Code Section Group

Corporations Code - CORP

TITLE 1. CORPORATIONS [100 - 14631]

  ( Title 1 enacted by Stats. 1947, Ch. 1038. )

DIVISION 1. GENERAL CORPORATION LAW [100 - 2319]

  ( Division 1 repealed and added by Stats. 1975, Ch. 682. )

CHAPTER 1. General Provisions and Definitions [100 - 195]
  ( Chapter 1 added by Stats. 1975, Ch. 682. )

100.
  

(a) This division shall be known and may be cited as the General Corporation Law.

(b) This title of the Corporations Code, or any division, part, chapter, article or section thereof, may at any time be amended or repealed.

(Repealed and added by Stats. 1975, Ch. 682.)

101.
  

Unless the provision or the context otherwise requires, the general provisions and definitions set forth in this chapter govern the construction of this division.

(Repealed and added by Stats. 1975, Ch. 682.)

102.
  

(a) Subject to Chapter 23 (commencing with Section 2300) (transition provisions), this division applies to corporations organized under this division and to domestic corporations that are not subject to Division 1.5 (commencing with Section 2500), and to domestic corporations that are not subject to Division 2 (commencing with Section 5000) or Part 1 (commencing with Section 12000), 2 (commencing with Section 12200), 3 (commencing with Section 13200), or 5 (commencing with Section 14000) of Division 3 on December 31, 1976, and that are not organized or existing under any statute of this state other than this code; this division applies to any other corporation only to the extent expressly included in a particular provision of this division.

(b) The existence of corporations formed or existing on the date of enactment or reenactment of this division shall not be affected by the enactment or reenactment of this division nor by any change in the requirements for the formation of corporations nor by the amendment or repeal of the laws under which they were formed or created.

(c) Neither the repeals effected by the enactment or reenactment of this division nor the enactment of this title nor the amendment thereof shall impair or take away any existing liability or cause of action against any corporation, its shareholders, directors, or officers incurred prior to the time of the enactment, reenactment, or amendment.

(Amended by Stats. 2011, Ch. 740, Sec. 1. Effective January 1, 2012.)

103.
  

Every corporation organized under the laws of this state, any other state of the United States or the District of Columbia or under an act of the Congress of the United States, all of the capital stock of which is beneficially owned by the United States, an agency or instrumentality of the United States or any corporation the whole of the capital stock of which is owned by the United States or by an agency or instrumentality of the United States, is conclusively presumed to be an agency and instrumentality of the United States and is entitled to all privileges and immunities to which the holders of all of its stock are entitled as agencies of the United States.

(Repealed and added by Stats. 1975, Ch. 682.)

104.
  

Unless otherwise expressly provided, whenever reference is made in this division to any other state or federal statute, such reference is to that statute as it may be amended from time to time, whether before or after the enactment of this division.

(Repealed and added by Stats. 1975, Ch. 682.)

105.
  

A corporation or association may be sued as provided in the Code of Civil Procedure.

(Repealed and added by Stats. 1975, Ch. 682.)

106.
  

Any corporation heretofore or hereafter formed under this division shall, as a condition of its existence as a corporation, be subject to the provisions of the Code of Civil Procedure authorizing the attachment of corporate property.

(Repealed and added by Stats. 1975, Ch. 682.)

107.
  

No corporation, social purpose corporation, association, or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.

(Amended by Stats. 2014, Ch. 694, Sec. 1. Effective January 1, 2015.)

108.
  

The fees of the Secretary of State for filing instruments by or on behalf of corporations are prescribed in Article 3 (commencing with Section 12180) of Chapter 3 of Part 2 of Division 3 of Title 2 of the Government Code.

(Repealed and added by Stats. 1975, Ch. 682.)

109.
  

(a) Any agreement, certificate or other instrument relating to a domestic or foreign corporation filed pursuant to this division may be corrected with respect to any misstatement of fact contained therein, any defect in the execution thereof or any other error or defect contained therein, by filing a certificate of correction entitled “Certificate of Correction of ____ (insert here the title of the agreement, certificate or other instrument to be corrected and name(s) of corporation or corporations)”; provided, however, that no such certificate of correction shall alter the wording of any resolution or written consent which was in fact adopted by the board or the shareholders or effect a corrected amendment of articles which amendment as so corrected would not in all respects have complied with the requirements of this division at the time of filing of the agreement, certificate, or other instrument being corrected.

(b) If the certificate of correction corrects original articles, the certificate of correction shall be either an officers’ certificate or a certificate signed and verified by the incorporators, or a majority of them. If the certificate of correction corrects an agreement of merger or an officers’ certificate accompanying an agreement of merger, the certificate of correction shall be an officers’ certificate of the surviving corporation only. In all other instances, the certificate of correction shall be either an officer’s certificate or a certificate signed and verified as provided in this division with respect to the agreement, certificate or other instrument being corrected.

(c) A certificate of correction shall set forth the following:

(1) The name or names of the corporation or corporations.

(2) The date the agreement, certificate or other instrument being corrected was filed.

(3) The provision in the agreement, certificate or other instrument as corrected and, if the execution was defective, wherein it was defective.

(4) If applicable, that the certificate does not alter the wording of any resolution or written consent which was in fact adopted by the board or the shareholders.

(d) A provision of the articles, amended articles, restated articles, or certificate of determination being corrected by a certificate of correction shall be identified in the certificate of correction in accordance with subdivision (a) of Section 907.

