Bill Text: CA AB1161 | 2011-2012 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Cooperative corporations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-02-01 - Died pursuant to Art. IV, Sec. 10(c) of the Constitution. From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1161 Detail]
Download: California-2011-AB1161-Introduced.html
Bill Title: Cooperative corporations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-02-01 - Died pursuant to Art. IV, Sec. 10(c) of the Constitution. From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1161 Detail]
Download: California-2011-AB1161-Introduced.html
BILL NUMBER: AB 1161 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Skinner
FEBRUARY 18, 2011
An act to amend Sections 1113, 12200, 12201, 12243, 12253, 12310,
12330, 12404, 12446, and 12461 of, and to amend the heading of Part 2
(commencing with Section 12200) of Division 3 of, the Corporations
Code, relating to cooperative corporations.
LEGISLATIVE COUNSEL'S DIGEST
AB 1161, as introduced, Skinner. Cooperative corporations.
Existing law, the Consumer Cooperative Corporation Law, provides
for the organization and operation of primarily consumer
cooperatives, and is also applicable to other cooperatives. Existing
law provides for, among other things, information to be included in a
corporation's bylaws, definitions necessary for purposes of defining
patrons, and requirements as to voting rights of members and time
periods for sending notice of meetings at which members are entitled
to vote.
This bill would rename the law as the Cooperative Corporation Law,
and provide alternative provisions to which a cooperative
corporation may elect to be subject by designating itself as a worker
cooperative in its bylaws. This bill would limit a member of a
worker cooperative to only one vote on a matter to be voted on by all
classes voting together as a single class, regardless of the number
of voting classes in which the person is a member. The bill would
also require notice of a meeting in which members of a worker
cooperative are entitled to vote to be sent no more than 24 hours
before the time of the meeting. The bill would also make conforming
changes.
Violation of specified provisions of the existing law is a crime.
Because this bill would expand existing crimes, this bill would
create a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1113 of the Corporations Code is amended to
read:
1113. (a) Any one or more corporations may merge with one or more
other business entities (Section 174.5). One or more domestic
corporations (Section 167) not organized under this division and one
or more foreign corporations (Section 171) may be parties to the
merger. Notwithstanding the provisions of this section, the merger of
any number of corporations with any number of other business
entities may be effected only if:
(1) In a merger in which a domestic corporation not organized
under this division or a domestic other business entity is a party,
it is authorized by the laws under which it is organized to effect
the merger.
(2) In a merger in which a foreign corporation is a party, it is
authorized by the laws under which it is organized to effect the
merger.
(3) In a merger in which a foreign other business entity is a
party, it is authorized by the laws under which it is organized to
effect the merger.
(b) Each corporation and each other party which desires to merge
shall approve, and shall be a party to, an agreement of merger. Other
persons, including a parent party (Section 1200), may be parties to
the agreement of merger. The board of each corporation which desires
to merge, and, if required the shareholders, shall approve the
agreement of merger. The agreement of merger shall be approved on
behalf of each party by those persons required to approve the merger
by the laws under which it is organized. The agreement of merger
shall state:
(1) The terms and conditions of the merger.
(2) The name and place of incorporation or organization of each
party to the merger and the identity of the surviving party.
(3) The amendments, if any, subject to Sections 900 and 907, to
the articles of the surviving corporation, if applicable, to be
effected by the merger. If any amendment changes the name of the
surviving corporation, if applicable, the new name may be, subject to
subdivision (b) of Section 201, the same as or similar to the name
of a disappearing party to the merger.
(4) The manner of converting the shares of each constituent
corporation into shares, interests, or other securities of the
surviving party. If any shares of any constituent corporation are not
to be converted solely into shares, interests or other securities of
the surviving party, the agreement of merger shall state (i) the
cash, rights, securities, or other property which the holders of
those shares are to receive in exchange for the shares, which cash,
rights, securities, or other property may be in addition to or in
lieu of shares, interests or other securities of the surviving party,
or (ii) that the shares are canceled without consideration.
(5) Any other details or provisions required by the laws under
which any party to the merger is organized, including, if a public
benefit corporation or a religious corporation is a party to the
merger, Section 6019.1, or, if a mutual benefit corporation is a
party to the merger, Section 8019.1, or, if a consumer
cooperative corporation is a party to the merger, Section
12540.1, or, if a domestic limited partnership is a party to the
merger, Section 15678.2 or 15911.12, or, if a domestic partnership is
a party to the merger, Section 16911, or, if a domestic limited
liability company is a party to the merger, Section 17551.
