appurtenant are owned or
purchased by the state, or any department or agency thereof, or any
school district, or public agency, the stock shall be canceled by the
secretary, but shall be reissued to any person later acquiring title
to the land from the state department, agency, or school district,
or public agency.
14301. A corporation, including a nonprofit corporation organized
for or engaged in the business of developing, distributing,
supplying, or delivering water for irrigation or domestic use, or
both, may provide in its articles, or may amend its articles to
provide, that its only purpose shall be to develop, distribute,
supply, or deliver water for irrigation or domestic use, or both, to
its members or shareholders, at actual cost plus necessary expenses.
The amendment of the articles may be accomplished by:
(a) The passage by a three-fourths vote of the members of the
board of directors of the corporation of a resolution adopting as the
purpose of the corporation the purpose set forth in this section.
(b) The signing, verification, and filing of a certificate setting
forth the resolution and the manner of its adoption.
The corporation shall not distribute any gains, profits, or
dividends to its members or shareholders except upon the dissolution
of the corporation.
14302. Whenever the owner of real property to which water stock
by the terms of the certificate thereof is appurtenant at the time of
conveyance, by properly executed conveyance, transfers to another
the real property with the appurtenances belonging to the property,
or whenever title to the property passes by execution sale, or by
foreclosure or probate proceedings, the secretary of the water
company that issued the stock shall, upon exhibition to him or her of
a deed of the land duly recorded, or the necessary court order duly
recorded, issue to the grantee named in the conveyance a new
certificate of stock for the number of shares appurtenant to the land
as shown by the books and records of the company. The secretary of
the water company shall enter the name of the grantee upon the books
of the company as the owner of the shares of stock and shall cancel
on the books the number of former shares of stock so appurtenant to
the land in the name of the grantor or of any previous owner of the
land, or of any other person.
14303. A corporation organized for or engaged in the business of
selling, distributing, supplying, or delivering water for irrigation
purposes or domestic use, and not as a public utility, may levy
assessments upon its shares, whether or not fully paid, unless
otherwise provided in its articles or bylaws. If any shares of the
corporation that have been made appurtenant to any land as provided
in this chapter, become delinquent in the payment of assessments, the
right to receive water or dividends thereon may be denied, and they
may be sold and transferred without those lands as if not appurtenant
thereto, and the purchaser shall acquire the right to receive water
as provided in the articles or bylaws of the corporation, or they may
be forfeited to the corporation.
CHAPTER 2. MUTUAL WATER COMPANIES FORMED IN CONNECTION WITH
SUBDIVIDED LANDS
14310. (a) It is the intent of the Legislature to ensure both of
the following:
(1) That when a mutual water company is formed or is about to be
formed in connection with a subdivision, as defined in Sections 11000
and 11004.5 of the Business and Professions Code, an adequate
potable water supply and distribution system exists for domestic use
and fire protection.
(2) That adequate disclosure and protection to the security
holders exist with respect to rights and duties arising from their
security holdings in a mutual water company.
(b) For purposes of this chapter, the use of the term "subdivision"
has the same definition as "subdivision" as defined in Sections
11000 and 11004.5 of the Business and Professions Code.
14311. A mutual water company formed on or after January 1, 1998,
in connection with the offering for sale or lease, or with the sale
or lease, of lots within a subdivision and organized to sell,
distribute, supply, or deliver water for domestic use to owners of
lots in the subdivision shall meet all the requirements of this
chapter. A mutual water company described in this section and formed
before January 1, 1998, may elect to meet all the requirements of
this chapter.
14312. (a) Any person who intends to offer for sale or lease lots
within a subdivision within this state and to provide water for
domestic use to purchasers of the lots within a subdivision through
the formation of a mutual water corporation described in Section
14311, shall include as part of the application for a public report,
as described in Section 11010 of the Business and Professions Code, a
separate document containing all the following information,
representations, and assurances:
(1) That the provisions of this chapter have been complied with.
(2) That the area in which the mutual water company proposes to
deliver water encompasses and includes the entire subdivision, and
when applicable, will include parcels to be annexed to the
subdivision.
(3) That the mutual water company contacted the Public Utilities
Commission and the county local agency formation commission to
determine if the proposed area described in paragraph (2) will
overlap an existing water service area or if an existing water
service area could more appropriately serve the subdivision.
(4) That the mutual water company has a source of, and title to, a
water supply, distribution, and fire protection system sufficient to
satisfy expected demands for water from the subdivision.
(5) That copies of the contracts and other documents relating to
the acquisition by the mutual water company of the water supply,
distribution, and fire protection system have been delivered to, and
are on file with, the mutual water company and that these contracts
and documents evidence the mutual water company's title to the water
supply, distribution, and fire protection system.
(6) That the subdivider or applicant has executed and entered into
a written contract with the mutual water company wherein the
subdivider or applicant has agreed to pay monthly a proportional part
of the repair and replacement fund according to a ratio of the
number of lots owned or controlled by the subdivider or applicant to
the total number of lots in the subdivision.
(7) That an engineer's report has been prepared in accordance with
this chapter and Sections 260.504.2 to 260.504.2.4, inclusive, of
Title 10 of the California Code of Regulations and is on file with
the mutual water company.
(8) That the mutual water company will distribute potable water
for domestic use and has obtained, and has on file, a copy of the
certificate of the Director of Public Health, as required by Sections
116300 to 116385, inclusive, of the Health and Safety Code.
(9) That the securities of the mutual benefit water corporation
will be sold or issued only to purchasers of lots in the subdivision,
or to successors in interest of purchasers of lots in the
subdivision, and not sold or issued to the subdivider, applicant, or
to the successor in interest of the subdivider or applicant, and that
the securities shall be sold or issued only after a public report
for the subdivision has been issued by the Real Estate Commissioner.
(10) That the securities to be issued by the mutual water company
are appurtenant to the land pursuant to Section 14300.
(11) That the water supply and distribution system will serve each
lot in the subdivision and be completed prior to the issuance of the
public report by the Real Estate Commissioner.
(12) That there is a statement, signed by either the engineer who
prepared the engineer's report referred to in paragraph (7) or a
person employed or acting on behalf of a public agency or other
independent qualified person, that the water supply and distribution
system has been examined and tested and that the water supply and
distribution system operates in accordance with the design standards
of the water supply and distribution system required by this chapter,
and that a copy of this statement is on file with the mutual water
company.
(13) That the articles of incorporation or bylaws of the mutual
water company contain all of the following:
(A) A statement to the effect that the mutual water company shall
provide water to all members or shareholders. If there will be an
owners' association of the subdivision, an additional statement that
water shall also be provided to the common areas.
(B) A provision directing the board of directors to establish a
rate structure that will result in the accumulation and maintenance
of a fund for the repair, administration, maintenance, and
replacement of the water supply, distribution, and fire protection
system, that the rate charged shall bear a reasonable relationship to
the cost of furnishing water and maintaining the system, and that
unimproved lots included within the area to be served shall bear a
proportionate share of the cost of repair and replacement of the
water supply, distribution, and fire protection system, as well as a
proportionate share of the cost of maintaining the fund.
(C) A statement evidencing a reasonable relationship between each
unit of the securities to be issued and each unit of the area to be
served such as one share of common stock issued for each subdivision
lot purchased.
(D) A prohibition on the issuance of fractional shares or
securities.
(E) A statement, meeting the requirements of Section 14300, that
the securities are appurtenant to the land within the area to be
served.
(F) Provision for the transfer of the securities, voting rights of
the security holders, inspection of books and records by security
holders, necessary or contemplated expansion of the facilities of the
mutual water company, and further subdivision, where applicable, of
the area to be served.
(G) The limitation on the salaries paid to the persons operating,
or employed by, the mutual water company, including officers and
directors.
(H) A provision for annual meetings of the security holders
accompanied by a provision for adequate notice.
(I) A provision for the annual distribution to each security
holder of fiscal yearend financial statements within 105 days of the
close of the fiscal year.
(J) In the case of a mutual water company that purchases water for
distribution from a public utility, municipal water company, or
water district, a provision for charging all security holders a pro
rata amount of the cost of water supplied to an entity providing fire
protection service.
(K) A provision that a share certificate shall be issued to each
lot purchased.
(L) In the case of a mutual water company serving a residential
subdivision, the following statements: (i) the mutual water company
shall be a separate corporation formed and organized for the purpose
described in Section 14311; and (ii) if a shareholder becomes
delinquent in paying assessments, the right to receive water or
dividends may be denied or forfeited but those rights shall not be
sold or transferred without the land.
(14) That an offering circular has been prepared and will be used
in any offer and sale of the securities of the mutual water company.
(15) That the writings and documents evidencing compliance with
all of the above provisions of this subdivision are on file as part
of the permanent record of the mutual water company.
(b) The contracts and documents described in paragraph (5) of
subdivision (a) shall include all of the following:
(1) Any bill of sale transferring all personal property used and
usable in the operation of the mutual water company.
(2) A copy of any recorded deed to the wells and water tanks to be
used by the mutual water company in the supply, distribution, and
fire protection system.
(3) Copies of any recorded deeds granting easements for
construction, repair, maintenance, and improvements of the water
supply, distribution, and fire protection system.
(c) The written contract described in paragraph (6) of subdivision
(a) shall provide that, in consideration of the transfer by the
subdivider or applicant to the mutual water company of the water
supply, distribution, and fire protection system, the mutual water
company agrees to do all of the following:
(1) Sell and issue securities to the purchasers of the remaining
lots in the subdivision on the same terms, except for price, if the
difference is justified, for the initial purchasers.
(2) Cooperate with the subdivider or applicant in the operation,
maintenance, and improvement of the present and contemplated water
supply, distribution, and fire protection system.
(3) Contract with the subdivider, applicant, or a successor in
interest, if a reasonable request is made to do so, for the
management of the mutual water company for as long as lots in the
subdivision remain unsold. The terms of the contract shall be
subject to approval by the board of directors of the mutual water
company, including terms related to the compensation to the
subdivider, applicant, or successor in interest, if any.
(d) The offering circular described in paragraph (14) of
subdivision (a) shall be delivered to each prospective purchaser of
the securities and shall include, among other things, all of the
following:
(1) A discussion of the water supply, distribution, and fire
protection system.
(2) A summary of the opinion of the engineer along with the
engineer's consent, as required by Sections 260.504.2 to 260.504.2.4,
inclusive, of Title 10 of the California Code of Regulations.
(3) The area in which the mutual water company intends to provide
water service.
(4) A discussion of the rights and duties of the security holders
of the mutual water company as set forth in its articles of
incorporation and bylaws, including the consequence of failure to pay
for water or assessments.
(5) The fact that the articles of incorporation or bylaws provide
that the shares or securities of the mutual water company may not be
sold separately from the right to water evidenced by the security of
the mutual water company and prohibit issuance of fractional shares
or securities of the mutual water company.
(6) A discussion of the certificate issued by the Director of
Public Health certifying that the water is fit for domestic use.
(7) The limitation imposed on salaries to be paid to personnel
operating, or employed by, the mutual water company, including
officers and directors.
(8) A discussion of the transferability of the securities, the
voting rights of the security holders, access to books and records,
necessary or contemplated expansion of the facilities of the mutual
water company, and further subdivision of the area to be served, if
applicable.
(9) A discussion of the subdivider's duties with respect to
maintenance and repair or replacement of the water supply,
distribution, or fire protection system; and a discussion of the
establishment and maintenance of the operating, repair, and
replacement fund.
(e) The following exhibits shall also be attached to the offering
circular:
(1) A copy of the articles of incorporation and bylaws of the
mutual water company, including the articles or bylaws recorded under
Section 14300.
(2) A copy of financial statements of the mutual water company.
If the mutual water company has not yet commenced operations, a
detailed operating budget for the first six months of operations
should be included as an exhibit to the offering circular. The
operating budget must include estimated monthly fees to be charged to
the water users.
(3) A specimen certificate evidencing the security to be issued
and meeting the requirements of Section 14300.
(f) The Real Estate Commissioner shall prescribe the form and
content of the document required by this section.
14313. The engineer's report prepared pursuant to the document
under Section 14312 shall contain all relevant information pertaining
to the proposed water supply, distribution, and fire protection
system, including, but not limited to, the following:
(a) A system map of the area to be served showing all of the
following:
(1) The total acreage.
(2) The number and location of lots into which the area is or can
be subdivided and the location of the connection for water service.
(3) The location of all sources of supply, principal pumping
stations, diversion works, water treatment and filter plants, and
storage facilities.
(4) The size, character, and location of all mains and ditches.
(5) The location of all valves and gates, gauges, interconnections
with other systems, and fire hydrants.
(6) The location, size, and kind of each service pipe.
