BILL NUMBER: AB 2281 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Miller
FEBRUARY 18, 2010
An act to amend Sections 1502.1 and 2117.1 of the Corporations
Code, relating to corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 2281, as introduced, Miller. Corporate disclosures.
Existing law, the General Corporation Law, requires a domestic
corporation and a foreign corporation to file statements annually
with the Secretary of State disclosing specified information
concerning its operation and makes the information contained in the
statements open to public inspection. Existing law specifies
additional information that a publicly traded company is required to
include in the statement, including a description of any services
performed for the corporation by an independent auditor during its 2
most recent fiscal years, information regarding the compensation for
the most recent fiscal year of the corporation paid to each director
and certain corporate officers, information regarding any loans made
to any director in the 2 most recent fiscal years at below market
rates, and a description of any material pending legal proceedings to
which the corporation is a party, including any final judgments
entered against the corporation during the 5 preceding years.
This bill would provide that these publicly traded corporations
would be deemed to have satisfied various of those reporting
requirements if the corporation includes certain information
disclosed pursuant to federal securities laws relating to services
provided to the corporation by an independent auditor, compensation
paid to directors and certain corporate officers, and loans to
directors. The bill would also revise these reporting requirements to
require disclosure of any loan to a director in the 2 most recent
fiscal years and any final judgment entered against the corporation
during the fiscal years covered by the statement. The bill would make
various other clarifying and technical changes to the reporting
provisions applicable to publicly traded corporations.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1502.1 of the Corporations Code is amended to
read:
1502.1. (a) In addition to the statement required pursuant to
Section 1502, every publicly traded corporation shall file annually,
within 150 days after the end of its fiscal year, a statement, on a
form prescribed by the Secretary of State, that includes all of the
following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the corporation's annual financial
statements.
(2) A description of other services, if any, performed for the
corporation during its two most recent
recently completed fiscal years and the period between
the end of its most recent fiscal year and the date of the statement
by the foregoing independent auditor, by its parent
corporation, or by a subsidiary or corporate affiliate of the
independent auditor or its parent corporation. A publicly traded
corporation shall be deemed to satisfy the requirements of this
paragraph if it includes the information required to be disclosed
pursuant to Items 9(e)(1) to (9)(e)(4), inclusive, of Rule 14a-101
(17 C.F.R. 240.14a-101) adopted pursuant to the Securities Exchange
Act of 1934 (15 U.S.C. Sec. 78c).
(3) The name of the independent auditor employed by the
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The total compensation for the most recent fiscal
year of the corporation paid to each member of the board of directors
and paid to each of the five most highly compensated executive
officers of the corporation who are not members of the board of
directors , including and the number of
any shares issued, options for shares granted, and similar
equity-based compensation granted to each of those persons. If the
chief executive officer is not among the five most highly compensated
executive officers of the corporation, the compensation paid to the
chief executive officer shall also be included. A publicly
traded corporation shall be deemed to satisfy the requirements of
this paragraph with respect to executive officers if it
includes the total compensation for the most recent fiscal year of
the corporation paid to each of the executive officers for whom the
publicly traded corporation reports compensation for the most recent
fiscal year pursuant to Item 402(a)(3) or 402(m)(2), as applicable,
of Regulation S-K of the Securities and Exchange Commission (17
C.F.R. 229.402) and the number of any shares issued, options for
shares granted, and similar equity-based compensation granted to each
of those persons.
(5) A description of any loan , including the amount and
terms of the loan, made to any member of the board of
directors by the corporation during the corporation's two most recent
fiscal years at an interest rate lower than the interest
rate available from unaffiliated commercial lenders generally to a
similarly-situated borrower . A publicly traded
corporation shall be deemed to satisfy the requirements of this
paragraph if it includes the information with respect to any loan
required to be disclosed under Item 404(a) or 404(d)(1), as
applicable, of Regulation S-K of the Securities and Exchange
Commission (17 C.F.R. 229.404).
