AB 2908: Shareholders’ meetings: remote communication.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-07-18
Current Status:
Passed
(2024-07-18: Chaptered by Secretary of State - Chapter 157, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Existing law, the General Corporation Law, authorizes corporations not governed by other specified state laws to conduct a meeting of shareholders 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 to provide shareholders and proxyholders a reasonable opportunity to participate and vote, among other conditions. Existing law authorizes a corporation to conduct a meeting by means of electronic communication in the absence of consent of all shareholders, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.
This bill would delete the above-described deadline of December 31, 2025, thereby making this provision operative indefinitely.
Existing law regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law also authorizes these corporations to conduct a meeting by means of electronic communication in the absence of consent from all members, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.
This bill would delete the December 31, 2025, deadline in each of these provisions, thereby making them operative indefinitely.
Existing law, the General Corporation Law, authorizes corporations not governed by other specified state laws to conduct a meeting of shareholders 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 to provide shareholders and proxyholders a reasonable opportunity to participate and vote, among other conditions. Existing law authorizes a corporation to conduct a meeting by means of electronic communication in the absence of consent of all shareholders, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.
This bill would delete the above-described deadline of December 31, 2025, thereby making this provision operative indefinitely.
Existing law regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law also authorizes these corporations to conduct a meeting by means of electronic communication in the absence of consent from all members, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.
This bill would delete the December 31, 2025, deadline in each of these provisions, thereby making them operative indefinitely.
Existing law, the General Corporation Law, authorizes corporations not governed by other specified state laws to conduct a meeting of shareholders 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 to provide shareholders and proxyholders a reasonable opportunity to participate and vote, among other conditions. Existing law authorizes a corporation to conduct a meeting by means of electronic communication in the absence of consent of all shareholders, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.
This bill would delete the above-described deadline of December 31, 2025, thereby making this provision operative indefinitely.
Existing law regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law also authorizes these corporations to conduct a meeting by means of electronic communication in the absence of consent from all members, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.
This bill would delete the December 31, 2025, deadline in each of these provisions, thereby making them operative indefinitely.
(a)Meetings of shareholders may be held at any place within or without this state as may be stated in or fixed in accordance with the bylaws. If no other place is stated or so fixed, shareholder meetings shall be held at the principal office of the corporation. Subject to any limitations in the articles or bylaws of the corporation, if authorized by the board of directors in its sole discretion, and subject to those guidelines and procedures as the board of directors may adopt, shareholders not physically present in person or by proxy at a meeting of shareholders may, by electronic transmission by and to the corporation (Sections 20 and 21), electronic video screen communication, conference telephone, or other means of remote communication, participate in a meeting of shareholders, be deemed present in person or by proxy, and vote at a meeting of shareholders, subject to subdivision (e).
(b)An annual meeting of shareholders shall be held for the election of directors on a date and at a time stated in or fixed in accordance with the bylaws. However, if the corporation is a regulated management company, a meeting of shareholders shall be held as required by the Federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.). Any other proper business may be transacted at the annual meeting. For purposes of this subdivision, regulated management company means a regulated investment company as defined in Section 851 of the federal Internal Revenue Code.
(c)If there is a failure to hold the annual meeting for a period of 60 days after the date designated therefor or, if no date has been designated, for a period of 15 months after the organization of the corporation or after its last annual meeting, the superior court of the proper county may summarily order a meeting to be held upon the application of any shareholder after notice to the corporation giving it an opportunity to be heard. The shares represented at the meeting, either in person or by proxy, and entitled to vote thereat shall constitute a quorum for the purpose of the meeting, notwithstanding any provision of the articles or bylaws or in this division to the contrary. The court may issue any orders as may be appropriate, including, without limitation, orders designating the time and place of the meeting, the record date for determination of shareholders entitled to vote, and the form of notice of the meeting.
(d)Special meetings of the shareholders may be called by the board, the chairperson of the board, the president, the holders of shares entitled to cast not less than 10 percent of the votes at the meeting, or any additional persons as may be provided in the articles or bylaws.