(7) The layout of all principal pumping stations and water
treatment and filter plants to show size, location, and character of
all major equipment, pipelines, connections, valves, and other
equipment used in connection therewith.
(8) The date of construction and condition of all principal items
of plant and extensions of all mains.
(b) A description of the sources of supply, including, in the case
of wells, information on the depth, diameter, and casing of the
well, and a statement indicating that the proposed water supply and
distribution system complies with this section, supported by reports
showing the sustained capacity of source of supply, or, if all or
some water is to be obtained from another source, copies of contracts
for obtaining such water, together with estimates of the present and
ultimate water consumption in the area to be served.
(c) A statement indicating in detail the cost of the water supply,
distribution, and fire protection system, and indicating the cost of
any required repairs or replacement.
(d) An opinion by the engineer to the effect that the water
supply, distribution, and fire protection system will adequately,
dependably, and safely meet the total requirements for all water
consumers under maximum consumption and will meet the requirements of
Section 14314. The opinion shall have attached to it the
calculations and data used in estimating the water requirements.
(e) A statement by the engineer of the estimated cost of
maintenance of the system, the estimated useful life of the
components of the system, the estimated cost of replacement of the
system, and the monthly or annual amount which should be charged to
establish a reasonable reserve for maintenance and replacement of the
system based on these estimates.
14314. The water supply and distribution system of a mutual water
company described in Section 14311 that proposes to distribute water
for domestic use pursuant to this chapter shall comply with all of
the following design standards:
(a) The system shall be adequate to maintain normal operating
pressure of not less than 25 pounds per square inch, nor more than
125 pounds per square inch, at the service connection; provided,
however, that during periods of hourly maximum demand, or at the time
of peak seasonal loads, the pressure may be reduced to not less than
20 pounds per square inch, and during periods of hourly minimum
demand the pressure may increase to not more than 150 pounds per
square inch. Variations in pressure under normal operation shall not
exceed 50 percent of the average operating pressure. The average
operating pressure shall be determined by computing the arithmetical
average of at least 24 consecutive hourly pressure readings.
(b) The quantity of water delivered to the distribution system
from all source facilities shall be sufficient to supply adequately,
dependably, and safely the total requirements of all water consumers
under maximum consumption, and shall be sufficient to maintain the
pressure specified by subdivision (a).
(c) The distribution system shall provide at least one connection
per service and, to the extent feasible, shall be designed in a
property segmented grid so as to do both of the following:
(1) Minimize the extent of interruption in water service when
repairs are necessary.
(2) Avoid dead ends in its water mains.
14315. (a) The mutual water company described in Section 14311
shall provide at least a minimum level of water service to its
customers for fire protection purposes as an inherent part of the
water system design in accordance with the standards set forth in
this section. The standards set forth in this section are the
minimum levels of water service that the mutual water company shall
provide and shall not preclude the mutual water company from
designing a fire protection system that meets higher standards, nor
preclude any governmental agency from setting higher standards in any
area subject to its jurisdiction. A mutual water company may
request a fire protection agency to approve a fire protection system
that does not meet the standards set forth in this chapter upon a
showing by the mutual water company that the proposed system is
adequate for fire protection purposes.
(b) In the initial construction, extension, or modification of a
water system, any one of which is required to serve (1) a new user or
(2) a change in use, the facilities constructed, extended, or
modified shall be designed to be capable of providing, for a
sustained period of at least two hours, in addition to the
requirements of the average daily demand within the area to be
served, the minimum flow requirements set forth below opposite the
classification of land use to be served:
Land Use Minimum Flow
1. Rural, residential with a lot density of two or
fewer units per acre primarily for
recreational and retirement use ................ 250 gpm
2. Lot density of less than one single-family
residential unit per acre ...................... 500 gpm
3. Lot density of one or two single-family
residential units per acre ..................... 750 gpm
4. Lot density of three or more single-family
residential units per acre ..................... 1,000 gpm
5. Duplex residential units, neighborhood
business of one story .......................... 1,500 gpm
6. Multiple residential, one and two stories;
light commercial or light industrial ........... 2,000 gpm
7. Multiple residential, three stories or higher;
heavy commercial or heavy industrial ........... 2,500 gpm
14316. The water supply and distribution system of a mutual water
company described in Section 14311 that proposes to distribute water
for domestic use shall be constructed to conform with currently
accepted engineering practices, and shall comply with the following
construction standards where possible:
(a) Water mains to be installed below the frost level or otherwise
protected to prevent freezing and shall not have less than 30 inches
of cover over the top of the pipe in public streets or alleys except
where such depth is rendered impossible by underground obstructions
or rocky or hardpan conditions.
(b) The size, design, material, and installation of service pipes
shall conform to the reasonable requirements of the mutual water
company; provided, however, that the minimum size of the pipe shall
be 3/4 inch or greater nominal size. Except where services are not
intended for use during freezing weather and arrangements are made to
drain service pipes prior to freezing weather, and except at
terminations in connection with the meter or water consumer's piping,
all service pipes shall be laid at a depth sufficient to prevent
freezing.
14317. The fire protection system of a mutual water company shall
be constructed to conform with currently accepted engineering
practices, and shall comply with the following construction
standards:
(a) The flows set forth in Section 14315 shall be calculated on
the basis of a residual pressure of 20 p.s.i.g. in the distribution
system under flowing conditions.
(b) Fire hydrants shall be attached to the distribution systems at
the locations designated by the entity responsible for their use for
firefighting purposes. Any new mains to which a hydrant may be
attached shall not be less than six inches in diameter.
(c) Each separately operated water system shall not have less than
two independent sources of supply.
14318. The mutual water company shall be financially responsible
for the maintenance, repair, or replacement of fire hydrants. A
mutual water company shall perform and record annual flow tests
pursuant to Section 14317 or, in lieu of the annual flow test under
Section 14317, any test to determine available flow performed by a
fire protection agency. The recorded test results shall become part
of the mutual water company's books and records.
SEC. 4. Part 8 (commencing with Section 14350) is added to
Division 3 of Title 1 of the Corporations Code, to read:
PART 8. BRIDGE, FERRY, WHARF, CHUTE, AND PIER CORPORATIONS
14350. A corporation may not construct, or take tolls on, a
bridge, ferry, wharf, chute, or pier until authority is granted
therefor by the board of supervisors, or other governing body, as
appropriate.
14351. Every corporation that has heretofore or may hereafter be
incorporated may be dissolved under either of the following
conditions:
(a) If within one year from filing its articles of incorporation,
it has not obtained authority from the board of supervisors, or other
governing body, and if, within one year thereafter, it has not
commenced the construction of the bridge, wharf, chute, or pier, and
if, within two years after obtaining authority, there has not been
actually expended thereon a sum equal to at least 10 percent of the
issued capital stock of the corporation obtaining authority.
(b) If within seven years from the time that authority to
construct the bridge, wharf, chute, or pier was granted by the board
of supervisors, or within that further time as the board may lawfully
grant, the bridge, wharf, chute, or pier is not completed. However,
the board of supervisors may from time to time by order extend the
time of completion beyond seven years, if the actual and physical
work of constructing the bridge, wharf, chute, or pier has been
diligently prosecuted from the time of commencement thereof up to the
time that application for the extension or extensions beyond seven
years is presented to the board of supervisors.
(c) If, when the bridge, wharf, chute, or pier of the corporation
is destroyed, it is not reconstructed and ready for use within three
years thereafter.
(d) If the ferry of a corporation is not in running order within
one year after authority is obtained to establish it, or if at any
time thereafter it ceases for a like term consecutively to perform
the duties imposed by law.
14352. The president and secretary of every bridge, ferry, wharf,
chute, or pier corporation shall annually, under oath, report to the
board of supervisors, or other governing body having authority in
that behalf, of the county in which the articles of incorporation are
filed all of the following:
(a) The cost of constructing and providing all necessary
appendages and appurtenances for its bridge, ferry, wharf, chute, or
pier.
(b) The amount of all moneys expended thereon, since its
construction, for repairs and incidental expenses.
(c) The amount of its capital stock, how much paid in, and how
much actually expended thereof.
(d) The amount received during the year for tolls, and from all
other sources, stating each separately.
(e) The amount of dividends made, and the indebtedness of the
corporation, specifying for what it was incurred.
(f) Other facts and particulars respecting the business of the
corporation, as the board of supervisors or other governing body
having authority in that behalf may require.
The president and secretary shall cause this report to be
published for four weeks in a daily newspaper published nearest the
bridge, ferry, wharf, pier, or chute, if required by order of the
board of supervisors or other governing body having authority in that
behalf. A failure to make the report subjects the corporation to a
penalty of two hundred dollars ($200) and, for every week permitted
to elapse after that failure, an additional penalty of fifty dollars
($50), payable in each case to the county from which the authority of
the corporation was derived. All these cases shall be reported by
the board of supervisors, or other governing body having authority in
that behalf, to the district attorney or city attorney, who must
commence an action therefor.
14353. When a bridge, ferry, wharf, chute, or pier is
constructed, operated, or owned by a natural person, this part is
applicable to that person in like manner as it is applicable to
corporations.
SEC. 5. Part 9 (commencing with Section 14400) is added to
Division 3 of Title 1 of the Corporations Code, to read:
PART 9. CABLE TELEVISION CORPORATIONS
14400. Any person who willfully and maliciously does any injury
to any property of a cable television corporation is liable to the
corporation for three times the amount of actual damages sustained
thereby, to be recovered in any court of competent jurisdiction.
SEC. 6. Part 10 (commencing with Section 14450) is added to
Division 3 of Title 1 of the Corporations Code, to read:
PART 10. WATER AND CANAL CORPORATIONS
14450. No corporation formed to supply any city, city and county,
or town with water shall do so unless previously authorized by an
ordinance of the authorities thereof, or unless it is done in
conformity with a contract entered into between the city, city and
county, or town and the corporation. Contracts so made are valid and
binding in law, but do not take from the city, city and county, or
town the right to regulate the rates for water, nor shall any
exclusive right be granted. No contract or grant shall be made for a
term exceeding 50 years.
14451. (a) All corporations formed to supply water to cities or
towns shall furnish pure freshwater to the inhabitants thereof, for
domestic uses, as long as the supply permits, at reasonable rates and
without distinction of persons, upon proper demand therefor, and
shall furnish water to the extent of their means, in case of fire or
other great necessity, free of charge. The board of supervisors, or
the proper city or town authorities, may prescribe proper rules
relating to the delivery of water, not inconsistent with the laws of
the state.
(b) (1) A corporation formed to supply water to cities or towns
shall not charge, levy, assess, fix, or collect any charge, tax, fee,
rate, assessment, or levy of any kind whatsoever in connection with
its water system on or from any entity providing fire protection
services to others for supplying water for those fire protection
purposes within the service area of the corporation or for any costs
of operation, installation, capital, maintenance, repair, alteration,
or replacement of facilities related to supplying water for the fire
protection purposes within the service area of the corporation,
except pursuant to a written agreement with the entity providing fire
protection services.
(2) Paragraph (1) of this subdivision does not restrict or limit a
corporation formed to supply water to cities or towns from levying
charges for water service or facilities, including water for fire
protection purposes, on any person, property, or entity, whether
public or private, other than on an entity providing fire protection
service.
These charges shall be collected from other persons, property, or
entities pursuant to existing provisions of law that authorize the
charges, or from an entity providing fire protection services only
pursuant to the written agreement authorizing the charges.
(3) For the purposes of this subdivision, "entity providing fire
protection service" means a city, county, or city and county, whether
general law or chartered, or a fire company, fire protection
district, or any other person, association, company, corporation,
district, municipal corporation, or any other public or private
entity, which public or private entity or person provides fire
protection services to any other public or private entity or person.
14452. Whenever any corporation, organized under the laws of this
state, furnishes water to irrigate lands that the corporation has
sold, the right to the flow and use of that water is and shall remain
a perpetual easement to the land so sold, at any rates and terms
that may be established by the corporation in pursuance of law.
Whenever any person who is cultivating land on the line and within
the flow of any ditch owned by the corporation, has been furnished
water by it with which to irrigate his or her land, that person shall
be entitled to the continued use of that water, upon the same terms
as those who have purchased their land from the corporation.
SEC. 7. Part 11 (commencing with Section 14500) is added to
Division 3 of Title 1 of the Corporations Code, to read:
PART 11. SOCIETIES FOR THE PREVENTION OF CRUELTY TO CHILDREN
AND ANIMALS
14500. This title extends to all corporations heretofore formed
and existing for the prevention of cruelty to children or animals,
but do not extend or apply to any association, society, or
corporation that uses or specifies a name or style of the same, or
substantially the same, as that of any previously existing society or
corporation in this state organized for a like purpose.