(6) A statement indicating whether an order for relief has been
entered in a bankruptcy case with respect to the corporation, its
executive officers, or members of the board of directors of the
corporation during the 10 years preceding the date of the statement.
(7) A statement indicating whether any member of the board of
directors or executive officer of the corporation was convicted of
fraud during the 10 years preceding the date of the statement, if the
conviction has not been overturned or expunged.
(8) A description of any material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the corporation or any of its subsidiaries is a party or of
which any of their property is the subject, as specified by
of a type that would be required to be disclosed under
Item 103 of Regulation S-K of the Securities Exchange
Commission (Section 229.103 of Title 12 of the Code of
Federal Regulations) (17 C.F.R. 229.103) . A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the
five years preceding the date of fiscal year covered
by the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded corporation" means a corporation, as defined
in Section 162, that is an issuer as defined in Section 3 of the
Securities Exchange Act of 1934, as amended (15 U.S.C. Sec. 78c), and
has at least one class of securities listed or admitted for
trading on a national securities exchange ,
or that is quoted on the OTC Bulletin Board
, or on the electronic quotation
service operated by Pink OTC Markets Inc.
(2) "Executive officer" means the chief executive officer,
president, any vice president in charge of a principal business unit,
division, or function, any other officer of the corporation who
performs a policymaking function, or any other person who performs
similar policymaking functions for the corporation.
(3) "Compensation" "Total compensation"
as used in paragraph (4) of subdivision (a) means all plan and
nonplan compensation awarded to, earned by, or paid to the person for
all services rendered in all capacities to the corporation and to
its subsidiaries, as the compensation is specified by Item
402 would be required to be disclosed under Item 402
(c)(2)(x) or 402(n)(2)(x), as applicable, in the case of the
executive officer of the corporation, and Item 402(k)(2)
(viii) or 402(r)(2)(viii), as applicable, in the case of members of
the board of directors of the corporation, of Regulation S-K of
the Securities and Exchange Commission (Section 229.402 of
Title 17 of the Code of Federal Regulations) (17
C.F.R. 229.402) .
(4) "Loan" as used in paragraph (5) of subdivision (a)
excludes an advance for expenses permitted under subdivision (d) of
Section 315, the corporation's payment of life insurance premiums
permitted under subdivision (e) of Section 315, and an advance of
expenses permitted under Section 317 means
indebtedness that would be required to be disclosed under Item 404(a)
or 404(d)(1), as applicable, of Regulation S-K of the Securities and
Exchange Commission (17 C.F.R. 229.404) .
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A corporation shall certify that the information it provides
pursuant to this section is true and correct. No claim may be made
against the state for inaccurate information contained in statements
filed under this section with the Secretary of State.
SEC. 2. Section 2117.1 of the Corporations Code is amended to
read:
2117.1. (a) In addition to the statement required pursuant to
Section 2117, every publicly traded foreign corporation shall file
annually, within 150 days after the end of its fiscal year, on a form
prescribed by the Secretary of State, a statement that includes all
of the following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the publicly traded foreign corporation's
annual financial statements.
(2) A description of other services, if any, performed for the
publicly traded foreign corporation during its two most
recent recently completed fiscal years
and the period between the end of its most recent fiscal year and the
date of the statement by the foregoing independent
auditor, by its parent corporation, or by a subsidiary or corporate
affiliate of the independent auditor or its parent corporation.
A publicly traded foreign corporation shall be deemed to satisfy the
requirements of this paragraph if it includes the information
required to be disclosed pursuant to Items 9(e)(1) to (9)(e)(4),
inclusive, of Rule 14a-101 (17 C.F.R. 240.14a-101) adopted pursuant
to the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78c).
