BILL NUMBER: SB 351	INTRODUCED
	BILL TEXT


INTRODUCED BY   Committee on Banking and Financial Institutions
(Senators Block (Chair), Galgiani, Hall, Hueso, Lara, Morrell, and
Vidak)

                        FEBRUARY 24, 2015

   An act to amend Sections 5039.5, 5213, 7213, 9213, 12228.5, 12320,
12331, and 12353 of the Corporations Code, relating to corporations.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 351, as introduced, Committee on Banking and Financial
Institutions. Corporations: management.
   (1) The Nonprofit Corporation Law authorizes the formation of
public benefit corporations, mutual benefit corporations, and
religious corporations. The Consumer Cooperative Corporation Law
authorizes the formation of consumer cooperatives. Each of these laws
require a corporation formed under its provisions to have specific
corporate officers, which include, among others, a chair of the
board, which is also referred to with gender variations.
   This bill would specifically expand the permissible titles
relating to a chair of a board.
   (2) The Consumer Cooperative Corporation Law authorizes the
formation of consumer cooperatives corporations, and specifies the
corporate power of a corporation and its officers formed under its
provisions.
   This bill would expand the authority of a consumer cooperative
corporation to conduct its ordinary business operations in
anticipation of, or under the conditions of, an emergency, as
defined, to include, among others, the authority to modify the
requirements of giving notice to directors of a meeting of the board
of directors in any practicable manner. The bill would also authorize
a consumer cooperative corporation to enact bylaws effective only
during an emergency relating to the management and conduct of its
ordinary business affairs, to include, among others, bylaws providing
procedures for designating additional or substitute directors.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 5039.5 of the Corporations Code is amended to
read:
   5039.5.   The term "chair" includes "chairperson,"
"chairman," and "chairwoman."  All references in this
division to  "chairman" shall be deemed to refer to "chair."
  "chairman of the board," other than in Sections 5213,
7213, and 9213, shall be deemed to refer to all permissible titles
for a chair of the board, as permitted by Sections 5213, 7213, and
9213. 
  SEC. 2.  Section 5213 of the Corporations Code is amended to read:
   5213.  (a) A corporation shall have  (1)  a chair of the
board, who may be given the title  chair, chairperson, chairman,
chairwomen,  chair of the board, chairperson of the board,
chairman of the board, or chairwoman of the board, or a president or
both,  (2)  a secretary,  (3)  a treasurer or a
chief financial officer or both, and  (4)  any other
officers with any titles and duties as shall be stated in the bylaws
or determined by the board and as may be necessary to enable it to
sign instruments. The president, or if there is no president the
chair of the board, is the general manager and chief executive
officer of the corporation, unless otherwise provided in the articles
or bylaws. Unless otherwise specified in the articles or the bylaws,
if there is no chief financial officer, the treasurer is the chief
financial officer of the corporation. Any number of offices may be
held by the same person unless the articles or bylaws provide
otherwise, except that no person serving as the secretary, the
treasurer, or the chief financial officer may serve concurrently as
the president or chair of the board. Any compensation of the
president or chief executive officer and the chief financial officer
or treasurer shall be determined in accordance with subdivision (g)
of Section 12586 of the Government Code, if applicable.
   (b) Except as otherwise provided by the articles or bylaws,
officers shall be chosen by the board and serve at the pleasure of
the board, subject to the rights, if any, of an officer under any
contract of employment. Any officer may resign at any time upon
written notice to the corporation without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a
party.
   (c) If the articles or bylaws provide for the election of any
officers by the members, the term of office of the elected officer
shall be one year unless the articles or bylaws provide for a
different term which shall not exceed three years.
  SEC. 3.  Section 7213 of the Corporations Code is amended to read:
   7213.  (a) A corporation shall have  (1)  a chair of the
board, who may be given the title  chair, chairperson, chairman,
chairwomen,  chair of the board, chairperson of the board,
chairman of the board, or chairwoman of the board, or a president or
both,  (2)  a secretary,  (3)  a treasurer or a
chief financial officer or both, and  (4)  any other
officers with any titles and duties as shall be stated in the bylaws
or determined by the board and as may be necessary to enable it to
sign instruments. The president, or if there is no president the
chair of the board, is the general manager and chief executive
officer of the corporation, unless otherwise provided in the articles
or bylaws. Unless otherwise specified in the articles or the bylaws,
if there is no chief financial officer, the treasurer is the chief
financial officer of the corporation. Any number of offices may be
held by the same person unless the articles or bylaws provide
otherwise. Where a corporation holds assets in charitable trust, any
compensation of the president or chief executive officer and the
chief financial officer or treasurer shall be determined in
accordance with subdivision (g) of Section 12586 of the Government
Code, if applicable.
   (b) Except as otherwise provided by the articles or bylaws,
officers shall be chosen by the board and serve at the pleasure of
the board, subject to the rights, if any, of an officer under any
contract of employment. Any officer may resign at any time upon
written notice to the corporation without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a
party.
  SEC. 4.  Section 9213 of the Corporations Code is amended to read:
   9213.  (a) A corporation shall have  (1)  a chair of the
board, who may be given the title  chair, chairperson, chairman,
chairwomen,  chair of the board, chairperson of the board,
chairman of the board, or chairwoman of the board, or a president or
both,  (2)  a secretary,  (3)  a treasurer or a
chief financial officer or both and  (4)  any other officers
with any titles and duties as are stated in the bylaws or determined
by the board and as may be necessary to enable it to sign
instruments. The president, or if there is no president, the chair of
the board, is the general manager and chief executive officer of the
corporation, unless otherwise provided in the articles or bylaws.
Unless otherwise specified in the articles or the bylaws, if there is
no chief financial officer, the treasurer is the chief financial
officer of the corporation. Any number of offices may be held by the
same person unless the articles or bylaws provide otherwise, except
that no person serving as the secretary, the treasurer, or the chief
financial officer may serve concurrently as the president or chair of
the board. Any compensation of the president or chief executive
officer and the chief financial officer or treasurer shall be
determined in accordance with subdivision (g) of Section 12586 of the
Government Code, if applicable.
   (b) Except as otherwise provided by the articles or bylaws,
officers shall be chosen by the board and serve at the pleasure of
the board, subject to the rights, if any, of an officer under any
contract of employment. Any officer may resign at any time upon
written notice to the corporation without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a
party.
  SEC. 5.  Section 12228.5 of the Corporations Code is amended to
read:
   12228.5.   The term "chair" includes "chairperson,"
"chairman," and "chairwoman."  For the purposes of this
part, all references to  "chairman" shall be deemed to refer
to "chair."   "chairman of the board," other than in
Section 12353, shall be deemed to refer to all permissible titles for
a chair of the board, as permitted by Section 12353. 
  SEC. 6.  Section 12320 of the Corporations Code is amended to read:

