BILL NUMBER: AB 919 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 19, 2010
AMENDED IN SENATE JUNE 22, 2009
AMENDED IN ASSEMBLY JUNE 1, 2009
AMENDED IN ASSEMBLY APRIL 13, 2009
INTRODUCED BY Assembly Member Nava
FEBRUARY 26, 2009
An act to add Section 2948.2 to the Civil Code, and to
amend Section 27288.1 of the Government Code, relating to mortgages.
An act to add Chapter 7.5 (commencing with Section
750) to Division 1 of Title 1 of the Corporations Code, relating to
corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 919, as amended, Nava. Mortgages: information and
recordation. Corporations: political activities:
shareholder objections.
Existing law provides a shareholder dissenter's rights with
respect to specified corporate transactions, including mergers and
sales of assets, if a shareholder does not vote in favor of the
transaction and notifies the corporation, as specified, that the
shareholder dissents, and requires the corporation to pay the
dissenting shareholder cash in the amount of the fair market value of
the shareholder's dissenting shares, as specified, in lieu of the
other consideration that a nondissenting shareholder is entitled to
receive.
The Political Reform Act of 1974 provides for the regulation of
political campaign financing, including the reporting and disclosure
of campaign contributions and expenditures. Under the act, elected
officers, candidates for elective office, and campaign committees are
required to file periodic campaign statements that disclose
specified information for specified reporting periods, including the
amount of contributions received and the identities of donors.
This bill would require a corporation, as defined, that makes a
contribution or expenditure to, or in support of, or in opposition
to, a candidate, ballot measure campaign, or a signature-gathering
effort on behalf of a ballot measure, political party, or political
action committee to report those contributions or expenditures to
shareholders by specified means, including posting the report on the
corporation's Internet Web site, if any, and to refund to an
objecting shareholder a pro rata share of dollar value of those
contributions or expenditures, based on the shareholder's share
ownership. The bill would define, among other terms, "objecting
shareholder" and "political activity" for these purposes.
This bill would provide for a civil cause of action, including
recovery of reasonable attorney's fees, by a shareholder against a
corporation for violations of the bill's provisions. The bill would
require a corporation to maintain records that include copies of the
reports on its political activities for 5 years, and to make copies
of these reports available to the Secretary of State upon request.
The bill would also state findings and declarations of the
Legislature.
Upon a breach of the obligation of a mortgage or transfer of an
interest in property, in order to exercise a power of sale, existing
law requires the trustee, mortgagee, or beneficiary to record in the
office of the county recorder in the county where the mortgaged or
trust property is situated, a notice of default. Existing law
provides a form for a mortgage of real property. Existing law
requires a county recorder, upon proper payment, to accept any
instrument authorized by statute to be recorded, provided that it
meets specified requirements. Existing law requires certain documents
relating to real property that are to be recorded to contain
specified information.
This bill would require a mortgage or deed of trust that is
secured by residential real property, as defined, to have an attached
Residential Mortgage Participant Rider form, as set forth, that
identifies by name any appraiser, lender, loan originator, and real
estate broker, as defined, who were involved in the origination of
the mortgage or deed of trust and his or her professional license
number, if any. The bill would prohibit the county recorder from
accepting a mortgage or deed of trust for recordation if a
Residential Mortgage Participant Rider form is not included. By
creating a duty for a county recorder to examine a mortgage or deed
of trust to establish if a completed rider has been included, this
bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) Corporations make substantial political contributions and
expenditures to support and oppose candidates, ballot measures,
political parties, and political causes. However, decisions to use
corporate funds for political contributions and expenditures are
usually made by corporate boards and executives, rather than the
shareholders who own the corporations.
(b) Shareholders have a right to know how corporations are
spending shareholder funds to make political contributions and
expenditures to support or oppose candidates, ballot measures,
political parties, and political causes.
(c) Most shareholders have no means by which they may learn of,
influence, or object to the political activities of the corporations
in which they have invested. Moreover, most shareholders have no
means by which they may demand reimbursement or demand that their
invested funds not be used to make political contributions or
expenditures to support candidates, ballot measures, political
parties, or political causes to which the shareholders are opposed.
(d) By limiting the extent to which corporate political
contributions and expenditures may be regulated, the United States
Supreme Court, through its decision in Citizens United v. Federal
Election Com'n (2010) 130 S.Ct. 876, has increased the need for
greater accountability of corporations to their shareholders with
regard to political contributions and expenditures.
(e) The Citizens United decision was handed down in January 2010,
but the debate over whether the invested funds of shareholders should
be used for political activities without their consent is not a new
one. In 1905, President Theodore Roosevelt said, "All contributions
by corporations to any political committee or for any political
purpose should be forbidden by law; directors should not be permitted
to use stockholders' money for such purposes."
(f) It is the intent of the Legislature in enacting this act to
protect shareholders from having portions of their investments used
for political activities that the shareholders do not support.
