Corporations Code — Part 10 | CORP — United States — California law | Esheria

Corporations Code

Part 10 of 13 · provisions 1,801–2,000

This provision says the act is called the Corporations Code.

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Attorney General reporting Department of Justice information disclosure LLC compliance LLC formation filings LLC governance Membership interests Secretary of State Secretary of State filings Unincorporated associations acceptance location access to records accountability accounting accounting standards accredited investors accrued rights acknowledgment acquisition filings acquisition notice acquisition of control acquisition review adjourned meetings adjournment administration +2,294 more

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This section repeals the listed acts and sections, but it does not affect certain pre-1873 corporations that did not elect to continue under the Civil Code. This section repeals the acts and code sections listed in it. This section repeals the listed acts and code sections. This section repeals the listed acts and code sections. This section repeals Chapter 183 of the Statutes of 1941.

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Provisions of Corporations Code

Showing 200 of 2,411

  1. 5008.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    The Secretary of State must file qualifying instruments, stamp the filing date, and follow special timing rules for receipt dates, future effective dates, and resubmitted filings.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5008. (a) Upon receipt of any instrument by the Secretary of State for filing pursuant to this part, Part 2, Part 3, Part 4, or Part 5, if it conforms to law, it shall be filed by, and in the office of the Secretary of State and the date of filing endorsed thereon. Except for instruments filed pursuant to Section 6210, 8210, or 9660 the date of filing shall be the date the instrument is received by the Secretary of State unless the instrument provides that it is to be withheld from filing until a future date, other than instruments filed pursuant to Section 5017, or, unless in the judgment of the Secretary of State, the filing is intended to be coordinated with the filing of some other corporate document which cannot be filed. The Secretary of State shall file a document as of any requested future date not more than 90 days after its receipt, including a Saturday, Sunday, or legal holiday, if the document is received in the Secretary of State’s office at least one business day prior to the requested date of filing. An instrument does not fail to conform to law because it is not accompanied by the full filing fee if the unpaid portion of the fee does not exceed the limits established by the policy of the Secretary of State for extending credit in these cases. (b) If the Secretary of State determines that an instrument submitted for filing or otherwise submitted does not conform to law and returns it to the person submitting it, the instrument may be resubmitted accompanied by a written opinion of the member of the State Bar of California submitting the instrument, or representing the person submitting it, to the effect that the specific provision of the instrument objected to by the Secretary of State does conform to law and stating the points and authorities upon which the opinion is based. The Secretary of State shall rely, with respect to any disputed point of law, other than the application of Section 5122, 7122, or 9122, upon that written opinion in determining whether the instrument conforms to law. The date of filing in that case shall be the date the instrument is received on resubmission. (c) Any instrument filed with respect to a corporation, other than original articles or instruments filed pursuant to Section 5017, may provide that it is to become effective not more than 90 days subsequent to its filing date. In case such a delayed effective date is specified, the instrument may be prevented from becoming effective by a certificate stating that by appropriate corporate action it has been revoked and is null and void, executed in the same manner as the original instrument and filed before the specified effective date. In the case of a merger agreement, the certificate revoking the earlier filing need only be executed on behalf of one of the constituent corporations. If no revocation certificate is filed, the instrument becomes effective on the date specified. (d) Any instrument submitted to the Secretary of State for filing pursuant to this part, Part 2, Part 3, Part 4, or Part 5 by a domestic corporation or foreign corporation that is qualified to transact business in California under Section 2105 shall include the entity name and number as they exist on the Secretary of State’s records. (Amended by Stats. 2024, Ch. 80, Sec. 29. (SB 1525) Effective January 1, 2025.)
  2. 5008.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    The Secretary of State may cancel articles if the filing payment is not honored, but must first send written notice and set a cancellation date at least 20 days after mailing.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5008.5. The Secretary of State may cancel the filing of articles if a check or other remittance accepted in payment of the filing fee or franchise tax is not paid upon presentation. 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 section and the cancellation date, which shall be not less than 20 days from the date of mailing the written notice as certified by the Secretary of State, to the agent for service of process or to the person submitting the instrument. Thereafter, if the amount has not been paid by cashier’s check or equivalent before the date of cancellation as stated in the written notice of cancellation, the cancellation shall thereupon be effective. (Amended by Stats. 2022, Ch. 617, Sec. 43. (SB 1202) Effective January 1, 2023.)
  3. 5008.6.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    A corporation that misses required filing conditions may be suspended, and the Secretary of State must give notice before suspension takes effect.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5008.6. (a) A corporation that (1) fails to file a statement pursuant to Section 6210, 8210, or 9660 for an applicable filing period, (2) has not filed a statement pursuant to Section 6210, 8210, or 9660 during the preceding 24 months, and (3) was certified for penalty pursuant to Section 6810, 8810, or 9690 for the same filing period, shall be subject to suspension pursuant to this section rather than to penalty under Section 6810 or 8810. (b) When subdivision (a) is applicable, the Secretary of State shall provide a notice to the corporation informing the corporation that its corporate powers, rights, and privileges will be suspended 60 days from the date of the notice if the corporation does not file the statement required by Section 6210, 8210, or 9660. (c) If the 60-day period expires without the delinquent corporation filing the required statement, the Secretary of State shall notify the Franchise Tax Board of the suspension, and provide a notice of the suspension to the corporation. Thereupon, except for the purpose of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect that application or to set forth a new name, the corporate powers, rights, and privileges of the corporation are suspended. (d) A statement required by Section 6210, 8210, or 9660 may be filed, notwithstanding suspension of the corporate powers, rights, and privileges under this section or under provisions of the Revenue and Taxation Code. Upon the filing of a statement under Section 6210, 8210, or 9660, by a corporation that has suffered suspension under this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the corporation may thereupon be relieved from suspension, unless the corporation is held in suspension by the Franchise Tax Board because of Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code. (Amended by Stats. 2012, Ch. 494, Sec. 12. (SB 1532) Effective January 1, 2013.)
  4. 5008.9.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section lets the Franchise Tax Board trigger administrative dissolution or surrender of certain nonprofit and foreign nonprofit corporations after a long tax suspension or forfeiture, with notice and a chance to object.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5008.9. (a) A nonprofit corporation described in Section 5059, 5060, or 5061, or a foreign nonprofit corporation, as defined in Section 5053, that has qualified to transact intrastate business, shall be subject to administrative dissolution or administrative surrender in accordance with this section if, as of January 1, 2016, or later, the nonprofit corporation’s or foreign corporation’s corporate powers are, and have been, suspended or forfeited by the Franchise Tax Board for a period of not less than 48 continuous months. (b) Prior to the administrative dissolution or administrative surrender of the nonprofit corporation or foreign corporation, the corporation shall be notified of the pending administrative dissolution or administrative surrender as follows: (1) The Franchise Tax Board shall mail written notice to the last known address of a nonprofit corporation or foreign corporation meeting the requirement described in subdivision (a). (2) If the nonprofit corporation or foreign corporation does not have a valid address in the records of the Franchise Tax Board, the notice provided in subdivision (d) shall be deemed sufficient notice prior to administrative dissolution or administrative surrender. (c) The Franchise Tax Board shall transmit to the Secretary of State and the Attorney General’s Registry of Charities and Fundraisers the names and Secretary of State file numbers of nonprofit corporations and foreign corporations subject to the administrative dissolution or administrative surrender provisions of this section. (d) The Secretary of State shall provide 60 calendar days’ notice of the pending administrative dissolution or administrative surrender on its internet website by listing the corporation name and the Secretary of State’s file number for the nonprofit corporation or foreign corporation. The Secretary of State shall also, in conjunction with the information above, provide instructions for a nonprofit corporation or foreign corporation to submit a written objection of the pending administrative dissolution or administrative surrender to the Franchise Tax Board. (e) (1) A nonprofit corporation or foreign corporation may provide the Franchise Tax Board with a written objection to the administrative dissolution or administrative surrender. (2) The Franchise Tax Board shall notify the Secretary of State if a written objection has been received. (f) If no written objection to the administrative dissolution or administrative surrender is received by the Franchise Tax Board during the 60-day period described in subdivision (d), the nonprofit corporation or foreign corporation shall be administratively dissolved or administratively surrendered in accordance with this section. The certificate of the Secretary of State shall be prima facie evidence of the administrative dissolution or administrative surrender. (g) (1) If the written objection of a nonprofit corporation or foreign corporation to the administrative dissolution or administrative surrender has been received by the Franchise Tax Board before the expiration of the 60-day period described in subdivision (d), that nonprofit corporation or foreign corporation shall have an additional 90 days from the date the written objection is received by the Franchise Tax Board to pay or otherwise satisfy all accrued taxes, penalties, and interest and to file a current Statement of Information with the Secretary of State. (2) (A) If the conditions in paragraph (1) are satisfied, the administrative dissolution or administrative surrender shall be canceled. (B) If the conditions in paragraph (1) are not satisfied, the nonprofit corporation or foreign corporation shall be administratively dissolved or administratively surrendered in accordance with this section as of the date that is 90 days after the receipt of the written objection. (3) The Franchise Tax Board may extend the 90-day period in paragraph (1), but for no more than one period of 90 days. (h) Upon administrative dissolution or administrative surrender in accordance with this section, the nonprofit corporation’s or the foreign corporation’s liabilities for qualified taxes, interest, and penalties as defined in Section 23156 of the Revenue and Taxation Code, if any, shall be abated. Any actions taken by the Franchise Tax Board to collect that abated liability shall be released, withdrawn, or otherwise terminated by the Franchise Tax Board, and no subsequent administrative or civil action shall be taken or brought to collect all or part of that amount. Any amounts erroneously received by the Franchise Tax Board in contravention of this section may be credited and refunded in accordance with Article 1 (commencing with Section 19301) of Chapter 6 of Part 10.2 of Division 2 of the Revenue and Taxation Code. (i) If the nonprofit corporation or foreign corporation is administratively dissolved or administratively surrendered under this section, the liability to creditors, if any, is not discharged. The liability of the directors of, or other persons related to, the administratively dissolved or administratively surrendered nonprofit corporation or foreign corporation is not discharged. The administrative dissolution or administrative surrender of a nonprofit corporation or foreign corporation pursuant to this section shall not diminish or adversely affect the ability of the Attorney General to enforce liabilities as otherwise provided by law. (Amended by Stats. 2023, Ch. 478, Sec. 18. (AB 1756) Effective January 1, 2024.)
  5. 5009.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “mailing” for parts 1 through 5 and says registered mail includes certified mail.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5009. Except as otherwise required, any reference in this part, Part 2, Part 3, Part 4 or Part 5 to mailing means first-, second-, or third-class mail, postage prepaid, unless registered mail is specified. Registered mail includes certified mail. (Added by Stats. 1978, Ch. 567.)
  6. 501.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

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    A corporation or its subsidiaries must not make a distribution to shareholders if doing so would likely leave the corporation unable to pay its liabilities when due.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 501. Neither a corporation nor any of its subsidiaries shall make any distribution to the corporation’s shareholders (Section 166) if the corporation or the subsidiary making the distribution is, or as a result thereof would be, likely to be unable to meet its liabilities (except those whose payment is otherwise adequately provided for) as they mature. (Repealed and added by Stats. 1975, Ch. 682.)
  7. 5010.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section says that if governing documents give a membership more or less than one vote, voting references are based on votes entitled to be cast. It also says disqualified members do not count toward quorum or the required vote on that matter.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5010. If the articles or bylaws provide for more or less than one vote for any membership on any matter, the references in Sections 5033 and 5034 to a majority or other proportion of memberships mean, as to those matters, a majority or other proportion of the votes entitled to be cast. Whenever in Part 2 (commencing with Section 5110) or Part 3 (commencing with Section 7110) members are disqualified from voting on any matter, their memberships shall not be counted for the determination of a quorum at any meeting to act upon, or the required vote to approve action upon, that matter under any other provision of Part 2 (commencing with Section 5110) or Part 3 (commencing with Section 7110) or the articles or bylaws. (Amended by Stats. 1983, Ch. 101, Sec. 9.)
  8. 5011.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    For Part 3, references to voting memberships also include voting of securities that have voting rights in the articles.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5011. All references in Part 3 (commencing with Section 7110) to the voting of memberships include the voting of securities given voting rights in the articles pursuant to paragraph (3) of subdivision (a) of Section 7132. (Amended by Stats. 1983, Ch. 101, Sec. 10.)
  9. 5012.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “financial statements” for certain parts of the Corporations Code.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5012. All references in this part, Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110) to financial statements of a corporation mean statements prepared in conformity with generally accepted accounting principles or some other basis of accounting which reasonably sets forth the assets and liabilities and the income and expenses of the corporation and discloses the accounting basis used in their preparation. (Amended by Stats. 1983, Ch. 101, Sec. 11.)
  10. 5013.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “independent accountant” for this part and related parts.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5013. As used in this part, Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110), “independent accountant” means a certified public accountant or public accountant who is independent of the corporation, as determined in accordance with generally accepted auditing standards, and who is engaged to audit financial statements of the corporation or perform other accounting services. (Amended by Stats. 1983, Ch. 101, Sec. 12.)
  11. 5014.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    For Part 3 voting requirements, a vote of each class of members counts even if voting rights are limited or restricted, unless the rule is expressly limited to voting memberships.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5014. Any requirement in Part 3 (commencing with Section 7110) for a vote of each class of members means such a vote regardless of limitations or restrictions upon the voting rights thereof, unless expressly limited to voting memberships. (Amended by Stats. 1983, Ch. 101, Sec. 13.)
  12. 5015.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when notice is considered given or sent for parts of the Corporations Code listed here.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5015. Any reference in this part, Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), Part 4 (commencing with Section 9110), or Part 5 (commencing with Section 9910) to the time a notice is given or sent means, unless otherwise expressly provided, (a) the time a written notice by mail is deposited in the United States mails, postage prepaid; or (b) the time any other written notice, including facsimile, telegram, or other electronic mail message, is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or (c) the time any oral notice is communicated, in person or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, or wireless, to the recipient, including the recipient’s designated voice mailbox or address on such a system, or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. (Amended by Stats. 1995, Ch. 154, Sec. 10. Effective January 1, 1996.)
  13. 5016.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    A newsletter, magazine, or similar member mailing counts as written notice or report if it is properly addressed and mailed or delivered to the member, or to one household member at the corporation’s address on file.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5016. A notice or report mailed or delivered as part of a newsletter, magazine or other organ regularly sent to members shall constitute written notice or report pursuant to this division when addressed and mailed or delivered to the member, or in the case of members who are residents of the same household and who have the same address on the books of the corporation, when addressed and mailed or delivered to one of such members, at the address appearing on the books of the corporation. (Amended by Stats. 1979, Ch. 724.)
  14. 5017.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section lets certain corporate actions be ratified or validated, but sets approval, notice, filing, court, and recordkeeping requirements.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5017. (a) (1) Otherwise lawful corporate actions not in compliance, or purportedly not in compliance, with this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the corporate action, may be ratified, or validated by the superior court, in accordance with the provisions of this section. (2) Except as otherwise determined by the superior court pursuant to subdivision (e), a ratification or validation of a corporate action in accordance with this section is conclusive in the absence of fraud. (3) This section does not limit the authority of the board, the members, or the corporation to effect any other lawful means of ratification or validation of a corporate action or correction of a record. (4) No corporate action may be ratified under subdivision (b) by a dissolved corporation or a foreign corporation, and no petition may be filed under subdivision (e) in respect of any corporate action of such a corporation. (5) This section shall not be used to ratify or validate any corporate action in respect of any of the following: (A) Noncompliance with subdivision (a) of Section 5231, 7231, or 9241. (B) Noncompliance with Section 5234, subdivision (a) or (b) of Section 7233, or Section 9244. (C) Noncompliance with Section 5236 or 7235. (D) Transactions covered by Section 5233. (E) Transactions covered by Section 9243. (b) (1) A ratification of a corporate action pursuant to this section, other than a ratification relating to the election of the initial directors pursuant to paragraph (2) of this subdivision, shall be approved by the board and, as applicable, approved by the members in accordance with any provision set forth in this division or the articles, bylaws, or a plan or agreement to which the corporation is a party that is applicable to the type of corporate action proposed to be ratified and in effect at the time of the ratification, unless there are no members entitled to vote on the ratification at the time of the ratification, in which case the ratification shall be approved solely by the board, or a higher approval standard that was or would have been applicable to the original taking or purported taking of the corporate action, in which case the ratification shall be approved in accordance with such higher approval standard. In order to approve a ratification of a corporate action pursuant to this paragraph, the board and, as applicable, the members shall adopt resolutions setting forth all of the following: (A) Each corporate action to be ratified. (B) The date when each such corporate action was purportedly taken, and the date any such corporate action shall be deemed to have become effective pursuant to this section if different than the date the corporate action was purportedly taken. (C) The nature of the noncompliance or purported noncompliance of each such corporate action. (D) A statement that the ratification of each such corporate action is approved. (2) If the corporate action to be ratified relates to the election of the initial directors pursuant to Section 5134, 7134, or 9134, a majority of the persons who, at the time of the ratification, are exercising the powers of directors may approve that ratification by adopting resolutions setting forth all of the following: (A) The name of the person or persons who first took action in the name of the corporation as the initial directors of the corporation. (B) The earlier of the date on which such persons first took such action or were purported to have been elected as the initial directors, and the date on which such person or persons shall be deemed to have become the initial directors of the corporation pursuant to this section if different than the date of such first action or purported election, as applicable. (C) That the ratification of the election of such person or persons as the initial directors is approved. (c) Notice of any ratification of a corporate action pursuant to this section shall be given promptly after ratification pursuant to subdivision (b) to each member, regardless of whether approval of the members is required for the ratification. The notice shall be given as provided in subdivision (b) of Section 5511 or 7511 or subdivision (a) of Section 9411, as applicable, and shall include a copy of any resolutions adopted pursuant to subdivision (b) and a copy of this section. (d) (1) If a corporate action ratified pursuant to this section would have required the filing of an instrument with the Secretary of State pursuant to the provisions of this division, or if such ratification would cause any instrument previously filed with the Secretary of State to be inaccurate or incomplete in any material respect after giving effect to the ratification, the corporation shall file a certificate of ratification to make, amend, or correct each such instrument. The certificate of ratification shall have the effect as specified therein, and shall be filed with the Secretary of State. A certificate of ratification shall consist of an officers’ certificate setting forth all of the following: (A) The name of the corporation and the Secretary of State’s file number of the corporation. (B) The title of any such instrument whose making, amendment, or correction is being effected by the certificate of ratification. (C) The date any such instrument was filed with the Secretary of State, or a statement that any such instrument was not previously filed with the Secretary of State and, as applicable, a statement that the ratification approved pursuant to the resolutions set forth in the certificate of ratification would cause any such instrument to be inaccurate or incomplete in any material respect after giving effect to the ratification. (D) The date any such instrument shall be deemed to have become effective pursuant to this section, which may be prior to or after the filing date. (E) A statement that the certificate of ratification is making, amending, or correcting any such instrument, as applicable, and a copy of any such instrument containing all of the information required to be included under this division for such instrument to be so made, amended, or corrected. An instrument attached to a certificate of ratification pursuant to this subparagraph need not be separately executed and acknowledged and need not include any statement required by any other section of this division that such instrument has been approved and adopted in accordance with the provisions of such other section. (F) A statement that the ratification has been approved pursuant to subdivision (b), a copy of the resolutions adopted pursuant to subdivision (b) in respect of the ratification. (2) The office of the Secretary of State may, in its discretion, refuse to file any certificate of ratification if the instrument would render prior filings with the Secretary of State inaccurate, ambiguous, or unintelligible. Upon refusal of the Secretary of State to file a certificate of ratification pursuant to this subdivision, the corporation shall seek validation pursuant to subdivision (e). (e) (1) Upon the filing of a petition by an authorized person, the superior court of the proper county shall have jurisdiction in equity to determine the validity of any corporate action (whether or not such corporate action is a ratification or has been the subject of any ratification), validate and declare effective any such corporate action, and declare the date any such corporate action shall be deemed to have become effective or valid, as applicable, pursuant to this section. (2) This section does not prescribe or circumscribe the facts and circumstances the superior court may consider or which remedies the superior court may grant in exercising its jurisdiction under this section, except as described in this subdivision. The superior court may make any order concerning the corporate action as justice and equity may require. (3) Any petition relating to a ratification taken or proposed to be taken pursuant to this section shall be filed not later than 180 days after the notice required by subdivision (c) is given, except this paragraph shall not apply to an action asserting that a ratification was not accomplished in accordance with this section or to any person to whom notice of the ratification was required to have been given pursuant to subdivision (c), but to whom such notice was not given. (4) For purposes of this subdivision, the proper county shall be the county where the principal office of the corporation is located or, if the principal office is not located in this state, in the county in which the corporation’s agent for service of process is located. (5) Service of the petition under paragraph (1) upon the registered agent of the corporation shall be deemed to be service upon the corporation, and no other party need be joined in order for the superior court to adjudicate the matter. The superior court may require notice of the action to be provided to other persons specified by the court and permit those other persons to intervene in the action. (6) For purposes of this subdivision, “authorized person” means the corporation, any successor entity to the corporation, any director, any member, or any other person, so long as the other person claims to be substantially and adversely affected by the ratification of a corporate action pursuant to this section. (7) Any petition seeking validation of a corporate action shall identify every pending legal proceeding of which the petitioner is aware and in which (A) the validity of the corporate action is being directly challenged or (B) the validation of the corporate action would result in the dismissal of the proceeding in whole or in part. If the petitioner becomes aware of any additional such legal proceeding, the petitioner shall amend, or, to the extent required by applicable rules, move for leave to amend, the petition within 10 court days to identify each such proceeding. Identification of a proceeding shall include the venue or forum in which the proceeding was filed, any case number or other unique identifier assigned to the proceeding in that venue or forum, the names of the parties to the proceeding, and the date on which the proceeding was filed. (f) If a corporate action validated by the superior court pursuant to this section would have required the filing of an instrument with the Secretary of State pursuant to the provisions of this division, or if such validation would cause any instrument previously filed with the Secretary of State to be inaccurate or incomplete in any material respect after giving effect to the validation, the corporation shall file a certificate of validation to make, amend, or correct each such instrument. The certificate of validation shall have the effect as specified therein, and shall be filed with the Secretary of State. A certificate of validation shall consist of an officers’ certificate setting forth all of the following: (1) The name of the corporation and the Secretary of State’s file number of the corporation. (2) The title of any such instrument whose making, amendment, or correction is being effected by the certificate of validation. (3) The date any such instrument was filed with the Secretary of State, or a statement that any such instrument was not previously filed with the Secretary of State and, as applicable, a statement that the validation ordered pursuant to the superior court order set forth in the certificate of validation would cause any such instrument to be inaccurate or incomplete in any material respect after giving effect to the validation. (4) The date any such instrument shall be deemed to have become effective pursuant to this section, which may be prior to or after the filing date. (5) A statement that the certificate of validation is making, amending, or correcting any such instrument, as applicable, and a copy of any such instrument containing all of the information required to be included under this division for such instrument to be so made, amended, or corrected. An instrument attached to a certificate of validation pursuant to this paragraph need not be separately executed and acknowledged and need not include any statement required by any other section of this division that such instrument has been approved and adopted in accordance with the provisions of such other section. (6) A statement that the validation has been ordered pursuant to subdivision (e), and a copy of the superior court order issued pursuant to subdivision (e) in respect of such validation. (g) Unless otherwise stated in resolutions adopted pursuant to subdivision (b) or determined by the superior court pursuant to subdivision (e), a corporate action or security of the corporation ratified or validated in accordance with this section relates back to the date of the original corporate action. (h) As used in this section: (1) “Corporate action” means any of the following: (A) Any action or purported action of the board. (B) Any action or purported action of the members. (C) Any other action or transaction taken, or purportedly taken, by or on behalf of the corporation. (2) “Higher approval standard” means any provision set forth in this division or the articles, bylaws, or a plan or agreement to which the corporation was a party in effect at the time of the original taking or purported taking of a corporate action: (A) Requiring action of the board or members, at a meeting or by written consent, to be taken by a proportion greater than would have been required pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section. (B) Requiring a greater proportion of the directors or members to constitute a quorum for the transaction of business at a meeting than would have been required pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section. (C) Requiring, prohibiting, or prescribing conditions on action of the board or members at a meeting or by written consent, which would not have been required, prohibited, or prescribed pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section. (D) Requiring separate action of any specified person or persons, which would not have been required pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section. (i) The corporation shall retain all records related to the ratification or validation of a corporate action under this section in accordance with Section 6320, 8320, or 9510. (j) If the corporation is a party to a pending legal proceeding in which (1) the validity of a corporate action sought to be ratified or validated pursuant to this section is at issue or (2) the ratification or validation of a corporate action pursuant to this section would result in the dismissal in whole or in part of the proceeding, the corporation shall notify the judge, arbitrator, or other person presiding over the proceeding at least 10 court days prior to adopting resolutions pursuant to subdivision (b) or filing a petition pursuant to subdivision (e) with respect to that corporate action. That person shall have power to stay the ratification or validation as justice and equity may require. (Added by Stats. 2023, Ch. 151, Sec. 2. (SB 446) Effective January 1, 2024.)
  15. 503.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