   12320.  Subject to any limitations contained in the articles or
bylaws and to compliance with other provisions of this part and any
other applicable laws, a corporation, in carrying out its activities,
shall have all of the powers of a natural person, including, without
limitation, the power to:
   (a) Adopt, use, and at will alter a corporate seal, but failure to
affix a seal does not affect the validity of any instrument.
   (b) Adopt, amend, and repeal bylaws.
   (c) Qualify to conduct its activities in any other state,
territory, dependency or foreign country.
   (d) Issue, purchase, redeem, receive, take or otherwise acquire,
own, sell, lend, exchange, transfer or otherwise dispose of, pledge,
use and otherwise deal in and with its own memberships, bonds,
debentures, notes and debt securities.
   (e) Pay pensions, and establish and carry out pension, deferred
compensation, saving, thrift and other retirement, incentive and
benefit plans, trusts and provisions for any or all of its directors,
officers, employees, and persons providing services to it or any of
its subsidiary or related or associated corporations, and to
indemnify and purchase and maintain insurance on behalf of any
fiduciary of such plans, trusts, or provisions.
   (f) Issue certificates evidencing membership in accordance with
the provisions of Section 12401 and issue identity cards to identify
those persons eligible to use the corporation's facilities.
   (g) Levy dues, assessments, and membership and transfer fees.
   (h) Make donations for the public welfare or for community funds,
hospital, charitable, educational, scientific, civic, religious or
similar purposes.
   (i) Assume obligations, enter into contracts, including contracts
of guarantee or suretyship, incur liabilities, borrow or lend money
or otherwise use its credit, and secure any of its obligations,
contracts or liabilities by mortgage, pledge or other encumbrance of
all or any part of its property and income.
   (j) Participate with others in any partnership, joint venture or
other association, transaction or arrangement of any kind whether or
not such participation involves sharing or delegation of control with
or to others.
   (k) Act as trustee under any trust incidental to the principal
objects of the corporation, and receive, hold, administer, exchange,
and expend funds and property subject to such trust.
   (  l  ) Carry on a business at a profit and apply any
profit that results from the business activity to any activity in
which it may lawfully engage. 
   (m) (1) In anticipation of or during an emergency, take either or
both of the following actions necessary to conduct the corporation's
ordinary business operations and affairs, unless bylaws, authorized
pursuant to subdivision (h) of Section 12331, provide otherwise:
 