(e) The filing of the certificate of correction shall not alter the effective time of the agreement, certificate or instrument being corrected, which shall remain as its original effective time, and such filing shall not affect any right or liability accrued or incurred before such filing, except that any right or liability accrued or incurred by reason of the error or defect being corrected shall be extinguished by such filing if the person having that right has not detrimentally relied on the original instrument.

(Amended by Stats. 1988, Ch. 919, Sec. 1.)

109.5.
  

(a) Provisions of the articles described in paragraph (3) of subdivision (g) of Section 202 and subdivisions (a) and (b) of Section 204 may be made dependent upon facts ascertainable outside the articles, if the manner in which those facts shall operate upon those provisions is clearly and expressly set forth in the articles. Similarly, any of the terms of an agreement of merger pursuant to Section 1101 may be made dependent upon facts ascertainable outside that agreement, if the manner in which those facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger.

(b) Notwithstanding subdivision (a), when any provisions or terms of articles or an agreement of merger are made dependent upon facts ascertainable outside the filed instrument through a reference to an agreement or similar document, the corporation filing that instrument shall (1) maintain at its principal executive office a copy of any such agreement or document and all amendments and (2) provide to its shareholders, in the case of articles, or to shareholders of any constituent corporation, in the case of an agreement of merger, a copy of them upon written request and without charge.

(c) If the reference to an agreement or contract is a reference to an agreement or contract to which the corporation is a party (a “referenced agreement” in this section), any amendment or revision of the referenced agreement requires shareholder approval, in addition to approvals otherwise required, in the following instances and no other:

(1) If the amendment or revision of the referenced agreement would result in a material change in the rights, preferences, privileges, or restrictions of a class or series of shares, the amendment or revision of the referenced agreement is required to be approved by the outstanding shares (Section 152) of that class or series.

(2) If the amendment or revision of the referenced agreement would result in a material change in the rights or liabilities of any class or series of shares with respect to the subject matter of paragraph (1), (2), (3), (5), or (9) of subdivision (a) of Section 204, the amendment or revision of the referenced agreement is required to be approved by the outstanding shares (Section 152) of that class or series.

(3) If the amendment or revision of the referenced agreement would result in a material change in the restrictions on transfer or hypothecation of any class or series of shares, the amendment or revision of the referenced agreement is required to be approved by the outstanding shares (Section 152) of that class or series.

(4) If the amendment or revision of the referenced agreement would result in a change of any of the principal terms of an agreement of merger, the amendment or revision of the referenced agreement is required to be approved in the same manner as required by Section 1104 for a change in the principal terms of an agreement of merger.

(Amended by Stats. 2014, Ch. 834, Sec. 1. Effective January 1, 2015.)

110.
  

(a) Upon receipt of any instrument by the Secretary of State for filing pursuant to this division, if it conforms to law, it shall be filed by, and in the office of, the Secretary of State and the date of filing endorsed thereon. Except for instruments filed pursuant to Section 1502, the date of filing shall be the date the instrument is received by the Secretary of State unless the instrument provides that it is to be withheld from filing until a future date or unless in the judgment of the Secretary of State the filing is intended to be coordinated with the filing of some other corporate document which cannot be filed. The Secretary of State shall file a document as of any requested future date not more than 90 days after its receipt, including a Saturday, Sunday, or legal holiday, if the document is received in the Secretary of State’s office at least one business day prior to the requested date of filing. An instrument does not fail to conform to law because it is not accompanied by the full filing fee if the unpaid portion of the fee does not exceed the limits established by the policy of the Secretary of State for extending credit in these cases.

(b) If the Secretary of State determines that an instrument submitted for filing or otherwise submitted does not conform to law and returns it to the person submitting it, the instrument may be resubmitted accompanied by a written opinion of the member of the State Bar of California submitting the instrument, or representing the person submitting it, to the effect that the specific provision of the instrument objected to by the Secretary of State does conform to law and stating the points and authorities upon which the opinion is based. The Secretary of State shall rely, with respect to any disputed point of law (other than the application of Sections 201, 2101, and 2106), upon that written opinion in determining whether the instrument conforms to law. The date of filing in that case shall be the date the instrument is received on resubmission.

(c) Any instrument filed with respect to a corporation (other than original articles) may provide that it is to become effective not more than 90 days subsequent to its filing date. In case such a delayed effective date is specified, the instrument may be prevented from becoming effective by a certificate stating that by appropriate corporate action it has been revoked and is null and void, executed in the same manner as the original instrument and filed before the specified effective date. In the case of a merger agreement, the certificate revoking the earlier filing need only be executed on behalf of one of the constituent corporations. If no revocation certificate is filed, the instrument becomes effective on the date specified.

(Amended by Stats. 2012, Ch. 494, Sec. 3. Effective January 1, 2013.)

110.5.
  

The Secretary of State may cancel the filing of articles of a domestic corporation or the filing of a statement and designation by a foreign corporation if a check or other remittance accepted in payment of the filing fee or franchise tax is not paid upon presentation. Upon receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give written notice of the applicability of this section and the cancellation date which shall be not less than 20 days from the date of mailing the written notice as certified by the Secretary of State, to the agent for service of process or to the person submitting the instrument. Thereafter, if the amount has not been paid by cashier’s check or equivalent before the date of cancellation as stated in the written notice of cancellation, the cancellation shall thereupon be effective. The written notice shall be given 70 days or less after the original filing.

(Amended by Stats. 1988, Ch. 508, Sec. 1.)

111.
  

