AB 231: Shareholders’ meetings: remote communication.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-07-27
Current Status:
Passed
(2023-07-27: Chaptered by Secretary of State - Chapter 115, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Existing law authorizes and regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law authorizes meetings of members to be held at any place as stated or fixed in the bylaws, as specified, and provides that, subject to certain conditions, members not physically present may participate in a meeting, be deemed present, and vote by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication. Existing law prohibits conducting a meeting of members solely by electronic transmission, electronic video screen communication, conference telephone, or other remote communications unless all of the or members consent, the board determines it is necessary or appropriate because of an emergency, as defined, or if the meeting is conducted on or before June 30, 2022.
Existing law, the General Corporation Law, additionally authorizes corporations not governed by other specified state laws to 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 if the meeting is conducted on or before December 31, 2025, as specified, and includes a live audiovisual feed for the duration of the meeting. Existing law provides that a de minimis disruption of an audio, visual, or audiovisual feed does not require a corporation to end a shareholder meeting under, or render the corporation out of compliance with, the above-described provisions.
This bill would authorize corporations conducting a meeting on or before December 31, 2025, as described above, to offer, in addition to the live audiovisual feed, an audio-only means of participation. The bill would grant the shareholder or proxyholder the right to choose whether to participate via audiovisual or audio-only means and would prohibit the corporation from imposing any barriers on either mode of participation. The bill would provide that 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, those provisions. The bill would extend those same provisions to a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation holding a meeting of members.
Existing law requires a corporation to implement reasonable measures when it conducts a meeting of shareholders solely by specified means of remote communication. The General Corporation Law requires a corporation not governed by other specified state laws to verify that a person who has voted remotely is a shareholder or proxyholder. Existing law requires a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation to verify that each person participating remotely is a member or proxyholder.
This bill would instead require a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation to verify that person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel requirement set forth in the General Corporation Law.
Existing law requires a cooperative corporation or a corporation not governed by other specified state laws to provide members or shareholders, and proxyholders as applicable, a reasonable opportunity to participate in a meeting conducted by remote communication, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings. Existing law requires a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation to provide members and proxyholders a reasonable opportunity to participate in a meeting conducted by remote communication, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with those proceedings.
This bill would instead require a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation to provide members and proxyholders an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings, thereby aligning those corporations with the parallel requirements set forth in the Cooperative Corporation Law and in the General Corporation Law.
Existing law authorizes and regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law authorizes meetings of members to be held at any place as stated or fixed in the bylaws, as specified, and provides that, subject to certain conditions, members not physically present may participate in a meeting, be deemed present, and vote by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication. Existing law prohibits conducting a meeting of members solely by electronic transmission, electronic video screen communication, conference telephone, or other remote communications unless all of the or members consent, the board determines it is necessary or appropriate because of an emergency, as defined, or if the meeting is conducted on or before June 30, 2022.
Existing law, the General Corporation Law, additionally authorizes corporations not governed by other specified state laws to 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 if the meeting is conducted on or before December 31, 2025, as specified, and includes a live audiovisual feed for the duration of the meeting. Existing law provides that a de minimis disruption of an audio, visual, or audiovisual feed does not require a corporation to end a shareholder meeting under, or render the corporation out of compliance with, the above-described provisions.
This bill would authorize corporations conducting a meeting on or before December 31, 2025, as described above, to offer, in addition to the live audiovisual feed, an audio-only means of participation. The bill would grant the shareholder or proxyholder the right to choose whether to participate via audiovisual or audio-only means and would prohibit the corporation from imposing any barriers on either mode of participation. The bill would provide that 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, those provisions. The bill would extend those same provisions to a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation holding a meeting of members.
Existing law requires a corporation to implement reasonable measures when it conducts a meeting of shareholders solely by specified means of remote communication. The General Corporation Law requires a corporation not governed by other specified state laws to verify that a person who has voted remotely is a shareholder or proxyholder. Existing law requires a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation to verify that each person participating remotely is a member or proxyholder.
This bill would instead require a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation to verify that person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel requirement set forth in the General Corporation Law.
Existing law requires a cooperative corporation or a corporation not governed by other specified state laws to provide members or shareholders, and proxyholders as applicable, a reasonable opportunity to participate in a meeting conducted by remote communication, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings. Existing law requires a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation to provide members and proxyholders a reasonable opportunity to participate in a meeting conducted by remote communication, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with those proceedings.
This bill would instead require a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation to provide members and proxyholders an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings, thereby aligning those corporations with the parallel requirements set forth in the Cooperative Corporation Law and in the General Corporation Law.
Existing law authorizes and regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law authorizes meetings of members to be held at any place as stated or fixed in the bylaws, as specified, and provides that, subject to certain conditions, members not physically present may participate in a meeting, be deemed present, and vote by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication. Existing law prohibits conducting a meeting of members solely by electronic transmission, electronic video screen communication, conference telephone, or other remote communications unless all of the or members consent, the board determines it is necessary or appropriate because of an emergency, as defined, or if the meeting is conducted on or before June 30, 2022.
Existing law, the General Corporation Law, additionally authorizes corporations not governed by other specified state laws to 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 if the meeting is conducted on or before December 31, 2025, as specified, and includes a live audiovisual feed for the duration of the meeting. Existing law provides that a de minimis disruption of an audio, visual, or audiovisual feed does not require a corporation to end a shareholder meeting under, or render the corporation out of compliance with, the above-described provisions.
This bill would authorize corporations conducting a meeting on or before December 31, 2025, as described above, to offer, in addition to the live audiovisual feed, an audio-only means of participation. The bill would grant the shareholder or proxyholder the right to choose whether to participate via audiovisual or audio-only means and would prohibit the corporation from imposing any barriers on either mode of participation. The bill would provide that 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, those provisions. The bill would extend those same provisions to a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation holding a meeting of members.
Existing law requires a corporation to implement reasonable measures when it conducts a meeting of shareholders solely by specified means of remote communication. The General Corporation Law requires a corporation not governed by other specified state laws to verify that a person who has voted remotely is a shareholder or proxyholder. Existing law requires a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation to verify that each person participating remotely is a member or proxyholder.
This bill would instead require a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation to verify that person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel requirement set forth in the General Corporation Law.
Existing law requires a cooperative corporation or a corporation not governed by other specified state laws to provide members or shareholders, and proxyholders as applicable, a reasonable opportunity to participate in a meeting conducted by remote communication, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings. Existing law requires a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation to provide members and proxyholders a reasonable opportunity to participate in a meeting conducted by remote communication, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with those proceedings.
This bill would instead require a nonprofit public benefit corporation, nonprofit mutual benefit corporation, or nonprofit religious corporation to provide members and proxyholders an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings, thereby aligning those corporations with the parallel requirements set forth in the Cooperative Corporation Law and in the General Corporation Law.
