Bill Text: CA AB1859 | 2013-2014 | Regular Session | Amended
Bill Title: Professional fiduciaries: professional corporations.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Engrossed - Dead) 2014-06-19 - In committee: Set, second hearing. Hearing canceled at the request of author. [AB1859 Detail]
Download: California-2013-AB1859-Amended.html
BILL NUMBER: AB 1859 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 15, 2014
AMENDED IN ASSEMBLY APRIL 21, 2014
AMENDED IN ASSEMBLY APRIL 1, 2014
AMENDED IN ASSEMBLY MARCH 20, 2014
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, to amend
Section 13401 of the Corporations Code, and to add Sections 2104.5,
8406, and 15605 to the Probate Code, 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
Moscone-Knox Professional Corporation Act , as
specified , and would make these corporations subject to
registration by the Professional Fiduciaries Bureau and payment of a
licensure fee, 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 "licensed professional fiduciary" and wording
or abbreviations denoting corporate existence. The bill would require
each director, shareholder, and officer , or
employee of a licensed professional fiduciary corporation
who renders professional services to be a licensed person
with regard to the professional services rendered and to also 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 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. The bill would impose
other various duties upon a licensed professional fiduciary
corporation, as specified. The bill would provide
authority to the bureau to enforce the provisions of this act, as
specified, and in accordance with the Administrative Procedure Act.
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 a licensed 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 licensed professional fiduciary
may individually exercise the powers and duties of that appointment
, as specified .
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 licensed professional fiduciary corporation is a
corporation that , which is registered with
the Professional Fiduciaries Bureau and has a currently effective
certificate of registration from the bureau, and 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 (Part 4 (commencing
with Section 13400) of Division 3 of Title 1 of the Corporations
Code) , 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.
6600.3. An applicant for registration as a licensed professional
fiduciary corporation shall provide to the bureau all necessary and
pertinent documents and information requested by the bureau,
including the names of all of the officers, directors, shareholders,
or employees who are licensed professional fiduciaries, as set forth
in subdivision (c) of Section 6600.5. The bureau may make available
forms of application for registration pursuant to this article.
6600.5. The bureau shall issue a certificate of registration,
which may be in electronic form, if all of the following apply:
(a) The corporation is duly organized and existing under the
General Corporation Law (Division 1 (commencing with Section 100) of
Title 1 of the Corporations Code).
(b) Each officer, director, shareholder, or employee who will
render professional services is a licensed person, as defined in the
Moscone-Knox Professional Corporation Act (Part 4 (commencing with
Section 13400) of Division 3 of Title 1 of the Corporations Code).
(c) Except as provided in Section 13403 of the Corporations Code,
each officer, director, shareholder, or employee who will render
professional services is a licensed professional fiduciary who has
satisfied all of the licensing requirements under the Professional
Fiduciaries Act (Chapter 6 (commencing with Section 6500)).
(d) From the application, it appears to the bureau's satisfaction
that the affairs of the corporation will be conducted in compliance
with the law and the rules and regulations of the bureau.
(e) The corporation pays the registration fee in the amount as the
bureau may determine pursuant to Section 6600.7.
6600.6. Each licensed professional fiduciary corporation shall
renew its permit to practice annually and shall pay the renewal fee
fixed by the bureau pursuant to Section 6600.7.
6600.7. (a) The fee to be charged to each applicant for
registration as a licensed professional fiduciary corporation shall
be fixed by the bureau at an amount not to exceed two hundred fifty
dollars ($250).
(b) The annual fee for the renewal of registration as a licensed
professional fiduciary corporation shall not exceed two hundred fifty
dollars ($250).
(c) The license and renewal fees under subdivisions (a) and (b)
shall be set by the bureau through regulation at an amount not to
exceed that which is necessary to recover the reasonable costs to the
bureau to implement this article.