14501. Every society, incorporated and organized for the
prevention of cruelty to animals, or for the prevention of cruelty to
children, may, in each city, or city and county, or county, where
the society exists, while actively engaged in enforcing the
provisions of laws of this state, now or hereafter enacted, for the
prevention of cruelty to animals, or children, or arresting, or
prosecuting offenders thereunder or preventing cruelty to animals or
children, be paid as compensation therefor, from the city or county,
or city and county general fund, by the board of supervisors or other
governing body thereof, a sum not exceeding five hundred dollars
($500) per calendar month, in the same manner as other claims against
said city or county, or city and county, are paid.
14502. (a) (1) (A) (i) On and after July 1, 1996, no entity,
other than a humane society or society for the prevention of cruelty
to animals, shall be eligible to apply for an appointment of any
individual as a level 1 or level 2 humane officer, the duty of which
shall be the enforcement of the laws for the prevention of cruelty to
animals.
(ii) On and after July 1, 1996, only a person who meets the
requirements of this section may be appointed as, or perform the
duties of, a humane officer.
(iii) Any person appointed as a humane officer prior to July 1,
1996, may continue to serve as a humane officer until the expiration
of the term of appointment only if the appointing agency maintains
records pursuant to subparagraph (C) documenting that both the
appointing agency and the humane officer meet the requirements of
this section.
(B) Each humane society or society for the prevention of cruelty
to animals that makes application to the court for the appointment of
an individual to act as a level 1 or level 2 humane officer for the
humane society or society for the prevention of cruelty to animals
shall provide with the application documentation that demonstrates
that the person has satisfactorily completed the training
requirements set forth in subdivision (i).
(C) Each humane society or society for the prevention of cruelty
to animals for which an individual is acting as a level 1 or level 2
humane officer shall maintain complete and accurate records
documenting that the individual has successfully completed all
requirements established in this section and shall make those records
available, upon request, to the superior court, the Attorney
General, or any entity duly authorized to review that information,
including the State Humane Association of California. The records
shall include the full name and address of each level 1 or level 2
humane officer.
(2) Any corporation incorporated for the purpose of the prevention
of cruelty to animals that possesses insurance of at least one
million dollars ($1,000,000) for liability for bodily injury or
property damage may, six months after the date of its incorporation
and by resolution of its board of directors or trustees duly entered
on its minutes, appoint any number of persons, who shall be citizens
of the State of California, as humane officers, provided that the
individuals to be appointed have met the training guidelines set
forth in subdivision (i).
(3) Each appointment of a humane officer shall be by separate
resolution. The resolution shall state the full name and address of
the appointing agency, the full name of the person so appointed, and
the fact that he or she is a citizen of the State of California, and
shall also designate the number of the badge to be allotted to the
officer.
(b) The humane society or society for the prevention of cruelty to
animals shall recommend any appointee to the judge of the superior
court in and for the county or city and county in which the humane
society is incorporated, and shall deliver to the judge a copy of the
resolution appointing the person, duly certified to be correct by
the president and secretary of the corporation and attested by its
seal, together with the fingerprints of the appointee taken on
standard 8X8-inch cards, proof of the society's proper incorporation
in compliance with Part 9 (commencing with Section 10400) of Division
2, a copy of the society's liability for bodily injury or property
damage insurance policy in the amount of at least one million dollars
($1,000,000), and documentation establishing that the appointee has
satisfactorily completed the training requirements set forth in this
section.
(c) The judge shall send a copy of the resolution, together with
the fingerprints of the appointee, to the Department of Justice,
which shall thereupon submit to the judge, in writing, a report of
the record in its possession, if any, of the appointee. If the
Department of Justice has no record of the appointee, it shall so
report to the judge in writing.
(d) Upon receipt of the report the judge shall review the matter
of the appointee's qualifications and fitness to act as a humane
officer and, if he or she reaffirms the appointment, shall so state
on a court order confirming the appointment. The appointee shall
thereupon file a certified copy of the reviewed court order in the
office of the county clerk of the county or city and county and
shall, at the same time, take and subscribe the oath of office
prescribed for constables or other peace officers.
(e) The county clerk shall thereupon immediately enter in a book
to be kept in his or her office and designated "Record of Humane
Officers" the name of the officer, the name of the agency appointing
him or her, the number of his or her badge, the name of the judge
appointing him or her, and the date of the filing. At the time of
the filing the county clerk shall collect from the officer a fee of
five dollars ($5), which shall be in full for all services to be
performed by the county clerk under this section.
(f) All appointments of humane officers shall automatically expire
if the society disbands or legally dissolves. In addition, all
appointments of humane officers shall automatically expire within
three years from the date on which the certified copy of the court
order was filed with the county clerk. Officers whose appointments
are about to expire may only be reappointed after satisfactorily
completing the continuing education and training set forth in this
section.
(g) (1) The corporation appointing an officer may revoke an
appointment at any time by filing in the office of the county clerk
in which the appointment of the officer is recorded a copy of the
revocation in writing under the letterhead of the corporation and
duly certified by its executive officer. Upon the filing the county
clerk shall enter the fact of the revocation and the date of the
filing thereof opposite the name of the officer in the record of
humane officers.
(2) Notwithstanding paragraph (1), a revocation hearing may be
initiated by petition from any duly authorized sheriff or local
police agency or the State Humane Association of California. The
petition shall show cause why an appointment should be revoked and
shall be made to the superior court in the jurisdiction of the
appointment.
(h) The corporation or local humane society appointing the humane
officer shall pay the training expenses of the humane officer
attending the training required pursuant to this section.
(i) (1) (A) A level 1 humane officer is not a peace officer, but
may exercise the powers of a peace officer at all places within the
state in order to prevent the perpetration of any act of cruelty upon
any animal and to that end may summon to his or her aid any
bystander. A level 1 humane officer may use reasonable force
necessary to prevent the perpetration of any act of cruelty upon any
animal.
(B) A level 1 humane officer may make arrests for the violation of
any penal law of this state relating to or affecting animals in the
same manner as any peace officer and may also serve search warrants.
(C) A level 1 humane officer is authorized to carry firearms while
exercising the duties of a humane officer, upon satisfactory
completion of the training specified in subparagraph (D) and the
basic training for a level 1 reserve officer by the Commission on
Peace Officer Standards and Training pursuant to Section 13510.1 of
the Penal Code.
(D) A level 1 humane officer shall, prior to appointment, provide
evidence satisfactory to the appointing agency that he or she has
successfully completed courses of training in the following subjects:
(i) At least 20 hours of a course of training in animal care
sponsored or provided by an accredited postsecondary institution or
any other provider approved by the California Veterinary Medical
Association, the focus of which shall be the identification of
disease, injury, and neglect in domestic animals and livestock.
(ii) At least 40 hours of a course of training in the state humane
laws relating to the powers and duties of a humane officer,
sponsored or provided by an accredited postsecondary institution, law
enforcement agency, or the State Humane Association of California.
(E) A person may not be appointed as a level 1 humane officer
until he or she has satisfied the requirements in Sections 1029,
1030, and 1031 of the Government Code. A humane society or society
for the prevention of cruelty to animals shall complete a background
investigation, using standards defined by the Commission on Peace
Officer Standards and Training as guidelines for all level 1 humane
officer appointments.
(F) In order to be eligible for reappointment, a level 1 humane
officer shall complete ongoing weapons training and range
qualifications at least every six months pursuant to subdivision (s)
of Section 830.3 of the Penal Code and shall, every three years,
complete 40 hours of continuing education and training relating to
the powers and duties of a humane officer, which education and
training shall be provided by an accredited postsecondary
institution, law enforcement agency, or the State Humane Association
of California.
(G) (i) Notwithstanding any other provision of this section, a
level 1 humane officer may carry firearms only if authorized by, and
only under the terms and conditions specified by, his or her
appointing agency.
(ii) Notwithstanding any other provision of this section, a level
1 humane officer shall not be authorized to carry firearms unless and
until his or her appointing agency has adopted a policy on the use
of deadly force by its officers and the officer has been instructed
in that policy.
(2) (A) A level 2 humane officer is not a peace officer, but may
exercise the powers of a peace officer at all places within the state
in order to prevent the perpetration of any act of cruelty upon any
animal and to that end may summon to his or her aid any bystander. A
level 2 humane officer may use reasonable force necessary to prevent
the perpetration of any act of cruelty upon any animal.
(B) A level 2 humane officer may make arrests for the violation of
any penal law of this state relating to or affecting animals in the
same manner as any peace officer and may serve search warrants during
the course and within the scope of employment, upon the successful
completion of a course relating to the exercise of the police powers
specified in Section 832 of the Penal Code, except the power to carry
and use firearms.
(C) A level 2 humane officer is not authorized to carry firearms.
(D) A level 2 humane officer shall, prior to appointment, provide
evidence satisfactory to the appointing agency that he or she has
successfully completed courses of training in the following subjects:
(i) At least 20 hours of a course of training in animal care
sponsored or provided by an accredited postsecondary institution or
any other provider approved by the California Veterinary Medical
Association, the focus of which is the identification of disease,
injury, and neglect in domestic animals and livestock.
(ii) At least 40 hours of a course of training in the state humane
laws relating to the powers and duties of a humane officer,
sponsored or provided by an accredited postsecondary institution, law
enforcement agency, or the State Humane Association of California.
(E) In order to be eligible for reappointment, a level 2 humane
officer shall, every three years, complete 40 hours of continuing
education and training relating to the powers and duties of a humane
officer, which education and training shall be provided by an
accredited postsecondary institution, law enforcement agency, or the
State Humane Association of California.
(j) Every humane officer shall, when making an arrest, exhibit and
expose a suitable badge to be adopted by the corporation under this
title of which he or she is a member which shall bear its name and a
number. Uniforms worn by humane officers shall prominently display
the name of the appointing agency. Humane officer uniforms shall not
display the words "state" or "California," unless part of the
appointing agency's incorporated name.
(k) Any person resisting a humane officer in the performance of
his or her duty as provided in this section, is guilty of a
misdemeanor. Any person who has not been appointed and qualified as
a humane officer as provided in this section, or whose appointment
has been revoked as provided in this section, or whose appointment,
having expired, has not been renewed as provided in this section, who
shall represent himself or herself to be or shall attempt to act as
an officer shall be guilty of a misdemeanor.
(l) No humane officer shall serve a search warrant without
providing prior notice to local law enforcement agencies operating
within that jurisdiction.
(m) Any humane society, society for the prevention of cruelty to
animals, or person, who knowingly provides a court with false or
forged documentation for the appointment of a humane officer, is
guilty of a misdemeanor and shall be punished by a fine of up to ten
thousand dollars ($10,000).
(n) A humane society or a society for the prevention of cruelty to
animals shall notify the sheriff of the county in which the society
is incorporated, prior to appointing a humane officer, of the society'
s intent to enforce laws for the prevention of cruelty to animals.
Humane societies or societies for the prevention of cruelty to
animals incorporated and enforcing animal cruelty laws prior to
January 1, 1996, that intend to continue to enforce those laws, shall
notify the sheriff of the county in which the society is
incorporated by March 1, 1996.
(o) Except as otherwise provided by this section, a humane officer
shall serve only in the county in which he or she is appointed. A
humane officer may serve temporarily in a county other than that in
which he or she is appointed if the humane officer gives notice
requesting consent to the sheriff of the county in which he or she
intends to serve, and acquires consent from the sheriff of the county
in which he or she intends to serve, or from a person authorized by
the sheriff to give that consent. A sheriff shall promptly respond
to any request by a humane officer to serve in his or her
jurisdiction and any request shall not be unreasonably denied.
14503. The governing body of a local agency, by ordinance, may
authorize employees of public pounds, societies for the prevention of
cruelty to animals, and humane societies, who have qualified as
humane officers pursuant to Section 14502, and which societies or
pounds have contracted with such local agency to provide animal care
or protection services, to issue notices to appear in court pursuant
to Chapter 5c (commencing
with Section 853.5) of Title 3 of Part 2 of the Penal Code for
violations of state or local animal control laws. Those employees
shall not be authorized to take any person into custody even though
the person to whom the notice is delivered does not give his or her
written promise to appear in court. The authority of these employees
is to be limited to the jurisdiction of the local agency authorizing
the employees.
SEC. 8. Part 12 (commencing with Section 14550) is added to
Division 3 of Title 1 of the Corporations Code, to read:
PART 12. NONPROFIT COOPERATIVE AGRICULTURAL MARKETING
ASSOCIATIONS
14550. In order to promote, foster, and encourage the intelligent
and orderly marketing of agricultural products through cooperation;
to eliminate speculation and waste; to make the distribution of
agricultural products between producer and consumer as direct as can
be efficiently done; and to stabilize the marketing of agricultural
products, this act is passed.