All references in this division to the voting of shares include the voting of other securities given voting rights in the articles pursuant to subdivision (a)(7) of Section 204.

(Repealed and added by Stats. 1975, Ch. 682.)

112.
  

If the articles provide for more or less than one vote for any share on any matter, the references in Sections 152, 153 and 602 to a majority or other proportion of shares means, as to such matter, a majority or other proportion of the votes entitled to be cast. Whenever in this division shares are disqualified from voting on any matter, they shall not be considered outstanding for the determination of a quorum at any meeting to act upon, or the required vote to approve action upon, that matter under any other provision of this division or the articles or bylaws.

(Repealed and added by Stats. 1975, Ch. 682.)

113.
  

Any reference in this division to mailing means first-class mail, postage prepaid, unless registered or some other form of mail is specified or permitted. Registered mail includes certified mail.

(Amended by Stats. 1978, Ch. 370.)

114.
  

All references in this division to financial statements, balance sheets, income statements, and statements of cashflows, and all references to assets, liabilities, earnings, retained earnings, and similar accounting items of a corporation mean those financial statements or comparable statements or items prepared or determined in conformity with generally accepted accounting principles then applicable, fairly presenting in conformity with generally accepted accounting principles the matters that they purport to present, subject to any specific accounting treatment required by a particular section of this division. Unless otherwise expressly stated, all references in this division to financial statements mean, in the case of a corporation that has subsidiaries, consolidated statements of the corporation and each of its subsidiaries as are required to be included in the consolidated statements under generally accepted accounting principles then applicable and all references to accounting items mean the items determined on a consolidated basis in accordance with the consolidated financial statements. Financial statements other than annual statements may be condensed or otherwise presented as permitted by authoritative accounting pronouncements.

(Amended by Stats. 2006, Ch. 214, Sec. 1. Effective January 1, 2007.)

115.
  

As used in this division, independent accountant means a certified public accountant or public accountant who is independent of the corporation as determined in accordance with generally accepted auditing standards and who is engaged to audit financial statements of the corporation or perform other accounting services.

(Amended by Stats. 1976, Ch. 641.)

116.
  

Nothing contained in this division modifies the provisions of subdivision (h) of Section 25102 or the conditions provided therein to the availability of an exemption under that subdivision.

(Repealed and added by Stats. 1975, Ch. 682.)

117.
  

Any requirement in this division for a vote of each class of outstanding shares means such a vote regardless of limitations or restrictions upon the voting rights thereof, unless expressly limited to voting shares.

(Added by Stats. 1976, Ch. 641.)

118.
  

Any reference in this division to the time a notice is given or sent means, unless otherwise expressly provided, any of the following:

(a) The time a written notice by mail is deposited in the United States mails, postage prepaid.

(b) The time any other written notice, including facsimile, telegram, or electronic mail message, is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient.

(c) The time any oral notice is communicated, in person or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, or wireless, to the recipient, including the recipient’s designated voice mailbox or address on the system, or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.

(Amended by Stats. 2006, Ch. 538, Sec. 78. Effective January 1, 2007.)

149.
  

“Acknowledged” means that an instrument is either:

(a) Formally acknowledged as provided in Article 3 (commencing with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of the Civil Code, or

(b) Accompanied by a declaration in writing signed by the persons executing the same that they are such persons and that the instrument is the act and deed of the person or persons executing the same.

Any certificate of acknowledgment taken without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated.

(Amended by Stats. 1976, Ch. 641.)

150.
  

A corporation is an “affiliate” of, or a corporation is “affiliated” with, another specified corporation if it directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the other specified corporation.

(Added by Stats. 1975, Ch. 682.)

151.
  

“Approved by (or approval of) the board” means approved or ratified by the vote of the board or by the vote of a committee authorized to exercise the powers of the board, except as to matters not within the competence of the committee under Section 311.

(Added by Stats. 1975, Ch. 682.)

152.
  

“Approved by (or approval of) the outstanding shares” means approved by the affirmative vote of a majority of the outstanding shares entitled to vote. Such approval shall include the affirmative vote of a majority of the outstanding shares of each class or series entitled, by any provision of the articles or of this division, to vote as a class or series on the subject matter being voted upon and shall also include the affirmative vote of such greater proportion (including all) of the outstanding shares of any class or series if such greater proportion is required by the articles or this division.

(Amended by Stats. 1976, Ch. 641.)

153.
  

“Approved by (or approval of) the shareholders” means approved or ratified by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) or by the written consent of shareholders (Section 603) or by the affirmative vote or written consent of such greater proportion (including all) of the shares of any class or series as may be provided in the articles or in this division for all or any specified shareholder action.

(Amended by Stats. 1977, Ch. 235.)

154.
  

“Articles” includes the articles of incorporation, amendments thereto, amended articles, restated articles, certificate of incorporation and certificates of determination. All references in this division to a vote required by the “articles” include, in the case of a close corporation (Section 158), any vote required by a shareholders’ agreement.

(Amended by Stats. 1976, Ch. 641.)

155.
  

“Board” means the board of directors of the corporation.

(Added by Stats. 1975, Ch. 682.)

156.
  

“Certificate of determination” means a certificate executed and filed pursuant to Section 401.

(Added by Stats. 1975, Ch. 682.)

156.1.
  

“Certificated security” means a share (Section 184), as defined in paragraph (4) of subdivision (a) of Section 8102 of, or an obligation of the issuer as described in paragraph (15) of subdivision (a) of, the Commercial Code.