(6) Any other details or provisions as are desired, including,
without limitation, a provision for the payment of cash in lieu of
fractional shares or for any other arrangement with respect thereto
consistent with the provisions of Section 407.
(c) Each share of the same class or series of any constituent
corporation (other than the cancellation of shares held by a party to
the merger or its parent, or a wholly owned subsidiary of either, in
another constituent corporation) shall, unless all shareholders of
the class or series consent and except as provided in Section 407, be
treated equally with respect to any distribution of cash, rights,
securities, or other property. Notwithstanding paragraph (4) of
subdivision (b), the unredeemable common shares of a constituent
corporation may be converted only into unredeemable common shares of
a surviving corporation or a parent party (Section 1200) or
unredeemable equity securities of a surviving party other than a
corporation if another party to the merger or its parent owns,
directly or indirectly, prior to the merger shares of that
corporation representing more than 50 percent of the voting power of
that corporation, unless all of the shareholders of the class consent
and except as provided in Section 407.
(d) Notwithstanding its prior approval, an agreement of merger may
be amended prior to the filing of the agreement of merger or the
certificate of merger, as is applicable, if the amendment is approved
by the board of each constituent corporation and, if the amendment
changes any of the principal terms of the agreement, by the
outstanding shares (Section 152), if required by Chapter 12
(commencing with Section 1200), in the same manner as the original
agreement of merger. If the agreement of merger as so amended and
approved is also approved by each of the other parties to the
agreement of merger, the agreement of merger as so amended shall then
constitute the agreement of merger.
(e) The board of a constituent corporation may, in its discretion,
abandon a merger, subject to the contractual rights, if any, of
third parties, including other parties to the agreement of merger,
without further approval by the outstanding shares (Section 152), at
any time before the merger is effective.
(f) Each constituent corporation shall sign the agreement of
merger by its chairperson of the board, president or a vice president
and also by its secretary or an assistant secretary acting on behalf
of their respective corporations.
(g) (1) If the surviving party is a corporation or a foreign
corporation, or if a public benefit corporation (Section 5060), a
mutual benefit corporation (Section 5059), a religious corporation
(Section 5061), or a corporation organized under the
Consumer Cooperative Corporation Law (Section 12200) is a
party to the merger, after required approvals of the merger by each
constituent corporation through approval of the board (Section 151)
and any approval of the outstanding shares (Section 152) required by
Chapter 12 (commencing with Section 1200) and by the other parties to
the merger, the surviving party shall file a copy of the agreement
of merger with an officers' certificate of each constituent domestic
and foreign corporation attached stating the total number of
outstanding shares or membership interests of each class entitled to
vote on the merger (and identifying any other person or persons whose
approval is required), that the agreement of merger in the form
attached or its principal terms, as required, were approved by that
corporation by a vote of a number of shares or membership interests
of each class that equaled or exceeded the vote required, specifying
each class entitled to vote and the percentage vote required of each
class and, if applicable, by that other person or persons whose
approval is required, or that the merger agreement was entitled to be
and was approved by the board alone (as provided in Section 1201, in
the case of corporations subject to that section). If equity
securities of a parent party (Section 1200) are to be issued in the
merger, the officers' certificate of that controlled party shall
state either that no vote of the shareholders of the parent party was
required or that the required vote was obtained. In lieu of an
officers' certificate, a certificate of merger, on a form prescribed
by the Secretary of State, shall be filed for each constituent other
business entity. The certificate of merger shall be executed and
acknowledged by each domestic constituent limited liability company
by all managers of the limited liability company (unless a lesser
number is specified in its articles of organization or operating
agreement) and by each domestic constituent limited partnership by
all general partners (unless a lesser number is provided in its
certificate of limited partnership or partnership agreement) and by
each domestic constituent general partnership by two partners (unless
a lesser number is provided in its partnership agreement) and by
each foreign constituent limited liability company by one or more
managers and by each foreign constituent general partnership or
foreign constituent limited partnership by one or more general
partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed those officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact, and by each other party to the merger by those
persons required or authorized to execute the certificate of merger
by the laws under which that party is organized, specifying for that
party the provision of law or other basis for the authority of the
signing persons. The certificate of merger shall set forth, if a vote
of the shareholders, members, partners, or other holders of