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 (Part 4
(commencing with Section 13400) of Division 3 of Title 1 of the
Corporations Code) , 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 "licensed 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. (a) The bureau may adopt and enforce regulations to
implement the purposes and objectives of this article.
(b) The bureau shall list the registered professional fiduciary
corporations and their managers on its publicly available Internet
Web site.
6606. 6606.5. (a) The bylaws of a
licensed professional fiduciary corporation shall 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 60 days.
(b) A licensed professional fiduciary corporation shall maintain
adequate insurance at a minimum amount of one million dollars
($1,000,000) for claims against the corporation and for claims
against licensed professional fiduciaries who are its officers,
directors, shareholders, and employees, by its customers
arising out of the rendering of professional services.
(c) The minimum insurance amount required to be maintained by this
section shall be increased by two hundred fifty thousand dollars
($250,000) for each licensed professional fiduciary in excess of two
licensed professional fiduciaries who are members of the licensed
professional fiduciary corporation.
(d) Nothing provided in this article shall be deemed to conflict
with the common law rule in this state under which personal liability
is imposed on officers, directors, and shareholders for damages
resulting from tortious conduct that they have personally committed
or participated in, and for damages resulting from tortious conduct
that they have specifically and directly ordered.
6607. (a) A licensed professional fiduciary corporation that is
appointed as a guardian, conservator, personal representative, or
trustee by a court shall be liable for any licensed professional
fiduciary who violates the powers and duties of those appointments
while acting on behalf of the corporation.
(b) Nothing in subdivision (a) shall be interpreted to prevent the
bureau from individual enforcement and disciplinary action against a
licensed professional fiduciary who has violated any of the
provisions of this chapter.
(c) Notwithstanding subdivision (a), a licensed professional
fiduciary shall be entirely responsible and liable for his or her
compliance with the provisions of the Professional Fiduciaries Act
(Chapter 6 (commencing with Section 6500)) and this article.
6608. Each office of a licensed professional fiduciary
corporation shall be managed by a licensed professional fiduciary.
6609. Each licensed professional fiduciary corporation shall file
with the bureau at the times the bureau may require a report
containing information pertaining to qualification and compliance
with the statutes, rules, and regulations of the bureau, as the
bureau may determine. All reports shall be signed and verified by an
officer of the corporation.
6610. The bureau may conduct an investigation of the conduct of
the business of a licensed professional fiduciary corporation. Upon
investigation, the bureau shall have power to issue subpoenas,
administer oaths, examine witnesses, and compel the production of
records, in the same manner as upon an investigation or formal
hearing in a disciplinary matter under this chapter.
6611. All proceedings against a licensed professional fiduciary
corporation for any violation of this article or any regulations
adopted by the bureau shall be conducted in accordance with the
Administrative Procedure Act (Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code),
and shall be prosecuted by the Attorney General's office, and the
bureau shall have all the powers granted therein.
6612. (a) Notwithstanding Section 6611 and Section 11415.60 of
the Government Code, the bureau may enter into a settlement with a
licensed professional fiduciary corporation or applicant for
registration instead of the issuance of an accusation or statement of
issues against that licensee or applicant.
(b) The settlement shall identify the factual basis for the action
being taken and the statutes or regulations violated.
(c) Any settlement with a licensed professional fiduciary
corporation executed pursuant to this section shall be considered
discipline and a public record and shall be posted on the bureau's
Internet Web site. Any settlement with an applicant for registration
executed pursuant to this section shall be considered a public record
and shall be posted on the bureau's Internet Web site.
6613. Notwithstanding Section 6611, if any violation occurs, in
its discretion, the bureau may refer the case to the Attorney General
or to the local district attorney for criminal prosecution. The
referral of a case for criminal prosecution shall not preclude the
bureau from taking any other action provided for in this article.
SEC. 2. Section 13401 of the Corporations Code is amended to read:
13401. As used in this part:
(a) "Professional services" means any type of professional
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.