   (A) Modify lines of succession to accommodate the incapacity of
any director, officer, employee, or agent resulting from the
emergency.  
   (B) Relocate the principal office, designate alternative principal
offices or regional offices, or authorize the officers to do so.
 
   (2) During an emergency, take either or both of the following
actions necessary to conduct the corporation's ordinary business
operations and affairs, unless bylaws, authorized pursuant to
subdivision (h) of Section 12331, provide otherwise:  
   (A) Give notice to a director or directors in any practicable
manner under the circumstances, including, but not limited to, by
publication and radio, when notice of a meeting of the board cannot
be given to that director or directors in the manner prescribed by
the bylaws or Section 12351.  
   (B) Deem that one or more officers of the corporation present at a
board meeting is a director, in order of rank and within the same
rank in order of seniority, as necessary to achieve a quorum for that
meeting.  
   (3) In anticipation of or during an emergency, the board may not
take any action that requires the vote of the members or is not in
the corporation's ordinary course of business, unless the required
vote of the members was obtained prior to the emergency.  
   (4) Any actions taken in good faith in anticipation of or during
an emergency under this subdivision bind the corporation and may not
be used to impose liability on a corporate director, officer,
employee, or agent.  
   (5) For purposes of this subdivision, "emergency" means any of the
following events or circumstances as a result of which, and only so
long as, a quorum of the corporation's board of directors cannot be
readily convened for action:  
   (A) A natural catastrophe, including, but not limited to, a
hurricane, tornado, storm, high water, wind-driven water, tidal wave,
tsunami, earthquake, volcanic eruption, landslide, mudslide,
snowstorm, or, regardless of cause, any fire, flood, or explosion.
 
   (B) An attack on this state or nation by an enemy of the United
States of America, or upon receipt by this state of a warning from
the federal government indicating that an enemy attack is probable or
imminent.  
   (C) An act of terrorism or other manmade disaster that results in
extraordinary levels of casualties or damage or disruption severely
affecting the infrastructure, environment, economy, government
functions, or population, including, but not limited to, mass
evacuations.  
   (D) A state of emergency proclaimed by the governor or by the
President of the United States. 
  SEC. 7.  Section 12331 of the Corporations Code is amended to read:

   12331.  (a) The bylaws shall set forth (unless such provision is
contained in the articles, in which case it may only be changed by an
amendment of the articles) the number of directors of the
corporation, or the method of determining the number of directors of
the corporation, or that the number of directors shall be not less
than a stated minimum or more than a stated maximum with the exact
number of directors to be fixed, within the limits specified, by
approval of the board or the members (Sections 12222 and 12224), in
the manner provided in the bylaws, subject to subdivision (e). The
number or minimum number of directors shall not be less than three.
Alternate directors may be permitted, in which event, the bylaws
shall specify the manner and times of their election and the
conditions to their service in place of a director.
   (b) Once members have been admitted, a bylaw specifying or
changing a fixed number of directors or the maximum or minimum number
or changing from a fixed to a variable board or vice versa may only
be adopted by approval of the members.
   (c) The bylaws may contain any provision, not in conflict with law
or the articles, for the management of the activities and for the
conduct of the affairs of the corporation, including but not limited
to:
   (1) Any provision referred to in subdivision (c) of Section 12313.

