Published: 2015-07-08
Key Benefits:
This division shall be known and may be cited as the Social Purpose Corporations Act.
(Amended by Stats. 2014, Ch. 694, Sec. 13. Effective January 1, 2015.)
Except as otherwise expressly stated, the provisions of Division 1 (commencing with Section 100) shall apply to corporations organized under this division, and references in that division to the terms “close corporation,” “constituent corporation,” “corporation,” “disappearing corporation,” “domestic corporation,” “foreign corporation,” “surviving corporation,” and similar terms shall be read to apply, in the same manner, to include the similar “social purpose corporation.”
(Amended by Stats. 2014, Ch. 694, Sec. 14. Effective January 1, 2015.)
This division applies only to social purpose corporations organized expressly under this division whether organized or existing under this division or amended, merged or converted into a social purpose corporation in accordance with Chapter 9 (commencing with Section 900) of Division 1, Chapter 11 (commencing with Section 1100) of Division 1 or Chapter 11.5 (commencing with Section 1150) of Division 1, including all flexible purpose corporations formed under this division prior to January 1, 2015, and now existing except as provided in paragraph (2) of subdivision (b) of Section 2601 and paragraph (3) of subdivision (b) of Section 2602.
(Amended by Stats. 2014, Ch. 694, Sec. 15. Effective January 1, 2015.)
Every social purpose corporation organized under the laws of this state or similar foreign social purpose corporation, all of the capital stock of which is beneficially owned by the United States, an agency or instrumentality of the United States or any social purpose corporation or similar foreign social purpose 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.
(Amended by Stats. 2014, Ch. 694, Sec. 16. Effective January 1, 2015.)
Unless otherwise expressly provided, whenever reference is made in this division to any other state or federal statute, that reference is to that statute as it may be amended from time to time, whether before or after the enactment of this division.
(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)
A social purpose corporation may be sued in the same manner as a corporation as provided in the Code of Civil Procedure.
(Amended by Stats. 2014, Ch. 694, Sec. 17. Effective January 1, 2015.)
A social purpose corporation formed under this division shall, in respect of its property, as a condition of its existence as a social purpose corporation, be subject, in the same manner as a corporation, to the provisions of the Code of Civil Procedure authorizing the attachment of corporate property.
(Amended by Stats. 2014, Ch. 694, Sec. 18. Effective January 1, 2015.)
The fees of the Secretary of State for filing instruments by or on behalf of social purpose corporations shall be the same fees prescribed for corporations in Article 3 (commencing with Section 12180) of Chapter 3 of Part 2 of Division 3 of Title 2 of the Government Code.
(Amended by Stats. 2014, Ch. 694, Sec. 19. Effective January 1, 2015.)
(a) Provisions of the articles described in paragraph (3) of subdivision (e) of Section 2602 and subdivisions (a) and (b) of Section 2603 may be made dependent upon facts ascertainable outside of 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 of 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 of the filed instrument through a reference to an agreement or similar document, the social purpose corporation filing that instrument shall maintain at its principal executive office a copy of that referenced agreement or document and all amendments, and shall provide to its shareholders, in the case of articles, or to shareholders of any constituent corporation or other business entity, in the case of an agreement of merger, a copy of them upon written request and without charge.
(c) For the purposes of this section, “referenced agreement” means an agreement or contract to which the social purpose corporation is a party. An amendment or revision of a referenced agreement shall require shareholder approval, in addition to any other required approvals, upon any of the following circumstances:
(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 shall be approved by the outstanding shares, as defined in 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 2603, the amendment or revision shall be approved by the outstanding shares, as defined in 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 shall be approved by the outstanding shares, as defined in 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 shall be approved in the same manner as required by Section 3504 for a change in the principal terms of an agreement of merger.
(Amended by Stats. 2014, Ch. 694, Sec. 20. Effective January 1, 2015.)
Nothing contained in this division shall be construed to modify the provisions of subdivision (h) of Section 25102, or the conditions provided therein to the availability of an exemption under that subdivision.
(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)
“Annual report” means the report required by subdivision (a) of Section 3500, including the information specified in subdivision (b) of Section 3500.
(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)
“Close social purpose corporation” means a social purpose corporation that is also a close corporation.
(Amended by Stats. 2014, Ch. 694, Sec. 21. Effective January 1, 2015.)
“Constituent social purpose corporation” means a social purpose corporation that is merged with or into one or more corporations or one or more other business entities and includes a surviving social purpose corporation.
(Amended by Stats. 2014, Ch. 694, Sec. 22. Effective January 1, 2015.)
“Conversion” means a conversion pursuant to Chapter 11.5 (commencing with Section 1150) of Division 1 and Chapter 9 (commencing with Section 3300) of this division.
(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)
“Disappearing social purpose corporation” means a constituent social purpose corporation that is not the surviving entity.
(Amended by Stats. 2014, Ch. 694, Sec. 23. Effective January 1, 2015.)
“Domestic social purpose corporation” means a corporation organized under this division.