14551. It is here recognized that agriculture is characterized by
individual production in contrast to the group or factory system
that characterizes other forms of industrial production; and that the
ordinary form of corporate organization permits industrial groups to
combine for the purpose of group production and the ensuing group
marketing; and that the public has an interest in permitting farmers
to bring their industry to the high degree of efficiency and
merchandising skill evidenced in the manufacturing industries; and
that the public interest urgently needs to prevent the migration from
the farm to the city in order to keep up farm production and to
preserve the agricultural supply of the nation; and that the public
interest demands that the farmer be encouraged to attain a superior
and more direct system of marketing in the substitution of
merchandising for the blind, unscientific, and speculative selling of
crops.
SEC. 9. Section 25100 of the Corporations Code is amended to read:
25100. The following securities are exempted from Sections 25110,
25120, and 25130:
(a) Any security (including a revenue obligation) issued or
guaranteed by the United States, any state, any city, county, city
and county, public district, public authority, public corporation,
public entity, or political subdivision of a state or any agency or
corporate or other instrumentality of any one or more of the
foregoing; or any certificate of deposit for any of the foregoing.
(b) Any security issued or guaranteed by Canada, any Canadian
province, any political subdivision or municipality of that province,
or by any other foreign government with which the United States
currently maintains diplomatic relations, if the security is
recognized as a valid obligation by the issuer or guarantor; or any
certificate of deposit for any of the foregoing.
(c) Any security issued or guaranteed by and representing an
interest in or a direct obligation of a national bank or a bank or
trust company incorporated under the laws of this state, and any
security issued by a bank to one or more other banks and representing
an interest in an asset of the issuing bank.
(d) Any security issued or guaranteed by a federal savings
association or federal savings bank or federal land bank or joint
land bank or national farm loan association or by any savings
association, as defined in subdivision (a) of Section 5102 of the
Financial Code, which is subject to the supervision and regulation of
the Commissioner of Financial Institutions of this state.
(e) Any security (other than an interest in all or portions of a
parcel or parcels of real property which are subdivided land or a
subdivision or in a real estate development), the issuance of which
is subject to authorization by the Insurance Commissioner, the Public
Utilities Commission, or the Real Estate Commissioner of this state.
(f) Any security consisting of any interest in all or portions of
a parcel or parcels of real property which are subdivided lands or a
subdivision or in a real estate development; provided that the
exemption in this subdivision shall not be applicable to: (1) any
investment contract sold or offered for sale with, or as part of that
interest, or (2) any person engaged in the business of selling,
distributing, or supplying water for irrigation purposes or domestic
use that is not a public utility except that the exemption is
applicable to any security of a mutual water company (other than an
investment contract described in paragraph (1)) offered or sold in
connection with subdivided lands pursuant to Chapter 2 (commencing
with Section 14310) of Part 7 of Division 3 of Title 1.
(g) Any mutual capital certificates or savings accounts, as
defined in the Savings Association Law, issued by a savings
association, as defined by subdivision (a) of Section 5102 of the
Financial Code, and holding a license or certificate of authority
then in force from the Commissioner of Financial Institutions of this
state.
(h) Any security issued or guaranteed by any federal credit union,
or by any credit union organized and supervised, or regulated, under
the Credit Union Law.
(i) Any security issued or guaranteed by any railroad, other
common carrier, public utility, or public utility holding company
which is (1) subject to the jurisdiction of the Interstate Commerce
Commission or its successor or (2) a holding company registered with
the Securities and Exchange Commission under the Public Utility
Holding Company Act of 1935 or a subsidiary of that company within
the meaning of that act or (3) regulated in respect of the issuance
or guarantee of the security by a governmental authority of the
United States, of any state, of Canada or of any Canadian province;
and the security is subject to registration with or authorization of
issuance by that authority.
(j) Any security (except evidences of indebtedness, whether
interest bearing or not) of an issuer (1) organized exclusively for
educational, benevolent, fraternal, religious, charitable, social, or
reformatory purposes and not for pecuniary profit, if no part of the
net earnings of the issuer inures to the benefit of any private
shareholder or individual, or (2) organized as a chamber of commerce
or trade or professional association. The fact that amounts received
from memberships or dues or both will or may be used to construct or
otherwise acquire facilities for use by members of the nonprofit
organization does not disqualify the organization for this exemption.
This exemption does not apply to the securities of any nonprofit
organization if any promoter thereof expects or intends to make a
profit directly or indirectly from any business or activity
associated with the organization or operation of that nonprofit
organization or from remuneration received from that nonprofit
organization.
(k) Any agreement, commonly known as a "life income contract," of
an issuer (1) organized exclusively for educational, benevolent,
fraternal, religious, charitable, social, or reformatory purposes and
not for pecuniary profit and (2) which the commissioner designates
by rule or order, with a donor in consideration of a donation of
property to that issuer and providing for the payment to the donor or
persons designated by him or her of income or specified periodic
payments from the donated property or other property for the life of
the donor or those other persons.
(l) Any note, draft, bill of exchange, or banker's acceptance
which is freely transferable and of prime quality, arises out of a
current transaction or the proceeds of which have been or are to be
used for current transactions, and which evidences an obligation to
pay cash within nine months of the date of issuance, exclusive of
days of grace, or any renewal of that paper which is likewise
limited, or any guarantee of that paper or of that renewal, provided
that the paper is not offered to the public in amounts of less than
twenty-five thousand dollars ($25,000) in the aggregate to any one
purchaser. In addition, the commissioner may, by rule or order,
exempt any issuer of any notes, drafts, bills of exchange or banker's
acceptances from qualification of those securities when the
commissioner finds that the qualification is not necessary or
appropriate in the public interest or for the protection of
investors.
(m) Any security issued by any corporation organized and existing
under the provisions of Chapter 1 (commencing with Section 54001) of
Division 20 of the Food and Agricultural Code.
(n) Any beneficial interest in an employees' pension,
profit-sharing, stock bonus or similar benefit plan which meets the
requirements for qualification under Section 401 of the federal
Internal Revenue Code or any statute amendatory thereof or
supplementary thereto. A determination letter from the Internal
Revenue Service stating that an employees' pension, profit-sharing,
stock bonus or similar benefit plan meets those requirements shall be
conclusive evidence that the plan is an employees' pension,
profit-sharing, stock bonus or similar benefit plan within the
meaning of the first sentence of this subdivision until the date the
determination letter is revoked in writing by the Internal Revenue
Service, regardless of whether or not the revocation is retroactive.
(o) Any security listed or approved for listing upon notice of
issuance on a national securities exchange or designated or approved
for designation upon notice of issuance as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., if the exchange or
interdealer quotation system has been certified by rule or order of
the commissioner and any warrant or right to purchase or subscribe to
the security. The exemption afforded by this subdivision does not
apply to securities listed or designated, or approved for listing or
designation upon notice of issuance, in a rollup transaction unless
the rollup transaction is an eligible rollup transaction as defined
in Section 25014.7.
That certification of any exchange or system shall be made by the
commissioner upon the written request of the exchange or system if
the commissioner finds that the exchange or system: (i) in acting on
applications for listing of common stock substantially applies the
minimum standards set forth in either alternative (A) or (B) of
paragraph (1), and (ii) in considering suspension or removal from
listing or designation, substantially applies each of the criteria
set forth in paragraph (2).
(1) Listing standards:
(A) (i) Shareholders' equity of at least four million dollars
($4,000,000).
(ii) Pretax income of at least seven hundred fifty thousand
dollars ($750,000) in the issuer's last fiscal year or in two of its
last three fiscal years.
(iii) Minimum public distribution of 500,000 shares (exclusive of
the holdings of officers, directors, controlling shareholders, and
other concentrated or family holdings), together with a minimum of
800 public holders or minimum public distribution of 1,000,000 shares
together with a minimum of 400 public holders. The exchange or
system may also consider the listing or designation of a company's
securities if the company has a minimum of 500,000 shares publicly
held, a minimum of 400 shareholders and daily trading volume in the
issue has been approximately 2,000 shares or more for the six months
preceding the date of application. In evaluating the suitability of
an issue for listing or designation under this trading provision, the
exchange or system shall review the nature and frequency of that
activity and any other factors as it may determine to be relevant in
ascertaining whether the issue is suitable for trading. A security
which trades infrequently shall not be considered for listing or
designation under this paragraph even though average daily volume
amounts to 2,000 shares per day or more.
Companies whose securities are concentrated in a limited
geographical area, or whose securities are largely held in block by
institutional investors, normally may not be considered eligible for
listing or designation unless the public distribution appreciably
exceeds 500,000 shares.
(iv) Minimum price of three dollars ($3) per share for a
reasonable period of time prior to the filing of a listing or
designation application; provided, however, in certain instances an
exchange or system may favorably consider listing an issue selling
for less than three dollars ($3) per share after considering all
pertinent factors, including market conditions in general, whether
historically the issue has sold above three dollars ($3) per share,
the applicant's capitalization, and the number of outstanding and
publicly held shares of the issue.
(v) An aggregate market value for publicly held shares of at least
three million dollars ($3,000,000).
(B) (i) Shareholders' equity of at least four million dollars
($4,000,000).
(ii) Minimum public distribution set forth in clause (iii) of
subparagraph (A) of paragraph (1).
(iii) Operating history of at least three years.
(iv) An aggregate market value for publicly held shares of at
least fifteen million dollars ($15,000,000).
(2) Criteria for consideration of suspension or removal from
listing:
(i) If a company which (A) has shareholders' equity of less than
one million dollars ($1,000,000) has sustained net losses in each of
its two most recent fiscal years, or (B) has net tangible assets of
less than three million dollars ($3,000,000) and has sustained net
losses in three of its four most recent fiscal years.
(ii) If the number of shares publicly held (excluding the holdings
of officers, directors, controlling shareholders and other
concentrated or family holdings) is less than 150,000.
(iii) If the total number of shareholders is less than 400 or if
the number of shareholders of lots of 100 shares or more is less than
300.
(iv) If the aggregate market value of shares publicly held is less
than seven hundred fifty thousand dollars ($750,000).
(v) If shares of common stock sell at a price of less than three
dollars ($3) per share for a substantial period of time and the
issuer shall fail to effectuate a reverse stock split of the shares
within a reasonable period of time after being requested by the
exchange to take that action.
A national securities exchange or interdealer quotation system of
the National Association of Securities Dealers, Inc. certified by
rule or order of the commissioner under this subdivision shall file
annual reports when requested to do so by the commissioner. The
annual reports shall contain, by issuer: the variances granted to an
exchange's listing standards or interdealer quotation system's
designation criteria, including variances from corporate governance
and voting rights' standards, for any security of that issuer; the
reasons for the variances; a discussion of the review procedure
instituted by the exchange or interdealer quotation system to
determine the effect of the variances on investors and whether the
variances should be continued; and any other information that the
commissioner deems relevant. The purpose of these reports is to
assist the commissioner in determining whether the quantitative and
qualitative requirements of this subdivision are substantially being
met by the exchange or system in general or with regard to any
particular security.
The commissioner after appropriate notice and opportunity for
hearing in accordance with the provisions of the Administrative
Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, may, in his or her
discretion, by rule or order, decertify any exchange or interdealer
quotation system previously certified which ceases substantially to
apply the minimum standards or criteria as set forth in paragraphs
(1) and (2).
A rule or order of certification shall conclusively establish that
any security listed or approved for listing upon notice of issuance
on any exchange, or designated or approved for designation upon
issuance as a national market system security on any interdealer
quotation system, named in a rule or order of certification, and any
warrant or right to purchase or subscribe to that security, is exempt
under this subdivision until the adoption by the commissioner of any
rule or order decertifying the exchange or interdealer quotation
system.
(p) A promissory note secured by a lien on real property, which is
neither one of a series of notes of equal priority secured by
interests in the same real property nor a note in which beneficial
interests are sold to more than one person or entity.
(q) Any unincorporated interindemnity or reciprocal or
interinsurance contract, which qualifies under the provisions of
Section 1280.7 of the Insurance Code, between members of a
cooperative corporation, organized and operating under Part 2
(commencing with Section 12200) of Division 3 of Title 1, and whose
members consist only of physicians and surgeons licensed in
California, which contracts indemnify solely in respect to medical
malpractice claims against the members, and which do not collect in
advance of loss any moneys other than contributions by each member to
a collective reserve trust fund or for necessary expenses of
administration.
(1) Whenever it appears to the commissioner that any person has
engaged or is about to engage in any act or practice constituting a
violation of any provision of Section 1280.7 of the Insurance Code,
the commissioner may in the commissioner's discretion bring an action
in the name of the people of the State of California in the superior
court to enjoin the acts or practices or to enforce compliance with
Section 1280.7 of the Insurance Code. Upon a proper showing a
permanent or preliminary injunction, restraining order or writ of
mandate shall be granted and a receiver or conservator may be
appointed for the defendant or the defendant's assets.
