100. (a) This division shall be known and may be cited as the
General Corporation Law.
(b) This title of the Corporations Code, or any division, part,
chapter, article or section thereof, may at any time be amended or
repealed.
101. Unless the provision or the context otherwise requires, the
general provisions and definitions set forth in this chapter govern
the construction of this division.
102. (a) Subject to Chapter 23 (commencing with Section 2300)
(transition provisions), this division applies to corporations
organized under this division and to domestic corporations which are
not subject to Division 2 (commencing with Section 5000) or Part 1
(commencing with Section 12000), 2 (commencing with Section 12200), 3
(commencing with Section 13200), or 5 (commencing with Section
14000) of Division 3 on December 31, 1976, and which are not
organized or existing under any statute of this state other than this
code; this division applies to any other corporation only to the
extent expressly included in a particular provision of this division.
(b) The existence of corporations formed or existing on the date
of enactment or reenactment of this division shall not be affected by
the enactment or reenactment of this division nor by any change in
the requirements for the formation of corporations nor by the
amendment or repeal of the laws under which they were formed or
created.
(c) Neither the repeals effected by the enactment or reenactment
of this division nor the enactment of this title nor the amendment
thereof shall impair or take away any existing liability or cause of
action against any corporation, its shareholders, directors, or
officers incurred prior to the time of the enactment, reenactment, or
amendment.
103. Every corporation organized under the laws of this state, any
other state of the United States or the District of Columbia or under
an act of the Congress of the United States, all of the capital
stock of which is beneficially owned by the United States, an agency
or instrumentality of the United States or any corporation the whole
of the capital stock of which is owned by the United States or by an
agency or instrumentality of the United States, is conclusively
presumed to be an agency and instrumentality of the United States and
is entitled to all privileges and immunities to which the holders of
all of its stock are entitled as agencies of the United States.
104. Unless otherwise expressly provided, whenever reference is
made in this division to any other state or federal statute, such
reference is to that statute as it may be amended from time to time,
whether before or after the enactment of this division.
105. A corporation or association may be sued as provided in the
Code of Civil Procedure.
106. Any corporation heretofore or hereafter formed under this
division shall, as a condition of its existence as a corporation, be
subject to the provisions of the Code of Civil Procedure authorizing
the attachment of corporate property.
107. No corporation, association or individual shall issue or put
in circulation, as money, anything but the lawful money of the United
States.
108. The fees of the Secretary of State for filing instruments by
or on behalf of corporations are prescribed in Article 3 (commencing
with Section 12180) of Chapter 3 of Part 2 of Division 3 of Title 2
of the Government Code.
109. (a) Any agreement, certificate or other instrument relating to
a domestic or foreign corporation filed pursuant to this division
may be corrected with respect to any misstatement of fact contained
therein, any defect in the execution thereof or any other error or
defect contained therein, by filing a certificate of correction
entitled "Certificate of Correction of ____ (insert here the title of
the agreement, certificate or other instrument to be corrected and
name(s) of corporation or corporations)"; provided, however, that no
such certificate of correction shall alter the wording of any
resolution or written consent which was in fact adopted by the board
or the shareholders or effect a corrected amendment of articles which
amendment as so corrected would not in all respects have complied
with the requirements of this division at the time of filing of the
agreement, certificate, or other instrument being corrected.
(b) If the certificate of correction corrects original articles,
the certificate of correction shall be either an officers'
certificate or a certificate signed and verified by the
incorporators, or a majority of them. If the certificate of
correction corrects an agreement of merger or an officers'
certificate accompanying an agreement of merger, the certificate of
correction shall be an officers' certificate of the surviving
corporation only. In all other instances, the certificate of
correction shall be either an officer's certificate or a certificate
signed and verified as provided in this division with respect to the
agreement, certificate or other instrument being corrected.
(c) A certificate of correction shall set forth the following:
(1) The name or names of the corporation or corporations.
(2) The date the agreement, certificate or other instrument being
corrected was filed.
(3) The provision in the agreement, certificate or other
instrument as corrected and, if the execution was defective, wherein
it was defective.
(4) If applicable, that the certificate does not alter the wording
of any resolution or written consent which was in fact adopted by
the board or the shareholders.
(d) A provision of the articles, amended articles, restated
articles, or certificate of determination being corrected by a
certificate of correction shall be identified in the certificate of
correction in accordance with subdivision (a) of Section 907.
(e) The filing of the certificate of correction shall not alter
the effective time of the agreement, certificate or instrument being
corrected, which shall remain as its original effective time, and
such filing shall not affect any right or liability accrued or
incurred before such filing, except that any right or liability
accrued or incurred by reason of the error or defect being corrected
shall be extinguished by such filing if the person having that right
has not detrimentally relied on the original instrument.
109.5. (a) Provisions of the articles described in paragraph (3) of
subdivision (e) of Section 202 and subdivision (a) and (b) of
Section 204 may be made dependent upon facts ascertainable outside
the articles, if the manner in which those facts shall operate upon
those provisions is clearly and expressly set forth in the articles.
Similarly, any of the terms of an agreement of merger pursuant to
Section 1101 may be made dependent upon facts ascertainable outside
that agreement, if the manner in which those facts shall operate upon
the terms of the agreement is clearly and expressly set forth in the
agreement of merger.
(b) Notwithstanding subdivision (a), when any provisions or terms
of articles or an agreement of merger are made dependent upon facts
ascertainable outside the filed instrument through a reference to an
agreement or similar document, the corporation filing that instrument
shall (1) maintain at its principal executive office a copy of any
such agreement or document and all amendments and (2) provide to its
shareholders, in the case of articles, or to shareholders of any
constituent corporation, in the case of an agreement of merger, a
copy of them upon written request and without charge.
(c) If the reference to an agreement or contract is a reference to
an agreement or contract to which the corporation is a party (a
"referenced agreement" in this section), any amendment or revision of
the referenced agreement requires shareholder approval, in addition
to approvals otherwise required, in the following instances and no
other:
(1) If the amendment or revision of the referenced agreement would
result in a material change in the rights, preferences, privileges
or restrictions of a class or series of shares, the amendment or
revision of the referenced agreement is required to be approved by
the outstanding shares (Section 152) of that class or series.
(2) If the amendment or revision of the referenced agreement would
result in a material change in the rights or liabilities of any
class or series of shares with respect to the subject matter of
paragraph (1), (2), (3), (5), or (9) of subdivision (a) of Section
204, the amendment or revision of the referenced agreement is
required to be approved by the outstanding shares (Section 152) of
that class or series.
(3) If the amendment or revision of the referenced agreement would
result in a material change in the restrictions on transfer or
hypothecation of any class or series of shares, the amendment or
revision of the referenced agreement is required to be approved by
the outstanding shares (Section 152) of that class or series.
(4) If the amendment or revision of the referenced agreement would
result in a change of any of the principal terms of an agreement of
merger, the amendment or revision of the referenced agreement is
required to be approved in the same manner as required by Section
1104 for a change in the principal terms of an agreement of merger.
110. (a) Upon receipt of any instrument by the Secretary of State
for filing pursuant to this division, if it conforms to law, it shall
be filed by, and in the office of, the Secretary of State and the
date of filing endorsed thereon. Except for instruments filed
pursuant to Section 1502, the date of filing shall be the date the
instrument is received by the Secretary of State unless withheld from
filing for a period of time pursuant to a request by the party
submitting it for filing or unless in the judgment of the Secretary
of State the filing is intended to be coordinated with the filing of
some other corporate document which cannot be filed. The Secretary of
State shall file a document as of any requested future date not more
than 90 days after its receipt, including a Saturday, Sunday, or
legal holiday, if the document is received in the Secretary of State'
s office at least one business day prior to the requested date of
filing. An instrument does not fail to conform to law because it is
not accompanied by the full filing fee if the unpaid portion of the
fee does not exceed the limits established by the policy of the
Secretary of State for extending credit in these cases.
(b) If the Secretary of State determines that an instrument
submitted for filing or otherwise submitted does not conform to law
and returns it to the person submitting it, the instrument may be
resubmitted accompanied by a written opinion of the member of the
State Bar of California submitting the instrument, or representing
the person submitting it, to the effect that the specific provision
of the instrument objected to by the Secretary of State does conform
to law and stating the points and authorities upon which the opinion
is based. The Secretary of State shall rely, with respect to any
disputed point of law (other than the application of Sections 201,
2101, and 2106), upon that written opinion in determining whether the
instrument conforms to law. The date of filing in that case shall be
the date the instrument is received on resubmission.
(c) Any instrument filed with respect to a corporation (other than
original articles) may provide that it is to become effective not
more than 90 days subsequent to its filing date. In case such a
delayed effective date is specified, the instrument may be prevented
from becoming effective by a certificate stating that by appropriate
corporate action it has been revoked and is null and void, executed
in the same manner as the original instrument and filed before the
specified effective date. In the case of a merger agreement, the
certificate revoking the earlier filing need only be executed on
behalf of one of the constituent corporations. If no revocation
certificate is filed, the instrument becomes effective on the date
specified.
110.5. The Secretary of State may cancel the filing of articles of
a domestic corporation or the filing of a statement and designation
by a foreign corporation if a check or other remittance accepted in
payment of the filing fee or franchise tax is not paid upon
presentation. Upon receiving written notification that the item
presented for payment has not been honored for payment, the Secretary
of State shall give written notice of the applicability of this
section and the cancellation date which shall be not less than 20
days from the date of mailing the written notice as certified by the
Secretary of State, to the agent for service of process or to the
person submitting the instrument. Thereafter, if the amount has not
been paid by cashier's check or equivalent before the date of
cancellation as stated in the written notice of cancellation, the
cancellation shall thereupon be effective. The written notice shall
be given 70 days or less after the original filing.
111. All references in this division to the voting of shares
include the voting of other securities given voting rights in the
articles pursuant to subdivision (a)(7) of Section 204.
112. If the articles provide for more or less than one vote for any
share on any matter, the references in Sections 152, 153 and 602 to
a majority or other proportion of shares means, as to such matter, a
majority or other proportion of the votes entitled to be cast.
Whenever in this division shares are disqualified from voting on any
matter, they shall not be considered outstanding for the
determination of a quorum at any meeting to act upon, or the required
vote to approve action upon, that matter under any other provision
of this division or the articles or bylaws.
113. Any reference in this division to mailing means first-class
mail, postage prepaid, unless registered or some other form of mail
is specified or permitted. Registered mail includes certified mail.
114. All references in this division to financial statements,
balance sheets, income statements, and statements of cashflows, and
all references to assets, liabilities, earnings, retained earnings,
and similar accounting items of a corporation mean those financial
statements or comparable statements or items prepared or determined
in conformity with generally accepted accounting principles then
applicable, fairly presenting in conformity with generally accepted
accounting principles the matters that they purport to present,
subject to any specific accounting treatment required by a particular
section of this division. Unless otherwise expressly stated, all
references in this division to financial statements mean, in the case
of a corporation that has subsidiaries, consolidated statements of
the corporation and each of its subsidiaries as are required to be
included in the consolidated statements under generally accepted
accounting principles then applicable and all references to
accounting items mean the items determined on a consolidated basis in
accordance with the consolidated financial statements. Financial
statements other than annual statements may be condensed or otherwise
presented as permitted by authoritative accounting pronouncements.
115. As used in this division, independent accountant means a
certified public accountant or public accountant who is independent
of the corporation as determined in accordance with generally
accepted auditing standards and who is engaged to audit financial
statements of the corporation or perform other accounting services.
116. Nothing contained in this division modifies the provisions of
subdivision (h) of Section 25102 or the conditions provided therein
to the availability of an exemption under that subdivision.
117. Any requirement in this division for a vote of each class of
outstanding shares means such a vote regardless of limitations or
restrictions upon the voting rights thereof, unless expressly limited
to voting shares.
118. Any reference in this division to the time a notice is given
or sent means, unless otherwise expressly provided, any of the
following:
(a) The time a written notice by mail is deposited in the United
States mails, postage prepaid.
(b) The time any other written notice, including facsimile,
telegram, or electronic mail message, is personally delivered to the
recipient or is delivered to a common carrier for transmission, or
actually transmitted by the person giving the notice by electronic
means, to the recipient.
(c) The time any oral notice is communicated, in person or by
telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, or wireless,
to the recipient, including the recipient's designated voice mailbox
or address on the system, or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.
149. "Acknowledged" means that an instrument is either:
(a) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code, or
(b) Accompanied by a declaration in writing signed by the persons
executing the same that they are such persons and that the instrument
is the act and deed of the person or persons executing the same.
Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.
150. A corporation is an "affiliate" of, or a corporation is
"affiliated" with, another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the other specified
corporation.
151. "Approved by (or approval of) the board" means approved or
ratified by the vote of the board or by the vote of a committee
authorized to exercise the powers of the board, except as to matters
not within the competence of the committee under Section 311.
152. "Approved by (or approval of) the outstanding shares" means
approved by the affirmative vote of a majority of the outstanding
shares entitled to vote. Such approval shall include the affirmative
vote of a majority of the outstanding shares of each class or series
entitled, by any provision of the articles or of this division, to
vote as a class or series on the subject matter being voted upon and
shall also include the affirmative vote of such greater proportion
(including all) of the outstanding shares of any class or series if
such greater proportion is required by the articles or this division.