(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 is conducted on or before December 31, 2025, and 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.
SEC. 2.Section 5510 of the Corporations Code is amended to read: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 is conducted on or before December 31, 2025, and 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.
SEC. 3.Section 7510 of the Corporations Code is amended to read:7510.(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 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 and 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 (m) of Section 7140; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before December 31, 2025, and 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.
SEC. 4.Section 9411 of the Corporations Code is amended to read:9411.(a)Subject to the provisions of this chapter, regular and special meetings of members shall be called, noticed, and held as may be ordered by the board. 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 9140. 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, 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)Special meetings of members for any lawful purpose may be called by the board or the chairperson of the board or the president. In addition, special meetings of members for any lawful purpose may be called by 5 percent or more of the members.
(c)Upon request in writing to 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 board shall expeditiously set a reasonable time and place for the meeting and the officer forthwith shall cause notice to be given to the members entitled to vote of the time and place of the meeting. 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)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, if proxies are allowed, by proxy), and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. 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 except as provided in subdivision (e).
(e)Any member approval required under subdivision (b) of Section 9150, Section 9222, Section 5812 (made applicable pursuant to Section 9620), subdivision (a) of Section 9631, subdivision (c) of Section 9640, subdivision (a) of Section 6015 (made applicable pursuant to Section 9640), or subdivision (b) of Section 9680, 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.
(f)A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation or by 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 9140; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before December 31, 2025, and 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.
SEC. 5.Section 12460 of the Corporations Code is amended to read:12460.(a)Meetings of members may be held at a place within or without this state that is stated in or fixed in accordance with the bylaws. If no other place is so stated or fixed, meetings of members 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, members not physically present in person 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, and vote at a meeting of members, subject to subdivision (f).
(b)Except as provided in Section 12460.5, a regular meeting of members shall be held annually. In any year in which directors are elected, the election shall be held at the regular meeting unless the directors are chosen in some other manner authorized by law. Any other proper business may be transacted at the meeting.
(c)If a corporation 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, after notice to the corporation giving it an opportunity to be heard.
(d)The votes represented 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 provision 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 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, however, in a worker cooperative with more than four worker-members, a special meeting may only be called by the greater of three worker-members or 5 percent of the worker-members. In a worker cooperative with fewer than four worker-members, special meetings may be called by one worker-member.
(f)A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation, by electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures: (1) to provide members 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 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. 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 (m) of Section 12320; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before December 31, 2025, and 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 may participate provided that the choice between participating via audiovisual or via audio-only means is made by the member 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.
(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 is conducted on or before December 31, 2025, and 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.
SEC. 2.Section 5510 of the Corporations Code is amended to read: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 is conducted on or before December 31, 2025, and 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.
SEC. 3.Section 7510 of the Corporations Code is amended to read:7510.(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 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 and 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 (m) of Section 7140; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before December 31, 2025, and 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.
SEC. 4.Section 9411 of the Corporations Code is amended to read:9411.(a)Subject to the provisions of this chapter, regular and special meetings of members shall be called, noticed, and held as may be ordered by the board. 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 9140. 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, 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)Special meetings of members for any lawful purpose may be called by the board or the chairperson of the board or the president. In addition, special meetings of members for any lawful purpose may be called by 5 percent or more of the members.
(c)Upon request in writing to 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 board shall expeditiously set a reasonable time and place for the meeting and the officer forthwith shall cause notice to be given to the members entitled to vote of the time and place of the meeting. 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)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, if proxies are allowed, by proxy), and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. 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 except as provided in subdivision (e).
(e)Any member approval required under subdivision (b) of Section 9150, Section 9222, Section 5812 (made applicable pursuant to Section 9620), subdivision (a) of Section 9631, subdivision (c) of Section 9640, subdivision (a) of Section 6015 (made applicable pursuant to Section 9640), or subdivision (b) of Section 9680, 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.
(f)A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation or by 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 9140; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before December 31, 2025, and 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.
SEC. 5.Section 12460 of the Corporations Code is amended to read:12460.(a)Meetings of members may be held at a place within or without this state that is stated in or fixed in accordance with the bylaws. If no other place is so stated or fixed, meetings of members 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, members not physically present in person 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, and vote at a meeting of members, subject to subdivision (f).
(b)Except as provided in Section 12460.5, a regular meeting of members shall be held annually. In any year in which directors are elected, the election shall be held at the regular meeting unless the directors are chosen in some other manner authorized by law. Any other proper business may be transacted at the meeting.
(c)If a corporation 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, after notice to the corporation giving it an opportunity to be heard.
(d)The votes represented 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 provision 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 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, however, in a worker cooperative with more than four worker-members, a special meeting may only be called by the greater of three worker-members or 5 percent of the worker-members. In a worker cooperative with fewer than four worker-members, special meetings may be called by one worker-member.
(f)A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation, by electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures: (1) to provide members 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 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. 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 (m) of Section 12320; or (C) notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before December 31, 2025, and 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 may participate provided that the choice between participating via audiovisual or via audio-only means is made by the member 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.
(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 is conducted on or before December 31, 2025, and 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, visual, 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.
SEC. 2.Section 5510 of the Corporations Code is amended to read: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 substantially 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 participating 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; or (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) the notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before June 30, 2022. December 31, 2025, and 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.
SEC. 3.Section 7510 of the Corporations Code is amended to read:7510.(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 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 and 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 substantially 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 participating 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; or (B) the board determines it is necessary or appropriate because of an emergency, as defined in paragraph (5) of subdivision (m) of Section 7140; or (C) the notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before June 30, 2022. December 31, 2025, and 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.
SEC. 4.Section 9411 of the Corporations Code is amended to read:9411.(a)Subject to the provisions of this chapter, regular and special meetings of members shall be called, noticed, and held as may be ordered by the board. 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 9140. 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, 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)Special meetings of members for any lawful purpose may be called by the board or the chairperson of the board or the president. In addition, special meetings of members for any lawful purpose may be called by 5 percent or more of the members.
(c)Upon request in writing to 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 board shall expeditiously set a reasonable time and place for the meeting and the officer forthwith shall cause notice to be given to the members entitled to vote of the time and place of the meeting. 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)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, if proxies are allowed, by proxy), and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. 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 except as provided in subdivision (e).
(e)Any member approval required under subdivision (b) of Section 9150, Section 9222, Section 5812 (made applicable pursuant to Section 9620), subdivision (a) of Section 9631, subdivision (c) of Section 9640, subdivision (a) of Section 6015 (made applicable pursuant to Section 9640), or subdivision (b) of Section 9680, 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.