interests of the constituent other business entity was required, a
statement setting forth the total number of outstanding interests of
each class entitled to vote on the merger and that the agreement of
merger in the form attached or its principal terms, as required, were
approved by a vote of the number of interests of each class that
equaled or exceeded the vote required, specifying each class entitled
to vote and the percentage vote required of each class, and any
other information required to be set forth under the laws under which
the constituent other business entity is organized, including, if a
domestic limited partnership is a party to the merger, subdivision
(a) of Section 15678.4 or subdivision (a) of Section 15911.14, if a
domestic partnership is a party to the merger, subdivision (b) of
Section 16915, and, if a domestic limited liability company is a
party to the merger, subdivision (a) of Section 17552. The
certificate of merger for each constituent foreign other business
entity, if any, shall also set forth the statutory or other basis
under which that foreign other business entity is authorized by the
laws under which it is organized to effect the merger. The merger and
any amendment of the articles of the surviving corporation, if
applicable, contained in the agreement of merger shall be effective
upon filing of the agreement of merger with an officer's certificate
of each constituent domestic and foreign corporation and a
certificate of merger for each constituent other business entity,
subject to subdivision (c) of Section 110 and subject to the
provisions of subdivision (j), and the several parties thereto shall
be one entity. If a domestic reciprocal insurer organized after 1974
to provide medical malpractice insurance is a party to the merger,
the agreement of merger or certificate of merger shall not be filed
until there has been filed the certificate issued by the Insurance
Commissioner approving the merger pursuant to Section 1555 of the
Insurance Code. The Secretary of State may certify a copy of the
agreement of merger separate from the officers' certificates and
certificates of merger attached thereto.
(2) If the surviving entity is an other business entity, and no
public benefit corporation (Section 5060), mutual benefit corporation
(Section 5059), religious corporation (Section 5061), or corporation
organized under the Consumer Cooperative
Corporation Law (Section 12200) is a party to the merger, after
required approvals of the merger by each constituent corporation
through approval of the board (Section 151) and any approval of the
outstanding shares (Section 152) required by Chapter 12 (commencing
with Section 1200) and by the other parties to the merger, the
parties to the merger shall file a certificate of merger in the
office of, and on a form prescribed by, the Secretary of State. The
certificate of merger shall be executed and acknowledged by each
constituent domestic and foreign corporation by its chairperson of
the board, president or a vice president and also by its secretary or
an assistant secretary and by each domestic constituent limited
liability company by all managers of the limited liability company
(unless a lesser number is specified in its articles of organization
or operating agreement) and by each domestic constituent limited
partnership by all general partners (unless a lesser number is
provided in its certificate of limited partnership or partnership
agreement) and by each domestic constituent general partnership by
two partners (unless a lesser number is provided in its partnership
agreement) and by each foreign constituent limited liability company
by one or more managers and by each foreign constituent general
partnership or foreign constituent limited partnership by one or more
general partners, and by each constituent reciprocal insurer by the
chairperson of the board, president, or vice president, and by the
secretary or assistant secretary, or, if a constituent reciprocal
insurer has not appointed those officers, by the chairperson of the
board, president, or vice president, and by the secretary or
assistant secretary of the constituent reciprocal insurer's
attorney-in-fact. The certificate of merger shall be signed by each
other party to the merger by those persons required or authorized to
execute the certificate of merger by the laws under which that party
is organized, specifying for that party the provision of law or other
basis for the authority of the signing persons. The certificate of
merger shall set forth all of the following:
(A) The name, place of incorporation or organization, and the
Secretary of State's file number, if any, of each party to the
merger, separately identifying the disappearing parties and the
surviving party.
(B) If the approval of the outstanding shares of a constituent
corporation was required by Chapter 12 (commencing with Section
1200), a statement setting forth the total number of outstanding
shares of each class entitled to vote on the merger and that the
principal terms of the agreement of merger were approved by a vote of
the number of shares of each class entitled to vote and the
percentage vote required of each class.
(C) The future effective date or time, not more than 90 days
subsequent to the date of filing of the merger, if the merger is not
to be effective upon the filing of the certificate of merger with the
office of the Secretary of State.
(D) A statement, by each party to the merger which is a domestic
corporation not organized under this division, a foreign corporation,
or an other business entity, of the statutory or other basis under
which that party is authorized by the laws under which it is
organized to effect the merger.
