Bill Text: CA SB1168 | 2023-2024 | Regular Session | Amended
Bill Title: Business entities: Secretary of State: document filings.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2024-06-03 - Referred to Coms. on P. & C.P. and JUD. [SB1168 Detail]
Download: California-2023-SB1168-Amended.html
|
Amended
IN
Senate
March 21, 2024 |
| Introduced by Senator Limón |
February 14, 2024 |
LEGISLATIVE COUNSEL'S DIGEST
Existing law authorizes the Secretary of State to cancel the filing of articles of domestic corporations, statements and designations by foreign corporations, articles of specified nonprofit corporations, articles of cooperative corporations, certificates of limited partnerships, applications and certificates of registration of foreign limited partnerships, statements of partnerships, registrations of limited liability partnerships, articles of organization of limited liability companies, and applications and certificates of registration of foreign limited liability companies if a check or other remittance accepted in payment of the filing fee or other required fee or tax is
not paid upon presentation, as specified.
This bill would authorize the Secretary of State to cancel the filing of the documents described above upon reasonable belief that the entity was created for specified purposes, including an unlawful, false, or fraudulent purpose, and would require the Secretary of State to mail written notice of the applicability of these provisions to the entity, as specified.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 1798.202 of the Civil Code is amended to read:1798.202.
(a) A petition filed pursuant to Section 1798.201 shall be heard and determined based on declarations, affidavits, police reports, or other material, relevant, and reliable information submitted by the parties or ordered to be made part of the record by the court.SEC. 2.
Section 1798.203 is added to the Civil Code, to read:1798.203.
(a) In addition to any of the other remedies provided under this title, a person who has learned that their personal identifying information has been used unlawfully, as described in subdivision (a) of Section 530.5 of the Penal Code, in a business entity filing may file with the Secretary of State a disclaimer of proper authority, as described in subdivision(a)The Secretary of State may cancel the filing of articles of a domestic corporation, including articles effecting a conversion, 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. Within 90 days of 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
subdivision 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.
(b)(1)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 upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the corporation on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing of the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the corporation may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subdivision (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(a)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. Within 90 days of 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 subdivision 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.
(b)(1)The Secretary of State may cancel the filing of articles upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the corporation on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the corporation may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(a)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. Within 90 days of 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 subdivision 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.
(b)(1)The Secretary of State may cancel the filing of articles upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the corporation on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the corporation may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(a)In order for a limited partnership to be formed, a certificate of limited partnership must be filed with and on a form prescribed by the Secretary of State and, either before or after the filing of a certificate of limited partnership, the partners shall have entered into a partnership agreement. The certificate shall state all of the following:
(1)The name of the limited partnership, which shall comply with Section 15901.08.
(2)The street address of the initial principal office.
(3)The name and street address of the initial agent for service of process in accordance with paragraph (1) of subdivision (d) of Section 15901.16.
(4)The name and the address of each general partner.
(5)The mailing address of the limited partnership, if different from the address of the initial principal office.
(b)A certificate of limited partnership may also contain any other matters but may not vary or otherwise affect the provisions specified in subdivision (b) of Section 15901.10 in a manner inconsistent with that section.
(c)A limited partnership is formed when the Secretary of State files the certificate of limited partnership.
(d)Subject to subdivision (b), if any provision of a partnership agreement is inconsistent with the filed certificate of limited partnership or with a filed certificate of dissociation, cancellation, or amendment or filed certificate of conversion or merger:
(1)The partnership agreement prevails as to partners and transferees; and
(2)The filed certificate of limited partnership, certificate of dissociation, cancellation, or amendment or filed certificate of conversion or merger prevails as to persons, other than partners and transferees, that reasonably rely on the filed record to their detriment.
(e)A limited partnership may record in the office of the county recorder of any county in this state a certified copy of the certificate of limited partnership, or any amendment thereto, which has been filed by the Secretary of State. A foreign limited partnership may record in the office of the county recorder of any county in
the state a certified copy of the application for registration to transact business, together with the certificate of registration, referred to in Section 15909.02, or any amendment thereto, which has been filed by the Secretary of State. The recording shall create a conclusive presumption in favor of any bona fide purchaser or encumbrancer for value of the partnership real property located in the county in which the certified copy has been recorded, that the persons named as general partners therein are the general partners of the partnership named and that they are all of the general partners of the partnership.
(f)The Secretary of State may cancel the filing of certificates of limited partnership, including certificates effecting a conversion, if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. For partners and transferees, the partnership agreement is paramount. Within 90 days of receiving
written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of this subdivision 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, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice.
