BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2668|
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CONSENT
Bill No: AB 2668
Author: Assembly Banking and Finance Committee
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 6/12/12
AYES: Evans, Harman, Corbett, Leno
NO VOTE RECORDED: Blakeslee
ASSEMBLY FLOOR : 71-0, 4/23/12 (Consent) - See last page
for vote
SUBJECT : Corporate agents: indemnification
SOURCE : Nonprofit and Unincorporated Organizations
Committee of
the Business Law Section of the State Bar of
California
DIGEST : This bill updates internal cross-references and
descriptions of employee benefit plan fiduciaries in
specified sections of the Corporations Code, and makes
other technical, non-substantive changes.
ANALYSIS : Existing law provides that a corporation may
indemnify its agents, as defined, against certain actions,
as specified.
Existing law provides that a nonprofit public benefit
corporation, nonprofit mutual benefit corporation,
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nonprofit religious corporation, and consumer cooperative
corporation, may indemnify its agents, as defined, against
certain actions, as specified.
Existing law provides that this indemnification authority
does not apply to a proceeding against a trustee,
investment manager or other fiduciary of an employee
benefit plan, even though those persons may be agents of
the corporation. Existing law permits a corporation to
indemnify a trustee, investment manager, or other fiduciary
to the extent permitted by Section 207(f) of the
Corporations Code.
Existing law provides that this indemnification authority
does not apply to a proceeding against a trustee,
investment manager or other fiduciary of an employee
benefit plan, even though those persons may be agents of
the corporation. Existing law permits a corporation to
indemnify such trustee, investment manager or other
fiduciary to the extent permitted by Section 207(f) of the
Corporations Code.
Existing law provides that the powers of a corporation,
among other things, include, without limitation, the power
to: pay pensions, and establish and carry out pension,
profit-sharing, share bonus, share purchase, share option,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions for any or all of the
directors, officers and employees of the corporation or any
of its subsidiary or affiliated corporations, and to
indemnify and purchase and maintain insurance on behalf of
any fiduciary of such plans, trusts or provisions.
Existing law provides that the powers of a corporation,
among other things, include, without limitation, the power
to: pay pensions, and establish and carry out pension,
deferred compensation, saving, thrift and other retirement,
incentive and benefit plans, trusts and provisions for any
or all of its directors, officers, employees, and persons
providing services to it or any of its subsidiary or
related or associated corporations, and to indemnify and
purchase and maintain insurance on behalf of any fiduciary
of such plans, trusts, or provisions.
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This bill replaces the reference to "employee benefit
plans" in Sections 5238(j), 7237(j), 9246(j), 12377(j),
above, to provide instead that their indemnification
authority does not apply to any proceeding against any
trustee, investment manager or other fiduciary of a
pension, deferred compensation, saving, thrift, or other
retirement, incentive, or benefit plan, trust, or provision
for any or all of the corporation's directors, officers,
employees, and persons providing services to the
corporation or any of its subsidiary or related or
affiliated corporations, in that person's capacity as such,
even though he or she may otherwise be defined as an agent,
as specified.
This bill replaces the cross-references to Section 207(f)
of the Corporations Code in Sections 5238(j), 7237(j),
9246(j), 12377(j) with a cross-reference to Section
5140(f), 7140(e), 9140(f), and 12320(e), respectively.
This bill makes other technical, non-substantive changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/13/12)
Nonprofit and Unincorporated Organizations Committee of the
Business Law Section of the State Bar of California
(source)
ARGUMENTS IN SUPPORT : According to the author, "�t]his
�bill] would eliminate the ambiguity in the Corporations
Code regarding the indemnification standards applicable to
fiduciaries of an employee benefit plan when acting on
behalf of a nonprofit public benefit, mutual benefit,
religious or consumer cooperative corporation." The author
explains the need to amend the cross-reference made to
Section 207(f) in Sections 5238, 7237, 9246 and 12377 of
the Corporations Code:
Each of these sections makes the indemnification
standards provided by Corporations Code �S]ection
207(f) applicable to any trustee, investment manager
or other fiduciary of an employee benefit plan when
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acting in that capacity on behalf of a nonprofit
public benefit, mutual benefit, religious and consumer
cooperative corporation, respectively. Such
indemnification is authorized even if the person would
also be considered that corporation's agent under
�these sections], which describe�] the scope of the
indemnification generally applicable to a
corporation's agents. �AB 2668] would eliminate
ambiguity arising from the internal cross-reference to
a section of the General Corporation Law (Corporations
Code section 207(f)) where an analogous statute
already contained in the Nonprofit Corporation Law
(Corporations Code sections 5140(f), 7140(e), and
9140(f)) and the Consumer Cooperative Corporation Law
(Corporations Code Section 12320(e)).
The �bill] would also eliminate further ambiguity
between different descriptions of employee benefit
plan fiduciaries contained in Corporations Code
sections 207(f), on the other hand, and sections
5140(f), 7140(e), 9140(f), and subdivision (j) of
sections 5238, 7237, 9246, and 12377, on the other
hand.
ASSEMBLY FLOOR : 71-0, 4/23/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Buchanan, Butler, Campos, Carter, Chesbro, Conway, Cook,
Dickinson, Donnelly, Eng, Feuer, Fong, Fuentes, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nielsen,
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: Brownley, Charles Calderon, Cedillo,
Davis, Fletcher, Furutani, Nestande, Norby, Smyth
RJG:nl 6/14/12 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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