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 wordsbegin delete “professional fiduciary”end deletebegin insert “licensed professional fiduciary”end insert 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.begin delete The bill would authorize the bureau to adopt and enforce regulations to carry out these provisions.end deletebegin insert The bill would require 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, or a deceased person, to be sold to the corporation or to the remaining shareholders of the corporation within 60 days. The bill would require a licensed professional fiduciary corporation to maintain insurance coverage of at least $1,000,000
for claims against the corporation, as specified. The bill would require a licensed fiduciary corporation that is appointed as a guardian, conservator, personal representative, or trustee by a court to be liable for any licensed professional fiduciary who violates the powers and duties of those appointments while acting on behalf of the corporation.end 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.
This bill would provide that if abegin insert licensedend insert professional fiduciary corporation is appointed as a guardian, conservator, trustee, or personal representative, each shareholder, officer, director, or employee of the corporation who is abegin insert licensedend insert professional fiduciary may individually exercise the powers and duties of that appointment.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Article 7 (commencing with Section 6600) is
2added to Chapter 6 of Division 3 of the Business and Professions
3Code, to read:
4
begin delete(a)end deletebegin delete end deleteA licensed professional fiduciary corporation is a
8corporation that is authorized to render professional services, as
9defined in Section 13401 of the Corporations Code, if that
10corporation and its shareholders, officers, directors, and employees
11rendering professional services who are licensed professional
12fiduciaries are in compliance with the Moscone-Knox Professional
13Corporation Act, the provisions of this article, and all other statutes
14and regulations pertaining to the corporation and the conduct of
15its affairs. With respect to a licensed professional fiduciary
16corporation, the
governmental agency referred to in the
17Moscone-Knox Professional Corporation Act (Part 4 (commencing
18with Section 13400) of Division 3 of Title 1 of the Corporations
19Code) is the Professional Fiduciaries Bureau.
It is unprofessional conduct and a violation of this chapter
21for any person licensed pursuant to this chapter to violate, attempt
22to violate, directly or indirectly, or assist in or abet the violation
23of, or conspire to violate any provision or term of this article, the
24Moscone-Knox Professional Corporation Act, or any regulations
25duly adopted under those provisions.
A licensed professional fiduciary corporation shall not
27commit or omit any act that, if committed or omitted, would
28constitute unprofessional conduct under any statute or regulation.
29A licensed professional fiduciary corporation, in the conduct of
30its practice, shall observe and be bound by these statutes and
31regulations to the same extent as a person holding a license under
32this chapter.
The name of a licensed professional fiduciary corporation
34and any name or names under which it may render professional
35services shall contain the wordsbegin delete “professional fiduciary”end deletebegin insert “licensed
P4 1professional fiduciary”end insert and wording or abbreviations denoting
2corporate existence.
Except as provided in Section 13403 of the Corporations
4Code, each director, shareholder, and officer of a licensed
5professional fiduciary corporation shall be a licensed professional
6fiduciary.
The income of a licensed professional fiduciary
8corporation attributable to professional services rendered while a
9shareholder is a disqualified person, as defined in Section 13401
10of the Corporations Code, shall not in any manner accrue to the
11benefit of the shareholder or his or her shares in the licensed
12professional fiduciary corporation.
The bureau may adopt and enforce regulations to carry
14out the purposes and objectives of this article, including the
15following:
16(a) A regulation that requires the
begin insert(a)end insertbegin insert end insertbegin insertTheend insert bylaws of a licensed professional fiduciary
18corporationbegin delete toend deletebegin insert shallend insert include a provision that requires the capital
19stock of the corporation owned by a disqualified person, as defined
20in Section 13401 of the Corporations Code, or a deceased person,
21to be sold to the corporation or to the remaining shareholders of
22the corporation withinbegin delete the timeframe provided by the regulationend delete
23begin insert
60 daysend insert.