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    Sections 500 and 501 do not apply to certain share purchases or redemptions funded by insurance proceeds when carried out under a buy-sell agreement.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 503. (a) The provisions of Sections 500 and 501 shall not apply to a purchase or redemption of shares of a deceased shareholder from the proceeds of insurance on the life of that shareholder in excess of the total amount of all premiums paid by the corporation for that insurance, in order to carry out the provisions of an agreement between the corporation and that shareholder to purchase or redeem those shares upon the death of the shareholder. (b) The provisions of Sections 500 and 501 shall not apply to the purchase or redemption of shares of a disabled shareholder from the proceeds of disability insurance applicable to the disabled shareholder in excess of the total amount of all premiums paid by the corporation for the insurance, in order to carry out the provisions of an agreement between the corporation and the shareholder to purchase or redeem shares upon the disability of the shareholder as defined within that policy. For the purposes of this subdivision, “disability insurance” means an agreement of indemnification against the insured’s loss of the ability to work due to accident or illness. (Repealed and added by Stats. 2011, Ch. 203, Sec. 5. (AB 571) Effective January 1, 2012.)
  16. 5030.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when an instrument is “acknowledged” and says some out-of-state acknowledgment certificates do not need further authentication.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5030. “Acknowledged” means that an instrument is either: (a) Formally acknowledged as provided in Article 3 (commencing with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of the Civil Code; or (b) Accompanied by a declaration in writing signed by the persons executing the same that they are such persons and that the instrument is the act and deed of the person or persons executing the same. Any certificate of acknowledgment taken without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated. (Added by Stats. 1978, Ch. 567.)
  17. 5031.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    A corporation is an affiliate of another specified corporation if it controls, is controlled by, or is under common control with that corporation, directly or through intermediaries.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5031. A corporation is an “affiliate” of, or a corporation is “affiliated” with, another specified corporation if it directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the other specified corporation. (Added by Stats. 1978, Ch. 567.)
  18. 5032.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when something is considered approved by the board.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5032. “Approved by (or approval of) the board” means approved or ratified by the vote of the board or by the vote of a committee authorized to exercise the powers of the board, except as to matters not within the competence of the committee under Section 5212, Section 7212, or Section 9212. (Added by Stats. 1978, Ch. 567.)
  19. 5033.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when approval by a majority of all members is achieved.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5033. “Approval by (or approval of) a majority of all members” means approval by an affirmative vote (or written ballot in conformity with Section 5513, Section 7513, or Section 9413) of a majority of the votes entitled to be cast. Such approval shall include the affirmative vote of a majority of the outstanding memberships of each class, unit, or grouping of members entitled, by any provision of the articles or bylaws or of Part 2, Part 3, Part 4 or Part 5 to vote as a class, unit, or grouping of members on the subject matter being voted upon and shall also include the affirmative vote of such greater proportion, including all, of the votes of the memberships of any class, unit, or grouping of members if such greater proportion is required by the bylaws (subdivision (e) of Section 5151, subdivision (e) of Section 7151, or subdivision (e) of Section 9151) or Part 2, Part 3, Part 4 or Part 5. (Amended by Stats. 1979, Ch. 724.)
  20. 5034.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when members are considered to have approved something.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5034. “Approval by (or approval of) the members” means approved or ratified by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present (which affirmative votes also constitute a majority of the required quorum) or written ballot in conformity with Section 5513, 7513, or 9413 or by the affirmative vote or written ballot of such greater proportion, including all of the votes of the memberships of any class, unit, or grouping of members as may be provided in the bylaws (subdivision (e) of Section 5151, subdivision (e) of Section 7151, or subdivision (e) of Section 9151) or in Part 2, Part 3, Part 4 or Part 5 for all or any specified member action. (Amended by Stats. 1979, Ch. 724.)
  21. 5035.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    In this section, “Articles” means the articles of incorporation and related amended or restated versions, including certificates of incorporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5035. “Articles” includes the articles of incorporation, amendments thereto, amended articles, restated articles, and certificates of incorporation. (Added by Stats. 1978, Ch. 567.)
  22. 5036.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    The section defines the “authorized number” as a percentage of voting power, with different formulas depending on how many votes can be cast for a director, and lets a member exercise certain rights using written authorizations collected within 11 months.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5036. (a) Except as provided in subdivision (b) or (c), “authorized number” means 5 percent of the voting power. (b) Where (disregarding any provision for cumulative voting which would otherwise apply) the total number of votes entitled to be cast for a director is 1,000 or more, but less than 5,000 the authorized number shall be 21/2 percent of the voting power, but not less than 50. (c) Where (disregarding any provision for cumulative voting which would otherwise apply) the total number of votes entitled to be cast for a director is 5,000 or more, the authorized number shall be one-twentieth of 1 percent of the voting power, but not less than 125. (d) Any right under Part 2, Part 3, or Part 4 which may be exercised by the authorized number, or some multiple thereof, may be exercised by a member with written authorizations obtained within any 11-month period from members who, in the aggregate, hold the equivalent voting power. Any such authorization shall specify the right to be exercised thereunder and the duration thereof (which shall not exceed three years). (e) Where any provision of Part 2, Part 3, or Part 4 specifies twice the authorized number, that means two times the number calculated according to subdivision (a), (b) or (c). (Amended by Stats. 1979, Ch. 724.)
  23. 5037.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    In this section, “bylaws” includes amendments to bylaws and amended bylaws.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5037. “Bylaws” includes amendments thereto and amended bylaws. (Added by Stats. 1978, Ch. 567.)
  24. 5038.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “board” as the corporation’s board of directors.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5038. “Board” means the board of directors of the corporation. (Added by Stats. 1978, Ch. 567.)
  25. 5039.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5039. “Business corporation” means a corporation as defined in Section 162 of the General Corporation Law. (Added by Stats. 1978, Ch. 567.)
  26. 5039.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    In this division, references to “chairperson of the board” generally count as references to any permitted title for a board chair, except in Sections 5213, 7213, and 9213.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5039.5. All references in this division to “chairperson of the board,” other than in Sections 5213, 7213, and 9213, shall be deemed to refer to all permissible titles for a chair of the board, as permitted by Sections 5213, 7213, and 9213. (Amended by Stats. 2022, Ch. 617, Sec. 44. (SB 1202) Effective January 1, 2023.)
  27. 504.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

    Verify source ↗

    Section 504 exempts certain dividends and share redemptions from the rules in Section 500 and this chapter.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 504. (a) The provisions of Section 500 do not apply to a dividend declared by either of the following: (1) A regulated investment company, as defined in the federal Internal Revenue Code, as amended, to the extent that the dividend is necessary to maintain the status of the corporation as a regulated investment company under the provisions of that code. (2) A real estate investment trust, as defined in Part II of Subchapter M of Chapter 1 of Subtitle A of the federal Internal Revenue Code, as amended, to the extent that the dividend is necessary to maintain the status of the corporation as a real estate investment trust under the provisions of that code. (b) The provisions of this chapter do not apply to any purchase or redemption of shares redeemable at the option of the holder by a registered open-end investment company under the United States Investment Company Act of 1940, so long as the right of redemption remains unsuspended under the provisions of that statute and the articles and bylaws of the corporation. (Amended by Stats. 2000, Ch. 112, Sec. 1. Effective January 1, 2001.)
  28. 5040.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    “Chapter” means a chapter of specified parts of the Nonprofit Corporation Law, unless the text expressly says otherwise.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5040. “Chapter” refers to a chapter of Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110) unless otherwise expressly stated. (Amended by Stats. 1983, Ch. 101, Sec. 15.)
  29. 5041.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    “Class” means memberships that are identified as a different type in the articles or bylaws, or that have the same voting, dissolution, redemption, and transfer rights.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5041. “Class” refers to those memberships which: (a) are identified in the articles or bylaws as being a different type of membership; or (b) have the same rights with respect to voting, dissolution, redemption and transfer. For the purpose of this section, rights shall be considered the same if they are determined by a formula applied uniformly. (Repealed and added by Stats. 1979, Ch. 724.)
  30. 5043.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    “Common shares” means shares with no preference over other shares for asset distribution on liquidation or for dividend payments.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5043. “Common shares,” as used in Part 3 (commencing with Section 7110), means shares which have no preference over any other shares with respect to distribution of assets on liquidation or with respect to payment of dividends. (Amended by Stats. 1983, Ch. 101, Sec. 17.)
  31. 5044.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “constituent corporation” as a corporation that is merged with one or more other corporations, including the surviving corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5044. “Constituent corporation” means a corporation which is merged with one or more other corporations and includes the surviving corporation. (Added by Stats. 1978, Ch. 567.)
  32. 5045.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “control” as having the direct or indirect power to direct, or cause the direction of, a corporation’s management and policies.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5045. “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation. (Added by Stats. 1978, Ch. 567.)
  33. 5046.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines what “Corporation” means in different parts of the Corporations Code.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5046. (a) “Corporation” as used in this part and Part 5 (commencing with Section 9910), refers to corporations defined in subdivisions (b), (c), and (d). (b) “Corporation,” as used in Part 2 (commencing with Section 5110), means a nonprofit public benefit corporation as defined in Section 5060. (c) “Corporation,” as used in Part 3 (commencing with Section 7110) means a nonprofit mutual benefit corporation as defined in Section 5059. (d) “Corporation,” as used in Part 4 (commencing with Section 9110), including those provisions of Part 2 (commencing with Section 5110) made applicable pursuant to Chapter 6 (commencing with Section 9610) of Part 4, means a nonprofit religious corporation as defined in Section 5061. (Amended by Stats. 1983, Ch. 101, Sec. 18.)
  34. 5047.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines who counts as a “director” for the nonprofit corporation law division.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5047. Except as otherwise expressly provided, “directors” means natural persons, designated in the articles or bylaws or elected by the incorporators, and their successors and natural persons designated, elected, or appointed by any other name or title to act as members of the governing body of the corporation. If the articles or bylaws designate that a natural person is a director or a member of the governing body of the corporation by reason of occupying a specified position within the corporation or outside the corporation, without limiting that person’s right to vote as a member of the governing body, that person shall be a director for all purposes and shall have the same rights and obligations, including voting rights, as the other directors. A person who does not have authority to vote as a member of the governing body of the corporation, is not a director as that term is used in this division regardless of title. (Amended by Stats. 2015, Ch. 303, Sec. 45. (AB 731) Effective January 1, 2016.)
  35. 5047.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    Volunteer directors and officers of covered nonprofit corporations are generally protected from monetary-damages claims for qualifying negligent acts or omissions, subject to listed exceptions and insurance-coverage conditions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5047.5. (a) The Legislature finds and declares that the services of directors and officers of nonprofit corporations who serve without compensation are critical to the efficient conduct and management of the public service and charitable affairs of the people of California. The willingness of volunteers to offer their services has been deterred by a perception that their personal assets are at risk for these activities. The unavailability and unaffordability of appropriate liability insurance makes it difficult for these corporations to protect the personal assets of their volunteer decisionmakers with adequate insurance. It is the public policy of this state to provide incentive and protection to the individuals who perform these important functions. (b) Except as provided in this section, no cause of action for monetary damages shall arise against any person serving without compensation as a director or officer of a nonprofit corporation subject to Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110) of this division on account of any negligent act or omission occurring (1) within the scope of that person’s duties as a director acting as a board member, or within the scope of that person’s duties as an officer acting in an official capacity; (2) in good faith; (3) in a manner that the person believes to be in the best interest of the corporation; and (4) is in the exercise of his or her policymaking judgment. (c) This section shall not limit the liability of a director or officer for any of the following: (1) Self-dealing transactions, as described in Sections 5233 and 9243. (2) Conflicts of interest, as described in Section 7233. (3) Actions described in Sections 5237, 7236, and 9245. (4) In the case of a charitable trust, an action or proceeding against a trustee brought by a beneficiary of that trust. (5) Any action or proceeding brought by the Attorney General. (6) Intentional, wanton, or reckless acts, gross negligence, or an action based on fraud, oppression, or malice. (7) Any action brought under Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code. (d) This section only applies to nonprofit corporations organized to provide religious, charitable, literary, educational, scientific, social, or other forms of public service that are exempt from federal income taxation under Section 501(c)(3) or 501(c)(6) of the Internal Revenue Code. (e) This section applies only if the nonprofit corporation maintains a liability insurance policy with an amount of coverage of at least the following amounts: (1) If the corporation’s annual budget is less than fifty thousand dollars ($50,000), the minimum required amount is five hundred thousand dollars ($500,000). (2) If the corporation’s annual budget equals or exceeds fifty thousand dollars ($50,000), the minimum required amount is one million dollars ($1,000,000). This section applies only if the claim against the director or officer can also be made directly against the corporation and a liability insurance policy is applicable to the claim. If that policy is found to cover the damages caused by the director or officer, no cause of action as provided in this section shall be maintained against the director or officer. (f) For the purposes of this section, the payment of actual expenses incurred in attending meetings or otherwise in the execution of the duties of a director or officer shall not constitute compensation. (g) Nothing in this section shall be construed to limit the liability of a nonprofit corporation for any negligent act or omission of a director, officer, employee, agent, or servant occurring within the scope of his or her duties. (h) This section does not apply to any corporation that unlawfully restricts membership, services, or benefits conferred on the basis of political affiliation, age, or any characteristic listed or defined in subdivision (b) or (e) of Section 51 of the Civil Code. (i) This section does not apply to any volunteer director or officer who receives compensation from the corporation in any other capacity, including, but not limited to, as an employee. (Amended by Stats. 2009, Ch. 631, Sec. 3. (AB 1233) Effective January 1, 2010.)
  36. 5048.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

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

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5048. “Disappearing corporation” means a constituent corporation which is not the surviving corporation. (Added by Stats. 1978, Ch. 567.)
  37. 5049.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “distribution” and “member” for the nonprofit corporation law provisions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5049. “Distribution” means the distribution of any gains, profits or dividends to any member as such. As used in this section, “member” means any person who is a member as defined in Section 5056 and any person who is referred to as a member as authorized by subdivision (a) of Sections 5332, 7333 and 9332. (Amended by Stats. 1979, Ch. 724.)
  38. 505.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

    Verify source ↗

    This chapter does not bar extra restrictions on dividends or on a corporation buying back or redeeming its own shares, if those restrictions are set in the articles, bylaws, indenture, or another agreement entered into by the corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 505. Nothing in this chapter prohibits additional restrictions upon the declaration of dividends or the purchase or redemption of a corporation’s own shares by provision in the articles or bylaws or in any indenture or other agreement entered into by the corporation. (Added by Stats. 1975, Ch. 682.)
  39. 5050.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    A “domestic corporation” is a corporation formed under the laws of this state.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5050. “Domestic corporation” means a corporation formed under the laws of this state. (Added by Stats. 1978, Ch. 567.)
  40. 5051.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    “Filed” means filed in the office of the Secretary of State, unless the text expressly provides otherwise.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5051. “Filed,” unless otherwise expressly provided, means filed in the office of the Secretary of State. (Added by Stats. 1978, Ch. 567.)
  41. 5052.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “foreign business corporation” for Part 3.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5052. “Foreign business corporation,” as used in Part 3 (commencing with Section 7110), means a foreign corporation as defined in Section 171 except that it does not include a foreign corporation as defined in Section 5053. (Amended by Stats. 1983, Ch. 101, Sec. 19.)
  42. 5053.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “foreign corporation” as a nonprofit corporation incorporated outside California, with a special meaning in certain listed sections.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5053. “Foreign corporation” means any corporation incorporated in a jurisdiction other than California pursuant to that jurisdiction’s law for the incorporation of nonprofit corporations; except that as used in subdivision (b) of Section 5122, in subdivision (c) of Section 7122, and in subdivision (b) of Section 9122, “foreign corporation” means a corporation described in Section 171. (Amended by Stats. 1979, Ch. 724.)
  43. 5054.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “incentive and benefit plans” to include plans or agreements that tie officers’ or employees’ compensation, in whole or part, to the corporation’s financial performance.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5054. “Incentive and benefit plans,” as used in Section 5140, in Section 7140, and in Section 9140 includes, but is not limited to, any plan or agreement under which the compensation of officers or employees is fixed, in full or in part, by reference to the financial performance of the corporation. (Added by Stats. 1978, Ch. 567.)
  44. 5055.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “liquidating price” or “liquidation preference” for Part 3.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5055. “Liquidating price” or “liquidation preference,” as used in Part 3 (commencing with Section 7110), means amounts payable on memberships of any class, upon voluntary or involuntary dissolution, winding up or distribution of the entire assets of the corporation, in priority to amounts payable to members of another class or classes. (Amended by Stats. 1983, Ch. 101, Sec. 20.)
  45. 5056.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines who counts as a “member” and allows articles or bylaws to give member rights to people who otherwise do not have voting rights.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5056. (a) “Member” means any person who, pursuant to a specific provision of a corporation’s articles or bylaws, has the right to vote for the election of a director or directors or on a disposition of all or substantially all of the assets of a corporation or on a merger or on a dissolution unless the provision granting such right to vote is only effective as a result of paragraph (2) of subdivision (a) of Section 7132. “Member” also means any person who is designated in the articles or bylaws as a member and, pursuant to a specific provision of a corporation’s articles or bylaws, has the right to vote on changes to the articles or bylaws. (b) The articles or bylaws may confer some or all of the rights of a member, set forth in this part and in Parts 2 through 5 of this division, upon any person or persons who do not have any of the voting rights referred to in subdivision (a). (c) Where a member of a corporation is not a natural person, such member may authorize in writing one or more natural persons to vote on its behalf on any or all matters which may require a vote of the members. (d) A person is not a member by virtue of any of the following: (1) Any rights such person has as a delegate. (2) Any rights such person has to designate or select a director or directors. (3) Any rights such person has as a director. (Amended by Stats. 1982, Ch. 36, Sec. 5. Effective February 17, 1982.)
  46. 5057.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “membership” as the rights a member has under the corporation’s articles, bylaws, and this division.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5057. A “membership” refers to the rights a member has pursuant to a corporation’s articles, bylaws and this division. (Amended by Stats. 1979, Ch. 724.)
  47. 5058.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “membership certificate” for Part 3.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5058. “Membership certificate,” as used in Part 3 (commencing with Section 7110), means a document evidencing a transferable property interest in a corporation. (Amended by Stats. 1983, Ch. 101, Sec. 21.)
  48. 5059.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “nonprofit mutual benefit corporation” and “mutual benefit corporation.”

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5059. “Nonprofit mutual benefit corporation” or “mutual benefit corporation” means a corporation which is organized under Part 3 (commencing with Section 7110), or subject to Part 3 under the provisions of subdivision (a) of Section 5003. (Amended by Stats. 1979, Ch. 724.)
  49. 506.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

    Verify source ↗

    A shareholder who knowingly receives a prohibited distribution is liable to the corporation for the amount received, with interest and related valuation costs in some cases.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 506. (a) Any shareholder who receives any distribution prohibited by this chapter with knowledge of facts indicating the impropriety thereof is liable to the corporation for the benefit of all of the creditors or shareholders entitled to institute an action under subdivision (b) for the amount so received by the shareholder with interest thereon at the legal rate on judgments until paid, but not exceeding the liabilities of the corporation owed to nonconsenting creditors at the time of the violation and the injury suffered by nonconsenting shareholders, as the case may be. For purposes of determining the value of any noncash property received in a distribution described in the preceding sentence, the shareholder receiving that illegal distribution shall be liable to the corporation for an amount equal to the fair market value of the property at the time of the illegal distribution plus interest thereon from the date of the distribution at the legal rate on judgments until paid, together with all reasonably incurred costs of appraisal or other valuation, if any, of that property, but not exceeding the liabilities of the corporation owed to nonconsenting creditors at the time of the violation and the injury suffered by nonconsenting shareholders, as the case may be. (b) Suit may be brought in the name of the corporation to enforce the liability (1) to creditors arising under subdivision (a) for a violation of Section 500 or 501 against any or all shareholders liable by any one or more creditors of the corporation whose debts or claims arose prior to the time of the distribution to shareholders and who have not consented thereto, whether or not they have reduced their claims to judgment, or (2) to shareholders arising under subdivision (a) for a violation of Section 500 against any or all shareholders liable by one or more holders of shares having preferential rights with respect to cumulative dividends in arrears, in the case of a violation of paragraph (1) of subdivision (a) of Section 500, or upon dissolution, in the case of a violation of paragraph (2) of subdivision (a) of Section 500, in each case who have not consented to the applicable distribution, without regard to the provisions in Section 800, and in each case to the extent the applicable shares with preferential rights were outstanding at the time of the distribution; provided that holders of shares of preferential rights shall not have the right to bring suit in the name of the corporation under this subdivision unless the preferential dividends arrears amount, in the case of a violation of paragraph (1) of subdivision (a) of Section 500, or the preferential rights amount, in the case of a violation of paragraph (2) of subdivision (a) of Section 500, was greater than zero. A cause of action with respect to an obligation to return a distribution pursuant to this section shall be extinguished unless the action is brought within four years after the date the distribution is made. (c) Any shareholder sued under this section may implead all other shareholders liable under this section and may compel contribution, either in that action or in an independent action against shareholders not joined in that action. (d) Nothing contained in this section affects any liability which any shareholder may have under Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code. (Amended by Stats. 2011, Ch. 203, Sec. 8. (AB 571) Effective January 1, 2012.)
  50. 5060.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “nonprofit public benefit corporation” and “public benefit corporation.”

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5060. “Nonprofit public benefit corporation” or “public benefit corporation” means a corporation which is organized under Part 2 (commencing with Section 5110) or subject to Part 2 under the provisions of subdivision (a) of Section 5003. (Amended by Stats. 1979, Ch. 724.)
  51. 5061.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “nonprofit religious corporation” or “religious corporation” as a corporation organized under Part 4, or subject to Part 4 under Section 5003(a).

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5061. “Nonprofit religious corporation” or “religious corporation” means a corporation which is organized under Part 4 (commencing with Section 9110) or subject to Part 4 pursuant to subdivision (a) of Section 5003. (Amended by Stats. 1979, Ch. 724.)
  52. 5062.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “officer’s certificate” as a certificate signed and verified by specified officers.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5062. “Officer’s certificate” means a certificate signed and verified by the chair of the board, the president or any vice president and by the secretary, the chief financial officer, the treasurer or any assistant secretary or assistant treasurer. (Amended by Stats. 2009, Ch. 631, Sec. 4. (AB 1233) Effective January 1, 2010.)
  53. 5063.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    This section defines “On the certificate” for Part 3.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5063. “On the certificate,” as used in Part 3 (commencing with Section 7110), means that a statement appears on the face of a certificate or on the reverse thereof with a reference thereto on the face. (Amended by Stats. 1983, Ch. 101, Sec. 22.)
  54. 5063.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “other business entity” and lists the business forms included in that term.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5063.5. “Other business entity” means a domestic or foreign limited liability company, limited partnership, general partnership, business trust, real estate investment trust, unincorporated association, or a domestic reciprocal insurer organized after 1974 to provide medical malpractice insurance as set forth in Article 16 (commencing with Section 1550) of Chapter 3 of Part 2 of Division 1 of the Insurance Code. As used herein, “general partnership” means a “partnership” as defined in Section 16101; “business trust” means a business organization formed as a trust; “real estate investment trust” means a “real estate investment trust” as defined in subsection (a) of Section 856 of the Internal Revenue Code of 1986, as amended; and “unincorporated association” has the meaning set forth in Section 18035. (Amended by Stats. 2024, Ch. 361, Sec. 7. (AB 1862) Effective January 1, 2025.)
  55. 5064.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “parent” for a specified corporation as an affiliate that controls the corporation directly or indirectly through one or more intermediaries.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5064. A “parent” of a specified corporation is an affiliate controlling such corporation directly or indirectly through one or more intermediaries. (Added by Stats. 1978, Ch. 567.)
  56. 5064.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “parent party” for merger purposes.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5064.5. “Parent party” means the corporation in control of any constituent domestic or foreign corporation or other business entity and whose equity securities are issued, transferred, or exchanged in a merger pursuant to Section 6019.1 or 8019.1. (Added by Stats. 1999, Ch. 437, Sec. 12.7. Effective January 1, 2000.)
  57. 5065.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “person” broadly to include many kinds of entities, unless another provision expressly provides otherwise.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5065. “Person,” in addition to those entities specified in Section 18 and unless otherwise expressly provided, includes any association, business corporation, company, corporation, corporation sole, domestic corporation, estate, foreign corporation, foreign business corporation, individual, joint stock company, joint venture, mutual benefit corporation, public benefit corporation, religious corporation, partnership, government or political subdivision, agency or instrumentality of a government. (Added by Stats. 1978, Ch. 567.)
  58. 5067.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “preferred shares” for Part 3 as shares other than common shares.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5067. “Preferred shares,” as used in Part 3 (commencing with Section 7110), means shares other than common shares. (Amended by Stats. 1983, Ch. 101, Sec. 24.)
  59. 5068.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “proper county” for a corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5068. “Proper county” means the county where the corporation’s principal office in this state is located or, if the corporation has no such office, the County of Sacramento. (Amended by Stats. 1979, Ch. 724.)
  60. 5069.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “proxy” and “signed” for nonprofit corporation voting purposes.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5069. “Proxy” means a written authorization signed by a member or the member’s attorney in fact giving another person or persons power to vote on behalf of such member. “Signed” for the purpose of this section means the placing of the member’s name on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the member or such member’s attorney in fact. (Added by Stats. 1978, Ch. 567.)
  61. 5070.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “proxyholder” as the person or persons to whom a proxy is given.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5070. “Proxyholder” means the person or persons to whom a proxy is given. (Added by Stats. 1978, Ch. 567.)
  62. 5071.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “shareholder” for Part 3 as a holder of record of shares.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5071. “Shareholder,” as used in Part 3 (commencing with Section 7110), means one who is a holder of record of shares. (Amended by Stats. 1983, Ch. 101, Sec. 25.)
  63. 5072.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “shares” for Part 3 as the units dividing proprietary interests in a business corporation or foreign business corporation in the articles.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5072. “Shares,” as used in Part 3 (commencing with Section 7110), means the units into which the proprietary interests in a business corporation or foreign business corporation are divided in the articles. (Amended by Stats. 1983, Ch. 101, Sec. 26.)
  64. 5073.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when a corporation counts as a subsidiary of a specified corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5073. (a) Except as provided in subdivision (b), “subsidiary” of a specified corporation means a corporation more than 50 percent of the voting power of which is owned directly, or indirectly through one or more subsidiaries, by the specified corporation. (b) For the purpose of Section 7315, “subsidiary” of a specified corporation means a corporation more than 25 percent of the voting power of which is owned directly, or indirectly through one or more subsidiaries as defined in subdivision (a), by the specified corporation. (Amended by Stats. 1979, Ch. 724.)
  65. 5074.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines “surviving corporation” as the corporation that results when one or more corporations are merged into it.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5074. “Surviving corporation” means a corporation into which one or more other corporations are merged. (Added by Stats. 1978, Ch. 567.)
  66. 5075.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    This section defines when a board seat is a “vacancy.”