SEC. 2. Chapter 7.5 (commencing with Section 750)
is added to Division 1 of Title 1 of the Corporations Code
, to read:
CHAPTER 7.5. POLITICAL OBJECTIONS OF SHAREHOLDERS
750. As used in this chapter, the following terms have the
following meanings:
(a) "Ballot measure" means a constitutional amendment or other
proposition that is submitted to a popular vote at an election by
action of a legislative body, or that is submitted or is intended to
be submitted to a popular vote at an election by initiative,
referendum, or recall procedure, whether or not it qualifies for the
ballot.
(b) "Corporation" means any of the following:
(1) A publicly held corporation with shareholders.
(2) An entity in which a corporation with shareholders has an
equity interest.
(3) The parent corporation of a subsidiary or affiliate of a
corporation with shareholders.
(c) "Objecting shareholder" means a shareholder who informs the
corporation that the shareholder does not wish the pro rata value of
the shareholder's shares to be used for political activities.
(d) "Political activity" means a contribution or expenditure made
to, or in support of, or in opposition to, a candidate, ballot
measure campaign, signature-gathering effort on behalf of a ballot
measure, political party, or political action committee.
(e) "Public corporation" means a corporation that is required to
file periodic reports pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (15 U.S.C. Secs. 78m(a),
78o(d)).
(f) "Shareholder" has the same meaning as set forth in Section
185.
751. A corporation that has shareholders with legal residency in
California and that engages in political activity shall do all of the
following:
(a) (1) Within 30 days after the close of the corporation's fiscal
year, the corporation shall prepare a report entitled "Political
Activity Report" describing all political activity by the corporation
during that fiscal year and provide a written copy of the report to
the corporation's California shareholders. The report shall include
all of the following:
(A) A description of the political activities, the intended
results of those activities, and the anticipated benefits of those
activities to the corporation's shareholders.
(B) The name of the person, candidate, committee, or political
party, or a description of the political cause, to which each
contribution or expenditure was made.
(C) The aggregate amount of the contribution or contributions and
expenditure or expenditures for each candidate, ballot measure
campaign, signature-gathering effort on behalf of a ballot measure,
political party, or political action committee.
(D) If a contribution or expenditure was made in support of or in
opposition to a candidate, the office sought by the candidate and the
political party affiliation of the candidate.
(E) If a contribution or expenditure was made for or against a
ballot measure, a description of the ballot measure and a statement
as to whether the contribution or expenditure was made in support of
or in opposition to the ballot measure.
(2) A public corporation is deemed to have complied with this
subdivision if it includes the report required by paragraph (1) in
its annual report to shareholders under a separate caption entitled
"Political Activity Report," if the annual report is provided to
shareholders within 90 days of the fiscal yearend.
(3) If the corporation maintains an Internet Web site, the
corporation shall post the report required by this subdivision on its
Internet Web site.
(b) This section shall not apply to a corporation's use of
segregated accounts, political action committees, or political
committees, as long as the funds in those accounts or committees come
from shareholders, board members, or employees of the corporation
who, as individuals, choose to contribute to those accounts or
committees.
752. (a) A corporation required to submit a report pursuant to
Section 751 shall notify each shareholder, in writing, using the same
mailing used for the Political Activity Report, that the shareholder
has the right to object to the use of corporate funds equaling the
pro rata value of the shareholder's shares for political activities
for the fiscal year that directly follows the year to which the
Political Activity Report pertains. The written notification shall
inform the shareholder of the appropriate procedure for objecting.
(b) The corporation shall give each shareholder a minimum of 60
days following receipt of the notification required by subdivision
(a) to file a notice that he or she is objecting. A shareholder who
fails to file a notice of objection within the timeframe established
by the corporation shall be deemed to have consented to the use of
corporate funds equaling the pro rata value of the shareholder's
shares for political activities.
(c) At the end of the fiscal year in which a shareholder has
objected pursuant to subdivision (b), the corporation shall calculate
the objecting shareholder's pro rata share of the total dollar value
of the political activities in the previous fiscal year, and shall
return that amount to the shareholder in the form of a dividend. The
objecting shareholder's pro rata share shall be determined by
dividing the total dollar value of the political activities in the
previous fiscal year by the number of outstanding shares, and
multiplying the result by the number of shares held by the objecting
shareholder.
(d) Only shares owned by an objecting shareholder at the time of
the objection shall be used in the fiscal yearend calculation
pursuant to subdivision (c).
(e) A corporation shall not be required to provide the notice of
objection to a shareholder who does not own shares at the beginning
of the fiscal year and subsequently purchases shares after that date.
753. (a) A corporation subject to Section 751 shall maintain
records of its political activities, including the report required by
subdivision (a), for a minimum of five years.
(b) Upon a request by the Secretary of State, a corporation shall
file with the Secretary of State a copy of each report produced
pursuant to subdivision (a) of Section 751.
754. No provision of Section 751 or 752 shall be construed to
relieve a corporation of its obligations under existing law,
including but not limited to, the following:
(a) Section 604, or a successor statute or regulation.
(b) Any state or federal statute or regulation that regulates the
solicitation of proxies.
(c) With respect to a corporation with an outstanding class of
securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (15 U.S.C. Sec. 78l), the proxy
rules promulgated under that act.