24(b) Abegin delete regulation that requires aend delete licensed professional fiduciary
25corporationbegin delete to provideend deletebegin insert shall maintainend insert adequatebegin delete security byend delete
26 insurancebegin delete or otherwiseend deletebegin insert
at a minimum amount of one million dollars
27($1,000,000)end insert for claims against the corporation by its customers
28arising out of the rendering of professional services.
(a) A licensed professional fiduciary corporation that
30is appointed as a guardian, conservator, personal representative,
31or trustee by a court shall be liable for any licensed professional
32fiduciary who violates the powers and duties of those appointments
33while acting on behalf of the corporation.
34(b) Nothing in subdivision (a) shall be interpreted to prevent
35the bureau from individual enforcement and disciplinary action
36against a licensed professional fiduciary who has violated any of
37the provisions of this chapter.
begin insertSection 13401 of the end insertbegin insertCorporations Codeend insertbegin insert is amended
39to read:end insert
As used in this part:
P5 1(a) “Professional services” means any type of professional
2services that may be lawfully rendered only pursuant to a license,
3certification, or registration authorized by the Business and
4Professions Code, the Chiropractic Act, or the Osteopathic Act.
5(b) “Professional corporation” means a corporation organized
6under the General Corporation Law or pursuant to subdivision (b)
7of Section 13406 that is engaged in rendering professional services
8in a single profession, except as otherwise authorized in Section
913401.5, pursuant to a certificate of registration issued by the
10governmental agency regulating the profession as herein provided
11and that in its practice
or business designates itself as a professional
12or other corporation as may be required by statute. However, any
13professional corporation or foreign professional corporation
14rendering professional services by persons duly licensed by the
15Medical Board of California or any examining committee under
16the jurisdiction of the board, the Osteopathic Medical Board of
17California, the Dental Board of California, the California State
18Board of Pharmacy, the Veterinary Medical Board, the California
19Architects Board, the Court Reporters Board of California, the
20Board of Behavioral Sciences, the Speech-Language Pathology
21and Audiology Board, the Board of Registered Nursing,begin insert the
22Professional Fiduciaries Bureau,end insert or the State Board of Optometry
23shall not be required to obtain a certificate of registration in order
24to render those professional services.
25(c) “Foreign professional corporation” means a corporation
26organized under the laws of a state of the United States other than
27this state that is engaged in a profession of a type for which there
28is authorization in the Business and Professions Code for the
29performance of professional services by a foreign professional
30corporation.
31(d) “Licensed person” means any natural person who is duly
32licensed under the provisions of the Business and Professions
33Code, the Chiropractic Act, or the Osteopathic Act to render the
34same professional services as are or will be rendered by the
35professional corporation or foreign professional corporation of
36which he or she is or intends to become, an officer, director,
37shareholder, or employee.
38(e) “Disqualified person” means a licensed person who for any
39reason becomes legally disqualified (temporarily or permanently)
40to render the
professional services that the particular professional
P6 1corporation or foreign professional corporation of which he or she
2is an officer, director, shareholder, or employee is or was rendering.
Section 2104.5 is added to the Probate Code, to read:
If abegin insert licensedend insert professional fiduciary corporation is
6appointed as a guardian or conservator, each shareholder, officer,
7director, or employee of the corporation who is abegin insert licensedend insert
8 professional fiduciary may individually exercise the powers and
9duties of the guardian or conservator.
Section 8406 is added to the Probate Code, to read:
If abegin insert licensedend insert professional fiduciary corporation is
13appointed as a personal representative, each shareholder, officer,
14director, or employee of the corporation who is abegin insert licensedend insert
15 professional fiduciary may individually exercise the powers and
16duties of the personal representative.
Section 15605 is added to the Probate Code, to read:
If abegin insert licensedend insert professional fiduciary corporation is
20appointed as a trustee, each shareholder, officer, director, or
21employee of the corporation who is abegin insert licensedend insert professional
22fiduciary may individually exercise the powers and duties of the
23trustee.
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