(f)A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation or by 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 substantially 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 participating 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, or consent; (B) the board determines it is necessary or appropriate because of an emergency, as defined in paragraph (5) of subdivision (n) of Section 9140; or (C) the notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before June 30, 2022. December 31, 2025, and 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.
SEC. 5.Section 12460 of the Corporations Code is amended to read:12460.(a)Meetings of members may be held at a place within or without this state that is stated in or fixed in accordance with the bylaws. If no other place is so stated or fixed, meetings of members 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, members not physically present in person 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, and vote at a meeting of members, subject to subdivision (f).
(b)Except as provided in Section 12460.5, a regular meeting of members shall be held annually. In any year in which directors are elected, the election shall be held at the regular meeting unless the directors are chosen in some other manner authorized by law. Any other proper business may be transacted at the meeting.
(c)If a corporation 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, after notice to the corporation giving it an opportunity to be heard.
(d)The votes represented 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 provision 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 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, however, in a worker cooperative with more than four worker-members, a special meeting may only be called by the greater of three worker-members or 5 percent of the worker-members. In a worker cooperative with fewer than four worker-members, special meetings may be called by one worker-member.
(f)A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation, by electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures: (1) to provide members 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 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 participating who has voted remotely is a member. 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; or (B) the board determines it is necessary or appropriate because of an emergency, as defined in paragraph (5) of subdivision (m) of Section 12320; or (C) the notwithstanding the absence of consent from all members pursuant to (A) or subdivision (b) of Section 20, the meeting is conducted on or before June 30, 2022. December 31, 2025, and 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 may participate provided that the choice between participating via audiovisual or via audio-only means is made by the member 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.
|
Date
|
Status
|
|---|---|
| Jul 27, 2023 | Chaptered by Secretary of State - Chapter 115, Statutes of 2023. |
| Jul 27, 2023 | Approved by the Governor. |
| Jul 25, 2023 | Enrolled and presented to the Governor at 4 p.m. |
| Jul 13, 2023 | In Assembly. Ordered to Engrossing and Enrolling. |
| Jul 13, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 37. Noes 0. Page 2038.). |
| Jul 10, 2023 | Read second time. Ordered to Consent Calendar. |
| Jul 6, 2023 | From committee: Do pass. To Consent Calendar. (Ayes 11. Noes 0.) (July 6). |
| Jun 21, 2023 | From committee: Do pass and re-refer to Com. on JUD. with recommendation: To Consent Calendar. (Ayes 7. Noes 0.) (June 21). Re-referred to Com. on JUD. |
| May 3, 2023 | Referred to Coms. on B. & F.I. and JUD. |
| Apr 20, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Apr 20, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 76. Noes 0. Page 1272.) |
| Mar 22, 2023 | Read second time. Ordered to third reading. |
| Mar 21, 2023 | From committee: Do pass. (Ayes 12. Noes 0.) (March 20). |
| Jan 26, 2023 | Referred to Com. on B. & F. |
| Jan 13, 2023 | From printer. May be heard in committee February 12. |
| Jan 12, 2023 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jul 13, 2023 | Consent Calendar AB231 Chen | Senate Floor |
Passed |
|
| Jul 6, 2023 | Do pass and be ordered to the Consent Calendar | Senate Standing Committee on Judiciary |
Passed |
|
| Jun 21, 2023 | Do pass, but first be re-referred to the Committee on [Judiciary] with the recommendation: To Consent Calendar | Senate Standing Committee on Banking and Financial Institutions |
Passed |
|
| Apr 20, 2023 | AB 231 Chen Assembly Third Reading | Assembly Floor |
Passed |
|
| Mar 20, 2023 | Do pass. | Assembly Standing Committee on Banking and Finance |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Anaheim Chamber Of Commerce | ** Support | |
| California Credit Union League | ** Support | |
| California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section | ** Support | |
| Delfino Madden | * Support | Mar 20, 2023 |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 231 |
CONSENT
Bill No: AB 231
Author: Chen (R)
Introduced: 1/12/23
Vote: 21
SENATE BANKING & F.I. COMMITTEE: 7-0, 6/21/23
AYES: Limón, Niello, Bradford, Caballero, Min, Nguyen, Portantino
SENATE JUDICIARY COMMITTEE: 11-0, 7/6/23
AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Min, Niello, Stern, Wiener
ASSEMBLY FLOOR: 76-0, 4/20/23 - See last page for vote
SUBJECT: Shareholders’ meetings: remote communication
SOURCE: California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section
DIGEST:
This bill provides additional flexibility to corporations to offer audiovisual or audio-only participation in shareholder or member meetings, as specified.
ANALYSIS:
Existing law:
- Establishes formation and governance requirements related to corporations pursuant to the General Corporation Law, the Nonprofit Corporation Law, and the Cooperative Corporation Law.
- Defines an “electronic transmission by the corporation” to mean a communication delivered by fax, e-mail, electronic message board, or other means of electronic communication to a recipient who has provided an unrevoked consent to the use of those means of transmission. (Corporations Code Section 20)
- Authorizes, for meetings conducted on or before December 31, 2025, unless expressly prohibited by the articles of incorporation or bylaws, the board of directors of a corporation, in its sole discretion and irrespective of whether any shareholder has opted out of electronic transmission by the corporation, to determine that a meeting of shareholders may be conducted by electronic transmission by and to the corporation or by electronic video screen communication, conference telephone, or other means of remote communication, subject to the corporation implementing reasonable measures to:
- Provide shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholder, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings.
- Maintain a record of any shareholder or proxyholder votes or any other action taken by a shareholder or proxyholder at the meeting, as specified.
- Verify that each person participating remotely is a shareholder or proxyholder. (Corporations Code Section 600)
- Authorizes a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation to conduct a meeting of members solely by electronic transmission if all of the members consent or if the board determines it is necessary or appropriate because of an emergency. (Corporations Code Sections 5510, 7510, 9411, and 12460)
This bill:
- Authorizes a corporation to offer, in addition to a remote audiovisual feed, an audio-only means by which a shareholder or proxyholder may participate, so long as the choice to participate via audio-only means is made by the person and not the corporation and the corporation does not impose any barriers to either mode of participation.
- Authorizes, until December 31, 2025, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperate corporation to conduct an annual meeting of members solely by live audiovisual feed and to 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.
- Requires a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation to verify that a person who has voted – rather than participated – remotely is a member or proxyholder.
Background
Historically, state law required corporations organized in California to hold their annual shareholder meetings at a physical location unless the corporation received unanimous consent from all shareholders to conduct a remote-only meeting. In the early stages of the COVID-19 pandemic, the Governor issued Executive Order N-40-20, which allowed corporations to conduct remote-only meetings given the public health risks associated with large gatherings in a physical setting.