(e)A meeting of the shareholders may be conducted, in whole or in part, by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures: (1) to provide shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting concurrently with those proceedings, (2) if any shareholder or proxyholder votes or takes other action at the meeting by means of electronic transmission to the corporation, electronic video screen communication, conference telephone, or other means of remote communication, to maintain a record of that vote or action in its books and records, and (3) to verify that each person who has voted remotely is a shareholder or proxyholder. A corporation shall not conduct a meeting of shareholders solely by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication unless one or more of the following conditions apply: (A) all of the shareholders consent; (B) the board determines it is necessary or appropriate because of an emergency, as defined in paragraph (5) of subdivision (i) of Section 207; or (C) notwithstanding the absence of consent from all shareholders pursuant to (A) or subdivision (b) of Section 20, the meeting includes a live audiovisual feed for the duration of the meeting. A corporation holding a meeting pursuant to (C) may offer, in addition to remote audiovisual feed, an audio-only means by which a shareholder or proxyholder may participate provided that the choice between participating via audiovisual or via audio-only means is made by the shareholder or proxyholder and the corporation does not impose any barriers to either mode of participation. A de minimis disruption of an audio or audiovisual feed does not require a corporation to end a shareholder meeting under, or render the corporation out of compliance with, this subdivision.
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 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 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 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 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 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 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 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 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 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.
|
Date
|
Status
|
|---|---|
| Jul 18, 2024 | Chaptered by Secretary of State - Chapter 157, Statutes of 2024. |
| Jul 18, 2024 | Approved by the Governor. |
| Jul 18, 2024 | Enrolled and presented to the Governor at 12:30 p.m. |
| Jul 5, 2024 | In Assembly. Ordered to Engrossing and Enrolling. |
| Jul 3, 2024 | Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 4931.). |
| Jun 27, 2024 | Read second time. Ordered to Consent Calendar. |
| Jun 26, 2024 | From committee: Do pass. To Consent Calendar. (Ayes 11. Noes 0.) (June 25). |
| Jun 20, 2024 | From committee: Do pass and re-refer to Com. on JUD. with recommendation: To Consent Calendar. (Ayes 6. Noes 0.) (June 19). Re-referred to Com. on JUD. |
| May 1, 2024 | Referred to Coms. on B. & F.I. and JUD. |
| Apr 15, 2024 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Apr 15, 2024 | Read third time. Passed. Ordered to the Senate. (Ayes 73. Noes 0. Page 4794.) |
| Apr 3, 2024 | Read second time. Ordered to third reading. |
| Apr 2, 2024 | From committee: Do pass. (Ayes 8. Noes 0.) (April 1). |
| Mar 11, 2024 | Referred to Com. on B. & F. |
| Feb 16, 2024 | From printer. May be heard in committee March 17. |
| Feb 15, 2024 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Jul 3, 2024 | Consent Calendar 2nd AB2908 Chen | Senate Floor |
Passed |
|
| Jun 25, 2024 | Do pass and be ordered to the Consent Calendar | Senate Standing Committee on Judiciary |
Passed |
|
| Jun 19, 2024 | 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 15, 2024 | AB 2908 Chen Assembly Third Reading | Assembly Floor |
Passed |
|
| Apr 1, 2024 | 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
|
|---|---|---|
| California Credit Union League | ** Support | |
| California Lawyers Association, Business Law Section | ** Support | |
| California Water Association | ** Support | |
| Corporations Committee | * Support | Apr 1, 2024 |
| Delfino Madden | * Support | Apr 1, 2024 |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 2908 |
CONSENT
Bill No: AB 2908
Author: Chen (R)
Introduced: 2/15/24
Vote: 21
SENATE BANKING & F.I. COMMITTEE: 6-0, 6/19/24
AYES: Limón, Niello, Caballero, Min, Nguyen, Portantino
NO VOTE RECORDED: Bradford
SENATE JUDICIARY COMMITTEE: 11-0, 6/25/24
AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Niello, Roth, Stern, Wahab
ASSEMBLY FLOOR: 73-0, 4/15/24 - See last page for vote
SUBJECT: Shareholders’ meetings: remote communication
SOURCE: California Lawyers Association Business Law Section
DIGEST:
This bill removes a sunset provision that applies to an authorization for corporations to hold remote shareholder or member meetings, as specified, making this authorization apply indefinitely.
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 § 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 in to 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.