(Amended by Stats. 1996, Ch. 497, Sec. 25. Effective January 1, 1997.)

156.5.
  

“Certificate of Redomestication” is the document by which the appropriate official of another state approves the redomestication of a California insurer.

(Added by Stats. 1995, Ch. 702, Sec. 1. Effective January 1, 1996.)

156.6.
  

All references in this division to “chairperson of the board” shall be deemed to refer to all permissible titles for the chairperson of the board, as permitted by Section 312.

(Added by Stats. 2015, Ch. 98, Sec. 1. Effective January 1, 2016.)

157.
  

“Chapter” refers to a chapter of this Division 1 of Title 1 of the Corporations Code, unless otherwise expressly stated.

(Added by Stats. 1975, Ch. 682.)

158.
  

(a) “Close corporation” means a corporation, including a close social purpose corporation, whose articles contain, in addition to the provisions required by Section 202, a provision that all of the corporation’s issued shares of all classes shall be held of record by not more than a specified number of persons, not exceeding 35, and a statement, “This corporation is a close corporation.”

(b) The special provisions referred to in subdivision (a) may be included in the articles by amendment, but if such amendment is adopted after the issuance of shares only by the affirmative vote of all of the issued and outstanding shares of all classes.

(c) The special provisions referred to in subdivision (a) may be deleted from the articles by amendment, or the number of shareholders specified may be changed by amendment, but if such amendment is adopted after the issuance of shares, only by the affirmative vote of at least two-thirds of each class of the outstanding shares; provided, however, that the articles may provide for a lesser vote, but not less than a majority of the outstanding shares, or may deny a vote to any class, or both.

(d) In determining the number of shareholders for the purposes of the provision in the articles authorized by this section, spouses and the personal representative of either shall be counted as one regardless of how shares may be held by either or both of them, a trust or personal representative of a decedent holding shares shall be counted as one regardless of the number of trustees or beneficiaries, and a partnership or corporation or business association holding shares shall be counted as one (except that any such trust or entity the primary purpose of which was the acquisition or voting of the shares shall be counted according to the number of beneficial interests therein).

(e) A corporation shall cease to be a close corporation upon the filing of an amendment to its articles pursuant to subdivision (c) or, if it shall have more than the maximum number of holders of record of its shares specified in its articles as a result of an inter vivos transfer of shares which is not void under subdivision (d) of Section 418, the transfer of shares on distribution by will or pursuant to the laws of descent and distribution, the dissolution of a partnership or corporation or business association, or the termination of a trust which holds shares, by court decree upon dissolution of a marriage or otherwise by operation of law. Promptly upon acquiring more than the specified number of holders of record of its shares, a close corporation shall execute and file an amendment to its articles deleting the special provisions referred to in subdivision (a) and deleting any other provisions not permissible for a corporation which is not a close corporation, which amendment shall be promptly approved and filed by the board and need not be approved by the outstanding shares.

(f) Nothing contained in this section shall invalidate any agreement among the shareholders to vote for the deletion from the articles of the special provisions referred to in subdivision (a) upon the lapse of a specified period of time or upon the occurrence of a certain event or condition or otherwise.

(g) The following sections contain specific references to close corporations: Sections 186, 202, 204, 300, 418, 421, 1111, 1201, 1800, and 1904.

(Amended by Stats. 2016, Ch. 50, Sec. 20. Effective January 1, 2017.)

159.
  

“Common shares” means shares which have no preference over any other shares with respect to distribution of assets on liquidation or with respect to payment of dividends.

(Added by Stats. 1975, Ch. 682.)

160.
  

(a) Except as provided in subdivision (b), “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation.

(b) “Control” in Sections 181, 1001, and 1200 means the ownership directly or indirectly of shares or equity securities possessing more than 50 percent of the voting power of a domestic corporation, a foreign corporation, or an other business entity.

(Amended by Stats. 1999, Ch. 437, Sec. 1. Effective January 1, 2000.)

161.
  

“Constituent corporation” means a corporation which is merged with or into one or more other corporations or one or more other business entities and includes a surviving corporation.

(Amended by Stats. 1994, Ch. 1200, Sec. 9. Effective September 30, 1994.)

161.5.
  

“Constituent limited partnership” means a limited partnership which is merged with one or more corporations and includes the surviving limited partnership.

(Added by Stats. 1993, Ch. 543, Sec. 2. Effective January 1, 1994.)

161.7.
  

“Constituent other business entity” means an other business entity that is merged with or into one or more corporations and includes the surviving other business entity.

(Added by Stats. 1994, Ch. 1200, Sec. 10. Effective September 30, 1994.)

161.9.
  

“Conversion” means a conversion pursuant to Chapter 11.5 (commencing with Section 1150).

(Added by Stats. 2002, Ch. 480, Sec. 1. Effective January 1, 2003.)

162.
  

“Corporation”, unless otherwise expressly provided, refers only to a corporation organized under this division or a corporation subject to this division under the provisions of subdivision (a) of Section 102.

(Amended by Stats. 1976, Ch. 641.)

163.
  

“Corporation subject to the Banking Law” (Division 1.1 (commencing with Section 1000) of the Financial Code) means:

(a) Any corporation which, with the approval of the Commissioner of Business Oversight, is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Business Oversight to engage in, the commercial banking business under Division 1.1 (commencing with Section 1000) of the Financial Code.