(Amended by Stats. 2014, Ch. 694, Sec. 24. Effective January 1, 2015.)
“Social purpose corporation,” unless otherwise expressly provided, refers only to a corporation organized under this division.
(Amended by Stats. 2014, Ch. 694, Sec. 25. Effective January 1, 2015.)
“Social purpose corporation subject to the Banking Law” means any of the following:
(a) A social purpose corporation that, with the approval of the Commissioner of Financial Institutions, is incorporated for the purpose of engaging in, or that is authorized by the Commissioner of Financial Institutions to engage in, the commercial banking business under the Banking Law (Division 1 (commencing with Section 99) of the Financial Code).
(b) Any social purpose corporation that, with the approval of the Commissioner of Financial Institutions, is incorporated for the purpose of engaging in, or that is authorized by the Commissioner of Financial Institutions to engage in, the industrial banking business under the Banking Law (Division 1 (commencing with Section 99) of the Financial Code).
(c) Any social purpose corporation, other than a social purpose corporation described in subdivision (d), that, with the approval of the Commissioner of Financial Institutions, is incorporated for the purpose of engaging in, or that is authorized by the Commissioner of Financial Institutions to engage in, the trust business under the Banking Law (Division 1 (commencing with Section 99) of the Financial Code).
(d) Any social purpose corporation that is authorized by the Commissioner of Financial Institutions 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.
(e) Any social purpose corporation that, with the approval of the Commissioner of Financial Institutions, is incorporated for the purpose of engaging in, or that is authorized by the Commissioner of Financial Institutions to engage in, business under Article 1 (commencing with Section 3500) of Chapter 19 of Division 1 of the Financial Code.
(Amended by Stats. 2014, Ch. 694, Sec. 26. Effective January 1, 2015.)
“Social purpose corporation subject to the Insurance Code as an insurer” means a social purpose corporation that has met the requirements of Sections 201.5, 201.6, and 201.7.
(Amended by Stats. 2014, Ch. 694, Sec. 27. Effective January 1, 2015.)
“Reorganization” means a merger reorganization, an exchange reorganization, or a sale of assets reorganization.
(a) “Merger reorganization” means a merger pursuant to Chapter 11 (commencing with Section 1100) of Division 1 and Chapter 8 (commencing with Section 3200), of this division, other than a short-form merger.
(b) “Exchange reorganization” means the acquisition by one domestic social purpose corporation, foreign social purpose corporation, or other business entity in exchange, in whole or in part, for its equity securities, or the equity securities of a domestic social purpose corporation, a foreign social purpose corporation, or an other business entity that is in control of the acquiring entity, of equity securities of another domestic social purpose corporation, foreign social purpose corporation, or other business entity if, immediately after the acquisition, the acquiring entity has control of the other entity.
(c) “Sale-of-assets reorganization” means the acquisition by one domestic social purpose corporation, foreign social purpose corporation, or other business entity in exchange in whole or in part for its equity securities, or the equity securities of a domestic social purpose corporation, a foreign social purpose corporation, or an other business entity that is in control of the acquiring entity, or for its debt securities, or debt securities of a domestic social purpose corporation, foreign social purpose corporation, or other business entity that is in control of the acquiring entity, that are not adequately secured and that 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 social purpose corporation, foreign social purpose corporation, or other business entity.
(Amended by Stats. 2014, Ch. 694, Sec. 28. Effective January 1, 2015.)
“Share exchange tender offer” means any acquisition by one social purpose corporation in exchange in whole or in part for its equity securities, or the equity securities of a corporation or a social purpose corporation that is in control of the acquiring social purpose corporation, of shares of another corporation or social purpose corporation, other than an exchange reorganization (subdivision (b) of Section 2511).
(Amended by Stats. 2014, Ch. 694, Sec. 29. Effective January 1, 2015.)
“Special purpose” means the special purpose set forth in a social purpose corporation’s articles pursuant to subdivision (b) of Section 2602.
(Amended by Stats. 2014, Ch. 694, Sec. 30. Effective January 1, 2015.)
“Special purpose current report” means the report required of a social purpose corporation pursuant to Section 3501.
(Amended by Stats. 2014, Ch. 694, Sec. 31. Effective January 1, 2015.)
“Special purpose MD&A” means the management discussion and analysis required of a social purpose corporation pursuant to subdivision (b) of Section 3500.
(Amended by Stats. 2014, Ch. 694, Sec. 32. Effective January 1, 2015.)
“Special purpose objectives” means those objectives set forth by management and the directors of a social purpose corporation for purposes of measuring the impact of the social purpose corporation’s efforts relating to its special purpose in accordance with Section 3500.
(Amended by Stats. 2014, Ch. 694, Sec. 33. Effective January 1, 2015.)
“Surviving social purpose corporation” means a social purpose corporation into which one or more other corporations or one or more other business entities is merged.
(Amended by Stats. 2014, Ch. 694, Sec. 34. Effective January 1, 2015.)