- Pursuant to the authority described in a), the corporation must include a live audiovisual feed for the duration of the meeting. The corporation may provide, 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. (Corporations Code § 600(e))
- 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 in to 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:
- Similar to the authorities provided to corporations described in 3), 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. (Corporations Code § 5510, 7510, 9411, and 12460)
This bill removes the condition that a shareholder meeting or meeting of members be conducted on or before December 31, 2025, in order to be conducted remotely, as specified.
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 four bills that provide corporations with additional flexibility in conducting annual meetings remotely. Through December 31, 2025, existing law provides for-profit, nonprofit, and cooperative 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 those authorizations indefinitely, removing the condition that the meeting be conducted on or before December, 31, 2025.
Comments
- Purpose. According to the author:
Restrictions imposed as a result of the COVID-19 pandemic revealed that certain provisions of the Corporations Code had not kept up with technological advances, even in the absence of an emergency, and challenges in accessibility that arose also demonstrated that existing provisions that provided some flexibility to the board of directors of a California for profit or nonprofit corporation during an emergency did not adequately recognize the need for such flexibility outside the context of an emergency. As a result, the Corporations Code was revised to authorize for-profit corporations and nonprofit public benefit, mutual benefit and religious corporations, as well as cooperative corporations, to conduct nonemergency virtual meetings of shareholders and members, as applicable, if the corporation implements reasonable measures to provide them a reasonable opportunity to participate and vote, among other conditions. However, all of these provisions have a sunset date of December 31, 2025, and the purpose of this bill is to eliminate the sunset date, making these provisions operative indefinitely.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 6/27/24)
California Lawyers Association, Business Law Section (source)
California Water Association
OPPOSITION: (Verified 6/27/24)
None received
ARGUMENTS IN SUPPORT: The California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section writes in support, as sponsor:
[T]he Corporations Code was revised to authorize California corporations to conduct nonemergency remote meetings of shareholders and members, as applicable, if the corporation implements reasonable measures to provide the shareholders and members a reasonable opportunity to participate and vote, among other conditions. These statutory provisions have a sunset date of December 31, 2025.
This bill eliminates the December 31, 2025, sunset date applicable to these provisions. These provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of nonemergency remote meetings. This bill is a commonsense measure that is necessary to create a permanent solution.
Moreover, this bill is needed to avoid a last-minute bill introduced later (2025, rather than 2024) for California corporations to continue to hold such nonemergency remote meetings. If a bill is not introduced until 2025, California corporations might only have two months’ notice of the change (if signed by the Governor in October 2025). However, these corporations schedule their annual shareholder or member meetings significantly in advance of such meetings. Thus, waiting until late 2025 to confirm the change would undermine efficiency and effectiveness in the practice of such corporations.
ASSEMBLY FLOOR: 73-0, 4/15/24
AYES: Addis, Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Cervantes, Chen, Connolly, Davies, Dixon, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: Alvarez, Bennett, Wendy Carrillo, Megan Dahle, Essayli, Low, Mathis
Prepared by: Michael Burdick / B. & F.I. /
6/27/24 15:38:57
**** END ****
Senator Thomas Umberg, Chair
2023-2024 Regular Session
Bill No: AB 2908 (Author:Chen)
Version: February 15, 2024
Hearing Date: June 25, 2024
Fiscal: No
Urgency: No
Consultant: AWM
SUBJECT
Shareholders’ meetings: remote communication
DIGEST
This bill eliminates the sunset on provisions authorizing certain California corporations to hold fully remote shareholder meetings without shareholder consent, making those provisions permanent.
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. Then in 2022 and 2023, the Legislature enacted bills permitting corporations—including for-profit, nonprofit, and cooperative corporations—to hold fully remote shareholder meetings under any circumstances, provided that the corporation provided a live audiovisual feed of the meeting for the duration. (AB 769 (Grayson, Ch. 12, Stats. 2022); AB 1780 (Chen, Ch. 951, Stats. 2022); AB 231 (Chen, Ch. 115, Stats. 2023).) The provisions allowing fully remote shareholder meetings without shareholder consent are set to sunset on December 31, 2025.
This bill removes the sunset provisions authorizing fully remote shareholder meetings with a live audiovisual feed, making those provisions permanent.
This bill is sponsored by the Nonprofit Organization and Corporations Committees of the Business Law Section of the California Lawyers Association and is supported by the California Water Association. The Committee has not received timely opposition to this bill. The Senate Banking and Financial Institutions Committee passed this bill with a vote of 6-0.