(2) The commissioner may, in the commissioner's discretion, (A)
make public or private investigations within or outside of this state
as the commissioner deems necessary to determine whether any person
has violated or is about to violate any provision of Section 1280.7
of the Insurance Code or to aid in the enforcement of Section 1280.7,
and (B) publish information concerning the violation of Section
1280.7.
(3) For the purpose of any investigation or proceeding under this
section, the commissioner or any officer designated by the
commissioner may administer oaths and affirmations, subpoena
witnesses, compel their attendance, take evidence, and require the
production of any books, papers, correspondence, memoranda,
agreements, or other documents or records which the commissioner
deems relevant or material to the inquiry.
(4) In case of contumacy by, or refusal to obey a subpoena issued
to, any person, the superior court, upon application by the
commissioner, may issue to the person an order requiring the person
to appear before the commissioner, or the officer designated by the
commissioner, there to produce documentary evidence, if so ordered,
or to give evidence touching the matter under investigation or in
question. Failure to obey the order of the court may be punished by
the court as a contempt.
(5) No person is excused from attending or testifying or from
producing any document or record before the commissioner or in
obedience to the subpoena of the commissioner or any officer
designated by the commissioner, or in any proceeding instituted by
the commissioner, on the ground that the testimony or evidence
(documentary or otherwise), required of the person may tend to
incriminate the person or subject the person to a penalty or
forfeiture, but no individual may be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter,
or thing concerning which the person is compelled, after validly
claiming the privilege against self-incrimination, to testify or
produce evidence (documentary or otherwise), except that the
individual testifying is not exempt from prosecution and punishment
for perjury or contempt committed in testifying.
(6) The cost of any review, examination, audit, or investigation
made by the commissioner under Section 1280.7 of the Insurance Code
shall be paid to the commissioner by the person subject to the
review, examination, audit, or investigation, and the commissioner
may maintain an action for the recovery of these costs in any court
of competent jurisdiction. In determining the cost, the commissioner
may use the actual amount of the salary or other compensation paid
to the persons making the review, examination, audit, or
investigation plus the actual amount of expenses including overhead
reasonably incurred in the performance of the work.
The recoverable cost of each review, examination, audit, or
investigation made by the commissioner under Section 1280.7 of the
Insurance Code shall not exceed twenty-five thousand dollars
($25,000), except that costs exceeding twenty-five thousand dollars
($25,000) shall be recoverable if the costs are necessary to prevent
a violation of any provision of Section 1280.7 of the Insurance Code.
(r) Any shares or memberships issued by any corporation organized
and existing pursuant to the provisions of Part 2 (commencing with
Section 12200) of Division 3 of Title 1, provided the aggregate
investment of any shareholder or member in shares or memberships sold
pursuant to this subdivision does not exceed three hundred dollars
($300). This exemption does not apply to the shares or memberships
of that corporation if any promoter thereof expects or intends to
make a profit directly or indirectly from any business or activity
associated with the corporation or the operation of the corporation
or from remuneration, other than reasonable salary, received from the
corporation. This exemption does not apply to nonvoting shares or
memberships of that corporation issued to any person who does not
possess, and who will not acquire in connection with the issuance of
nonvoting shares or memberships, voting power (Section 12253) in the
corporation. This exemption also does not apply to shares or
memberships issued by a nonprofit cooperative corporation organized
to facilitate the creation of an unincorporated interindemnity
arrangement that provides indemnification for medical malpractice to
its physician and surgeon members as set forth in subdivision (q).
(s) Any security consisting of or representing an interest in a
pool of mortgage loans which meets each of the following
requirements:
(1) The pool consists of whole mortgage loans or participation
interests in those loans, which loans were originated or acquired in
the ordinary course of business by a national bank or federal savings
association or federal savings bank having its principal office in
this state, by a bank incorporated under the laws of this state or by
a savings association as defined in subdivision (a) of Section 5102
of the Financial Code and which is subject to the supervision and
regulation of the Commissioner of Financial Institutions, and each of
which at the time of transfer to the pool is an authorized
investment for the originating or acquiring institution.
(2) The pool of mortgage loans is held in trust by a trustee which
is a financial institution specified in paragraph (1) as trustee or
otherwise.
(3) The loans are serviced by a financial institution specified in
paragraph (1).
(4) The security is not offered in amounts of less than
twenty-five thousand dollars ($25,000) in the aggregate to any one
purchaser.
(5) The security is offered pursuant to a registration under the
Securities Act of 1933, or pursuant to an exemption under Regulation
A under that act, or in the opinion of counsel for the issuer, is
offered pursuant to an exemption under Section 4(2) of that act.
(t) (1) Any security issued or guaranteed by and representing an
interest in or a direct obligation of an industrial loan company
incorporated under the laws of the state and authorized by the
Commissioner of Financial Institutions to engage in industrial loan
business.
(2) Any investment certificate in or issued by any industrial loan
company that is organized under the laws of a state of the United
States other than this state, that is insured by the Federal Deposit
Insurance Corporation, and that maintains a branch office in this
state.
(u) Any security issued by an issuer registered as an open-end
management company or unit investment trust under the Investment
Company Act of 1940, provided that all of the following requirements
are met:
(1) The registration statement for the securities is currently
effective under the Securities Act of 1933.
(2) Prior to any offer or sale in this state of securities claimed
to be exempt under this subdivision, there is filed with or paid to
the commissioner each of the following:
(A) A notice of intention to sell that has been executed by the
issuer and that includes the name and address of the issuer and the
name of the securities to be offered and sold under this subdivision.
(B) A copy of the current prospectus to be used in the offer and
sale of the security.
(C) The fee provided in subdivision (f) of Section 25608.
If any offer or sale is made pursuant to this exemption more than
12 months after the date the notice was filed under this subdivision,
the issuer shall file another notice of intention to sell, a copy of
the prospectus the issuer is currently utilizing for the purpose of
making that offer, and the fee specified in subparagraph (C) of
paragraph (2).
SEC. 9.5. Section 25100 of the Corporations Code, as amended by
Chapter 1064 of the Statutes of 1996, is amended to read:
25100. The following securities are exempted from Sections 25110,
25120, and 25130:
(a) Any security (including a revenue obligation) issued or
guaranteed by the United States, any state, any city, county, city
and county, public district, public authority, public corporation,
public entity, or political subdivision of a state or any agency or
corporate or other instrumentality of any one or more of the
foregoing; or any certificate of deposit for any of the foregoing.
(b) Any security issued or guaranteed by Canada, any Canadian
province, any political subdivision or municipality of that province,
or by any other foreign government with which the United States
currently maintains diplomatic relations, if the security is
recognized as a valid obligation by the issuer or guarantor; or any
certificate of deposit for any of the foregoing.
(c) Any security issued or guaranteed by and representing an
interest in or a direct obligation of a national bank or a bank or
trust company incorporated under the laws of this state, and any
security issued by a bank to one or more other banks and representing
an interest in an asset of the issuing bank.
(d) Any security issued or guaranteed by a federal savings
association or federal savings bank or federal land bank or joint
land bank or national farm loan association or by any savings
association, as defined in subdivision (a) of Section 5102 of the
Financial Code, which is subject to the supervision and regulation of
the Commissioner of Financial Institutions of this state.
(e) Any security (other than an interest in all or portions of a
parcel or parcels of real property which are subdivided land or a
subdivision or in a real estate development), the issuance of which
is subject to authorization by the Insurance Commissioner, the Public
Utilities Commission, or the Real Estate Commissioner of this state.
(f) Any security consisting of any interest in all or portions of
a parcel or parcels of real property which are subdivided lands or a
subdivision or in a real estate development; provided that the
exemption in this subdivision shall not be applicable to: (1) any
investment contract sold or offered for sale with, or as part of,
that interest, or (2) any person engaged in the business of selling,
distributing, or supplying water for irrigation purposes or domestic
use that is not a public utility except that the exemption is
applicable to any security of a mutual water company (other than an
investment contract as described in paragraph (1)) offered or sold in
connection with subdivided lands pursuant to Chapter 2 (commencing
with Section 14310) of Part 7 of Division 3 of Title 1.
(g) Any mutual capital certificates or savings accounts, as
defined in the Savings Association Law, issued by a savings
association, as defined by subdivision (a) of Section 5102 of the
Financial Code, and holding a license or certificate of authority
then in force from the Commissioner of Financial Institutions of this
state.
(h) Any security issued or guaranteed by any federal credit union,
or by any credit union organized and supervised, or regulated, under
the Credit Union Law.
(i) Any security issued or guaranteed by any railroad, other
common carrier, public utility, or public utility holding company
which is (1) subject to the jurisdiction of the Interstate Commerce
Commission or its successor or (2) a holding company registered with
the Securities and Exchange Commission under the Public Utility
Holding Company Act of 1935 or a subsidiary of that company within
the meaning of that act or (3) regulated in respect of the issuance
or guarantee of the security by a governmental authority of the
United States, of any state, of Canada or of any Canadian province;
and the security is subject to registration with or authorization of
issuance by that authority.
(j) Any security (except evidences of indebtedness, whether
interest bearing or not) of an issuer (1) organized exclusively for
educational, benevolent, fraternal, religious, charitable, social, or
reformatory purposes and not for pecuniary profit, if no part of the
net earnings of the issuer inures to the benefit of any private
shareholder or individual, or (2) organized as a chamber of commerce
or trade or professional association. The fact that amounts received
from memberships or dues or both will or may be used to construct or
otherwise acquire facilities for use by members of the nonprofit
organization does not disqualify the organization for this exemption.
This exemption does not apply to the securities of any nonprofit
organization if any promoter thereof expects or intends to make a
profit directly or indirectly from any business or activity
associated with the organization or operation of that nonprofit
organization or from remuneration received from that nonprofit
organization.
(k) Any agreement, commonly known as a "life income contract," of
an issuer (1) organized exclusively for educational, benevolent,
fraternal, religious, charitable, social, or reformatory purposes and
not for pecuniary profit and (2) which the commissioner designates
by rule or order, with a donor in consideration of a donation of
property to that issuer and providing for the payment to the donor or
persons designated by him or her of income or specified periodic
payments from the donated property or other property for the life of
the donor or those other persons.
(l) Any note, draft, bill of exchange, or banker's acceptance
which is freely transferable and of prime quality, arises out of a
current transaction or the proceeds of which have been or are to be
used for current transactions, and which evidences an obligation to
pay cash within nine months of the date of issuance, exclusive of
days of grace, or any renewal of that paper which is likewise
limited, or any guarantee of that paper or of that renewal, provided
that the paper is not offered to the public in amounts of less than
twenty-five thousand dollars ($25,000) in the aggregate to any one
purchaser. In addition, the commissioner may, by rule or order,
exempt any issuer of any notes, drafts, bills of exchange or banker's
acceptances from qualification of those securities when the
commissioner finds that the qualification is not necessary or
appropriate in the public interest or for the protection of
investors.
(m) Any security issued by any corporation organized and existing
under the provisions of Chapter 1 (commencing with Section 54001) of
Division 20 of the Food and Agricultural Code.
(n) Any beneficial interest in an employees' pension,
profit-sharing, stock bonus or similar benefit plan which meets the
requirements for qualification under Section 401 of the federal
Internal Revenue Code or any statute amendatory thereof or
supplementary thereto. A determination letter from the Internal
Revenue Service stating that an employees' pension, profit-sharing,
stock bonus or similar benefit plan meets those requirements shall be
conclusive evidence that the plan is an employees' pension,
profit-sharing, stock bonus or similar benefit plan within the
meaning of the first sentence of this subdivision until the date the
determination letter is revoked in writing by the Internal Revenue
Service, regardless of whether or not the revocation is retroactive.
(o) Any security listed or approved for listing upon notice of
issuance on a national securities exchange or designated or approved
for designation upon notice of issuance as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., if the exchange or
interdealer quotation system has been certified by rule or order of
the commissioner and any warrant or right to purchase or subscribe to
the security. The exemption afforded by this subdivision does not
apply to securities listed or designated, or approved for listing or
designation upon notice of issuance, in a rollup transaction unless
the rollup transaction is an eligible rollup transaction as defined
in Section 25014.7.
That certification of any exchange or system shall be made by the
commissioner upon the written request of the exchange or system if
the commissioner finds that the exchange or system: (i) in acting on
applications for listing of common stock substantially applies the
minimum standards set forth in either alternative (A) or (B) of
paragraph (1), and (ii) in considering suspension or removal from
listing or designation, substantially applies each of the criteria
set forth in paragraph (2).
(1) Listing standards:
(A) (i) Shareholders' equity of at least four million dollars
($4,000,000).
(ii) Pretax income of at least seven hundred fifty thousand
dollars ($750,000) in the issuer's last fiscal year or in two of its
last three fiscal years.