(b) Any corporation which, with the approval of the Commissioner of Business Oversight, is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Business Oversight to engage in, the industrial banking business under Division 1.1 (commencing with Section 1000) of the Financial Code.

(c) Any corporation (other than a corporation described in subdivision (d)) which, with the approval of the Commissioner of Business Oversight, is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Business Oversight to engage in, the trust business under Division 1.1 (commencing with Section 1000) of the Financial Code.

(d) Any corporation which is authorized by the Commissioner of Business Oversight and the Commissioner of Insurance to maintain a title insurance department to engage in title insurance business and a trust department to engage in trust business; or

(e) Any corporation which, with the approval of the Commissioner of Business Oversight, is incorporated for the purpose of engaging in, or which is authorized by the Commissioner of Business Oversight to engage in, business under Article 1 (commencing with Section 1850), Chapter 21, Division 1.1 of the Financial Code.

(Amended by Stats. 2014, Ch. 401, Sec. 16. Effective January 1, 2015.)

163.1.
  

For purposes of subdivision (b) of Section 500 and subdivision (b) of Section 506, “cumulative dividends in arrears” means only cumulative dividends that have not been paid as required on a scheduled payment date set forth in, or determined pursuant to, the articles of incorporation, regardless of whether those dividends had been declared prior to that scheduled payment date.

(Amended by Stats. 2011, Ch. 203, Sec. 1. Effective January 1, 2012.)

164.
  

“Directors” means natural persons designated in the articles as such or elected by the incorporators and natural persons designated, elected or appointed by any other name or title to act as directors, and their successors.

(Amended by Stats. 1976, Ch. 641.)

165.
  

“Disappearing corporation” means a constituent corporation which is not the surviving corporation.

(Added by Stats. 1975, Ch. 682.)

165.5.
  

“Disappearing limited partnership” means a constituent limited partnership which is not the surviving limited partnership.

(Added by Stats. 1993, Ch. 543, Sec. 3. Effective January 1, 1994.)

166.
  

“Distribution to its shareholders” means the transfer of cash or property by a corporation to its shareholders without consideration, whether by way of dividend or otherwise, except a dividend in shares of the corporation, or the purchase or redemption of its shares for cash or property, including the transfer, purchase, or redemption by a subsidiary of the corporation. The time of any distribution by way of dividend shall be the date of declaration thereof and the time of any distribution by purchase or redemption of shares shall be the date cash or property is transferred by the corporation, whether or not pursuant to a contract of an earlier date; provided, that where a debt obligation that is a security (as defined in Section 8102 of the Commercial Code) is issued in exchange for shares the time of the distribution is the date when the corporation acquires the shares in the exchange. In the case of a sinking fund payment, cash or property is transferred within the meaning of this section at the time that it is delivered to a trustee for the holders of preferred shares to be used for the redemption of the shares or physically segregated by the corporation in trust for that purpose. “Distribution to its shareholders” shall not include (a) satisfaction of a final judgment of a court or tribunal of appropriate jurisdiction ordering the rescission of the issuance of shares, (b) the rescission by a corporation of the issuance of it shares, if the board determines (with any director who is, or would be, a party to the transaction not being entitled to vote) that (1) it is reasonably likely that the holder or holders of the shares in question could legally enforce a claim for the rescission, (2) that the rescission is in the best interests of the corporation, and (3) the corporation is likely to be able to meet its liabilities (except those for which payment is otherwise adequately provided) as they mature, or (c) the repurchase by a corporation of its shares issued by it pursuant to Section 408, if the board determines (with any director who is, or would be, a party to the transaction not being entitled to vote) that (1) the repurchase is in the best interests of the corporation and that (2) the corporation is likely to be able to meet its liabilities (except those for which payment is otherwise adequately provided) as they mature.

(Amended by Stats. 1996, Ch. 497, Sec. 26. Effective January 1, 1997.)

167.
  

“Domestic corporation” means a corporation formed under the laws of this state.

(Added by Stats. 1975, Ch. 682.)

167.3.
  

“Domestic limited liability company” means a limited liability company as defined in subdivision (t) of Section 17000.

(Added by Stats. 1994, Ch. 1200, Sec. 11. Effective September 30, 1994.)

167.5.
  

“Domestic limited partnership” means any limited partnership formed under the laws of this state.

(Amended by Stats. 2006, Ch. 495, Sec. 4. Effective January 1, 2007.)

167.7.
  

“Domestic other business entity” means an other business entity organized under the laws of this state.

(Added by Stats. 1994, Ch. 1200, Sec. 12. Effective September 30, 1994.)

167.8.
  

“Disappearing other business entity” means a constituent other business entity that is not the surviving other business entity.

(Added by Stats. 1994, Ch. 1200, Sec. 13. Effective September 30, 1994.)

168.
  

“Equity security” in Sections 181, 1001, 1113, 1200, and 1201 means any share or membership of a domestic or foreign corporation; any partnership interest, membership interest, or equivalent equity interest in an other business entity; and any security convertible with or without consideration into, or any warrant or right to subscribe to or purchase, any of the foregoing.

(Amended by Stats. 1999, Ch. 437, Sec. 2. Effective January 1, 2000.)

169.
  

“Filed”, unless otherwise expressly provided, means filed in the office of the Secretary of State.

(Added by Stats. 1975, Ch. 682.)

170.
  

“Foreign association” means a business association organized as a trust under the laws of a foreign jurisdiction.

(Added by Stats. 1975, Ch. 682.)

171.
  

