State Codes and Statutes

Statutes > California > Corp > 5002-5080

CORPORATIONS CODE
SECTION 5002-5080



5002.  Unless the provisions or the context otherwise requires, the
general provisions and definitions set forth in this part govern the
construction of this part and of Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), Part 4 (commencing with
Section 9110), and Part 5 (commencing with Section 9910) of this
division.



5003.  (a) The provisions of this part apply to:
   (1) Corporations organized under Part 2, Part 3, and Part 4 of
this division;
   (2) Corporations expressly subject to Part 2, Part 3 or Part 4 of
this division pursuant to a particular provision of this division or
Division 3 (commencing with Section 12000) or other specific
statutory provision;
   (3) Corporations which pursuant to the express provisions of Part
1, Division 2 (commencing with Section 9000) in effect immediately
prior to January 1, 1980, are subject to the provisions of Part 1 of
Division 2 and which, on or after January 1, 1980, are subject to the
Nonprofit Public Benefit Corporation Law, the Nonprofit Mutual
Benefit Corporation Law or the Nonprofit Religious Corporation Law,
pursuant to Section 9912.
   (4) Corporations expressly subject to Part 1, Division 2
(commencing with Section 9000) in effect immediately prior to January
1, 1980, pursuant to a particular provision of this division or
Division 3 (commencing with Section 12000) or other specific
statutory provision in effect immediately prior to January 1, 1980,
and which, on or after January 1, 1980, are subject to the Nonprofit
Public Benefit Corporation Law, the Nonprofit Mutual Benefit
Corporation Law, or the Nonprofit Religious Corporation Law, pursuant
to Section 9912; and
   (5) Corporations incorporated as permitted by subdivision (d) of
Section 9911.
   (b) The existence of corporations formed or existing on the date
of enactment or reenactment of this part, Part 2, Part 3, Part 4 or
Part 5 shall not be affected by the enactment or reenactment of such
parts or by any change in the requirements for the formation of
corporations or 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 part or of Part 2, Part 3, Part 4 or Part 5, nor the
amendment thereof shall impair or take away any existing liability or
cause of action against any corporation, its members, directors or
officers incurred prior to the time of such enactment, reenactment or
amendment.



5004.  A corporation may be sued as provided in the Code of Civil
Procedure.


5005.  Any corporation 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.



5005.1.  (a) Except for a liability which may be insured against
pursuant to Division 4 (commencing with Section 3200) of the Labor
Code, an authorized corporation may do any of the following:
   (1) Insure itself against all or any part of any tort liability.
   (2) Insure any employee of the corporation against all or any part
of his or her liability for injury resulting from an act or omission
in the scope of employment.
   (3) Insure any board member, officer, or volunteer of the
corporation against any liability that may arise from any act or
omission in the scope of participation with the corporation.
   (4) Insure itself against any loss arising from physical damage to
motor vehicles owned or operated by the corporation.
   (b) The insurance authorized pursuant to this section shall only
be available to an authorized corporation where that corporation has
joined with two or more other authorized corporations in an
arrangement providing for the pooling of self-insured claims or
losses. The pooling arrangement shall not be considered insurance nor
be subject to regulation under the Insurance Code.
   (c) Nothing in this section shall be construed to authorize a
corporation organized pursuant to this division to pay for, or to
insure, contract, or provide for payment for, any part of a claim or
judgment against an employee of the corporation for punitive or
exemplary damages.
   (d) Any insurance pool established pursuant to this section shall
have initial pooled resources of not less than two hundred fifty
thousand dollars ($250,000).
   (e) All participating corporations in any pool established
pursuant to this section must agree to pay premiums or make other
mandatory financial contributions or commitments necessary to ensure
a financially sound risk pool.
   (f) For the purpose of this section, an authorized "corporation"
means any corporation that meets all of the following criteria:
   (1) Is organized chiefly to provide or fund health or human
services, but does not include a hospital.
   (2) Is exempt from taxation under paragraph (3) of subsection (c)
of Section 501 of the United States Internal Revenue Code.




5006.  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.