153. "Approved by (or approval of) the shareholders" means approved
or ratified by the affirmative vote of a majority of the shares
represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a
majority of the required quorum) or by the written consent of
shareholders (Section 603) or by the affirmative vote or written
consent of such greater proportion (including all) of the shares of
any class or series as may be provided in the articles or in this
division for all or any specified shareholder action.
154. "Articles" includes the articles of incorporation, amendments
thereto, amended articles, restated articles, certificate of
incorporation and certificates of determination. All references in
this division to a vote required by the "articles" include, in the
case of a close corporation (Section 158), any vote required by a
shareholders' agreement.
155. "Board" means the board of directors of the corporation.
156. "Certificate of determination" means a certificate executed
and filed pursuant to Section 401.
156.1. "Certificated security" means a share (Section 184), as
defined in paragraph (4) of subdivision (a) of Section 8102 of, or an
obligation of the issuer as described in paragraph (15) of
subdivision (a) of, the Commercial Code.
156.5. "Certificate of Redomestication" is the document by which
the appropriate official of another state approves the
redomestication of a California insurer.
157. "Chapter" refers to a chapter of this Division 1 of Title 1 of
the Corporations Code, unless otherwise expressly stated.
158. (a) "Close corporation" means a corporation whose articles
contain, in addition to the provisions required by Section 202, a
provision that all of the corporation's issued shares of all classes
shall be held of record by not more than a specified number of
persons, not exceeding 35, and a statement "This corporation is a
close corporation."
(b) The special provisions referred to in subdivision (a) may be
included in the articles by amendment, but if such amendment is
adopted after the issuance of shares only by the affirmative vote of
all of the issued and outstanding shares of all classes.
(c) The special provisions referred to in subdivision (a) may be
deleted from the articles by amendment, or the number of shareholders
specified may be changed by amendment, but if such amendment is
adopted after the issuance of shares only by the affirmative vote of
at least two-thirds of each class of the outstanding shares;
provided, however, that the articles may provide for a lesser vote,
but not less than a majority of the outstanding shares, or may deny a
vote to any class, or both.
(d) In determining the number of shareholders for the purposes of
the provision in the articles authorized by this section, a husband
and wife and the personal representative of either shall be counted
as one regardless of how shares may be held by either or both of
them, a trust or personal representative of a decedent holding shares
shall be counted as one regardless of the number of trustees or
beneficiaries and a partnership or corporation or business
association holding shares shall be counted as one (except that any
such trust or entity the primary purpose of which was the acquisition
or voting of the shares shall be counted according to the number of
beneficial interests therein).
(e) A corporation shall cease to be a close corporation upon the
filing of an amendment to its articles pursuant to subdivision (c) or
if it shall have more than the maximum number of holders of record
of its shares specified in its articles as a result of an inter vivos
transfer of shares which is not void under subdivision (d) of
Section 418, the transfer of shares on distribution by will or
pursuant to the laws of descent and distribution, the dissolution of
a partnership or corporation or business association or the
termination of a trust which holds shares, by court decree upon
dissolution of a marriage or otherwise by operation of law. Promptly
upon acquiring more than the specified number of holders of record of
its shares, a close corporation shall execute and file an amendment
to its articles deleting the special provisions referred to in
subdivision (a) and deleting any other provisions not permissible for
a corporation which is not a close corporation, which amendment
shall be promptly approved and filed by the board and need not be
approved by the outstanding shares.
(f) Nothing contained in this section shall invalidate any
agreement among the shareholders to vote for the deletion from the
articles of the special provisions referred to in subdivision (a)
upon the lapse of a specified period of time or upon the occurrence
of a certain event or condition or otherwise.
(g) The following sections contain specific references to close
corporations: 186, 202, 204, 300, 418, 421, 1111, 1201, 1800 and
1904.
159. "Common shares" means shares which have no preference over any
other shares with respect to distribution of assets on liquidation
or with respect to payment of dividends.
160. (a) Except as provided in subdivision (b), "control" means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a corporation.
(b) "Control" in Sections 181, 1001, and 1200 means the ownership
directly or indirectly of shares or equity securities possessing more
than 50 percent of the voting power of a domestic corporation, a
foreign corporation, or an other business entity.
161. "Constituent corporation" means a corporation which is merged
with or into one or more other corporations or one or more other
business entities and includes a surviving corporation.
161.5. "Constituent limited partnership" means a limited
partnership which is merged with one or more corporations and
includes the surviving limited partnership.
161.7. "Constituent other business entity" means an other business
entity that is merged with or into one or more corporations and
includes the surviving other business entity.
161.9. "Conversion" means a conversion pursuant to Chapter 11.5
(commencing with Section 1150).
162. "Corporation", unless otherwise expressly provided, refers
only to a corporation organized under this division or a corporation
subject to this division under the provisions of subdivision (a) of
Section 102.
163. "Corporation subject to the Banking Law" (Division 1
(commencing with Section 99) of the Financial Code) means:
(a) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the commercial banking business under
Division 1 (commencing with Section 99) of the Financial Code.
(b) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the industrial banking business under
Division 1 (commencing with Section 99) of the Financial Code.
(c) Any corporation (other than a corporation described in
subdivision (d)) which, with the approval of the Commissioner of
Financial Institutions, is incorporated for the purpose of engaging
in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the trust business under Division 1
(commencing with Section 99) of the Financial Code.
(d) Any corporation which is authorized by the Commissioner of
Financial Institutions and the Commissioner of Insurance to maintain
a title insurance department to engage in title insurance business
and a trust department to engage in trust business; or
(e) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, business under Article 1 (commencing with
Section 3500), Chapter 19, Division 1 of the Financial Code.
163.1. For purposes of Section 503, "cumulative dividends in
arrears" means only cumulative dividends that have not been paid as
required on a scheduled payment date set forth in, or determined
pursuant to, the articles of incorporation, regardless of whether
those dividends had been declared prior to that scheduled payment
date.
164. "Directors" means natural persons designated in the articles
as such or elected by the incorporators and natural persons
designated, elected or appointed by any other name or title to act as
directors, and their successors.
165. "Disappearing corporation" means a constituent corporation
which is not the surviving corporation.
165.5. "Disappearing limited partnership" means a constituent
limited partnership which is not the surviving limited partnership.
166. "Distribution to its shareholders" means the transfer of cash
or property by a corporation to its shareholders without
consideration, whether by way of dividend or otherwise, except a
dividend in shares of the corporation, or the purchase or redemption
of its shares for cash or property, including the transfer, purchase,
or redemption by a subsidiary of the corporation. The time of any
distribution by way of dividend shall be the date of declaration
thereof and the time of any distribution by purchase or redemption of
shares shall be the date cash or property is transferred by the
corporation, whether or not pursuant to a contract of an earlier
date; provided, that where a debt obligation that is a security (as
defined in Section 8102 of the Commercial Code) is issued in exchange
for shares the time of the distribution is the date when the
corporation acquires the shares in the exchange. In the case of a
sinking fund payment, cash or property is transferred within the
meaning of this section at the time that it is delivered to a trustee
for the holders of preferred shares to be used for the redemption of
the shares or physically segregated by the corporation in trust for
that purpose. "Distribution to its shareholders" shall not include
(a) satisfaction of a final judgment of a court or tribunal of
appropriate jurisdiction ordering the rescission of the issuance of
shares, (b) the rescission by a corporation of the issuance of it
shares, if the board determines (with any director who is, or would
be, a party to the transaction not being entitled to vote) that (1)
it is reasonably likely that the holder or holders of the shares in
question could legally enforce a claim for the rescission, (2) that
the rescission is in the best interests of the corporation, and (3)
the corporation is likely to be able to meet its liabilities (except
those for which payment is otherwise adequately provided) as they
mature, or (c) the repurchase by a corporation of its shares issued
by it pursuant to Section 408, if the board determines (with any
director who is, or would be, a party to the transaction not being
entitled to vote) that (1) the repurchase is in the best interests of
the corporation and that (2) the corporation is likely to be able to
meet its liabilities (except those for which payment is otherwise
adequately provided) as they mature.
167. "Domestic corporation" means a corporation formed under the
laws of this state.
167.3. "Domestic limited liability company" means a limited
liability company as defined in subdivision (t) of Section 17000.
167.5. "Domestic limited partnership" means any limited partnership
formed under the laws of this state.
167.7. "Domestic other business entity" means an other business
entity organized under the laws of this state.
167.8. "Disappearing other business entity" means a constituent
other business entity that is not the surviving other business
entity.
168. "Equity security" in Sections 181, 1001, 1113, 1200, and 1201
means any share or membership of a domestic or foreign corporation;
any partnership interest, membership interest, or equivalent equity
interest in an other business entity; and any security convertible
with or without consideration into, or any warrant or right to
subscribe to or purchase, any of the foregoing.
169. "Filed", unless otherwise expressly provided, means filed in
the office of the Secretary of State.
170. "Foreign association" means a business association organized
as a trust under the laws of a foreign jurisdiction.
171. "Foreign corporation" means any corporation other than a
domestic corporation and, when used in Section 191, Section 201,
Section 2203, Section 2258 and Section 2259 and Chapter 21, includes
a foreign association, unless otherwise stated. "Foreign corporation"
as used in Chapter 21 does not include a corporation or association
chartered under the laws of the United States.
171.03. "Foreign limited liability company" means a foreign limited
liability company as defined in subdivision (q) of Section 17001.
171.05. "Foreign limited partnership" means any limited
partnership, including a limited liability limited partnership,
formed under the laws of any state other than this state or of the
District of Columbia or under the laws of a foreign country.
171.07. "Foreign other business entity" means an other business
entity organized under the laws of any state, other than this state,
or of the District of Columbia or under the laws of a foreign
country.
171.1. "Initial transaction statement" means a statement signed by
or on behalf of the issuer sent to the new registered owner or
registered pledgee, and "written statements," when used in connection
with uncertificated securities, means the written statements that
are periodically, or at the request of the registered owner or
registered pledgee, sent by the issuer to the registered owner or
registered pledgee describing the issue of which the uncertificated
security is a part.
171.3. "Limited liability company" means a limited liability
company as defined in subdivision (t) of Section 17001.
171.5. "Limited partnership" means a partnership formed by two or
more persons and having one or more general partners and one or more
limited partners, or their equivalents under any name.
172. "Liquidation price" or "liquidation preference" means amounts
payable on shares of any class upon voluntary or involuntary
dissolution, winding up or distribution of the entire assets of the
corporation, including any cumulative dividends accrued and unpaid,
in priority to shares of another class or classes.
173. "Officers' certificate" means a certificate signed and
verified by the chairman of the board, the president or any vice
president and by the secretary, the chief financial officer, the
treasurer or any assistant secretary or assistant treasurer.
174. "On the certificate" means that a statement appears on the
face of a share certificate or on the reverse thereof with a
reference thereto on the face or, in the case of an uncertificated
security, that the applicable provisions of subdivision (a) of
Section 8202 and Section 8204 of the Commercial Code have been
complied with.
174.5. "Other business entity" means a domestic or foreign limited
liability company, limited partnership, general partnership, business
trust, real estate investment trust, unincorporated association
(other than a nonprofit association), or a domestic reciprocal
insurer organized after 1974 to provide medical malpractice insurance
as set forth in Article 16 (commencing with Section 1550) of Chapter
3 of Part 2 of Division 1 of the Insurance Code. As used herein,
"general partnership" means a "partnership" as defined in subdivision
(7) of Section 16101; "business trust" means a business organization
formed as a trust; "real estate investment trust" means a "real
estate investment trust" as defined in subsection (a) of Section 856
of the Internal Revenue Code of 1986, as amended; and "unincorporated
association" has the meaning set forth in Section 18035.
175. Except as used in Sections 1001, 1101, and 1113, a "parent" of
a specified corporation is an affiliate in control (Section 160(a))
of that corporation directly or indirectly through one or more
intermediaries. In Sections 1001, 1101, and 1113, "parent" means a
person in control (Section 160(b)) of a domestic corporation, a
foreign corporation, or an other business entity.
176. "Preferred shares" means shares other than common shares.
177. "Proper county" means the county where the principal executive
office of the corporation is located or, if the principal executive
office of the corporation is not located in this state, or the
corporation has no such office, the County of Sacramento.
178. "Proxy" means a written authorization signed or an electronic
transmission authorized by a shareholder or the shareholder's
attorney in fact giving another person or persons power to vote with
respect to the shares of such shareholder. "Signed" for the purpose
of this section means the placing of the shareholder's name or other
authorization on the proxy (whether by manual signature, typewriting,
telegraphic, or electronic transmission or otherwise) by the
shareholder or the shareholder's attorney in fact.
A proxy may be transmitted by an oral telephonic transmission if
it is submitted with information from which it may be determined that
the proxy was authorized by the shareholder, or his or her attorney
in fact.
179. "Proxyholder" means the person or persons to whom a proxy is
given.
180. "Redemption price" means the amount or amounts (in cash,
property or securities, or any combination thereof) payable on shares
of any class or series upon the redemption of the shares. Unless
otherwise expressly provided, the redemption price is payable in
cash.
180.5. "Redomestication" means the transfer of an insurer's place
of incorporation from another state to this state or from this state
to another state.