“Foreign corporation” means any corporation other than a domestic corporation and, when used in Section 191, Section 201, Section 2203, Section 2258 and Section 2259 and Chapter 21, includes a foreign association, unless otherwise stated. “Foreign corporation” as used in Chapter 21 does not include a corporation or association chartered under the laws of the United States.

(Amended by Stats. 1977, Ch. 235.)

171.03.
  

“Foreign limited liability company” means a foreign limited liability company as defined in subdivision (j) of Section 17701.02.

(Amended by Stats. 2012, Ch. 419, Sec. 5. Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.)

171.05.
  

“Foreign limited partnership” means any limited partnership, including a limited liability limited partnership, formed under the laws of any state other than this state or of the District of Columbia or under the laws of a foreign country.

(Amended by Stats. 2006, Ch. 495, Sec. 5. Effective January 1, 2007.)

171.07.
  

“Foreign other business entity” means an other business entity organized under the laws of any state, other than this state, or of the District of Columbia or under the laws of a foreign country.

(Added by Stats. 1994, Ch. 1200, Sec. 15. Effective September 30, 1994.)

171.08.
  

“Social purpose corporation” means any social purpose corporation formed under Division 1.5 (commencing with Section 2500).

(Amended by Stats. 2014, Ch. 694, Sec. 3. Effective January 1, 2015.)

171.1.
  

“Initial transaction statement” means a statement signed by or on behalf of the issuer sent to the new registered owner or registered pledgee, and “written statements,” when used in connection with uncertificated securities, means the written statements that are periodically, or at the request of the registered owner or registered pledgee, sent by the issuer to the registered owner or registered pledgee describing the issue of which the uncertificated security is a part.

(Amended by Stats. 1996, Ch. 497, Sec. 27. Effective January 1, 1997.)

171.3.
  

“Limited liability company” means a limited liability company as defined in subdivision (k) of Section 17701.02.

(Amended by Stats. 2012, Ch. 419, Sec. 6. Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.)

171.5.
  

“Limited partnership” means a partnership formed by two or more persons and having one or more general partners and one or more limited partners, or their equivalents under any name.

(Added by Stats. 1993, Ch. 543, Sec. 6. Effective January 1, 1994.)

172.
  

“Liquidation price” or “liquidation preference” means amounts payable on shares of any class upon voluntary or involuntary dissolution, winding up or distribution of the entire assets of the corporation, including any cumulative dividends accrued and unpaid, in priority to shares of another class or classes.

(Added by Stats. 1975, Ch. 682.)

173.
  

“Officers’ certificate” means a certificate signed and verified by the chairperson of the board, the president or any vice president and by the secretary, the chief financial officer, the treasurer or any assistant secretary or assistant treasurer.

(Amended by Stats. 2015, Ch. 98, Sec. 2. Effective January 1, 2016.)

174.
  

“On the certificate” means that a statement appears on the face of a share certificate or on the reverse thereof with a reference thereto on the face or, in the case of an uncertificated security, that the applicable provisions of subdivision (a) of Section 8202 and Section 8204 of the Commercial Code have been complied with.

(Amended by Stats. 1996, Ch. 497, Sec. 28. Effective January 1, 1997.)

174.5.
  

“Other business entity” means a domestic or foreign limited liability company, limited partnership, general partnership, business trust, real estate investment trust, unincorporated association (other than a nonprofit association), or a domestic reciprocal insurer organized after 1974 to provide medical malpractice insurance as set forth in Article 16 (commencing with Section 1550) of Chapter 3 of Part 2 of Division 1 of the Insurance Code. As used herein, “general partnership” means a “partnership” as defined in subdivision (7) of Section 16101; “business trust” means a business organization formed as a trust; “real estate investment trust” means a “real estate investment trust” as defined in subsection (a) of Section 856 of the Internal Revenue Code of 1986, as amended; and “unincorporated association” has the meaning set forth in Section 18035.

(Amended by Stats. 2004, Ch. 178, Sec. 4. Effective January 1, 2005.)

175.
  

Except as used in Sections 1001, 1101, and 1113, a “parent” of a specified corporation is an affiliate in control (Section 160(a)) of that corporation directly or indirectly through one or more intermediaries. In Sections 1001, 1101, and 1113, “parent” means a person in control (Section 160(b)) of a domestic corporation, a foreign corporation, or an other business entity.

(Amended by Stats. 1999, Ch. 437, Sec. 4. Effective January 1, 2000.)

176.
  

“Preferred shares” means shares other than common shares.

(Added by Stats. 1975, Ch. 682.)

177.
  

“Proper county” means the county where the principal executive office of the corporation is located or, if the principal executive office of the corporation is not located in this state, or the corporation has no such office, the County of Sacramento.

(Added by Stats. 1975, Ch. 682.)

178.
  

“Proxy” means a written authorization signed or an electronic transmission authorized by a shareholder or the shareholder’s attorney in fact giving another person or persons power to vote with respect to the shares of such shareholder. “Signed” for the purpose of this section means the placing of the shareholder’s name or other authorization on the proxy (whether by manual signature, typewriting, telegraphic, or electronic transmission or otherwise) by the shareholder or the shareholder’s attorney in fact.

A proxy may be transmitted by an oral telephonic transmission if it is submitted with information from which it may be determined that the proxy was authorized by the shareholder, or his or her attorney in fact.

(Amended by Stats. 1991, Ch. 308, Sec. 1.)

179.
  

“Proxyholder” means the person or persons to whom a proxy is given.

(Added by Stats. 1975, Ch. 682.)

