Amended in Assembly March 20, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1859

Introduced by Assembly Member Maienschein

February 19, 2014

An act to begin delete amend Section 6535 of end delete begin insert add Article 7 (commencing with Section 6600) to Chapter 6 of Division 3 of end insert the Business and Professions Code, relating to professional fiduciaries.

LEGISLATIVE COUNSEL’S DIGEST

AB 1859, as amended, Maienschein. Professional fiduciaries: begin delete licensing. end delete begin insert professional corporations. end insert

Existing law, the Professional Fiduciaries Act, establishes the Professional Fiduciaries Bureau within the Department of Consumer Affairs and requires the bureau to license and regulate professional fiduciaries, as specified.

begin delete

This bill would make a technical, nonsubstantive change to these provisions.

end delete begin insert

The Moscone-Knox Professional Corporation Act provides for the organization of a corporation under specified provisions of law for the purposes of qualifying as a professional corporation under that act and rendering professional services. The act defines professional services as services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.

end insert begin insert

This bill would provide for the formation of licensed professional fiduciary corporations pursuant to the act described above, as specified. The bill would provide that it is unprofessional conduct and a violation of the Professional Fiduciaries Act to violate, attempt to violate, directly or indirectly, or assist in or abet the violation of, or conspire to violate these provisions, the Moscone-Knox Professional Corporation Act, or any regulations duly adopted under those laws. The bill would require the name of a licensed professional fiduciary corporation and any name or names under which it may render professional services to contain the words “professional fiduciary” and wording or abbreviations denoting corporate existence. The bill would require each director, shareholder, and officer of a licensed professional fiduciary corporation to be a licensed professional fiduciary. The bill would prohibit the income of a licensed professional fiduciary corporation attributable to professional services rendered while a shareholder is a disqualified person, as defined, from accruing, in any manner, to the benefit of the shareholder or his or her shares in the licensed professional fiduciary corporation. The bill would authorize the bureau to adopt and enforce regulations to carry out these provisions.

end insert

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Article 7 (commencing with Section 6600) is
added to Chapter 6 of Division 3 of the end insert begin insert Business and Professions
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 7. end insert   Licensed Professional Fiduciary Corporations

 

begin insert 6600. end insert   

(a) A licensed professional fiduciary corporation is a
corporation that is authorized to render professional services, as
defined in Section 13401 of the Corporations Code, if that
corporation and its shareholders, officers, directors, and employees
rendering professional services who are licensed professional
fiduciaries are in compliance with the Moscone-Knox Professional
Corporation Act, the provisions of this article, and all other statutes
and regulations pertaining to the corporation and the conduct of
its affairs. With respect to a licensed professional fiduciary
corporation, the governmental agency referred to in the
Moscone-Knox Professional Corporation Act (Part 4 (commencing
with Section 13400) of Division 3 of Title 1 of the Corporations
Code) is the Professional Fiduciaries Bureau.

begin insert 6601. end insert   

It is unprofessional conduct and a violation of this
chapter for any person licensed pursuant to this chapter to violate,
attempt to violate, directly or indirectly, or assist in or abet the
violation of, or conspire to violate any provision or term of this
article, the Moscone-Knox Professional Corporation Act, or any
regulations duly adopted under those provisions.

begin insert 6602. end insert   

A licensed professional fiduciary corporation shall not
commit or omit any act that, if committed or omitted, would
constitute unprofessional conduct under any statute or regulation.
A licensed professional fiduciary corporation, in the conduct of
its practice, shall observe and be bound by these statutes and
regulations to the same extent as a person holding a license under
this chapter.

begin insert 6603. end insert   

The name of a licensed professional fiduciary
corporation and any name or names under which it may render
professional services shall contain the words “professional
fiduciary” and wording or abbreviations denoting corporate
existence.

begin insert 6604. end insert   

Except as provided in Section 13403 of the Corporations
Code, each director, shareholder, and officer of a licensed
professional fiduciary corporation shall be a licensed professional
fiduciary.

begin insert 6605. end insert   

The income of a licensed professional fiduciary
corporation attributable to professional services rendered while
a shareholder is a disqualified person, as defined in Section 13401
of the Corporations Code, shall not in any manner accrue to the
benefit of the shareholder or his or her shares in the licensed
professional fiduciary corporation.

begin insert 6606. end insert   

The bureau may adopt and enforce regulations to carry
out the purposes and objectives of this article, including the
following:

(a) A regulation that requires the bylaws of a licensed
professional fiduciary corporation to include a provision that
requires the capital stock of the corporation owned by a
disqualified person, as defined in Section 13401 of the
Corporations Code, or a deceased person, to be sold to the
corporation or to the remaining shareholders of the corporation
within the timeframe provided by the regulation.

(b) A regulation that requires a licensed professional fiduciary
corporation to provide adequate security by insurance or otherwise
for claims against the corporation by its customers arising out of
the rendering of professional services.

end insert

begin delete

SECTION 1.  

Section 6535 of the Business and Professions
Code is amended to read:

6535.  

The bureau shall approve or deny licensure in a timely
manner to applicants who apply for licensure. Upon approval of
a license, the bureau shall notify the applicant of issuance of the
license, and shall issue a license certificate identifying the applicant
as a “licensed professional fiduciary.”

end delete