5007.  Any agreement, certificate or other instrument relating to a
domestic corporation, a foreign corporation, or a foreign business
corporation filed pursuant to the provisions of this part, Part 2,
Part 3, Part 4 or Part 5 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 the corporation or
corporations)"; provided, however, that no such certificate of
correction shall alter the wording of any resolution which was in
fact adopted by the board or the members or delegates or effect a
corrected amendment of articles which amendment as so corrected would
not in all respects have complied with the requirements of this
part, Part 2, Part 3, Part 4 or Part 5 at the time of filing of the
agreement, certificate or other instrument being corrected. Such
certificate of correction shall be signed and verified or
acknowledged as provided in this part with respect to the agreement,
certificate or other instrument being corrected. It shall set forth
the following:
   (a) The name or names of the corporation or corporations.
   (b) The date the agreement, certificate or other instrument being
corrected was filed.
   (c) The provision in the agreement, certificate or other
instrument as corrected and, if the execution was defective, wherein
it was defective.
   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 such right
has not detrimentally relied on the original instrument.




5008.  (a) Upon receipt of any instrument by the Secretary of State
for filing pursuant to this part, Part 2, Part 3, Part 4 or Part 5,
if it conforms to law, it shall be filed by, and in the office of the
Secretary of State and the date of filing endorsed thereon. Except
for instruments filed pursuant to Section 6210, 8210, or 9660 the
date of filing shall be the date the instrument is received by the
Secretary of State unless 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 such fee does not exceed the limits
established by the policy of the Secretary of State for extending
credit in such 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 a member of the State
Bar of California submitting the instrument, or representing the
person submitting it, to the effect that the specific provision of
the instrument objected to by the Secretary of State does conform to
law and stating the points and authorities upon which the opinion is
based. The Secretary of State shall rely, with respect to any
disputed point of law (other than the application of Section 5122,
7122, or 9122), upon such written opinion in determining whether the
instrument conforms to law. The date of filing in such 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, such
certificate revoking the earlier filing need only be executed on
behalf of one of the constituent corporations. If no such revocation
certificate is filed, the instrument becomes effective on the date
specified.


5008.5.  The Secretary of State may cancel the filing of articles if
a check or other remittance accepted in payment of the filing fee or
franchise tax is not paid upon presentation. 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.



5008.6.  (a) A corporation that (1) fails to file a statement
pursuant to Section 6210, 8210, or 9660 for an applicable filing
period, (2) has not filed a statement pursuant to Section 6210, 8210,
or 9660 during the preceding 24 months, and (3) was certified for
penalty pursuant to Section 6810, 8810, or 9690 for the same filing
period, shall be subject to suspension pursuant to this section
rather than to penalty under Section 6810 or 8810.
   (b) When subdivision (a) is applicable, the Secretary of State
shall mail a notice to the corporation informing the corporation that
its corporate powers, rights, and privileges will be suspended 60
days from the date of the notice if the corporation does not file the
statement required by Section 6210, 8210, or 9660.
   (c) If the 60-day period expires without the delinquent
corporation filing the required statement, the Secretary of State
shall notify the Franchise Tax Board of the suspension, and mail a
notice of the suspension to the corporation. Thereupon, except for
the purpose of filing an application for exempt status or amending
the articles of incorporation as necessary either to perfect that
application or to set forth a new name, the corporate powers, rights,
and privileges of the corporation are suspended.
   (d) A statement required by Section 6210, 8210, or 9660 may be
filed, notwithstanding suspension of the corporate powers, rights,
and privileges under this section or under provisions of the Revenue
and Taxation Code. Upon the filing of a statement under Section 6210,
8210, or 9660, by a corporation that has suffered suspension under
this section, the Secretary of State shall certify that fact to the
Franchise Tax Board and the corporation may thereupon be relieved
from suspension, unless the corporation is held in suspension by the
Franchise Tax Board because of Section 23301, 23301.5, or 23775 of
the Revenue and Taxation Code.



5009.  Except as otherwise required, any reference in this part,
Part 2, Part 3, Part 4 or Part 5 to mailing means first-, second-, or
third-class mail, postage prepaid, unless registered mail is
specified. Registered mail includes certified mail.




