Bill Text: CA AB2260 | 2011-2012 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Foreign corporations.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2012-07-03 - In committee: Set, first hearing. Failed passage. [AB2260 Detail]

Download: California-2011-AB2260-Introduced.html

---

BILL NUMBER: AB 2260	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Hagman

                        FEBRUARY 24, 2012

   An act to amend Section 2115 of the Corporations Code, relating to
foreign corporations.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2260, as introduced, Hagman. Foreign corporations.
   Existing law requires foreign corporations to abide by specified
provisions of the Corporations Code, including provisions relating to
the election and removal of directors, shareholders' rights, vote
requirements, and mergers.
   This bill would make a technical, nonsubstantive change to these
provisions.
   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 2115 of the Corporations Code is amended to
read:
   2115.  (a) A foreign corporation (other than a foreign association
or foreign nonprofit corporation but including a foreign parent
corporation even though it does not itself transact intrastate
business) is subject to the requirements of subdivision (b)
commencing on the date specified in subdivision (d) and continuing
until the date specified in subdivision (e) if:
   (1) The average of the property factor, the payroll factor, and
the sales factor (as defined in Sections 25129, 25132, and 25134 of
the Revenue and Taxation Code) with respect to it is more than 50
percent during its latest full income year  ,  and
   (2) more than one-half of its outstanding voting securities are
held of record by persons having addresses in this state appearing on
the books of the corporation on the record date for the latest
meeting of shareholders held during its latest full income year or,
if no meeting was held during that year, on the last day of the
latest full income year. The property factor, payroll factor, and
sales factor shall be those used in computing the portion of its
income allocable to this state in its franchise tax return or, with
respect to corporations the allocation of whose income is governed by
special formulas or that are not required to file separate or any
tax returns, which would have been so used if they were governed by
this three-factor formula. The determination of these factors with
 respect   regard  to any parent
corporation shall be made on a consolidated basis, including in a
unitary computation (after elimination of intercompany transactions)
the property, payroll, and sales of the parent and all of its
subsidiaries in which it owns directly or indirectly more than 50
percent of the outstanding shares entitled to vote for the election
of directors, but deducting a percentage of the property, payroll,
and sales of any subsidiary equal to the percentage minority
ownership, if any, in the subsidiary. For the purpose of this
subdivision, any securities held to the knowledge of the issuer in
the names of broker-dealers, nominees for broker-dealers (including
clearing corporations), or banks, associations, or other entities
holding securities in a nominee name or otherwise on behalf of a
beneficial owner (collectively "nominee holders"), shall not be
considered outstanding. However, if the foreign corporation requests
all nominee holders to certify, with respect to all beneficial owners
for whom securities are held, the number of shares held for those
beneficial owners having addresses (as shown on the records of the
nominee holder) in this state and outside of this state, then all
shares so certified shall be considered outstanding and held of
record by persons having addresses either in this state or outside of
this state as so certified, provided that the certification so
provided shall be retained with the record of shareholders and made
available for inspection and copying in the same manner as is
provided in Section 1600 with respect to that record. A current list
of beneficial owners of a foreign corporation's securities provided
to the corporation by one or more nominee holders or their agent
pursuant to the requirements of Rule 14b-1(b)(3) or 14b-2(b)(3) as
adopted on January 6, 1992, promulgated under the Securities Exchange
Act of 1934, shall constitute an acceptable certification with
respect to beneficial owners for the purposes of this subdivision.
   (b) Except as provided in subdivision (c), the following chapters
and sections of this division shall apply to a foreign corporation as
defined in subdivision (a) (to the exclusion of the law of the
jurisdiction in which it is incorporated):
   Chapter 1 (general provisions and definitions), to the extent
applicable to the following provisions;
   Section 301 (annual election of directors);
   Section 303 (removal of directors without cause);
   Section 304 (removal of directors by court proceedings);
   Section 305, subdivision (c) (filling of director vacancies where
less than a majority in office elected by shareholders);
   Section 309 (directors' standard of care);
   Section 316 (excluding paragraph (3) of subdivision (a) and
paragraph (3) of subdivision (f)) (liability of directors for
unlawful distributions);
   Section 317 (indemnification of directors, officers, and others);
   Sections 500 to 505, inclusive (limitations on corporate
distributions in cash or property);
   Section 506 (liability of shareholder who receives unlawful
distribution);
   Section 600, subdivisions (b) and (c) (requirement for annual
shareholders' meeting and remedy if same not timely held);
   Section 708, subdivisions (a), (b), and (c) (shareholder's right
to cumulate votes at any election of directors);
   Section 710 (supermajority vote requirement);
   Section 1001, subdivision (d) (limitations on sale of assets);
   Section 1101 (provisions following subdivision (e)) (limitations
on mergers);
   Section 1151 (first sentence only) (limitations on conversions);
   Section 1152 (requirements of conversions);
   Chapter 12 (commencing with Section 1200) (reorganizations);
   Chapter 13 (commencing with Section 1300) (dissenters' rights);
   Sections 1500 and 1501 (records and reports);
   Section 1508 (action by Attorney General);
   Chapter 16 (commencing with Section 1600) (rights of inspection).
   (c) This section does not apply to any corporation (1) with
outstanding securities listed on the New York Stock Exchange, the
NYSE Amex, the NASDAQ Global Market, or the NASDAQ Capital Market, or
(2) if all of its voting shares (other than directors' qualifying
shares) are owned directly or indirectly by a corporation or
corporations not subject to this section.
   (d) For purposes of subdivision (a), the requirements of
subdivision (b) shall become applicable to a foreign corporation only
upon the first day of the first income year of the corporation (1)
commencing on or after the 135th day of the income year immediately
following the latest income year with respect to which the tests
referred to in subdivision (a) have been met or (2) commencing on or
after the entry of a final order by a court of competent jurisdiction
declaring that those tests have been met.
   (e) For purposes of subdivision (a), the requirements of
subdivision (b) shall cease to be applicable to a foreign corporation
(1) at the end of the first income year of the corporation
immediately following the latest income year with respect to which at
least one of the tests referred to in subdivision (a) is not met or
(2) at the end of the income year of the corporation during which a
final order has been entered by a court of competent jurisdiction
declaring that one of those tests is not met, provided that a
contrary order has not been entered before the end of the income
year.
   (f) Any foreign corporation that is subject to the requirements of
subdivision (b) shall advise any shareholder of record, any officer,
director, employee, or other agent (within the meaning of Section
317) and any creditor of the corporation in writing, within 30 days
of receipt of written request for that information, whether or not it
is subject to subdivision (b) at the time the request is received.
Any party who obtains a final determination by a court of competent
jurisdiction that the corporation failed to provide to the party
information required to be provided by this subdivision or provided
the party information of the kind required to be provided by this
subdivision that was incorrect, then the court, in its discretion,
shall have the power to include in its judgment recovery by the party
from the corporation of all court costs and reasonable attorneys'
fees incurred in that legal proceeding to the extent they relate to
obtaining that final determination.