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.)
- Establishes the Nonprofit Corporation Law, which governs corporations incorporated in this state for specific purposes and on a nonprofit basis, as specified. (Corp. Code, tit. 1, div. 2, §§ 5000 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 corporation incorporated under 1), nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations incorporated under 2), and cooperative corporations incorporated under 3) to hold a shareholder meeting via a hybrid of in-person and electronic remote means, provided that certain technological and recordkeeping requirements are met. (Corp. Code, §§ 600, 5510, 7510, 9411, 12460.)
- Authorizes a corporation incorporated under 1), nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations incorporated under 2), and cooperative corporations incorporated under 3) to hold a shareholder meeting through exclusively remote means under the following circumstances:
- All of the shareholders consent to the remote meeting;
- The board determines a remote meeting is necessary or appropriate because of an emergency, as defined; or
- The meeting is conducted on or before December 31, 2025, and the meeting includes a live audiovisual feed for the duration of the meeting; the corporation may offer an audio-only option in addition to the audiovisual feed. (Corp. Code, §§ 600(e), 5510(f), 7510(f), 9411(f), 12460(f).)
This bill:
- Removes the December 31, 2025, sunset on the provisions allowing specified corporations to hold fully remote shareholder meetings with an audiovisual feed without shareholder consent, making those provisions permanent.
COMMENTS
- Author’s comment
According to the author:
Restrictions imposed on group and travel activity as a result of the COVID-19 pandemic revealed that certain provisions of the Corporations Code relating to the governance of California corporations had not kept up with technological advances, even in the absence of an emergency. Challenges in accessibility that arose also demonstrated that existing provisions that provided some flexibility to the board of directors of a California for profit or nonprofit corporation during an emergency did not adequately recognize the need for such flexibility outside the context of an emergency. As a result, the Corporations Code was revised to authorize for-profit corporations and nonprofit public benefit, mutual benefit and religious corporations, as well as cooperative corporations, to conduct nonemergency virtual meetings of shareholders and members, as applicable, if the corporation implements reasonable measures to provide them a reasonable opportunity to participate and vote, among other conditions. However, all of these provisions have a sunset date of December 31, 2025.
This bill eliminates the December 31, 2025, sunset date. The existing provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of such nonemergency virtual meetings. This bill is a commonsense measure that is necessary to create a permanent solution.
2. Background on fully 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, California corporations were unsure whether the omicron variant constituted an “emergency” under AB 663. As a result, Governor Newsom signed a new executive order re-authorizing California corporations to conduct fully remote shareholder meetings without shareholder consent until March 31, 2022.[5]
Shortly thereafter, 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, 2025, provided that the board provided a continuous live audiovisual feed of the meeting. And in 2023, the Legislature passed AB 231 (Chen, Ch. 115, Stats. 2023), which gave corporations incorporated under the Nonprofit Corporations Law and the Cooperative Corporation law the same authorization to hold fully remote meetings as those incorporated under the General Corporation Law, with the same December 31, 2025, sunset.
3. This bill allows specified California corporations to hold fully remote shareholder meetings with a live audiovisual feed on a permanent basis
This bill removes the December 31, 2025, sunset on the provisions allowing certain corporations to hold fully remote shareholder meetings without shareholder consent. The requirement that the corporation provide a live audiovisual feed for the duration of the meeting will remain in place. According to the sponsors:
This bill eliminates the December 31, 2025, sunset date applicable to these provisions. These provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of nonemergency remote meetings. This bill is a commonsense measure that is necessary to create a permanent solution.
Moreover, this bill is needed to avoid a last-minute bill introduced later (2025, rather than 2024) for California corporations to continue to hold such nonemergency remote meetings. If a bill is not introduced until 2025, California corporations might only have two months’ notice of the change (if signed by the Governor in October 2025). However, these corporations schedule their annual shareholder or member meetings significantly in advance of such meetings. Thus, waiting until late 2025 to confirm the change would undermine efficiency and effectiveness in the practice of such corporations.
This is the fifth remote shareholder meeting bill this Committee has heard in four years, and the Committee has not received opposition to any of them. Accordingly, although the sunsets do not expire for another year, there does not appear to be a reason to hold off on making these provisions permanent.
