BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1041|
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CONSENT
Bill No: SB 1041
Author: Jackson (D)
Amended: 4/21/14
Vote: 21
SENATE JUDICIARY COMMITTEE : 7-0, 4/8/14
AYES: Jackson, Anderson, Corbett, Lara, Leno, Monning, Vidak
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Business: filings
SOURCE : California Secretary of State
DIGEST : This bill makes various technical, non-substantive,
and clarifying changes throughout the Corporations Code in
preparation for the Secretary of State (SOS) automated filing
system.
ANALYSIS :
Existing law:
1.Requires certain business entities, including, but not limited
to, a corporation, a limited partnership (LP), a foreign
corporation, a foreign LP, a limited liability partnership
(LLP), a foreign LLP, a flexible purpose corporation, a
limited liability company (LLC), an unincorporated
association, and a credit union, to make various filings with
the SOS.
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2.Authorizes agents designated for service of process for
specified entities to file a written statement of resignation
as that agent with the SOS.
3.Allows a person to apply for and reserve a name for a business
entity and to reinstate a fraudulently terminated business
entity upon court order with the SOS.
This bill:
1.Requires a written statement of resignation to be made on a
form prescribed by the SOS for filing, and allows the SOS to
destroy or otherwise dispose of a resignation after a new form
is filed, replacing the agent.
2.Allows a person to cancel the registration of the name of
specified business entities by delivering to the SOS a
certificate of cancellation of the entity's name on a form
prescribed by the SOS.
3.Requires a foreign LLC that adopts a new name to relinquish an
alternate name, and additionally conditions reinstatement of a
fraudulently terminated business entity upon the business
entity concurrently submitting for filing an amendment to
change its name to eliminate conflict, if there is a conflict
with the entity name.
4.Specifies the process by which a foreign LP and foreign LLP
can change its name with the SOS.
5.Corrects cross-references.
6.Makes technical, non-substantive or clarifying changes.
Background
The California Corporations Code provides for the formation and
governance of various business entities, including corporations,
associations, partnerships, LPs, LLCs, and LLPs. Each of these
businesses must file certain documents with the SOS in order to
form and stay in good standing with the state. These include
articles of incorporation, annual statements, and more. The
California Business Connect Project is a project set to automate
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current processes within the SOS office, and allow for all
business instruments to be filed and accessed online, on an
around the clock basis.
The California Business Connect Feasibility Study Report,
approved by the California Technology Agency in April of 2011,
provides an overview of the problem faced by California with
respect to its current business filings system. The reliance on
manual labor and hard copies makes it not only increasingly
difficult to comply with current mandates and new mandates that
are created by law, but it also makes these vital business
records prone to human error and at risk of irreparable
destruction. (California Business Connect Feasibility Study
Report, March 2011, page 4.) "SOS staff pointed out that the
filing systems are so archaic, that in many cases, there is no
backup. The systems contain only a single paper copy of each
recording for LLCs, LPs, and general partnerships for the
generations of filings that make up much of the state's legally
organized small businesses. This means that in the event of a
disaster, such as a fire, the permanent records of hundreds of
thousands of California businesses may be wiped out."
Prior Legislation
SB 1532 (Pavley, Chapter 494, Statutes of 2012), similar to this
bill, was enacted to implement changes necessary for the
California Business Connect automated system. The bill
specified that the required address information in business
filings is the street address and required business entities to
provide a mailing address if not the same as the street address.
SB 1532 also revised requirements with respect to the
maintenance of forms filed with the SOS, revised provisions
relating to the assignment of filing dates and fees by the SOS,
repealed specified provisions relating to special purpose
corporations, and made other technical changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/28/14)
California Secretary of State (source)
California Chamber of Commerce
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ARGUMENTS IN SUPPORT : According to the author's office,
currently, business filing statutes complicate the automated and
manual processing procedures, which ultimately results in
certain benefits being made available to some businesses, but
not all.
This bill seeks to standardize the business filing process to
make it more efficient upon completion of the California
Business Connect automation project.
The bill makes minor and clarifying changes to achieve two main
goals, (1) standardize filing processes to
avoid unnecessary confusion and inconsistencies
for business filers and other SOS customers; and (2) avoid
unnecessary California Business Connect design and development
costs by eliminating technical deficiencies in existing law that
add unnecessary complexities to the project.
AL:e 4/29/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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