(E) Any other information required to be stated in the certificate
of merger by the laws under which each party to the merger is
organized, including, if a domestic limited liability company is a
party to the merger, subdivision (a) of Section 17552, if a domestic
partnership is a party to the merger, subdivision (b) of Section
16915, and, if a domestic limited partnership is a party to the
merger, subdivision (a) of Section 15678.4 or subdivision (a) of
Section 15911.14.
(F) Any other details or provisions that may be desired.
Unless a future effective date or time is provided in a
certificate of merger, in which event the merger shall be effective
at that future effective date or time, a merger shall be effective
upon the filing of the certificate of merger in the office of the
Secretary of State and the several parties thereto shall be one
entity. The surviving other business entity shall keep a copy of the
agreement of merger at its principal place of business which, for
purposes of this subdivision, shall be the office referred to in
Section 17057 if a domestic limited liability company, at the
business address specified in paragraph (5) of subdivision (a) of
Section 17552 if a foreign limited liability company, at the office
referred to in subdivision (a) of Section 16403 if a domestic general
partnership, at the business address specified in subdivision (f) of
Section 16911 if a foreign partnership, at the office referred to in
subdivision (a) of Section 15614 or in subdivision (a) of Section
15901.14 if a domestic limited partnership, or at the business
address specified in paragraph (5) of subdivision (a) of Section
15678.4 or paragraph (3) of subdivision (a) of Section 15909.02 if a
foreign limited partnership. Upon the request of a holder of equity
securities of a party to the merger, a person with authority to do so
on behalf of the surviving other business entity shall promptly
deliver to that holder, a copy of the agreement of merger. A waiver
by that holder of the rights provided in the foregoing sentence shall
be unenforceable. If a domestic reciprocal insurer organized after
1974 to provide medical malpractice insurance is a party to the
merger the agreement of merger or certificate of merger shall not be
filed until there has been filed the certificate issued by the
Insurance Commissioner approving the merger in accordance with
Section 1555 of the Insurance Code.
(h) (1) A copy of an agreement of merger certified on or after the
effective date by an official having custody thereof has the same
force in evidence as the original and, except as against the state,
is conclusive evidence of the performance of all conditions precedent
to the merger, the existence on the effective date of the surviving
party to the merger and the performance of the conditions necessary
to the adoption of any amendment to the articles, if applicable,
contained in the agreement of merger.
(2) For all purposes for a merger in which the surviving entity is
a domestic other business entity and the filing of a certificate of
merger is required by paragraph (2) of subdivision (g), a copy of the
certificate of merger duly certified by the Secretary of State is
conclusive evidence of the merger of the constituent corporations,
either by themselves or together with the other parties to the
merger, into the surviving other business entity.
(i) (1) Upon a merger pursuant to this section, the separate
existences of the disappearing parties to the merger cease and the
surviving party to the merger shall succeed, without other transfer,
to all the rights and property of each of the disappearing parties to
the merger and shall be subject to all the debts and liabilities of
each in the same manner as if the surviving party to the merger had
itself incurred them.
(2) All rights of creditors and all liens upon the property of
each of the constituent corporations and other parties to the merger
shall be preserved unimpaired, provided that those liens upon
property of a disappearing party shall be limited to the property
affected thereby immediately prior to the time the merger is
effective.
(3) Any action or proceeding pending by or against any
disappearing corporation or disappearing party to the merger may be
prosecuted to judgment, which shall bind the surviving party, or the
surviving party may be proceeded against or substituted in its place.
(4) If a limited partnership or a general partnership is a party
to the merger, nothing in this section is intended to affect the
liability a general partner of a disappearing limited partnership or
general partnership may have in connection with the debts and
liabilities of the disappearing limited partnership or general
partnership existing prior to the time the merger is effective.
(j) (1) The merger of domestic corporations with foreign
corporations or foreign other business entities in a merger in which
one or more other business entities is a party shall comply with
subdivision (a) and this subdivision.