5010.  If the articles or bylaws provide for more or less than one
vote for any membership on any matter, the references in Sections
5033 and 5034 to a majority or other proportion of memberships mean,
as to those matters, a majority or other proportion of the votes
entitled to be cast. Whenever in Part 2 (commencing with Section
5110) or Part 3 (commencing with Section 7110) members are
disqualified from voting on any matter, their memberships shall not
be counted for the determination of a quorum at any meeting to act
upon, or the required vote to approve action upon, that matter under
any other provision of Part 2 (commencing with Section 5110) or Part
3 (commencing with Section 7110) or the articles or bylaws.




5011.  All references in Part 3 (commencing with Section 7110) to
the voting of memberships include the voting of securities given
voting rights in the articles pursuant to paragraph (3) of
subdivision (a) of Section 7132.



5012.  All references in this part, Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), or Part 4 (commencing
with Section 9110) to financial statements of a corporation mean
statements prepared in conformity with generally accepted accounting
principles or some other basis of accounting which reasonably sets
forth the assets and liabilities and the income and expenses of the
corporation and discloses the accounting basis used in their
preparation.


5013.  As used in this part, Part 2 (commencing with Section 5110),
Part 3 (commencing with Section 7110), or Part 4 (commencing with
Section 9110), "independent accountant" means a certified public
accountant or public accountant who is independent of the
corporation, as determined in accordance with generally accepted
auditing standards, and who is engaged to audit financial statements
of the corporation or perform other accounting services.



5014.  Any requirement in Part 3 (commencing with Section 7110) for
a vote of each class of members means such a vote regardless of
limitations or restrictions upon the voting rights thereof, unless
expressly limited to voting memberships.




5015.  Any reference in this part, Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), Part 4 (commencing with
Section 9110), or Part 5 (commencing with Section 9910) to the time
a notice is given or sent means, unless otherwise expressly provided,
(a) the time a written notice by mail is deposited in the United
States mails, postage prepaid; or (b) the time any other written
notice, including facsimile, telegram, or other electronic mail
message, is personally delivered to the recipient or is delivered to
a common carrier for transmission, or actually transmitted by the
person giving the notice by electronic means, to the recipient; or
(c) the time any oral notice is communicated, in person or by
telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, or wireless,
to the recipient, including the recipient's designated voice mailbox
or address on such a system, or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.



5016.  A notice or report mailed or delivered as part of a
newsletter, magazine or other organ regularly sent to members shall
constitute written notice or report pursuant to this division when
addressed and mailed or delivered to the member, or in the case of
members who are residents of the same household and who have the same
address on the books of the corporation, when addressed and mailed
or delivered to one of such members, at the address appearing on the
books of the corporation.



5030.  "Acknowledged" means that an instrument is either:
   (a) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code; or
   (b) Accompanied by a declaration in writing signed by the persons
executing the same that they are such persons and that the instrument
is the act and deed of the person or persons executing the same.
   Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.



5031.  A corporation is an "affiliate" of, or a corporation is
"affiliated" with, another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the other specified
corporation.



5032.  "Approved by (or approval of) the board" means approved or
ratified by the vote of the board or by the vote of a committee
authorized to exercise the powers of the board, except as to matters
not within the competence of the committee under Section 5212,
Section 7212, or Section 9212.



5033.  "Approval by (or approval of) a majority of all members"
means approval by an affirmative vote (or written ballot in
conformity with Section 5513, Section 7513, or Section 9413) of a
majority of the votes entitled to be cast. Such approval shall
include the affirmative vote of a majority of the outstanding
memberships of each class, unit, or grouping of members entitled, by
any provision of the articles or bylaws or of Part 2, Part 3, Part 4
or Part 5 to vote as a class, unit, or grouping of members on the
subject matter being voted upon and shall also include the
affirmative vote of such greater proportion, including all, of the
votes of the memberships of any class, unit, or grouping of members
if such greater proportion is required by the bylaws (subdivision (e)
of Section 5151, subdivision (e) of Section 7151, or subdivision (e)
of Section 9151) or Part 2, Part 3, Part 4 or Part 5.