181. "Reorganization" means either:
(a) A merger pursuant to Chapter 11 (commencing with Section 1100)
other than a short-form merger (a "merger reorganization").
(b) The acquisition by one domestic corporation, foreign
corporation, or other business entity in exchange, in whole or in
part, for its equity securities (or the equity securities of a
domestic corporation, a foreign corporation, or an other business
entity which is in control of the acquiring entity) of equity
securities of another domestic corporation, foreign corporation, or
other business entity if, immediately after the acquisition, the
acquiring entity has control of the other entity (an "exchange
reorganization").
(c) The acquisition by one domestic corporation, foreign
corporation, or other business entity in exchange in whole or in part
for its equity securities (or the equity securities of a domestic
corporation, a foreign corporation, or an other business entity which
is in control of the acquiring entity) or for its debt securities
(or debt securities of a domestic corporation, foreign corporation,
or other business entity which is in control of the acquiring entity)
which are not adequately secured and which have a maturity date in
excess of five years after the consummation of the reorganization, or
both, of all or substantially all of the assets of another domestic
corporation, foreign corporation, or other business entity (a
"sale-of-assets reorganization").
182. "Reverse stock split" means the pro rata combination of all
the outstanding shares of a class into a smaller number of shares of
the same class by an amendment to the articles stating the effect on
outstanding shares.
183. "Series" of shares means those shares within a class which
have the same rights, preferences, privileges and restrictions but
which differ in one or more rights, preferences, privileges or
restrictions from other shares within the same class. Certificated
securities and uncertificated securities do not constitute different
series if the only difference is certificated and uncertificated
status.
183.5. "Share exchange tender offer" means any acquisition by one
corporation in exchange in whole or in part for its equity securities
(or the equity securities of a corporation which is in control of
the acquiring corporation) of shares of another corporation, other
than an exchange reorganization (subdivision (b) of Section 181).
184. "Shares" means the units into which the proprietary interests
in a corporation are divided in the articles.
185. "Shareholder" means one who is a holder of record of shares.
186. "Shareholders' agreement" means a written agreement among all
of the shareholders of a close corporation, or if a close corporation
has only one shareholder between such shareholder and the
corporation, as authorized by subdivision (b) of Section 300.
187. "Short-form merger" means a merger pursuant to Section 1110.
188. "Stock split" means the pro rata division, otherwise than by a
share dividend, of all the outstanding shares of a class into a
greater number of shares of the same class by an amendment to the
articles stating the effect on outstanding shares.
189. (a) Except as provided in subdivision (b), "subsidiary" of a
specified corporation means a corporation shares of which possessing
more than 50 percent of the voting power are owned directly or
indirectly through one or more subsidiaries by the specified
corporation.
(b) For the purpose of Section 703, "subsidiary" of a specified
corporation means a corporation shares of which possessing more than
25 percent of the voting power are owned directly or indirectly
through one or more subsidiaries as defined in subdivision (a) by the
specified corporation.
190. "Surviving corporation" means a corporation into which one or
more other corporations or one or more other business entities are
merged.
190.5. "Surviving limited partnership" means a limited partnership
into which one or more other limited partnerships or one or more
corporations are merged.
190.7. "Surviving other business entity" means an other business
entity into which one or more other business entities or one or more
corporations are merged.
191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated
and successive transactions of its business in this state, other than
interstate or foreign commerce.
(b) A foreign corporation shall not be considered to be
transacting intrastate business merely because its subsidiary
transacts intrastate business or merely because of its status as any
one or more of the following:
(1) A shareholder of a domestic corporation.
(2) A shareholder of a foreign corporation transacting intrastate
business.
(3) A limited partner of a domestic limited partnership.
(4) A limited partner of a foreign limited partnership transacting
intrastate business.
(5) A member or manager of a domestic limited liability company.
(6) A member or manager of a foreign limited liability company
transacting intrastate business.
(c) Without excluding other activities that may not constitute
transacting intrastate business, a foreign corporation shall not be
considered to be transacting intrastate business within the meaning
of subdivision (a) solely by reason of carrying on in this state any
one or more of the following activities:
(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.
(2) Holding meetings of its board or shareholders or carrying on
other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositaries with relation to
its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance outside this state before becoming binding contracts.
(7) Creating evidences of debt or mortgages, liens or security
interests on real or personal property.
(8) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(d) Without excluding other activities that may not constitute
transacting intrastate business, any foreign lending institution,
including, but not limited to: any foreign banking corporation, any
foreign corporation all of the capital stock of which is owned by one
or more foreign banking corporations, any foreign savings and loan
association, any foreign insurance company or any foreign corporation
or association authorized by its charter to invest in loans secured
by real and personal property, whether organized under the laws of
the United States or of any other state, district or territory of the
United States, shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as
a trustee of a pension plan, employee profit sharing or retirement
plan, testamentary or inter vivos trust, or in any other fiduciary
capacity:
(1) The acquisition by purchase, by contract to purchase, by
making of advance commitments to purchase or by assignment of loans,
secured or unsecured, or any interest therein, if those activities
are carried on from outside this state by the lending institution.
(2) The making by an officer or employee of physical inspections
and appraisals of real or personal property securing or proposed to
secure any loan, if the officer or employee making any physical
inspection or appraisal is not a resident of and does not maintain a
place of business for that purpose in this state.
(3) The ownership of any loans and the enforcement of any loans
by trustee's sale, judicial process or deed in lieu of foreclosure or
otherwise.
(4) The modification, renewal, extension, transfer or sale of
loans or the acceptance of additional or substitute security therefor
or the full or partial release of the security therefor or the
acceptance of substitute or additional obligors thereon, if the
activities are carried on from outside this state by the lending
institution.
(5) The engaging by contractural arrangement of a corporation,
firm or association, qualified to do business in this state, that is
not a subsidiary or parent of the lending institution and that is not
under common management with the lending institution, to make
collections and to service loans in any manner whatsoever, including
the payment of ground rents, taxes, assessments, insurance, and the
like and the making, on behalf of the lending institution, of
physical inspections and appraisals of real or personal property
securing any loans or proposed to secure any loans, and the
performance of any such engagement.
(6) The acquisition of title to the real or personal property
covered by any mortgage, deed of trust or other security instrument
by trustee's sale, judicial sale, foreclosure or deed in lieu of
foreclosure, or for the purpose of transferring title to any federal
agency or instrumentality as the insurer or guarantor of any loan,
and the retention of title to any real or personal property so
acquired pending the orderly sale or other disposition thereof.
(7) The engaging in activities necessary or appropriate to carry
out any of the foregoing activities.
Nothing contained in this subdivision shall be construed to permit
any foreign banking corporation to maintain an office in this state
otherwise than as provided by the laws of this state or to limit the
powers conferred upon any foreign banking corporation as set forth in
the laws of this state or to permit any foreign lending institution
to maintain an office in this state except as otherwise permitted
under the laws of this state.
191.1. "Uncertificated security" means a share (Section 184), or an
obligation of the issuer, described in paragraphs (15) and (18) of
subdivision (a) of Section 8102 of the Commercial Code.
192. "Vacancy" when used with respect to the board means any
authorized position of director which is not then filled by a duly
elected director, whether caused by death, resignation, removal,
change in the authorized number of directors (by the board or the
shareholders) or otherwise.
193. "Verified" means that the statements contained in a
certificate or other document are declared to be true of the own
knowledge of the persons executing the same in either:
(a) An affidavit signed by them under oath before an officer
authorized by the laws of this state or of the place where it is
executed to administer oaths, or
(b) A declaration in writing executed by them "under penalty of
perjury" and stating the date and place (whether within or without
this state) of execution.
Any affidavit sworn to without this state before a notary public
or a judge or clerk of a court of record having an official seal need
not be further authenticated.
194. "Vote" includes authorization by written consent, subject to
the provisions of subdivision (b) of Section 307 and subdivision (d)
of Section 603.
194.5. "Voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and
does not include the right to vote upon the happening of some
condition or event which has not yet occurred. In any case where
different classes of shares are entitled to vote as separate classes
for different members of the board, the determination of percentage
of voting power shall be made on the basis of the percentage of the
total number of authorized directors which the shares in question
(whether of one or more classes) have the power to elect in an
election at which all shares then entitled to vote for the election
of any directors are voted.
194.7. "Voting shift" means a change, pursuant to or by operation
of a provision of the articles, in the relative rights of the holders
of one or more classes or series of shares, voting as one or more
separate classes or series, to elect one or more directors.
195. "Written" or "in writing" includes facsimile, telegraphic, and
other electronic communication when authorized by this code,
including an electronic transmission by a corporation that satisfies
the requirements of Section 20.
100. (a) This division shall be known and may be cited as the
General Corporation Law.
(b) This title of the Corporations Code, or any division, part,
chapter, article or section thereof, may at any time be amended or
repealed.
101. Unless the provision or the context otherwise requires, the
general provisions and definitions set forth in this chapter govern
the construction of this division.
102. (a) Subject to Chapter 23 (commencing with Section 2300)
(transition provisions), this division applies to corporations
organized under this division and to domestic corporations which are
not subject to Division 2 (commencing with Section 5000) or Part 1
(commencing with Section 12000), 2 (commencing with Section 12200), 3
(commencing with Section 13200), or 5 (commencing with Section
14000) of Division 3 on December 31, 1976, and which are not
organized or existing under any statute of this state other than this
code; this division applies to any other corporation only to the
extent expressly included in a particular provision of this division.
(b) The existence of corporations formed or existing on the date
of enactment or reenactment of this division shall not be affected by
the enactment or reenactment of this division nor by any change in
the requirements for the formation of corporations nor by the
amendment or repeal of the laws under which they were formed or
created.
(c) Neither the repeals effected by the enactment or reenactment
of this division nor the enactment of this title nor the amendment
thereof shall impair or take away any existing liability or cause of
action against any corporation, its shareholders, directors, or
officers incurred prior to the time of the enactment, reenactment, or
amendment.
103. Every corporation organized under the laws of this state, any
other state of the United States or the District of Columbia or under
an act of the Congress of the United States, all of the capital
stock of which is beneficially owned by the United States, an agency
or instrumentality of the United States or any corporation the whole
of the capital stock of which is owned by the United States or by an
agency or instrumentality of the United States, is conclusively
presumed to be an agency and instrumentality of the United States and
is entitled to all privileges and immunities to which the holders of
all of its stock are entitled as agencies of the United States.
104. Unless otherwise expressly provided, whenever reference is
made in this division to any other state or federal statute, such
reference is to that statute as it may be amended from time to time,
whether before or after the enactment of this division.
105. A corporation or association may be sued as provided in the
Code of Civil Procedure.
106. Any corporation heretofore or hereafter formed under this
division shall, as a condition of its existence as a corporation, be
subject to the provisions of the Code of Civil Procedure authorizing
the attachment of corporate property.
107. No corporation, association or individual shall issue or put
in circulation, as money, anything but the lawful money of the United
States.
108. The fees of the Secretary of State for filing instruments by
or on behalf of corporations are prescribed in Article 3 (commencing
with Section 12180) of Chapter 3 of Part 2 of Division 3 of Title 2
of the Government Code.
109. (a) Any agreement, certificate or other instrument relating to
a domestic or foreign corporation filed pursuant to this division
may be corrected with respect to any misstatement of fact contained
therein, any defect in the execution thereof or any other error or
defect contained therein, by filing a certificate of correction
entitled "Certificate of Correction of ____ (insert here the title of
the agreement, certificate or other instrument to be corrected and
name(s) of corporation or corporations)"; provided, however, that no
such certificate of correction shall alter the wording of any
resolution or written consent which was in fact adopted by the board
or the shareholders or effect a corrected amendment of articles which
amendment as so corrected would not in all respects have complied
with the requirements of this division at the time of filing of the
agreement, certificate, or other instrument being corrected.
(b) If the certificate of correction corrects original articles,
the certificate of correction shall be either an officers'
certificate or a certificate signed and verified by the
incorporators, or a majority of them. If the certificate of
correction corrects an agreement of merger or an officers'
certificate accompanying an agreement of merger, the certificate of
correction shall be an officers' certificate of the surviving
corporation only. In all other instances, the certificate of
correction shall be either an officer's certificate or a certificate
signed and verified as provided in this division with respect to the
agreement, certificate or other instrument being corrected.
(c) A certificate of correction shall set forth the following:
(1) The name or names of the corporation or corporations.
(2) The date the agreement, certificate or other instrument being
corrected was filed.
(3) The provision in the agreement, certificate or other
instrument as corrected and, if the execution was defective, wherein
it was defective.
(4) If applicable, that the certificate does not alter the wording
of any resolution or written consent which was in fact adopted by
the board or the shareholders.
(d) A provision of the articles, amended articles, restated
articles, or certificate of determination being corrected by a
certificate of correction shall be identified in the certificate of
correction in accordance with subdivision (a) of Section 907.
(e) The filing of the certificate of correction shall not alter
the effective time of the agreement, certificate or instrument being
corrected, which shall remain as its original effective time, and
such filing shall not affect any right or liability accrued or
incurred before such filing, except that any right or liability
accrued or incurred by reason of the error or defect being corrected
shall be extinguished by such filing if the person having that right
has not detrimentally relied on the original instrument.