180.
  

“Redemption price” means the amount or amounts (in cash, property or securities, or any combination thereof) payable on shares of any class or series upon the redemption of the shares. Unless otherwise expressly provided, the redemption price is payable in cash.

(Added by Stats. 1975, Ch. 682.)

180.5.
  

“Redomestication” means the transfer of an insurer’s place of incorporation from another state to this state or from this state to another state.

(Added by Stats. 1995, Ch. 702, Sec. 2. Effective January 1, 1996.)

181.
  

“Reorganization” means either:

(a) A merger pursuant to Chapter 11 (commencing with Section 1100) other than a short-form merger (a “merger reorganization”).

(b) The acquisition by one domestic corporation, foreign corporation, or other business entity in exchange, in whole or in part, for its equity securities (or the equity securities of a domestic corporation, a foreign corporation, or an other business entity which is in control of the acquiring entity) of equity securities of another domestic corporation, foreign corporation, or other business entity if, immediately after the acquisition, the acquiring entity has control of the other entity (an “exchange reorganization”).

(c) The acquisition by one domestic corporation, foreign corporation, or other business entity in exchange in whole or in part for its equity securities (or the equity securities of a domestic corporation, a foreign corporation, or an other business entity which is in control of the acquiring entity) or for its debt securities (or debt securities of a domestic corporation, foreign corporation, or other business entity which is in control of the acquiring entity) which are not adequately secured and which have a maturity date in excess of five years after the consummation of the reorganization, or both, of all or substantially all of the assets of another domestic corporation, foreign corporation, or other business entity (a “sale-of-assets reorganization”).

(Amended by Stats. 1999, Ch. 437, Sec. 5. Effective January 1, 2000.)

182.
  

“Reverse stock split” means the pro rata combination of all the outstanding shares of a class into a smaller number of shares of the same class by an amendment to the articles stating the effect on outstanding shares.

(Added by Stats. 1975, Ch. 682.)

183.
  

“Series” of shares means those shares within a class which have the same rights, preferences, privileges and restrictions but which differ in one or more rights, preferences, privileges or restrictions from other shares within the same class. Certificated securities and uncertificated securities do not constitute different series if the only difference is certificated and uncertificated status.

(Amended by Stats. 1986, Ch. 766, Sec. 9.)

183.5.
  

“Share exchange tender offer” means any acquisition by one corporation in exchange in whole or in part for its equity securities (or the equity securities of a corporation which is in control of the acquiring corporation) of shares of another corporation, other than an exchange reorganization (subdivision (b) of Section 181).

(Added by Stats. 1989, Ch. 1116, Sec. 4. Effective September 30, 1989.)

184.
  

“Shares” means the units into which the proprietary interests in a corporation are divided in the articles.

(Added by Stats. 1975, Ch. 682.)

185.
  

“Shareholder” means one who is a holder of record of shares.

(Added by Stats. 1975, Ch. 682.)

186.
  

“Shareholders’ agreement” means a written agreement among all of the shareholders of a close corporation, or if a close corporation has only one shareholder between such shareholder and the corporation, as authorized by subdivision (b) of Section 300.

(Amended by Stats. 1976, Ch. 641.)

187.
  

“Short-form merger” means a merger pursuant to Section 1110.

(Added by Stats. 1975, Ch. 682.)

188.
  

“Stock split” means the pro rata division, otherwise than by a share dividend, of all the outstanding shares of a class into a greater number of shares of the same class by an amendment to the articles stating the effect on outstanding shares.

(Added by Stats. 1975, Ch. 682.)

189.
  

(a) Except as provided in subdivision (b), “subsidiary” of a specified corporation means a corporation shares of which possessing more than 50 percent of the voting power are owned directly or indirectly through one or more subsidiaries by the specified corporation.

(b) For the purpose of Section 703, “subsidiary” of a specified corporation means a corporation shares of which possessing more than 25 percent of the voting power are owned directly or indirectly through one or more subsidiaries as defined in subdivision (a) by the specified corporation.

(Amended by Stats. 1976, Ch. 641.)

190.
  

“Surviving corporation” means a corporation into which one or more other corporations or one or more other business entities are merged.

(Amended by Stats. 1994, Ch. 1200, Sec. 18. Effective September 30, 1994.)

190.5.
  

“Surviving limited partnership” means a limited partnership into which one or more other limited partnerships or one or more corporations are merged.

(Added by Stats. 1993, Ch. 543, Sec. 8. Effective January 1, 1994.)

190.7.
  

“Surviving other business entity” means an other business entity into which one or more other business entities or one or more corporations are merged.

(Added by Stats. 1994, Ch. 1200, Sec. 19. Effective September 30, 1994.)

191.
  

(a) For the purposes of Chapter 21 (commencing with Section 2100), “transact intrastate business” means entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce.

(b) A foreign corporation shall not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business or merely because of its status as any one or more of the following:

(1) A shareholder of a domestic corporation.

(2) A shareholder of a foreign corporation transacting intrastate business.

(3) A limited partner of a domestic limited partnership.

(4) A limited partner of a foreign limited partnership transacting intrastate business.

(5) A member or manager of a domestic limited liability company.

(6) A member or manager of a foreign limited liability company transacting intrastate business.

(c) Without excluding other activities that may not constitute transacting intrastate business, a foreign corporation shall not be considered to be transacting intrastate business within the meaning of subdivision (a) solely by reason of carrying on in this state any one or more of the following activities:

(1) Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes.