Since 2021, the Legislature has passed three bills that provide corporations with additional flexibility in conducting annual meetings remotely. Through December 31, 2025, existing law provides for-profit corporations with the option to conduct meetings exclusively via live audiovisual feed without requiring the corporation to first obtain consent from all its shareholders. This bill would extend that same privilege to nonprofit and cooperative corporations. Furthermore, this bill would allow for-profit, nonprofit, and cooperative corporations to offer an audio-only option, alongside audiovisual, that a shareholder, member, or proxyholder could elect to use for remote participation.
Comments
Purpose: According to the author:
This bill would allow for the same fully remote non-emergency member meetings for California nonprofit public benefit, mutual benefit and religious corporations and cooperative corporations, as is currently provided for non-emergency shareholder meetings for California for-profit corporations.
This bill would also permit for-profit corporations, nonprofit public benefit, mutual benefit and religious corporations, and cooperative associations to offer remote audiovisual and audio-only means of participation to shareholders, members and proxyholders and, if audio-only means is provided, grant each shareholder, member or proxyholder the right to choose whether to participate in the solely virtual audiovisual meeting via audiovisual or audio-only means, and would prohibit the corporation from imposing any barriers on either mode of participation.
This bill would also require nonprofit and cooperative corporations to verify that a person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel requirement for for-profit corporations set forth in the General Corporation Law.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 7/20/23)
California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section (source)
Anaheim Chamber of Commerce
California Credit Union League
OPPOSITION: (Verified 7/10/23)
None received
ARGUMENTS IN SUPPORT: The California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section, as sponsor, writes:
Challenges in accessibility that arose as a result of the COVID-19 pandemic demonstrated that provisions providing some flexibility for meetings of members of a California nonprofit or cooperative corporation during an emergency do not adequately recognize the need for such flexibility outside the context of an emergency. Such non-emergency flexibility is, however, currently provided for fully remote shareholder meetings of California for-profit corporations….This bill treats member meetings of nonprofit and cooperative corporations the same way that it (and current law) treats shareholder meetings of for-profit corporations.
ASSEMBLY FLOOR: 76-0, 4/20/23
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner Horvath, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gipson, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO VOTE RECORDED: Gabriel, Gallagher, Garcia, Irwin
Prepared by: Michael Burdick / B. & F.I. /
7/12/23 14:15:01
**** END ****
Senator Thomas Umberg, Chair
2023-2024 Regular Session
Bill No: AB 231 (Author:Chen)
Version: January 12, 2023
Hearing Date: July 6, 2023
Fiscal: No
Urgency: No
Consultant: AWM
SUBJECT
Shareholders’ meetings: remote communication
DIGEST
This bill permits a corporation incorporated under the General Corporation Law to, in addition to providing an audiovisual remote meeting option, provide an audio-only participation method; and extends existing shareholder remote meeting methods to other types of corporations, including nonprofit corporations
EXECUTIVE SUMMARY
Prior to the COVID-19 pandemic, a corporation incorporated in California could hold a fully remote shareholder meeting only with the consent of all of the shareholders. Since then, however, the Legislature has enacted several measures allowing California corporations to hold fully remote meetings at the discretion of the board, provided that certain requirements are met. In 2021, the Legislature enacted AB 663 (Chen, Ch. 523, Stats. 2021), which authorized certain California corporations to hold fully remote shareholder meetings when an emergency, as defined, prevented a quorum of the board of directors from convening. And in 2022, the Legislature enacted AB 789 (Grayson, Ch. 12, Stats. 2022), which allowed California for-profit, nonprofit, and cooperative corporations to hold fully remote shareholder meetings without shareholder consent until June 30, 2022; in the same year, the Legislature enacted AB 1780 (Chen, Ch. 951, Stats. 2022), which extended—for for-profit corporations only—the authorization to hold a fully remote shareholder meeting without shareholder consent through December 31, 2025.
This bill permits specified nonprofit and cooperative corporations to hold fully remote shareholder meetings under the same terms as a for-profit corporation, subject to the same December 31, 2025, sunset. The bill also allows for-profit, nonprofit, and cooperative corporations to provide an audio-only means of participating in a remote meeting in addition to the required live audiovisual feed, provided that shareholders retain the right to choose which means of participation they use and the corporation does not attempt to encourage one or the other.
This bill is sponsored by the Nonprofit Organizations Committee and the Corporations Committee of the Business Law Section of the California Lawyers Association, and is supported by the Anaheim Chamber of Commerce and the California Credit Union League. There is no known opposition. This bill was passed out by the Senate Banking and Financial Institutions Committee with a vote of 7-0.
PROPOSED CHANGES TO THE LAW
Existing law:
- Establishes the General Corporation Law, which governs most corporations incorporated in this state, as specified. (Corp. Code, tit. 1, div. 1, §§ 100 et seq.)
- Authorizes a corporation incorporated under the General Corporation Law to conduct a shareholder meeting in whole or in part through remote electronic means provided that the corporation implements specified measures to provide shareholders and proxyholders a reasonable opportunity to participate and vote on matters considered at the meeting. A de minimis disruption of the audiovisual feed does not require a corporation to end the meeting or render the corporation out of compliance with the law. (Corp. Code, § 600(e).)
- Permits a corporation incorporated under the General Corporation Law to conduct a shareholder meeting pursuant to 2) solely through remote means only if one of the following is satisfied:
- All of the shareholders consent to the remote meeting;
- The board determines the remote meeting is necessary or appropriate because of emergency circumstances, as defined; or
- The meeting is conducted on or before December 21, 2025, and includes a live audiovisual feed for the duration of the meeting. (Corp. Code, § 600(e).)
- Establishes the Nonprofit Corporation Law, which authorizes the formation of a corporation for a range of purposes, including public, charitable, and religious purposes, on a not-for-profit basis. (Corp. Code, tit. 1, div. 2., §§ 5002 et seq.)
- Establishes the Cooperative Corporation Law, which authorizes the formation of a corporation for any lawful purpose provided that it is organized and conducts its business primarily for the mutual benefit of its members as “patrons” of the corporation. (Corp. Code, tit. 1, div. 3, pt. 2, §§ 12200 et seq.)
- Authorizes a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation to conduct a shareholder meeting in whole or in part under the same terms as 2); and to conduct its shareholder meeting solely through remote means only if one of the following is satisfied:
- All of the shareholders, members, or patrons consent to the remote meeting; or
- The board determines the remote meeting is necessary or appropriate because of emergency circumstances, as defined. (Corp. Code, §§ 5510, 7510, 9411, 12460.)
This bill:
- Authorizes a corporation incorporated under the General Corporation Law to provide for a shareholder meeting, in addition to a live audiovisual feed for remote participation, an audio-only means for a shareholder or proxyholder to participate, provided that the choice to participate via the audio-only means is made by the person, not the corporation, and the corporation does not impose any barriers to either mode of participation.