109.5. (a) Provisions of the articles described in paragraph (3) of
subdivision (e) of Section 202 and subdivision (a) and (b) of
Section 204 may be made dependent upon facts ascertainable outside
the articles, if the manner in which those facts shall operate upon
those provisions is clearly and expressly set forth in the articles.
Similarly, any of the terms of an agreement of merger pursuant to
Section 1101 may be made dependent upon facts ascertainable outside
that agreement, if the manner in which those facts shall operate upon
the terms of the agreement is clearly and expressly set forth in the
agreement of merger.
(b) Notwithstanding subdivision (a), when any provisions or terms
of articles or an agreement of merger are made dependent upon facts
ascertainable outside the filed instrument through a reference to an
agreement or similar document, the corporation filing that instrument
shall (1) maintain at its principal executive office a copy of any
such agreement or document and all amendments and (2) provide to its
shareholders, in the case of articles, or to shareholders of any
constituent corporation, in the case of an agreement of merger, a
copy of them upon written request and without charge.
(c) If the reference to an agreement or contract is a reference to
an agreement or contract to which the corporation is a party (a
"referenced agreement" in this section), any amendment or revision of
the referenced agreement requires shareholder approval, in addition
to approvals otherwise required, in the following instances and no
other:
(1) If the amendment or revision of the referenced agreement would
result in a material change in the rights, preferences, privileges
or restrictions of a class or series of shares, the amendment or
revision of the referenced agreement is required to be approved by
the outstanding shares (Section 152) of that class or series.
(2) If the amendment or revision of the referenced agreement would
result in a material change in the rights or liabilities of any
class or series of shares with respect to the subject matter of
paragraph (1), (2), (3), (5), or (9) of subdivision (a) of Section
204, the amendment or revision of the referenced agreement is
required to be approved by the outstanding shares (Section 152) of
that class or series.
(3) If the amendment or revision of the referenced agreement would
result in a material change in the restrictions on transfer or
hypothecation of any class or series of shares, the amendment or
revision of the referenced agreement is required to be approved by
the outstanding shares (Section 152) of that class or series.
(4) If the amendment or revision of the referenced agreement would
result in a change of any of the principal terms of an agreement of
merger, the amendment or revision of the referenced agreement is
required to be approved in the same manner as required by Section
1104 for a change in the principal terms of an agreement of merger.
110. (a) Upon receipt of any instrument by the Secretary of State
for filing pursuant to this division, if it conforms to law, it shall
be filed by, and in the office of, the Secretary of State and the
date of filing endorsed thereon. Except for instruments filed
pursuant to Section 1502, the date of filing shall be the date the
instrument is received by the Secretary of State unless withheld from
filing for a period of time pursuant to a request by the party
submitting it for filing or unless in the judgment of the Secretary
of State the filing is intended to be coordinated with the filing of
some other corporate document which cannot be filed. The Secretary of
State shall file a document as of any requested future date not more
than 90 days after its receipt, including a Saturday, Sunday, or
legal holiday, if the document is received in the Secretary of State'
s office at least one business day prior to the requested date of
filing. An instrument does not fail to conform to law because it is
not accompanied by the full filing fee if the unpaid portion of the
fee does not exceed the limits established by the policy of the
Secretary of State for extending credit in these cases.
(b) If the Secretary of State determines that an instrument
submitted for filing or otherwise submitted does not conform to law
and returns it to the person submitting it, the instrument may be
resubmitted accompanied by a written opinion of the member of the
State Bar of California submitting the instrument, or representing
the person submitting it, to the effect that the specific provision
of the instrument objected to by the Secretary of State does conform
to law and stating the points and authorities upon which the opinion
is based. The Secretary of State shall rely, with respect to any
disputed point of law (other than the application of Sections 201,
2101, and 2106), upon that written opinion in determining whether the
instrument conforms to law. The date of filing in that case shall be
the date the instrument is received on resubmission.
(c) Any instrument filed with respect to a corporation (other than
original articles) may provide that it is to become effective not
more than 90 days subsequent to its filing date. In case such a
delayed effective date is specified, the instrument may be prevented
from becoming effective by a certificate stating that by appropriate
corporate action it has been revoked and is null and void, executed
in the same manner as the original instrument and filed before the
specified effective date. In the case of a merger agreement, the
certificate revoking the earlier filing need only be executed on
behalf of one of the constituent corporations. If no revocation
certificate is filed, the instrument becomes effective on the date
specified.
110.5. The Secretary of State may cancel the filing of articles of
a domestic corporation or the filing of a statement and designation
by a foreign corporation if a check or other remittance accepted in
payment of the filing fee or franchise tax is not paid upon
presentation. Upon receiving written notification that the item
presented for payment has not been honored for payment, the Secretary
of State shall give written notice of the applicability of this
section and the cancellation date which shall be not less than 20
days from the date of mailing the written notice as certified by the
Secretary of State, to the agent for service of process or to the
person submitting the instrument. Thereafter, if the amount has not
been paid by cashier's check or equivalent before the date of
cancellation as stated in the written notice of cancellation, the
cancellation shall thereupon be effective. The written notice shall
be given 70 days or less after the original filing.
111. All references in this division to the voting of shares
include the voting of other securities given voting rights in the
articles pursuant to subdivision (a)(7) of Section 204.
112. If the articles provide for more or less than one vote for any
share on any matter, the references in Sections 152, 153 and 602 to
a majority or other proportion of shares means, as to such matter, a
majority or other proportion of the votes entitled to be cast.
Whenever in this division shares are disqualified from voting on any
matter, they shall not be considered outstanding for the
determination of a quorum at any meeting to act upon, or the required
vote to approve action upon, that matter under any other provision
of this division or the articles or bylaws.
113. Any reference in this division to mailing means first-class
mail, postage prepaid, unless registered or some other form of mail
is specified or permitted. Registered mail includes certified mail.
114. All references in this division to financial statements,
balance sheets, income statements, and statements of cashflows, and
all references to assets, liabilities, earnings, retained earnings,
and similar accounting items of a corporation mean those financial
statements or comparable statements or items prepared or determined
in conformity with generally accepted accounting principles then
applicable, fairly presenting in conformity with generally accepted
accounting principles the matters that they purport to present,
subject to any specific accounting treatment required by a particular
section of this division. Unless otherwise expressly stated, all
references in this division to financial statements mean, in the case
of a corporation that has subsidiaries, consolidated statements of
the corporation and each of its subsidiaries as are required to be
included in the consolidated statements under generally accepted
accounting principles then applicable and all references to
accounting items mean the items determined on a consolidated basis in
accordance with the consolidated financial statements. Financial
statements other than annual statements may be condensed or otherwise
presented as permitted by authoritative accounting pronouncements.
115. As used in this division, independent accountant means a
certified public accountant or public accountant who is independent
of the corporation as determined in accordance with generally
accepted auditing standards and who is engaged to audit financial
statements of the corporation or perform other accounting services.
116. Nothing contained in this division modifies the provisions of
subdivision (h) of Section 25102 or the conditions provided therein
to the availability of an exemption under that subdivision.
117. Any requirement in this division for a vote of each class of
outstanding shares means such a vote regardless of limitations or
restrictions upon the voting rights thereof, unless expressly limited
to voting shares.
118. Any reference in this division to the time a notice is given
or sent means, unless otherwise expressly provided, any of the
following:
(a) The time a written notice by mail is deposited in the United
States mails, postage prepaid.
(b) The time any other written notice, including facsimile,
telegram, or electronic mail message, is personally delivered to the
recipient or is delivered to a common carrier for transmission, or
actually transmitted by the person giving the notice by electronic
means, to the recipient.
(c) The time any oral notice is communicated, in person or by
telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, or wireless,
to the recipient, including the recipient's designated voice mailbox
or address on the system, or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.
149. "Acknowledged" means that an instrument is either:
(a) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code, or
(b) Accompanied by a declaration in writing signed by the persons
executing the same that they are such persons and that the instrument
is the act and deed of the person or persons executing the same.
Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.
150. A corporation is an "affiliate" of, or a corporation is
"affiliated" with, another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the other specified
corporation.
151. "Approved by (or approval of) the board" means approved or
ratified by the vote of the board or by the vote of a committee
authorized to exercise the powers of the board, except as to matters
not within the competence of the committee under Section 311.
152. "Approved by (or approval of) the outstanding shares" means
approved by the affirmative vote of a majority of the outstanding
shares entitled to vote. Such approval shall include the affirmative
vote of a majority of the outstanding shares of each class or series
entitled, by any provision of the articles or of this division, to
vote as a class or series on the subject matter being voted upon and
shall also include the affirmative vote of such greater proportion
(including all) of the outstanding shares of any class or series if
such greater proportion is required by the articles or this division.
153. "Approved by (or approval of) the shareholders" means approved
or ratified by the affirmative vote of a majority of the shares
represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a
majority of the required quorum) or by the written consent of
shareholders (Section 603) or by the affirmative vote or written
consent of such greater proportion (including all) of the shares of
any class or series as may be provided in the articles or in this
division for all or any specified shareholder action.
154. "Articles" includes the articles of incorporation, amendments
thereto, amended articles, restated articles, certificate of
incorporation and certificates of determination. All references in
this division to a vote required by the "articles" include, in the
case of a close corporation (Section 158), any vote required by a
shareholders' agreement.
155. "Board" means the board of directors of the corporation.
156. "Certificate of determination" means a certificate executed
and filed pursuant to Section 401.
156.1. "Certificated security" means a share (Section 184), as
defined in paragraph (4) of subdivision (a) of Section 8102 of, or an
obligation of the issuer as described in paragraph (15) of
subdivision (a) of, the Commercial Code.
156.5. "Certificate of Redomestication" is the document by which
the appropriate official of another state approves the
redomestication of a California insurer.
157. "Chapter" refers to a chapter of this Division 1 of Title 1 of
the Corporations Code, unless otherwise expressly stated.
158. (a) "Close corporation" means a corporation whose articles
contain, in addition to the provisions required by Section 202, a
provision that all of the corporation's issued shares of all classes
shall be held of record by not more than a specified number of
persons, not exceeding 35, and a statement "This corporation is a
close corporation."
(b) The special provisions referred to in subdivision (a) may be
included in the articles by amendment, but if such amendment is
adopted after the issuance of shares only by the affirmative vote of
all of the issued and outstanding shares of all classes.
(c) The special provisions referred to in subdivision (a) may be
deleted from the articles by amendment, or the number of shareholders
specified may be changed by amendment, but if such amendment is
adopted after the issuance of shares only by the affirmative vote of
at least two-thirds of each class of the outstanding shares;
provided, however, that the articles may provide for a lesser vote,
but not less than a majority of the outstanding shares, or may deny a
vote to any class, or both.
(d) In determining the number of shareholders for the purposes of
the provision in the articles authorized by this section, a husband
and wife and the personal representative of either shall be counted
as one regardless of how shares may be held by either or both of
them, a trust or personal representative of a decedent holding shares
shall be counted as one regardless of the number of trustees or
beneficiaries and a partnership or corporation or business
association holding shares shall be counted as one (except that any
such trust or entity the primary purpose of which was the acquisition
or voting of the shares shall be counted according to the number of
beneficial interests therein).
(e) A corporation shall cease to be a close corporation upon the
filing of an amendment to its articles pursuant to subdivision (c) or
if it shall have more than the maximum number of holders of record
of its shares specified in its articles as a result of an inter vivos
transfer of shares which is not void under subdivision (d) of
Section 418, the transfer of shares on distribution by will or
pursuant to the laws of descent and distribution, the dissolution of
a partnership or corporation or business association or the
termination of a trust which holds shares, by court decree upon
dissolution of a marriage or otherwise by operation of law. Promptly
upon acquiring more than the specified number of holders of record of
its shares, a close corporation shall execute and file an amendment
to its articles deleting the special provisions referred to in
subdivision (a) and deleting any other provisions not permissible for
a corporation which is not a close corporation, which amendment
shall be promptly approved and filed by the board and need not be
approved by the outstanding shares.
(f) Nothing contained in this section shall invalidate any
agreement among the shareholders to vote for the deletion from the
articles of the special provisions referred to in subdivision (a)
upon the lapse of a specified period of time or upon the occurrence
of a certain event or condition or otherwise.
(g) The following sections contain specific references to close
corporations: 186, 202, 204, 300, 418, 421, 1111, 1201, 1800 and
1904.
159. "Common shares" means shares which have no preference over any
other shares with respect to distribution of assets on liquidation
or with respect to payment of dividends.
160. (a) Except as provided in subdivision (b), "control" means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a corporation.
(b) "Control" in Sections 181, 1001, and 1200 means the ownership
directly or indirectly of shares or equity securities possessing more
than 50 percent of the voting power of a domestic corporation, a
foreign corporation, or an other business entity.
161. "Constituent corporation" means a corporation which is merged
with or into one or more other corporations or one or more other
business entities and includes a surviving corporation.
161.5. "Constituent limited partnership" means a limited
partnership which is merged with one or more corporations and
includes the surviving limited partnership.
161.7. "Constituent other business entity" means an other business
entity that is merged with or into one or more corporations and
includes the surviving other business entity.