(iii) Minimum public distribution of 500,000 shares (exclusive of
the holdings of officers, directors, controlling shareholders, and
other concentrated or family holdings), together with a minimum of
800 public holders or minimum public distribution of 1,000,000 shares
together with a minimum of 400 public holders. The exchange or
system may also consider the listing or designation of a company's
securities if the company has a minimum of 500,000 shares publicly
held, a minimum of 400 shareholders and daily trading volume in the
issue has been approximately 2,000 shares or more for the six months
preceding the date of application. In evaluating the suitability of
an issue for listing or designation under this trading provision, the
exchange or system shall review the nature and frequency of that
activity and any other factors as it may determine to be relevant in
ascertaining whether the issue is suitable for trading. A security
which trades infrequently shall not be considered for listing or
designation under this paragraph even though average daily volume
amounts to 2,000 shares per day or more.
Companies whose securities are concentrated in a limited
geographical area, or whose securities are largely held in block by
institutional investors, normally may not be considered eligible for
listing or designation unless the public distribution appreciably
exceeds 500,000 shares.
(iv) Minimum price of three dollars ($3) per share for a
reasonable period of time prior to the filing of a listing or
designation application; provided, however, in certain instances an
exchange or system may favorably consider listing an issue selling
for less than three dollars ($3) per share after considering all
pertinent factors, including market conditions in general, whether
historically the issue has sold above three dollars ($3) per share,
the applicant's capitalization, and the number of outstanding and
publicly held shares of the issue.
(v) An aggregate market value for publicly held shares of at least
three million dollars ($3,000,000).
(B) (i) Shareholders' equity of at least four million dollars
($4,000,000).
(ii) Minimum public distribution set forth in clause (iii) of
subparagraph (A) of paragraph (1).
(iii) Operating history of at least three years.
(iv) An aggregate market value for publicly held shares of at
least fifteen million dollars ($15,000,000).
(2) Criteria for consideration of suspension or removal from
listing:
(i) If a company which (A) has shareholders' equity of less than
one million dollars ($1,000,000) has sustained net losses in each of
its two most recent fiscal years, or (B) has net tangible assets of
less than three million dollars ($3,000,000) and has sustained net
losses in three of its four most recent fiscal years.
(ii) If the number of shares publicly held (excluding the holdings
of officers, directors, controlling shareholders and other
concentrated or family holdings) is less than 150,000.
(iii) If the total number of shareholders is less than 400 or if
the number of shareholders of lots of 100 shares or more is less than
300.
(iv) If the aggregate market value of shares publicly held is less
than seven hundred fifty thousand dollars ($750,000).
(v) If shares of common stock sell at a price of less than three
dollars ($3) per share for a substantial period of time and the
issuer shall fail to effectuate a reverse stock split of the shares
within a reasonable period of time after being requested by the
exchange to take that action.
A national securities exchange or interdealer quotation system of
the National Association of Securities Dealers, Inc. certified by
rule or order of the commissioner under this subdivision shall file
annual reports when requested to do so by the commissioner. The
annual reports shall contain, by issuer: the variances granted to an
exchange's listing standards or interdealer quotation system's
designation criteria, including variances from corporate governance
and voting rights' standards, for any security of that issuer; the
reasons for the variances; a discussion of the review procedure
instituted by the exchange or interdealer quotation system to
determine the effect of the variances on investors and whether the
variances should be continued; and any other information that the
commissioner deems relevant. The purpose of these reports is to
assist the commissioner in determining whether the quantitative and
qualitative requirements of this subdivision are substantially being
met by the exchange or system in general or with regard to any
particular security.
The commissioner after appropriate notice and opportunity for
hearing in accordance with the provisions of the Administrative
Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, may, in his or her
discretion, by rule or order, decertify any exchange or interdealer
quotation system previously certified which ceases substantially to
apply the minimum standards or criteria as set forth in paragraphs
(1) and (2).
A rule or order of certification shall conclusively establish that
any security listed or approved for listing upon notice of issuance
on any exchange, or designated or approved for designation upon
issuance as a national market system security on any interdealer
quotation system, named in a rule or order of certification, and any
warrant or right to purchase or subscribe to that security, is exempt
under this subdivision until the adoption by the commissioner of any
rule or order decertifying the exchange or interdealer quotation
system.
(p) A promissory note secured by a lien on real property, which is
neither one of a series of notes of equal priority secured by
interests in the same real property nor a note in which beneficial
interests are sold to more than one person or entity.
(q) Any unincorporated interindemnity or reciprocal or
interinsurance contract, which qualifies under the provisions of
Section 1280.7 of the Insurance Code, between members of a
cooperative corporation, organized and operating under Part 2
(commencing with Section 12200) of Division 3 of Title 1, and whose
members consist only of physicians and surgeons licensed in
California, which contracts indemnify solely in respect to medical
malpractice claims against the members, and which do not collect in
advance of loss any moneys other than contributions by each member to
a collective reserve trust fund or for necessary expenses of
administration.
(1) Whenever it appears to the commissioner that any person has
engaged or is about to engage in any act or practice constituting a
violation of any provision of Section 1280.7 of the Insurance Code,
the commissioner may, in the commissioner's discretion, bring an
action in the name of the people of the State of California in the
superior court to enjoin the acts or practices or to enforce
compliance with Section 1280.7 of the Insurance Code. Upon a proper
showing a permanent or preliminary injunction, a restraining order,
or a writ of mandate shall be granted and a receiver or conservator
may be appointed for the defendant or the defendant's assets.
(2) The commissioner may, in the commissioner's discretion, (A)
make public or private investigations within or outside of this state
as the commissioner deems necessary to determine whether any person
has violated or is about to violate any provision of Section 1280.7
of the Insurance Code or to aid in the enforcement of Section 1280.7,
and (B) publish information concerning the violation of Section
1280.7.
(3) For the purpose of any investigation or proceeding under this
section, the commissioner or any officer designated by the
commissioner may administer oaths and affirmations, subpoena
witnesses, compel their attendance, take evidence, and require the
production of any books, papers, correspondence, memoranda,
agreements, or other documents or records which the commissioner
deems relevant or material to the inquiry.
(4) In case of contumacy by, or refusal to obey a subpoena issued
to, any person, the superior court, upon application by the
commissioner, may issue to the person an order requiring the person
to appear before the commissioner, or the officer designated by the
commissioner, there to produce documentary evidence, if so ordered,
or to give evidence touching the matter under investigation or in
question. Failure to obey the order of the court may be punished by
the court as a contempt.
(5) No person is excused from attending or testifying or from
producing any document or record before the commissioner or in
obedience to the subpoena of the commissioner or any officer
designated by the commissioner, or in any proceeding instituted by
the commissioner, on the ground that the testimony or evidence
(documentary or otherwise), required of the person may tend to
incriminate the person or subject the person to a penalty or
forfeiture, but no individual may be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter,
or thing concerning which the person is compelled, after validly
claiming the privilege against self-incrimination, to testify or
produce evidence (documentary or otherwise), except that the
individual testifying is not exempt from prosecution and punishment
for perjury or contempt committed in testifying.
(6) The cost of any review, examination, audit, or investigation
made by the commissioner under Section 1280.7 of the Insurance Code
shall be paid to the commissioner by the person subject to the
review, examination, audit, or investigation, and the commissioner
may maintain an action for the recovery of these costs in any court
of competent jurisdiction. In determining the cost, the commissioner
may use the actual amount of the salary or other compensation paid
to the persons making the review, examination, audit, or
investigation plus the actual amount of expenses including overhead
reasonably incurred in the performance of the work.
The recoverable cost of each review, examination, audit, or
investigation made by the commissioner under Section 1280.7 of the
Insurance Code shall not exceed twenty-five thousand dollars
($25,000), except that costs exceeding twenty-five thousand dollars
($25,000) shall be recoverable if the costs are necessary to prevent
a violation of any provision of Section 1280.7 of the Insurance Code.
(r) Any shares or memberships issued by any corporation organized
and existing pursuant to the provisions of Part 2 (commencing with
Section 12200) of Division 3 of Title 1, provided the aggregate
investment of any shareholder or member in shares or memberships sold
pursuant to this subdivision does not exceed three hundred dollars
($300). This exemption does not apply to the shares or memberships
of that corporation if any promoter thereof expects or intends to
make a profit directly or indirectly from any business or activity
associated with the corporation or the operation of the corporation
or from remuneration, other than reasonable salary, received from the
corporation. This exemption does not apply to nonvoting shares or
memberships of that corporation issued to any person who does not
possess, and who will not acquire in connection with the issuance of
nonvoting shares or memberships, voting power (Section 12253) in the
corporation. This exemption also does not apply to shares or
memberships issued by a nonprofit cooperative corporation organized
to facilitate the creation of an unincorporated interindemnity
arrangement that provides indemnification for medical malpractice to
its physician and surgeon members as set forth in subdivision (q).
(s) Any security consisting of or representing an interest in a
pool of mortgage loans which meets each of the following
requirements:
(1) The pool consists of whole mortgage loans or participation
interests in those loans, which loans were originated or acquired in
the ordinary course of business by a national bank or federal savings
association or federal savings bank having its principal office in
this state, by a bank incorporated under the laws of this state or by
a savings association as defined in subdivision (a) of Section 5102
of the Financial Code and which is subject to the supervision and
regulation of the Commissioner of Financial Institutions, and each of
which at the time of transfer to the pool is an authorized
investment for the originating or acquiring institution.
(2) The pool of mortgage loans is held in trust by a trustee which
is a financial institution specified in paragraph (1) as trustee or
otherwise.
(3) The loans are serviced by a financial institution specified in
paragraph (1).
(4) The security is not offered in amounts of less than
twenty-five thousand dollars ($25,000) in the aggregate to any one
purchaser.
(5) The security is offered pursuant to a registration under the
Securities Act of 1933, or pursuant to an exemption under Regulation
A under that act, or in the opinion of counsel for the issuer, is
offered pursuant to an exemption under Section 4(2) of that act.
(t) (1) Any security issued or guaranteed by and representing an
interest in or a direct obligation of an industrial loan company
incorporated under the laws of the state and authorized by the
Commissioner of Financial Institutions to engage in industrial loan
business.
(2) Any investment certificate in or issued by any industrial loan
company that is organized under the laws of a state of the United
States other than this state, that is insured by the Federal Deposit
Insurance Corporation, and that maintains a branch office in this
state.
SEC. 10. Section 25988 of the Health and Safety Code is amended to
read:
25988. A peace officer, officer of a humane society as qualified
under Section 14502 or 14503 of the Corporations Code, or officer of
an animal control or animal regulation department of a public agency,
as qualified under Section 830.9 of the Penal Code, may issue a
citation as prescribed in Section 25988.5, to any person or entity
keeping horses or other equine animals for hire, if the person or
entity fails to meet any of the following standards of humane
treatment regarding the keeping of horses or other equine animals:
(a) Any enclosure where an equine is primarily kept shall be of
sufficient size to enable the equine to comfortably stand up, turn
around, and lie down, and shall be kept free of excessive urine and
waste matter.
(b) Paddocks and corrals shall be of adequate size for the equine
to move about freely.
(c) Buildings, premises, and conveyances used in conjunction with
equines shall be kept free of sharp objects, protrusions, or other
materials that are likely to cause injury.
(d) Equines shall be supplied with nutritionally adequate feed and
clean water, in accordance with standards published by the
Cooperative Extension of the Division of Agricultural Sciences of the
University of California.
(e) Tack and equipment shall be appropriate and fit properly.
(f) After use the equine shall be cooled out to a normal condition
at rest.
(g) When not being ridden, a saddled equine shall have available
adequate shelter from the elements, and have loosened saddle straps
and girths.
(h) An equine shall not be available for hire or use if the equine
has any conditions that violate subdivision (b) of Section 597 or
Section 597f of the Penal Code or any of the following conditions:
(1) Sores or abrasions caused or likely to be irritated by the
surfaces of saddles, girths, harnesses, or bridles.
(2) Blindness in both eyes.
(3) Improperly or inadequately trimmed and shod feet contrary to
the standards published by the Cooperative Extension of the Division
of Agricultural Sciences of the University of California.
(i) Each equine shall be individually identified, using humane
methods, such as a detailed description, including, but not limited
to, name, breed, color, markings, size, age, sex, and photograph.
(j) Farrier and veterinary receipts shall be kept and shall
identify each equine treated.
(k) Veterinary, farrier, and feed records shall be made available
during normal business hours to the law enforcement officer. Upon
failure to provide these records, the equine or equines in question
may not be used for hire until such time as the records are produced
or an equine veterinarian shall certify that the equine or equines
are fit for labor.