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5075. “Vacancy” when used with respect to the board means any authorized position of director which is not then filled, whether the vacancy is caused by death, resignation, removal, change in the number of directors authorized in the articles or bylaws (by the board or the members) or otherwise. (Amended by Stats. 1979, Ch. 724.)
  67. 5076.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    “Verified” means a statement in a certificate or other document is declared true by the executing person’s own knowledge, using either an affidavit or a written declaration under penalty of perjury.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5076. “Verified” means that the statements contained in a certificate or other document are declared to be true of the own knowledge of the persons executing the same in either: (a) An affidavit signed by them under oath before an officer authorized by the laws of this state or of the place where it is executed to administer oaths; or (b) A declaration in writing executed by them under penalty of perjury and stating the date and place (whether within or without this state) of execution. Any affidavit sworn to without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated. (Added by Stats. 1978, Ch. 567.)
  68. 5077.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    “Vote” includes authorization by written consent and authorization by written ballot under the listed sections.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5077. “Vote” includes, but is not limited to, authorization by written consent pursuant to subdivision (b) of Section 5211, subdivision (b) of Section 7211, or subdivision (b) of Section 9211 and authorization by written ballot pursuant to Section 5513, Section 7513, or Section 9413. (Added by Stats. 1978, Ch. 567.)
  69. 5078.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

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    “Voting power” means the power to vote for directors, but not a future conditional right to vote.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5078. “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. (Amended by Stats. 1979, Ch. 724.)
  70. 5079.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    “Written” or “in writing” includes facsimile, telegraphic, and other electronic communication, including certain electronic transmissions by a corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5079. “Written” or “in writing” includes facsimile, telegraphic, and other electronic communication as authorized by this code, including an electronic transmission by a corporation that satisfies the requirements of Section 20. (Amended by Stats. 2004, Ch. 254, Sec. 13. Effective January 1, 2005.)
  71. 508.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

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    This chapter does not apply to proceedings for winding up and dissolution under Chapter 18 or 19.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 508. This chapter does not apply in connection with any proceeding for winding up and dissolution under Chapter 18 or 19. (Added by Stats. 1975, Ch. 682.)
  72. 5080.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

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

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5 [5002 - 5080] ( Part 1 added by Stats. 1978, Ch. 567. ) ## 5080. “Written ballot” does not include a ballot distributed at a special or regular meeting of members. (Added by Stats. 1978, Ch. 567.)
  73. 509.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

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    A corporation may redeem shares that are redeemable at its option, if it gives the required notice and pays or deposits the redemption price.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 509. (a) A corporation may redeem any or all shares which are redeemable at its option by (1) giving notice of redemption as provided in subdivisions (b) and (c) or as otherwise provided in its articles of incorporation, and (2) payment or deposit of the redemption price of the shares as provided in its articles or deposit of the redemption price pursuant to subdivision (d). (b) Subject to any provisions in the articles with respect to the notice required for redemption of shares, the corporation may give notice of the redemption of any or all shares subject to redemption by causing a notice of redemption to be published in a newspaper of general circulation in the county in which the principal office of the corporation is located at least once a week for two successive weeks, in each instance on any day of the week, commencing not earlier than 60 nor later than 20 days before the date fixed for redemption. The notice of redemption shall set forth all of the following: (1) The class or series of shares or part of any class or series of shares to be redeemed. (2) The date fixed for redemption. (3) The redemption price. (4) If the shares are certificated securities, the place at which the shareholders may obtain payment of the redemption price upon surrender of their share certificates. (c) If the corporation gives notice of redemption pursuant to subdivision (b), it shall also mail a copy of the notice of redemption to each holder of record of shares to be redeemed as of the date of mailing or record date fixed in accordance with Section 701, addressed to the holder at the address of such holder appearing on the books of the corporation or given by the holder to the corporation for the purpose of notice, or if no such address appears or is given at the place where the principal office of the corporation is located, not earlier than 60 nor later than 20 days before the date fixed for redemption. Failure to comply with this subdivision does not invalidate the redemption of the shares. (d) If, on or before any date fixed for redemption of redeemable shares, the corporation deposits with any bank or trust company in this state as a trust fund, (1) a sum sufficient to redeem, on the date fixed for redemption thereof, the shares called for redemption, (2) in the case of the redemption of any uncertificated securities, an officer’s certificate setting forth the holders thereof registered on the books of the corporation and the number of shares held by each, and (3) irrevocable instructions and authority to the bank or trust company to publish the notice of redemption thereof (or to complete publication if theretofore commenced) and to pay, on and after the date fixed for redemption or prior thereto, the redemption price of the shares to their respective holders upon the surrender of their share certificates, in the case of certificated securities, or the delivery of the officer’s certificate in the case of uncertificated securities, then from and after the date of the deposit (although before the date fixed for redemption) the shares called shall be redeemed and the dividends on those shares shall cease to accrue after the date fixed for redemption. The deposit shall constitute full payment of the shares to their holders and from and after the date of the deposit the shares shall no longer be outstanding and the holders thereof shall cease to be shareholders with respect to the shares and shall have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of the shares without interest, upon surrender of their certificates therefor, in the case of certificated securities, and any right to convert the shares which may exist and then continue for any period fixed by its terms. In determining the holders of uncertificated securities, the bank or trust company shall be entitled to rely on any officer’s certificate deposited with it in accordance with this subdivision. (Amended by Stats. 2022, Ch. 617, Sec. 13. (SB 1202) Effective January 1, 2023.)
  74. 510.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

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    This section rules how a corporation’s reacquired shares are treated and when the articles must be amended.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 510. (a) When a corporation reacquires its own shares, those shares are restored to the status of authorized but unissued shares, unless the articles prohibit the reissuance thereof. (b) When a corporation reacquires authorized shares of a class or series and the articles prohibit the reissuance of those shares: (1) If all of the authorized shares of that class or series, as the case may be, are reacquired, then (A) that class or series is automatically eliminated, (B) in the case of reacquisition of all of the authorized shares of a series, the authorized number of shares of the class to which the shares belonged is reduced by the number of shares so reacquired, and (C) the articles shall be amended to eliminate any statement of rights, preferences, privileges, and restrictions relating solely to that class or series. (2) If less than all of the authorized shares but all of the issued and outstanding shares of that class or series, as the case may be, are reacquired, the authorized number of shares of the class or series is automatically reduced by the number of shares so reacquired, and the board shall determine either (A) to eliminate that class or series, whereupon the articles shall be amended to eliminate any statement of rights, preferences, privileges, and restrictions relating solely to that class or series, or (B) not to eliminate that class or series, whereupon the articles shall be amended to reflect that reduction of the number of authorized shares of that class or series by the shares so reacquired. (3) If less than all of the authorized shares and less than all of the issued and outstanding shares of a class or series, as the case may be, are reacquired, the authorized number of shares of that class or series shall be automatically reduced by the number of shares reacquired, and the articles shall be amended to reflect that reduction. (c) When a corporation reacquires authorized shares of a series of shares and the articles only prohibit the reissuance of those shares as shares of the same series: (1) If all of the authorized shares of that series are reacquired, then that series is automatically eliminated, the articles shall be amended to eliminate any statement of rights, preferences, privileges, and restrictions relating solely to that series, and the board shall determine either (A) to return those shares to the status of authorized but undesignated shares of the class to which they belong or (B) to eliminate those shares entirely, whereupon the articles in either case shall be amended to reflect the reduction in the authorized shares of that series and the effect, if any, on the class to which that series belongs. (2) If all of the issued and outstanding shares of that series (but less than all of the authorized shares of that series) are reacquired, the board shall determine either (A) to eliminate that series, whereupon the articles shall be amended to eliminate any statement of rights, preferences, privileges, and restrictions relating solely to that series, or (B) not to eliminate that series, whereupon the articles shall be amended to reflect the return of the reacquired shares to the status of authorized but undesignated shares of the class to which they belong. (3) If less than all of the issued and outstanding shares of that series are reacquired, the authorized number of shares of that series shall be automatically reduced by the number of shares reacquired, and the board shall determine either (A) to return those shares to the status of authorized but undesignated shares of the class to which they belong, or (B) to eliminate those shares entirely, whereupon the articles in either case shall be amended to reflect the reduction in the authorized shares of that series and the effect, if any, on the class to which that series belongs. (d) “Reacquires” as used in this section means that a corporation purchases, redeems, acquires by way of conversion to another class or series, or otherwise acquires its own shares or that issued and outstanding shares cease to be outstanding. (e) The provisions of this section are subject to any contrary or inconsistent provision in the articles. (f) A certificate of amendment shall be filed in accordance with the requirements of Chapter 9 (commencing with Section 900) reflecting any elimination or reduction of authorized shares set forth in subdivisions (b) and (c), and any related elimination from the articles of the designation and the rights, preferences, privileges, and restrictions of any series or class of stock that is eliminated, except that approval by the outstanding shares (Section 152) shall not be required to adopt any such amendment. Nothing contained in this section is intended to alter or otherwise affect the powers of the board to amend the articles as contemplated in Sections 202 and 401. (Amended by Stats. 1995, Ch. 154, Sec. 5. Effective January 1, 1996.)
  75. 511.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. )

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    A corporation’s negotiable instrument for buying or redeeming shares is enforceable by a holder in due course, even without notice of that purpose.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 5. Dividends and Reacquisitions of Shares [500 - 511] ( Chapter 5 added by Stats. 1975, Ch. 682. ) ## 511. Notwithstanding the provisions of this chapter, a negotiable instrument issued by a corporation for the purchase or redemption of shares shall be enforceable by a holder in due course (Section 3302 of the Commercial Code) without notice that it was issued for that purpose or by a person who acquired the instrument through such a holder. (Added by Stats. 1978, Ch. 370.)
  76. 5110.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Title and Purposes [5110 - 5111] ( Article 1 added by Stats. 1978, Ch. 567. )

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    This part is known as the Nonprofit Public Benefit Corporation Law and may be cited by that name.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Title and Purposes [5110 - 5111] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5110. This part shall be known and may be cited as the Nonprofit Public Benefit Corporation Law. (Added by Stats. 1978, Ch. 567.)
  77. 5111.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Title and Purposes [5110 - 5111] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A corporation may be formed under this part for public or charitable purposes, subject to other applicable state laws.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Title and Purposes [5110 - 5111] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5111. Subject to any other provisions 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 public or charitable purposes. (Amended by Stats. 1979, Ch. 724.)
  78. 5120.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A corporation may be formed by filing articles of incorporation, and certain filings and signatures are required depending on whether initial directors are named.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5120. (a) One or more persons may form a corporation under this part by executing and filing articles of incorporation. (b) If initial directors are named in the articles, each director named in the articles shall sign and acknowledge the articles; if initial directors are not named in the articles, the articles shall be signed by one or more persons who thereupon are the incorporators of the corporation. (c) The corporate existence begins upon the filing of the articles and continues perpetually, unless otherwise expressly provided by law or in the articles. (d) At the time of filing pursuant to this section, the Secretary of State shall make available the filed articles of incorporation to the Attorney General. (e) If the corporation was created by the elected legislative body in order to exercise authority that may lawfully be delegated by the elected governing body to a private corporation or other entity, the Secretary of State shall forward a copy of the filed articles of incorporation to the Controller. (Amended by Stats. 2022, Ch. 617, Sec. 45. (SB 1202) Effective January 1, 2023.)
  79. 5121.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. )

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    An existing unincorporated association may convert to a corporation if properly authorized, and the filing must include a verified statement from two officers or board members. A corporation formed this way cannot use the same or a similar name as the association in certain cases.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5121. (a) In the case of an existing unincorporated association, the association may change its status to that of a corporation upon a proper authorization for such by the association in accordance with its rules and procedures. (b) In addition to the matters required to be set forth in the articles pursuant to Section 5130, the articles in the case of an incorporation authorized by subdivision (a) shall set forth that an existing unincorporated association, stating its name, is being incorporated by the filing of the articles. (c) The articles filed pursuant to this section shall be accompanied by a verified statement of any two officers or governing board members of the association stating that the incorporation of the association by means of the articles to which the verified statement is attached has been approved by the association in accordance with its rules and procedures. (d) Upon the change of status of an unincorporated association to a corporation pursuant to subdivision (a), the property of the association becomes the property of the corporation and the members of the association who had any voting rights of the type referred to in Section 5056 become members of the corporation. (e) The filing for record in the office of the county recorder of any county in this state in which any of the real property of the association is located of a copy of the articles of incorporation filed pursuant to this section, certified by the Secretary of State shall evidence record ownership in the corporation of all interests of the association in and to the real property located in that county. (f) All rights of creditors and all liens upon the property of the association shall be preserved unimpaired. Any action or proceeding pending by or against the unincorporated association may be prosecuted to judgment, which shall bind the corporation, or the corporation may be proceeded against or substituted in its place. (g) If a corporation is organized by a person who is or was an officer, director or member of an unincorporated association and such corporation is not organized pursuant to subdivision (a), the unincorporated association may continue to use its name and the corporation may not use a name which is the same as or similar to the name of the unincorporated association. (Amended by Stats. 1981, Ch. 587, Sec. 3.)
  80. 5122.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. )

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    The Secretary of State may not file certain nonprofit corporation articles with bank- or trust-related names unless approval is attached, and corporation names must not be misleading.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5122. (a) The Secretary of State shall not file articles setting forth a name in which “bank,” “trust,” “trustee,” or related words appear, unless the certificate of approval of the Commissioner of Financial Protection and Innovation is attached thereto. (b) The name of a corporation shall not be a name that the Secretary of State determines is likely to mislead the public and shall be distinguishable in the records of the Secretary of State from all of the following: (1) The name of any corporation. (2) The name of any foreign corporation authorized to transact intrastate business in this state. (3) Each name that is under reservation pursuant to this title. (4) The name of a foreign corporation that has registered its name pursuant to Section 2101. (5) An alternate name of a foreign corporation under subdivision (b) of Section 2106. (6) A name that will become the record name of a domestic or foreign corporation upon a corporate instrument when there is a delayed effective or file date. (c) The use by a corporation of a name in violation of this section may be enjoined notwithstanding the filing of its articles by the Secretary of State. (d) Any applicant may, upon payment of the fee prescribed therefor in the Government Code, obtain from the Secretary of State a certificate of reservation of any name not prohibited by subdivision (b), and upon the issuance of the certificate the name stated therein shall be reserved for a period of 60 days. The Secretary of State shall not, however, issue certificates reserving the same name for two or more consecutive 60-day periods to the same applicant or for the use or benefit of the same person; nor shall consecutive reservations be made by or for the use or benefit of the same person of names so similar as to fall within the prohibitions of subdivision (b). (Amended by Stats. 2022, Ch. 617, Sec. 46. (SB 1202) Effective January 1, 2023.)
  81. 5122.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. )

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    The Secretary of State may not reserve a corporate name or file articles using the name Golden State Energy unless the articles are for Golden State Energy and meet the stated legal conditions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Formation [5120 - 5122.5] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5122.5. The Secretary of State shall not reserve a corporate name or file articles using the name Golden State Energy unless those articles are for Golden State Energy, incorporated and operating pursuant to this part and Division 1.7 (commencing with Section 3400) of the Public Utilities Code. (Added by Stats. 2021, Ch. 115, Sec. 2. (AB 148) Effective July 22, 2021.)
  82. 5130.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. )

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    Articles of incorporation for a corporation formed under this part must include the required name, statement, service-of-process agent information, and address details.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5130. The articles of incorporation of a corporation formed under this part shall set forth: (a) The name of the corporation. (b) (1) Except as provided in paragraph (2), the following statement: “This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for (public or charitable [insert one or both]) purposes.” [If the purposes include “public” purposes, the articles shall, and in all other cases the articles may, include a further description of the corporation’s purposes.] (2) If the corporation is a public bank, as defined in Section 57600 of the Government Code, the articles shall set forth a statement of purpose that is prescribed in subdivision (b) of Section 57601 of the Government Code. (c) The name and street address in this state of the corporation’s initial agent for service of process in accordance with subdivision (b) of Section 6210. (d) The initial street address of the corporation. (e) The initial mailing address of the corporation, if different from the initial street address. (Amended by Stats. 2019, Ch. 442, Sec. 2. (AB 857) Effective January 1, 2020.)
  83. 5131.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. )

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    The articles of incorporation may include a statement limiting the corporation’s purposes or powers.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5131. The articles of incorporation may set forth a further statement limiting the purposes or powers of the corporation. (Added by Stats. 1978, Ch. 567.)
  84. 5132.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. )

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    Articles of incorporation may include certain listed provisions, but those provisions are effective only if the articles expressly provide for them.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5132. (a) The articles of incorporation may set forth any or all of the following provisions, which shall not be effective unless expressly provided in the articles: (1) A provision limiting the duration of the corporation’s existence to a specified date. (2) In the case of a subordinate corporation instituted or created under the authority of a head organization, a provision setting forth either or both of the following: (A) That the subordinate corporation shall dissolve whenever its charter is surrendered to, taken away by, or revoked by the head organization granting it. (B) That in the event of its dissolution pursuant to an article provision allowed by subparagraph (A) or in the event of its dissolution for any reason, any assets of the corporation after compliance with the applicable provisions of Chapters 15 (commencing with Section 6510), 16 (commencing with Section 6610) and 17 (commencing with Section 6710) shall be distributed to the head organization. (b) Nothing contained in subdivision (a) shall affect the enforceability, as between the parties thereto, of any lawful agreement not otherwise contrary to public policy. (c) The articles of incorporation may set forth any or all of the following provisions: (1) The names and addresses of the persons appointed to act as initial directors. (2) The classes of members, if any, and if there are two or more classes, the rights, privileges, preferences, restrictions and conditions attaching to each class. (3) A provision that would allow any member to have more or less than one vote in any election or other matter presented to the members for a vote. (4) A provision that requires an amendment to the articles, as provided in subdivision (a) of Section 5812, or to the bylaws, and any amendment or repeal of that amendment, to be approved in writing by a specified person or persons other than the board or the members. However, this approval requirement, unless the articles specify otherwise, shall not apply if any of the following circumstances exist: (A) The specified person or persons have died or ceased to exist. (B) 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. (C) 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. (5) Any other provision, not in conflict with law, for the management of the activities and for the conduct of the affairs of the corporation, including any provision that is required or permitted by this part to be stated in the bylaws. (Amended by Stats. 2009, Ch. 631, Sec. 6. (AB 1233) Effective January 1, 2010.)
  85. 5133.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. )

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    A Secretary of State–certified copy of a corporation’s articles is conclusive evidence that the corporation was formed, except in an action in the nature of quo warranto, and is prima facie evidence that it exists as a corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5133. For all purposes other than an action in the nature of quo warranto, a copy of the articles of a corporation duly certified by the Secretary of State is conclusive evidence of the formation of the corporation and prima facie evidence of its corporate existence. (Added by Stats. 1978, Ch. 567.)
  86. 5134.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. )

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    If initial directors are not named in the articles, the incorporator(s) may take necessary steps to complete the corporation’s organization until directors are elected.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Articles of Incorporation [5130 - 5134] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5134. If initial directors have not been named in the articles, the incorporator or incorporators, until the directors are elected, may do whatever is necessary and proper to perfect the organization of the corporation, including the adoption and amendment of bylaws of the corporation and the election of directors and officers. (Added by Stats. 1978, Ch. 567.)
  87. 5140.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Powers [5140 - 5142] ( Article 4 added by Stats. 1978, Ch. 567. )

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    A corporation may use the powers of a natural person, subject to its articles, bylaws, and applicable law; in an emergency, the board may take needed actions to run the business and respond to the emergency.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Powers [5140 - 5142] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5140. Subject to any limitations contained in the articles or bylaws and to compliance with other provisions of this division and any other applicable laws, a corporation, in carrying out its activities, shall have all of the powers of a natural person, including, without limitation, the power to: (a) Adopt, use, and at will alter a corporate seal, but failure to affix a seal does not affect the validity of any instrument. (b) Adopt, amend, and repeal bylaws. (c) Qualify to conduct its activities in any other state, territory, dependency, or foreign country. (d) Issue, purchase, redeem, receive, take or otherwise acquire, own, sell, lend, exchange, transfer or otherwise dispose of, pledge, use, and otherwise deal in and with its own bonds, debentures, notes, and debt securities. (e) Issue memberships. (f) Pay pensions, and establish and carry out pension, deferred compensation, saving, thrift, and other retirement, incentive, and benefit plans, trusts, and provisions for any or all of its directors, officers, employees, and persons providing services to it or any of its subsidiary or related or associated corporations, and to indemnify and purchase and maintain insurance on behalf of any fiduciary of such plans, trusts, or provisions. (g) Levy dues, assessments, and admission fees. (h) Make donations for the public welfare or for community funds, hospital, charitable, educational, scientific, civic, religious, or similar purposes. (i) Assume obligations, enter into contracts, including contracts of guaranty or suretyship, incur liabilities, borrow or lend money or otherwise use its credit, and secure any of its obligations, contracts, or liabilities by mortgage, pledge, or other encumbrance of all or any part of its property and income. (j) Participate with others in any partnership, joint venture, or other association, transaction, or arrangement of any kind whether or not such participation involves sharing or delegation of control with or to others. (k) Act as trustee under any trust incidental to the principal objects of the corporation, and receive, hold, administer, exchange, and expend funds and property subject to such trust. (l) Carry on a business at a profit and apply any profit that results from the business activity to any activity in which it may lawfully engage. (m) Pay the reasonable value of services rendered in this state to the corporation before January 1, 1975, and not previously paid, by any person who performed such services on a full-time basis under the direction of a religious organization in connection with the religious tenets of the organization. Such person shall have relied solely on the religious organization for their financial support for a minimum of five years. A payment shall not be made if such person or religious organization waives the payment or receipt of compensation for such services in writing. Payment may be made to such religious organization to reimburse it for maintenance of any person who rendered such services and to assist it in providing future support and maintenance; however, payment shall not be made from any funds or assets acquired with funds donated by or traceable to gifts made to the corporation by any person, organization, or governmental agency other than the members, immediate families of members, and affiliated religious organizations of the religious organization under whose direction the services were performed. (n) (1) In anticipation of or during an emergency, take either or both of the following actions necessary to conduct the corporation’s business operations and affairs, unless emergency bylaws provide otherwise pursuant to subdivision (g) of Section 5151: (A) Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent resulting from the emergency. (B) Relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so. (2) During an emergency, take either or both of the following actions necessary to conduct the corporation’s business operations and affairs, unless emergency bylaws provide otherwise pursuant to subdivision (g) of Section 5151: (A) Give notice to a director or directors in any practicable manner under the circumstances, including, but not limited to, by publication and radio, when notice of a meeting of the board cannot be given to that director or directors in the manner prescribed by the bylaws or Section 5211. (B) Deem that one or more officers of the corporation present at a board meeting is a director, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum for that meeting. (3) In anticipation of or during an emergency, the board may 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 shall not take any action that requires the vote of the members, unless the required vote of the members was obtained prior to the emergency. (4) Any actions taken in good faith in anticipation of or during an emergency under this subdivision bind the corporation and shall not be used to impose liability on a corporate director, officer, employee, or agent. (5) For purposes of this subdivision, “emergency” means any of the following 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: (A) A natural catastrophe, including, but not limited to, a hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, drought, epidemic, pandemic, or disease outbreak, or, regardless of cause, any fire, flood, or explosion. (B) 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 of America, or upon receipt by this state of a warning from the federal government indicating that any such enemy attack is probable or imminent. (C) An act of terrorism or other manmade disaster that results in extraordinary levels of casualties or damage or disruption severely affecting the infrastructure, environment, economy, government functions, or population, including, but not limited to, mass evacuations. (D) A state of emergency proclaimed by the Governor of this state, including any person serving as Governor in accordance with Section 10 of Article V of the California Constitution and Section 12058 of the Government Code, or by the President of the United States of America. (Amended by Stats. 2021, Ch. 523, Sec. 5. (AB 663) Effective January 1, 2022.)
  88. 5141.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Powers [5140 - 5142] ( Article 4 added by Stats. 1978, Ch. 567. )

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    This section says limits in the articles or related chapters generally cannot be used against the corporation, its members, officers, or directors in disputes with third parties, except in specific court proceedings. It also says certain authorized or properly made contracts and conveyances bind the corporation, and the corporation gets rights under them.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Powers [5140 - 5142] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5141. Subject to Section 5142: (a) No limitation upon the activities, purposes, or powers of the corporation or upon the powers of the members, officers, or directors, or the manner of exercise of such powers, contained in or implied by the articles or by Chapters 15 (commencing with Section 6510), 16 (commencing with Section 6610), and 17 (commencing with Section 6710) shall be asserted as between the corporation or member, officer or director and any third person, except in a proceeding: (1) by a member or the state to enjoin the doing or continuation of unauthorized activities by the corporation or its officers, or both, in cases where third parties have not acquired rights thereby, (2) to dissolve the corporation, or (3) by the corporation or by a member suing in a representative suit against the officers or directors of the corporation for violation of their authority. (b) Any contract or conveyance made in the name of a corporation which is authorized or ratified by the board or is done within the scope of authority, actual or apparent, conferred by the board or within the agency power of the officer executing it, except as the board’s authority is limited by law other than this part, binds the corporation, and the corporation acquires rights thereunder whether the contract is executed or wholly or in part executory. (Amended by Stats. 1979, Ch. 724.)
  89. 5142.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Powers [5140 - 5142] ( Article 4 added by Stats. 1978, Ch. 567. )

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    This section lets certain people sue to stop, correct, or get damages for a breach of a charitable trust, and requires notice to the Attorney General, who may intervene.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Powers [5140 - 5142] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5142. (a) Notwithstanding Section 5141, any of the following may bring an action to enjoin, correct, obtain damages for or to otherwise remedy a breach of a charitable trust: (1) The corporation, or a member in the name of the corporation pursuant to Section 5710. (2) An officer of the corporation. (3) A director of the corporation. (4) A person with a reversionary, contractual, or property interest in the assets subject to such charitable trust. (5) The Attorney General, or any person granted relator status by the Attorney General. The Attorney General shall be given notice of any action brought by the persons specified in paragraphs (1) through (4), and may intervene. (b) In an action under this section, the court may not rescind or enjoin the performance of a contract unless: (1) All of the parties to the contract are parties to the action; (2) No party to the contract has, in good faith, and without actual notice of the trust restriction, parted with value under the contract or in reliance upon it; and (3) It is equitable to do so. (Amended by Stats. 1979, Ch. 724.)
  90. 5150.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. )

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    The board may adopt, amend, or repeal bylaws unless the change would materially and adversely affect members’ voting or transfer rights; members may also do so by approval.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5150. (a) Except as provided in subdivision (c), and Sections 5151, 5220, 5224, 5512, 5613, and 5616, bylaws may be adopted, amended or repealed by the board unless the action would materially and adversely affect the rights of members as to voting or transfer. (b) Bylaws may be adopted, amended or repealed by approval of members (Section 5034); provided, however, that such adoption, amendment or repeal also requires approval by the members of a class if that action would materially and adversely affect the rights of that class as to voting or transfer in a manner different than that action affects another class. (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 5151. (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 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. (Amended by Stats. 2009, Ch. 631, Sec. 7. (AB 1233) Effective January 1, 2010.)
  91. 5151.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. )