SUPPORT
California Lawyers Association, Nonprofit Organizations & Corporations Committees of the Business Law Section (sponsor)
California Water Association
OPPOSITION
None received
RELATED LEGISLATION
Pending Legislation: None known.
Prior Legislation:
AB 231 (Chen, Ch. 115, Stats. 2023) permitted 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 extended the shareholder remote meeting options available to general corporations to other types of corporations, subject to the same December 31, 2025, sunset.
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.
PRIOR VOTES:
Senate Banking and Financial Institutions Committee (Ayes 6, Noes 0)
Assembly Floor (Ayes 73, Noes 0)
Assembly Banking and Finance Committee (Ayes 8, 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). ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 2908
Author:(Chen)
As Introduced Ver:February 15, 2024
Majority vote
SUMMARY
Makes permanent the authority for corporations to conduct their annual shareholder or member meetings remotely.
Major Provisions
- Removes the December 31, 2025 sunset date for the authority of a corporation to conduct its annual shareholder meeting entirely by electronic transmission.
- Removes the December 31, 2025 sunset date for similar authority granted to a nonprofit mutual benefit corporation, nonprofit religious corporation, and cooperative corporation.
COMMENTS
Shareholder meetings, mandated by state law, serve as a vital conduit for shareholders to communicate with the leadership of an organization. In the case of for-profit corporations, owning a share of a company confers upon a shareholder the right to vote on significant decisions that shape the future of the corporation. Annual shareholder meetings can cover the election of board members, approval of crucial hiring or selection decisions such as appointing an auditor, voting on compensation plans, and consideration of any proposals put forth by shareholders. Prior to recent policy changes, state law required corporations to hold their annual shareholder meetings at a physical venue unless all shareholders unanimously consented to a remote-only meeting, a hurdle that was, practically speaking, nearly impossible to clear.
In response to the COVID-19 pandemic and concerns about public health, 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 2021, 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 now be conducted fully remotely if the board determined it was necessary because of an emergency, as defined.
While AB 663 provided much-needed flexibility for a corporation seeking to hold a remote shareholder meeting 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 (Chen), Chapter 115, Statutes of 2023, extended this temporary authority to other types of corporations, including nonprofit and cooperative corporations.
AB 2908 would remove the December 31, 2025 sunsets, thereby granting corporations the permanent authority to conduct these meetings remotely, provided they comply with specified procedural requirements.
According to the Author
"This bill eliminates the December 31, 2025, sunset date. The existing provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of such nonemergency virtual meetings. This bill is a commonsense measure that is necessary to create a permanent solution."
Arguments in Support
The California Lawyer's Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section, writes:
"This bill eliminates the December 31, 2025, sunset date applicable to these provisions. These provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of nonemergency remote meetings. This bill is a commonsense measure that is necessary to create a permanent solution.
Moreover, this bill is needed to avoid a last-minute bill introduced later (2025, rather than 2024) for California corporations to continue to hold such nonemergency remote meetings. If a bill is not introduced until 2025, California corporations might only have two months' notice of the change (if signed by the Governor in October 2025). However, these corporations schedule their annual shareholder or member meetings significantly in advance of such meetings."
Arguments in Opposition
None received.
FISCAL COMMENTS
No state costs. This bill is keyed Nonfiscal by Legislative Counsel.
VOTES
ASM BANKING AND FINANCE: 8-0-1
YES: Grayson, Chen, Dixon, Mike Fong, Maienschein, Petrie-Norris, Blanca Rubio, Soria
ABS, ABST OR NV: Cervantes
UPDATED
VERSION: February 15, 2024
CONSULTANT: Luke Reidenbach / B. & F. / (916) 319-3081 FN: 0002689
Date of Hearing: April 1, 2024
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Timothy Grayson, Chair
ABPCA Bill Id:AB 2908 (
Author:Chen) – As Introduced Ver:February 15, 2024
SUBJECT: Shareholders’ meetings: remote communication
SUMMARY: Makes permanent the authority for corporations to conduct their annual shareholder or member meetings remotely.
Specifically, this bill:
- Removes the December 31, 2025 sunset date for the authority of a corporation to conduct its annual shareholder meeting entirely by electronic transmission.
- Removes the December 31, 2025 sunset date for similar authority granted to a nonprofit mutual benefit corporation, nonprofit religious corporation, and cooperative corporation
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.