SEC. 11. Section 597d of the Penal Code is amended to read:
597d. Any sheriff, police, or peace officer, or officer qualified
as provided in Section 14502 of the Corporations Code, may enter any
place, building, or tenement, where there is an exhibition of the
fighting of birds or animals, or where preparations are being made
for such an exhibition, and, without a warrant, arrest all persons
present.
SEC. 12. Section 597z of the Penal Code is amended to read:
597z. A humane officer appointed under Section 14502 of the
Corporations Code or the State Sealer may enter any facility
utilizing a carbon monoxide gas chamber for the purpose of inspecting
the operation of such facility to determine whether there is
compliance with Section 597u.
SEC. 13. Section 11105 of the Penal Code is amended to read:
11105. (a) (1) The Department of Justice shall maintain state
summary criminal history information.
(2) As used in this section:
(i) "State summary criminal history information" means the master
record of information compiled by the Attorney General pertaining to
the identification and criminal history of any person, such as name,
date of birth, physical description, fingerprints, photographs, date
of arrests, arresting agencies and booking numbers, charges,
dispositions, and similar data about the person.
(ii) "State summary criminal history information" does not refer
to records and data compiled by criminal justice agencies other than
the Attorney General, nor does it refer to records of complaints to
or investigations conducted by, or records of intelligence
information or security procedures of, the office of the Attorney
General and the Department of Justice.
(b) The Attorney General shall furnish state summary criminal
history information to any of the following, if needed in the course
of their duties, provided that when information is furnished to
assist an agency, officer, or official of state or local government,
a public utility, or any entity, in fulfilling employment,
certification, or licensing duties, Chapter 1321 of the Statutes of
1974 and of Section 432.7 of the Labor Code shall apply:
(1) The courts of the
state.
(2) Peace officers of the state as defined in Section 830.1,
subdivisions (a), (b), and (f) of Section 830.2, subdivision (a) of
Section 830.3, subdivisions (a) and (b) of Section 830.5, and
subdivision (a) of Section 830.31.
(3) District attorneys of the state.
(4) Prosecuting city attorneys of any city within the state.
(5) Probation officers of the state.
(6) Parole officers of the state.
(7) A public defender or attorney of record when representing a
person in proceedings upon a petition for a certificate of
rehabilitation and pardon pursuant to Section 4852.08.
(8) A public defender or attorney of record when representing a
person in a criminal case and if authorized access by statutory or
decisional law.
(9) Any agency, officer, or official of the state if the criminal
history information is required to implement a statute or regulation
that expressly refers to specific criminal conduct applicable to the
subject person of the state summary criminal history information, and
contains requirements or exclusions, or both, expressly based upon
that specified criminal conduct.
(10) Any city or county, or city and county, or district, or any
officer, or official thereof if access is needed in order to assist
that agency, officer, or official in fulfilling employment,
certification, or licensing duties, and if the access is specifically
authorized by the city council, board of supervisors, or governing
board of the city, county, or district if the criminal history
information is required to implement a statute, ordinance, or
regulation that expressly refers to specific criminal conduct
applicable to the subject person of the state summary criminal
history information, and contains requirements or exclusions, or
both, expressly based upon that specified criminal conduct.
(11) The subject of the state summary criminal history information
under procedures established under Article 5 (commencing with
Section 11120) of Chapter 1 of Title 1 of Part 4.
(12) Any person or entity when access is expressly authorized by
statute if the criminal history information is required to implement
a statute or regulation that expressly refers to specific criminal
conduct applicable to the subject person of the state summary
criminal history information, and contains requirements or
exclusions, or both, expressly based upon that specified criminal
conduct.
(13) Health officers of a city, county, or city and county, or
district, when in the performance of their official duties enforcing
Section 120175 of the Health and Safety Code.
(14) Any managing or supervising correctional officer of a county
jail or other county correctional facility.
(15) Any humane society, or society for the prevention of cruelty
to animals, for the specific purpose of complying with Section 14502
of the Corporations Code for the appointment of level 1 humane
officers.
(c) The Attorney General may furnish state summary criminal
history information upon a showing of a compelling need to any of the
following, provided that when information is furnished to assist an
agency, officer, or official of state or local government, a public
utility, or any entity, in fulfilling employment, certification, or
licensing duties, Chapter 1321 of the Statutes of 1974 and of Section
432.7 of the Labor Code shall apply:
(1) Any public utility as defined in Section 216 of the Public
Utilities Code that operates a nuclear energy facility when access is
needed in order to assist in employing persons to work at the
facility, provided that, if the Attorney General supplies the data,
he or she shall furnish a copy of the data to the person to whom the
data relates.
(2) To a peace officer of the state other than those included in
subdivision (b).
(3) To a peace officer of another country.
(4) To public officers (other than peace officers) of the United
States, other states, or possessions or territories of the United
States, provided that access to records similar to state summary
criminal history information is expressly authorized by a statute of
the United States, other states, or possessions or territories of the
United States if the information is needed for the performance of
their official duties.
(5) To any person when disclosure is requested by a probation,
parole, or peace officer with the consent of the subject of the state
summary criminal history information and for purposes of furthering
the rehabilitation of the subject.
(6) The courts of the United States, other states, or territories
or possessions of the United States.
(7) Peace officers of the United States, other states, or
territories or possessions of the United States.
(8) To any individual who is the subject of the record requested
if needed in conjunction with an application to enter the United
States or any foreign nation.
(9) Any public utility as defined in Section 216 of the Public
Utilities Code, if access is needed in order to assist in employing
current or prospective employees who in the course of their
employment may be seeking entrance to private residences. The
information provided shall be limited to the record of convictions
and any arrest for which the person is released on bail or on his or
her own recognizance pending trial.
If the Attorney General supplies the data pursuant to this
paragraph, the Attorney General shall furnish a copy of the data to
the current or prospective employee to whom the data relates.
Any information obtained from the state summary criminal history
is confidential and the receiving public utility shall not disclose
its contents, other than for the purpose for which it was acquired.
The state summary criminal history information in the possession of
the public utility and all copies made from it shall be destroyed not
more than 30 days after employment or promotion or transfer is
denied or granted, except for those cases where a current or
prospective employee is out on bail or on his or her own recognizance
pending trial, in which case the state summary criminal history
information and all copies shall be destroyed not more than 30 days
after the case is resolved.
A violation of this paragraph is a misdemeanor, and shall give the
current or prospective employee who is injured by the violation a
cause of action against the public utility to recover damages
proximately caused by the violations. Any public utility's request
for state summary criminal history information for purposes of
employing current or prospective employees who may be seeking
entrance to private residences in the course of their employment
shall be deemed a "compelling need" as required to be shown in this
subdivision.
Nothing in this section shall be construed as imposing any duty
upon public utilities to request state summary criminal history
information on any current or prospective employees.
(10) To any campus of the California State University or the
University of California, or any four-year college or university
accredited by a regional accreditation organization approved by the
United States Department of Education, if needed in conjunction with
an application for admission by a convicted felon to any special
education program for convicted felons, including, but not limited
to, university alternatives and halfway houses. Only conviction
information shall be furnished. The college or university may
require the convicted felon to be fingerprinted, and any inquiry to
the department under this section shall include the convicted felon's
fingerprints and any other information specified by the department.
(d) Whenever an authorized request for state summary criminal
history information pertains to a person whose fingerprints are on
file with the Department of Justice and the department has no
criminal history of that person, and the information is to be used
for employment, licensing, or certification purposes, the fingerprint
card accompanying the request for information, if any, may be
stamped "no criminal record" and returned to the person or entity
making the request.
(e) Whenever state summary criminal history information is
furnished as the result of an application and is to be used for
employment, licensing, or certification purposes, the Department of
Justice may charge the person or entity making the request a fee that
it determines to be sufficient to reimburse the department for the
cost of furnishing the information. In addition, the Department of
Justice may add a surcharge to the fee to fund maintenance and
improvements to the systems from which the information is obtained.
Notwithstanding any other law, any person or entity required to pay a
fee to the department for information received under this section
may charge the applicant a fee sufficient to reimburse the person or
entity for this expense. All moneys received by the department
pursuant to this section, Sections 11105.3 and 12054 of the Penal
Code, and Section 13588 of the Education Code shall be deposited in a
special account in the General Fund to be available for expenditure
by the department to offset costs incurred pursuant to those sections
and for maintenance and improvements to the systems from which the
information is obtained upon appropriation by the Legislature.
(f) Whenever there is a conflict, the processing of criminal
fingerprints and fingerprints of applicants for security guard or
alarm agent registrations or firearms qualification permits submitted
pursuant to Section 7514 of the Business and Professions Code shall
take priority over the processing of applicant fingerprints.
(g) It is not a violation of this section to disseminate
statistical or research information obtained from a record, provided
that the identity of the subject of the record is not disclosed.
(h) It is not a violation of this section to include information
obtained from a record in (1) a transcript or record of a judicial or
administrative proceeding or (2) any other public record if the
inclusion of the information in the public record is authorized by a
court, statute, or decisional law.
(i) Notwithstanding any other law, the Department of Justice or
any state or local law enforcement agency may require the submission
of fingerprints for the purpose of conducting summary criminal
history information checks that are authorized by law.
(j) The state summary criminal history information shall include
any finding of mental incompetence pursuant to Chapter 6 (commencing
with Section 1367) of Title 10 of Part 2 arising out of a complaint
charging a felony offense specified in Section 290.
SEC. 14. Section 11165.16 of the Penal Code is amended to read:
11165.16. (a) For the purposes of this article, the following
terms have the following meanings:
(1) "Animal control officer" means any person employed by a city,
county, or city and county for the purpose of enforcing animal
control laws or regulations.
(2) "Humane society officer" means any person appointed or
employed by a public or private entity as a humane officer who is
qualified pursuant to Section 14502 or 14503 of the Corporations
Code.
(b) No firefighter, animal control officer, or humane society
officer shall be subject to the reporting requirements of this
article unless he or she has received training in identification and
reporting of child abuse equivalent to that received by teachers and
child care custodians.
SEC. 15. Section 12031 of the Penal Code is amended to read:
12031. (a) (1) A person is guilty of carrying a loaded firearm
when he or she carries a loaded firearm on his or her person or in a
vehicle while in any public place or on any public street in an
incorporated city or in any public place or on any public street in a
prohibited area of unincorporated territory.
(2) Carrying a loaded firearm in violation of this section is
punishable, as follows:
(A) Where the person previously has been convicted of any felony,
or of any crime made punishable by this chapter, as a felony.
(B) Where the firearm is stolen and the person knew or had
reasonable cause to believe that it was stolen, as a felony.
(C) Where the person is an active participant in a criminal street
gang, as defined in subdivision (a) of Section 186.22, under the
Street Terrorism Enforcement and Prevention Act (Chapter 11
(commencing with Section 18620) of Title 7 of Part 1), as a felony.
(D) Where the person is not in lawful possession of the firearm,
as defined in this section, or is within a class of persons
prohibited from possessing or acquiring a firearm pursuant to Section
12021 or 12021.1 of this code or Section 8100 or 8103 of the Welfare
and Institutions Code, as a felony.
(E) Where the person has been convicted of a crime against a
person or property, or of a narcotics or dangerous drug violation, by
imprisonment in the state prison, or by imprisonment in a county
jail not to exceed one year, by a fine not to exceed one thousand
dollars ($1,000), or by both that imprisonment and fine.
(F) In all cases other than those specified in subparagraphs (A)
to (E), inclusive, as a misdemeanor, punishable by imprisonment in a
county jail not to exceed one year, by a fine not to exceed one
thousand dollars ($1,000), or by both that imprisonment and fine.
(G) For purposes of this section, "lawful possession of the
firearm" means that the person who has possession or custody of the
firearm either owns the firearm or has the permission of the owner or
a person who otherwise has apparent authority to possess or have
custody of the firearm. A person who takes a firearm without the
permission of the owner or without the permission of a person who has
custody of the firearm does not have lawful possession of the
firearm.
(3) Nothing in this section shall preclude prosecution under
Sections 12021 and 12021.1 of this code, Section 8100 or 8103 of the
Welfare and Institutions Code, or any other law with a greater
penalty than this section.
(4) Notwithstanding paragraphs (2) and (3) of subdivision (a) of
Section 836, a peace officer may make an arrest without a warrant:
(A) When the person arrested has violated this section, although
not in the officer's presence.
(B) Whenever the officer has reasonable cause to believe that the
person to be arrested has violated this section, whether or not this
section has, in fact, been violated.
(5) (A) Every person convicted under this section who has
previously been convicted of an offense enumerated in Section
12001.6, or of any crime made punishable under this chapter, shall
serve a term of at least three months in a county jail, or, if
granted probation, or if the execution or imposition of sentence is
suspended, it shall be a condition thereof that he or she be
imprisoned for a period of at least three months.