(g)(1)The Secretary of State may cancel the filing of a certificate of limited partnership upon reasonable
belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the limited partnership on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the limited partnership may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(h)The Secretary of State shall include with instructional materials, provided in conjunction with the form for filing a certificate of limited partnership under subdivision (a), a notice that the filing of the certificate of limited partnership will obligate the limited partnership to pay an annual tax for that taxable year to the Franchise Tax Board pursuant to Section 17935 of the Revenue and Taxation Code. That notice shall be updated annually to specify the dollar amount of the annual tax.
(a)A foreign limited partnership whose name does not comply with Section 15901.08 may not obtain a certificate of registration until it adopts, for the purpose of transacting business in this state, an alternate name that complies with Section 15901.08.
(b)If a foreign limited partnership authorized to transact business in this state changes its name to one that does not comply with Section 15901.08, it may not thereafter transact business in this state until it complies with subdivision (a) and obtains an amended certificate of registration.
(c)The Secretary of State may cancel the application and certificate of registration of a foreign limited partnership if a check or other remittance
accepted in payment of the filing fee is not paid upon presentation. Within 90 days of receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of this subdivision 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, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice.
(d)(1)The
Secretary of State may cancel the filing of a certificate of registration of a foreign limited partnership upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the foreign limited partnership on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the foreign limited partnership may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(a)A statement may be filed in the office of the Secretary of State. A certified copy of a statement that is filed in an office in another state may be filed in the office of the Secretary of State. Either filing has the effect provided in this chapter with respect to partnership property located in or transactions that occur in this state.
(b)A certified copy of a statement that has been filed in the office of the Secretary of State and recorded in the office for recording transfers of real property has the effect provided for recorded statements in this chapter. A recorded statement that is not a certified copy of a statement filed in the office of the Secretary of State does not have the effect provided for recorded statements in this chapter.
(c)A statement filed by a partnership shall be executed by at least two partners. Other statements shall be executed by a partner or other person authorized by this chapter. An individual who executes a statement as, or on behalf of, a partner or other person named as a partner in a statement shall personally declare under penalty of perjury that the contents of the statement are accurate.
(d)A person authorized by this chapter to file a statement may amend or cancel the statement by filing an amendment or cancellation that names the partnership, identifies the statement, and states the substance of the amendment or cancellation.
(e)A person who files a statement pursuant to this section shall promptly send a copy of the statement to every nonfiling partner and to any other person named as a partner in the statement.
Failure to send a copy of a statement to a partner or other person does not limit the effectiveness of the statement as to a person not a partner.
(f)The Secretary of State may collect a fee for filing or providing a certified copy of a statement. The officer responsible for recording transfers of real property may collect a fee for recording a statement.
(g)The Secretary of State may cancel a statement, including a statement effecting a conversion, if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. Within 90 days of receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of
this subdivision to the partners, or the appointed agent, or to the person submitting the instrument. Thereafter, if the amount has not been paid by cashier’s check or equivalent, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice.
(h)(1)The Secretary of State may cancel a statement upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the partnership on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the partnership may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(a)The Secretary of State may cancel the filing of a registration of a registered limited liability partnership upon reasonable belief of any of the following:
(1)The entity was created for an unlawful, false, or fraudulent purpose.
(2)The entity was created to promote or conduct an illegitimate object or purpose.
(3)The entity was created in bad faith.
(4)The entity was created for the purpose of harassing or defrauding a person or entity.
(b)The Secretary of State shall mail
written notice of the applicability of this subdivision to the mailing address of the limited liability partnership on record with the Secretary of State that contains both of the following:
(1)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(2)A form prescribed by the Secretary of State that the limited liability partnership may send back requesting that the entity not be canceled pursuant to this subdivision.
(c)If the Secretary of State has not received the form described in paragraph (2) of subdivision (b) before the cancellation date described in paragraph (1) of subdivision (b), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the
entity.
(a)The Secretary of State may cancel the filing of a registration of a foreign limited liability partnership upon reasonable belief of any of the following:
(1)The entity was created for an unlawful, false, or fraudulent purpose.
(2)The entity was created to promote or conduct an illegitimate object or purpose.
(3)The entity was created in bad faith.
(4)The entity was created for the purpose of harassing or defrauding a person or entity.
(b)The Secretary of State shall mail written
notice of the applicability of this subdivision to the mailing address of the limited liability partnership on record with the Secretary of State that contains both of the following:
(1)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(2)A form prescribed by the Secretary of State that the limited liability partnership may send back requesting that the entity not be canceled pursuant to this subdivision.