755. (a) A violation of Section 751 or 752 by a corporation shall
create a civil cause of action for damages against the corporation
that may be brought by any shareholder of the corporation.
(b) Reasonable attorney's fees and costs may be recovered by the
shareholder for any action brought pursuant to this section.
(c) The remedies provided in this section are in addition to any
other rights or remedies available under any other provision of law.
756. The provisions of this chapter are severable. If any
provision of this chapter or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SECTION 1. Section 2948.2 is added to the Civil
Code, to read:
2948.2. (a) A mortgage or deed of trust that is secured by
residential real property shall have attached a fully completed and
signed Residential Mortgage Participant Rider form, as set forth in
subdivision (d). A Residential Mortgage Participant Rider is a
mortgage rider that identifies by name any of the following parties
who participated in the origination of the mortgage or deed of trust
and his or her professional license number, if any:
(1) Appraiser.
(2) Lender.
(3) Loan originator.
(4) Real estate broker.
(b) If a transaction does not include any of the parties listed in
subdivision (a), the Residential Mortgage Participant Rider shall
indicate that the participant type is not applicable.
(c) For purposes of this section:
(1) "Appraiser" means a person who is, or should be, licensed
under Part 3 (commencing with Section 11300) of Division 4 of the
Business and Professions Code.
(2) "Lender" means the secured creditor or creditors named in the
debt obligation and document creating the lien.
(3) "Loan originator" means a person who, for compensation or gain
or in the expectation of compensation or gain, takes a residential
mortgage application or offers or negotiates the terms or a
residential mortgage loan. "Loan originator" does not include:
(A) A person engaged solely as a loan processor or underwriter.
(B) A person or entity that performs only real estate brokerage
activities and is licensed or registered in accordance with
California law, unless the person or entity is compensated by a
lender, a mortgage broker, a loan originator, or by any agent of
those parties.
(C) A person or entity that is involved solely in an extension of
credit relating to a timeshare plan as defined in Section 101 of
Title 11 of the United States Code.
(4) "Residential mortgage loan" means a credit transaction that is
secured by residential real property that is improved by four or
fewer residential units.
(5) "Residential real property" means real property that is
improved by four or fewer residential units.
(d) The Residential Mortgage Participant Rider required pursuant
to this section, shall be in substantially the following form:
Residential Mortgage Participant Rider
(To be recorded with Mortgage or Deed of Trust
pursuant to Section 2948.2 of the Civil Code.)
Residential real property address: _____________
________________________________________________
+------------------+------------+------------------+
|Participant |Name |Professional |
| | |License Number |
+------------------+------------+------------------+
|Appraiser(s) | | |
| | | |
|( ) Not | | |
|Applicable* | | |
+------------------+------------+------------------+
|Lender(s) | | |
| | | |
|( ) Not | | |
|Applicable* | | |
+------------------+------------+------------------+
|Loan | | |
|originator(s) | | |
| | | |
|( ) Not | | |
|Applicable* | | |
+------------------+------------+------------------+
|Real estate | | |
|broker(s) | | |
| | | |
|( ) Not | | |
|Applicable* | | |
+------------------+------------+------------------+
*Note: In the event that a transaction does not
include any of the participants listed in the table
above, the box marked ""Not Applicable'' must be
checked in order for the form to be complete.
Form Completed by__________ Date: __________________
(Signed)
______________________
(Printed)
SEC. 2. Section 27288.1 of the Government Code
is amended to read:
27288.1. (a) All documents described in this section now or
hereafter authorized by law to be recorded in the official records of
a county shall contain the following information in addition to any
information as may be required by law pertaining to the particular
document:
(1) If the document effects or evidences a transfer or encumbrance
of an interest in real property, the name or names in which the
interest appears of record, except that a notice of assessment
recorded pursuant to Section 3114 of the Streets and Highways Code, a
notice of special tax lien recorded pursuant to Section 3114.5 of
the Streets and Highways Code, and a notice of award of contract
recorded pursuant to Section 5248 of the Streets and Highways Code,
shall show the name or names of the assessed owners as they appear on
the latest secured assessment roll.
(2) If the document releases or terminates any interest, right or
encumbrance, it shall contain or have appended thereto all of the
names of those persons and entities owning the title or interest
being relieved by the document, or the names of the owners of that
title or interest as they appeared at the time and in the document
creating the interest, right or encumbrance.
(3) In cases where the county tax collector is filing purchaser's
deeds with respect to a sale for defaulted taxes, those documents
shall be deemed to constitute compliance with this section.
(b) No document subject to this section shall be recorded or
indexed in the official records of a county unless it contains the
information required by this section as well as any additional
information required by law pertaining to the particular document,
including, but not limited to, the Residential Mortgage Participant
Rider form required by Section 2948.2 of the Civil Code, but the
recorder may rely upon the information contained in, or appended to,
the document being offered for record. The failure of any document to
include all of the names required by this section shall not affect
the constructive notice which would otherwise be afforded by the
recording of the document. This section shall not apply to a vacation
or abandonment by a public agency of a public highway or road.
SEC. 3. If the Commission on State Mandates
determines that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code.