(2) If the surviving party is a domestic corporation or domestic
other business entity, the merger proceedings with respect to that
party and any domestic disappearing corporation shall conform to the
provisions of this section. If the surviving party is a foreign
corporation or foreign other business entity, then, subject to the
requirements of subdivision (c), and of Section 407 and Chapter 12
(commencing with Section 1200) and Chapter 13 (commencing with
Section 1300), and, if applicable, corresponding provisions of the
Nonprofit Corporation Law or the Consumer
Cooperative Corporation Law, with respect to any domestic constituent
corporations, Chapter 13 (commencing with Section 17600) of Title
2.5 with respect to any domestic constituent limited liability
companies, Article 6 (commencing with Section 16601) of Chapter 5 of
Title 2 with respect to any domestic constituent general
partnerships, and Article 7.6 (commencing with Section 15679.1) of
Chapter 3, and Article 11.5 (commencing with Section 15911.20) of
Chapter 5.5 of Title 2 with respect to any domestic constituent
limited partnerships, the merger proceedings may be in accordance
with the laws of the state or place of incorporation or organization
of the surviving party.
(3) If the surviving party is a domestic corporation or domestic
other business entity, the certificate of merger or the agreement of
merger with attachments shall be filed as provided in subdivision (g)
and thereupon, subject to subdivision (c) of Section 110 or
paragraph (2) of subdivision (g), as is applicable, the merger shall
be effective as to each domestic constituent corporation and domestic
constituent other business entity.
(4) If the surviving party is a foreign corporation or foreign
other business entity, the merger shall become effective in
accordance with the law of the jurisdiction in which the surviving
party is organized, but, except as provided in paragraph (5), the
merger shall be effective as to any domestic disappearing corporation
as of the time of effectiveness in the foreign jurisdiction upon the
filing in this state of a copy of the agreement of merger with an
officers' certificate of each constituent foreign and domestic
corporation and a certificate of merger of each constituent other
business entity attached, which officers' certificates and
certificates of merger shall conform to the requirements of paragraph
(1) of subdivision (g). If one or more domestic other business
entities is a disappearing party in a merger pursuant to this
subdivision in which a foreign other business entity is the surviving
entity, a certificate of merger required by the laws under which
that domestic other business entity is organized, including
subdivision (a) of Section 15678.4, subdivision (a) of Section
15911.14, subdivision (b) of Section 16915, or subdivision (a) of
Section 17552, as is applicable, shall also be filed at the same time
as the filing of the agreement of merger.
(5) If the date of the filing in this state pursuant to this
subdivision is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of a
domestic disappearing corporation are suspended at the time of
effectiveness in the foreign jurisdiction, the merger shall be
effective as to the domestic disappearing corporation as of the date
of filing in this state.
(6) In a merger described in paragraph (3) or (4), each foreign
disappearing corporation that is qualified for the transaction of
intrastate business shall by virtue of the filing pursuant to this
subdivision, subject to subdivision (c) of Section 110, automatically
surrender its right to transact intrastate business in this state.
The filing of the agreement of merger or certificate of merger, as is
applicable, pursuant to this subdivision, by a disappearing foreign
other business entity registered for the transaction of intrastate
business in this state shall, by virtue of that filing, subject to
subdivision (c) of Section 110, automatically cancels the
registration for that foreign other business entity, without the
necessity of the filing of a certificate of cancellation.
SEC. 2. Section 12200 of the Corporations Code is amended to read:
12200. This part shall be known as the Consumer
Cooperative Corporation Law. This part is intended
primarily to apply to the organization and operation of consumer
cooperatives and worker cooperatives . It is also
applicable to other cooperatives, including, but not limited to,
cooperatives formed for the purpose of recycling or treating
hazardous wastes, which elect to incorporate under it.
SEC. 3. Section 12201 of the Corporations Code is amended to read:
12201. (a) Subject to any other provision
of law of this state applying to the particular class of corporation
or line of activity, a corporation may be formed under this part for
any lawful purpose provided that it shall be organized and shall
conduct its business primarily for the mutual benefit of its members
as patrons of the corporation. The earnings, savings, or benefits of
the corporation shall be used for the general welfare of the members
or shall be proportionately and equitably distributed to some or all
of its members or its patrons, based upon their patronage (Section
12243) of the corporation, in the form of cash, property, evidences
of indebtedness, capital credits, memberships, or services.
Such
(b) Those corporations that
are democratically controlled and are not organized to make a
profit for themselves, as such, or for their members, as such, but
primarily for their members as patrons (Section 12243).
(c) A corporation organized under this part that has designated in
its bylaws that it is a worker cooperative shall also designate that
its workers constitute its members or one class of its members.
SEC. 4. Section 12243 of the Corporations Code is amended to read:
12243. (a) 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 service 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.