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    This section says nonprofit corporation bylaws must set out how many directors there are, and may include a range, member-approval rules, governance provisions, member admission and discipline rules, limits on member admissions, and emergency rules.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5151. (a) The bylaws shall set forth (unless that provision is contained in the articles, in which case it may only be changed by an amendment of the articles) the number of directors of the corporation, or the method of determining the number of directors of the corporation, or that the number of directors shall be not less than a stated minimum nor more than a stated maximum with the exact number of directors to be fixed, within the limits specified, by approval of the board or the members (Section 5034), in the manner provided in the bylaws, subject to subdivision (e). The number or minimum number of directors may be one or more. (b) Once members have been admitted, a bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa may only be adopted by approval of the members (Section 5034). (c) The bylaws may contain any provision, not in conflict with law or the articles, for the management of the activities and for the conduct of the affairs of the corporation, including, but not limited to: (1) Any provision referred to in subdivision (c) of Section 5132. (2) The time, place, and manner of calling, conducting, and giving notice of members’, directors’, and committee meetings, or of conducting mail ballots. (3) The qualifications, duties, and compensation of directors; the time of their election; and the requirements of a quorum for directors’ and committee meetings. (4) The appointment and authority of committees. (5) The appointment, duties, compensation, and tenure of officers. (6) The mode of determination of members of record. (7) The making of reports and financial statements to members. (8) Setting, imposing, and collecting dues, assessments, and admission fees. (d) The bylaws may provide for the manner of admission, withdrawal, suspension, and expulsion of members, consistent with the requirements of Section 5341. (e) The bylaws may require, for any or all corporate actions (except as provided in paragraphs (1) and (2) of subdivision (a) of Section 5222, subdivision (c) of Section 5616, and Section 6610), the vote of a larger proportion of, or all of, the members or the members of any class, unit, or grouping of members, or the vote of a larger proportion of, or all of, the directors, than is otherwise required by this part. Such a provision in the bylaws requiring such greater vote shall not be altered, amended, or repealed except by such greater vote, unless otherwise provided in the bylaws. (f) The bylaws may contain a provision limiting the number of members, in total or of any class, which the corporation is authorized to admit. (g) (1) The bylaws may contain any provision, not in conflict with the articles, to manage and conduct the business affairs of the corporation effective only in an emergency as defined in Section 5140, including, but not limited to, procedures for calling a board meeting, quorum requirements for a board meeting, and designation of additional or substitute directors. (2) During an emergency, the board may 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 shall not take any action that requires the vote of the members, unless the required vote of the members was obtained prior to the emergency. (3) All provisions of the regular bylaws consistent with the emergency bylaws shall remain effective during the emergency, and the emergency bylaws shall not be effective after the emergency ends. (4) Corporate action taken in good faith in accordance with the emergency bylaws binds the corporation, and shall not be used to impose liability on a corporate director, officer, employee, or agent. (Amended by Stats. 2021, Ch. 523, Sec. 6. (AB 663) Effective January 1, 2022.)
  92. 5152.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. )

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    A corporation may authorize delegates in its bylaws; each delegate gets one vote on each matter, may not vote by proxy, and may be given a different name.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5152. A corporation may provide in its bylaws for delegates having some or all of the authority of members. Where delegates are provided for, the bylaws shall set forth delegates’ terms of office, any reasonable method for delegates’ selection and removal, and any reasonable method for calling, noticing, and holding meetings of delegates, may set forth the manner in which delegates may act by written ballot similar to Section 5513 for written ballot of members, and may set forth the manner in which delegates may participate in meetings of delegates similar to paragraph (6) of subdivision (a) of Section 5211 for meetings of directors. Each delegate shall have one vote on each matter presented for action. A delegate shall not vote by proxy. Delegates may be given a name other than “delegates.” (Amended by Stats. 2021, Ch. 523, Sec. 7. (AB 663) Effective January 1, 2022.)
  93. 5153.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. )

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    A corporation may authorize voting in its bylaws by members or delegates based on chapters, organizational units, regions, or other geographic groupings.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Bylaws [5150 - 5153] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5153. A corporation may provide in its bylaws for voting by its members or delegates on the basis of chapter or other organizational unit, or by region or other geographic grouping. (Added by Stats. 1979, Ch. 724.)
  94. 5160.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 6. Location and Inspection of Articles and Bylaws [5160- 5160.] ( Article 6 added by Stats. 1978, Ch. 567. )

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    Every corporation must keep its articles and bylaws at its principal office in California and make them available for member inspection during office hours.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 1. Organization and Bylaws [5110 - 5160] ( Chapter 1 added by Stats. 1978, Ch. 567. ) ## ARTICLE 6. Location and Inspection of Articles and Bylaws [5160- 5160.] ( Article 6 added by Stats. 1978, Ch. 567. ) ## 5160. Every corporation shall keep at its principal office in this state the original or a copy of its articles and bylaws as amended to date, which shall be open to inspection by the members at all reasonable times during office hours. If the corporation has no office in this state, it shall upon the written request of any member furnish to such member a copy of the articles or bylaws as amended to date. (Added by Stats. 1978, Ch. 567.)
  95. 5210.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. )

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    Each corporation must have a board of directors.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5210. Each corporation shall have a board of directors. Subject to the provisions of this part and any limitations in the articles or bylaws relating to action required to be approved by the members (Section 5034), or by a majority of all members (Section 5033), the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board. The board may delegate the management of the activities of the corporation to any person or persons, management company, or committee however composed, provided that the activities and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board. (Amended by Stats. 1996, Ch. 589, Sec. 4. Effective January 1, 1997.)
  96. 5211.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. )

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    This section sets rules for nonprofit public benefit corporation board meetings, including who may call meetings, when notice is required, quorum rules, written consents, and how directors may vote.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5211. (a) Unless otherwise provided in the articles or in the bylaws, all of the following apply: (1) Meetings of the board may be called by the chair of the board or the president or any vice president or the secretary or any two directors. (2) Regular meetings of the board may be held without notice if the time and place of the meetings are fixed by the bylaws or the board. Special meetings of the board shall be held upon four days’ notice by first-class mail or 48 hours’ notice delivered personally or by telephone, including a voice messaging system or by electronic transmission by the corporation (Section 20). The articles or bylaws may not dispense with notice of a special meeting. A notice, or waiver of notice, need not specify the purpose of any regular or special meeting of the board. (3) Notice of a meeting need not be given to a director who provides a waiver of notice or consent to holding the meeting or an approval of the minutes thereof in writing, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to that director. These waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meetings. (4) A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of an adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment. (5) Meetings of the board may be held at a place within or without the state that has been designated in the notice of the meeting or, if not stated in the notice or there is no notice, designated in the bylaws or by resolution of the board. (6) Directors may participate in a meeting through use of conference telephone, electronic video screen communication, or electronic transmission by and to the corporation (Sections 20 and 21). Participation in a meeting through use of conference telephone or electronic video screen communication pursuant to this subdivision constitutes presence in person at that meeting as long as all directors participating in the meeting are able to hear one another. Participation in a meeting through use of electronic transmission by and to the corporation, other than conference telephone and electronic video screen communication, pursuant to this subdivision constitutes presence in person at that meeting if both of the following apply: (A) Each director participating in the meeting can communicate with all of the other directors concurrently. (B) Each director is provided the means of participating in all matters before the board, including, without limitation, the capacity to propose, or to interpose an objection to, a specific action to be taken by the corporation. (7) A majority of the number of directors authorized in or pursuant to the articles or bylaws constitutes a quorum of the board for the transaction of business. The articles or bylaws may require the presence of one or more specified directors in order to constitute a quorum of the board to transact business, as long as the death or nonexistence of a specified director or the death or nonexistence of the person or persons otherwise authorized to appoint or designate that director does not prevent the corporation from transacting business in the normal course of events. The articles or bylaws may not provide that a quorum shall be less than one-fifth the number of directors authorized in or pursuant to the articles or bylaws, or less than two, whichever is larger, unless the number of directors authorized in or pursuant to the articles or bylaws is one, in which case one director constitutes a quorum. (8) Subject to the provisions of Sections 5212, 5233, 5234, 5235, and subdivision (e) of Section 5238, an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board. The articles or bylaws may not provide that a lesser vote than a majority of the directors present at a meeting is the act of the board. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting, or a greater number required by this division, the articles, or the bylaws. (b) An action required or permitted to be taken by the board may be taken without a meeting if all directors individually or collectively consent in writing to that action and if, subject to subdivision (a) of Section 5224, the number of directors then in office constitutes a quorum. The written consent or consents shall be filed with the minutes of the proceedings of the board. The action by written consent shall have the same force and effect as a unanimous vote of the directors. For purposes of this subdivision only, “all directors” does not include an “interested director” as defined in subdivision (a) of Section 5233 or a “common director” as described in Section 5234 who abstains in writing from providing consent, if (1) the facts described in paragraph (2) or (3) of subdivision (d) of Section 5233 are established or the provisions of paragraph (1) or (2) of subdivision (a) of Section 5234 are satisfied, as appropriate, at or prior to execution of the written consent or consents; (2) the establishment of those facts or satisfaction of those provisions, as applicable, is included in the written consent or consents executed by the noninterested or noncommon directors or in other records of the corporation; and (3) the noninterested or noncommon directors, as applicable, approve the action by a vote that is sufficient without counting the votes of the interested directors or common directors. (c) Each director shall have one vote on each matter presented to the board of directors for action. A director shall not vote by proxy. (d) The provisions of this section apply also to incorporators, to committees of the board, and to action by those incorporators or committees mutatis mutandis. (Amended by Stats. 2019, Ch. 497, Sec. 32. (AB 991) Effective January 1, 2020.)
  97. 5212.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. )

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    The board may create committees and give them board powers, but certain matters stay reserved to the board or members. An audit committee must be appointed if another law requires it.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5212. (a) The board may, by resolution adopted by a majority of the number of directors then in office, provided that a quorum is present, create one or more committees, each consisting of two or more directors, to serve at the pleasure of the board. Appointments to such committees shall be by a majority vote of the directors then in office, unless the articles or bylaws require a majority vote of the number of directors authorized in or pursuant to the articles or bylaws. The bylaws may authorize one or more such committees, each consisting of two or more directors, and may provide that a specified officer or officers who are also directors of the corporation shall be a member or members of such committee or committees. The board may appoint one or more directors as alternate members of such committee, who may replace any absent member at any meeting of the committee. Such committee, to the extent provided in the resolution of the board or in the bylaws, shall have all the authority of the board, except with respect to: (1) The approval of any action for which this part also requires approval of the members (Section 5034) or approval of a majority of all members (Section 5033), regardless of whether the corporation has members. (2) The filling of vacancies on the board or in any committee which has the authority of the board. (3) The fixing of compensation of the directors for serving on the board or on any committee. (4) The amendment or repeal of bylaws or the adoption of new bylaws. (5) The amendment or repeal of any resolution of the board which by its express terms is not so amendable or repealable. (6) The appointment of committees of the board or the members thereof. (7) The expenditure of corporate funds to support a nominee for director after there are more people nominated for director than can be elected. (8) The approval of any self-dealing transaction except as provided in paragraph (3) of subdivision (d) of Section 5233. (b) A committee exercising the authority of the board shall not include as members persons who are not directors. However, the board may create other committees that do not exercise the authority of the board and these other committees may include persons regardless of whether they are directors. (c) Unless the bylaws otherwise provide, the board may delegate to any committee powers as authorized by Section 5210, but may not delegate the powers set forth in paragraphs (1) to (8), inclusive, of subdivision (a). (d) If required by subdivision (e) of Section 12586 of the Government Code, the board shall appoint an audit committee in accordance with that subdivision and for the purposes set forth therein. (Amended by Stats. 2011, Ch. 442, Sec. 3. (AB 1211) Effective January 1, 2012.)
  98. 5213.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A nonprofit corporation must have specified officers, its officers are generally chosen by the board, and an officer may resign by written notice.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5213. (a) A corporation shall have (1) a chair of the board, who may be given the title chair, chairperson, chair of the board, or chairperson of the board, or a president or both, (2) a secretary, (3) a treasurer or a chief financial officer or both, and (4) any other officers with any titles and duties as shall be stated in the bylaws or determined by the board and as may be necessary to enable it to sign instruments. The president, or if there is no president the chair of the board, is the general manager and chief executive officer of the corporation, unless otherwise provided in the articles or bylaws. Unless otherwise specified in the articles or the bylaws, if there is no chief financial officer, the treasurer is the chief financial officer of the corporation. Any number of offices may be held by the same person unless the articles or bylaws provide otherwise, except that no person serving as the secretary, the treasurer, or the chief financial officer may serve concurrently as the president or chair of the board. Any compensation of the president or chief executive officer and the chief financial officer or treasurer shall be determined in accordance with subdivision (g) of Section 12586 of the Government Code, if applicable. (b) Except as otherwise provided by the articles or bylaws, officers shall be chosen by the board and serve at the pleasure of the board, subject to the rights, if any, of an officer under any contract of employment. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. (c) If the articles or bylaws provide for the election of any officers by the members, the term of office of the elected officer shall be one year unless the articles or bylaws provide for a different term which shall not exceed three years. (Amended by Stats. 2022, Ch. 617, Sec. 47. (SB 1202) Effective January 1, 2023.)
  99. 5214.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A written corporate instrument is not invalid just because the signing officers lacked authority, if it is signed by the specified officers and the other party did not actually know they lacked authority.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5214. Subject to the provisions of subdivision (a) of Section 5141 and Section 5142, any note, mortgage, evidence of indebtedness, contract, conveyance or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any corporation and any other person, when signed by any one of the chairperson of the board, the president or any vice president and by any one of the secretary, any assistant secretary, the chief financial officer or any assistant treasurer of such corporation, is not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same. (Amended by Stats. 2022, Ch. 617, Sec. 48. (SB 1202) Effective January 1, 2023.)
  100. 5215.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A certified written copy of certain corporate records can serve as prima facie evidence of their adoption or of the facts stated in them.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5210 - 5215] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5215. The original or a copy in writing or in any other form capable of being converted into clearly legible tangible form of the bylaws or of the minutes of any incorporators’, members’, directors’, committee or other meeting or of any resolution adopted by the board or a committee thereof, or members, certified to be a true copy by a person purporting to be the secretary or an assistant secretary of the corporation, is prima facie evidence of the adoption of such bylaws or resolution or of the due holding of such meeting and of the matters stated therein. (Amended by Stats. 2004, Ch. 254, Sec. 15. Effective January 1, 2005.)
  101. 5220.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    This section sets rules for nonprofit corporation directors’ terms, election, staggered terms, designated directors, and ex officio directors.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5220. (a) Except as provided in subdivision (d), (e), or (f), directors shall be elected for terms of not longer than four years, as fixed in the articles or bylaws. However, the terms of directors of a corporation without members may be up to six years. In the absence of any provision in the articles or bylaws, the term shall be one year. The articles or bylaws may provide for staggering the terms of directors by dividing the total number of directors into groups of one or more directors. The terms of office of the several groups and the number of directors in each group need not be uniform. An amendment of the articles or bylaws may not extend the term of a director beyond that for which the director was elected, and any bylaw provision increasing the terms of directors may not be adopted without approval of the members (Section 5034). (b) Unless otherwise provided in the articles or bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office. (c) The articles or bylaws may provide for the election of one or more directors by the members of any class voting as a class. (d) For the purposes of this subdivision, “designator” means one or more designators. Notwithstanding subdivisions (a) to (c), inclusive, all or any portion of the directors authorized in the articles or bylaws of a corporation may hold office by virtue of designation or selection by a specified designator as provided by the articles or bylaws rather than by election. Those directors shall continue in office for the term prescribed by the governing article or bylaw provision, or, if there is no term prescribed, until the governing article or bylaw provision is duly amended or repealed, except as provided in subdivision (e) of Section 5222. A bylaw provision authorized by this subdivision may be adopted, amended, or repealed only by approval of the members (Section 5034) except as provided in subdivision (d) of Section 5150. Unless otherwise provided in the articles or bylaws, the entitlement to designate or select a director or directors shall cease if any of the following circumstances exist: (1) The specified designator of that director or directors has died or ceased to exist. (2) If the entitlement of the specified designator of that director or directors to designate is in the capacity of an officer, trustee, or other status and the office, trust, or status has ceased to exist. (e) If a corporation has not issued memberships and (1) all the directors resign, die, or become incompetent, or (2) a corporation’s initial directors have not been named in the articles and all incorporators resign, die, or become incompetent before the election of the initial directors, the superior court of any county may appoint directors of the corporation upon application by any party in interest. (f) If authorized in the articles or bylaws of a corporation, all or any portion of the directors may hold office ex officio by virtue of occupying a specified position within the corporation or outside the corporation. The term of office of an ex officio director shall coincide with that director’s respective term of office in the specified position entitling him or her to serve on the board of directors. Upon an ex officio director’s resignation or removal from that position, or resignation or removal from the board for any reason, the term of office as a director of the corporation shall immediately cease. At that time, the successor in office shall become an ex officio director of the corporation, occupying the place of the former director. (Amended by Stats. 2018, Ch. 322, Sec. 2. (AB 2557) Effective January 1, 2019.)
  102. 5221.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    The board may declare a director’s seat vacant if specified disqualifying events occur, including unsound mind, felony conviction, court findings of breach of duty, missing required board meetings when bylaws allow removal for that reason, or failing to keep required qualifications.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5221. (a) The board may declare vacant the office of a director who has been declared of unsound mind by a final order of court, or convicted of a felony, or been found by a final order or judgment of any court to have breached any duty under Article 3 (commencing with Section 5230), or, if at the time a director is elected, the bylaws provide that a director may be removed for missing a specified number of board meetings, fails to attend the specified number of meetings. (b) As provided in paragraph (3) of subdivision (c) of Section 5151, the articles or bylaws may prescribe the qualifications of directors. The board, by a majority vote of the directors who meet all of the required qualifications to be a director, may declare vacant the office of any director who fails or ceases to meet any required qualification that was in effect at the beginning of that director’s current term of office. (Amended by Stats. 1996, Ch. 589, Sec. 7. Effective January 1, 1997.)
  103. 5222.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    Section 5222 sets when nonprofit corporation directors may be removed, including removal without cause, required approvals, special class-vote limits, and rules for directors chosen by a designator.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5222. (a) Subject to subdivisions (b) and (f), any or all directors may be removed without cause if: (1) In a corporation with fewer than 50 members, the removal is approved by a majority of all members (Section 5033). (2) In a corporation with 50 or more members, the removal is approved by the members (Section 5034). (3) In a corporation with no members, the removal is approved by a majority of the directors then in office. (b) Except for a corporation having no members pursuant to Section 5310: (1) In a corporation in which the articles or bylaws authorize members to cumulate their votes pursuant to subdivision (a) of Section 5616, no director may be removed (unless the entire board is removed) if the votes cast against removal, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively at an election at which the same total number of votes were cast (or, if the action is taken by written ballot, all memberships entitled to vote were voted) and the entire number of directors authorized at the time of the director’s most recent election were then being elected. (2) If by the provisions of the articles or bylaws the members of any class, voting as a class, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the members of that class. (3) If by the provisions of the articles or bylaws the members within a chapter or other organizational unit, or region or other geographic grouping, voting as such, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the members within the organizational unit or geographic grouping. (c) Any reduction of the authorized number of directors or any amendment reducing the number of classes of directors does not remove any director prior to the expiration of the director’s term of office unless the reduction or any amendment also provides for the removal of one or more specified directors. (d) Except as provided in this section and Sections 5221, 5223, and 5227, a director may not be removed prior to the expiration of the director’s term of office. (e) If a director removed under this section, Section 5221, Section 5223, or Section 5227 was chosen by designation pursuant to subdivision (d) of Section 5220, then: (1) If a different person may be designated pursuant to a governing article or bylaw provision, the new designation shall be made. (2) If the governing article or bylaw provision contains no provision under which a different person may be designated, the governing article or bylaw provision shall be deemed repealed. (f) For the purposes of this subdivision, “designator” means one or more designators. If by the provisions of the articles or bylaws a designator is entitled to designate one or more directors, then: (1) Unless otherwise provided in the articles or bylaws at the time of designation, any director so designated may be removed without cause by the designator of that director. (2) Any director so designated may only be removed under subdivision (a) with the written consent of the designator of that director. (3) Unless otherwise provided in the articles or bylaws, the right to remove shall not apply if any of the following circumstances exist: (A) The designator entitled to that right has died or ceased to exist. (B) If that right is in the capacity of an officer, trustee, or other status, and the office, trust, or status has ceased to exist. (Amended by Stats. 2011, Ch. 442, Sec. 5. (AB 1211) Effective January 1, 2012.)
  104. 5223.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A superior court may remove a director for fraud, dishonesty, gross abuse of authority or discretion, or breach of specified duties, and may also bar that director from reelection for a court-set period.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5223. (a) The superior court of the proper county may, at the suit of a director, or twice the authorized number (Section 5036) of members or 20 members, whichever is less, remove from office any director in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation or breach of any duty arising under Article 3 (commencing with Section 5230) of this chapter, and may bar from reelection any director so removed for a period prescribed by the court. The corporation shall be made a party to such action. (b) The Attorney General may bring an action under subdivision (a), may intervene in such an action brought by any other party and shall be given notice of any such action brought by any other party. (Amended by Stats. 1981, Ch. 587, Sec. 6.)
  105. 5224.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    This section says who may fill board vacancies and how a director may resign.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5224. (a) Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of the board (Section 5032) or, if the number of directors then in office is less than a quorum, by (1) the unanimous written consent of the directors then in office, (2) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice complying with Section 5211, or (3) a sole remaining director. Unless the articles or a bylaw approved by the members (Section 5034) provide that the board may fill vacancies occurring in the board by reason of the removal of directors, or unless the corporation has no members pursuant to Section 5310, such vacancies may be filled only by approval of the members (Section 5034). (b) The members may elect a director at any time to fill any vacancy not filled by the directors. (c) Any director may resign effective upon giving written notice to the chairperson of the board, the president, the secretary or the board of directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. (Amended by Stats. 2022, Ch. 617, Sec. 49. (SB 1202) Effective January 1, 2023.)
  106. 5225.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A court may appoint a provisional director when nonprofit corporate governance is deadlocked, and the provisional director must be impartial and qualified.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5225. (a) If a corporation has an even number of directors who are equally divided and cannot agree as to the management of its affairs, so that its activities can no longer be conducted to advantage or so that there is danger that its property, activities, or business will be impaired or lost, the superior court of the proper county may, notwithstanding any provisions of the articles or bylaws and whether or not an action is pending for an involuntary winding up or dissolution of the corporation, appoint a provisional director pursuant to this section. Action for such appointment may be brought by any director or by members holding not less than 331/3 percent of the voting power. (b) If the members of a corporation are deadlocked so that they cannot elect the directors to be elected at the time prescribed therefor, the superior court of the proper county may, notwithstanding any provisions of the articles or bylaws, upon petition of members holding 50 percent of the voting power, appoint a provisional director or directors pursuant to this section or order such other equitable relief as the court deems appropriate. (c) Any person bringing an action under subdivision (a) or (b) shall give notice to the Attorney General, who may intervene. (d) The Attorney General may bring an action under subdivision (a) or (b). (e) A provisional director shall be an impartial person, who is neither a member nor a creditor of the corporation, nor related by consanguinity or affinity within the third degree according to the common law to any of the other directors of the corporation or to any judge of the court by which such provisional director is appointed. A provisional director shall have all the rights and powers of a director until the deadlock in the board or among members is broken or until such provisional director is removed by order of the court or by approval of a majority of all members (Section 5033). Such person shall be entitled to such compensation as shall be fixed by the court unless otherwise agreed with the corporation. (Amended by Stats. 1995, Ch. 154, Sec. 12. Effective January 1, 1996.)
  107. 5226.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A director may not resign if that would leave the corporation without a duly elected director in charge, unless notice is given to the Attorney General.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5226. Except upon notice to the Attorney General, no director may resign where the corporation would then be left without a duly elected director or directors in charge of its affairs. (Added by Stats. 1978, Ch. 567.)
  108. 5227.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A corporation’s board may have no more than 49% interested persons, and a person with standing under Section 5142 may sue to correct a violation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Selection, Removal and Resignation of Directors [5220 - 5227] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5227. (a) Any other provision of this part notwithstanding, not more than 49 percent of the persons serving on the board of any corporation may be interested persons. (b) For the purpose of this section, “interested persons” means either: (1) Any person currently being compensated by the corporation for services rendered to it within the previous 12 months, whether as a full- or part-time employee, independent contractor, or otherwise, excluding any reasonable compensation paid to a director as director; or (2) Any brother, sister, ancestor, descendant, spouse, brother-in-law, sister-in-law, son-in-law, daughter-in-law, mother-in-law, or father-in-law of any such person. (c) A person with standing under Section 5142 may bring an action to correct any violation of this section. The court may enter any order which shall provide an equitable and fair remedy to the corporation, including, but not limited to, an order for the election of additional directors, an order to enlarge the size of the board, or an order for the removal of directors. (d) The provisions of this section shall not affect the validity or enforceability of any transaction entered into by a corporation. (Amended by Stats. 1996, Ch. 589, Sec. 8. Effective January 1, 1997.)
  109. 5230.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    The article’s duties and liabilities apply to directors whether or not they are compensated, and a specified Probate Code part does not apply to directors of any corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5230. (a) Any duties and liabilities set forth in this article shall apply without regard to whether a director is compensated by the corporation. (b) Part 4 (commencing with Section 16000) of Division 9 of the Probate Code does not apply to the directors of any corporation. (Amended by Stats. 1987, Ch. 923, Sec. 1.2. Operative January 1, 1988, by Sec. 103 of Ch. 923.)
  110. 5231.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    Directors must act in good faith, in the corporation’s best interests, and with the care of an ordinarily prudent person.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5231. (a) A director shall perform the duties of a director, including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner that director believes to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. (b) In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by: (1) One or more officers or employees of the corporation whom the director believes to be reliable and competent in the matters presented; (2) Counsel, independent accountants or other persons as to matters which the director believes to be within that person’s professional or expert competence; or (3) A committee upon which the director does not serve that is composed exclusively of any or any combination of directors, persons described in paragraph (1), or persons described in paragraph (2), as to matters within the committee’s designated authority, which committee the director believes to merit confidence, so long as, in any case, the director acts in good faith, after reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause that reliance to be unwarranted. (c) Except as provided in Section 5233, a person who performs the duties of a director in accordance with subdivisions (a) and (b) shall have no liability based upon any alleged failure to discharge the person’s obligations as a director, including, without limiting the generality of the foregoing, any actions or omissions which exceed or defeat a public or charitable purpose to which a corporation, or assets held by it, are dedicated. (Amended by Stats. 2009, Ch. 631, Sec. 14. (AB 1233) Effective January 1, 2010.)
  111. 5232.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    Section 5232 says Section 5231 governs directors’ duties for acts or omissions connected to electing, selecting, or nominating directors.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5232. (a) Section 5231 governs the duties of directors as to any acts or omissions in connection with the election, selection, or nomination of directors. (b) This section shall not be construed to limit the generality of Section 5231. (Added by Stats. 1978, Ch. 567.)
  112. 5233.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    This section defines self-dealing transactions, lists exceptions, allows certain parties to sue in superior court, sets filing deadlines, and authorizes court remedies against interested directors.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5233. (a) Except as provided in subdivision (b), for the purpose of this section, a self-dealing transaction means a transaction to which the corporation is a party and in which one or more of its directors has a material financial interest and which does not meet the requirements of paragraph (1), (2), or (3) of subdivision (d). Such a director is an “interested director” for the purpose of this section. (b) The provisions of this section do not apply to any of the following: (1) An action of the board fixing the compensation of a director as a director or officer of the corporation. (2) A transaction which is part of a public or charitable program of the corporation if it: (i) is approved or authorized by the corporation in good faith and without unjustified favoritism; and (ii) results in a benefit to one or more directors or their families because they are in the class of persons intended to be benefited by the public or charitable program. (3) A transaction, of which the interested director or directors have no actual knowledge, and which does not exceed the lesser of 1 percent of the gross receipts of the corporation for the preceding fiscal year or one hundred thousand dollars ($100,000). (c) The Attorney General or, if the Attorney General is joined as an indispensable party, any of the following may bring an action in the superior court of the proper county for the remedies specified in subdivision (h): (1) The corporation, or a member asserting the right in the name of the corporation pursuant to Section 5710. (2) A director of the corporation. (3) An officer of the corporation. (4) Any person granted relator status by the Attorney General. (d) In any action brought under subdivision (c) the remedies specified in subdivision (h) shall not be granted if: (1) The Attorney General, or the court in an action in which the Attorney General is an indispensable party, has approved the transaction before or after it was consummated; or (2) The following facts are established: (A) The corporation entered into the transaction for its own benefit; (B) The transaction was fair and reasonable as to the corporation at the time the corporation entered into the transaction; (C) Prior to consummating the transaction or any part thereof the board authorized or approved the transaction in good faith by a vote of a majority of the directors then in office without counting the vote of the interested director or directors, and with knowledge of the material facts concerning the transaction and the director’s interest in the transaction. Except as provided in paragraph (3) of this subdivision, action by a committee of the board shall not satisfy this paragraph; and (D) (i) Prior to authorizing or approving the transaction the board considered and in good faith determined after reasonable investigation under the circumstances that the corporation could not have obtained a more advantageous arrangement with reasonable effort under the circumstances or (ii) the corporation in fact could not have obtained a more advantageous arrangement with reasonable effort under the circumstances; or (3) The following facts are established: (A) A committee or person authorized by the board approved the transaction in a manner consistent with the standards set forth in paragraph (2) of this subdivision; (B) It was not reasonably practicable to obtain approval of the board prior to entering into the transaction; and (C) The board, after determining in good faith that the conditions of subparagraphs (A) and (B) of this paragraph were satisfied, ratified the transaction at its next meeting by a vote of the majority of the directors then in office without counting the vote of the interested director or directors. (e) Except as provided in subdivision (f), an action under subdivision (c) must be filed within two years after written notice setting forth the material facts of the transaction and the director’s interest in the transaction is filed with the Attorney General in accordance with such regulations, if any, as the Attorney General may adopt or, if no such notice is filed, within three years after the transaction occurred, except for the Attorney General, who shall have 10 years after the transaction occurred within which to file an action. (f) In any action for breach of an obligation of the corporation owed to an interested director, where the obligation arises from a self-dealing transaction which has not been approved as provided in subdivision (d), the court may, by way of offset only, make any order authorized by subdivision (h), notwithstanding the expiration of the applicable period specified in subdivision (e). (g) Interested directors may be counted in determining the presence of a quorum at a meeting of the board which authorizes, approves or ratifies a contract or transaction. (h) If a self-dealing transaction has taken place, the interested director or directors shall do such things and pay such damages as in the discretion of the court will provide an equitable and fair remedy to the corporation, taking into account any benefit received by the corporation and whether the interested director or directors acted in good faith and with intent to further the best interest of the corporation. Without limiting the generality of the foregoing, the court may order the director to do any or all of the following: (1) Account for any profits made from such transaction, and pay them to the corporation; (2) Pay the corporation the value of the use of any of its property used in such transaction; and (3) Return or replace any property lost to the corporation as a result of such transaction, together with any income or appreciation lost to the corporation by reason of such transaction, or account for any proceeds of sale of such property, and pay the proceeds to the corporation together with interest at the legal rate. The court may award prejudgment interest to the extent allowed in Section 3287 or 3288 of the Civil Code. In addition, the court may, in its discretion, grant exemplary damages for a fraudulent or malicious violation of this section. (Amended by Stats. 1981, Ch. 587, Sec. 7.)
  113. 5234.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    A contract or transaction involving a director’s other directorship is not void or voidable if the material facts are disclosed or known and the board acts in good faith without counting the interested director’s vote.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5234. (a) No contract or other transaction between a corporation and any domestic or foreign corporation, firm or association of which one or more of its directors are directors is either void or voidable because such director or directors are present at the meeting of the board or a committee thereof which authorizes, approves or ratifies the contract or transaction, if: (1) The material facts as to the transaction and as to such director’s other directorship are fully disclosed or known to the board or committee, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient without counting the vote of the common director or directors; or (2) As to contracts or transactions not approved as provided in paragraph (1) of this subdivision, the contract or transaction is just and reasonable as to the corporation at the time it is authorized, approved or ratified. (b) This section does not apply to transactions covered by Section 5233. (Added by Stats. 1978, Ch. 567.)
  114. 5235.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    The board may set director compensation, and must take any additional actions required by Government Code section 12586(g) if applicable.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5235. (a) The board may fix the compensation of a director, as director or officer, and no obligation, otherwise valid, to pay such compensation shall be voidable merely because the persons receiving the compensation participated in the decision to pay it, unless it was not just and reasonable as to the corporation at the time it was authorized, ratified or approved. The board shall take other actions that are required by subdivision (g) of Section 12586 of the Government Code, if applicable. (b) In the absence of fraud, any liability under this section shall be limited to the amount by which the compensation exceeded what was just and reasonable, plus interest from the date of payment. (Amended by Stats. 2011, Ch. 442, Sec. 6. (AB 1211) Effective January 1, 2012.)
  115. 5236.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    A corporation generally may not lend to or guarantee a director’s or officer’s debt unless the Attorney General approves it, but there are stated exceptions and special conditions for certain advances, insurance-related payments, and some officer home loans.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5236. (a) A corporation shall not make any loan of money or property to or guarantee the obligation of any director or officer, unless approved by the Attorney General; provided, however, that a corporation may advance money to a director or officer of the corporation or of its parent or any subsidiary for expenses reasonably anticipated to be incurred in the performance of the duties of such officer or director, provided that in the absence of such advance, such director or officer would be entitled to be reimbursed for such expenses by such corporation, its parent, or any subsidiary. (b) The provisions of subdivision (a) do not apply to the payment of premiums in whole or in part by a corporation on a life insurance policy on the life of a director or officer so long as repayment to the corporation of the amount paid by it is secured by either the policy’s death benefit proceeds or its cash surrender value, or both. (c) When repayment of a loan, entered into under subdivision (b), to a corporation is secured by only the policy’s death benefit, the contract between the corporation and director or officer that secures the loan shall include terms sufficient to ensure that any policy fees and charges, withdrawals of the cash value, or loans taken against it do not impair the value of the death benefit to repay the cost of the loan, for the life of the policy. (d) When repayment of a loan, entered into under subdivision (b), to a corporation is secured by only the policy’s cash surrender value, the contract between the corporation and the director or officer that secures the loan shall include terms sufficient to ensure that the cash surrender value is sufficient to repay the cost of the loan, for the life of the policy. (e) The provisions of subdivision (a) do not apply to a loan of money to or for the benefit of an officer in circumstances where the loan is necessary, in the judgment of the board, to provide financing for the purchase of the principal residence of the officer in order to secure the services or continued services of the officer and the loan is secured by real property located in the state. (Amended by Stats. 2019, Ch. 250, Sec. 1. (SB 540) Effective January 1, 2020.)
  116. 5237.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    Directors who approve certain corporate actions can be held jointly and severally liable to the corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5237. (a) Subject to the provisions of Section 5231, directors of a corporation who approve any of the following corporate actions shall be jointly and severally liable to the corporation for: (1) The making of any distribution. (2) The distribution of assets after institution of dissolution proceedings of the corporation, without paying or adequately providing for all known liabilities of the corporation, excluding any claims not filed by creditors within the time limit set by the court in a notice given to creditors under Chapters 15 (commencing with Section 6510), 16 (commencing with Section 6610) and 17 (commencing with Section 6710). (3) The making of any loan or guaranty contrary to Section 5236. (b) A director who is present at a meeting of the board, or any committee thereof, at which action specified in subdivision (a) is taken and who abstains from voting shall be considered to have approved the action. (c) Suit may be brought in the name of the corporation to enforce the liability: (1) Under paragraph (1) of subdivision (a) against any or all directors liable by the persons entitled to sue under subdivision (b) of Section 5420; (2) Under paragraph (2) or (3) of subdivision (a) against any or all directors liable by any one or more creditors of the corporation whose debts or claims arose prior to the time of the corporate action who have not consented to the corporate action, whether or not they have reduced their claims to judgment; (3) Under paragraph (1), (2) or (3) of subdivision (a), by the Attorney General. (d) The damages recoverable from a director under this section shall be the amount of the illegal distribution, or if the illegal distribution consists of property, the fair market value of that property at the time of the illegal distribution, plus interest thereon from the date of the distribution at the legal rate on judgments until paid, together with all reasonably incurred costs of appraisal or other valuation, if any, of that property, or the loss suffered by the corporation as a result of the illegal loan or guaranty. (e) Any director sued under this section may implead all other directors liable and may compel contribution, either in that action or in an independent action against directors not joined in that action. (f) Directors liable under this section shall also be entitled to be subrogated to the rights of the corporation: (1) With respect to paragraph (1) of subdivision (a), against the persons who received the distribution. (2) With respect to paragraph (2) of subdivision (a), against the persons who received the distribution. (3) With respect to paragraph (3) of subdivision (a), against the person who received the loan or guaranty. Any director sued under this section may file a cross-complaint against the person or persons who are liable to the director as a result of the subrogation provided for in this subdivision or may proceed against them in an independent action. (Amended by Stats. 1999, Ch. 453, Sec. 2. Effective January 1, 2000.)
  117. 5238.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    This section lets a corporation indemnify certain agents and buy insurance for them, but only within specified conditions and exceptions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5238. (a) For the purposes of this section, “agent” means any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation; “proceeding” means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and “expenses” includes without limitation attorneys’ fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e). (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor, an action brought under Section 5233, or an action brought by the Attorney General or a person granted relator status by the Attorney General for any breach of duty relating to assets held in charitable trust) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if the person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person’s conduct was unlawful. (c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation, or brought under Section 5233, or brought by the Attorney General or a person granted relator status by the Attorney General for breach of duty relating to assets held in charitable trust, to procure a judgment in its favor by reason of the fact that the person is or was an agent of the corporation, against expenses actually and reasonably incurred by the person in connection with the defense or settlement of the action if the person acted in good faith, in a manner the person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. No indemnification shall be made under this subdivision: (1) In respect of any claim, issue or matter as to which the person shall have been adjudged to be liable to the corporation in the performance of the person’s duty to the corporation, unless and only to the extent that the court in which the proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses which the court shall determine; (2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or (3) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval unless it is settled with the approval of the Attorney General. (d) To the extent that an agent of a corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith. (e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in subdivision (b) or (c), by: (1) A majority vote of a quorum consisting of directors who are not parties to the proceeding; (2) Approval of the members (Section 5034), with the persons to be indemnified not being entitled to vote thereon; or (3) The court in which the proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney, or other person is opposed by the corporation. (f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay the amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section. The provisions of subdivision (a) of Section 5236 do not apply to advances made pursuant to this subdivision. (g) No provision made by a corporation to indemnify its or its subsidiary’s directors or officers for the defense of any proceeding, whether contained in the articles, bylaws, a resolution of members or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than the directors and officers may be entitled by contract or otherwise. (h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstance where it appears: (1) That it would be inconsistent with a provision of the articles, bylaws, a resolution of the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement. (i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent’s status as such whether or not the corporation would have the power to indemnify the agent against that liability under the provisions of this section; provided, however, that a corporation shall have no power to purchase and maintain that insurance to indemnify any agent of the corporation for a violation of Section 5233. (j) This section does not apply to any proceeding against any trustee, investment manager, or other fiduciary of a pension, deferred compensation, saving, thrift, or other retirement, incentive, or benefit plan, trust, or provision for any or all of the corporation’s directors, officers, employees, and persons providing services to the corporation or any of its subsidiary or related or affiliated corporations, in that person’s capacity as such, even though the person may also be an agent as defined in subdivision (a) of the employer corporation. A corporation shall have power to indemnify the trustee, investment manager or other fiduciary to the extent permitted by subdivision (f) of Section 5140. (Amended by Stats. 2012, Ch. 61, Sec. 1. (AB 2668) Effective January 1, 2013.)
  118. 5239.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. )

