BILL ANALYSIS �
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THIRD READING
Bill No: AB 2289
Author: Daly (D)
Amended: 8/4/14 in Senate
Vote: 21
SENATE BANKING & FINANCIAL INST. COMM. : 9-0, 6/18/14
AYES: Evans, Block, Correa, Hill, Hueso, Morrell, Roth, Torres,
Vidak
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote
SUBJECT : Business filings
SOURCE : Author
DIGEST : This bill amends several laws administered by the
Department of Business Oversight (DBO) to clarify the definition
of an electronic record, and increases, from 15 days to 30 days,
the amount of time in which the Commissioner of DBO has to
review franchise applications and franchise renewals under the
Franchise Investment Law.
Senate Floor Amendments of 8/4/14 make a technical change by
correcting an inadvertent drafting error.
ANALYSIS :
Existing law:
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1. Provides, under the Corporate Securities Law of 1968, that
notwithstanding any other provision of law, the Commissioner
may by rule or order prescribe circumstances under which to
accept electronic records or electronic signatures, and
clarifies that nothing in the aforementioned language
requires the commissioner to accept electronic records or
electronic signatures.
2. Defines an "electronic record" under the Corporate
Securities Law as a record created, generated, sent,
communicated, received, or stored by electronic means, and
includes a record transmitted by means of facsimile machine
or other telephone transceiving equipment.
3. Defines an "electronic signature" under the Corporate
Securities Law as an electronic sound, symbol, or process
attached to or logically associated with an electronic record
and executed or adopted by a person with the intent to sign
the electronic record.
4. Contains a codified statement of legislative intent within
the Corporate Securities Law of 1968 which states that DBO
has continuously implemented methods to file records
electronically, including broker-dealer and investment
adviser applications, and is encouraged to continue to expand
its use of electronic filings to the extent feasible, as
budget, resources, and equipment are made available to
accomplish that goal.
5. Provides, under the Franchise Investment Law, that if no
stop order is in effect, registration of an offer of
franchises automatically becomes effective on the 15th
business day after an application for registration is filed,
or after the last amendment to that application is filed, or
at such earlier time as the Commissioner determines.
6. Provides, under the Franchise Investment Law, that a
registration may be renewed for additional periods of one
year each, unless the Commissioner by rule or order specifies
a different period, by submitting a registration renewal
statement no later than 15 business days prior to the
expiration of the registration, unless such period is waived
by order of the Commissioner. If no stop order or other
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order is in effect, provides that the registration
automatically renews on the date the prior registration was
scheduled to expire, or at such earlier time as the
Commissioner determines.
This bill:
1. Amends the Check Sellers, Bill Payers and Proraters Law;
Escrow Law; California Finance Lenders Law; Franchise
Investment Law; and California Deferred Deposit Transaction
Law to provide that, notwithstanding any other law, the
Commissioner may by rule or order prescribe circumstances
under which to accept electronic records, as specified, or
electronic signatures; and clarifies that this authority
shall not require the Commissioner to accept electronic
records or electronic signatures.
2. Amends all of the aforementioned laws and the Corporate
Securities Law to add a definition of "electronic record"
which includes, but is not limited to:
An application, amendment, supplement, and exhibit
filed for any qualification, registration, order, permit,
certificate, license, consent, or other authority.
A financial statement, reports, or advertising.
An order, permit, certificate, license, consent, or
other authority.
A notice of public hearing, accusation, and statement
of issues in connection with any application,
qualification, registration, order, permit, certificate,
license, consent, or other authority.
A proposed decision of a hearing officer and a
decision of the Commissioner.
The hearing transcripts.
A release, newsletter, interpretive opinion,
determination, or specific ruling.
Correspondence between a party and the Commissioner
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directly relating to any document listed above.
1. Amends the Franchise Investment Law to provide that, as long
as no stop order is in effect, registration of an offer of
franchises automatically becomes effective on the 30th
business day after the filing of a complete application for
registration or the last preeffective amendment to that
application; and defines a "complete application" as one that
contains the appropriate filing fee, Uniform Franchise
Disclosure Document, and all additional exhibits, including
financial statements in conformity with regulations of the
Commissioner, and "preeffective amendment" as an application
amendment filed before the effective date of the registration
of the sale of franchises.
Background
Electronic submissions . DBO is currently in the middle of a
multi-year effort to increase the number and type of licensee
submissions it will accept electronically. Virtually all of the
laws under DBO's jurisdiction were written when paper
submissions were the norm, and thus fail to reference electronic
filings. This bill authorizes the Commissioner to accept
electronic filings under several of the laws under DBO's
jurisdiction, and gives the Commissioner the authority to
prescribe the circumstances under which such submissions would
be accepted.
Additional time to review franchise applications and renewals.
Under existing law, initial and renewal applications for
franchise registrations automatically become effective on the
15th day after they are filed, unless the Commissioner approves
them at an earlier time. This timeframe was not problematic in
1971, when the Franchise Investment Law was first operative, but
has become increasingly problematic for DBO as the number of
franchisors has grown. DBO receives approximately 2,000
franchise registrations and 500 exemption notice filings each
year.
Under current regulation, a franchise registration expires 110
days following the end of the applicant's fiscal year, unless
the Commissioner specifies a different period. Because most
franchisors operate under a January to December fiscal year,
most renewal applications are due by the same date. During
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franchise renewal season (March - May), DBO's eight-person legal
staff must review an average of over 1,000 renewal applications,
as well as any other securities filings received during that
time period. This bill will ease DBO's burden during renewal
time by giving DBO staff an additional 15 business days in which
to review franchise applications and renewals, and by clarifying
that the clock begins ticking when a complete application is
submitted.
Comments
According to the author's office, this bill allows DBO to accept
various electronic application filings that are not currently
specifically authorized by statute. Since 2008, DBO has
embarked on a long-term project, called DOCQNET, to upgrade and
improve its electronic systems, including the ability for the
public to upload various applications for filing with DBO. This
bill does not address issues with the specific implementation of
DOCQNET. It does, however, propose various enabling statutes
within the laws administered by DBO, to ensure that DBO may
receive the electronic applications and filings, subject to
budget, resources, and availability of equipment and technology.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR : 73-0, 5/8/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Grove, Hagman, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V.
Manuel P�rez, Vacancy
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MW:k 8/5/14 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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