- Authorizes, through December 31, 2025, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation to conduct an annual meeting remotely, including via the audio and audiovisual methods described in 1).
- Requires a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation to verify that a person who has voted – rather than participated – remotely is a member or proxyholder.
COMMENTS
- Author’s comment
According to the author:
This bill would allow for fully remote non-emergency member meetings for California nonprofit public benefit, mutual benefit and religious corporations and cooperative corporations, as is currently provided for non-emergency shareholder meetings for California for-profit corporations.
This bill would also permit for-profit corporations, nonprofit public benefit, mutual benefit and religious corporations, and cooperative associations to offer remote audiovisual and audio-only means of participation to shareholders, members and proxyholders and, if audio-only means is provided, grant each shareholder, member or proxyholder the right to choose whether to participate in the solely virtual audiovisual meeting via audiovisual or audio-only means, and would prohibit the corporation from imposing any barriers on either mode of participation.
This bill would also require nonprofit and cooperative corporations to verify that a person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel shareholder requirement set forth in the General Corporation Law.
2. The state of the law on remote shareholder meetings
Prior to the COVID-19 pandemic, corporations incorporated in California were not authorized to hold annual shareholder meetings entirely through remote electronic means absent consent from all of their shareholders. Corporations are, however, authorized to conduct hybrid shareholder meetings—meetings wherein the board of directors had to convene a quorum at an in-person location, but shareholders had the option to attend remotely, subject to certain technical and recordkeeping requirements.[1]
At the onset of the COVID-19 pandemic, Governor Gavin Newsom, in recognition of the risks of large, in-person gatherings, issued executive orders authorizing California corporations to hold fully remote shareholder meetings.[2] The executive orders were allowed to expire on September 30, 2021, in light of what appeared to be the waning pandemic.[3] In the interim, the Legislature enacted, and the Governor signed, AB 663 (Chen, Ch. 523, Stats. 2021), which authorized a California corporation to hold a fully remote shareholder meeting either with the consent of all the shareholders or when the board determines that it is necessary and appropriate as a result of an emergency, as defined, that prevents a quorum of the board from readily convening.[4]
Near the end of 2021, as the omicron variant of COVID-19 spread through the state, Governor Newsom signed a new executive order relating to corporate meetings. California corporations were unsure whether the omicron variant constituted an “emergency” under AB 663, so the order re-authorized California corporations to conduct fully remote shareholder meetings without shareholder consent until March 31, 2022.[5]
In anticipation of the expiration of the executive order, the Legislature enacted AB 769 (Grayson, Ch. 12, Stats. 2022), an urgency measure allowing a California corporation to hold a fully remote shareholder meeting for any reason until June 30, 2022. Later that year, the Legislature passed AB 1780 (Chen, Ch. 951, Stats. 2022), which extended the right of a corporation incorporated under the General Corporation Law to hold a fully remote shareholder meeting for any reason through December 31, 2022.
3. This bill allows nonprofit and cooperative corporations to hold remote-only shareholder meetings under the same terms as a for-profit corporation and allows an audio-only meeting participation method to be provided in addition to an audiovisual method
AB 231 contains three major changes to remote annual meeting participation, while maintaining the existing December 31, 2025, sunset date on the authorization for fully remote shareholder meetings at the discretion of the board.
First, this bill allows for an audio-only option (such as a call-in option) for a corporation’s remote shareholder meeting. This method of participation cannot be in lieu of any audio-visual component, and a participant’s use of audio participation must be their choice and not the corporation’s.
Second, AB 231 extends to nonprofit and cooperative corporations all of the remote shareholder flexibility that AB 1780 and this bill provide to for-profit corporations. Nonprofit public benefit corporations, nonprofit mutual benefit corporations, and cooperative corporations all have annual member meetings, so this bill creates consistency across corporation types.
Finally, under current law, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation conducting a remote member meeting must verify that a person who is participating is a member of proxyholder. By contrast, a for-profit corporation must verify this information only for a person who has voted. AB 231 extends this approach to these nonprofit entities.
4. Arguments in support
According to the sponsors of the bill:
Challenges in accessibility that arose as a result of the COVID-19 pandemic demonstrated that provisions providing some flexibility for meetings of members of a California nonprofit or cooperative corporation during an emergency do not adequately recognize the need for such flexibility outside the context of an emergency. Such non-emergency flexibility is, however, currently provided for fully remote shareholder meetings of California for-profit corporations…
This bill treats member meetings of nonprofit and cooperative corporations the same way that it (and current law) treats shareholder meetings of for-profit corporations. The bill also clarifies that, notwithstanding the absence of consent from shareholders or members, as applicable, if the meeting is conducted on or before December 31, 2025, a corporation may offer, in addition to a remote audiovisual feed, an audio-only means by which a shareholder, member, or proxyholder may participate, provided that the choice between participating via audiovisual or via audio-only means is made by the shareholder, member, or proxyholder and the corporation does not impose any barriers to either mode of participation.
SUPPORT
California Lawyers Association, Business Law Section, Nonprofit Organizations Committee and Corporations Committee (sponsors)
Anaheim Chamber of Commerce
California Credit Union League
OPPOSITION
None known
RELATED LEGISLATION
Pending Legislation: None known.
Prior Legislation:
AB 1780 (Chen, Ch. 951, Stats. 2022) authorized a corporation to send communications to a shareholder via email unless the shareholder expressly opted out, and authorized a corporation to hold fully remote shareholder meetings unless specifically prohibited by its articles of incorporation or bylaws, until January 1, 2026.
AB 769 (Grayson, Ch. 12, Stats. 2022) authorized specified corporations incorporated in California to hold fully remote shareholder meetings on or before June 30, 2022.
AB 663 (Chen, Ch. 523, Stats. 2021) among other things, authorized California corporations to hold fully remote shareholder meetings (1) with the consent of all of the shareholders, or (2) when the board determines that a remote meeting is necessary or appropriate as the result of an ongoing emergency, as defined.
SB 351 (Senate Banking and Financial Institutions Committee, Ch. 98, Stats. 2015) provided cooperative corporations with the same emergency authority granted to general and nonprofit corporations.
AB 491 (Torres, Ch. 255, Stats. 2013) granted general and nonprofit corporations the authority to take certain actions in emergencies.