(B) The court shall apply the three-month minimum sentence except
in unusual cases where the interests of justice would best be served
by granting probation or suspending the imposition or execution of
sentence without the minimum imprisonment required in this
subdivision or by granting probation or suspending the imposition or
execution of sentence with conditions other than those set forth in
this subdivision, in which case, the court shall specify on the
record and shall enter on the minutes the circumstances indicating
that the interests of justice would best be served by that
disposition.
(6) A violation of this section which is punished by imprisonment
in a county jail not exceeding one year shall not constitute a
conviction of a crime punishable by imprisonment for a term exceeding
one year for the purposes of determining federal firearms
eligibility under Section 922(g)(1) of Title 18 of the United States
Code.
(b) Subdivision (a) shall not apply to any of the following:
(1) Peace officers listed in Section 830.1 or 830.2, whether
active or honorably retired, other duly appointed peace officers,
honorably retired peace officers listed in subdivision (c) of Section
830.5, other honorably retired peace officers who during the course
and scope of their employment as peace officers were authorized to,
and did, carry firearms, full-time paid peace officers of other
states and the federal government who are carrying out official
duties while in California, or any person summoned by any of those
officers to assist in making arrests or preserving the peace while
the person is actually engaged in assisting that officer. Any peace
officer described in this paragraph who has been honorably retired
shall be issued an identification certificate by the law enforcement
agency from which the officer has retired. The issuing agency may
charge a fee necessary to cover any reasonable expenses incurred by
the agency in issuing certificates pursuant to this paragraph and
paragraph (3).
Any officer, except an officer listed in Section 830.1, 830.2, or
subdivision (c) of Section 830.5 who retired prior to January 1,
1981, shall have an endorsement on the identification certificate
stating that the issuing agency approves the officer's carrying of a
loaded firearm.
No endorsement or renewal endorsement issued pursuant to paragraph
(2) shall be effective unless it is in the format set forth in
subparagraph (D) of paragraph (1) of subdivision (a) of Section
12027, except that any peace officer listed in subdivision (f) of
Section 830.2 or in subdivision (c) of Section 830.5, who is retired
between January 2, 1981, and on or before December 31, 1988, and who
is authorized to carry a loaded firearm pursuant to this section,
shall not be required to have an endorsement in the format set forth
in subparagraph (D) of paragraph (1) of subdivision (a) of Section
12027 until the time of the issuance, on or after January 1, 1989, of
a renewal endorsement pursuant to paragraph (2).
(2) A retired peace officer, except an officer listed in Section
830.1, 830.2, or subdivision (c) of Section 830.5 who retired prior
to January 1, 1981, shall petition the issuing agency for renewal of
his or her privilege to carry a loaded firearm every five years. An
honorably retired peace officer listed in Section 830.1 or 830.2 or
subdivision (c) of Section 830.5 who retired prior to January 1,
1981, shall not be required to obtain an endorsement from the issuing
agency to carry a loaded firearm. The agency from which a peace
officer is honorably retired may, upon initial retirement of the
peace officer, or at any time subsequent thereto, deny or revoke, for
good cause, the retired officer's privilege to carry a loaded
firearm. A peace officer who is listed in Section 830.1 or 830.2 or
subdivision (c) of Section 830.5 who is retired prior to January 1,
1981, shall have his or her privilege to carry a loaded firearm
denied or revoked by having the agency from which the officer retired
stamp on the officer's identification certificate "No CCW privilege."
(3) An honorably retired peace officer who is listed in
subdivision (c) of Section 830.5 and authorized to carry loaded
firearms by this subdivision shall meet the training requirements of
Section 832 and shall qualify with the firearm at least annually.
The individual retired peace officer shall be responsible for
maintaining his or her eligibility to carry a loaded firearm. The
Department of Justice shall provide subsequent arrest notification
pursuant to Section 11105.2 regarding honorably retired peace
officers listed in subdivision (c) of Section 830.5 to the agency
from which the officer has retired.
(4) Members of the military forces of this state or of the United
States engaged in the performance of their duties.
(5) Persons who are using target ranges for the purpose of
practice shooting with a firearm or who are members of shooting clubs
while hunting on the premises of those clubs.
(6) The carrying of pistols, revolvers, or other firearms capable
of being concealed upon the person by persons who are authorized to
carry those weapons pursuant to Article 3 (commencing with Section
12050) of Chapter 1 of Title 2 of Part 4.
(7) Armored vehicle guards, as defined in Section 7521 of the
Business and Professions Code, (A) if hired prior to January 1, 1977;
or (B) if hired on or after that date, if they have received a
firearms qualification card from the Department of Consumer Affairs,
in each case while acting within the course and scope of their
employment.
(8) Upon approval of the sheriff of the county in which they
reside, honorably retired federal officers or agents of federal law
enforcement agencies, including, but not limited to, the Federal
Bureau of Investigation, the Secret Service, the United States
Customs Service, the Federal Bureau of Alcohol, Tobacco, and
Firearms, the Federal Bureau of Narcotics, the Drug Enforcement
Administration, the United States Border Patrol, and officers or
agents of the Internal Revenue Service who were authorized to carry
weapons while on duty, who were assigned to duty within the state for
a period of not less than one year, or who retired from active
service in the state.
Retired federal officers or agents shall provide the sheriff with
certification from the agency from which they retired certifying
their service in the state, the nature of their retirement, and
indicating the agency's concurrence that the retired federal officer
or agent should be accorded the privilege of carrying a loaded
firearm.
Upon approval, the sheriff shall issue a permit to the retired
federal officer or agent indicating that he or she may carry a loaded
firearm in accordance with this paragraph. The permit shall be
valid for a period not exceeding five years, shall be carried by the
retiree while carrying a loaded firearm, and may be revoked for good
cause.
The sheriff of the county in which the retired federal officer or
agent resides may require recertification prior to a permit renewal,
and may suspend the privilege for cause. The sheriff may charge a
fee necessary to cover any reasonable expenses incurred by the
county.
(c) Subdivision (a) shall not apply to any of the following who
have completed a regular course in firearms training approved by the
Commission on Peace Officer Standards and Training:
(1) Patrol special police officers appointed by the police
commission of any city, county, or city and county under the express
terms of its charter who also, under the express terms of the
charter, (A) are subject to suspension or dismissal after a hearing
on charges duly filed with the commission after a fair and impartial
trial, (B) are not less than 18 years of age or more than 40 years of
age, (C) possess physical qualifications prescribed by the
commission, and (D) are designated by the police commission as the
owners of a certain beat or territory as may be fixed from time to
time by the police commission.
(2) The carrying of weapons by animal control officers or
zookeepers, regularly compensated as such by a governmental agency
when acting in the course and scope of their employment and when
designated by a local ordinance or, if the governmental agency is not
authorized to act by ordinance, by a resolution, either individually
or by class, to carry the weapons, or by persons who are authorized
to carry the weapons pursuant to Section 14502 of the Corporations
Code, while actually engaged in the performance of their duties
pursuant to that section.
(3) Harbor police officers designated pursuant to Section 663.5 of
the Harbors and Navigation Code.
(d) Subdivision (a) shall not apply to any of the following who
have been issued a certificate pursuant to Section 12033. The
certificate shall not be required of any person who is a peace
officer, who has completed all training required by law for the
exercise of his or her power as a peace officer, and who is employed
while not on duty as a peace officer.
(1) Guards or messengers of common carriers, banks, and other
financial institutions while actually employed in and about the
shipment, transportation, or delivery of any money, treasure,
bullion, bonds, or other thing of value within this state.
(2) Guards of contract carriers operating armored vehicles
pursuant to California Highway Patrol and Public Utilities Commission
authority (A) if hired prior to January 1, 1977; or (B) if hired on
or after January 1, 1977, if they have completed a course in the
carrying and use of firearms which meets the standards prescribed by
the Department of Consumer Affairs.
(3) Private investigators and private patrol operators who are
licensed pursuant to Chapter 11.5 (commencing with Section 7512) of,
and alarm company operators who are licensed pursuant to Chapter 11.6
(commencing with Section 7590) of, Division 3 of the Business and
Professions Code, while acting within the course and scope of their
employment.
(4) Uniformed security guards or night watch persons employed by
any public agency, while acting within the scope and course of their
employment.
(5) Uniformed security guards, regularly employed and compensated
in that capacity by persons engaged in any lawful business, and
uniformed alarm agents employed by an alarm company operator, while
actually engaged in protecting and preserving the property of their
employers or on duty or en route to or from their residences or their
places of employment, and security guards and alarm agents en route
to or from their residences or employer-required range training.
Nothing in this paragraph shall be construed to prohibit cities and
counties from enacting ordinances requiring alarm agents to register
their names.
(6) Uniformed employees of private patrol operators and private
investigators licensed pursuant to Chapter 11.5 (commencing with
Section 7512) of Division 3 of the Business and Professions Code,
while acting within the course and scope of their employment.
(e) In order to determine whether or not a firearm is loaded for
the purpose of enforcing this section, peace officers are authorized
to examine any firearm carried by anyone on his or her person or in a
vehicle while in any public place or on any public street in an
incorporated city or prohibited area of an unincorporated territory.
Refusal to allow a peace officer to inspect a firearm pursuant to
this section constitutes probable cause for arrest for violation of
this section.
(f) As used in this section, "prohibited area" means any place
where it is unlawful to discharge a weapon.
(g) A firearm shall be deemed to be loaded for the purposes of
this section when there is an unexpended cartridge or shell,
consisting of a case that holds a charge of powder and a bullet or
shot, in, or attached in
any manner to, the firearm, including, but not limited to, in the
firing chamber, magazine, or clip thereof attached to the firearm;
except that a muzzle-loader firearm shall be deemed to be loaded when
it is capped or primed and has a powder charge and ball or shot in
the barrel or cylinder.
(h) Nothing in this section shall prevent any person engaged in
any lawful business, including a nonprofit organization, or any
officer, employee, or agent authorized by that person for lawful
purposes connected with that business, from having a loaded firearm
within the person's place of business, or any person in lawful
possession of private property from having a loaded firearm on that
property.
(i) Nothing in this section shall prevent any person from carrying
a loaded firearm in an area within an incorporated city while
engaged in hunting, provided that the hunting at that place and time
is not prohibited by the city council.
(j) (1) Nothing in this section is intended to preclude the
carrying of any loaded firearm, under circumstances where it would
otherwise be lawful, by a person who reasonably believes that the
person or property of himself or herself or of another is in
immediate, grave danger and that the carrying of the weapon is
necessary for the preservation of that person or property. As used
in this subdivision, "immediate" means the brief interval before and
after the local law enforcement agency, when reasonably possible, has
been notified of the danger and before the arrival of its
assistance.
(2) A violation of this section is justifiable when a person who
possesses a firearm reasonably believes that he or she is in grave
danger because of circumstances forming the basis of a current
restraining order issued by a court against another person or persons
who has or have been found to pose a threat to his or her life or
safety. This paragraph may not apply when the circumstances involve
a mutual restraining order issued pursuant to Division 10 (commencing
with Section 6200) of the Family Code absent a factual finding of a
specific threat to the person's life or safety. It is not the intent
of the Legislature to limit, restrict, or narrow the application of
current statutory or judicial authority to apply this or other
justifications to defendants charged with violating Section 12025 or
of committing other similar offenses.
Upon trial for violating this section, the trier of fact shall
determine whether the defendant was acting out of a reasonable belief
that he or she was in grave danger.
(k) Nothing in this section is intended to preclude the carrying
of a loaded firearm by any person while engaged in the act of making
or attempting to make a lawful arrest.
(l) Nothing in this section shall prevent any person from having a
loaded weapon, if it is otherwise lawful, at his or her place of
residence, including any temporary residence or campsite.
SEC. 16. Section 12583 of the Penal Code is amended to read:
12583. Nothing in this article shall prohibit the sale to,
purchase by, possession of, or use of blowguns or blowgun ammunition
by zookeepers, animal control officers, Department of Fish and Game
personnel, humane officers whose names are maintained in the county
record of humane officers pursuant to Section 14502 of the
Corporations Code, or veterinarians in the course and scope of their
business in order to administer medicine to animals.
SEC. 17. It is the intent of the Legislature that Chapter 2
(commencing with Section 14310) of Part 7 of Division 3 of Title 1 of
the Corporations Code as added by the act enacting this section
shall not be construed to alter the laws regarding service areas of
public water utilities regulated by the Public Utilities Commission.
SEC. 18. Section 9.5 of this bill incorporates amendments to
Section 25100 of the Corporations Code proposed by both this bill and
AB 721. It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 1998, (2) each
bill amends Section 25100 of the Corporations Code, and (3) this bill
is enacted after AB 721, in which case Section 9 of this bill shall
not become operative.