5034.  "Approval by (or approval of) the members" means approved or
ratified by the affirmative vote of a majority of the votes
represented and voting at a duly held meeting at which a quorum is
present (which affirmative votes also constitute a majority of the
required quorum) or written ballot in conformity with Section 5513,
7513, or 9413 or by the affirmative vote or written ballot of such
greater proportion, including all of the votes of the memberships of
any class, unit, or grouping of members as may be provided in the
bylaws (subdivision (e) of Section 5151, subdivision (e) of Section
7151, or subdivision (e) of Section 9151) or in Part 2, Part 3, Part
4 or Part 5 for all or any specified member action.




5035.  "Articles" includes the articles of incorporation, amendments
thereto, amended articles, restated articles, and certificates of
incorporation.


5036.  (a) Except as provided in subdivision (b) or (c), "authorized
number" means 5 percent of the voting power.
   (b) Where (disregarding any provision for cumulative voting which
would otherwise apply) the total number of votes entitled to be cast
for a director is 1,000 or more, but less than 5,000 the authorized
number shall be 2 1/2 percent of the voting power, but not less than
50.
   (c) Where (disregarding any provision for cumulative voting which
would otherwise apply) the total number of votes entitled to be cast
for a director is 5,000 or more, the authorized number shall be
one-twentieth of 1 percent of the voting power, but not less than
125.
   (d) Any right under Part 2, Part 3, or Part 4 which may be
exercised by the authorized number, or some multiple thereof, may be
exercised by a member with written authorizations obtained within any
11-month period from members who, in the aggregate, hold the
equivalent voting power. Any such authorization shall specify the
right to be exercised thereunder and the duration thereof (which
shall not exceed three years).
   (e) Where any provision of Part 2, Part 3, or Part 4 specifies
twice the authorized number, that means two times the number
calculated according to subdivision (a), (b) or (c).



5037.  "Bylaws" includes amendments thereto and amended bylaws.



5038.  "Board" means the board of directors of the corporation.



5039.  "Business corporation" means a corporation as defined in
Section 162 of the General Corporation Law.



5039.5.  The term "chair" includes "chairperson," "chairman," and
"chairwoman." All references in this division to "chairman" shall be
deemed to refer to "chair."



5040.  "Chapter" refers to a chapter of Part 2 (commencing with
Section 5110), Part 3 (commencing with Section 7110), or Part 4
(commencing with Section 9110) unless otherwise expressly stated.



5041.  "Class" refers to those memberships which: (a) are identified
in the articles or bylaws as being a different type of membership;
or (b) have the same rights with respect to voting, dissolution,
redemption and transfer. For the purpose of this section, rights
shall be considered the same if they are determined by a formula
applied uniformly.



5043.  "Common shares," as used in Part 3 (commencing with Section
7110), means shares which have no preference over any other shares
with respect to distribution of assets on liquidation or with respect
to payment of dividends.


5044.  "Constituent corporation" means a corporation which is merged
with one or more other corporations and includes the surviving
corporation.


5045.  "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a corporation.


5046.  (a) "Corporation" as used in this part and Part 5 (commencing
with Section 9910), refers to corporations defined in subdivisions
(b), (c), and (d).
   (b) "Corporation," as used in Part 2 (commencing with Section
5110), means a nonprofit public benefit corporation as defined in
Section 5060.
   (c) "Corporation," as used in Part 3 (commencing with Section
7110) means a nonprofit mutual benefit corporation as defined in
Section 5059.
   (d) "Corporation," as used in Part 4 (commencing with Section
9110), including those provisions of Part 2 (commencing with Section
5110) made applicable pursuant to Chapter 6 (commencing with Section
9610) of Part 4, means a nonprofit religious corporation as defined
in Section 5061.



5047.  Except where otherwise expressly provided, "directors" means
natural persons, designated in the articles or bylaws or elected by
the incorporators, and their successors and natural persons
designated, elected or appointed by any other name or title to act as
members of the governing body of the corporation. A person who does
not have authority to act as a member of the governing body of the
corporation, including through voting rights as a member of the
governing body, is not a director as that term is used in this
division regardless of title. However, if the articles or bylaws
designate that a natural person is a director or a member of the
governing body of the corporation by reason of occupying a specified
position within or outside the corporation, that person shall be a
director for all purposes and shall have the same rights and
obligations, including voting rights, as the other directors.



