Bill Text: CA AB491 | 2013-2014 | Regular Session | Introduced

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

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Bill Title: Corporations: bylaws: emergency powers.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2013-09-06 - Chaptered by Secretary of State - Chapter 255, Statutes of 2013. [AB491 Detail]

Download: California-2013-AB491-Introduced.html

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BILL NUMBER: AB 491	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Torres

                        FEBRUARY 19, 2013

   An act to amend Sections 207 and 212 of the Corporations Code,
relating to corporations.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 491, as introduced, Torres. Corporations: bylaws.
   The General Corporation Law authorizes and regulates the formation
and operation of a corporation, including, but not limited to, the
adoption and contents of corporate bylaws.
   This bill would authorize a corporation to take actions during an
emergency, as defined, to conduct the corporation's ordinary business
operations and affairs, as specified, and provide that any action
taken in good faith during an emergency under this authorization
would bind the corporation and not be a basis to impose liability on
a corporate director, officer, employee, or agent. This bill would
also authorize a corporation to adopt bylaws to further direct the
operations of the corporation during an emergency, as specified.
   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 207 of the Corporations Code is amended to
read:
   207.  Subject to any limitations contained in the articles and to
compliance with other provisions of this division and any other
applicable laws, a corporation shall have all of the powers of a
natural person in carrying out its business activities, 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 do business in any other state, territory,
dependency or foreign country.
   (d) Subject to the provisions of Section 510, issue, purchase,
redeem, receive, take or otherwise acquire, own, hold, sell, lend,
exchange, transfer or otherwise dispose of, pledge, use and otherwise
deal in and with its own shares, bonds, debentures and other
securities.
   (e) Make donations, regardless of specific corporate benefit, for
the public welfare or for community fund, hospital, charitable,
educational, scientific, civic or similar purposes.
   (f) Pay pensions, and establish and carry out pension,
profit-sharing, share bonus, share purchase, share option, savings,
thrift and other retirement, incentive and benefit plans, trusts and
provisions for any or all of the directors, officers and employees of
the corporation or any of its subsidiary or affiliated corporations,
and to indemnify and purchase and maintain insurance on behalf of
any fiduciary of such plans, trusts or provisions.
   (g) Subject to the provisions of Section 315, assume obligations,
enter into contracts, including contracts of guaranty or suretyship,
incur liabilities, borrow and lend money and 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, franchises and income.
   (h) 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. 
   (i) (1) In advance of, or during an emergency, take any or all of
the following actions necessary to conduct the corporation's ordinary
business operations and affairs during an emergency, unless
emergency bylaws provide otherwise pursuant to subdivision (c) of
Section 212:  
   (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.
 
   (C) 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 307.  
   (D) 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.  
   (2) During an emergency, the board may not take any action that
requires the vote of the shareholders or is not in the corporation's
ordinary course of business, unless the required vote of the
shareholders was obtained prior to the emergency.  
   (3) Any actions taken in good faith during an emergency under this
subdivision binds the corporation and may not be used to impose
liability on a corporate director, officer, employee, or agent. 

   (4) For purposes of this subdivision, "emergency" means any of the
following events or circumstances as a result of which 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 drought, 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 man-made 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. 
  SEC. 2.  Section 212 of the Corporations Code is amended to read:
   212.  (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 that the number of directors shall be not less than a
stated minimum nor more than a stated maximum (which in no case
shall be greater than two times the stated minimum minus one), with
the exact number of directors to be fixed, within the limits
specified, by approval of the board or the shareholders (Section 153)
in the manner provided in the bylaws, subject to paragraph (5) of
subdivision (a) of Section 204. The number or minimum number of
directors shall not be less than three; provided, however, that (1)
before shares are issued, the number may be one, (2) before shares
are issued, the number may be two, (3) so long as the corporation has
only one shareholder, the number may be one, (4) so long as the
corporation has only one shareholder, the number may be two, and (5)
so long as the corporation has only two shareholders, the number may
be two. After the issuance of shares, 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 outstanding shares (Section 152);
provided, however, that a bylaw or amendment of the articles reducing
the fixed number or the minimum number of directors to a number less
than five cannot be adopted if the votes cast against its adoption
at a meeting or the shares not consenting in the case of action by
written consent are equal to more than 162/3 percent of the
outstanding shares entitled to vote.
   (b) The bylaws may contain any provision, not in conflict with law
or the articles for the management of the business and for the
conduct of the affairs of the corporation, including but not limited
to:
   (1) Any provision referred to in subdivision (b), (c) or (d) of
Section 204.
   (2) The time, place and manner of calling, conducting and giving
notice of shareholders', directors' and committee meetings.
   (3) The manner of execution, revocation and use of proxies.
   (4) The qualifications, duties and compensation of directors; the
time of their annual election; and the requirements of a quorum for
directors' and committee meetings.
   (5) The appointment and authority of committees of the board.
   (6) The appointment, duties, compensation and tenure of officers.
   (7) The mode of determination of holders of record of its shares.
   (8) The making of annual reports and financial statements to the
shareholders. 
   (c) (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 in an emergency as defined in Section
207, 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 shareholders or otherwise is not in the
corporation's ordinary course of business, unless the required vote
of the shareholders was obtained prior to the emergency.  
   (3) All provisions of the regular bylaws consistent with the
emergency bylaws 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
emergency bylaws binds the corporation, and may not be used to impose
liability on a corporate director, officer, employee, or agent.