AB 663

Bill Subjects

Abstract

Existing law authorizes and regulates the formation and operation of a corporation, nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law authorizes these types of corporations, in anticipation of or during an emergency, to take specified actions necessary to conduct the corporation's ordinary business operations and affairs, unless emergency bylaws provide otherwise. Existing law, however, prohibits the boards of these corporations, in anticipation of or during an emergency, from taking any action that requires the vote of the shareholders or members or that is not in the corporation's ordinary course of business. This bill would recast those provisions to authorize the board, in anticipation of or during an emergency, to take any action that it determines to be necessary or appropriate to respond to the emergency, mitigate the effects of the emergency, or comply with lawful federal and state government orders, but would prohibit action that requires the vote of the shareholders or members, unless the required shareholder or member approval was obtained prior to the emergency, and would make conforming changes regarding corporate bylaws. Existing law defines "emergency," for these purposes, to mean any of specified events or circumstances, as a result of which, and only so long as, a quorum of the corporation's board of directors cannot be readily convened for action. Under existing law, "emergency" includes an attack on this state or nation by an enemy of the United States of America, as specified. Existing law also defines "emergency" to include a natural catastrophe, including, among others, a drought, fire, or explosion. This bill would revise the above provision to specifically refer to an attack on or within this state or on the public security of its residents by an enemy of this state or on the nation by an enemy of the United States. The bill would specify that "emergency" includes an epidemic, pandemic, or disease outbreak. The bill would remove references to the corporation's "ordinary" business operations and affairs to instead refer to the corporation's business operations and affairs. Existing law, with respect to the above-described corporations, authorizes meetings of shareholders or members to be held at any place as stated or fixed in the bylaws, as specified. Existing law provides that unless prohibited by the bylaws of the corporation, if authorized by the board of directors, and subject to certain consent requirements and procedures, shareholders or members not physically present may, by electronic transmission or electronic video screen communication, participate in a meeting of the shareholders or members, be deemed present, and vote, as specified. This bill would authorize shareholders or members, if specified conditions are met, to also participate, be deemed present, and vote in shareholder or member meetings by conference telephone or other remote communications, in accordance with certain procedures. Existing law generally requires notice of a shareholders' or members' meeting or any report, with respect to the above-described corporations, to be given personally, by electronic transmission by the corporation, by mail, or, in various other circumstances, by other specified means. Existing law authorizes certain corporations to provide for delegates in its bylaws and requires those bylaws to set forth information relating to delegates if delegates are provided for. Under existing law, delegates may only act personally at a meeting or by written ballot. This bill would remove the provision specifying that delegates may only act personally at a meeting or by written ballot and instead authorizes the bylaws to set forth the manner in which delegates may participate in meetings of delegates, as provided. The bill would also state that each delegate has one vote on each matter presented for action. This bill, notwithstanding the foregoing provision, would authorize notice of a shareholders' or members' meeting or any report to be sent by electronic communication or other means of remote communication if the board determines it is necessary or appropriate because of an emergency, as defined. The bill would make related, conforming changes to these provisions. This bill would incorporate additional changes to Section 7511 of the Corporations Code proposed by SB 432 to be operative only if this bill and SB 432 are enacted and this bill is enacted last.