BILL ANALYSIS �
SB 1532
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1532 (Pavley) - As Amended: June 19, 2012
PROPOSED CONSENT
SENATE VOTE : 38-0
SUBJECT : BUSINESS FILINGS
KEY ISSUE : SHOULD TECHNICAL AND NON-SUBSTANTIVE CHANGES BE MADE
TO VARIOUS SECTIONS OF THE CALIFORNIA CODES TO HELP STREAMLINE
THE WAY THE SECRETARY OF STATE WILL IMPLEMENT AN ONLINE SYSTEM
THAT WILL ALLOW BUSINESSES TO FILE DOCUMENTS ELECTRONICALLY ?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
This non-controversial bill, sponsored by the Secretary of State
(SOS), seeks to update and standardize various sections of the
California Codes related to business filings for the purpose of
facilitating more efficient implementation of California
Business Connect (CBC), an electronic filing system for business
documents slated to go online in 2016. CBC is intended to
replace the manual, time-consuming, and paper-intensive current
process with a new electronic system that will allow businesses
to file documents and request records via the Internet, 24 hours
a day, 7 days a week. The bill makes a large number of
technical and non-substantive changes to streamline further
development of CBC, including, among other things, standardizing
the address information that businesses must provide in initial
filings with the SOS. The bill has no known opposition and has
been unanimously passed by the Senate as well as the Assembly
Banking and Finance Committee.
SUMMARY : Updates and standardizes various sections of the Codes
relating to business filings, in order to more efficiently
facilitate implementation of California Business Connect (CBC),
an electronic filing system for business documents being
developed by the Secretary of State. Specifically, this bill ,
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among other things:
1)Amends multiple sections of the California Codes to clarify
that, with respect to particular documents to be filed with
the Secretary of State, where applicable:
a) A business entity must provide in its articles of
organization the initial street address and the initial
mailing address of the entity, as well as the name and
street address of its initial agent for service of process,
as specified.
b) A business entity must provide the mailing address of
its principal office (or other specified office), if
different from the street address;
c) A business entity shall not amend its articles of
organization to amend any statement that may appear in the
original articles of organization concerning the street
address, mailing address, or name and address of the
initial agent for service of process, except as specified.
2)Clarifies that upon electronic filing of a document that was
previously required to be filed in paper hard copy, filing is
deemed complete upon acceptance by the SOS of only the
statement and the fee (i.e. no "copy of the statement" need be
filed anymore.) Also relieves the SOS from the requirement to
print the file number and filing date on the copy of the
statement and return it to the filer.
3)Deletes existing law that allows for the SOS to collect a fee
for comparing a copy of any law, resolution, record or other
document or paper with the original, or the certified copy of
the original, on file with the SOS.
4)Provides that upon the filing of any document pursuant to any
provision of the Corporations Code for which there is a filing
fee of twenty-five dollars ($25) or more, the Secretary of
State shall provide a copy without charge at the time of the
filing.
5)Makes other technical and non-substantive changes.
EXISTING LAW :
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1)Requires business entities to file specified documents with
the SOS, and to disclose, among other things, specified
contact information for the entity. This contact information
includes, in relevant part, the address of the entity's agent
for service of process, or address of the principal (or other
specified) office, or both. (Corporations Code Sections
202(c), 1505(a)(1), 1505(a)(1), 2105(a)(2)-(3), 2602(c),
5130(c), 7130(c), 9130(c), 12310(c), 12570(c), 13226,
15901.16(d)(1), 15092.01(a)(2)-(3), 15909.02(a)(3)-(4),
16303(a)(1), 16309(a), 16953(a)(2)-(3), 16959(a)(1),
17051(a), 17051(a)(4), 17060(a)(2), 17060(d), 17451(a),
17451(a)(3), 17451(a)(5), 18200(a)(1)-(2), and 18200(b).)