(3) The name of the independent auditor employed by the foreign
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The total compensation for the most recent fiscal
year of the publicly traded foreign corporation paid to each member
of the board of directors and paid to each of the five most highly
compensated executive officers of the foreign corporation who are not
members of the board of directors , including
and the number of any shares issued, options for shares
granted, and similar equity-based compensation granted to each of
those persons. If the chief executive officer is not among the five
most highly compensated executive officers of the corporation, the
compensation paid to the chief executive officer shall also be
included. A publicly traded foreign corporation shall be deemed
to satisfy the requirements of this paragraph with respect
to executive officers if it includes the total compensation for the
most recent fiscal year of the foreign corporation paid to each of
the executive officers for whom the foreign corporation reports
compensation for the most recent fiscal year pursuant to Item 402(a)
(3) or 402(m)(2), as applicable, of Regulation S-K of the Securities
and Exchange Commission (17 C.F.R. 229.402) and the number of any
shares issued, options for shares granted, and similar equity-based
compensation granted to each of those persons.
(5) A description of any loan , including the amount and
terms of the loans, made to any member of the board of
directors by the publicly traded foreign corporation during the
foreign corporation's two most recent fiscal years at an
interest rate lower than the interest rate available from
unaffiliated commercial lenders generally to a similarly situated
borrower . A publicly traded foreign corporation shall
be deemed to satisfy the requirements of this paragraph if it
includes the information with respect to any loan required to be
disclosed un der Item 404(a) or 404(d)(1), as applicable,
of Regulation S-K of the Securities and Exchange Commission (17
C.F.R. 229.404).
(6) A statement indicating whether an order for relief has been
entered in a bankruptcy case with respect to the foreign corporation,
its executive officers, or members of the board of directors of the
foreign corporation during the 10 years preceding the date of the
statement.
(7) A statement indicating whether any member of the board of
directors or executive officer of the publicly traded foreign
corporation was convicted of fraud during the 10 years preceding the
date of the statement, which conviction has not been overturned or
expunged.
(8) A description of any material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the corporation or any of its subsidiaries is a party or of
which any of their property is the subject, as specified by
of a type that would be required to be disclosed under
Item 103 of Regulation S-K of the Securities Exchange
Commission (Section 229.103 of Title 12 of the Code of
Federal Regulations) (17 C.F.R. 229.103) . A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the
five years preceding the date of fis cal
years covered by the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded foreign corporation" means a foreign
corporation, as defined in Section 171, that is an issuer as defined
in Section 3 of the Securities Exchange Act of 1934, as amended (15
U.S.C. Sec. 78c), and has at least one class of securities listed
or admitted for trading on a national securities
exchange , or that is quoted on the OTC
Bulletin Board , or on the electronic
quotation service operated by Pink OTC Markets Inc.
(2) "Executive officer" means the chief executive officer,
president, any vice president in charge of a principal business unit,
division, or function, any other officer of the corporation who
performs a policymaking function, or any other person who performs
similar policymaking functions for the corporation.
(3) "Compensation" "Total compensation"
as used in paragraph (4) of subdivision (a) means all plan and
nonplan compensation awarded to, earned by, or paid to the person for
all services rendered in all capacities to the corporation and to
its subsidiaries, as the compensation is specified by Item
402 would be required to be disclosed under Item
402(c)(2)(x) or 402(n)(2)(x), as applicable, in the case of
executive officer of the corporation, and Item 402(k)(2)
(viii) or 402(r)(2)(viii), as applicable, in the case of members of
the board of directors of the corporation, of Regulation S-K of
the Securities and Exchange Commission (Section 229.402 of
Title 17 of the Code of Federal Regulations) (17
C.F.R. 229.402) .
(4) "Loan" as used in paragraph (5) of subdivision (a)
excludes an advance for expenses, the foreign corporation's payment
of life insurance premiums, and an advance of litigation expenses, in
each instance as permitted according to the applicable law of the
state or place of incorporation or organization of the foreign
corporation means indebtedness that would be required
to be disclosed under Item 404(a) or 404(d)(1), as applicable, of
Regulation S-K of the Securities and Exchange Commission (17 C.F.R.
229.404) .
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A foreign corporation shall certify that the information it
provides pursuant to this section is true and correct. No claim may
be made against the state for inaccurate information contained in
statements filed under this section with the Secretary of State.