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    Volunteer directors and volunteer executive officers of covered nonprofit corporations are generally shielded from personal liability for monetary damages, if specified good-faith, scope, conduct, and insurance conditions are met.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Standards of Conduct [5230 - 5239] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5239. (a) There shall be no personal liability to a third party for monetary damages on the part of a volunteer director or volunteer executive officer of a nonprofit corporation subject to this part, caused by the director’s or officer’s negligent act or omission in the performance of that person’s duties as a director or officer, if all of the following conditions are met: (1) The act or omission was within the scope of the director’s or executive officer’s duties. (2) The act or omission was performed in good faith. (3) The act or omission was not reckless, wanton, intentional, or grossly negligent. (4) Damages caused by the act or omission are covered pursuant to a liability insurance policy issued to the corporation, either in the form of a general liability policy or a director’s and officer’s liability policy, or personally to the director or executive officer. In the event that the damages are not covered by a liability insurance policy, the volunteer director or volunteer executive officer shall not be personally liable for the damages if the board of directors of the corporation and the person had made all reasonable efforts in good faith to obtain available liability insurance. (b) “Volunteer” means the rendering of services without compensation. “Compensation” means remuneration whether by way of salary, fee, or other consideration for services rendered. However, the payment of per diem, mileage, or other reimbursement expenses to a director or executive officer does not affect that person’s status as a volunteer within the meaning of this section. (c) “Executive officer” means the president, vice president, secretary, or treasurer of a corporation, or such other individual who serves in like capacity, who assists in establishing the policy of the corporation. (d) Nothing in this section shall limit the liability of the corporation for any damages caused by acts or omissions of the volunteer director or volunteer executive officer. (e) This section does not eliminate or limit the liability of a director or officer for any of the following: (1) As provided in Section 5233 or 5237. (2) In any action or proceeding brought by the Attorney General. (f) Nothing in this section creates a duty of care or basis of liability for damage or injury caused by the acts or omissions of a director or officer. (g) This section is only applicable to causes of action based upon acts or omissions occurring on or after January 1, 1988. (h) As used in this section as applied to nonprofit public benefit corporations which have an annual budget of less than twenty-five thousand dollars ($25,000) and that are exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code, the condition of making “all reasonable efforts in good faith to obtain available liability insurance” shall be satisfied by the corporation if it makes at least one inquiry per year to purchase a general liability insurance policy and that insurance was not available at a cost of less than 5 percent of the previous year’s annual budget of the corporation. If the corporation is in its first year of operation, this subdivision shall apply for as long as the budget of the corporation does not exceed twenty-five thousand dollars ($25,000) in its first year of operation. An inquiry pursuant to this subdivision shall obtain premium costs for a general liability policy with an amount of coverage of at least five hundred thousand dollars ($500,000). (Amended by Stats. 1993, Ch. 634, Sec. 1. Effective January 1, 1994.)
  119. 5240.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Investments [5240 - 5241] ( Article 4 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    The board must manage investment assets prudently, avoid speculation, and follow any extra standards in governing documents or contribution instruments, with some exceptions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Investments [5240 - 5241] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5240. (a) This section applies to all assets held by the corporation for investment. Assets which are directly related to the corporation’s public or charitable programs are not subject to this section. (b) Except as provided in subdivision (c), in investing, reinvesting, purchasing, acquiring, exchanging, selling and managing the corporation’s investments, the board shall do the following: (1) Avoid speculation, looking instead to the permanent disposition of the funds, considering the probable income, as well as the probable safety of the corporation’s capital. (2) Comply with additional standards, if any, imposed by the articles, bylaws or express terms of an instrument or agreement pursuant to which the assets were contributed to the corporation. (c) No investment violates this section where it conforms to provisions authorizing the investment contained in an instrument or agreement pursuant to which the assets were contributed to the corporation. No investment violates this section or Section 5231 where it conforms to provisions requiring the investment contained in an instrument or agreement pursuant to which the assets were contributed to the corporation. (d) In carrying out duties under this section, each director shall act as required by subdivision (a) of Section 5231, may rely upon others as permitted by subdivision (b) of Section 5231, and shall have the benefit of subdivision (c) of Section 5231, and the board may delegate its investment powers as permitted by Section 5210. (e) Compliance with the Uniform Prudent Management of Institutional Funds Act (Part 7 (commencing with Section 18501) of Division 9 of the Probate Code), if that act would be applicable, will be deemed to be compliance with subdivision (b). (Amended by Stats. 2015, Ch. 56, Sec. 1. (AB 792) Effective January 1, 2016.)
  120. 5241.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Investments [5240 - 5241] ( Article 4 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A court may, in proper cases, allow a corporation to deviate from a trust or agreement about making or keeping investments, and notice must be given to the Attorney General.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Investments [5240 - 5241] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5241. Nothing in Section 5240 shall abrogate or restrict the power of the appropriate court in proper cases to direct or permit a corporation to deviate from the terms of a trust or agreement regarding the making or retention of investments. Notice of such action or proceeding shall be given to the Attorney General who may intervene. (Amended by Stats. 1979, Ch. 724.)
  121. 5250.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Examination by Attorney General [5250- 5250.] ( Article 5 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A corporation may be examined by the Attorney General at any time.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Examination by Attorney General [5250- 5250.] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5250. A corporation is subject at all times to examination by the Attorney General, on behalf of the state, to ascertain the condition of its affairs and to what extent, if at all, it fails to comply with trusts which it has assumed or has departed from the purposes for which it is formed. In case of any such failure or departure the Attorney General may institute, in the name of the state, the proceeding necessary to correct the noncompliance or departure. (Added by Stats. 1978, Ch. 567.)
  122. 5260.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 6. Compliance With Internal Revenue Code [5260- 5260.] ( Article 6 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    Corporations that are treated as private foundations must distribute income, and if necessary principal, in a way that avoids tax under Internal Revenue Code Section 4942, and they must avoid certain private-foundation prohibited transactions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 2. Directors and Management [5210 - 5260] ( Chapter 2 added by Stats. 1978, Ch. 567. ) ## ARTICLE 6. Compliance With Internal Revenue Code [5260- 5260.] ( Article 6 added by Stats. 1978, Ch. 567. ) ## 5260. Notwithstanding any other law, every corporation, during any period or periods that corporation is deemed to be a “private foundation” as defined in Section 509 of the Internal Revenue Code of 1986, shall distribute its income for each taxable year (and principal, if necessary) at the time and in a manner so as not to subject that corporation to tax under Section 4942 of that code, and the corporation shall not engage in any act of self-dealing as defined in subsection (d) of Section 4941 of that code, retain any excess business holdings as defined in subsection (c) of Section 4943 of that code, make any investments in a manner that subjects the corporation to tax under Section 4944 of that code, or make any taxable expenditure as defined in subsection (d) of Section 4945 of that code. This section shall apply to any corporation, and any provision contained in its articles of incorporation or other governing instrument inconsistent with, or contrary to, this section shall be without effect. (Amended by Stats. 2017, Ch. 516, Sec. 1. (SB 363) Effective January 1, 2018.)
  123. 5310.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A corporation may allow members, or it may set itself up with no members; if it has no members, some member-approval actions instead need only board approval.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5310. (a) A corporation may admit persons to membership, as provided in its articles or bylaws, or may provide in its articles or bylaws that it shall have no members. In the absence of any provision in its articles or bylaws providing for members, a corporation shall have no members. (b) In the case of a corporation which has no members, any action for which there is no specific provision of this part applicable to a corporation which has no members and which would otherwise require approval by a majority of all members (Section 5033) or approval by the members (Section 5034) shall require only approval of the board, any provision of this part or the articles or bylaws to the contrary notwithstanding. (c) Reference in this part to a corporation which has no members includes a corporation in which the directors are the only members. (Amended by Stats. 1984, Ch. 812, Sec. 1.7.)
  124. 5311.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A corporation may issue memberships, but only subject to its articles or bylaws.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5311. Subject to the articles or bylaws, memberships may be issued by a corporation for no consideration or for such consideration as is determined by the board. (Amended by Stats. 1981, Ch. 587, Sec. 10.)
  125. 5312.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A person generally may not hold more than one membership or any fractional membership, but the articles or bylaws can allow certain shared or multiple-class membership arrangements.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5312. No person may hold more than one membership, and no fractional memberships may be held, provided, however, that: (a) Two or more persons may have an indivisible interest in a single membership when authorized by, and in such manner or under the circumstances prescribed by, the articles or bylaws subject to Section 5612; and (b) If the articles or bylaws provide for classes of membership and if the articles or bylaws permit a person to be a member of more than one class, a person may hold a membership in one or more classes. (Amended by Stats. 1979, Ch. 724.)
  126. 5313.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A corporation may admit any person to membership unless its articles or bylaws say otherwise.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Issuance of Memberships [5310 - 5313] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5313. Except as provided in its articles or bylaws, a corporation may admit any person to membership. (Added by Stats. 1978, Ch. 567.)
  127. 5320.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Transfer of Memberships [5320- 5320.] ( Article 2 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A member generally may not transfer a membership or any related right, and may not transfer it for value, unless an exception applies.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Transfer of Memberships [5320- 5320.] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5320. (a) Subject to Section 5613, and unless otherwise provided in the corporation’s articles or bylaws: (1) No member may transfer a membership or any right arising therefrom. (2) All rights of membership cease upon the member’s death or dissolution. (b) Notwithstanding subdivision (a), no member may transfer for value a membership or any right arising therefrom. (c) Notwithstanding subdivisions (a) and (b), this section does not prohibit or restrict the transfer, purchase, or sale of a membership in a limited equity housing cooperative, provided that the transfer, purchase, or sale is consistent with Section 33007.5 of the Health and Safety Code. (Amended by Stats. 1992, Ch. 250, Sec. 1. Effective January 1, 1993.)
  128. 5330.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Types of Memberships [5330 - 5332] ( Article 3 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A corporation may issue memberships with different rights or conditions if its articles or bylaws authorize it.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Types of Memberships [5330 - 5332] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5330. A corporation may issue memberships having different rights, privileges, preferences, restrictions or conditions, as authorized by its articles or bylaws. (Amended by Stats. 1979, Ch. 724.)
  129. 5331.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Types of Memberships [5330 - 5332] ( Article 3 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    Memberships generally must have the same rights, privileges, preferences, restrictions, and conditions, unless the articles or bylaws provide otherwise.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Types of Memberships [5330 - 5332] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5331. Except as provided in or authorized by the articles or bylaws, all memberships shall have the same rights, privileges, preferences, restrictions and conditions. (Amended by Stats. 1979, Ch. 724.)
  130. 5332.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Types of Memberships [5330 - 5332] ( Article 3 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A corporation may call certain associated persons “members” and may also benefit, serve, or assist nonmembers under board-determined or document-authorized terms.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 3. Types of Memberships [5330 - 5332] ( Article 3 added by Stats. 1978, Ch. 567. ) ## 5332. (a) A corporation may refer to persons associated with it as “members” even though such persons are not members within the meaning of Section 5056; but references to members in this part mean members as defined in Section 5056. (b) A corporation may benefit, serve, or assist persons who are not members within the meaning of Section 5056 for such consideration, if any, as the board may determine or as is authorized or provided for in the articles or bylaws. (Amended by Stats. 1979, Ch. 724.)
  131. 5340.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Termination of Memberships [5340 - 5342] ( Article 4 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    A member may resign at any time, but resignation does not cancel certain existing payment or contract obligations, and memberships issued for a fixed period expire when that period ends unless renewed.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Termination of Memberships [5340 - 5342] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5340. (a) A member may resign from membership at any time. (b) This section shall not relieve the resigning member from any obligation for charges incurred, services or benefits actually rendered, dues, assessments or fees, or arising from contract or otherwise, and this section shall not diminish any right of the corporation to enforce any such obligation or obtain damages for its breach. (c) A membership issued for a period of time shall expire when such period of time has elapsed unless the membership is renewed. (Amended by Stats. 1979, Ch. 724.)
  132. 5341.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Termination of Memberships [5340 - 5342] ( Article 4 added by Stats. 1978, Ch. 567. )