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



5048.  "Disappearing corporation" means a constituent corporation
which is not the surviving corporation.



5049.  "Distribution" means the distribution of any gains, profits
or dividends to any member as such. As used in this section, "member"
means any person who is a member as defined in Section 5056 and any
person who is referred to as a member as authorized by subdivision
(a) of Sections 5332, 7333 and 9332.


5050.  "Domestic corporation" means a corporation formed under the
laws of this state.



5051.  "Filed," unless otherwise expressly provided, means filed in
the office of the Secretary of State.



5052.  "Foreign business corporation," as used in Part 3 (commencing
with Section 7110), means a foreign corporation as defined in
Section 171 except that it does not include a foreign corporation as
defined in Section 5053.


5053.  "Foreign corporation" means any corporation incorporated in a
jurisdiction other than California pursuant to that jurisdiction's
law for the incorporation of nonprofit corporations; except that as
used in subdivision (b) of Section 5122, in subdivision (c) of
Section 7122, and in subdivision (b) of Section 9122, "foreign
corporation" means a corporation described in Section 171.



5054.  "Incentive and benefit plans," as used in Section 5140, in
Section 7140, and in Section 9140 includes, but is not limited to,
any plan or agreement under which the compensation of officers or
employees is fixed, in full or in part, by reference to the financial
performance of the corporation.



5055.  "Liquidating price" or "liquidation preference," as used in
Part 3 (commencing with Section 7110), means amounts payable on
memberships of any class, upon voluntary or involuntary dissolution,
winding up or distribution of the entire assets of the corporation,
in priority to amounts payable to members of another class or
classes.



5056.  (a) "Member" means any person who, pursuant to a specific
provision of a corporation's articles or bylaws, has the right to
vote for the election of a director or directors or on a disposition
of all or substantially all of the assets of a corporation or on a
merger or on a dissolution unless the provision granting such right
to vote is only effective as a result of paragraph (2) of subdivision
(a) of Section 7132. "Member" also means any person who is
designated in the articles or bylaws as a member and, pursuant to a
specific provision of a corporation's articles or bylaws, has the
right to vote on changes to the articles or bylaws.
   (b) The articles or bylaws may confer some or all of the rights of
a member, set forth in this part and in Parts 2 through 5 of this
division, upon any person or persons who do not have any of the
voting rights referred to in subdivision (a).
   (c) Where a member of a corporation is not a natural person, such
member may authorize in writing one or more natural persons to vote
on its behalf on any or all matters which may require a vote of the
members.
   (d) A person is not a member by virtue of any of the following:
   (1) Any rights such person has as a delegate.
   (2) Any rights such person has to designate or select a director
or directors.
   (3) Any rights such person has as a director.



5057.  A "membership" refers to the rights a member has pursuant to
a corporation's articles, bylaws and this division.



5058.  "Membership certificate," as used in Part 3 (commencing with
Section 7110), means a document evidencing a transferable property
interest in a corporation.



5059.  "Nonprofit mutual benefit corporation" or "mutual benefit
corporation" means a corporation which is organized under Part 3
(commencing with Section 7110), or subject to Part 3 under the
provisions of subdivision (a) of Section 5003.




5060.  "Nonprofit public benefit corporation" or "public benefit
corporation" means a corporation which is organized under Part 2
(commencing with Section 5110) or subject to Part 2 under the
provisions of subdivision (a) of Section 5003.


5061.  "Nonprofit religious corporation" or "religious corporation"
means a corporation which is organized under Part 4 (commencing with
Section 9110) or subject to Part 4 pursuant to subdivision (a) of
Section 5003.


5062.  "Officer's certificate" means a certificate signed and
verified by the chair of the board, the president or any vice
president and by the secretary, the chief financial officer, the
treasurer or any assistant secretary or assistant treasurer.




5063.  "On the certificate," as used in Part 3 (commencing with
Section 7110), means that a statement appears on the face of a
certificate or on the reverse thereof with a reference thereto on the
face.