PRIOR VOTES:
Senate Banking and Financial Institutions Committee (Ayes 7, Noes 0)
Assembly Floor (Ayes 76, Noes 0)
Assembly Banking and Finance Committee (Ayes 12, Noes 0)
**************
Corp. Code, §§ 600, 5510, 7150, 9411, 12460. ↑
See Governor’s Exec. Order No. N-40-20 (Mar. 30, 2021); Governor’s Exec. Order No. N-80-20 (Sept. 23, 2020). ↑
See Governor’s Exec. Order No. N-08-21 (June 11, 2021). ↑
AB 663 (Chen, Ch. 523, Stats. 2021). ↑
See Governor’s Exec. Order No. N-23-21 (Dec. 21, 2021). ↑
SENATE COMMITTEE ON
BANKING AND FINANCIAL INSTITUTIONS
Senator Monique Limón, Chair
2023 - 2024 Regular
Bill No: AB 231 Hearing Date: June 21, 2023
Author: | Chen | ||
Version: | January 12, 2023 Introduced | ||
Urgency: | No | Fiscal: | No |
Consultant: | Michael Burdick | ||
Subject: Shareholders’ meetings: remote communication
SUMMARY
This bill provides additional flexibility to corporations to offer audiovisual or audio-only participation in shareholder or member meetings, as specified.
EXISTING LAW
- Establishes formation and governance requirements related to corporations pursuant to the General Corporation Law, the Nonprofit Corporation Law, and the Cooperative Corporation Law.
- Defines an “electronic transmission by the corporation” to mean a communication delivered by fax, e-mail, electronic message board, or other means of electronic communication to a recipient who has provided an unrevoked consent to the use of those means of transmission. (Corporations Code Section 20)
- For meetings conducted on or before December 31, 2025, authorizes, unless expressly prohibited by the articles of incorporation or bylaws, the board of directors of a corporation, in its sole discretion and irrespective of whether any shareholder has opted out of electronic transmission by the corporation, to determine that a meeting of shareholders may be conducted by electronic transmission by and to the corporation or by electronic video screen communication, conference telephone, or other means of remote communication, subject to the corporation implementing reasonable measures to:
- Provide shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholder, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings.
- Maintain a record of any shareholder or proxyholder votes or any other action taken by a shareholder or proxyholder at the meeting, as specified.
- Verify that each person participating remotely is a shareholder or proxyholder. (Corporations Code Section 600)
- Authorizes a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation to conduct a meeting of members solely by electronic transmission if all of the members consent or if the board determines it is necessary or appropriate because of an emergency. (Corporations Code Sections 5510, 7510, 9411, and 12460)
THIS BILL
- Authorizes a corporation to offer, in addition to a remote audiovisual feed, an audio-only means by which a shareholder or proxyholder may participate, so long as the choice to participate via audio-only means is made by the person and not the corporation and the corporation does not impose any barriers to either mode of participation.
- Authorizes, until December 31, 2025, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperate corporation to conduct an annual meeting of members solely by live audiovisual feed and to 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.
- Requires a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation to verify that a person who has voted – rather than participated – remotely is a member or proxyholder.
COMMENTS
- PURPOSE
According to the author:
This bill would allow for the same fully remote non-emergency member meetings for California nonprofit public benefit, mutual benefit and religious corporations and cooperative corporations, as is currently provided for non-emergency shareholder meetings for California for-profit corporations.
This bill would also permit for-profit corporations, nonprofit public benefit, mutual benefit and religious corporations, and cooperative associations to offer remote audiovisual and audio-only means of participation to shareholders, members and proxyholders and, if audio-only means is provided, grant each shareholder, member or proxyholder the right to choose whether to participate in the solely virtual audiovisual meeting via audiovisual or audio-only means, and would prohibit the corporation from imposing any barriers on either mode of participation.
This bill would also require nonprofit and cooperative corporations to verify that a person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel requirement for for-profit corporations set forth in the General Corporation Law.
- BACKGROUND
Historically, state law required corporations organized in California to hold their annual shareholder meetings at a physical location unless the corporation received unanimous consent from all shareholders to conduct a remote-only meeting. In the early stages of the COVID-19 pandemic, the Governor issued Executive Order N-40-20, which allowed corporations to conduct remote-only meetings given the public health risks associated with large gatherings in a physical setting.
Since 2021, the Legislature has passed three bills that provide corporations with additional flexibility in conducting annual meetings remotely. Through December 31, 2025, existing law provides for-profit corporations with the option to conduct meetings exclusively via live audiovisual feed without requiring the corporation to first obtain consent from all its shareholders. This bill would extend that same privilege to nonprofit and cooperative corporations. Furthermore, this bill would allow for-profit, nonprofit, and cooperative corporations to offer an audio-only option, alongside audiovisual, that a shareholder, member, or proxyholder could elect to use for remote participation.
- ARGUMENTS IN SUPPORT
The California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section, as sponsor, writes:
Challenges in accessibility that arose as a result of the COVID-19 pandemic demonstrated that provisions providing some flexibility for meetings of members of a California nonprofit or cooperative corporation during an emergency do not adequately recognize the need for such flexibility outside the context of an emergency. Such non-emergency flexibility is, however, currently provided for fully remote shareholder meetings of California for-profit corporations….This bill treats member meetings of nonprofit and cooperative corporations the same way that it (and current law) treats shareholder meetings of for-profit corporations.
- ARGUMENTS IN OPPOSITION
None received
- DOUBLE REFERRAL
This bill is double-referred to the Committee on Judiciary.
- PRIOR AND RELATED LEGISLATION
AB 1780 (Chen, Chapter 951, Statutes of 2022), until December 31, 2025, allows corporations organized under the laws of this state to hold annual shareholder meetings by means of remote communication, as specified.
AB 769 (Grayson, Chapter 12, Statutes of 2022), allowed corporations to hold annual meetings of shareholders or members solely by remote communication if the meeting was conducted on or before June 30, 2022.
AB 663 (Chen, Chapter 523, Statutes of 2021) allows a corporation to hold its shareholder meetings remotely without first needing to receive unanimous consent of its shareholders, so long as the board of directors of the corporation determines it necessary and appropriate because of an emergency.
LIST OF REGISTERED SUPPORT/OPPOSITION
Support
Anaheim Chamber of Commerce
California Credit Union League
California Lawyers Association, Business Law Section (sponsor)
Opposition
None received
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 231
Author:(Chen)
As Introduced Ver:January 12, 2023
Majority vote
SUMMARY
Modifies the method of remote shareholder meetings to allow additional audio-only participation methods and extends existing shareholder remote participation methods to other types of corporations, including nonprofit corporations.
Major Provisions
- Authorizes a for-profit corporation to offer, in addition to a remote audiovisual feed, an audio-only means by which a shareholder or proxyholder may participate, so long as the choice to participate via audio-only means is made by the person and not the corporation and the corporation does not impose any barriers to either mode of participation.
- Authorizes, until December 31, 2025, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation to conduct an annual meeting remotely, including via the audio and audiovisual methods described in #1 above.
- Requires a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation to verify that a person who has voted – rather than participated – remotely is a member or proxyholder.
