Code Section Group

Corporations Code - CORP

TITLE 1. CORPORATIONS [100 - 14631]

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

DIVISION 3. CORPORATIONS FOR SPECIFIC PURPOSES [12000 - 14631]

  ( Division 3 enacted by Stats. 1947, Ch. 1038. )

PART 2. COOPERATIVE CORPORATIONS [12200 - 12704]

  ( Heading of Part 2 amended by Stats. 2015, Ch. 192, Sec. 2. )

CHAPTER 1. General Provisions, Organization and Bylaws [12200 - 12340]

  ( Chapter 1 added by Stats. 1982, Ch. 1625, Sec. 3. )

ARTICLE 2. General Provisions and Definitions [12210 - 12256]
  ( Article 2 added by Stats. 1982, Ch. 1625, Sec. 3. )

12210.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12211.
  

Any corporation 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.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12212.
  

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.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12213.
  

Any agreement, certificate, or other instrument filed pursuant to the provisions of this part, 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 the name of the corporation or corporations).” However, no such certificate of correction shall alter the wording of any resolution which was in fact adopted by the board or the members or delegates or effect a corrected amendment of articles which amendment as so corrected would not in all respects have complied with the requirements of this part, at the time of filing of the agreement, certificate or other instrument being corrected. Such certificate of correction shall be signed and verified or acknowledged as provided in this part with respect to the agreement, certificate or other instrument being corrected. It shall set forth the following:

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

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

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

The filing of the certificate of correction shall not alter the effective time of the agreement, certificate or other 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 such right has not detrimentally relied on the original instrument.

(Amended by Stats. 1983, Ch. 792, Sec. 1.)

12214.
  

(a) Upon receipt of any instrument by the Secretary of State for filing pursuant to this part, 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 12570 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 such fee does not exceed the limits established by the policy of the Secretary of State for extending credit in such 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 a 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 Section 12302), upon such written opinion in determining whether the instrument conforms to law. The date of filing in such 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, such certificate revoking the earlier filing need only be executed on behalf of one of the constituent corporations. If no such revocation certificate is filed, the instrument becomes effective on the date specified.

(Amended by Stats. 2012, Ch. 494, Sec. 27. Effective January 1, 2013.)

12214.5.
  

The Secretary of State may cancel the filing of articles 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. 3.)

12214.6.
  

(a) A corporation that (1) fails to file a statement pursuant to Section 12570 for an applicable filing period, (2) has not filed a statement pursuant to Section 12570 during the preceding 24 months, and (3) was certified for penalty pursuant to Section 12670 for the same filing period of the prior year, shall be subject to suspension pursuant to this section rather than to a penalty under Section 12670.

(b) When subdivision (a) is applicable, the Secretary of State shall mail a notice to the corporation informing the corporation that its corporate powers, rights, and privileges will be suspended 60 days from the date of the notice if the corporation does not file the statement required by Section 12570.

(c) If the 60-day period expires without the delinquent corporation filing the required statement, the Secretary of State shall notify the Franchise Tax Board of the suspension, and mail a notice of the suspension to the corporation. Following completion of these notification requirements, except for the purpose of amending the articles of incorporation to set forth a new name or filing an application for exempt status, the corporate powers, rights, and privileges of the corporation are suspended.

(d) A statement required by Section 12570 may be filed, notwithstanding suspension of the corporate powers, rights, and privileges under this section or under provisions of the Revenue and Taxation Code. Upon the filing of a statement under Section 12570, by a corporation that has been suspended pursuant to this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the corporation may, in accordance with Section 23305a of the Revenue and Taxation Code, be relieved from suspension, unless the corporation is held in suspension by the Franchise Tax Board pursuant to Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code.

(Added by Stats. 1996, Ch. 589, Sec. 45. Effective January 1, 1997.)

12215.
  

Except as otherwise permitted, any reference in this part 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. 1983, Ch. 792, Sec. 2.)

12216.
  

If the articles provide for more than one vote for any member on any matter, the references in Sections 12223 and 12224 to a majority or other proportion of members mean, as to such matters, a majority or other proportion of the votes entitled to be cast. Whenever members are disqualified from voting on any matter, they shall not be counted 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 part or the articles or bylaws.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12217.
  

All references in this part to financial statements of a corporation mean statements prepared in conformity with generally accepted accounting principles or some other basis of accounting which reasonably sets forth the assets and liabilities and the income and expenses of the corporation and discloses the accounting basis used in their preparation.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12218.
  

As used in this part, “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.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12219.
  

Any reference in this part to the time a notice is given or sent means, unless otherwise expressly provided, the time a written notice by mail is deposited in the United States mails, postage prepaid; or the time any other written notice 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; or the time any oral notice is communicated, in person or by telephone or wireless, to the recipient 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.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12220.
  