5063.5.  "Other business entity" means a domestic or foreign limited
liability company, limited partnership, general partnership,
business trust, real estate investment trust, unincorporated
association, or a domestic reciprocal insurer organized after 1974 to
provide medical malpractice insurance as set forth in Article 16
(commencing with Section 1550) of Chapter 3 of Part 2 of Division 1
of the Insurance Code. As used herein, "general partnership" means a
"partnership" as defined in subdivision (9) 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.



5064.  A "parent" of a specified corporation is an affiliate
controlling such corporation directly or indirectly through one or
more intermediaries.


5064.5.  "Parent party" means the corporation in control of any
constituent domestic or foreign corporation or other business entity
and whose equity securities are issued, transferred, or exchanged in
a merger pursuant to Section 6019.1 or 8019.1.



5065.  "Person," in addition to those entities specified in Section
18 and unless otherwise expressly provided, includes any association,
business corporation, company, corporation, corporation sole,
domestic corporation, estate, foreign corporation, foreign business
corporation, individual, joint stock company, joint venture, mutual
benefit corporation, public benefit corporation, religious
corporation, partnership, government or political subdivision, agency
or instrumentality of a government.



5067.  "Preferred shares," as used in Part 3 (commencing with
Section 7110), means shares other than common shares.



5068.  "Proper county" means the county where the corporation's
principal office in this state is located or, if the corporation has
no such office, the County of Sacramento.



5069.  "Proxy" means a written authorization signed by a member or
the member's attorney in fact giving another person or persons power
to vote on behalf of such member. "Signed" for the purpose of this
section means the placing of the member's name on the proxy (whether
by manual signature, typewriting, telegraphic transmission or
otherwise) by the member or such member's attorney in fact.



5070.  "Proxyholder" means the person or persons to whom a proxy is
given.


5071.  "Shareholder," as used in Part 3 (commencing with Section
7110), means one who is a holder of record of shares.



5072.  "Shares," as used in Part 3 (commencing with Section 7110),
means the units into which the proprietary interests in a business
corporation or foreign business corporation are divided in the
articles.


5073.  (a) Except as provided in subdivision (b), "subsidiary" of a
specified corporation means a corporation more than 50 percent of the
voting power of which is owned directly, or indirectly through one
or more subsidiaries, by the specified corporation.
   (b) For the purpose of Section 7315, "subsidiary" of a specified
corporation means a corporation more than 25 percent of the voting
power of which is owned directly, or indirectly through one or more
subsidiaries as defined in subdivision (a), by the specified
corporation.


5074.  "Surviving corporation" means a corporation into which one or
more other corporations are merged.



5075.  "Vacancy" when used with respect to the board means any
authorized position of director which is not then filled, whether the
vacancy is caused by death, resignation, removal, change in the
number of directors authorized in the articles or bylaws (by the
board or the members) or otherwise.



5076.  "Verified" means that the statements contained in a
certificate or other document are declared to be true of the own
knowledge of the persons executing the same in either:
   (a) An affidavit signed by them under oath before an officer
authorized by the laws of this state or of the place where it is
executed to administer oaths; or
   (b) A declaration in writing executed by them under penalty of
perjury and stating the date and place (whether within or without
this state) of execution.
   Any affidavit sworn to without this state before a notary public
or a judge or clerk of a court of record having an official seal need
not be further authenticated.



5077.  "Vote" includes, but is not limited to, authorization by
written consent pursuant to subdivision (b) of Section 5211,
subdivision (b) of Section 7211, or subdivision (b) of Section 9211
and authorization by written ballot pursuant to Section 5513, Section
7513, or Section 9413.



5078.  "Voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and
does not include the right to vote upon the happening of some
condition or event which has not yet occurred. In any case where
different classes of memberships are entitled to vote as separate
classes for different members of the board, the determination of
percentage of voting power shall be made on the basis of the
percentage of the total number of authorized directors which the
memberships in question (whether of one or more classes) have the
power to elect in an election at which all memberships then entitled
to vote for the election of any directors are voted.



5079.  "Written" or "in writing" includes facsimile, telegraphic,
and other electronic communication as authorized by this code,
including an electronic transmission by a corporation that satisfies
the requirements of Section 20.


5080.  "Written ballot" does not include a ballot distributed at a
special or regular meeting of members.