COMMENTS
Shareholder or member meetings, which are required by state law, are a key mechanism for shareholders or members to express themselves to the organization's leadership. For for-profit corporations, buying a share of a company grants a shareholder, in certain cases, voting power on major decisions affecting the future of the corporation. A shareholder meeting often includes an election of board members, approval of key hiring or selection decisions such as an auditor, votes on compensation plans, as well as any proposals that shareholders may put forward. Prior to recent policy changes, state law required corporations to hold their annual shareholder meetings at a physical location unless the corporation received unanimous consent from all shareholders to conduct a remote-only meeting.
In response to the COVID-19 pandemic, both the administration and the Legislature took action to give companies additional flexibility to hold remote shareholder meetings. The Governor issued Executive Order (EO) N-40-20 to, among many of its provisions, ease requirements around in-person shareholder meetings. And, AB 663 (Chen), Chapter 523, Statutes of 2020, loosened the rules around when a shareholder meeting could be held remotely, especially during times of emergency. Among many of the changes enacted by AB 663, a shareholder meeting could be conducted fully remotely if the board determined it was necessary or appropriate because of an emergency, as defined.
While AB 663 provided much-needed flexibility for a corporation seeking to hold its annual shareholder meeting remotely during an emergency, the nature of the COVID-19 pandemic continued to generate confusion for companies. Under AB 663, a qualified "emergency" that triggered the possibility of an all-remote shareholder meeting is one that would prevent a quorum of the corporation's board of directors from readily convening. During the pandemic, corporations believed it was possible to readily convene a board, but doing so may not be appropriate or good public health practice.
In response to the above concern, the Governor issued Executive Order (EO) N-23-21 on December 16, 2021. That EO, among other things, allowed for additional remote shareholder meetings until March 31, 2022. In response to the March 31, 2022 expiration of remote shareholder meetings, as granted by the EO, the Legislature passed AB 769 (Grayson), Chapter 12, Statutes of 2022, to allow additional flexibility until June 30, 2022.
Even after the passage of AB 769, the Legislature was not done tinkering with this issue. AB 1780 (Chen), Chapter 951, Statutes of 2022, authorized a corporation to hold a fully remote shareholder meeting, without prior consent from shareholders, if the meeting is conducted on or before December 31, 2025, and the meeting includes a live audiovisual feed for the duration of the meeting.
AB 231 makes more changes to remote annual meeting participation to build upon the changes described above. Importantly, the existing December 31, 2025 sunset date for current law's flexibility remains in place. Most notably, AB 231 allows phone participation under specific conditions and extends remote meetings to nonprofit corporations.
According to the Author
"This bill would allow for fully remote non-emergency member meetings for California nonprofit public benefit, mutual benefit and religious corporations and cooperative corporations, as is currently provided for non-emergency shareholder meetings for California for-profit corporations.
This bill would also require for-profit corporations, nonprofit public benefit, mutual benefit and religious corporations, and cooperative associations to offer remote audiovisual and audio-only means of participation to shareholders, members and proxyholders and grant each shareholder, member or proxyholder the right to choose whether to participate in the solely virtual audiovisual meeting via audiovisual or audio-only means, and would prohibit the corporation from imposing any barriers on either mode of participation."
Arguments in Support
The California Credit Union League writes in support of this bill, arguing that "as we move forward and beyond the COVID-19 pandemic in this increasingly digital world, AB 231 will allow credit unions to continue operating with greater efficiency and practicality by extending the option for virtual meetings."
Arguments in Opposition
None received.
FISCAL COMMENTS
None. This bill is keyed Nonfiscal by Legislative Counsel.
VOTES
ASM BANKING AND FINANCE: 12-0-0
YES: Grayson, Chen, Bauer-Kahan, Cervantes, Dixon, Mike Fong, Gabriel, Petrie-Norris, Soria, Waldron, Wicks, Wilson
UPDATED
VERSION: January 12, 2023
CONSULTANT: Luke Reidenbach / B. & F. / (916) 319-3081 FN: 0000159
Date of Hearing: March 20, 2023
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Timothy Grayson, Chair
ABPCA Bill Id:AB 231 (
Author:Chen) – As Introduced Ver:January 12, 2023
SUBJECT: Shareholders’ meetings: remote communication
SUMMARY: Modifies the method of remote shareholder meetings to allow additional audio-only participation methods and extends existing shareholder remote participation methods to other types of corporations, including nonprofit corporations.
Specifically, this bill:
- Authorizes a for-profit corporation to offer, in addition to a remote audiovisual feed, an audio-only means by which a shareholder or proxyholder may participate, so long as the choice to participate via audio-only means is made by the person and not the corporation and the corporation does not impose any barriers to either mode of participation.
- Authorizes, until December 31, 2025, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation to conduct an annual meeting remotely, including via the audio and audiovisual methods described in #1 above.
- Requires a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation to verify that a person who has voted – rather than participated – remotely is a member or proxyholder.
EXISTING LAW:
- Establishes formation and governance requirements related to corporations pursuant to the General Corporation Law.
- Authorizes a corporation (Corp. Code Section 600) to conduct its annual meeting, in whole or in part, by electronic transmission by and to the corporation, electric video screen communication, conference telephone, or other means or remote communication if the corporation implements specified reasonable measures to provide shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders. Prohibits a corporation from conducting a shareholder meeting solely by electronic transmission unless one or more of the following conditions apply:
- All of the shareholders consent;
- The board determines it is necessary or appropriate because of an emergency, as defined.
- The meeting is conducted on or before December 31, 2025, and includes a live audiovisual feed for the direction of the meeting.
- Authorizes a nonprofit corporation (Corp. Code Section 5510), a nonprofit mutual benefit corporation (Corp. Code Sec. 7510), a nonprofit religious corporation (Corp. Code Sec. 9411), and a cooperative corporation (Corp. Code Sec. 12460) to conduct its annual meeting, in whole or in part, by electronic transmission by and to the corporation, electric video screen communication, conference telephone, or other means or remote communication if the corporation implements specified reasonable measures. Prohibits a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, and a cooperative corporation from conducting a shareholder or member meeting solely by electronic transmission unless one or more of the following conditions apply:
- All of the shareholders consent;
- The board determines it is necessary or appropriate because of an emergency, as defined.
FISCAL EFFECT: None. This bill is keyed nonfiscal by Legislative Counsel.
COMMENTS:
- Purpose
According to the author:
This bill would allow for fully remote non-emergency member meetings for California nonprofit public benefit, mutual benefit and religious corporations and cooperative corporations, as is currently provided for non-emergency shareholder meetings for California for-profit corporations.
This bill would also require for-profit corporations, nonprofit public benefit, mutual benefit and religious corporations, and cooperative associations to offer remote audiovisual and audio-only means of participation to shareholders, members and proxyholders and grant each shareholder, member or proxyholder the right to choose whether to participate in the solely virtual audiovisual meeting via audiovisual or audio-only means, and would prohibit the corporation from imposing any barriers on either mode of participation.