A notice or report mailed or delivered as part of a newsletter, magazine or other organ regularly sent to members shall constitute written notice or report pursuant to this part when addressed and mailed postage prepaid by first or second class mail or delivered to the member, or in the case of members who are residents of the same household and who have the same address on the books of the corporation, when addressed and mailed postage prepaid by first or second class mail or delivered to one of such members, at the address appearing on the books of the corporation.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12221.
  

“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.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12222.
  

“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 12352.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12223.
  

“Approval by (or approval of) a majority of all members” means approval by an affirmative vote (or written ballot in conformity with Section 12463) of a majority of the votes entitled to be cast. Such approval shall include the affirmative vote of a majority of the outstanding memberships of each class, unit, or grouping of members entitled, by any provision of the articles or bylaws of this part to vote as a class, unit, or grouping of members on the subject matter being voted upon and shall also include the affirmative vote of such greater proportion, including all of the votes of the memberships of any class, unit, or grouping of members if such greater proportion is required by the bylaws or by this part.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12224.
  

“Approval by (or approval of) the members” means approved or ratified by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present (which affirmative votes also constitute a majority of the required quorum) or written ballot in conformity with Section 12463 or by the affirmative vote or written ballot of such greater proportion of the votes of the memberships of any class, unit, or grouping of members as may be provided in the bylaws or in this part for all or any specified member action.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12225.
  

“Articles” includes the articles of incorporation, amendments thereto, amended articles, restated articles, and certificates of incorporation.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12226.
  

“Bylaws” includes amendments thereto and amended bylaws.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12227.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12228.
  

“Business corporation” means a corporation as defined in Section 162 of the General Corporation Law.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12228.3.
  

“Capital account cooperative” is a worker cooperative in which the entire net book value is reflected in member capital accounts, one for each member, and an unallocated capital account, if any.

(Added by Stats. 2015, Ch. 192, Sec. 5. Effective January 1, 2016.)

12228.5.
  

For the purposes of this part, all references to “chairman of the board,” other than in Section 12353, shall be deemed to refer to all permissible titles for a chair of the board, as permitted by Section 12353.

(Amended by Stats. 2015, Ch. 98, Sec. 14. Effective January 1, 2016.)

12229.
  

“Chapter” refers to a chapter of this part unless otherwise expressly stated.

(Amended by Stats. 1983, Ch. 792, Sec. 3.)

12230.
  

“Class” refers to those memberships which: (a) are identified in the articles or bylaws as being a different type of membership; or (b) have the same rights with respect to voting, dissolution, redemption, distributions and transfer. For the purpose of this section, rights shall be considered the same if they are determined by a formula applied uniformly.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12230.5.
  

“Collective board worker cooperative” means a worker cooperative in which there is only one class of members consisting of worker-members, all of whom are members of the board.

(Added by Stats. 2015, Ch. 192, Sec. 6. Effective January 1, 2016.)

12231.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12232.
  

“Corporation” as used in this part means a corporation which is organized under, or subject to this part, including a central organization.

(Amended by Stats. 1983, Ch. 792, Sec. 4.)

12233.
  

“Directors” means natural persons, designated in the articles or bylaws or elected by the incorporators, and their successors and natural persons designated, elected, or appointed by any other name or title to act as members of the governing body of the corporation. “Directors” also means alternate directors described in Section 12331. A person who does not have authority to act as a member of the governing body of the corporation, including through voting rights as a member of the governing body, is not a director as that term is used in this part regardless of title. However, if the articles or bylaws designate that a natural person is a director or a member of the governing body of the corporation by reason of occupying a specified position within or outside the corporation, that person shall be a director for all purposes and shall have the same rights and obligations, including voting rights, as the other directors.

(Amended by Stats. 2009, Ch. 631, Sec. 38. Effective January 1, 2010.)

12234.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12235.
  

“Distribution” means the distribution of any gains, profits or dividends to any member as such, but does not include patronage distributions.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12236.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12237.
  

“Foreign corporation” means a foreign corporation as defined in Section 171.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12238.
  

(a) “Member” means any person who, pursuant to a specific provision of a corporation’s articles or bylaws, has the right to vote for the election of a director or directors, or possesses proprietary interests in the corporation.

(b) The articles or bylaws may confer some or all of the rights of a member, set forth in this part, upon any person or persons who do not have any of the voting rights referred to in subdivision (a).

(c) Where a member of a corporation is not a natural person, such member may authorize in writing one or more natural persons to vote on its behalf on any or all matters which may require a vote of the members.

(d) A person is not a member by virtue of any of the following:

(1) Any rights such person has as a delegate.

(2) Any rights such person has to designate or select a director or directors.

(3) Any rights such person has as a director.

(e) “Worker-member” means a member of a worker cooperative who is a natural person and also a patron of a worker cooperative.

(f)  “Community investor” means a person who is not a worker-member and who holds a share or other proprietary interest in a worker cooperative.

(g) “Worker” means a natural person contributing labor or services to a worker cooperative. “Candidate” means a worker who is being considered for membership in a worker cooperative, as defined in the corporation’s articles or bylaws.

(Amended by Stats. 2015, Ch. 192, Sec. 7. Effective January 1, 2016.)