161.9. "Conversion" means a conversion pursuant to Chapter 11.5
(commencing with Section 1150).
162. "Corporation", unless otherwise expressly provided, refers
only to a corporation organized under this division or a corporation
subject to this division under the provisions of subdivision (a) of
Section 102.
163. "Corporation subject to the Banking Law" (Division 1
(commencing with Section 99) of the Financial Code) means:
(a) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the commercial banking business under
Division 1 (commencing with Section 99) of the Financial Code.
(b) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the industrial banking business under
Division 1 (commencing with Section 99) of the Financial Code.
(c) Any corporation (other than a corporation described in
subdivision (d)) which, with the approval of the Commissioner of
Financial Institutions, is incorporated for the purpose of engaging
in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the trust business under Division 1
(commencing with Section 99) of the Financial Code.
(d) Any corporation which is authorized by the Commissioner of
Financial Institutions and the Commissioner of Insurance to maintain
a title insurance department to engage in title insurance business
and a trust department to engage in trust business; or
(e) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, business under Article 1 (commencing with
Section 3500), Chapter 19, Division 1 of the Financial Code.
163.1. For purposes of Section 503, "cumulative dividends in
arrears" means only cumulative dividends that have not been paid as
required on a scheduled payment date set forth in, or determined
pursuant to, the articles of incorporation, regardless of whether
those dividends had been declared prior to that scheduled payment
date.
164. "Directors" means natural persons designated in the articles
as such or elected by the incorporators and natural persons
designated, elected or appointed by any other name or title to act as
directors, and their successors.
165. "Disappearing corporation" means a constituent corporation
which is not the surviving corporation.
165.5. "Disappearing limited partnership" means a constituent
limited partnership which is not the surviving limited partnership.
166. "Distribution to its shareholders" means the transfer of cash
or property by a corporation to its shareholders without
consideration, whether by way of dividend or otherwise, except a
dividend in shares of the corporation, or the purchase or redemption
of its shares for cash or property, including the transfer, purchase,
or redemption by a subsidiary of the corporation. The time of any
distribution by way of dividend shall be the date of declaration
thereof and the time of any distribution by purchase or redemption of
shares shall be the date cash or property is transferred by the
corporation, whether or not pursuant to a contract of an earlier
date; provided, that where a debt obligation that is a security (as
defined in Section 8102 of the Commercial Code) is issued in exchange
for shares the time of the distribution is the date when the
corporation acquires the shares in the exchange. In the case of a
sinking fund payment, cash or property is transferred within the
meaning of this section at the time that it is delivered to a trustee
for the holders of preferred shares to be used for the redemption of
the shares or physically segregated by the corporation in trust for
that purpose. "Distribution to its shareholders" shall not include
(a) satisfaction of a final judgment of a court or tribunal of
appropriate jurisdiction ordering the rescission of the issuance of
shares, (b) the rescission by a corporation of the issuance of it
shares, if the board determines (with any director who is, or would
be, a party to the transaction not being entitled to vote) that (1)
it is reasonably likely that the holder or holders of the shares in
question could legally enforce a claim for the rescission, (2) that
the rescission is in the best interests of the corporation, and (3)
the corporation is likely to be able to meet its liabilities (except
those for which payment is otherwise adequately provided) as they
mature, or (c) the repurchase by a corporation of its shares issued
by it pursuant to Section 408, if the board determines (with any
director who is, or would be, a party to the transaction not being
entitled to vote) that (1) the repurchase is in the best interests of
the corporation and that (2) the corporation is likely to be able to
meet its liabilities (except those for which payment is otherwise
adequately provided) as they mature.
167. "Domestic corporation" means a corporation formed under the
laws of this state.
167.3. "Domestic limited liability company" means a limited
liability company as defined in subdivision (t) of Section 17000.
167.5. "Domestic limited partnership" means any limited partnership
formed under the laws of this state.
167.7. "Domestic other business entity" means an other business
entity organized under the laws of this state.
167.8. "Disappearing other business entity" means a constituent
other business entity that is not the surviving other business
entity.
168. "Equity security" in Sections 181, 1001, 1113, 1200, and 1201
means any share or membership of a domestic or foreign corporation;
any partnership interest, membership interest, or equivalent equity
interest in an other business entity; and any security convertible
with or without consideration into, or any warrant or right to
subscribe to or purchase, any of the foregoing.
169. "Filed", unless otherwise expressly provided, means filed in
the office of the Secretary of State.
170. "Foreign association" means a business association organized
as a trust under the laws of a foreign jurisdiction.
171. "Foreign corporation" means any corporation other than a
domestic corporation and, when used in Section 191, Section 201,
Section 2203, Section 2258 and Section 2259 and Chapter 21, includes
a foreign association, unless otherwise stated. "Foreign corporation"
as used in Chapter 21 does not include a corporation or association
chartered under the laws of the United States.
171.03. "Foreign limited liability company" means a foreign limited
liability company as defined in subdivision (q) of Section 17001.
171.05. "Foreign limited partnership" means any limited
partnership, including a limited liability limited partnership,
formed under the laws of any state other than this state or of the
District of Columbia or under the laws of a foreign country.
171.07. "Foreign other business entity" means an other business
entity organized under the laws of any state, other than this state,
or of the District of Columbia or under the laws of a foreign
country.
171.1. "Initial transaction statement" means a statement signed by
or on behalf of the issuer sent to the new registered owner or
registered pledgee, and "written statements," when used in connection
with uncertificated securities, means the written statements that
are periodically, or at the request of the registered owner or
registered pledgee, sent by the issuer to the registered owner or
registered pledgee describing the issue of which the uncertificated
security is a part.
171.3. "Limited liability company" means a limited liability
company as defined in subdivision (t) of Section 17001.
171.5. "Limited partnership" means a partnership formed by two or
more persons and having one or more general partners and one or more
limited partners, or their equivalents under any name.
172. "Liquidation price" or "liquidation preference" means amounts
payable on shares of any class upon voluntary or involuntary
dissolution, winding up or distribution of the entire assets of the
corporation, including any cumulative dividends accrued and unpaid,
in priority to shares of another class or classes.
173. "Officers' certificate" means a certificate signed and
verified by the chairman of the board, the president or any vice
president and by the secretary, the chief financial officer, the
treasurer or any assistant secretary or assistant treasurer.
174. "On the certificate" means that a statement appears on the
face of a share certificate or on the reverse thereof with a
reference thereto on the face or, in the case of an uncertificated
security, that the applicable provisions of subdivision (a) of
Section 8202 and Section 8204 of the Commercial Code have been
complied with.
174.5. "Other business entity" means a domestic or foreign limited
liability company, limited partnership, general partnership, business
trust, real estate investment trust, unincorporated association
(other than a nonprofit association), or a domestic reciprocal
insurer organized after 1974 to provide medical malpractice insurance
as set forth in Article 16 (commencing with Section 1550) of Chapter
3 of Part 2 of Division 1 of the Insurance Code. As used herein,
"general partnership" means a "partnership" as defined in subdivision
(7) of Section 16101; "business trust" means a business organization
formed as a trust; "real estate investment trust" means a "real
estate investment trust" as defined in subsection (a) of Section 856
of the Internal Revenue Code of 1986, as amended; and "unincorporated
association" has the meaning set forth in Section 18035.
175. Except as used in Sections 1001, 1101, and 1113, a "parent" of
a specified corporation is an affiliate in control (Section 160(a))
of that corporation directly or indirectly through one or more
intermediaries. In Sections 1001, 1101, and 1113, "parent" means a
person in control (Section 160(b)) of a domestic corporation, a
foreign corporation, or an other business entity.
176. "Preferred shares" means shares other than common shares.
177. "Proper county" means the county where the principal executive
office of the corporation is located or, if the principal executive
office of the corporation is not located in this state, or the
corporation has no such office, the County of Sacramento.
178. "Proxy" means a written authorization signed or an electronic
transmission authorized by a shareholder or the shareholder's
attorney in fact giving another person or persons power to vote with
respect to the shares of such shareholder. "Signed" for the purpose
of this section means the placing of the shareholder's name or other
authorization on the proxy (whether by manual signature, typewriting,
telegraphic, or electronic transmission or otherwise) by the
shareholder or the shareholder's attorney in fact.
A proxy may be transmitted by an oral telephonic transmission if
it is submitted with information from which it may be determined that
the proxy was authorized by the shareholder, or his or her attorney
in fact.
179. "Proxyholder" means the person or persons to whom a proxy is
given.
180. "Redemption price" means the amount or amounts (in cash,
property or securities, or any combination thereof) payable on shares
of any class or series upon the redemption of the shares. Unless
otherwise expressly provided, the redemption price is payable in
cash.
180.5. "Redomestication" means the transfer of an insurer's place
of incorporation from another state to this state or from this state
to another state.
181. "Reorganization" means either:
(a) A merger pursuant to Chapter 11 (commencing with Section 1100)
other than a short-form merger (a "merger reorganization").
(b) The acquisition by one domestic corporation, foreign
corporation, or other business entity in exchange, in whole or in
part, for its equity securities (or the equity securities of a
domestic corporation, a foreign corporation, or an other business
entity which is in control of the acquiring entity) of equity
securities of another domestic corporation, foreign corporation, or
other business entity if, immediately after the acquisition, the
acquiring entity has control of the other entity (an "exchange
reorganization").
(c) The acquisition by one domestic corporation, foreign
corporation, or other business entity in exchange in whole or in part
for its equity securities (or the equity securities of a domestic
corporation, a foreign corporation, or an other business entity which
is in control of the acquiring entity) or for its debt securities
(or debt securities of a domestic corporation, foreign corporation,
or other business entity which is in control of the acquiring entity)
which are not adequately secured and which have a maturity date in
excess of five years after the consummation of the reorganization, or
both, of all or substantially all of the assets of another domestic
corporation, foreign corporation, or other business entity (a
"sale-of-assets reorganization").
182. "Reverse stock split" means the pro rata combination of all
the outstanding shares of a class into a smaller number of shares of
the same class by an amendment to the articles stating the effect on
outstanding shares.
183. "Series" of shares means those shares within a class which
have the same rights, preferences, privileges and restrictions but
which differ in one or more rights, preferences, privileges or
restrictions from other shares within the same class. Certificated
securities and uncertificated securities do not constitute different
series if the only difference is certificated and uncertificated
status.
183.5. "Share exchange tender offer" means any acquisition by one
corporation in exchange in whole or in part for its equity securities
(or the equity securities of a corporation which is in control of
the acquiring corporation) of shares of another corporation, other
than an exchange reorganization (subdivision (b) of Section 181).
184. "Shares" means the units into which the proprietary interests
in a corporation are divided in the articles.
185. "Shareholder" means one who is a holder of record of shares.
186. "Shareholders' agreement" means a written agreement among all
of the shareholders of a close corporation, or if a close corporation
has only one shareholder between such shareholder and the
corporation, as authorized by subdivision (b) of Section 300.
187. "Short-form merger" means a merger pursuant to Section 1110.
188. "Stock split" means the pro rata division, otherwise than by a
share dividend, of all the outstanding shares of a class into a
greater number of shares of the same class by an amendment to the
articles stating the effect on outstanding shares.
189. (a) Except as provided in subdivision (b), "subsidiary" of a
specified corporation means a corporation shares of which possessing
more than 50 percent of the voting power are owned directly or
indirectly through one or more subsidiaries by the specified
corporation.
(b) For the purpose of Section 703, "subsidiary" of a specified
corporation means a corporation shares of which possessing more than
25 percent of the voting power are owned directly or indirectly
through one or more subsidiaries as defined in subdivision (a) by the
specified corporation.
190. "Surviving corporation" means a corporation into which one or
more other corporations or one or more other business entities are
merged.
190.5. "Surviving limited partnership" means a limited partnership
into which one or more other limited partnerships or one or more
corporations are merged.
190.7. "Surviving other business entity" means an other business
entity into which one or more other business entities or one or more
corporations are merged.
191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated
and successive transactions of its business in this state, other than
interstate or foreign commerce.
(b) A foreign corporation shall not be considered to be
transacting intrastate business merely because its subsidiary
transacts intrastate business or merely because of its status as any
one or more of the following:
(1) A shareholder of a domestic corporation.
(2) A shareholder of a foreign corporation transacting intrastate
business.
(3) A limited partner of a domestic limited partnership.
(4) A limited partner of a foreign limited partnership transacting
intrastate business.
(5) A member or manager of a domestic limited liability company.
(6) A member or manager of a foreign limited liability company
transacting intrastate business.
(c) Without excluding other activities that may not constitute
transacting intrastate business, a foreign corporation shall not be
considered to be transacting intrastate business within the meaning
of subdivision (a) solely by reason of carrying on in this state any
one or more of the following activities:
(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.
(2) Holding meetings of its board or shareholders or carrying on
other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositaries with relation to
its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance outside this state before becoming binding contracts.
(7) Creating evidences of debt or mortgages, liens or security
interests on real or personal property.