This bill would also require nonprofit and cooperative corporations to verify that a person who has voted remotely is a member or proxyholder, thereby aligning those corporations with the parallel shareholder requirement set forth in the General Corporation Law.
- Background
Shareholder or member meetings, which are required by state law, are a key mechanism for shareholders or members to express themselves to the organization’s leadership. For for-profit corporations, buying a share of a company grants a shareholder, in certain cases, voting power on major decisions affecting the future of the corporation. A shareholder meeting often includes an election of board members, approval of key hiring or selection decisions such as an auditor, votes on compensation plans, as well as any proposals that shareholders may put forward. Prior to recent policy changes, state law required corporations to hold their annual shareholder meetings at a physical location unless the corporation received unanimous consent from all shareholders to conduct a remote-only meeting.
In response to the COVID-19 pandemic, both the administration and the Legislature took action to give companies additional flexibility to hold remote shareholder meetings. The Governor issued Executive Order (EO) N-40-20 to, among many of its provisions, ease requirements around in-person shareholder meetings. And, AB 663 (Chen), Chapter 523, Statutes of 2020, loosened the rules around when a shareholder meeting could be held remotely, especially during times of emergency. Among many of the changes enacted by AB 663, a shareholder meeting could be conducted fully remotely if the board determined it was necessary or appropriate because of an emergency, as defined.
While AB 663 provided much-needed flexibility for a corporation seeking to hold its annual shareholder meeting remotely during an emergency, the nature of the COVID-19 pandemic continued to generate confusion for companies. Under AB 663, a qualified “emergency” that triggered the possibility of an all-remote shareholder meeting is one that would prevent a quorum of the corporation’s board of directors from readily convening. During the pandemic, corporations believed it was possible to readily convene a board, but doing so may not be appropriate or good public health practice.
In response to the above concern, the Governor issued Executive Order (EO) N-23-21 on December 16, 2021. That EO, among other things, allowed for additional remote shareholder meetings until March 31, 2022. In response to the March 31, 2022 expiration of remote shareholder meetings, as granted by the EO, the Legislature passed AB 769 (Grayson), Chapter 12, Statutes of 2022, to allow additional flexibility until June 30, 2022.
Even after the passage of AB 769, the Legislature was not done tinkering with this issue. AB 1780 (Chen), Chapter 951, Statutes of 2022, authorized a corporation to hold a fully remote shareholder meeting, without prior consent from shareholders, if the meeting is conducted on or before December 31, 2025, and the meeting includes a live audiovisual feed for the duration of the meeting.
- What are the concerns with remote shareholder meetings?
The legislative history in Comment #2 highlights how the Legislature has adopted a conservative approach to softening the rules around remote shareholder meetings. While companies have argued that remote shareholder meetings increase participation, reduce costs, and expand opportunities for those with disabilities, there remain concerns that remote-only meetings undermine a shareholder’s ability to exercise their rights to hold boards of directors accountable. It is generally assumed that in-person meetings allow for more accountability and spontaneity and that a shareholder’s success in confronting company leadership directly is made possible by being in the same room.
Moreover, shareholder meetings also provide other stakeholders a chance to use in-person events as a way to engage a corporation’s board. Whether it comes from students[1] or environmental activists[2] or workers[3], protests and displays of activism at the location of a shareholder meeting have become a key strategy to help ensure certain voices are heard.
Yet, there are some early indications that activism – from both shareholders and outside stakeholders – can still be successful in a remote environment. For example, in May 2021 activist shareholder and hedge fund Engine No. 1 unseated Exxon Mobil Corp board members at the company’s annual shareholder meeting, which was done in part to force the company to reckon with its climate change policies.[4] Moreover, outside groups such as climate activists have still staged protests outside company headquarters on the days of remote shareholder meetings, even if there was nobody physically nearby.[5]
- What does this bill do?
AB 231 contains three major changes to remote annual meeting participation. Importantly, the existing December 31, 2025 sunset date for current law’s flexibility remains in place.
First, this bill allows for a call-in option for a corporation’s remote shareholder meeting. This “audio only” method of participation cannot be in lieu of any audio-visual component, and a participant’s use of audio participation must be their choice and not the corporation’s.
Second, AB 231 extends to nonprofit entities all of the remote shareholder flexibility that AB 1780 and this bill provide to for-profit corporations. Nonprofit public benefit corporations, nonprofit mutual benefit corporations, and cooperative corporations all have annual member meetings, and AB 231’s provisions create consistency across corporation types.
Finally, under current law, a nonprofit corporation, a nonprofit mutual benefit corporation, a nonprofit religious corporation, or a cooperative corporation conducting a remote member meeting must verify that a person who is participating is a member of proxyholder. In contrast, for a for-profit corporation must verify this for a person who has voted. AB 231 extends this approach to these nonprofit entities.
- Support.
The California Credit Union League writes in support of this bill, arguing that “as we move forward and beyond the COVID-19 pandemic in this increasingly digital world, AB 231 will allow credit unions to continue operating with greater efficiency and practicality by extending the option for virtual meetings.”
REGISTERED SUPPORT / OPPOSITION:
Support
California Credit Union League
Opposition
None on file.
Analysis Prepared by: Luke Reidenbach / B. & F. / (916) 319-3081
Ashley Smith, “Rally for Recognition,” Inside Higher Ed (July 28, 2015), available at https://www.insidehighered.com/news/2015/07/28/student-advocacy-groups-protest-itt-tech-shareholders-hold-annual-meeting. ↑
Alex Ruppenthal, “Protestors Disrupt Chase Shareholder Meeting Over Financing of Controversial Pipeline,” WTTW (May 21, 2019), available at https://news.wttw.com/2019/05/21/protesters-disrupt-chase-shareholder-meeting-over-financing-controversial-pipeline. ↑
Shirin Ghaffary, “Google employees protest at Alphabet’s shareholder meeting,” Vox (June 19, 2019), available at https://www.vox.com/recode/2019/6/19/18691870/google-employees-activists-protest-alphabet-shareholder-meeting. ↑
Jennifer Hiller and Svea Herbst-Bayloss, “Exxon loses board seats to activist hedge fund in landmark climate vote,” Reuters (May 26, 2021), available at: https://www.reuters.com/business/sustainable-business/shareholder-activism-reaches-milestone-exxon-board-vote-nears-end-2021-05-26/. ↑
“Activists protest AIG’s Support for Fossil Fuels During Company Shareholder Meeting,” Public Citizen (May 12, 2021), available at https://www.citizen.org/news/activists-protest-aigs-support-for-fossil-fuels-during-company-shareholder-meeting/. ↑
Discussed in Hearing
6MIN
Assembly Standing Committee on Banking and Finance
Bill Author
Bill Co-Author(s):