- The meeting is conducted on or before December 31, 2025, and includes a live audiovisual feed for the direction of the meeting.
FISCAL EFFECT: Unknown. This bill is keyed Fiscal by Legislative Counsel.
COMMENTS:
- Purpose
According to the author:
Restrictions imposed on group and travel activity as a result of the COVID-19 pandemic revealed that certain provisions of the Corporations Code relating to the governance of California corporations had not kept up with technological advances, even in the absence of an emergency. Challenges in accessibility that arose also demonstrated that existing provisions that provided some flexibility to the board of directors of a California for profit or nonprofit corporation during an emergency did not adequately recognize the need for such flexibility outside the context of an emergency. As a result, the Corporations Code was revised to authorize for-profit corporations and nonprofit public benefit, mutual benefit and religious corporations, as well as cooperative corporations, to conduct nonemergency virtual meetings of shareholders and members, as applicable, if the corporation implements reasonable measures to provide them a reasonable opportunity to participate and vote, among other conditions. However, all of these provisions have a sunset date of December 31, 2025.
This bill eliminates the December 31, 2025, sunset date. The existing provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of such nonemergency virtual meetings. This bill is a commonsense measure that is necessary to create a permanent solution.
- Background and some recent history
Shareholder meetings, mandated by state law, serve as a vital conduit for shareholders to communicate with the leadership of an organization. In the case of for-profit corporations, owning a share of a company confers upon a shareholder the right to vote on significant decisions that shape the future of the corporation. Annual shareholder meetings can cover the election of board members, approval of crucial hiring or selection decisions such as appointing an auditor, voting on compensation plans, and consideration of any proposals put forth by shareholders. Prior to recent policy changes, state law required corporations to hold their annual shareholder meetings at a physical venue unless all shareholders unanimously consented to a remote-only meeting, a hurdle that was, practically speaking, nearly impossible to clear.
In response to the COVID-19 pandemic and concerns about public health, 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 now be conducted fully remotely if the board determined it was necessary because of an emergency, as defined.
While AB 663 provided much-needed flexibility for a corporation seeking to hold a remote shareholder meeting 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 (Chen), Chapter 115, Statutes of 2023, extended this temporary authority to other types of corporations, including nonprofit and cooperative corporations.
- What are the concerns with remote shareholder meetings?
The legislative history reviewed above demonstrates the Legislature’s hesitant approach thus far in loosening 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 labor activists have still staged protests outside company headquarters on the days of remote shareholder meetings, even if there was nobody physically nearby. In May 2023, drivers for rideshare company Uber conducted nationwide protests over wage conditions, and these protests were timed to occur during Uber’s annual meeting.[5]
- What does this bill do?
AB 2908 proposes to settle the multi-year debate over the validity of remote shareholder meetings by removing the December 31, 2025 sunset date for the existing authority to conduct these meetings entirely remotely, so long as the companies and organizations comply with the law’s procedural requirements. This would make this authority permanent and would allow companies to plan their 2025 meetings with a better understanding of the format and venue expectations. Despite the concerns outlined above, the committee has not received any negative feedback about how remote shareholder or member meetings have worked so far.
- Support
AB 2908 is sponsored by the California Lawyers Association, Nonprofit Organizations Committee and Corporations Committee of the Business Law Section, who writes:
This bill eliminates the December 31, 2025, sunset date applicable to these provisions. These provisions removed barriers to participation in corporate governance and have been beneficial. We are not aware of any problems due to the allowance of nonemergency remote meetings. This bill is a commonsense measure that is necessary to create a permanent solution.
Moreover, this bill is needed to avoid a last-minute bill introduced later (2025, rather than 2024) for California corporations to continue to hold such nonemergency remote meetings. If a bill is not introduced until 2025, California corporations might only have two months’ notice of the change (if signed by the Governor in October 2025). However, these corporations schedule their annual shareholder or member meetings significantly in advance of such meetings.
REGISTERED SUPPORT / OPPOSITION:
Support
California Lawyers Association, Business Law Section (Sponsor)
California Credit Union League
California Water Association
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/. ↑
https://missionlocal.org/2023/05/hundreds-of-drivers-rally-ahead-of-uber-shareholder-meeting/ ↑
Discussed in Hearing
Assembly Standing Committee on Banking and Finance
Bill Author
Bill Co-Author(s):