(8) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(d) Without excluding other activities that may not constitute
transacting intrastate business, any foreign lending institution,
including, but not limited to: any foreign banking corporation, any
foreign corporation all of the capital stock of which is owned by one
or more foreign banking corporations, any foreign savings and loan
association, any foreign insurance company or any foreign corporation
or association authorized by its charter to invest in loans secured
by real and personal property, whether organized under the laws of
the United States or of any other state, district or territory of the
United States, shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as
a trustee of a pension plan, employee profit sharing or retirement
plan, testamentary or inter vivos trust, or in any other fiduciary
capacity:
(1) The acquisition by purchase, by contract to purchase, by
making of advance commitments to purchase or by assignment of loans,
secured or unsecured, or any interest therein, if those activities
are carried on from outside this state by the lending institution.
(2) The making by an officer or employee of physical inspections
and appraisals of real or personal property securing or proposed to
secure any loan, if the officer or employee making any physical
inspection or appraisal is not a resident of and does not maintain a
place of business for that purpose in this state.
(3) The ownership of any loans and the enforcement of any loans
by trustee's sale, judicial process or deed in lieu of foreclosure or
otherwise.
(4) The modification, renewal, extension, transfer or sale of
loans or the acceptance of additional or substitute security therefor
or the full or partial release of the security therefor or the
acceptance of substitute or additional obligors thereon, if the
activities are carried on from outside this state by the lending
institution.
(5) The engaging by contractural arrangement of a corporation,
firm or association, qualified to do business in this state, that is
not a subsidiary or parent of the lending institution and that is not
under common management with the lending institution, to make
collections and to service loans in any manner whatsoever, including
the payment of ground rents, taxes, assessments, insurance, and the
like and the making, on behalf of the lending institution, of
physical inspections and appraisals of real or personal property
securing any loans or proposed to secure any loans, and the
performance of any such engagement.
(6) The acquisition of title to the real or personal property
covered by any mortgage, deed of trust or other security instrument
by trustee's sale, judicial sale, foreclosure or deed in lieu of
foreclosure, or for the purpose of transferring title to any federal
agency or instrumentality as the insurer or guarantor of any loan,
and the retention of title to any real or personal property so
acquired pending the orderly sale or other disposition thereof.
(7) The engaging in activities necessary or appropriate to carry
out any of the foregoing activities.
Nothing contained in this subdivision shall be construed to permit
any foreign banking corporation to maintain an office in this state
otherwise than as provided by the laws of this state or to limit the
powers conferred upon any foreign banking corporation as set forth in
the laws of this state or to permit any foreign lending institution
to maintain an office in this state except as otherwise permitted
under the laws of this state.
191.1. "Uncertificated security" means a share (Section 184), or an
obligation of the issuer, described in paragraphs (15) and (18) of
subdivision (a) of Section 8102 of the Commercial Code.
192. "Vacancy" when used with respect to the board means any
authorized position of director which is not then filled by a duly
elected director, whether caused by death, resignation, removal,
change in the authorized number of directors (by the board or the
shareholders) or otherwise.
193. "Verified" means that the statements contained in a
certificate or other document are declared to be true of the own
knowledge of the persons executing the same in either:
(a) An affidavit signed by them under oath before an officer
authorized by the laws of this state or of the place where it is
executed to administer oaths, or
(b) A declaration in writing executed by them "under penalty of
perjury" and stating the date and place (whether within or without
this state) of execution.
Any affidavit sworn to without this state before a notary public
or a judge or clerk of a court of record having an official seal need
not be further authenticated.
194. "Vote" includes authorization by written consent, subject to
the provisions of subdivision (b) of Section 307 and subdivision (d)
of Section 603.
194.5. "Voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and
does not include the right to vote upon the happening of some
condition or event which has not yet occurred. In any case where
different classes of shares are entitled to vote as separate classes
for different members of the board, the determination of percentage
of voting power shall be made on the basis of the percentage of the
total number of authorized directors which the shares in question
(whether of one or more classes) have the power to elect in an
election at which all shares then entitled to vote for the election
of any directors are voted.
194.7. "Voting shift" means a change, pursuant to or by operation
of a provision of the articles, in the relative rights of the holders
of one or more classes or series of shares, voting as one or more
separate classes or series, to elect one or more directors.
195. "Written" or "in writing" includes facsimile, telegraphic, and
other electronic communication when authorized by this code,
including an electronic transmission by a corporation that satisfies
the requirements of Section 20.
100. (a) This division shall be known and may be cited as the
General Corporation Law.
(b) This title of the Corporations Code, or any division, part,
chapter, article or section thereof, may at any time be amended or
repealed.
101. Unless the provision or the context otherwise requires, the
general provisions and definitions set forth in this chapter govern
the construction of this division.
102. (a) Subject to Chapter 23 (commencing with Section 2300)
(transition provisions), this division applies to corporations
organized under this division and to domestic corporations which are
not subject to Division 2 (commencing with Section 5000) or Part 1
(commencing with Section 12000), 2 (commencing with Section 12200), 3
(commencing with Section 13200), or 5 (commencing with Section
14000) of Division 3 on December 31, 1976, and which are not
organized or existing under any statute of this state other than this
code; this division applies to any other corporation only to the
extent expressly included in a particular provision of this division.
(b) The existence of corporations formed or existing on the date
of enactment or reenactment of this division shall not be affected by
the enactment or reenactment of this division nor by any change in
the requirements for the formation of corporations nor by the
amendment or repeal of the laws under which they were formed or
created.
(c) Neither the repeals effected by the enactment or reenactment
of this division nor the enactment of this title nor the amendment
thereof shall impair or take away any existing liability or cause of
action against any corporation, its shareholders, directors, or
officers incurred prior to the time of the enactment, reenactment, or
amendment.
103. Every corporation organized under the laws of this state, any
other state of the United States or the District of Columbia or under
an act of the Congress of the United States, all of the capital
stock of which is beneficially owned by the United States, an agency
or instrumentality of the United States or any corporation the whole
of the capital stock of which is owned by the United States or by an
agency or instrumentality of the United States, is conclusively
presumed to be an agency and instrumentality of the United States and
is entitled to all privileges and immunities to which the holders of
all of its stock are entitled as agencies of the United States.
104. Unless otherwise expressly provided, whenever reference is
made in this division to any other state or federal statute, such
reference is to that statute as it may be amended from time to time,
whether before or after the enactment of this division.
105. A corporation or association may be sued as provided in the
Code of Civil Procedure.
106. Any corporation heretofore or hereafter formed under this
division shall, as a condition of its existence as a corporation, be
subject to the provisions of the Code of Civil Procedure authorizing
the attachment of corporate property.
107. No corporation, association or individual shall issue or put
in circulation, as money, anything but the lawful money of the United
States.
108. The fees of the Secretary of State for filing instruments by
or on behalf of corporations are prescribed in Article 3 (commencing
with Section 12180) of Chapter 3 of Part 2 of Division 3 of Title 2
of the Government Code.
109. (a) Any agreement, certificate or other instrument relating to
a domestic or foreign corporation filed pursuant to this division
may be corrected with respect to any misstatement of fact contained
therein, any defect in the execution thereof or any other error or
defect contained therein, by filing a certificate of correction
entitled "Certificate of Correction of ____ (insert here the title of
the agreement, certificate or other instrument to be corrected and
name(s) of corporation or corporations)"; provided, however, that no
such certificate of correction shall alter the wording of any
resolution or written consent which was in fact adopted by the board
or the shareholders or effect a corrected amendment of articles which
amendment as so corrected would not in all respects have complied
with the requirements of this division at the time of filing of the
agreement, certificate, or other instrument being corrected.
(b) If the certificate of correction corrects original articles,
the certificate of correction shall be either an officers'
certificate or a certificate signed and verified by the
incorporators, or a majority of them. If the certificate of
correction corrects an agreement of merger or an officers'
certificate accompanying an agreement of merger, the certificate of
correction shall be an officers' certificate of the surviving
corporation only. In all other instances, the certificate of
correction shall be either an officer's certificate or a certificate
signed and verified as provided in this division with respect to the
agreement, certificate or other instrument being corrected.
(c) A certificate of correction shall set forth the following:
(1) The name or names of the corporation or corporations.
(2) The date the agreement, certificate or other instrument being
corrected was filed.
(3) The provision in the agreement, certificate or other
instrument as corrected and, if the execution was defective, wherein
it was defective.
(4) If applicable, that the certificate does not alter the wording
of any resolution or written consent which was in fact adopted by
the board or the shareholders.
(d) A provision of the articles, amended articles, restated
articles, or certificate of determination being corrected by a
certificate of correction shall be identified in the certificate of
correction in accordance with subdivision (a) of Section 907.
(e) The filing of the certificate of correction shall not alter
the effective time of the agreement, certificate or instrument being
corrected, which shall remain as its original effective time, and
such filing shall not affect any right or liability accrued or
incurred before such filing, except that any right or liability
accrued or incurred by reason of the error or defect being corrected
shall be extinguished by such filing if the person having that right
has not detrimentally relied on the original instrument.
109.5. (a) Provisions of the articles described in paragraph (3) of
subdivision (e) of Section 202 and subdivision (a) and (b) of
Section 204 may be made dependent upon facts ascertainable outside
the articles, if the manner in which those facts shall operate upon
those provisions is clearly and expressly set forth in the articles.
Similarly, any of the terms of an agreement of merger pursuant to
Section 1101 may be made dependent upon facts ascertainable outside
that agreement, if the manner in which those facts shall operate upon
the terms of the agreement is clearly and expressly set forth in the
agreement of merger.
(b) Notwithstanding subdivision (a), when any provisions or terms
of articles or an agreement of merger are made dependent upon facts
ascertainable outside the filed instrument through a reference to an
agreement or similar document, the corporation filing that instrument
shall (1) maintain at its principal executive office a copy of any
such agreement or document and all amendments and (2) provide to its
shareholders, in the case of articles, or to shareholders of any
constituent corporation, in the case of an agreement of merger, a
copy of them upon written request and without charge.
(c) If the reference to an agreement or contract is a reference to
an agreement or contract to which the corporation is a party (a
"referenced agreement" in this section), any amendment or revision of
the referenced agreement requires shareholder approval, in addition
to approvals otherwise required, in the following instances and no
other:
(1) If the amendment or revision of the referenced agreement would
result in a material change in the rights, preferences, privileges
or restrictions of a class or series of shares, the amendment or
revision of the referenced agreement is required to be approved by
the outstanding shares (Section 152) of that class or series.
(2) If the amendment or revision of the referenced agreement would
result in a material change in the rights or liabilities of any
class or series of shares with respect to the subject matter of
paragraph (1), (2), (3), (5), or (9) of subdivision (a) of Section
204, the amendment or revision of the referenced agreement is
required to be approved by the outstanding shares (Section 152) of
that class or series.
(3) If the amendment or revision of the referenced agreement would
result in a material change in the restrictions on transfer or
hypothecation of any class or series of shares, the amendment or
revision of the referenced agreement is required to be approved by
the outstanding shares (Section 152) of that class or series.
(4) If the amendment or revision of the referenced agreement would
result in a change of any of the principal terms of an agreement of
merger, the amendment or revision of the referenced agreement is
required to be approved in the same manner as required by Section
1104 for a change in the principal terms of an agreement of merger.
110. (a) Upon receipt of any instrument by the Secretary of State
for filing pursuant to this division, if it conforms to law, it shall
be filed by, and in the office of, the Secretary of State and the
date of filing endorsed thereon. Except for instruments filed
pursuant to Section 1502, the date of filing shall be the date the
instrument is received by the Secretary of State unless withheld from
filing for a period of time pursuant to a request by the party
submitting it for filing or unless in the judgment of the Secretary
of State the filing is intended to be coordinated with the filing of
some other corporate document which cannot be filed. The Secretary of
State shall file a document as of any requested future date not more
than 90 days after its receipt, including a Saturday, Sunday, or
legal holiday, if the document is received in the Secretary of State'
s office at least one business day prior to the requested date of
filing. An instrument does not fail to conform to law because it is
not accompanied by the full filing fee if the unpaid portion of the
fee does not exceed the limits established by the policy of the
Secretary of State for extending credit in these cases.
(b) If the Secretary of State determines that an instrument
submitted for filing or otherwise submitted does not conform to law
and returns it to the person submitting it, the instrument may be
resubmitted accompanied by a written opinion of the member of the
State Bar of California submitting the instrument, or representing
the person submitting it, to the effect that the specific provision
of the instrument objected to by the Secretary of State does conform
to law and stating the points and authorities upon which the opinion
is based. The Secretary of State shall rely, with respect to any
disputed point of law (other than the application of Sections 201,
2101, and 2106), upon that written opinion in determining whether the
instrument conforms to law. The date of filing in that case shall be
the date the instrument is received on resubmission.
(c) Any instrument filed with respect to a corporation (other than
original articles) may provide that it is to become effective not
more than 90 days subsequent to its filing date. In case such a
delayed effective date is specified, the instrument may be prevented
from becoming effective by a certificate stating that by appropriate
corporate action it has been revoked and is null and void, executed
in the same manner as the original instrument and filed before the
specified effective date. In the case of a merger agreement, the
certificate revoking the earlier filing need only be executed on
behalf of one of the constituent corporations. If no revocation
certificate is filed, the instrument becomes effective on the date
specified.