    Verify source ↗

    Membership expulsion, suspension, or termination must follow the section’s procedures, including notice, a hearing opportunity, and good faith/fair treatment.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Termination of Memberships [5340 - 5342] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5341. (a) No member may be expelled or suspended, and no membership or membership rights may be terminated or suspended, except according to procedures satisfying the requirements of this section. An expulsion, termination or suspension not in accord with this section shall be void and without effect. (b) Any expulsion, suspension or termination must be done in good faith and in a fair and reasonable manner. Any procedure which conforms to the requirements of subdivision (c) is fair and reasonable, but a court may also find other procedures to be fair and reasonable when the full circumstances of the suspension, termination, or expulsion are considered. (c) A procedure is fair and reasonable when: (1) The provisions of the procedure have been set forth in the articles or bylaws, or copies of such provisions are sent annually to all the members as required by the articles or bylaws; (2) It provides the giving of 15 days prior notice of the expulsion, suspension or termination and the reasons therefor; and (3) It provides an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension or termination by a person or body authorized to decide that the proposed expulsion, termination or suspension not take place. (d) Any notice required under this section may be given by any method reasonably calculated to provide actual notice. Any notice given by mail must be given by first-class or registered mail sent to the last address of the member shown on the corporation’s records. (e) Any action challenging an expulsion, suspension or termination of membership, including any claim alleging defective notice, must be commenced within one year after the date of the expulsion, suspension or termination. In the event such an action is successful the court may order any relief, including reinstatement, it finds equitable under the circumstances, but no vote of the members or of the board may be set aside solely because a person was at the time of the vote wrongfully excluded by virtue of the challenged expulsion, suspension or termination, unless the court finds further that the wrongful expulsion, suspension or termination was in bad faith and for the purpose, and with the effect, of wrongfully excluding the member from the vote or from the meeting at which the vote took place, so as to affect the outcome of the vote. (f) This section governs only the procedures for expulsion, suspension or termination and not the substantive grounds therefor. An expulsion, suspension or termination based upon substantive grounds which violate contractual or other rights of the member or are otherwise unlawful, is not made valid by compliance with this section. (g) A member who is expelled or suspended or whose membership is terminated shall be liable for any charges incurred, services or benefits actually rendered, dues, assessments or fees incurred before the expulsion, suspension or termination or arising from contract or otherwise. (Amended by Stats. 1996, Ch. 589, Sec. 9. Effective January 1, 1997.)
  133. 5342.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Termination of Memberships [5340 - 5342] ( Article 4 added by Stats. 1978, Ch. 567. )

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    If an amendment would end all memberships or a class of memberships, the corporation must give members written notice, members must approve the amendment, and a member may request communication rights to discuss it.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 4. Termination of Memberships [5340 - 5342] ( Article 4 added by Stats. 1978, Ch. 567. ) ## 5342. (a) An amendment of the articles or bylaws which would terminate all memberships or any class of memberships shall meet the requirements of this part and this section. (b) Before such an amendment is adopted the corporation shall give written notice to members not less than 45 nor more than 90 days prior to any vote by the members on the amendment. The written notice shall describe the effect of the amendment on the corporation and the members. However, written notice need not be given at least 45 days prior to any vote by the members on the amendment if all members entitled to vote receive a written notice prior to the vote setting forth the information described in the preceding sentence and sign a written waiver of 45 days notice. (c) Any such amendment shall be approved by the members (Section 5034). (d) The articles or bylaws may impose additional requirements regarding termination of all memberships or any class of memberships. (e) Upon request of a member the corporation shall provide at its option the rights set forth in either paragraph (1) or (2) of subdivision (a) of Section 6330 as soon as reasonably possible to allow the member to communicate with other members regarding the proposed amendment. (f) Any such amendment shall terminate the rights members have pursuant to this part as members (Section 5056). (g) The provisions of Section 5341 shall not apply to termination of all memberships or any class of memberships pursuant to an amendment of the articles or bylaws. (Amended by Stats. 1986, Ch. 766, Sec. 29.)
  134. 5350.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. )

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    A corporation member is not personally liable for the corporation’s debts, liabilities, or obligations, and liability for obligations arising from membership is limited unless the person was admitted on their application or with their consent.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5350. (a) A member of a corporation is not, as such, personally liable for the debts, liabilities, or obligations of the corporation. (b) No person is liable for any obligation arising from membership unless the person was admitted to membership upon the person’s application or with the person’s consent. (Added by Stats. 1978, Ch. 567.)
  135. 5351.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. )

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    A corporation may charge members dues, assessments, or fees if its articles or bylaws allow it, and a member may avoid liability by promptly resigning after learning of the charges, unless the member is otherwise liable by contract or law.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5351. A corporation may levy dues, assessments or fees upon its members pursuant to its articles or bylaws, but a member upon learning of them may avoid liability for them by promptly resigning from membership, except where the member is, by contract or otherwise, liable for them. Article or bylaw provisions authorizing such dues, assessments or fees do not, of themselves, create such liability. (Added by Stats. 1978, Ch. 567.)
  136. 5352.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. )

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    A creditor generally cannot sue to reach a member’s liability to the corporation unless the creditor first gets a final judgment and unsatisfied execution, or the effort would be useless.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5352. (a) No action shall be brought by or on behalf of any creditor to reach and apply the liability, if any, of a member to the corporation to pay the amount due on such member’s membership or otherwise due to the corporation unless final judgment has been rendered in favor of the creditor against the corporation and execution has been returned unsatisfied in whole or in part or unless such proceedings would be useless. (b) All creditors of the corporation, with or without reducing their claims to judgment, may intervene in any such creditor’s action to reach and apply unpaid amounts due the corporation and any or all members who owe amounts to the corporation may be joined in such action. Several judgments may be rendered for and against the parties to the action or in favor of a receiver for the benefit of the respective parties thereto. (c) All amounts paid by any member in any such action shall be credited on the unpaid balance due the corporation by such member. (Added by Stats. 1978, Ch. 567.)
  137. 5353.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. )

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    This section says it does not reduce existing fraud- or illegality-based rights or remedies of creditors, members, or the corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5353. Nothing in this part shall be construed as in derogation of any rights or remedies which any creditor or member may have against any promoter, member, director, officer or the corporation because of participation in any fraud or illegality practiced upon such creditor or member by any such person or by the corporation in connection with the issue or sale of memberships or securities or in derogation of any rights which the corporation may have by rescission, cancellation or otherwise because of any fraud or illegality practiced on it by any such person in connection with the issue or sale of memberships or securities. (Added by Stats. 1978, Ch. 567.)
  138. 5354.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. )

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    A person holding a membership in a fiduciary or representative capacity is not personally liable for unpaid membership purchase prices or other amounts owed by the member to the corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 3. Members [5310 - 5354] ( Chapter 3 added by Stats. 1978, Ch. 567. ) ## ARTICLE 5. Rights and Obligations of Members and Creditors [5350 - 5354] ( Article 5 added by Stats. 1978, Ch. 567. ) ## 5354. A person holding a membership as executor, administrator, guardian, trustee, receiver or in any representative or fiduciary capacity is not personally liable for any unpaid balance of the purchase price of the membership, or for any amounts owing to the corporation by the member, because the membership is so held; but the estate and funds in the hands of such fiduciary are liable therefor. (Added by Stats. 1978, Ch. 567.)
  139. 5410.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 4. Distributions [5410 - 5420] ( Chapter 4 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Limitations [5410- 5410.] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A corporation must not make any distribution, except for certain membership purchases in a limited-equity housing cooperative that is organized as a public benefit corporation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 4. Distributions [5410 - 5420] ( Chapter 4 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Limitations [5410- 5410.] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5410. No corporation shall make any distribution. This section shall not apply to the purchase of a membership in a limited-equity housing cooperative, as defined in Section 33007.5 of the Health and Safety Code, which is organized as a public benefit corporation. (Amended by Stats. 1992, Ch. 250, Sec. 2. Effective January 1, 1993.)
  140. 5420.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 4. Distributions [5410 - 5420] ( Chapter 4 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Liability of Members [5420- 5420.] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A person who receives a distribution must repay the corporation the amount received plus interest at the legal rate on judgments. The section also allows certain people to sue in the corporation’s name and lets the court award punitive damages in fraud cases.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 4. Distributions [5410 - 5420] ( Chapter 4 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Liability of Members [5420- 5420.] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5420. (a) Any person who receives any distribution is liable to the corporation for the amount so received by such person with interest thereon at the legal rate on judgments until paid. (b) Suit may be brought in the name of a corporation by a creditor, a director, the Attorney General, or, subject to meeting the requirements of Section 5710, a member. In any such action in addition to the remedy provided in subdivision (a), the court may award punitive damages for the benefit of the corporation against any director, officer, member or other person who with intent to defraud the corporation caused, received or aided and abetted in the making of any distribution. (c) Any person sued under this section may implead all other persons liable under this section and may in the absence of fraud by a moving party compel contribution, either in that action or in an independent action against persons not joined in the action. (d) This section shall not affect any liability which any person may have under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). (Amended by Stats. 2015, Ch. 44, Sec. 19. (SB 161) Effective January 1, 2016.)
  141. 5510.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    This section sets rules for member meetings of nonprofit public benefit corporations, including when meetings may be held remotely and when they must be held.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5510. (a) Meetings of members may be held at a place within or without this state as may be stated in or fixed in accordance with the bylaws. If no other place is stated or so fixed, meetings of members shall be held at the principal office of the corporation. Subject to any limitations in the articles or the bylaws of the corporation, if authorized by the board of directors in its sole discretion, and subject to those guidelines and procedures as the board of directors may adopt, members not physically present in person (or, if proxies are allowed, by proxy) at a meeting of members may, by electronic transmission by and to the corporation (Sections 20 and 21), electronic video screen communication, conference telephone, or other means of remote communication, participate in a meeting of members, be deemed present in person (or, if proxies are allowed, by proxy), and vote at a meeting of members, subject to subdivision (f). (b) A regular meeting of members shall be held on a date, time, and with the frequency stated in or fixed in accordance with the bylaws, but in any event in each year in which directors are to be elected at that meeting for the purpose of conducting such election, and to transact any other proper business which may be brought before the meeting. (c) If a corporation with members is required by subdivision (b) to hold a regular meeting and fails to hold the regular meeting for a period of 60 days after the date designated therefor or, if no date has been designated, for a period of 15 months after the formation of the corporation, or after its last regular meeting, or if the corporation fails to hold a written ballot for a period of 60 days after the date designated therefor, then the superior court of the proper county may summarily order the meeting to be held or the ballot to be conducted upon the application of a member or the Attorney General, after notice to the corporation giving it an opportunity to be heard. (d) The votes represented, either in person (or, if proxies are allowed, by proxy), at a meeting called or by written ballot ordered pursuant to subdivision (c), and entitled to be cast on the business to be transacted shall constitute a quorum, notwithstanding any provision of the articles or bylaws or in this part to the contrary. 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 of the meeting. (e) Special meetings of members for any lawful purpose may be called by the board, the chairperson of the board, the president, or such other persons, if any, as are specified in the bylaws. In addition, special meetings of members for any lawful purpose may be called by 5 percent or more of the members. (f) A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures: (1) to provide members and proxyholders, if proxies are allowed, a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings, (2) if any member or proxyholder, if proxies are allowed, votes or takes other action at the meeting by means of electronic transmission to the corporation, electronic video screen communication, conference telephone, or other means of remote communication, to maintain a record of that vote or action in its books and records, and (3) to verify that each person who has voted remotely is a member or proxyholder, if proxies are allowed. A corporation shall not conduct a meeting of members solely by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication unless one or more of the following conditions apply: (A) all of the members consent; (B) the board determines it is necessary or appropriate because of an emergency, as defined in paragraph (5) of subdivision (n) of Section 5140; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting includes a live audiovisual feed for the duration of the meeting. A corporation holding a meeting pursuant to (C) may offer, in addition to remote audiovisual feed, an audio-only means by which a member or proxyholder may participate provided that the choice between participating via audiovisual or via audio-only means is made by the member or proxyholder and the corporation does not impose any barriers to either mode of participation. A de minimis disruption of an audio or audiovisual feed does not require a corporation to end a meeting under, or render the corporation out of compliance with, this subdivision. (Amended by Stats. 2025, Ch. 67, Sec. 39. (AB 1170) Effective January 1, 2026.)
  142. 5511.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    The corporation must give members written notice before meetings, with special timing rules for mailed notice, special meetings, and adjourned meetings.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5511. (a) Whenever members 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 member who, on the record date for notice of the meeting, is entitled to vote thereat; 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 to subdivision (f), and subdivision (b) of Section 5512, 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), electronic video screen communication, conference telephone, or other means of remote 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 5512, 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) (1) 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 the 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. Notwithstanding the foregoing, the notice of a members’ meeting or any report may 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 in paragraph (5) of subdivision (n) of Section 5140. An affidavit of giving of any notice or report as permitted because of an emergency or otherwise 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. (2) If any notice or report addressed to a 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 that 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. (3) (A) 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: (i) The corporation is unable to deliver two consecutive notices to the member by that means. (ii) 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. (B) This paragraph shall not apply if notices are provided by electronic communication or other means of remote communication as permitted because of an emergency. (c) Upon request in writing to the corporation addressed to the attention of the chairperson 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, conference telephone, or other means of remote communication, or electronic video screen communication, if any, by which members may participate) are announced at the meeting at which the adjournment is taken. No meeting may be adjourned for more than 45 days. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If after the adjournment a new record date is fixed for notice or voting, a notice of the adjourned meeting shall be given to each member who, on the record date for notice of the meeting, is 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 either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, 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 5222, 5224, 5812, or 6610, 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. (Amended by Stats. 2022, Ch. 617, Sec. 51. (SB 1202) Effective January 1, 2023.)
  143. 5512.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    This section sets quorum and voting rules for member meetings of nonprofit public benefit corporations.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5512. (a) One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members, unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws. (b) Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 5511. (c) Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division or the articles or the bylaws, the vote of a greater number or voting by classes. (d) In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c). (Amended by Stats. 2000, Ch. 485, Sec. 11. Effective January 1, 2001.)
  144. 5513.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A nonprofit corporation may act by written ballot instead of a meeting if it follows the section’s ballot, approval, quorum, and timing rules.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5513. (a) Subject to subdivision (e), and unless prohibited in the articles or bylaws, any action which may be taken at any regular or special meeting of members may be taken without a meeting if the corporation distributes a written ballot to every member entitled to vote on the matter. Unless otherwise provided by the articles or bylaws and if approved by the board of directors, that ballot and any related material may be sent by electronic transmission by the corporation (Section 20) and responses may be returned to the corporation by electronic transmission to the corporation (Section 21). That ballot shall set forth the proposed action, provide an opportunity to specify approval or disapproval of any proposal, and provide a reasonable time within which to return the ballot to the corporation. (b) Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot within the time period specified equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot. (c) Ballots shall be solicited in a manner consistent with the requirements of subdivision (b) of Section 5511, and Section 5514. All such solicitations shall indicate the number of responses needed to meet the quorum requirement and, with respect to ballots other than for the election of directors, shall state the percentage of approvals necessary to pass the measure submitted. The solicitation must specify the time by which the ballot must be received in order to be counted. (d) Unless otherwise provided in the articles or bylaws, a written ballot may not be revoked. (e) Directors may be elected by written ballot under this section, where authorized by the articles or bylaws, except that election by written ballot may not be authorized where the directors are elected by cumulative voting pursuant to Section 5616. (f) When directors are to be elected by written ballot and the articles or bylaws prescribe a nomination procedure, the procedure may provide for a date for the close of nominations prior to the printing and distributing of the written ballots. (Amended by Stats. 2004, Ch. 254, Sec. 18. Effective January 1, 2005.)
  145. 5514.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    Proxy forms and written ballots sent to enough members must let members choose approval or disapproval, and selected choices must be followed; withhold votes in director elections must not be counted for or against a director.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5514. (a) Any form of proxy or written ballot distributed to 10 or more members of a corporation with 100 or more members shall afford an opportunity on the proxy or form of written ballot to specify a choice between approval and disapproval of each matter or group of related matters intended, at the time the written ballot or proxy is distributed, to be acted upon at the meeting for which the proxy is solicited or by such written ballot, and shall provide, subject to reasonable specified conditions, that where the person solicited specifies a choice with respect to any such matter the vote shall be cast in accordance therewith. (b) In any election of directors, any form of proxy or written ballot in which the directors to be voted upon are named therein as candidates and which is marked by a member “withhold” or otherwise marked in a manner indicating that the authority to vote for the election of directors is withheld shall not be voted either for or against the election of a director. (c) Failure to comply with this section shall not invalidate any corporate action taken, but may be the basis for challenging any proxy at a meeting or written ballot and the superior court may compel compliance therewith at the suit of any member. (Amended by Stats. 1979, Ch. 724.)
  146. 5515.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    If it is impractical or unduly difficult for a corporation to hold or obtain consent for a members’, delegates’, or directors’ meeting as normally required, the superior court may authorize a meeting or a written ballot and set related procedures.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5515. (a) If for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, in the manner prescribed by its articles or bylaws, or this part, then the superior court of the proper county, upon petition of a director, officer, delegate, member or the Attorney General, may order that such a meeting be called or that a written ballot or other form of obtaining the vote of members, delegates, or directors be authorized, in such a manner as the court finds fair and equitable under the circumstances. (b) The court shall, in an order issued pursuant to this section, provide for a method of notice reasonably designed to give actual notice to all parties who would be entitled to notice of a meeting held pursuant to the articles, bylaws and this part, whether or not the method results in actual notice to every such person, or conforms to the notice requirements that would otherwise apply. In a proceeding under this section the court may determine who the members or directors are. (c) The order issued pursuant to this section may dispense with any requirement relating to the holding of and voting at meetings or obtaining of votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or this part. (d) Wherever practical any order issued pursuant to this section shall limit the subject matter of the meetings or other forms of consent authorized to items, including amendments to the articles or bylaws, the resolution of which will or may enable the corporation to continue managing its affairs without further resort to this section; provided, however, that an order under this section may also authorize the obtaining of whatever votes and approvals are necessary for the dissolution, merger, sale of assets or reorganization of the corporation. (e) Any meeting or other method of obtaining the vote of members, delegates, or directors conducted pursuant to an order issued under this section, and which complies with all the provisions of such order, is for all purposes a valid meeting or vote, as the case may be, and shall have the same force and effect as if it complied with every requirement imposed by the articles, bylaws and this part. (Amended by Stats. 1986, Ch. 766, Sec. 30.)
  147. 5516.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    Members may take action without a meeting if all members consent in writing.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5516. Any action required or permitted to be taken by the members may be taken without a meeting, if all members shall individually or collectively consent in writing to the action. The written consent or consents shall be filed with the minutes of the proceedings of the members. The action by written consent shall have the same force and effect as the unanimous vote of the members. (Added by Stats. 1980, Ch. 1155.)
  148. 5517.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A corporation may accept and count certain ballots, consents, waivers, or proxy appointments if it acts in good faith, and it may reject them when there is a good-faith basis to doubt the signature or authority.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5510 - 5517] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 5517. (a) If the name signed on a ballot, consent, waiver, or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the ballot, consent, waiver, or proxy appointment and give it effect as the act of the member. (b) If the name signed on a ballot, consent, waiver, or proxy appointment does not correspond to the record name of a member, the corporation if acting in good faith is nevertheless entitled to accept the ballot, consent, waiver, or proxy appointment and give it effect as the act of the member if any of the following occur: (1) The member is an entity and the name signed purports to be that of an officer or agent of the entity. (2) The name signed purports to be that of an attorney-in-fact of the member and if the corporation requests, evidence acceptable to the corporation of the signatory’s authority to sign for the member has been presented with respect to the ballot, consent, waiver, or proxy appointment. (3) Two or more persons hold the membership as cotenants or fiduciaries and the name signed purports to be the name of at least one of the coholders and the person signing appears to be acting on behalf of all the coholders. (c) The corporation is entitled to reject a ballot, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has a reasonable basis for doubt concerning the validity of the signature or the signatory’s authority to sign for the member. (d) The corporation and any officer or agent thereof who accepts or rejects a ballot, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section shall not be liable in damages to the member for the consequences of the acceptance or rejection. (e) Corporate action based on the acceptance or rejection of a ballot, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise. (Added by Stats. 1996, Ch. 589, Sec. 11. Effective January 1, 1997.)
  149. 5520.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A corporation must make reasonable nomination and election procedures available to members for directors elected by members, based on the corporation’s nature, size, and operations.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5520. (a) As to directors elected by members, there shall be available to the members reasonable nomination and election procedures given the nature, size and operations of the corporation. (b) If a corporation complies with all of the provisions of Sections 5521, 5522, 5523, and 5524 applicable to a corporation with the same number of members, the nomination and election procedures of that corporation shall be deemed reasonable. However, those sections do not prescribe the exclusive means of making available to the members reasonable procedures for nomination and election of directors. A corporation may make available to the members other reasonable nomination and election procedures given the nature, size, and operations of the corporation. (Amended by Stats. 1996, Ch. 589, Sec. 12. Effective January 1, 1997.)
  150. 5521.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A corporation with 500 or more members may allow director nominees to be proposed by the bylaws, by the board if the bylaws do not set a method, by petition meeting the stated vote and timing rules, or by a member present at an election meeting if proxies are allowed.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5521. A corporation with 500 or more members may provide that, except for directors who are elected as authorized by Section 5152 or 5153, and except as provided in Section 5522, any person who is qualified to be elected to the board of directors of the corporation may be nominated: (a) By any method authorized by the bylaws, or if no method is set forth in the bylaws by any method authorized by the board. (b) By petition delivered to an officer of the corporation, signed within 11 months preceding the next time directors will be elected, by members representing the following number of votes: Number of Votes Eligible to be Cast for Director Disregarding any Provision for Cumulative Voting Number of Votes Under 5,000 ........................ 2 percent of voting power 5,000 or more ........................ one-twentieth of 1 percent of voting power but not less than 100, nor more than 500. (c) If there is a meeting to elect directors, by any member present at the meeting in person or by proxy if proxies are permitted. (Amended by Stats. 1996, Ch. 589, Sec. 13. Effective January 1, 1997.)
  151. 5522.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A corporation with 5,000 or more members may use this election procedure for director elections, except elections authorized by Section 5152 or 5153.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5522. A corporation with 5,000 or more members may provide that, in any election of a director or directors by members of the corporation except for an election authorized by Section 5152 or 5153. (a) The corporation’s articles or bylaws shall set a date for the close of nominations for the board. The date shall not be less than 50 nor more than 120 days before the day directors are to be elected. No nominations for the board can be made after the date set for the close of nominations. (b) If more people are nominated for the board than can be elected, the election shall take place by means of a procedure which allows all nominees a reasonable opportunity to solicit votes and all members a reasonable opportunity to choose among the nominees. (c) A nominee shall have a reasonable opportunity to communicate to the members the nominee’s qualifications and the reasons for the nominee’s candidacy. (d) If after the close of nominations the number of people nominated for the board is not more than the number of directors to be elected, the corporation may without further action declare that those nominated and qualified to be elected have been elected. (Amended by Stats. 1996, Ch. 589, Sec. 14. Effective January 1, 1997.)
  152. 5523.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A corporation with 500 or more members may adopt a rule requiring equal, prominent space for other director nominees in election materials it distributes at its own expense.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5523. A corporation with 500 or more members may provide that where it distributes any written election material soliciting a vote for any nominee for director at the corporation’s expense, it shall make available, at the corporation’s expense to each other nominee, in or with the same material, the same amount of space that is provided any other nominee, with equal prominence, to be used by the nominee for a purpose reasonably related to the election. (Amended by Stats. 1996, Ch. 589, Sec. 15. Effective January 1, 1997.)
  153. 5524.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A nonprofit corporation with 500 or more members may adopt a rule requiring it to mail nominee-provided election material to members after a written request and payment of mailing costs.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5524. A corporation with 500 or more members may provide that upon written request by any nominee for election to the board and the payment with such request of the reasonable costs of mailing (including postage) the corporation shall within 10 business days after such request (provided payment has been made) mail to all members, or such portion of them as the nominee may reasonably specify, any material, which the nominee may furnish and which is reasonably related to the election, unless the corporation within five business days after the request allows the nominee, at the corporation’s option, the rights set forth in either paragraph (1) or (2) of subdivision (a) of Section 6330. (Amended by Stats. 1996, Ch. 589, Sec. 16. Effective January 1, 1997.)
  154. 5525.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    This section applies to corporations mailing or publishing nominee materials for director elections, limits their liability for those materials, requires the nominee to indemnify them, and lets them seek a court order not to mail or publish the material if it could expose them to liability.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5525. (a) This section shall apply to corporations publishing or mailing materials on behalf of any nominee in connection with procedures for the nomination and election of directors. (b) Neither the corporation, nor its agents, officers, directors, or employees, may be held criminally liable, liable for any negligence (active or passive) or otherwise liable for damages to any person on account of any material which is supplied by a nominee for director and which it mails or publishes in procedures intended to comply with Section 5520 or pursuant to Section 5523 or 5524, but the nominee on whose behalf such material was published or mailed shall be liable and shall indemnify and hold the corporation, its agents, officers, directors and employees and each of them harmless from all demands, costs, including reasonable legal fees and expenses, claims, damages and causes of action arising out of such material or any such mailing or publication. (c) Nothing in this section shall prevent a corporation or any of its agents, officers, directors, or employees from seeking a court order providing that the corporation need not mail or publish material tendered by or on behalf of a nominee under this article on the ground the material will expose the moving party to liability. (Amended by Stats. 1996, Ch. 589, Sec. 17. Effective January 1, 1997.)
  155. 5526.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    Corporate funds may not be spent to support a director nominee once there are more nominees than seats, unless the board authorizes it.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5526. Without authorization of the board, no corporate funds may be expended to support a nominee for director after there are more people nominated for director than can be elected. (Added by Stats. 1978, Ch. 567.)
  156. 5527.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. )

