BILL ANALYSIS �
AB 657
Page 1
Date of Hearing: April 11, 2011
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Mike Eng, Chair
AB 657 (Gordon) - As Amended: March 21, 2011
SUBJECT : Corporations: statement of information: Secretary of
State.
SUMMARY : Revises and recasts filing requirements and notice
requirements concerning documents that need to be filed within
the Secretary of State's (SOS) office. Specifically, this
bill :
1)Allows the SOS's office to receive an annual renewal notice by
electronic mail.
2)Requires foreign corporations to file an initial Statement of
Information within 90 days of formation or registration.
3)Allows a common interest development corporation to file a
"Statement by Common Interest Development" while the common
interest development corporation is suspended.
4)Provides that the SOS's office may destroy all superseded and
outdated Statement by Common Interest Development forms.
5)Standardizes the Statement of Information requirements for
credit union corporations.
6)Grants a credit union corporation the authority to designate a
corporation as agent for service of process.
7)Provides that the fee for the initial 90-day Statement of
Information for California and foreign limited liability
companies (LLCs), credit union corporations and consumer
cooperative corporations at $20.
8)Makes other technical changes.
EXISTING LAW
1)Requires California corporations to file their initial
Statements of Information within 90 days of formation or
registration. (Corporations Code, Section 2117)
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2)Permits a suspended common interest development corporation to
file its Statement of Information while still suspended.
(Civil Code, Section 1363.6.)
3)Permits the Secretary of State to destroy Statements of
Information once superseded. (Civil Code, Section 1363.6.)
4)Specifies the fees required for corporate filings and LLC
filings. (Government Code, Section 12186 and 12190.)
FISCAL EFFECT : Unknown.
COMMENTS : According to the sponsor, Secretary of State, Debra
Bowen, "Unfortunately, California statutes have not necessarily
kept up to date with the way we do business in the state. For
example, the law requires the SOS to mail paper notices to all
corporations and LLCs, reminding the entity to file the required
annual or biennial Statement of Information. Notices to
consumer cooperative corporations, credit union corporations and
LLCs must also include a paper copy of the Statement of
Information form, which is readily available on the Secretary of
State website. As a result, the SOS mails over 1.2 million
reminder, delinquency, penalty and suspension notices to
businesses at a cost of over $500,000 in printing and postage
each fiscal year. The costs and staff time can be significantly
reduced by sending statutory required notices via email to
businesses that voluntary opt to receive their notifications in
this fashion."
The Franchise Tax Board concluded that this measure is technical
and would not impact the Franchise Tax Board's programs and
operations or state income tax revenue.
This bill takes into consideration that not all corporations may
be interested in electronic mail and if this is the case these
corporations do not need to opt-in to electronic mail therefore
they will continue to receive notice by mail.
Several changes to this measure are intended to provide
consistency. Currently, the law requires California
corporations to file their initial Statements of Information
within 90 days of formation or registration but foreign
corporations are not required to file an initial state of
information until one year after the corporation has qualified
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to do business in California. AB 657 applies the 90 day
requirement to foreign corporations to provide consistency and
ease automation of filing.
Existing law permits a suspended common interest development
corporation to file its Statement of Information while still
suspended, but does not allow the suspended common interest
development corporation to file the "Statement by Common
Interest Development," which is the most current information
about the business. Correcting the inconsistency, this bill
would allow the Statement by Common Interest Development to be
filed while the common interest development corporation is
suspended.
Existing law permits the Secretary of State to destroy
Statements of Information once superseded, but does not grant
similar authority to destroy Statements by Common Interest
Development once superseded. For storage and efficiency
purposes, the bill would allow the Secretary of State's office
to destroy the superseded and outdated Statement by Common
Interest Development forms.
Consistent with the authority provided to all other types of
corporations, the bill would standardize the Statement of
Information requirements for credit union corporations and
grants a credit union corporation authority to designate a
corporation as an agent for service of process.
Existing law specifies the fees required for corporate filings
and LLC filings. This bill would specify the fee for the
initial 90-day Statement of Information for California and
foreign LLCs, credit union corporations and consumer cooperative
corporations at $20, which is consistent with other Statement of
Information filings. Unspecified filings would otherwise be
charged $30.
REGISTERED SUPPORT / OPPOSITION :
Support
Secretary of State (Sponsor)
California Credit Union League
AB 657
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Opposition
None on file.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081