(b) With respect to a corporation that is organized as a worker
cooperative, the corporation's "patrons" are its workers, those
persons who purchase goods or services from the corporation, and
those persons whose
products or services are marketed, processed, or handled by the
corporation.
"Patronage"
(c) "Patronage" of a patron is
measured by the volume or value, or both, of a patron's labor
provided for, purchases of such products
from, and use of such services furnished by, the
corporation, and by such the products
and services provided by the patron to the corporation for marketing.
SEC. 5. Section 12253 of the Corporations Code is amended to read:
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 which has not yet occurred.
In any case where 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
which 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.
(b) If a worker cooperative corporation has authorized voting
rights for a worker member class and one or more additional classes
of members, then at least a majority of the authorized directors
shall be elected by the worker member class.
SEC. 6. Section 12310 of the Corporations Code is amended to read:
12310. The articles of incorporation of a corporation formed
under this part shall set forth:
(a) The name of the corporation.
(b) The following statement:
"This corporation is a cooperative corporation organized under the
Consumer Cooperative Corporation Law. The purpose
of this corporation is to engage in any lawful act or activity for
which a corporation may be organized under such law."
The articles may include a further description of the corporation'
s purposes.]
(c) The name and address in this state of the corporation's
initial agent for service of process in accordance with subdivision
(b) of Section 12570.
(d) Whether the voting power or the proprietary interests of the
members are equal or unequal. If the voting power or proprietary
interests of the members are unequal, the articles shall state either
(i) the general rule or rules by which the voting power and
proprietary interests of the members shall be determined or (ii) that
such rule or rules shall be prescribed in the corporation's bylaws.
Equal voting power means voting power apportioned on the basis of one
vote for each member. Equal proprietary rights means property rights
apportioned on the basis of one proprietary unit for each member.
SEC. 7. Section 12330 of the Corporations Code is amended to read:
12330. (a) Except as provided in subdivision (c) and Sections
12331, 12360, 12364, 12462, and 12484, bylaws may be adopted,
amended, or repealed by the board unless the action would:
(1) Materially and adversely affect the rights or obligations of
members as to voting, dissolution, redemption, transfer,
distributions, patronage distributions, patronage, property rights,
or rights to repayment of contributed capital;
(2) Increase or decrease the number or members authorized in total
or for any class;
(3) Effect an exchange, reclassification or cancellation of all or
part of the memberships; or
(4) Authorize a new class of membership.
(b) Bylaws may be adopted, amended or repealed by approval of the
members (Section 12224); provided, however, that adoption, amendment,
or repeal also requires approval by the members of a class if that
action would:
(1) Materially and adversely affect the rights or obligations of
that class as to voting, dissolution, redemption, transfer,
distributions, patronage distributions, patronage, property rights,
or rights to repayment of contributed capital, in a manner different
than such action affects another class;
(2) Materially and adversely affect such class as to voting,
dissolution, redemption, transfer, distributions, patronage
distributions, patronage, property rights, or rights to repayment of
contributed capital, by changing the rights, privileges, preferences,
restrictions or conditions of another class;
(3) Increase or decrease the number of memberships authorized for
such class;
(4) Increase the number of memberships authorized for another
class;
(5) Effect an exchange, reclassification or cancellation of all or
part of the memberships of such class; or
(6) Authorize a new class of memberships.
(c) The articles or bylaws may restrict or eliminate the power of
the board to adopt, amend or repeal any or all bylaws, subject to
subdivision (e) of Section 12331.
(d) Bylaws may also provide that repeal or amendment of those
bylaws, or the repeal or amendment of specified portions of those
bylaws, may occur only with the approval in writing of a specified
person or persons other than the board or members. However, this
approval requirement, unless the articles or the bylaws specify
otherwise, shall not apply if any of the following circumstances
exist:
(1) The specified person or persons have died or ceased to exist.
(2) If the right of the specified person or persons to approve is
in the capacity of an officer, trustee, or other status and the
office, trust, or status has ceased to exist.
(3) If the corporation has a specific proposal for amendment or
repeal, and the corporation has provided written notice of that
proposal, including a copy of the proposal, to the specified person
or persons at the most recent address for each of them, based on the
corporation's records, and the corporation has not received written
approval or nonapproval within the period specified in the notice,
which shall not be less than 10 nor more than 30 days commencing at
least 20 days after the notice has been provided.