12239.
  

A “membership” refers to the rights a member has pursuant to a corporation’s articles, bylaws and this part.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12240.
  

“Membership certificate,” as used in this part, means a document evidencing a proprietary interest in a corporation.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12241.
  

“Officers’ certificate” means a certificate signed and verified by the chair 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. 2009, Ch. 631, Sec. 39. Effective January 1, 2010.)

12242.
  

“On the certificate,” as used in this part means that a statement appears on the face of a certificate or on the reverse thereof with a reference thereto on the face.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12242.5.
  

“Other business entity” means a domestic or foreign limited liability company, limited partnership, general partnership, business trust, real estate investment trust, unincorporated 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 (9) 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. 2009, Ch. 631, Sec. 40. Effective January 1, 2010.)

12242.6.
  

“Parent party” means the corporation in control of any constituent domestic or foreign corporation or other business entity and whose equity securities are issued, transferred, or exchanged in a merger pursuant to Section 12540.1.

(Added by Stats. 1999, Ch. 437, Sec. 23.7. Effective January 1, 2000.)

12243.
  

(a) (1) If the corporation is organized to provide goods or services to its members, the corporation’s “patrons” are those who purchase those types of goods from, or use those types of services of, the corporation. If the corporation is organized to market, process, or otherwise handle its members’ products or services, the corporation’s “patrons” are those persons whose products or services are so marketed, processed, or handled by the corporation.

(2) “Patronage” of a patron is measured by the volume or value, or both, of a patron’s purchases of products from, and use of services furnished by, the corporation, and by products and services provided by the patron to the corporation for marketing.

(b) (1) If the corporation is organized as a worker cooperative, the corporation’s “patrons” are its worker-members.

(2) If the corporation is organized as a worker cooperative, “patronage” may be measured by work performed, including, but not limited to, wages earned, number of hours worked, number of jobs created, or some combination of these measures.

(Amended by Stats. 2015, Ch. 192, Sec. 8. Effective January 1, 2016.)

12244.
  

“Patronage distribution” means any transfer made to a patron of the corporation the amount of which is computed with reference to the patron’s patronage of the corporation.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12245.
  

“Person,” unless otherwise expressly provided, includes any association, company, domestic or foreign corporation, corporation sole, estate, individual, joint stock company, joint venture, partnership, domestic or foreign limited liability company, government or political subdivision, agency or instrumentality of a government.

(Amended by Stats. 1994, Ch. 1010, Sec. 66. Effective January 1, 1995.)

12245.2.
  

“Preferred memberships” means memberships that have a preference over any other memberships with respect to distribution of assets on liquidation or with respect to payment of distributions.

(Added by Stats. 2013, Ch. 538, Sec. 1. Effective January 1, 2014.)

12246.
  

“Proper county” means the county where the corporation’s principal office in this state is located or, if the corporation has no such office, the County of Sacramento.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12246.2.
  

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

(Added by Stats. 2013, Ch. 538, Sec. 2. Effective January 1, 2014.)

12247.
  

“Shareholder” shall have the same meaning as “member” as defined in Section 12238.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12248.
  

“Share certificate” shall have the same meaning as “membership certificate” as defined in Section 12240.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12249.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12250.
  

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

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12251.
  

“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. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12252.
  

“Vote” includes, but is not limited to, authorization by written consent pursuant to subdivision (b) of Section 12351 and authorization by written ballot pursuant to Section 12463.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12253.
  

(a) “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 that has not yet occurred.

(b) If different classes of memberships 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 that the memberships in question (whether of one or more classes) have the power to elect in an election at which all memberships then entitled to vote for the election of any directors are voted.

(c) Community investor voting power in a worker cooperative shall be provided in the articles or bylaws, and is limited to approval rights only over a merger, sale of major assets, reorganization, or dissolution. Approval rights shall not include the right to propose any action.

(Amended by Stats. 2015, Ch. 192, Sec. 9. Effective January 1, 2016.)

12253.5.
  

“Worker cooperative” or “employment cooperative” means a corporation formed under this part that includes a class of worker-members who are natural persons whose patronage consists of labor contributed to or other work performed for the corporation. Election to be organized as a worker cooperative or an employment cooperative does not create a presumption that workers are employees of the corporation for any purposes. At least 51 percent of the workers shall be worker-members or candidates.

(Added by Stats. 2015, Ch. 192, Sec. 10. Effective January 1, 2016.)

12254.
  

“Written” or “in writing” includes facsimile, telegraphic, and other electronic communication as authorized by this code.

(Amended by Stats. 2004, Ch. 254, Sec. 35. Effective January 1, 2005.)

12255.
  

“Written ballot” does not include a ballot distributed at a special or regular meeting of members.

(Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

12256.
  

A central organization is a corporation whose membership is composed, in whole or in part, of other corporations organized under this part.

(Added by Stats. 1983, Ch. 792, Sec. 7.)

CORPCorporations Code - CORP2.