(b) "Professional corporation" means a corporation organized under
the General Corporation Law or pursuant to subdivision (b) of
Section 13406 that is engaged in rendering professional services in a
single profession, except as otherwise authorized in Section
13401.5, pursuant to a certificate of registration issued by the
governmental agency regulating the profession as herein provided and
that in its practice or business designates itself as a professional
or other corporation as may be required by statute. However, any
professional corporation or foreign professional corporation
rendering professional services by persons duly licensed by the
Medical Board of California or any examining committee under the
jurisdiction of the board, the Osteopathic Medical Board of
California, the Dental Board of California, the California State
Board of Pharmacy, the Veterinary Medical Board, the California
Architects Board, the Court Reporters Board of California, the Board
of Behavioral Sciences, the Speech-Language Pathology and Audiology
Board, the Board of Registered Nursing, the Professional Fiduciaries
Bureau, or the State Board of Optometry shall not be required to
obtain a certificate of registration in order to render those
professional services.
(c) "Foreign professional corporation" means a corporation
organized under the laws of a state of the United States other than
this state that is engaged in a profession of a type for which there
is authorization in the Business and Professions Code for the
performance of professional services by a foreign professional
corporation.
(d) "Licensed person" means any natural person who is duly
licensed under the provisions of the Business and Professions Code,
the Chiropractic Act, or the Osteopathic Act to render the same
professional services as are or will be rendered by the professional
corporation or foreign professional corporation of which he or she is
or intends to become, an officer, director, shareholder, or
employee.
(e) "Disqualified person" means a licensed person who for any
reason becomes legally disqualified (temporarily or permanently) to
render the professional services that the particular professional
corporation or foreign professional corporation of which he or she is
an officer, director, shareholder, or employee is or was rendering.
SEC. 3. Section 2104.5 is added to the Probate Code, to read:
2104.5. If a licensed professional fiduciary corporation is
appointed as a guardian or conservator, each shareholder, officer,
director, or employee of the corporation who is a licensed
professional fiduciary may individually exercise the powers and
duties of the guardian or conservator. The court shall appoint
and name both the professional fiduciary corporation and the
individuals who may individually exercise the power and duties of the
guardian or conservator. In the event that a corporation ceases to
operate, the individuals named as guardian or conservator shall
notify the court within 10 business days that the corporation has
ceased operating and the court shall make a new appointment. The
authority and responsibility of any individuals previously
appointed guardian or conservator shall continue regardless of the
existence of the corporation until the court makes a new appointment.
SEC. 4. Section 8406 is added to the Probate Code, to read:
8406. If a licensed professional fiduciary corporation is
appointed as a personal representative, each shareholder, officer,
director, or employee of the corporation who is a licensed
professional fiduciary may individually exercise the powers and
duties of the personal representative. The court shall appoint
and name both the professional fiduciary corporation and the
individuals who may individually exercise the power and duties of the
personal representative. In the event that a corporation ceases to
operate, the individuals named as guardian or conservator shall
notify the court within 10 business days that the corporation has
ceased operating and the court shall make a new appointment. The
authority and responsibility of any individuals previously
appointed guardian or conservator shall continue regardless of the
existence of the corporation until the court makes a new appointment.
SEC. 5. Section 15605 is added to the Probate Code, to read:
15605. If a licensed professional fiduciary corporation is
appointed as a trustee, each shareholder, officer, director, or
employee of the corporation who is a licensed professional fiduciary
may individually exercise the powers and duties of the trustee.
The court shall appoint and name both the professional fiduciary
corporation and the individuals who may individually exercise the
power and duties of the trustee. In the event that a corporation
ceases to operate, the individuals named as trustee shall notify the
court within 10 business days that the corporation has
ceased operating and the court shall make a new
appointment. The authority and responsibility of any individuals
previously appointed as trustee shall continue regardless of the
existence of the corporation until the court makes a new appointment.