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    A challenge to the validity of a director election, appointment, or removal must be filed within nine months.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 5. Meetings and Voting [5510 - 5527] ( Chapter 5 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Additional Provisions Relating to Election of Directors [5520 - 5527] ( Article 2 added by Stats. 1978, Ch. 567. ) ## 5527. An action challenging the validity of any election, appointment or removal of a director or directors must be commenced within nine months after the election, appointment or removal. If no such action is commenced, in the absence of fraud, any election, appointment or removal of a director is conclusively presumed valid nine months thereafter. (Amended by Stats. 1981, Ch. 587, Sec. 14.)
  157. 5610.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    Members are generally entitled to one vote per matter, unless the corporation’s articles or bylaws or Section 5616 provide otherwise.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5610. Except as provided in a corporation’s articles or bylaws or Section 5616, each member shall be entitled to one vote on each matter submitted to a vote of the members. Single memberships in which two or more persons have an indivisible interest shall be voted as provided in Section 5612. (Amended by Stats. 1979, Ch. 724.)
  158. 5611.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    This section lets the bylaws or the board set record dates that determine which members get notice, may vote, may cast written ballots, or may exercise other rights.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5611. (a) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to notice of any meeting of members. Such record date shall not be more than 90 nor less than 10 days before the date of the meeting. If no record date is fixed, members at the close of business on the business day preceding the day on which notice is given or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of a meeting of members. A determination of members entitled to notice of a meeting of members shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. (b) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to vote at a meeting of members. Such record date shall not be more than 60 days before the date of the meeting. Such record date shall also apply in the case of an adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. If no record date is fixed, members on the day of the meeting who are otherwise eligible to vote are entitled to vote at the meeting of members or, in the case of an adjourned meeting, members on the day of the adjourned meeting who are otherwise eligible to vote are entitled to vote at the adjourned meeting of members. (c) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to cast written ballots (Section 5513). Such record date shall not be more than 60 days before the day on which the first written ballot is mailed or solicited. If no record date is fixed, members on the day the first written ballot is mailed or solicited who are otherwise eligible to vote are entitled to cast written ballots. (d) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. Such record date shall not be more than 60 days prior to such other action. If no record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later, are entitled to exercise such rights. (Amended by Stats. 1981, Ch. 587, Sec. 15.)
  159. 5612.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    When a membership is held in the names of two or more persons, one vote can bind all of them, and if more than one votes, the majority vote binds all, unless the corporation’s secretary has written notice and the required document.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5612. If a membership stands of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, spouses as community property, tenants by the entirety, or otherwise, or if two or more persons (including proxyholders) have the same fiduciary relationship respecting the same membership, unless the secretary of the corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) If only one votes, such act binds all; (b) If more than one vote, the act of the majority so voting binds all. (Amended by Stats. 2016, Ch. 50, Sec. 22. (SB 1005) Effective January 1, 2017.)
  160. 5613.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    Members may authorize proxy voting, but proxy rights can be limited by governing documents and proxies must meet validity rules.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5613. (a) Any member may authorize another person or persons to act by proxy with respect to such membership, except that this right may be limited or withdrawn by the articles or bylaws, subject to subdivision (e). Any proxy purported to be executed in accordance with the provisions of this part shall be presumptively valid. (b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy, except that the maximum term of any proxy shall be three years from the date of execution. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. (c) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the corporation. (d) The proxy of a member may not be irrevocable. (e) Subdivision (a) notwithstanding, no amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members (Section 5034). (f) Anything to the contrary notwithstanding, any proxy covering matters requiring a vote of the members pursuant to Section 5222, Section 5224, subdivision (e) of this section, Section 5812, paragraph (2) of subdivision (a) of Section 5911, Section 6012, subdivision (a) of Section 6015, or Section 6610 is not valid as to such matters unless it sets forth the general nature of the matter to be voted on, or, in the event of a vote pursuant to Section 5220, unless the proxy lists those nominated at the time the notice of the vote is given to members. (Amended by Stats. 1981, Ch. 587, Sec. 16.)
  161. 5614.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    Voting agreements and voting trust agreements entered into by a member or members of a corporation are not enforceable.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5614. A voting agreement or voting trust agreement entered into by a member or members of a corporation shall not be enforced. (Amended by Stats. 1979, Ch. 724.)
  162. 5615.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    The board or meeting chair may appoint election inspectors for member meetings, and the inspectors must handle the vote process and related disputes fairly and impartially.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5615. (a) In advance of any meeting of members the board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairperson of any meeting of members may, and on the request of any member or a member’s proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more members or proxies, the majority of members represented in person or by proxy shall determine whether one or three inspectors are to be appointed. In the case of any action by written ballot (Section 5513), the board may similarly appoint inspectors of election to act with powers and duties as set forth in this section. (b) The inspectors of election shall determine the number of memberships outstanding and the voting power of each, the number represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all members. (c) The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. (Amended by Stats. 2022, Ch. 617, Sec. 52. (SB 1202) Effective January 1, 2023.)
  163. 5616.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    Members may use cumulative voting for directors only if the articles or bylaws authorize it, and elections generally need not be by ballot unless a member demands it or the bylaws require it.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5616. (a) If the articles or bylaws authorize cumulative voting, but not otherwise, every member entitled to vote at any election of directors may cumulate the member’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the member is entitled, or distribute the member’s votes on the same principle among as many candidates as the member thinks fit. An article or bylaw provision authorizing cumulative voting may be repealed or amended only by approval of the members (Section 5034), except that the governing article or bylaw provision may require the vote of a greater proportion of the members, or of the members of any class, for its repeal. (b) No member shall be entitled to cumulate votes for a candidate or candidates unless the candidate’s name or candidates’ names have been placed in nomination prior to the voting and a member has given notice at the meeting prior to the voting of the member’s intention to cumulate votes. If any one member has given this notice, all members may cumulate their votes for candidates in nomination. (c) In any election of directors by cumulative voting, the candidates receiving the highest number of votes are elected, subject to any lawful provision specifying election by classes. (d) In any election of directors not governed by subdivision (c), unless otherwise provided in the articles or bylaws, the candidates receiving the highest number of votes are elected. (e) Elections for directors need not be by ballot unless a member demands election by ballot at the meeting and before the voting begins or unless the bylaws so require. (Amended by Stats. 1984, Ch. 812, Sec. 3.)
  164. 5617.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. )

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    This section lets certain people challenge a corporation director election or appointment in superior court, requires notice to the Attorney General, and directs the court to set an early hearing and decide the dispute.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 6. Voting of Memberships [5610 - 5617] ( Chapter 6 added by Stats. 1978, Ch. 567. ) ## 5617. (a) Upon the filing of an action therefor by any director or member, or by any person who had the right to vote in the election at issue, the superior court of the proper county shall determine the validity of any election or appointment of any director of any corporation. (b) Any person bringing an action under this section shall give notice of the action to the Attorney General, who may intervene. (c) Upon the filing of the complaint, and before any further proceedings are had, the court shall enter an order fixing a date for the hearing, which shall be within five days unless for good cause shown a later date is fixed, and requiring notice of the date for the hearing and a copy of the complaint to be served upon the corporation and upon the person whose purported election or appointment is questioned and upon any person (other than the plaintiff) whom the plaintiff alleges to have been elected or appointed, in the manner in which a summons is required to be served, or, if the court so directs, by registered mail; and the court may make such further requirements as to notice as appear to be proper under the circumstances. (d) The court, consistent with the provisions of this part and in conformity with the articles and bylaws to the extent feasible, may determine the person entitled to the office of director or may order a new election to be held or appointment to be made, may determine the validity of the issuance of memberships and the right of persons to vote and may direct such other relief as may be just and proper. (Added by Stats. 1978, Ch. 567.)
  165. 5710.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 7. Members’ Derivative Actions [5710- 5710.] ( Chapter 7 added by Stats. 1978, Ch. 567. )

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    This section limits when members can bring derivative actions and lets the corporation or certain defendants seek a bond, while capping the bond at $50,000.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 7. Members’ Derivative Actions [5710- 5710.] ( Chapter 7 added by Stats. 1978, Ch. 567. ) ## 5710. (a) Subdivisions (c) through (f) notwithstanding, no motion to require a bond shall be granted in an action brought by 100 members or the authorized number (Section 5036), whichever is less. (b) No action may be instituted or maintained in the right of any corporation by any member of such corporation unless both of the following conditions exist: (1) The plaintiff alleges in the complaint that plaintiff was a member at the time of the transaction or any part thereof of which plaintiff complains; and (2) The plaintiff alleges in the complaint with particularity plaintiff’s efforts to secure from the board such action as plaintiff desires, or the reasons for not making such effort, and alleges further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file. (c) Subject to subdivision (a), in any action referred to in subdivision (b), at any time within 30 days after service of summons upon the corporation or upon any defendant who is an officer or director of the corporation, or held such office at the time of the acts complained of, the corporation or such defendant may move the court for an order, upon notice and hearing, requiring the plaintiff to furnish a bond as hereinafter provided. The motion shall be based upon one or both of the following grounds: (1) That there is no reasonable possibility that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the corporation or its members, economically or otherwise. (2) That the moving party, if other than the corporation, did not participate in the transaction complained of in any capacity. The court on application of the corporation or any defendant may, for good cause shown, extend the 30-day period for an additional period or periods not exceeding 60 days. (d) At the hearing upon any motion pursuant to subdivision (c), the court shall consider such evidence, written or oral, by witnesses or affidavit, as may be material (1) to the ground or grounds upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys’ fees, of the corporation and the moving party which will be incurred in the defense of the action. If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the amount of the bond, not to exceed fifty thousand dollars ($50,000), to be furnished by the plaintiff for reasonable expenses, including attorneys’ fees, which may be incurred by the moving party and the corporation in connection with the action, including expenses for which the corporation may become liable pursuant to Section 5238. A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. If the court, upon the motion, makes a determination that a bond shall be furnished by the plaintiff as to any one or more defendants, the action shall be dismissed as to such defendant or defendants, unless the bond required by the court has been furnished within such reasonable time as may be fixed by the court. (e) If the plaintiff shall, either before or after a motion is made pursuant to subdivision (c), or any order or determination pursuant to the motion, furnish a bond or bonds in the aggregate amount of fifty thousand dollars ($50,000) to secure the reasonable expenses of the parties entitled to make the motion, the plaintiff has complied with the requirements of this section and with any order for a bond theretofore made, and any such motion then pending shall be dismissed and no further or additional bond shall be required. (f) If a motion is filed pursuant to subdivision (c), no pleadings need be filed by the corporation or any other defendant and the prosecution of the action shall be stayed until 10 days after the motion has been disposed of. (Amended by Stats. 1982, Ch. 517, Sec. 187.)
  166. 5810.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    A corporation may amend its articles if it follows this chapter and keeps the amended articles within the stated limits; it may not change certain original address, director, or agent statements except to correct errors or delete the information after filing a Section 6210 statement.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5810. (a) By complying with the provisions of this chapter, a corporation may amend its articles from time to time, in any and as many respects as may be desired, so long as its articles as amended contain only such provisions as it would be lawful to insert in original articles filed at the time of the filing of the amendment or as authorized by Section 5813.5 and, if a change in the rights of members or an exchange, reclassification or cancellation of memberships is to be made, such provisions as may be necessary to effect such change, exchange, reclassification or cancellation. It is the intent of the Legislature in adopting this section to exercise to the fullest extent the reserve power of the state over corporations and to authorize any amendment of the articles covered by the preceding sentence regardless of whether any provision contained in the amendment was permissible at the time of the original incorporation of the corporation. (b) A corporation shall not amend its articles to add any statement or to alter any statement which may appear in the original articles of the initial street address and initial mailing address of the corporation, the names and addresses of the first directors, or the name and address of the initial agent, except to correct an error in the statement or to delete the information after the corporation has filed a statement under Section 6210. (Amended by Stats. 2012, Ch. 494, Sec. 14. (SB 1532) Effective January 1, 2013.)
  167. 5811.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    An amendment to the articles may be adopted by a writing signed by a majority of the incorporators, if the original articles named no directors, no directors have been elected, and the corporation has no members, unless Section 5813.5 applies.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5811. Except as provided in Section 5813.5, any amendment of the articles may be adopted by a writing signed by a majority of the incorporators, so long as: (a) No directors were named in the original articles; (b) No directors have been elected; and (c) The corporation has no members. (Amended by Stats. 1979, Ch. 724.)
  168. 5812.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    This section says an amendment to the articles may be adopted only with the required approvals, but some listed amendments can be approved by the board alone.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5812. (a) Except as provided in this section or Section 5813.5, amendments may be adopted if approved by the board and approved by the members (Section 5034) and approved by such other person or persons, if any, as required by the articles. The approval by the members or other person or persons may be before or after the approval by the board. (b) Notwithstanding subdivision (a), the following amendments may be adopted by approval of the board alone: (1) An amendment extending the corporate existence or making the corporate existence perpetual, if the corporation was organized prior to August 14, 1929. (2) An amendment deleting the initial street address and initial mailing address of the corporation, the names and addresses of the first directors, or the name and address of the initial agent. (3) Any amendment, at a time the corporation has no members; provided, however, that if the articles require approval by any person for an amendment, that an amendment may not be adopted without such approval. (4) An amendment adopted pursuant to Section 9913. (c) Whenever the articles require for corporate action the approval of a particular class of members or of a larger proportion of, or all of, the votes of any class, or of a larger proportion of, or all of, the directors, than is otherwise required by this part, the provision in the articles requiring such greater vote shall not be altered, amended or repealed except by such class or such greater vote, unless otherwise provided in the articles. (Amended by Stats. 2012, Ch. 494, Sec. 15. (SB 1532) Effective January 1, 2013.)
  169. 5813.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    A class’s members must approve an amendment if it would materially and adversely affect that class’s voting or transfer rights in a different way than it affects another class.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5813. An amendment must also be approved by the members (Section 5034) of a class, whether or not such class is entitled to vote thereon by the provisions of the articles or bylaws, if the amendment would materially and adversely affect the rights of that class as to voting or transfer in a manner different than such action affects another class. (Amended by Stats. 1981, Ch. 587, Sec. 17.)
  170. 5813.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    A public benefit corporation may change into certain other corporation types if it follows this section and related chapter rules.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5813.5. (a) A public benefit corporation may amend its articles to change its status to that of a mutual benefit corporation, a social purpose corporation, a religious corporation, a business corporation, or a cooperative corporation by complying with this section and the other sections of this chapter. The Secretary of State shall notify the Franchise Tax Board, in the manner and at the times agreed upon by the Secretary of State and the Franchise Tax Board, of any amendments to a public benefit corporation’s articles. (b) If the public benefit corporation has any assets, an amendment to change its status to a mutual benefit corporation, business corporation, social purpose corporation, or cooperative corporation shall be approved in advance in writing by the Attorney General. If the public benefit corporation has no assets, the Attorney General shall be given a copy of the amendment at least 20 days before the amendment is filed. (c) Amended articles authorized by this section shall include the provisions which would have been required (other than the initial street address and initial mailing address of the corporation and the name of the initial agent for service of process if a statement has been filed pursuant to Section 6210), and may in addition only include those provisions which would have been permitted, in original articles filed by the type of corporation (mutual benefit, religious, business, social purpose, or cooperative) into which the public benefit corporation is changing its status. (d) In the case of a change of status to a business corporation, social purpose corporation, or cooperative corporation, if the Franchise Tax Board has issued a determination exempting the corporation from tax as provided in Section 23701 of the Revenue and Taxation Code, the corporation shall be subject to Section 23221 of the Revenue and Taxation Code upon filing the certificate of amendment. (Amended by Stats. 2014, Ch. 694, Sec. 68. (SB 1301) Effective January 1, 2015.)
  171. 5814.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    After an amendment is adopted, the corporation must file a certificate of amendment, unless the amendment was adopted by the incorporators under Section 5811.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5814. (a) Except for amendments adopted by the incorporators pursuant to Section 5811, upon adoption of an amendment, the corporation shall file a certificate of amendment, which shall consist of an officers’ certificate stating: (1) The wording of the amendment or amended articles in accordance with Section 5816; (2) That the amendment has been approved by the board; (3) If the amendment is one for which the approval of the members (Section 5034) is required, that the amendment was approved by the required vote of members; and (4) If the amendment is one which may be adopted with approval by the board alone, a statement of the facts entitling the board alone to adopt the amendment. (5) If the amendment is one for which the approval of a person or persons other than the incorporators, directors, or members is required, that the approval of such person or persons has been obtained. (b) In the event of an amendment of the articles pursuant to a merger, the filing of the officers’ certificate and agreement pursuant to Section 6014 shall be in lieu of any filing required under this chapter. (Amended by Stats. 1979, Ch. 724.)
  172. 5815.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    When incorporators adopt amendments under Section 5811, the corporation must file a signed and verified certificate of amendment.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5815. In the case of amendments adopted by the incorporators under Section 5811, the corporation shall file a certificate of amendment signed and verified by a majority of the incorporators which shall state that the signers thereof constitute at least a majority of the incorporators, that directors were not named in the original articles and have not been elected, that the corporation has no members and that they adopt the amendment or amendments therein set forth. (Amended by Stats. 1979, Ch. 724.)
  173. 5816.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    A certificate of amendment must set out the wording of the amendment or amended articles using one or more listed methods, and if the amendment changes memberships, the amended articles must state the effect on those memberships.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5816. The certificate of amendment shall establish the wording of the amendment or amended articles by one or more of the following means: (a) By stating that the articles shall be amended to read as therein set forth in full. (b) By stating that any provision of the articles, which shall be identified by the numerical or other designation given it in the articles or by stating the wording thereof, shall be stricken from the articles or shall be amended to read as set forth in the certificate. (c) By stating that the provisions set forth therein shall be added to the articles. If the purpose of the amendment is to reclassify, cancel, exchange, or otherwise change outstanding memberships, the amended articles shall state the effect thereof on outstanding memberships. (Added by Stats. 1978, Ch. 567.)
  174. 5817.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    When a certificate of amendment is filed, the articles are amended accordingly, related membership changes are carried out, and the Secretary of State must provide the filed certificate to the Attorney General.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5817. Upon the filing of the certificate of amendment, the articles shall be amended in accordance with the certificate and any change, reclassification, or cancellation of memberships shall be effected, and a copy of the certificate, certified by the Secretary of State, is prima facie evidence of the performance of the conditions necessary to the adoption of the amendment. The Secretary of State shall make available the filed certificate of amendment to the Attorney General. (Amended by Stats. 2022, Ch. 617, Sec. 53. (SB 1202) Effective January 1, 2023.)
  175. 5818.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    A limited-term corporation may extend its existence after its term ends by amending its articles to remove the term limit and provide for perpetual existence.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5818. A corporation formed for a limited period may at any time subsequent to the expiration of the term of its corporate existence, extend the term of its existence by an amendment to its articles removing any provision limiting the term of its existence and providing for perpetual existence. If the filing of the certificate of amendment providing for perpetual existence would be prohibited if it were original articles by the provisions of Section 5122, the Secretary of State shall not file such certificate unless, by the same or a concurrently filed certificate of amendment, the articles of such corporation are amended to adopt a new available name. For the purpose of the adoption of any such amendment, persons who have been functioning as directors of such corporation shall be considered to have been validly elected even though their election may have occurred after the expiration of the original term of the corporate existence. (Added by Stats. 1978, Ch. 567.)
  176. 5819.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    A corporation may file restated articles in one certificate, and the certificate may also amend the articles if it meets the cited section requirements.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5819. (a) A corporation may restate in a single certificate the entire text of its articles as amended by filing an officers’ certificate or, in circumstances where incorporators or the board may amend a corporation’s articles pursuant to Sections 5811 and 5815, a certificate signed and verified by a majority of the incorporators or the board, as applicable, entitled “Restated Articles of Incorporation of (insert name of corporation)” that shall set forth the articles as amended to the date of filing of the certificate, except that the signatures and acknowledgments of the articles by the incorporators and any statements regarding the effect of any prior amendment upon memberships and any provisions of agreements of merger (other than amendments to the articles of the surviving corporation), and the initial street address and initial mailing address of the corporation and the names and addresses of the first directors and of the initial agent for service of process shall be omitted (except that the initial street address and initial mailing address of the corporation and the names and addresses of the initial agent for service of process and, if previously set forth in the articles, the initial directors, shall not be omitted prior to the time that the corporation has filed a statement under Section 6210). Those omissions are not alterations or amendments of the articles. The certificate may also itself alter or amend the articles in any respect, in which case the certificate must comply with Section 5814 or 5815, as the case may be, and Section 5816. (b) If the certificate does not itself alter or amend the articles in any respect, it shall be approved by the board or, prior to the issuance of any memberships and the naming and election of directors, by a majority of the incorporators, and shall be subject to the provisions of this chapter relating to an amendment of the articles not requiring approval of the members (Section 5034). If the certificate does itself alter or amend the articles, it shall be subject to the provisions of this chapter relating to the amendment or amendments so made. (c) Restated articles of incorporation filed pursuant to this section shall supersede for all purposes the original articles and all amendments filed prior thereto. (Amended by Stats. 2012, Ch. 494, Sec. 17. (SB 1532) Effective January 1, 2013.)
  177. 5820.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. )

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    Amending a corporation’s articles under this chapter does not, by itself, remove trust-based requirements or limits on the corporation or its property. The Attorney General may also give a requested ruling on whether to oppose a proposed action or article amendment.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 8. Amendment of Articles [5810 - 5820] ( Chapter 8 added by Stats. 1978, Ch. 567. ) ## 5820. (a) Amendment of the articles of a corporation, pursuant to this chapter, does not, of itself, abrogate any requirement or limitation imposed upon the corporation, or any property held by it, by virtue of the trust under which such property is held by the corporation. (b) The Attorney General may, at the corporation’s request, and pursuant to such regulations as the Attorney General may issue, give rulings as to whether the Attorney General will or may oppose a proposed action, or article amendment, as inconsistent with or proscribed by the requirements of a charitable trust. (Added by Stats. 1978, Ch. 567.)
  178. 5910.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. )

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    The board may approve a mortgage, deed of trust, pledge, or other hypothecation of corporate property to secure a contract or obligation.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. ) ## 5910. Any mortgage, deed of trust, pledge or other hypothecation of all or any part of the corporation’s property, real or personal, for the purpose of securing the payment or performance of any contract or obligation may be approved by the board. Unless the articles or bylaws otherwise provide, no approval of the members (Section 5034) shall be necessary for such action. (Added by Stats. 1978, Ch. 567.)
  179. 5911.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. )

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    A corporation may dispose of all or substantially all of its assets, but the sale terms must be approved by the board and sometimes by the members and others. The board may also abandon the proposed transaction.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. ) ## 5911. (a) Subject to the provisions of Section 5142, a corporation may sell, lease, convey, exchange, transfer or otherwise dispose of all or substantially all of its assets when the principal terms are: (1) Approved by the board; and (2) Unless the transaction is in the usual and regular course of its activities, approved by the members (Section 5034) and by any other person or persons whose approval is required by the articles, either before or after approval by the board and before or after the transaction. (b) Notwithstanding approval by the members (Section 5034) or such other person, the board may abandon the proposed transaction without further action by the members, subject to the contractual rights, if any, of third parties. (c) Subject to the provisions of Section 5142, such sale, lease, conveyance, exchange, transfer or other disposition may be made upon such terms and conditions and for such consideration as the board may deem in the best interests of the corporation. The consideration may be money, property, or securities of any domestic corporation, foreign corporation, or foreign business corporation or any of them. (Amended by Stats. 1981, Ch. 587, Sec. 18.)
  180. 5912.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. )

    Verify source ↗

    A corporation’s asset-transfer deed or instrument may be accompanied by a secretary’s certificate stating required approvals and transfer facts.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. ) ## 5912. Any deed or instrument conveying or otherwise transferring any assets of a corporation may have annexed to it the certificate of the secretary or an assistant secretary of the corporation, setting forth that the transaction has been validly approved by the board, that the notice, if any, required by Section 5913 has been given and (a) stating that the property described in such deed or instrument is less than substantially all of the assets of the corporation or that the transfer is in the usual and regular course of the business of the corporation, if such be the case, or (b) if such property constitutes all or substantially all of the assets of the corporation and the transfer is not in the usual and regular course of the business of the corporation, stating the fact of approval thereof by the members (Section 5034). Such certificate is prima facie evidence of the existence of the facts authorizing such conveyance or other transfer of the assets and conclusive evidence in favor of any purchaser or encumbrancer for value who, without notice of any trust restriction applicable to the property or any failure to comply therewith, in good faith parted with value. (Added by Stats. 1978, Ch. 567.)
  181. 5913.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. )

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    A corporation must give the Attorney General written notice 20 days before selling or otherwise disposing of all or substantially all of its assets, unless an exception applies.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. General Provisions [5910 - 5913] ( Article 1 heading added by Stats. 1996, Ch. 1105, Sec. 2. ) ## 5913. Except for an agreement or transaction subject to Section 5914 or 5920, a corporation shall give written notice to the Attorney General 20 days before it sells, leases, conveys, exchanges, transfers or otherwise disposes of all or substantially all of its assets unless the transaction is in the usual and regular course of its activities or unless the Attorney General has given the corporation a written waiver of this section as to the proposed transaction. This section shall not apply to a public benefit corporation that is exempt from the supervisory authority of the Attorney General pursuant to Sections 12581 and 12583 of the Government Code by virtue of being a committee, as defined in Section 82013 of the Government Code, that is required to and does file any statement pursuant to the provisions of Article 2 (commencing with Section 84200) of Chapter 4 of Title 9 of the Government Code. (Amended by Stats. 2011, Ch. 442, Sec. 7. (AB 1211) Effective January 1, 2012.)
  182. 5914.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    Certain nonprofit corporations operating health facilities must give the Attorney General written notice and get written consent before major asset or control transactions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5914. (a) (1) Any nonprofit corporation that is defined in Section 5046 and operates or controls a health facility, as defined in Section 1250 of the Health and Safety Code, or operates or controls a facility that provides similar health care, regardless of whether it is currently operating or providing health care services or has a suspended license, shall be required to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to do either of the following: (A) Sell, transfer, lease, exchange, option, convey, or otherwise dispose of, its assets to a for-profit corporation or entity or to a mutual benefit corporation or entity when a material amount of the assets of the nonprofit corporation are involved in the agreement or transaction. (B) Transfer control, responsibility, or governance of a material amount of the assets or operations of the nonprofit corporation to any for-profit corporation or entity or to any mutual benefit corporation or entity. (2) The substitution of a new corporate member or members that transfers the control of, responsibility for, or governance of the nonprofit corporation shall be deemed a transfer for purposes of this article. The substitution of one or more members of the governing body, or any arrangement, written or oral, that would transfer voting control of the members of the governing body, shall also be deemed a transfer for purposes of this article. (b) The notice to the Attorney General provided for in this section shall include and contain the information the Attorney General determines is required. The notice, including any other information provided to the Attorney General under this article, and that is in the public file, shall be made available by the Attorney General to the public in written form, as soon as is practicable after it is received by the Attorney General. The notice shall include a list of the primary languages spoken at the facility and the threshold languages for Medi-Cal beneficiaries, as determined by the State Department of Health Care Services for the county in which the facility is located. The Attorney General may require the nonprofit corporation to provide certain components of the notice in any of these languages. (c) This section shall not apply to a nonprofit corporation if the agreement or transaction is in the usual and regular course of its activities or if the Attorney General has given the corporation a written waiver of this section as to the proposed agreement or transaction. (d) This section shall apply to any foreign nonprofit corporation that operates or controls a health facility, as defined in Section 1250 of the Health and Safety Code, or a facility that provides similar health care, regardless of whether it is currently operating or providing health care services or has a suspended license. (Amended by Stats. 2017, Ch. 782, Sec. 1. (AB 651) Effective January 1, 2018.)
  183. 5915.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General must notify the public benefit corporation in writing within 90 days after receiving the notice required by Section 5914, and may extend that period once for 45 days if stated conditions are met.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5915. Within 90 days of the receipt of the written notice required by Section 5914, the Attorney General shall notify the public benefit corporation in writing of the decision to consent to, give conditional consent to, or not consent to the agreement or transaction. The Attorney General may extend this period for one additional 45-day period if any of the following conditions are satisfied: (a) The extension is necessary to obtain information pursuant to subdivision (a) of Section 5919. (b) The proposed agreement or transaction is substantially modified after the first public meeting conducted by the Attorney General in accordance with Section 5916. (c) The proposed agreement or transaction involves a multifacility health system serving multiple communities, rather than a single facility. (Amended by Stats. 2017, Ch. 782, Sec. 2. (AB 651) Effective January 1, 2018.)
  184. 5916.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