110.5. The Secretary of State may cancel the filing of articles of
a domestic corporation or the filing of a statement and designation
by a foreign corporation if a check or other remittance accepted in
payment of the filing fee or franchise tax is not paid upon
presentation. Upon receiving written notification that the item
presented for payment has not been honored for payment, the Secretary
of State shall give written notice of the applicability of this
section and the cancellation date which shall be not less than 20
days from the date of mailing the written notice as certified by the
Secretary of State, to the agent for service of process or to the
person submitting the instrument. Thereafter, if the amount has not
been paid by cashier's check or equivalent before the date of
cancellation as stated in the written notice of cancellation, the
cancellation shall thereupon be effective. The written notice shall
be given 70 days or less after the original filing.
111. All references in this division to the voting of shares
include the voting of other securities given voting rights in the
articles pursuant to subdivision (a)(7) of Section 204.
112. If the articles provide for more or less than one vote for any
share on any matter, the references in Sections 152, 153 and 602 to
a majority or other proportion of shares means, as to such matter, a
majority or other proportion of the votes entitled to be cast.
Whenever in this division shares are disqualified from voting on any
matter, they shall not be considered outstanding for the
determination of a quorum at any meeting to act upon, or the required
vote to approve action upon, that matter under any other provision
of this division or the articles or bylaws.
113. Any reference in this division to mailing means first-class
mail, postage prepaid, unless registered or some other form of mail
is specified or permitted. Registered mail includes certified mail.
114. All references in this division to financial statements,
balance sheets, income statements, and statements of cashflows, and
all references to assets, liabilities, earnings, retained earnings,
and similar accounting items of a corporation mean those financial
statements or comparable statements or items prepared or determined
in conformity with generally accepted accounting principles then
applicable, fairly presenting in conformity with generally accepted
accounting principles the matters that they purport to present,
subject to any specific accounting treatment required by a particular
section of this division. Unless otherwise expressly stated, all
references in this division to financial statements mean, in the case
of a corporation that has subsidiaries, consolidated statements of
the corporation and each of its subsidiaries as are required to be
included in the consolidated statements under generally accepted
accounting principles then applicable and all references to
accounting items mean the items determined on a consolidated basis in
accordance with the consolidated financial statements. Financial
statements other than annual statements may be condensed or otherwise
presented as permitted by authoritative accounting pronouncements.
115. As used in this division, independent accountant means a
certified public accountant or public accountant who is independent
of the corporation as determined in accordance with generally
accepted auditing standards and who is engaged to audit financial
statements of the corporation or perform other accounting services.
116. Nothing contained in this division modifies the provisions of
subdivision (h) of Section 25102 or the conditions provided therein
to the availability of an exemption under that subdivision.
117. Any requirement in this division for a vote of each class of
outstanding shares means such a vote regardless of limitations or
restrictions upon the voting rights thereof, unless expressly limited
to voting shares.
118. Any reference in this division to the time a notice is given
or sent means, unless otherwise expressly provided, any of the
following:
(a) The time a written notice by mail is deposited in the United
States mails, postage prepaid.
(b) The time any other written notice, including facsimile,
telegram, or electronic mail message, is personally delivered to the
recipient or is delivered to a common carrier for transmission, or
actually transmitted by the person giving the notice by electronic
means, to the recipient.
(c) The time any oral notice is communicated, in person or by
telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, or wireless,
to the recipient, including the recipient's designated voice mailbox
or address on the system, or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.
149. "Acknowledged" means that an instrument is either:
(a) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code, or
(b) Accompanied by a declaration in writing signed by the persons
executing the same that they are such persons and that the instrument
is the act and deed of the person or persons executing the same.
Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.
150. A corporation is an "affiliate" of, or a corporation is
"affiliated" with, another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the other specified
corporation.
151. "Approved by (or approval of) the board" means approved or
ratified by the vote of the board or by the vote of a committee
authorized to exercise the powers of the board, except as to matters
not within the competence of the committee under Section 311.
152. "Approved by (or approval of) the outstanding shares" means
approved by the affirmative vote of a majority of the outstanding
shares entitled to vote. Such approval shall include the affirmative
vote of a majority of the outstanding shares of each class or series
entitled, by any provision of the articles or of this division, to
vote as a class or series on the subject matter being voted upon and
shall also include the affirmative vote of such greater proportion
(including all) of the outstanding shares of any class or series if
such greater proportion is required by the articles or this division.
153. "Approved by (or approval of) the shareholders" means approved
or ratified by the affirmative vote of a majority of the shares
represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a
majority of the required quorum) or by the written consent of
shareholders (Section 603) or by the affirmative vote or written
consent of such greater proportion (including all) of the shares of
any class or series as may be provided in the articles or in this
division for all or any specified shareholder action.
154. "Articles" includes the articles of incorporation, amendments
thereto, amended articles, restated articles, certificate of
incorporation and certificates of determination. All references in
this division to a vote required by the "articles" include, in the
case of a close corporation (Section 158), any vote required by a
shareholders' agreement.
155. "Board" means the board of directors of the corporation.
156. "Certificate of determination" means a certificate executed
and filed pursuant to Section 401.
156.1. "Certificated security" means a share (Section 184), as
defined in paragraph (4) of subdivision (a) of Section 8102 of, or an
obligation of the issuer as described in paragraph (15) of
subdivision (a) of, the Commercial Code.
156.5. "Certificate of Redomestication" is the document by which
the appropriate official of another state approves the
redomestication of a California insurer.
157. "Chapter" refers to a chapter of this Division 1 of Title 1 of
the Corporations Code, unless otherwise expressly stated.
158. (a) "Close corporation" means a corporation whose articles
contain, in addition to the provisions required by Section 202, a
provision that all of the corporation's issued shares of all classes
shall be held of record by not more than a specified number of
persons, not exceeding 35, and a statement "This corporation is a
close corporation."
(b) The special provisions referred to in subdivision (a) may be
included in the articles by amendment, but if such amendment is
adopted after the issuance of shares only by the affirmative vote of
all of the issued and outstanding shares of all classes.
(c) The special provisions referred to in subdivision (a) may be
deleted from the articles by amendment, or the number of shareholders
specified may be changed by amendment, but if such amendment is
adopted after the issuance of shares only by the affirmative vote of
at least two-thirds of each class of the outstanding shares;
provided, however, that the articles may provide for a lesser vote,
but not less than a majority of the outstanding shares, or may deny a
vote to any class, or both.
(d) In determining the number of shareholders for the purposes of
the provision in the articles authorized by this section, a husband
and wife and the personal representative of either shall be counted
as one regardless of how shares may be held by either or both of
them, a trust or personal representative of a decedent holding shares
shall be counted as one regardless of the number of trustees or
beneficiaries and a partnership or corporation or business
association holding shares shall be counted as one (except that any
such trust or entity the primary purpose of which was the acquisition
or voting of the shares shall be counted according to the number of
beneficial interests therein).
(e) A corporation shall cease to be a close corporation upon the
filing of an amendment to its articles pursuant to subdivision (c) or
if it shall have more than the maximum number of holders of record
of its shares specified in its articles as a result of an inter vivos
transfer of shares which is not void under subdivision (d) of
Section 418, the transfer of shares on distribution by will or
pursuant to the laws of descent and distribution, the dissolution of
a partnership or corporation or business association or the
termination of a trust which holds shares, by court decree upon
dissolution of a marriage or otherwise by operation of law. Promptly
upon acquiring more than the specified number of holders of record of
its shares, a close corporation shall execute and file an amendment
to its articles deleting the special provisions referred to in
subdivision (a) and deleting any other provisions not permissible for
a corporation which is not a close corporation, which amendment
shall be promptly approved and filed by the board and need not be
approved by the outstanding shares.
(f) Nothing contained in this section shall invalidate any
agreement among the shareholders to vote for the deletion from the
articles of the special provisions referred to in subdivision (a)
upon the lapse of a specified period of time or upon the occurrence
of a certain event or condition or otherwise.
(g) The following sections contain specific references to close
corporations: 186, 202, 204, 300, 418, 421, 1111, 1201, 1800 and
1904.
159. "Common shares" means shares which have no preference over any
other shares with respect to distribution of assets on liquidation
or with respect to payment of dividends.
160. (a) Except as provided in subdivision (b), "control" means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a corporation.
(b) "Control" in Sections 181, 1001, and 1200 means the ownership
directly or indirectly of shares or equity securities possessing more
than 50 percent of the voting power of a domestic corporation, a
foreign corporation, or an other business entity.
161. "Constituent corporation" means a corporation which is merged
with or into one or more other corporations or one or more other
business entities and includes a surviving corporation.
161.5. "Constituent limited partnership" means a limited
partnership which is merged with one or more corporations and
includes the surviving limited partnership.
161.7. "Constituent other business entity" means an other business
entity that is merged with or into one or more corporations and
includes the surviving other business entity.
161.9. "Conversion" means a conversion pursuant to Chapter 11.5
(commencing with Section 1150).
162. "Corporation", unless otherwise expressly provided, refers
only to a corporation organized under this division or a corporation
subject to this division under the provisions of subdivision (a) of
Section 102.
163. "Corporation subject to the Banking Law" (Division 1
(commencing with Section 99) of the Financial Code) means:
(a) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the commercial banking business under
Division 1 (commencing with Section 99) of the Financial Code.
(b) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the industrial banking business under
Division 1 (commencing with Section 99) of the Financial Code.
(c) Any corporation (other than a corporation described in
subdivision (d)) which, with the approval of the Commissioner of
Financial Institutions, is incorporated for the purpose of engaging
in, or which is authorized by the Commissioner of Financial
Institutions to engage in, the trust business under Division 1
(commencing with Section 99) of the Financial Code.
(d) Any corporation which is authorized by the Commissioner of
Financial Institutions and the Commissioner of Insurance to maintain
a title insurance department to engage in title insurance business
and a trust department to engage in trust business; or
(e) Any corporation which, with the approval of the Commissioner
of Financial Institutions, is incorporated for the purpose of
engaging in, or which is authorized by the Commissioner of Financial
Institutions to engage in, business under Article 1 (commencing with
Section 3500), Chapter 19, Division 1 of the Financial Code.
163.1. For purposes of Section 503, "cumulative dividends in
arrears" means only cumulative dividends that have not been paid as
required on a scheduled payment date set forth in, or determined
pursuant to, the articles of incorporation, regardless of whether
those dividends had been declared prior to that scheduled payment
date.
164. "Directors" means natural persons designated in the articles
as such or elected by the incorporators and natural persons
designated, elected or appointed by any other name or title to act as
directors, and their successors.
165. "Disappearing corporation" means a constituent corporation
which is not the surviving corporation.
165.5. "Disappearing limited partnership" means a constituent
limited partnership which is not the surviving limited partnership.
166. "Distribution to its shareholders" means the transfer of cash
or property by a corporation to its shareholders without
consideration, whether by way of dividend or otherwise, except a
dividend in shares of the corporation, or the purchase or redemption
of its shares for cash or property, including the transfer, purchase,
or redemption by a subsidiary of the corporation. The time of any
distribution by way of dividend shall be the date of declaration
thereof and the time of any distribution by purchase or redemption of
shares shall be the date cash or property is transferred by the
corporation, whether or not pursuant to a contract of an earlier
date; provided, that where a debt obligation that is a security (as
defined in Section 8102 of the Commercial Code) is issued in exchange
for shares the time of the distribution is the date when the
corporation acquires the shares in the exchange. In the case of a
sinking fund payment, cash or property is transferred within the
meaning of this section at the time that it is delivered to a trustee
for the holders of preferred shares to be used for the redemption of
the shares or physically segregated by the corporation in trust for
that purpose. "Distribution to its shareholders" shall not include
(a) satisfaction of a final judgment of a court or tribunal of
appropriate jurisdiction ordering the rescission of the issuance of
shares, (b) the rescission by a corporation of the issuance of it
shares, if the board determines (with any director who is, or would
be, a party to the transaction not being entitled to vote) that (1)
it is reasonably likely that the holder or holders of the shares in
question could legally enforce a claim for the rescission, (2) that
the rescission is in the best interests of the corporation, and (3)
the corporation is likely to be able to meet its liabilities (except
those for which payment is otherwise adequately provided) as they
mature, or (c) the repurchase by a corporation of its shares issued
by it pursuant to Section 408, if the board determines (with any
director who is, or would be, a party to the transaction not being
entitled to vote) that (1) the repurchase is in the best interests of
the corporation and that (2) the corporation is likely to be able to
meet its liabilities (except those for which payment is otherwise
adequately provided) as they mature.
167. "Domestic corporation" means a corporation formed under the
laws of this state.
167.3. "Domestic limited liability company" means a limited
liability company as defined in subdivision (t) of Section 17000.
167.5. "Domestic limited partnership" means any limited partnership
formed under the laws of this state.
167.7. "Domestic other business entity" means an other business
entity organized under the laws of this state.
167.8. "Disappearing other business entity" means a constituent
other business entity that is not the surviving other business
entity.
168. "Equity security" in Sections 181, 1001, 1113, 1200, and 1201
means any share or membership of a domestic or foreign corporation;
any partnership interest, membership interest, or equivalent equity
interest in an other business entity; and any security convertible
with or without consideration into, or any warrant or right to
subscribe to or purchase, any of the foregoing.
169. "Filed", unless otherwise expressly provided, means filed in
the office of the Secretary of State.
170. "Foreign association" means a business association organized
as a trust under the laws of a foreign jurisdiction.