(c)If the Secretary of State has not received the form described in paragraph (2) of subdivision (b) before the cancellation date described in paragraph (1) of subdivision (b), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(a)One or more persons may act as organizers to form a limited liability company by signing and delivering to the Secretary of State for filing articles of organization on a form prescribed by the Secretary of State.
(b)The articles of organization shall state all of the following:
(1)A statement that the purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under this title.
(2)The name of the limited liability company, which shall comply with Section 17701.08.
(3)The street address of the initial principal office and the mailing address of the limited liability company if different from the street address of the initial principal office.
(4)The name and street address of the initial agent for service of process of the limited liability company who meets the qualifications specified in subdivision (c) of Section 17701.13. If a corporate agent is designated, only the name of the agent shall be set forth.
(5)If the limited liability company is to be manager-managed, the articles of organization shall contain a statement to that effect.
(6)If the limited liability company is to be managed by only one manager, the articles of organization shall contain a statement to that effect.
(c)Subject to subdivision (c) of Section 17701.12,
articles of organization may also contain any other provision not inconsistent with law other than those provisions required by subdivision (b).
(d)A limited liability company is formed when the Secretary of State has filed the articles of organization.
(e)Except in a proceeding by this state to dissolve a limited liability company, the filing of the articles of organization by the Secretary of State is conclusive proof that the organizer satisfied all conditions to the formation of a limited liability company.
(f)The Secretary of State may cancel the filing of the articles of organization, including articles effecting a conversion, if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. Within 90 days of receiving written notification that the item presented for payment
has not been honored for payment, the Secretary of State shall give a first written notice of the applicability of this subdivision 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, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice.
(g)(1)The Secretary of State may cancel the filing of the articles of organization upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the limited liability company on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the limited liability company may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
(h)The Secretary of State shall include with the instructional materials, provided in conjunction with the form for filing the articles of organization under subdivision (a), a notice that filing the registration will obligate the limited liability
company to pay an annual tax for that taxable year to the Franchise Tax Board pursuant to Section 17941 of the Revenue and Taxation Code. That notice shall be updated annually to specify the dollar amount of the tax.
(a)To cancel its registration to transact intrastate business in this state, a foreign limited liability company shall deliver to the Secretary of State for filing a certificate of cancellation, signed by a person with authority to do so under the law of the state of its organization, stating all of the following:
(1)The name under which the foreign limited liability company is authorized to transact intrastate business in this state, and the Secretary of State’s file number for the foreign limited liability company.
(2)That a final franchise tax return, as described by Section 23332 of the Revenue and Taxation Code, or a final annual tax return, as described by Section 17947 of the Revenue and Taxation Code, has been or will be filed with the Franchise Tax Board, as required under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code.
(3)That upon the filing of the certificate of cancellation the registration of the foreign limited liability company shall be canceled and its right to conduct intrastate business shall cease.
(b)The registration is canceled when the certificate of cancellation becomes effective.
(c)The Secretary of State may cancel the application and certificate of registration of a foreign limited liability company if a check or other remittance accepted in payment of the filing fee is not paid upon presentation. Within 90 days of receiving written notification that the item presented for payment has not been honored for payment, the Secretary of State
shall give a first written notice of the applicability of the section 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, the Secretary of State shall give a second written notice of cancellation and the cancellation shall thereupon be effective. The second notice shall be given 20 days or more after the first notice.
(d)(1)The Secretary of State may cancel the filing of a certificate of registration of a foreign limited liability company upon reasonable belief of any of the following:
(A)The entity was created for an unlawful, false, or fraudulent purpose.
(B)The entity was created to promote or conduct an illegitimate object or purpose.
(C)The entity was created in bad faith.
(D)The entity was created for the purpose of harassing or defrauding a person or entity.
(2)The Secretary of State shall mail written notice of the applicability of this subdivision to the mailing address of the foreign limited liability company on record with the Secretary of State that contains both of the following:
(A)A cancellation date that is at least 60 days from the date of mailing the written notice as certified by the Secretary of State.
(B)A form prescribed by the Secretary of State that the foreign limited liability company may send back requesting that the entity not be canceled pursuant to this subdivision.
(3)If the Secretary of State has not received the form described in subparagraph (B) of paragraph (2) before the cancellation date described in subparagraph (A) of paragraph (2), the cancellation shall be effective on that cancellation date and notice of the cancellation shall be placed in the record of the entity.
