AB 1529, as introduced, John A. Pérez. Nonprofit corporations: dissolution.
Existing law authorizes and regulates the formation and operation of a corporation, nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation, including, but not limited to, the adoption and contents of corporate bylaws.
This bill would require the office of the Secretary of State, the Franchise Tax Board, and the office of the Attorney General to collectively review and develop a streamlined process to efficiently dissolve a nonprofit corporation to the extent that this process is consistent with other sections of law.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the
2following:
3(a) There are more than 144,000 nonprofit corporations in
4California that provide a variety of programs and services in areas
5as diverse as education, recreation, health care, legal, job training,
P2 1and housing to millions of Californians. These organizations,
2depending on their formation status, are required to register with
3the office of the Secretary of State, the Franchise Tax Board, and
4the office of the Attorney General.
5(b) Each of these state agencies has a specific role to play in the
6establishment and oversight of a nonprofit corporation.
7(c) The office of the Secretary of State is in charge of
8administering the process for a nonprofit corporation that chooses
9to incorporate and also has the continued duty to ensure that the
10nonprofit corporation adheres to the mission for which it was
11formed.
12(d) The Franchise Tax Board has the responsibility of
13determining, reviewing, and monitoring the state tax-exempt status
14of a nonprofit corporation to ensure that its tax-exempt status still
15applies.
16(e) The California Attorney General regulates the nonprofit
17organizations and individuals that administer or solicit charitable
18funds or assets in California and has broad legal and statutory
19authority to commence enforcement actions against charitable
20organizations and trusts.
21(f) Through each of their roles, the office of the Secretary of
22State, the
Franchise Tax Board, and the office of the Attorney
23General play a crucial role in ensuring that the nonprofit
24corporations of California are adequately protecting the public’s
25trust.
26(g) Every year, hundreds of nonprofit corporations seek
27administrative changes to expand their mission or alter their tax
28status, and, in some cases, to even go out of existence. This
29dissolution process, which involves the winding down of the
30nonprofit corporation’s affairs, is very cumbersome and protracted.
Section 5008.9 is added to the Corporations Code, to
32read:
In order to more effectively analyze and monitor the
34status, finances, and activities of a corporation, as defined in
35Section 5046, in the state, the office of the Secretary of State, the
36Franchise Tax Board, and the office of the Attorney General shall
37collectively review and develop a streamlined process to efficiently
P3 1dissolve a corporation to the extent that this process is consistent
2with other sections of law.
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