(2) Holding meetings of its board or shareholders or carrying on other activities concerning its internal affairs.

(3) Maintaining bank accounts.

(4) Maintaining offices or agencies for the transfer, exchange, and registration of its securities or depositaries with relation to its securities.

(5) Effecting sales through independent contractors.

(6) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where those orders require acceptance outside this state before becoming binding contracts.

(7) Creating evidences of debt or mortgages, liens or security interests on real or personal property.

(8) Conducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature.

(d) Without excluding other activities that may not constitute transacting intrastate business, any foreign lending institution, including, but not limited to: any foreign banking corporation, any foreign corporation all of the capital stock of which is owned by one or more foreign banking corporations, any foreign savings and loan association, any foreign insurance company or any foreign corporation or association authorized by its charter to invest in loans secured by real and personal property, whether organized under the laws of the United States or of any other state, district or territory of the United States, shall not be considered to be doing, transacting or engaging in business in this state solely by reason of engaging in any or all of the following activities either on its own behalf or as a trustee of a pension plan, employee profit sharing or retirement plan, testamentary or inter vivos trust, or in any other fiduciary capacity:

(1) The acquisition by purchase, by contract to purchase, by making of advance commitments to purchase or by assignment of loans, secured or unsecured, or any interest therein, if those activities are carried on from outside this state by the lending institution.

(2) The making by an officer or employee of physical inspections and appraisals of real or personal property securing or proposed to secure any loan, if the officer or employee making any physical inspection or appraisal is not a resident of and does not maintain a place of business for that purpose in this state.

(3) The ownership of any loans and the enforcement of any loans by trustee’s sale, judicial process or deed in lieu of foreclosure or otherwise.

(4) The modification, renewal, extension, transfer or sale of loans or the acceptance of additional or substitute security therefor or the full or partial release of the security therefor or the acceptance of substitute or additional obligors thereon, if the activities are carried on from outside this state by the lending institution.

(5) The engaging by contractural arrangement of a corporation, firm or association, qualified to do business in this state, that is not a subsidiary or parent of the lending institution and that is not under common management with the lending institution, to make collections and to service loans in any manner whatsoever, including the payment of ground rents, taxes, assessments, insurance, and the like and the making, on behalf of the lending institution, of physical inspections and appraisals of real or personal property securing any loans or proposed to secure any loans, and the performance of any such engagement.

(6) The acquisition of title to the real or personal property covered by any mortgage, deed of trust or other security instrument by trustee’s sale, judicial sale, foreclosure or deed in lieu of foreclosure, or for the purpose of transferring title to any federal agency or instrumentality as the insurer or guarantor of any loan, and the retention of title to any real or personal property so acquired pending the orderly sale or other disposition thereof.

(7) The engaging in activities necessary or appropriate to carry out any of the foregoing activities.

Nothing contained in this subdivision shall be construed to permit any foreign banking corporation to maintain an office in this state otherwise than as provided by the laws of this state or to limit the powers conferred upon any foreign banking corporation as set forth in the laws of this state or to permit any foreign lending institution to maintain an office in this state except as otherwise permitted under the laws of this state.

(Amended by Stats. 2006, Ch. 57, Sec. 1. Effective January 1, 2007.)

191.1.
  

“Uncertificated security” means a share (Section 184), or an obligation of the issuer, described in paragraphs (15) and (18) of subdivision (a) of Section 8102 of the Commercial Code.

(Amended by Stats. 1996, Ch. 497, Sec. 29. Effective January 1, 1997.)

192.
  

“Vacancy” when used with respect to the board means any authorized position of director which is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors (by the board or the shareholders) or otherwise.

(Amended by Stats. 1976, Ch. 641.)

193.
  

“Verified” means that the statements contained in a certificate or other document are declared to be true of the own knowledge of the persons executing the same in either:

(a) An affidavit signed by them under oath before an officer authorized by the laws of this state or of the place where it is executed to administer oaths, or

(b) A declaration in writing executed by them “under penalty of perjury” and stating the date and place (whether within or without this state) of execution.

Any affidavit sworn to without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated.

(Added by Stats. 1975, Ch. 682.)

194.
  

“Vote” includes authorization by written consent, subject to the provisions of subdivision (b) of Section 307 and subdivision (d) of Section 603.

(Repealed and added by Stats. 1993, Ch. 128, Sec. 3. Effective January 1, 1994.)

194.5.
  

“Voting power” means the power to vote for the election of directors at the time any determination of voting power is made and does not include the right to vote upon the happening of some condition or event which has not yet occurred. In any case where different classes of shares are entitled to vote as separate classes for different members of the board, the determination of percentage of voting power shall be made on the basis of the percentage of the total number of authorized directors which the shares in question (whether of one or more classes) have the power to elect in an election at which all shares then entitled to vote for the election of any directors are voted.

(Added by Stats. 1976, Ch. 641.)

194.7.
  

“Voting shift” means a change, pursuant to or by operation of a provision of the articles, in the relative rights of the holders of one or more classes or series of shares, voting as one or more separate classes or series, to elect one or more directors.

(Added by Stats. 1988, Ch. 495, Sec. 1.)

195.
  

“Written” or “in writing” includes facsimile, telegraphic, and other electronic communication when authorized by this code, including an electronic transmission by a corporation that satisfies the requirements of Section 20.

(Amended by Stats. 2004, Ch. 254, Sec. 5. Effective January 1, 2005.)

CORPCorporations Code - CORP