State Codes and Statutes

Statutes > California > Corp > 5002-5080

CORPORATIONS CODE
SECTION 5002-5080



5002.  Unless the provisions or the context otherwise requires, the
general provisions and definitions set forth in this part govern the
construction of this part and of Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), Part 4 (commencing with
Section 9110), and Part 5 (commencing with Section 9910) of this
division.



5003.  (a) The provisions of this part apply to:
   (1) Corporations organized under Part 2, Part 3, and Part 4 of
this division;
   (2) Corporations expressly subject to Part 2, Part 3 or Part 4 of
this division pursuant to a particular provision of this division or
Division 3 (commencing with Section 12000) or other specific
statutory provision;
   (3) Corporations which pursuant to the express provisions of Part
1, Division 2 (commencing with Section 9000) in effect immediately
prior to January 1, 1980, are subject to the provisions of Part 1 of
Division 2 and which, on or after January 1, 1980, are subject to the
Nonprofit Public Benefit Corporation Law, the Nonprofit Mutual
Benefit Corporation Law or the Nonprofit Religious Corporation Law,
pursuant to Section 9912.
   (4) Corporations expressly subject to Part 1, Division 2
(commencing with Section 9000) in effect immediately prior to January
1, 1980, pursuant to a particular provision of this division or
Division 3 (commencing with Section 12000) or other specific
statutory provision in effect immediately prior to January 1, 1980,
and which, on or after January 1, 1980, are subject to the Nonprofit
Public Benefit Corporation Law, the Nonprofit Mutual Benefit
Corporation Law, or the Nonprofit Religious Corporation Law, pursuant
to Section 9912; and
   (5) Corporations incorporated as permitted by subdivision (d) of
Section 9911.
   (b) The existence of corporations formed or existing on the date
of enactment or reenactment of this part, Part 2, Part 3, Part 4 or
Part 5 shall not be affected by the enactment or reenactment of such
parts or by any change in the requirements for the formation of
corporations or 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 part or of Part 2, Part 3, Part 4 or Part 5, nor the
amendment thereof shall impair or take away any existing liability or
cause of action against any corporation, its members, directors or
officers incurred prior to the time of such enactment, reenactment or
amendment.



5004.  A corporation may be sued as provided in the Code of Civil
Procedure.


5005.  Any corporation 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.



5005.1.  (a) Except for a liability which may be insured against
pursuant to Division 4 (commencing with Section 3200) of the Labor
Code, an authorized corporation may do any of the following:
   (1) Insure itself against all or any part of any tort liability.
   (2) Insure any employee of the corporation against all or any part
of his or her liability for injury resulting from an act or omission
in the scope of employment.
   (3) Insure any board member, officer, or volunteer of the
corporation against any liability that may arise from any act or
omission in the scope of participation with the corporation.
   (4) Insure itself against any loss arising from physical damage to
motor vehicles owned or operated by the corporation.
   (b) The insurance authorized pursuant to this section shall only
be available to an authorized corporation where that corporation has
joined with two or more other authorized corporations in an
arrangement providing for the pooling of self-insured claims or
losses. The pooling arrangement shall not be considered insurance nor
be subject to regulation under the Insurance Code.
   (c) Nothing in this section shall be construed to authorize a
corporation organized pursuant to this division to pay for, or to
insure, contract, or provide for payment for, any part of a claim or
judgment against an employee of the corporation for punitive or
exemplary damages.
   (d) Any insurance pool established pursuant to this section shall
have initial pooled resources of not less than two hundred fifty
thousand dollars ($250,000).
   (e) All participating corporations in any pool established
pursuant to this section must agree to pay premiums or make other
mandatory financial contributions or commitments necessary to ensure
a financially sound risk pool.
   (f) For the purpose of this section, an authorized "corporation"
means any corporation that meets all of the following criteria:
   (1) Is organized chiefly to provide or fund health or human
services, but does not include a hospital.
   (2) Is exempt from taxation under paragraph (3) of subsection (c)
of Section 501 of the United States Internal Revenue Code.




5006.  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.