171. "Foreign corporation" means any corporation other than a
domestic corporation and, when used in Section 191, Section 201,
Section 2203, Section 2258 and Section 2259 and Chapter 21, includes
a foreign association, unless otherwise stated. "Foreign corporation"
as used in Chapter 21 does not include a corporation or association
chartered under the laws of the United States.
171.03. "Foreign limited liability company" means a foreign limited
liability company as defined in subdivision (q) of Section 17001.
171.05. "Foreign limited partnership" means any limited
partnership, including a limited liability limited partnership,
formed under the laws of any state other than this state or of the
District of Columbia or under the laws of a foreign country.
171.07. "Foreign other business entity" means an other business
entity organized under the laws of any state, other than this state,
or of the District of Columbia or under the laws of a foreign
country.
171.1. "Initial transaction statement" means a statement signed by
or on behalf of the issuer sent to the new registered owner or
registered pledgee, and "written statements," when used in connection
with uncertificated securities, means the written statements that
are periodically, or at the request of the registered owner or
registered pledgee, sent by the issuer to the registered owner or
registered pledgee describing the issue of which the uncertificated
security is a part.
171.3. "Limited liability company" means a limited liability
company as defined in subdivision (t) of Section 17001.
171.5. "Limited partnership" means a partnership formed by two or
more persons and having one or more general partners and one or more
limited partners, or their equivalents under any name.
172. "Liquidation price" or "liquidation preference" means amounts
payable on shares of any class upon voluntary or involuntary
dissolution, winding up or distribution of the entire assets of the
corporation, including any cumulative dividends accrued and unpaid,
in priority to shares of another class or classes.
173. "Officers' certificate" means a certificate signed and
verified by the chairman of the board, the president or any vice
president and by the secretary, the chief financial officer, the
treasurer or any assistant secretary or assistant treasurer.
174. "On the certificate" means that a statement appears on the
face of a share certificate or on the reverse thereof with a
reference thereto on the face or, in the case of an uncertificated
security, that the applicable provisions of subdivision (a) of
Section 8202 and Section 8204 of the Commercial Code have been
complied with.
174.5. "Other business entity" means a domestic or foreign limited
liability company, limited partnership, general partnership, business
trust, real estate investment trust, unincorporated association
(other than a nonprofit association), or a domestic reciprocal
insurer organized after 1974 to provide medical malpractice insurance
as set forth in Article 16 (commencing with Section 1550) of Chapter
3 of Part 2 of Division 1 of the Insurance Code. As used herein,
"general partnership" means a "partnership" as defined in subdivision
(7) of Section 16101; "business trust" means a business organization
formed as a trust; "real estate investment trust" means a "real
estate investment trust" as defined in subsection (a) of Section 856
of the Internal Revenue Code of 1986, as amended; and "unincorporated
association" has the meaning set forth in Section 18035.
175. Except as used in Sections 1001, 1101, and 1113, a "parent" of
a specified corporation is an affiliate in control (Section 160(a))
of that corporation directly or indirectly through one or more
intermediaries. In Sections 1001, 1101, and 1113, "parent" means a
person in control (Section 160(b)) of a domestic corporation, a
foreign corporation, or an other business entity.
176. "Preferred shares" means shares other than common shares.
177. "Proper county" means the county where the principal executive
office of the corporation is located or, if the principal executive
office of the corporation is not located in this state, or the
corporation has no such office, the County of Sacramento.
178. "Proxy" means a written authorization signed or an electronic
transmission authorized by a shareholder or the shareholder's
attorney in fact giving another person or persons power to vote with
respect to the shares of such shareholder. "Signed" for the purpose
of this section means the placing of the shareholder's name or other
authorization on the proxy (whether by manual signature, typewriting,
telegraphic, or electronic transmission or otherwise) by the
shareholder or the shareholder's attorney in fact.
A proxy may be transmitted by an oral telephonic transmission if
it is submitted with information from which it may be determined that
the proxy was authorized by the shareholder, or his or her attorney
in fact.
179. "Proxyholder" means the person or persons to whom a proxy is
given.
180. "Redemption price" means the amount or amounts (in cash,
property or securities, or any combination thereof) payable on shares
of any class or series upon the redemption of the shares. Unless
otherwise expressly provided, the redemption price is payable in
cash.
180.5. "Redomestication" means the transfer of an insurer's place
of incorporation from another state to this state or from this state
to another state.
181. "Reorganization" means either:
(a) A merger pursuant to Chapter 11 (commencing with Section 1100)
other than a short-form merger (a "merger reorganization").
(b) The acquisition by one domestic corporation, foreign
corporation, or other business entity in exchange, in whole or in
part, for its equity securities (or the equity securities of a
domestic corporation, a foreign corporation, or an other business
entity which is in control of the acquiring entity) of equity
securities of another domestic corporation, foreign corporation, or
other business entity if, immediately after the acquisition, the
acquiring entity has control of the other entity (an "exchange
reorganization").
(c) The acquisition by one domestic corporation, foreign
corporation, or other business entity in exchange in whole or in part
for its equity securities (or the equity securities of a domestic
corporation, a foreign corporation, or an other business entity which
is in control of the acquiring entity) or for its debt securities
(or debt securities of a domestic corporation, foreign corporation,
or other business entity which is in control of the acquiring entity)
which are not adequately secured and which have a maturity date in
excess of five years after the consummation of the reorganization, or
both, of all or substantially all of the assets of another domestic
corporation, foreign corporation, or other business entity (a
"sale-of-assets reorganization").
182. "Reverse stock split" means the pro rata combination of all
the outstanding shares of a class into a smaller number of shares of
the same class by an amendment to the articles stating the effect on
outstanding shares.
183. "Series" of shares means those shares within a class which
have the same rights, preferences, privileges and restrictions but
which differ in one or more rights, preferences, privileges or
restrictions from other shares within the same class. Certificated
securities and uncertificated securities do not constitute different
series if the only difference is certificated and uncertificated
status.
183.5. "Share exchange tender offer" means any acquisition by one
corporation in exchange in whole or in part for its equity securities
(or the equity securities of a corporation which is in control of
the acquiring corporation) of shares of another corporation, other
than an exchange reorganization (subdivision (b) of Section 181).
184. "Shares" means the units into which the proprietary interests
in a corporation are divided in the articles.
185. "Shareholder" means one who is a holder of record of shares.
186. "Shareholders' agreement" means a written agreement among all
of the shareholders of a close corporation, or if a close corporation
has only one shareholder between such shareholder and the
corporation, as authorized by subdivision (b) of Section 300.
187. "Short-form merger" means a merger pursuant to Section 1110.
188. "Stock split" means the pro rata division, otherwise than by a
share dividend, of all the outstanding shares of a class into a
greater number of shares of the same class by an amendment to the
articles stating the effect on outstanding shares.
189. (a) Except as provided in subdivision (b), "subsidiary" of a
specified corporation means a corporation shares of which possessing
more than 50 percent of the voting power are owned directly or
indirectly through one or more subsidiaries by the specified
corporation.
(b) For the purpose of Section 703, "subsidiary" of a specified
corporation means a corporation shares of which possessing more than
25 percent of the voting power are owned directly or indirectly
through one or more subsidiaries as defined in subdivision (a) by the
specified corporation.
190. "Surviving corporation" means a corporation into which one or
more other corporations or one or more other business entities are
merged.
190.5. "Surviving limited partnership" means a limited partnership
into which one or more other limited partnerships or one or more
corporations are merged.
190.7. "Surviving other business entity" means an other business
entity into which one or more other business entities or one or more
corporations are merged.
191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated
and successive transactions of its business in this state, other than
interstate or foreign commerce.
(b) A foreign corporation shall not be considered to be
transacting intrastate business merely because its subsidiary
transacts intrastate business or merely because of its status as any
one or more of the following:
(1) A shareholder of a domestic corporation.
(2) A shareholder of a foreign corporation transacting intrastate
business.
(3) A limited partner of a domestic limited partnership.
(4) A limited partner of a foreign limited partnership transacting
intrastate business.
(5) A member or manager of a domestic limited liability company.
(6) A member or manager of a foreign limited liability company
transacting intrastate business.
(c) Without excluding other activities that may not constitute
transacting intrastate business, a foreign corporation shall not be
considered to be transacting intrastate business within the meaning
of subdivision (a) solely by reason of carrying on in this state any
one or more of the following activities:
(1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes.
(2) Holding meetings of its board or shareholders or carrying on
other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange,
and registration of its securities or depositaries with relation to
its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through
employees or agents or otherwise, where those orders require
acceptance outside this state before becoming binding contracts.
(7) Creating evidences of debt or mortgages, liens or security
interests on real or personal property.
(8) Conducting an isolated transaction completed within a period
of 180 days and not in the course of a number of repeated
transactions of like nature.
(d) Without excluding other activities that may not constitute
transacting intrastate business, any foreign lending institution,
including, but not limited to: any foreign banking corporation, any
foreign corporation all of the capital stock of which is owned by one
or more foreign banking corporations, any foreign savings and loan
association, any foreign insurance company or any foreign corporation
or association authorized by its charter to invest in loans secured
by real and personal property, whether organized under the laws of
the United States or of any other state, district or territory of the
United States, shall not be considered to be doing, transacting or
engaging in business in this state solely by reason of engaging in
any or all of the following activities either on its own behalf or as
a trustee of a pension plan, employee profit sharing or retirement
plan, testamentary or inter vivos trust, or in any other fiduciary
capacity:
(1) The acquisition by purchase, by contract to purchase, by
making of advance commitments to purchase or by assignment of loans,
secured or unsecured, or any interest therein, if those activities
are carried on from outside this state by the lending institution.
(2) The making by an officer or employee of physical inspections
and appraisals of real or personal property securing or proposed to
secure any loan, if the officer or employee making any physical
inspection or appraisal is not a resident of and does not maintain a
place of business for that purpose in this state.
(3) The ownership of any loans and the enforcement of any loans
by trustee's sale, judicial process or deed in lieu of foreclosure or
otherwise.
(4) The modification, renewal, extension, transfer or sale of
loans or the acceptance of additional or substitute security therefor
or the full or partial release of the security therefor or the
acceptance of substitute or additional obligors thereon, if the
activities are carried on from outside this state by the lending
institution.
(5) The engaging by contractural arrangement of a corporation,
firm or association, qualified to do business in this state, that is
not a subsidiary or parent of the lending institution and that is not
under common management with the lending institution, to make
collections and to service loans in any manner whatsoever, including
the payment of ground rents, taxes, assessments, insurance, and the
like and the making, on behalf of the lending institution, of
physical inspections and appraisals of real or personal property
securing any loans or proposed to secure any loans, and the
performance of any such engagement.
(6) The acquisition of title to the real or personal property
covered by any mortgage, deed of trust or other security instrument
by trustee's sale, judicial sale, foreclosure or deed in lieu of
foreclosure, or for the purpose of transferring title to any federal
agency or instrumentality as the insurer or guarantor of any loan,
and the retention of title to any real or personal property so
acquired pending the orderly sale or other disposition thereof.
(7) The engaging in activities necessary or appropriate to carry
out any of the foregoing activities.
Nothing contained in this subdivision shall be construed to permit
any foreign banking corporation to maintain an office in this state
otherwise than as provided by the laws of this state or to limit the
powers conferred upon any foreign banking corporation as set forth in
the laws of this state or to permit any foreign lending institution
to maintain an office in this state except as otherwise permitted
under the laws of this state.
191.1. "Uncertificated security" means a share (Section 184), or an
obligation of the issuer, described in paragraphs (15) and (18) of
subdivision (a) of Section 8102 of the Commercial Code.
192. "Vacancy" when used with respect to the board means any
authorized position of director which is not then filled by a duly
elected director, whether caused by death, resignation, removal,
change in the authorized number of directors (by the board or the
shareholders) or otherwise.
193. "Verified" means that the statements contained in a
certificate or other document are declared to be true of the own
knowledge of the persons executing the same in either:
(a) An affidavit signed by them under oath before an officer
authorized by the laws of this state or of the place where it is
executed to administer oaths, or
(b) A declaration in writing executed by them "under penalty of
perjury" and stating the date and place (whether within or without
this state) of execution.
Any affidavit sworn to without this state before a notary public
or a judge or clerk of a court of record having an official seal need
not be further authenticated.
194. "Vote" includes authorization by written consent, subject to
the provisions of subdivision (b) of Section 307 and subdivision (d)
of Section 603.
194.5. "Voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and
does not include the right to vote upon the happening of some
condition or event which has not yet occurred. In any case where
different classes of shares are entitled to vote as separate classes
for different members of the board, the determination of percentage
of voting power shall be made on the basis of the percentage of the
total number of authorized directors which the shares in question
(whether of one or more classes) have the power to elect in an
election at which all shares then entitled to vote for the election
of any directors are voted.
194.7. "Voting shift" means a change, pursuant to or by operation
of a provision of the articles, in the relative rights of the holders
of one or more classes or series of shares, voting as one or more
separate classes or series, to elect one or more directors.
195. "Written" or "in writing" includes facsimile, telegraphic, and
other electronic communication when authorized by this code,
including an electronic transmission by a corporation that satisfies
the requirements of Section 20.
