BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1325|
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THIRD READING
Bill No: AB 1325
Author: Lara (D)
Amended: 7/2/12 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 9-0, 6/25/12
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Strickland, Vargas, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 1/26/12 (Consent) - See last page
for vote
SUBJECT : Business: fictitious business name statements
SOURCE : Author
DIGEST : This bill requires fictitious business name
statement registrants to provide specified personal
identification at the time of filing; and requires the
fictitious business name statement to contain language
specifying that false declarations are a misdemeanor
punishable by a fine of up to $1,000.
ANALYSIS :
Existing law:
1. Provides for individuals or partnerships doing business
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under fictitious names to file a fictitious business
name statement. The filing of a fictitious business
name is designed to make available to the public the
identities of persons doing business under the
fictitious name. (Business and Professions Code (BPC)
Section 17900)
2. Defines "fictitious business name" to mean: (BPC
Section 17900 (b))
A. For an individual, a name that does not include
the surname of the individual, or that suggests
additional owners of the business.
B. For a partnership, a name that does not include
the surname of each general partner, or that suggests
additional owners.
C. For a corporation, any name other than the
corporate name filed with the Secretary of State
(SOS).
D. For a limited partnership, any name other than
limited partnership name filed with the SOS.
E. For a limited liability company, any name other
than limited liability company name filed with the
SOS.
3. Requires every person who regularly transacts business
in California for profit under a fictitious business
name to file and maintain a current fictitious business
name statement. (BPC Section 17910)
4. Requires the fictitious business name statement to
contain specified information, including the statement:
"A registrant who declares as true information which he
or she knows to be false is guilty of a crime." (BPC
Section 17913 (a))
5. Specifies that a registrant who declares as true any
material matter regarding the content of fictitious
business name statements that he/she knows to be false
is guilty of a misdemeanor. (BPC Section 17913 (c))
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6. Requires a fictitious business name statement to be
published in a newspaper of general circulation in the
county in which the principal place of business of the
registrant is located, except as specified, to be signed
by specified individuals, and to be filed with the
county clerk in the county where the business is
located. (BPC Section 17917)
7. Specifies the requirements for what constitutes filing
of a fictitious business name statement, including:
presentation of the fictitious business name statement
for filing, submitting the filing fee, and acceptance of
the statement by the county clerk. (BPC Section 17916)
8. Specifies that any person who executes, files, or
publishes any fictitious business name statement,
knowing that it is false, in whole or in part, shall be
guilty of a misdemeanor punishable by a fine not to
exceed $1,000. (BPC Section 17930)
9. Requires that upon ceasing to transact business under a
fictitious business name, a registrant must file a
statement of abandonment, executed in the same manner as
a fictitious business name statement, as specified.
(BPC Section 17922)
10.Provides for a partner in a partnership who is
withdrawing from a partnership to file a statement of
withdrawal executed in the same manner as a fictitious
business name statement, as specified. (BPC Section
17923)
11.Provides for a county clerk to maintain a file of each
fictitious business name statement for four years, and
provides for the abandonment and destruction of a
fictitious business name statement as specified. (BPC
Section 17927)
This bill:
1. Revises the wording of the fictitious business name
statement in #4, above, to instead state: "A registrant
who declares as true any material matter pursuant to
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Section 17913 of the Business and Professions Code that
the registrant knows to be false is guilty of a
misdemeanor punishable by a fine not to exceed $1,000."
2. Recasts the criminal provision in #5, above, to instead
provide that a person registering a fictitious business
name statement who declares as true any material matter
in the fictitious business name statement that the
registrant knows to be false is guilty of a misdemeanor
punishable by a fine not to exceed $1,000.
3. Requires a registrant filing a fictitious business name
to display a personal identification in the form of a
California driver's license or other identification
acceptable to the county clerk to adequately determine
the identity of the registrant, and authorizes the
county clerk to require the registrant to complete and
sign an affidavit of identity statement.
4. If the registrant is a corporation, a limited liability
company, a limited liability partnership, an original
certificate of status issued by the SOS certifying the
current existence and good standing of that business
entity shall be deemed acceptable identification.