2)Provides that completion of filing occurs when the SOS has
accepted the statement, a copy of the statement, and the
filing fee. Requires the SOS to return a copy to the filing
entity with notations that indicate the file number and filing
date of the original. (Corporations Code Section 18200(c).)
3)Allows for the SOS to collect a fee for comparing a copy of
any law, resolution, record or other document or paper with
the original, or the certified copy of the original, on file
with the SOS. (Government Code Section 12178.1(c).)
4)Provides, that upon the filing of any document pursuant to any
provision of the Corporations Code for which there is a filing
fee of $25 or more, the SOS shall compare and certify up to
two copies without charge, provided that the copies are
submitted to the SOS with the original to be filed.
(Government Code Section 12185.)
COMMENTS : This non-controversial bill, sponsored by the
Secretary of State (SOS), seeks to update and standardize
various sections of the California Codes related to business
filings for the purpose of facilitating more efficient
implementation of California Business Connect (CBC), an
electronic filing system for business documents slated to go
online in 2016.
Need for the bill : According to the Secretary of State, it
currently relies on two separately developed legacy information
technology systems, first implemented in the 1980s, that serve
as databases for most business entities' information. The SOS
reports that there are 23 separate applications to support the
processes of tracking, recording, and retrieving records it
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oversees, which requires a manual, time-intensive process to
compare and approve copies of filed documents for customers.
Furthermore, these systems are in some cases so archaic that, in
many cases, there is only a single paper copy of each recording
for LLCs, limited partnerships, and other business entities that
have filed organization papers with the SOS. According to the
SOS, a major disaster could potentially wipe out the permanent
records of thousands of California businesses because no backup
or electronic form exists.
To address these problems, a new automated system called
California Business Connect (CBC) is slated for operation in
2016 to replace the manual, time-consuming, and paper-intensive
current process with a system that will allow businesses to file
documents and request records via the Internet, 24 hours a day,
7 days a week. CBC is expected to expedite the way California
does business and help preserve the business and special filing
records of the state. According to the author, this bill is
needed "to make the necessary changes in law so that systems are
in place to ensure that the new automated program is easier and
less expensive to design, build and implement."
This bill clarifies particular items of contact information that
must be submitted in various business documents filed with the
SOS under different sections of the Corporations Code. Various
sections of the Corporations Code specify the contact
information and other identifying details that must be included
in articles of incorporation or other business documents filed
with the SOS. In anticipation of standardizing these data
fields for entry and storage in the CBC system, this bill
requires businesses, among other things, to include their
mailing address, street address, and physical address in a
variety of initial filings with the SOS.
This bill updates filing processes in anticipation of an
automated system . This bill also seeks to make necessary
updates to provisions that are changing as a result of moving
toward an automated filing system-chiefly, provisions relating
to filing processes currently associated with the manually-based
aspects of the current system. For example, existing law
provides for the SOS to collect a fee for comparing copies of
records with the original -something that would not be necessary
with an automated system. Thus, this bill would remove that
provision.
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In other sections of existing law, because of the nature of
manual filing, completion of filing for specified statements may
be defined as the acceptance by the SOS of the statement, a copy
of the statement, and the filing fee. At that time, existing
law requires the Secretary to return the physical copy to the
filer, with "notations" that indicate the file number and filing
date of the original. In contrast, completion of online filing
under the CBC would presumably occur upon the click of a button,
a printout, and a confirmation receipt. Accordingly, this bill
would provide instead that filing would be deemed complete upon
acceptance by the SOS of the statement and the filing fee,
without the provision of a copy. This bill would allow the SOS
to supply a free copy of filed documents in lieu of manually
comparing two documents to ensure they are identical as is
required under the current scheme. This bill would also require
that any request for a future file date be included in the
document to be filed, which is easily accomplished under an
interactive system of electronic filing and recordkeeping.
REGISTERED SUPPORT / OPPOSITION :
Support
Secretary of State Debra Bowen (sponsor)
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334