Amended in Assembly April 1, 2014

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 add Article 7 (commencing with Section 6600) to Chapter 6 of Division 3 of the Business and Professions Code, begin insert and to add Sections 2104.5, 8406, and 15605 to the Probate Code, end insert relating to professional fiduciaries.

LEGISLATIVE COUNSEL’S DIGEST

AB 1859, as amended, Maienschein. Professional fiduciaries: professional corporations.

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.

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.

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.

begin insert

Existing law governing the administration of estates and trusts authorizes the appointment of a person as a personal representative of a decedent’s estate, a guardian or conservator of a person or an estate, or a trustee. Existing law defines “person” to include a corporation for these purposes.

end insert begin insert

This bill would provide that if a professional fiduciary corporation is appointed as a guardian, conservator, trustee, or personal representative, each shareholder, officer, director, or employee of the corporation who is a professional fiduciary may individually exercise the powers and duties of that appointment.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

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

 

Article 7.  Licensed Professional Fiduciary Corporations

 

6600.  

(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.

6601.  

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.

6602.  

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.

6603.  

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.

6604.  

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.

6605.  

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.

6606.  

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.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 2104.5 is added to the end insert begin insert Probate Code end insert begin insert , to read: end insert

begin insert

begin insert 2104.5. end insert   

If a professional fiduciary corporation is appointed
as a guardian or conservator, each shareholder, officer, director,
or employee of the corporation who is a professional fiduciary
may individually exercise the powers and duties of the guardian
or conservator.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 8406 is added to the end insert begin insert Probate Code end insert begin insert , to read: end insert

begin insert

begin insert 8406. end insert   

If a professional fiduciary corporation is appointed as
a personal representative, each shareholder, officer, director, or
employee of the corporation who is a professional fiduciary may
individually exercise the powers and duties of the personal
representative.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 15605 is added to the end insert begin insert Probate Code end insert begin insert , to read: end insert

begin insert

begin insert 15605. end insert   

If a professional fiduciary corporation is appointed as
a trustee, each shareholder, officer, director, or employee of the
corporation who is a professional fiduciary may individually
exercise the powers and duties of the trustee.

end insert