   (2) The time, place and manner of calling, conducting and giving
notice of members', directors', and committee meetings, or of
conducting mail ballots.
   (3) The qualifications, duties and compensation of directors; the
time of their election; and the requirements of a quorum for
directors' and committee meetings.
   (4) The appointment of committees, composed of directors or
nondirectors or both, by the board or any officer and the authority
of these committees.
   (5) The appointment, duties, compensation and tenure of officers.
   (6) The mode of determination of members of record.
   (7) The making of reports and financial statements to members.
   (8) Setting, imposing and collecting dues, assessments, and
membership and transfer fees.
   (9) The time and manner of patronage distributions consistent with
this part.
   (d) The bylaws may provide for eligibility, the manner of
admission, withdrawal, suspension, and expulsion of members, and the
suspension or termination of memberships consistent with the
requirements of Section 12431.
   (e) The bylaws may require, for any or all corporate actions, the
vote of a larger proportion of, or all of, the members or the members
of any class, unit, or grouping of members or the vote of a larger
proportion of, or all of, the directors, than is otherwise required
by this part. A provision in the bylaws requiring a greater vote
shall not be altered, amended or repealed except by the greater vote,
unless otherwise provided in the bylaws.
   (f) The bylaws may contain a provision limiting the number of
members, in total or of any class or series, which the corporation is
authorized to admit.
   (g) The bylaws may provide for the establishment by the
corporation of a program for the education of its members, officers,
employees and the general public in the principles and techniques of
cooperation. 
   (h) (1) The bylaws may contain any provision, not in conflict with
the articles, to manage and conduct the ordinary business affairs of
the corporation effective only during an emergency, including, but
not limited to, procedures for calling a board meeting, quorum
requirements for a board meeting, and designation of additional or
substitute directors.  
   (2) During an emergency, the board may not take any action that
requires the vote of the members or otherwise is not in the
corporation's ordinary course of business, unless the required vote
of the members was obtained prior to the emergency.  
   (3) All provisions of the regular bylaws consistent with the
bylaws effective only in the event of an emergency shall remain
effective during the emergency, and the emergency bylaws shall not be
effective after the emergency ends.  
   (4) Corporate action taken in good faith in accordance with the
bylaws effective only in the event of an emergency binds the
corporation, and may not be used to impose liability on a corporate
director, officer, employee, or agent.  
   (5) For purposed of this subdivision, "emergency" has the same
meaning as the term does in Section 12320. 
  SEC. 8.  Section 12353 of the Corporations Code is amended to read:

   12353.  (a) A corporation shall have  (1)  a chair of the
board, who may be given the title  chair, chairperson, chairman,
chairwomen,  chair of the board, chairperson of the board,
chairman of the board, or chairwoman of the board, or a president or
both,  (2)  a secretary,  (3)  a treasurer or a
chief financial officer or both, and  (4)  any other
officers with any titles and duties as shall be stated in the bylaws
or determined by the board and as may be necessary to enable it to
sign instruments. The president, or if there is no president the
chair of the board, is the chief executive officer of the
corporation, unless otherwise provided in the articles or bylaws.
Unless otherwise specified in the articles or the bylaws, if there is
no chief financial officer, the treasurer is the chief financial
officer of the corporation. Any number of offices may be held by the
same person unless the articles or bylaws provide otherwise. Either
the chair of the board or the president shall be elected from among
those board members elected by the membership of the corporation.
   (b) Except as otherwise provided by the articles or bylaws,
officers shall be chosen by the board and serve at the pleasure of
the board, subject to the rights, if any, of an officer under any
contract of employment. Any officer may resign at any time upon
written notice to the corporation without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a
party.