(e) If the corporation elects to be governed by provisions of this
part pertaining specifically to a worker cooperative, the
corporation shall state in its bylaws that it is a worker
cooperative.
SEC. 8. Section 12404 of the Corporations Code is amended to read:
12404. (a) Except as permitted in Section
12314, the voting power of members having voting rights shall be
equal.
(b) Within each class in which a member of a worker cooperative
has voting rights, each member shall have one vote on any matter put
before the class for a vote; provided, however, that when members are
entitled to vote together as a single class on a matter, each member
shall have only one vote regardless of the number of voting classes
to which the member belongs.
SEC. 9. Section 12446 of the Corporations Code is amended to read:
12446. (a) Subject to the provisions of subdivision (b), the
provisions of Chapter 7 (commencing with Section 1500) of Title 10 of
Part 3 of the Code of Civil Procedure shall not apply to any
proprietary interest in a consumer cooperative
corporation. Any proprietary interest that would otherwise escheat to
the state pursuant to Chapter 7 (commencing with Section 1500) of
Title 10 of Part 3 of the Code of Civil Procedure shall instead
become the property of the corporation.
(b) Notwithstanding the provisions of subdivision (a), no
proprietary interest shall become the property of the corporation
under this section unless the following requirements are satisfied:
(1) The articles or bylaws shall specifically provide for the
transfer of ownership of the otherwise escheated proprietary
interests to the corporation.
(2) At least 60 days prior notice of the proposed transfer of the
proprietary interest to the corporation is given to the affected
member by first-class or second-class mail to the last address of the
member shown on the corporation's records, and by publication in a
newspaper of general circulation in the county in which the
corporation has its principal office. Notice given in the foregoing
manner shall be deemed actual notice.
(3) No proprietary interest shall become the property of the
corporation under this section if written notice objecting thereto is
received by the corporation from the affected member prior to the
date of the proposed transfer.
(c) For purposes of this section, a "proprietary interest" shall
mean and include any membership, membership certificate, membership
share, or share certificate of any class representing a proprietary
interest in, and issued by, the corporation together with all accrued
and unpaid dividends and patronage distributions relating thereto.
SEC. 10. Section 12461 of the Corporations Code is amended to
read:
12461. (a) (1) Whenever members who
are not worker members of a worker cooperative are required or
permitted to take any action at a meeting, a written notice of the
meeting shall be given not less than 10 nor more than 90 days before
the date of the meeting to each nonworker member who, on
the record date for notice of the meeting, is entitled to vote
thereat at the meeting ; provided,
however, that if notice is given by mail, and the notice is not
mailed by first-class, registered, or certified mail, that notice
shall be given not less than 20 days before the meeting.
Subject
(2) Whenever worker members of a worker cooperative are required
or permitted to take any action at a meeting, notice of the meeting
shall be given not less that 24 hours before the time of the meeting
to each worker member who, on the record date for notice of the
meeting, is entitled to vote at the meeting.
(3) Subject to subdivision (f),
and subdivision (b) of Section 12462, that notice shall state the
place, date and time of the meeting, the means of electronic
transmission by and to the corporation (Sections 20 and 21) or
electronic video screen communication, if any, by which members may
participate in that meeting, and (1) in the case of a special
meeting, the general nature of the business to be transacted, and no
other business may be transacted, or (2) in the case of the regular
meeting, those matters which the board, at the time the notice is
given, intends to present for action by the members, but, except as
provided in subdivision (b) of Section 12462, any proper matter may
be presented at the meeting for such action. The notice of any
meeting at which directors are to be elected shall include the names
of all those who are nominees at the time the notice is given to
members.
(b) Notice of a members' meeting or any report shall be given
personally, by electronic transmission by the corporation, or by mail
or other means of written communication, addressed to a member at
the address of such member appearing on the books of the corporation
or given by the member to the corporation for purpose of notice; or
if no such address appears or is given, at the place where the
principal office of the corporation is located or by publication at
least once in a newspaper of general circulation in the county in
which the principal office is located. An affidavit of giving of any
notice or report in accordance with the provisions of this part,
executed by the secretary, assistant secretary or any transfer agent,
shall be prima facie evidence of the giving of the notice or report.
If any notice or report addressed to the member at the address of
such member appearing on the books of the corporation is returned to
the corporation by the United States Postal Service marked to
indicate the United States Postal Service is unable to deliver the
notice or report to the member at such address, all future notices or
reports shall be deemed to have been duly given without further
mailing if the same shall be available for the member upon written
demand of the member at the principal office of the corporation for a
period of one year from the date of the giving of the notice or
report to all other members.