5. Authorizes a county clerk to require a registrant that
mails a fictitious business name statement to a county
clerk's office for filing to submit a completed and
notarized affidavit of identity statement. A registrant
that is a corporation, a limited liability company, a
limited liability partnership, if required by the county
clerk to submit an affidavit of identity statement,
shall also submit an original certificate of status
issued by the SOS certifying the current existence and
good standing of that business entity.
6. Specifies that, to constitute a filing, the original
fictitious business name statement and one copy of the
statement must be accompanied by proper identification,
and accompanied by a completed affidavit of identity
statement, if required by the county clerk, as
specified.
7. Makes conforming changes regarding the documentation and
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affidavits of personal identity in relation to the
filing of: a notice of abandonment, a notice of
withdrawal from a partnership, and the county clerk's
maintenance of a fictitious business name file.
8. Makes reference to "married couple" rather than to
"husband and wife."
9. Makes various technical cleanup and conforming changes.
10.Delays the implementation of this bill's provisions
until January 1, 2014.
Background
The law requires every person who regularly transacts
business in California for profit under a fictitious
business name to file and maintain a current fictitious
business name statement with the county clerk in which the
principal place of business is located. This filing is
designed to protect consumers who deal with individuals or
partnerships that operate under fictitious business names
by making available to the public the identities of people
or companies doing business under a fictitious name.
The use of a fictitious business name can be advantageous
for individuals and corporations because it allows
operation of a business or multiple businesses at minimal
cost, without having to use a personal name or create an
entirely new legal entity for each business.
Businesses must file the fictitious business name
statement, which is effective for five years, within 40
days of their first transaction. An applicant may have
more than one fictitious business name and there may be
more than one registrant per fictitious business name. All
information on the fictitious business name statement is
public record under the California Public Record Act,
including the residence address.
According to a column published in the Los Angeles Times in
2010, an elderly resident of Los Angeles County discovered
her residential address had been used without her knowledge
or consent for several fictitious business name statements
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when the Los Angeles County Registrar-Recorder/County Clerk
notified her of the registrations. Mail for the fictitious
businesses and the person who registered them began
arriving at the home, which prompted the resident to
contact local government representatives and file a
complaint with the United States Postal Service and a
report with the police. The article notes that a person
might file such false statements in order to lend
legitimacy to fraudulent business activities, because a
search of a county registrar's Web site would yield the
registered fictitious business names.
While current law sets out a variety of requirements for
filing fictitious business name statements, it does not
require registrants to provide verifiable personal or
corporate identification when doing so. The statement also
does not specify the penalty and fine for providing false
information. This bill requires those who file fictitious
business name statements to provide identification at the
time of filing, and requires the filing form to explicitly
state that providing false information on the form is a
misdemeanor punishable by a fine of up to $1,000.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/6/12)
Consumer Federation of California
Los Angeles County Board of Supervisors
Los Angeles County District Attorney's Office
Norwalk Chamber of Commerce
OPPOSITION : (Verified 8/6/12)
Santa Monica Observer Newspaper
ARGUMENTS IN SUPPORT : This bill strengthens consumer
protections and curbs fictitious business name identity
theft by amending existing law to require applicants to
present proper identification at the time of filling for a
fictitious business name. The provision specifies the
types of identification acceptable to county clerks and the
requirements for filing a fictitious business name via
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mail. This bill also amends the existing fictitious
business name statement to include a reference to the
penalties for providing false information.
The author argues the need for this bill, stating:
"Existing law, however, does not require registrants to
present a form of identification to county clerk officials
in order to verify that the applicant's identity or
business address matches the information they submitted on
the fictitious business name form. The deficiency in
current law leaves room for fraudulent activity whereby
registrants use the addresses of unsuspecting Californians
to file a fictitious business name Statement."
ARGUMENTS IN OPPOSITION : Santa Monica Observer Newspaper
states that this bill is unnecessary to prevent fraud and
is an unnecessary hurdle to filing a fictitious business
name, and further argues this bill makes it harder to open
a business in California at a time where there is
substantial conversation among the business community
condemning California as the most difficult state in which
to open a business.
ASSEMBLY FLOOR : 75-0, 1/26/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Hall, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Davis, Gorell, Halderman, Harkey, Smyth
JJA:k 8/7/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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