    Verify source ↗

    Before certain written decisions or waivers, the Attorney General must hold public meetings and give advance written notice; the notice must be multilingual, and another meeting may be held if there is a substantive change.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5916. Prior to issuing any written decision referred to in Section 5915, or giving a written waiver under subdivision (c) of Section 5914, the Attorney General shall conduct one or more public meetings, one of which shall be in the county in which the facility is located, to hear comments from interested parties. At least 14 days before conducting the public meeting, the Attorney General shall provide written notice of the time and place of the meeting through publication in one or more newspapers of general circulation in the affected community and to the board of supervisors of the county in which the facility is located. This notice shall be provided in English and in the primary languages spoken at the facility and the threshold languages for Medi-Cal beneficiaries, as determined by the State Department of Health Care Services for the county in which the facility is located. If a substantive change in the proposed agreement or transaction is submitted to the Attorney General after the initial public meeting, the Attorney General may conduct an additional public meeting to hear comments from interested parties with respect to that change. (Amended by Stats. 2017, Ch. 782, Sec. 3. (AB 651) Effective January 1, 2018.)
  185. 5917.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General may consent, give conditional consent, or refuse consent to certain agreements or transactions, and must consider relevant factors when deciding.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5917. The Attorney General shall have discretion to consent to, give conditional consent to, or not consent to any agreement or transaction described in subdivision (a) of Section 5914. In making the determination, the Attorney General shall consider any factors that the Attorney General deems relevant, including, but not limited to, whether any of the following apply: (a) The terms and conditions of the agreement or transaction are fair and reasonable to the nonprofit corporation. (b) The agreement or transaction will result in inurement to any private person or entity. (c) Any agreement or transaction that is subject to this article is at fair market value. In this regard, “fair market value” means the most likely price that the assets being sold would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and in their own best interest, and a reasonable time being allowed for exposure in the open market. (d) The market value has been manipulated by the actions of the parties in a manner that causes the value of the assets to decrease. (e) The proposed use of the proceeds from the agreement or transaction is consistent with the charitable trust on which the assets are held by the health facility or by the affiliated nonprofit health system. (f) The agreement or transaction involves or constitutes any breach of trust. (g) The Attorney General has been provided, pursuant to Section 5250, with sufficient information and data by the nonprofit corporation to evaluate adequately the agreement or transaction or the effects thereof on the public. (h) The agreement or transaction may create a significant effect on the availability or accessibility of health care services to the affected community. (i) The proposed agreement or transaction is in the public interest. (j) The agreement or transaction may create a significant effect on the availability and accessibility of cultural interests provided by the facility in the affected community. (Amended by Stats. 2017, Ch. 782, Sec. 4. (AB 651) Effective January 1, 2018.)
  186. 5917.5.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

    Verify source ↗

    The Attorney General may not consent to certain health facility agreements or transactions if the seller restricts the type or level of medical services provided at the facility.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5917.5. The Attorney General shall not consent to a health facility agreement or transaction pursuant to Section 5914 or Section 5920 in which the seller restricts the type or level of medical services that may be provided at the health facility that is the subject of the agreement or transaction. (Added by Stats. 2003, Ch. 65, Sec. 1. Effective January 1, 2004.)
  187. 5918.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

    Verify source ↗

    The Attorney General may adopt regulations to implement this article.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5918. The Attorney General may adopt regulations implementing this article. (Added by Stats. 1996, Ch. 1105, Sec. 4. Effective January 1, 1997.)
  188. 5919.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

    Verify source ↗

    The Attorney General may hire and consult with agencies or experts to review certain nonprofit asset sales, and the nonprofit corporation must pay the review costs when asked.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5919. (a) Within the time periods designated in Section 5915 and relating to those factors specified in Section 5917, the Attorney General may do the following: (1) Contract with, consult, and receive advice from any state agency on those terms and conditions that the Attorney General deems appropriate. (2) In his or her sole discretion, contract with experts or consultants to assist in reviewing the proposed agreement or transaction. (b) Contract costs shall not exceed an amount that is reasonable and necessary to conduct the review and evaluation. Any contract entered into under this section shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code. The nonprofit corporation, upon request, shall pay the Attorney General promptly for all contract costs. (c) The Attorney General shall be entitled to reimbursement from the nonprofit corporation for all actual, reasonable, direct costs incurred in reviewing, evaluating, and making the determination referred to in this article, including administrative costs. The nonprofit corporation shall promptly pay the Attorney General, upon request, for all of those costs. (d) (1) In order to monitor effectively ongoing compliance with the terms and conditions of any sale or transfer of assets subject to Section 5914, including, but not limited to, the ongoing use of the charitable assets in a manner consistent with the trust pursuant to which they are held, the Attorney General may, in his or her sole discretion, contract with experts and consultants to assist in this regard. (2) Contract costs shall not exceed an amount that is reasonable and necessary to conduct the review and evaluation. Any contract entered into under this section shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code. The nonprofit corporation shall pay the Attorney General promptly for all contract costs. (3) The Attorney General shall be entitled to reimbursement from either the selling or the acquiring corporation, depending upon which one the burden of compliance falls, for all actual, reasonable, and direct costs incurred in monitoring ongoing compliance with the terms and conditions of the sale or transfer of assets, including contract and administrative costs. The Attorney General may bill either the selling or the acquiring corporation and the corporation billed by the Attorney General shall promptly pay for all of those costs. (Amended by Stats. 2002, Ch. 427, Sec. 3. Effective January 1, 2003.)
  189. 5920.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

    Verify source ↗

    Certain nonprofit corporations operating health facilities must give the Attorney General written notice and get written consent before major asset or control transactions.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5920. (a) (1) Any nonprofit corporation that is defined in Section 5046 and operates or controls a health care facility, as defined in Section 1250 of the Health and Safety Code, or operates or controls a facility that provides similar health care, regardless of whether it is currently operating or providing health care services or has a suspended license, shall be required to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to do either of the following: (A) Sell, transfer, lease, exchange, option, convey, or otherwise dispose of, its assets to another nonprofit corporation or entity when a material amount of the assets of the nonprofit corporation are involved in the agreement or transaction. (B) Transfer control, responsibility, or governance of a material amount of the assets or operations of the nonprofit corporation to another nonprofit corporation or entity. (2) The substitution of a new corporate member or members that transfers the control of, responsibility for, or governance of the nonprofit corporation, the substitution of one or more members of the governing body that would transfer voting control of the members of the governing body, or any arrangement, written or oral, that would transfer voting control of the entity shall be deemed a transfer for purposes of this article. (b) The notice to the Attorney General provided for in this section shall contain the information the Attorney General determines is required. The notice, including any other information provided to the Attorney General under this article, and that is the public file, shall be made available by the Attorney General to the public in written form, as soon as is practicable after it is received by the Attorney General. The notice to the Attorney General shall include a list of the primary languages spoken at the facility and the threshold languages for Medi-Cal beneficiaries as determined by the State Department of Health Care Services for the county in which the facility is located. The Attorney General may require the nonprofit corporation to provide certain components of the notice in any of those languages. (c) This section shall not apply to a nonprofit corporation if the agreement or transaction is in the usual and regular course of its activities or if the Attorney General has given the corporation a written waiver of this section as to the proposed agreement or transaction. (d) This section shall apply to any foreign nonprofit corporation that operates or controls a health facility, as defined in Section 1250 of the Health and Safety Code, or a facility that provides similar health care, regardless of whether it is currently operating or providing health care services or has a suspended license. (e) This section shall not apply to an agreement or transaction if the other party to the agreement or transaction is an affiliate, as defined in Section 5031, of the transferring nonprofit corporation or entity, and the corporation or entity has given the Attorney General 20 days advance notice of the agreement or transaction. (Amended by Stats. 2017, Ch. 782, Sec. 5. (AB 651) Effective January 1, 2018.)
  190. 5921.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General must notify the nonprofit corporation in writing within 90 days after the required notice is received, and may extend that period by one additional 45 days if specified conditions are met.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5921. Within 90 days of the receipt of the written notice required by Section 5920, the Attorney General shall notify the nonprofit corporation in writing of the decision to consent to, give conditional consent to, or not consent to the agreement or transaction. The Attorney General may extend this period for one additional 45-day period if any of the following conditions are satisfied: (a) The extension is necessary to obtain relevant information from any state agency, experts, or consultants. (b) The proposed agreement or transaction is substantially modified after the first public meeting conducted by the Attorney General in accordance with Section 5922. (c) The proposed agreement or transaction involves a multifacility health system serving multiple communities, rather than a single facility. (Amended by Stats. 2017, Ch. 782, Sec. 6. (AB 651) Effective January 1, 2018.)
  191. 5922.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    Before certain decisions or waivers, the Attorney General must hold public meetings and give advance written notice; the notice must be bilingual or multilingual as specified.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5922. Prior to issuing any written decision referred to in Section 5921, or giving a written waiver under subdivision (c) of Section 5920, the Attorney General shall conduct one or more public meetings, one of which shall be in the county in which the facility is located, to hear comments from interested parties. At least 14 days before conducting the public meeting, the Attorney General shall provide written notice of the time and place of the meeting through publication in one or more newspapers of general circulation in the affected community and to the board of supervisors of the county in which the facility is located. This notice shall be provided in English and in the primary languages spoken at the facility and the threshold languages for Medi-Cal beneficiaries as determined by the State Department of Health Care Services for the county in which the facility is located. If a substantive change in the proposed agreement or transaction is submitted to the Attorney General after the initial public meeting, the Attorney General may conduct an additional public meeting to hear comments from interested parties with respect to that change. (Amended by Stats. 2019, Ch. 795, Sec. 1. (AB 174) Effective January 1, 2020.)
  192. 5923.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General may consent, give conditional consent, or refuse consent for certain nonprofit asset transactions, and must consider relevant factors when deciding.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5923. The Attorney General shall have discretion to consent to, give conditional consent to, or not consent to any agreement or transaction described in subdivision (a) of Section 5920. In making the determination, the Attorney General shall consider any factors that the Attorney General deems relevant, including, but not limited to, whether any of the following apply: (a) The terms and conditions of the agreement or transaction are fair and reasonable to the nonprofit corporation. (b) The agreement or transaction will result in inurement to any private person or entity. (c) Fair market value of the agreement or transaction, meaning the most likely price that the assets being sold would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and in their own best interest, and a reasonable time being allowed for exposure in the open market. (d) The market value has been manipulated by the actions of the parties in a manner that causes the value of the assets to decrease. (e) The proposed use of the proceeds from the agreement or transaction is consistent with the charitable trust on which the assets are held by the health facility or by the affiliated nonprofit health system. (f) The agreement or transaction involves or constitutes any breach of trust. (g) The Attorney General has been provided, pursuant to Section 5250, with sufficient information and data by the nonprofit public benefit corporation to evaluate adequately the agreement or transaction or the effects thereof on the public. (h) The agreement or transaction may create a significant effect on the availability or accessibility of health care services to the affected community. (i) The proposed agreement or transaction is in the public interest. (j) The agreement or transaction may create a significant effect on the availability and accessibility of cultural interests provided by the facility in the affected community. (Amended by Stats. 2017, Ch. 782, Sec. 8. (AB 651) Effective January 1, 2018.)
  193. 5924.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General may hire or consult with agencies, experts, or consultants to review or monitor certain nonprofit asset sales, and the selling or acquiring nonprofit corporation may have to pay related costs.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5924. (a) Within the time periods designated in Section 5921 and relating to those factors specified in Section 5923, the Attorney General may do the following: (1) Contract with, consult, and receive advice from any state agency on those terms and conditions that the Attorney General deems appropriate. (2) In his or her sole discretion, contract with experts or consultants to assist in reviewing the proposed agreement or transaction. (b) Contract costs shall not exceed an amount that is reasonable and necessary to conduct the review and evaluation. Any contract entered into under this section shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code. The selling nonprofit corporation, upon request, shall pay the Attorney General promptly for all contract costs. (c) The Attorney General shall be entitled to reimbursement from the selling nonprofit corporation for all actual, reasonable, direct costs incurred in reviewing, evaluating, and making the determination referred to in Section 5921, including administrative costs. The selling nonprofit corporation shall promptly pay the Attorney General, upon request, for all of those costs. (d) (1) In order to effectively monitor ongoing compliance with the terms and conditions of any sale or transfer of assets subject to Section 5920, including, but not limited to, the ongoing use of the charitable assets in a manner consistent with the trust pursuant to which they are held, the Attorney General may, in his or her sole discretion, contract with experts and consultants to assist in this regard. (2) Contract costs shall not exceed an amount that is reasonable and necessary to conduct the review and evaluation. Any contract entered into under this section shall be on a noncompetitive bid basis and shall be exempt from Chapter 2 (commencing with Section 10290) of Part 2 of Division 2 of the Public Contract Code. The selling nonprofit corporation shall pay the Attorney General promptly for all contract costs. (3) The Attorney General shall be entitled to reimbursement from either the selling or the acquiring nonprofit corporation, depending upon which one the burden of compliance falls, for all actual, reasonable, and direct costs incurred in monitoring ongoing compliance with the terms and conditions of the sale or transfer of assets, including contract and administrative costs. The Attorney General shall be entitled to this reimbursement for a period of time not to exceed two years after any time period specified in the terms or conditions of sale or transfer of assets. The Attorney General may bill either the selling or the acquiring corporation and the corporation billed by the Attorney General shall promptly pay for all of those costs. (Amended by Stats. 2002, Ch. 427, Sec. 7. Effective January 1, 2003.)
  194. 5925.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General may adopt regulations to implement Sections 5920 to 5924.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5925. The Attorney General may adopt regulations implementing Sections 5920 to 5924, inclusive. (Added by Stats. 1999, Ch. 850, Sec. 11. Effective January 1, 2000.)
  195. 5926.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General may enforce consent conditions for certain agreements or transactions, and may seek specific performance, injunctions, other equitable relief, and attorney’s fees and costs for breaches.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5926. The Attorney General may enforce conditions imposed on the Attorney General’s consent to an agreement or transaction pursuant to Section 5914 or 5920 to the fullest extent provided by law. In addition to any legal remedies the Attorney General may have, the Attorney General shall be entitled to specific performance, injunctive relief, and other equitable remedies a court deems appropriate for breach of any of the conditions and shall be entitled to recover its attorney’s fees and costs incurred in remedying each violation. (Added by Stats. 2017, Ch. 782, Sec. 9. (AB 651) Effective January 1, 2018.)
  196. 5930.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. )

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    The Attorney General must prepare a plan to evaluate whether additional charitable-care and community-benefits standards should be set for certain nonprofit hospitals, consult interested groups while doing so, and submit the plan to legislative committees by March 1, 2001.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 9. Sales of Assets [5910 - 5930] ( Chapter 9 added by Stats. 1978, Ch. 567. ) ## ARTICLE 2. Health Facilities [5914 - 5930] ( Article 2 added by Stats. 1996, Ch. 1105, Sec. 4. ) ## 5930. (a) The Attorney General shall prepare a plan for an evaluation of whether additional standards for charitable care and community benefits should be established for private, not-for-profit corporations that operate or control a general acute care hospital as defined in Section 1250 of the Health and Safety Code. (b) In preparing the plan, the Attorney General shall consult with representatives of interested parties, including, but not limited to, all of the following: (1) Health facility associations. (2) Physician organizations. (3) Consumer groups. (4) Health care employee organizations. (5) Community groups. (6) The Office of Statewide Health Planning and Development. (c) The plan shall provide for the evaluation of all of the following: (1) The degree to which private, not-for-profit hospitals provide charitable care and community benefits, including the nature of the benefits, the definition of the community, and a comparison of the cost of providing the benefit with the value of the benefits given to the community. (2) The implications of the relationships among private not-for-profit hospitals and affiliated entities, as defined in Section 5031 of the Corporations Code, for purposes of determining community benefits. (3) The role of the board of directors of private, not-for-profit hospitals in ensuring benefit to the community. (d) The plan shall be submitted to the appropriate policy and fiscal committees of the Legislature by March 1, 2001. (Added by Stats. 2000, Ch. 801, Sec. 1. Effective January 1, 2001.)
  197. 6.

    ## Corporations Code - CORP ## GENERAL PROVISIONS ( General Provisions enacted by Stats. 1947, Ch. 1038. )

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    Section headings do not change how this code is read or what it means.

    ## Corporations Code - CORP ## GENERAL PROVISIONS ( General Provisions enacted by Stats. 1947, Ch. 1038. ) ## 6. Title, division, part, chapter, article, and section headings contained herein do not in any manner affect the scope, meaning, or intent of the provisions of this code. (Enacted by Stats. 1947, Ch. 1038.)
  198. 600.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 6. Shareholders’ Meetings and Consents [600 - 605] ( Chapter 6 added by Stats. 1975, Ch. 682. )

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    Section 600 sets rules for shareholder meetings, including where they may be held, when annual meetings must occur, when special meetings may be called, and when remote participation or fully remote meetings are allowed or barred.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 6. Shareholders’ Meetings and Consents [600 - 605] ( Chapter 6 added by Stats. 1975, Ch. 682. ) ## 600. (a) Meetings of shareholders may be held at any place within or without this state as may be stated in or fixed in accordance with the bylaws. If no other place is stated or so fixed, shareholder meetings shall be held at the principal office of the corporation. Subject to any limitations in the articles or bylaws of the corporation, if authorized by the board of directors in its sole discretion, and subject to those guidelines and procedures as the board of directors may adopt, shareholders not physically present in person or by proxy at a meeting of shareholders may, by electronic transmission by and to the corporation (Sections 20 and 21), electronic video screen communication, conference telephone, or other means of remote communication, participate in a meeting of shareholders, be deemed present in person or by proxy, and vote at a meeting of shareholders, subject to subdivision (e). (b) An annual meeting of shareholders shall be held for the election of directors on a date and at a time stated in or fixed in accordance with the bylaws. However, if the corporation is a regulated management company, a meeting of shareholders shall be held as required by the Federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.). Any other proper business may be transacted at the annual meeting. For purposes of this subdivision, “regulated management company” means a regulated investment company as defined in Section 851 of the federal Internal Revenue Code. (c) If there is a failure to hold the annual meeting for a period of 60 days after the date designated therefor or, if no date has been designated, for a period of 15 months after the organization of the corporation or after its last annual meeting, the superior court of the proper county may summarily order a meeting to be held upon the application of any shareholder after notice to the corporation giving it an opportunity to be heard. The shares represented at the meeting, either in person or by proxy, and entitled to vote thereat shall constitute a quorum for the purpose of the meeting, notwithstanding any provision of the articles or bylaws or in this division to the contrary. The court may issue any orders as may be appropriate, including, without limitation, orders designating the time and place of the meeting, the record date for determination of shareholders entitled to vote, and the form of notice of the meeting. (d) Special meetings of the shareholders may be called by the board, the chairperson of the board, the president, the holders of shares entitled to cast not less than 10 percent of the votes at the meeting, or any additional persons as may be provided in the articles or bylaws. (e) A meeting of the shareholders may be conducted, in whole or in part, by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures: (1) to provide shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings, (2) if any shareholder or proxyholder votes or takes other action at the meeting by means of electronic transmission to the corporation, electronic video screen communication, conference telephone, or other means of remote communication, to maintain a record of that vote or action in its books and records, and (3) to verify that each person who has voted remotely is a shareholder or proxyholder. A corporation shall not conduct a meeting of shareholders solely by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication unless one or more of the following conditions apply: (A) all of the shareholders consent; (B) the board determines it is necessary or appropriate because of an emergency, as defined in paragraph (5) of subdivision (i) of Section 207; or (C) notwithstanding the absence of consent from all shareholders pursuant to (A) or subdivision (b) of Section 20, the meeting includes a live audiovisual feed for the duration of the meeting. A corporation holding a meeting pursuant to (C) may offer, in addition to remote audiovisual feed, an audio-only means by which a shareholder or proxyholder may participate provided that the choice between participating via audiovisual or via audio-only means is made by the shareholder or proxyholder and the corporation does not impose any barriers to either mode of participation. A de minimis disruption of an audio or audiovisual feed does not require a corporation to end a shareholder meeting under, or render the corporation out of compliance with, this subdivision. (Amended by Stats. 2024, Ch. 157, Sec. 1. (AB 2908) Effective January 1, 2025.)
  199. 601.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 6. Shareholders’ Meetings and Consents [600 - 605] ( Chapter 6 added by Stats. 1975, Ch. 682. )

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    Corporations must give shareholders advance written notice of meetings and include required meeting details.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 1. GENERAL CORPORATION LAW [100 - 2319] ( Division 1 repealed and added by Stats. 1975, Ch. 682. ) ## CHAPTER 6. Shareholders’ Meetings and Consents [600 - 605] ( Chapter 6 added by Stats. 1975, Ch. 682. ) ## 601. (a) Whenever shareholders are required or permitted to take any action at a meeting a written notice of the meeting shall be given not less than 10 (or, if sent by third-class mail, 30) nor more than 60 days before the date of the meeting to each shareholder entitled to vote thereat. That notice shall state the place, date and hour of the meeting, the means of electronic transmission by and to the corporation (Sections 20 and 21), electronic video screen communication, conference telephone, or other means of remote communication, if any, by which shareholders 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 annual meeting, those matters that the board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of subdivision (f) any proper matter may be presented at the meeting for that action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the board for election. (b) (1) Notice of a shareholders’ meeting or any report shall be given personally, by electronic transmission by the corporation, or by first-class mail, or, in the case of a corporation with outstanding shares held of record by 500 or more persons (determined as provided in Section 605) on the record date for the shareholders’ meeting, notice may also be sent third-class mail, or other means of written communication, addressed to the shareholder at the address of that shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice, or if no 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. The notice or report shall be deemed to have been given at the time when delivered personally, sent by electronic transmission by the corporation, deposited in the mail, or sent by other means of written communication. Notwithstanding the foregoing, the notice of a shareholder’s meeting or any report may 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 in paragraph (5) of subdivision (i) of Section 207. An affidavit of mailing or electronic transmission by the corporation, or electronic communication or other means of remote communication as permitted because of an emergency, of any notice or report in accordance with the provisions of this division, executed by the secretary, assistant secretary, or any transfer agent, shall be prima facie evidence of the giving of the notice or report. (2) If any notice or report addressed to the shareholder at the address of that shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at that 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 shareholder upon written demand of the shareholder 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 shareholders. (3) (A) 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: (i) The corporation is unable to deliver two consecutive notices to the shareholder by that means. (ii) The inability to so deliver the notices to the shareholder becomes known to the secretary, any assistant secretary, the transfer agent, or other person responsible for the giving of the notice. (B) This paragraph shall not apply if notices are provided by electronic communication or other means of remote communication as permitted because of an emergency. (c) Upon request in writing to the corporation addressed to the attention of the chairperson of the board, president, vice president or secretary by any person (other than the board) entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than 35 nor more than 60 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 procedure provided in subdivision (c) of Section 305 shall apply to that application. The court may issue orders as may be appropriate, including, without limitation, orders designating the time and place of the meeting, the record date for determination of shareholders entitled to vote, and the form of notice. (d) When a shareholders’ 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, conference telephone, or other means of remote communication, if any, by which the shareholders may participate) are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that 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 shareholder of record entitled to vote at the meeting. (e) The transactions of any meeting of shareholders, 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 either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, provides a waiver of notice or consent to the holding of the meeting or an approval of the minutes thereof in writing. All those 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 the 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 division to be included in the notice but not so included, if the objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders 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 shareholder approval at a meeting, other than unanimous approval by those entitled to vote, pursuant to Section 310, 902, 1152, 1201, 1900, or 2007 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. (Amended by Stats. 2022, Ch. 617, Sec. 15. (SB 1202) Effective January 1, 2023.)
  200. 6010.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 10. Mergers [6010 - 6022] ( Chapter 10 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Merger [6010 - 6019.1] ( Article 1 added by Stats. 1978, Ch. 567. )

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    A public benefit corporation may merge with certain entities, but mergers outside the allowed categories generally need the Attorney General’s prior written consent.

    ## Corporations Code - CORP ## TITLE 1. CORPORATIONS [100 - 14707] ( Title 1 enacted by Stats. 1947, Ch. 1038. ) ## DIVISION 2. NONPROFIT CORPORATION LAW [5000 - 10841] ( Heading of Division 2 amended by Stats. 1978, Ch. 567. ) ## PART 2. NONPROFIT PUBLIC BENEFIT CORPORATIONS [5110 - 6910] ( Part 2 added by Stats. 1978, Ch. 567. ) ## CHAPTER 10. Mergers [6010 - 6022] ( Chapter 10 added by Stats. 1978, Ch. 567. ) ## ARTICLE 1. Merger [6010 - 6019.1] ( Article 1 added by Stats. 1978, Ch. 567. ) ## 6010. (a) A public benefit corporation may merge with any domestic corporation, foreign corporation (Section 171), or other business entity (Section 5063.5). However, without the prior written consent of the Attorney General, a public benefit corporation may only merge with another public benefit corporation or a religious corporation or a foreign nonprofit corporation or an unincorporated association the governing documents of which provide that its assets are irrevocably dedicated to charitable, religious, or public purposes. In addition, a public benefit corporation that is exempt from the supervisory authority of the Attorney General pursuant to Sections 12581 and 12583 of the Government Code by virtue of being a committee, as defined in Section 82013 of the Government Code, that is required to and does file any statement pursuant to the provisions of Article 2 (commencing with Section 84200) of Chapter 4 of Title 9 of the Government Code, may merge with another public benefit corporation similarly exempt without having to obtain the Attorney General’s consent. (b) At least 20 days prior to consummation of any merger allowed by subdivision (a), the Attorney General must be provided with a copy of the proposed agreement of merger. (c) Without the prior written consent of the Attorney General, when a merger occurs pursuant to subdivision (a), each member of a constituent corporation may only receive or keep a membership in the surviving corporation for or as a result of the member’s membership in the constituent corporation. (Amended by Stats. 2011, Ch. 442, Sec. 8. (AB 1211) Effective January 1, 2012.)

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