Notice given by electronic transmission by the corporation under
this subdivision shall be valid only if it complies with Section 20.
Notwithstanding the foregoing, notice shall not be given by
electronic transmission by the corporation under this subdivision
after either of the following:
(1) The corporation is unable to deliver two consecutive notices
to the member by that means.
(2) The inability to so deliver the notices to the member becomes
known to the secretary, any assistant secretary, the transfer agent,
or other person responsible for the giving of the notice.
(c) Upon request in writing to the corporation addressed to the
attention of the chairman of the board, president, vice president or
secretary by any person (other than the board) entitled to call a
special meeting of members, the officer forthwith shall cause notice
to be given to the members entitled to vote that a meeting will be
held at a time fixed by the board not less than 35 nor more than 90
days after the receipt of the request. If the notice is not given
within 20 days after receipt of the request, the persons entitled to
call the meeting may give the notice or the superior court of the
proper county shall summarily order the giving of the notice, after
notice to the corporation giving it an opportunity to be heard. The
court may issue such orders as may be appropriate, including, without
limitation, orders designating the time and place of the meeting,
the record date for determination of members entitled to vote and the
form of notice.
(d) When a members' meeting is adjourned to another time or place,
unless the bylaws otherwise require and except as provided in this
subdivision, notice need not be given of the adjourned meeting if the
time and place thereof (or the means of electronic transmission by
and to the corporation or electronic video screen communication, if
any, by which members may participate) are announced at the meeting
at which the adjournment is taken. At the adjourned meeting the
corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more
than 45 days or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be
given to each member of record entitled to vote at the meeting.
(e) The transactions of any meeting of members however called and
noticed, and wherever held, are as valid as though had at a meeting
duly held after regular call and notice, if a quorum is present, and
if, either before or after the meeting, each of the persons entitled
to vote, not present in person, provides a waiver of notice or
consent to the holding of the meeting or an approval of the minutes
thereof in writing. All such waivers, consents and approvals shall be
filed with the corporate records or made a part of the minutes of
the meeting. Attendance of a person at a meeting shall constitute a
waiver of notice of and presence at such meeting, except when the
person objects, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or
convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by this
part to be included in the notice but not so included, if such
objection is expressly made at the meeting. Neither the business to
be transacted at nor the purpose of any regular or special meeting of
members need be specified in any written waiver of notice, consent
to the holding of the meeting or approval of the minutes thereof,
unless otherwise provided in the articles or bylaws, except as
provided in subdivision (f).
(f) Any approval of the members required under Section 12362,
12364, 12373, 12502 or 12658 other than unanimous approval by those
entitled to vote, shall be valid only if the general nature of the
proposal so approved was stated in the notice of meeting or in any
written waiver of notice.
(g) A court may find that notice not given in conformity with this
section is still valid, if it was given in a fair and reasonable
manner.
(h) Subject to the provisions of subdivision (i), and unless
prohibited by the articles or bylaws, prior to any regular or special
meeting of members, the board may authorize distribution of a
written ballot to every member entitled to vote at the meeting. Such
ballot shall set forth the action proposed to be taken at the
meeting, shall provide an opportunity to specify approval or
disapproval of the proposed action, and shall state that unless
revoked by the member voting in person at the meeting, the ballot
will be counted if received by the corporation on or before the time
of the meeting with respect to which it was sent. If ballots are so
distributed with respect to a meeting, the number of members voting
at the meeting by unrevoked written ballots shall be deemed present
at the meeting for purposes of determining the existence of a quorum
pursuant to subdivision (a) of Section 12462 but only with respect to
the proposed action referred to in the ballots. These ballots shall
be distributed in a manner consistent with the requirements of
subdivision (b) and Section 12464.
(i) Unless prohibited by the articles or bylaws, written ballots
may be distributed in a manner contemplated by subdivision (h) with
respect to the election of directors, except that no ballots may be
so distributed with respect to the election of directors if
cumulative voting is permitted pursuant to Section 12484.
SEC. 11. The heading of Part 2 (commencing with Section 12200) of
Division 3 of Title 1 of the Corporations Code is amended to read:
PART 2. CONSUMER COOPERATIVE CORPORATIONS
SEC. 12. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