5007.  Any agreement, certificate or other instrument relating to a
domestic corporation, a foreign corporation, or a foreign business
corporation filed pursuant to the provisions of this part, Part 2,
Part 3, Part 4 or Part 5 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 the corporation or
corporations)"; provided, however, that no such certificate of
correction shall alter the wording of any resolution which was in
fact adopted by the board or the members or delegates or effect a
corrected amendment of articles which amendment as so corrected would
not in all respects have complied with the requirements of this
part, Part 2, Part 3, Part 4 or Part 5 at the time of filing of the
agreement, certificate or other instrument being corrected. Such
certificate of correction shall be signed and verified or
acknowledged as provided in this part with respect to the agreement,
certificate or other instrument being corrected. It shall set forth
the following:
   (a) The name or names of the corporation or corporations.
   (b) The date the agreement, certificate or other instrument being
corrected was filed.
   (c) The provision in the agreement, certificate or other
instrument as corrected and, if the execution was defective, wherein
it was defective.
   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 such right
has not detrimentally relied on the original instrument.




5008.  (a) Upon receipt of any instrument by the Secretary of State
for filing pursuant to this part, Part 2, Part 3, Part 4 or Part 5,
if it conforms to law, it shall be filed by, and in the office of the
Secretary of State and the date of filing endorsed thereon. Except
for instruments filed pursuant to Section 6210, 8210, or 9660 the
date of filing shall be the date the instrument is received by the
Secretary of State unless 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 such fee does not exceed the limits
established by the policy of the Secretary of State for extending
credit in such 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 a member of the State
Bar of California submitting the instrument, or representing the
person submitting it, to the effect that the specific provision of
the instrument objected to by the Secretary of State does conform to
law and stating the points and authorities upon which the opinion is
based. The Secretary of State shall rely, with respect to any
disputed point of law (other than the application of Section 5122,
7122, or 9122), upon such written opinion in determining whether the
instrument conforms to law. The date of filing in such 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, such
certificate revoking the earlier filing need only be executed on
behalf of one of the constituent corporations. If no such revocation
certificate is filed, the instrument becomes effective on the date
specified.


5008.5.  The Secretary of State may cancel the filing of articles if
a check or other remittance accepted in payment of the filing fee or
franchise tax is not paid upon presentation. 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.



5008.6.  (a) A corporation that (1) fails to file a statement
pursuant to Section 6210, 8210, or 9660 for an applicable filing
period, (2) has not filed a statement pursuant to Section 6210, 8210,
or 9660 during the preceding 24 months, and (3) was certified for
penalty pursuant to Section 6810, 8810, or 9690 for the same filing
period, shall be subject to suspension pursuant to this section
rather than to penalty under Section 6810 or 8810.
   (b) When subdivision (a) is applicable, the Secretary of State
shall mail a notice to the corporation informing the corporation that
its corporate powers, rights, and privileges will be suspended 60
days from the date of the notice if the corporation does not file the
statement required by Section 6210, 8210, or 9660.
   (c) If the 60-day period expires without the delinquent
corporation filing the required statement, the Secretary of State
shall notify the Franchise Tax Board of the suspension, and mail a
notice of the suspension to the corporation. Thereupon, except for
the purpose of filing an application for exempt status or amending
the articles of incorporation as necessary either to perfect that
application or to set forth a new name, the corporate powers, rights,
and privileges of the corporation are suspended.
   (d) A statement required by Section 6210, 8210, or 9660 may be
filed, notwithstanding suspension of the corporate powers, rights,
and privileges under this section or under provisions of the Revenue
and Taxation Code. Upon the filing of a statement under Section 6210,
8210, or 9660, by a corporation that has suffered suspension under
this section, the Secretary of State shall certify that fact to the
Franchise Tax Board and the corporation may thereupon be relieved
from suspension, unless the corporation is held in suspension by the
Franchise Tax Board because of Section 23301, 23301.5, or 23775 of
the Revenue and Taxation Code.



5009.  Except as otherwise required, any reference in this part,
Part 2, Part 3, Part 4 or Part 5 to mailing means first-, second-, or
third-class mail, postage prepaid, unless registered mail is
specified. Registered mail includes certified mail.




5010.  If the articles or bylaws provide for more or less than one
vote for any membership on any matter, the references in Sections
5033 and 5034 to a majority or other proportion of memberships mean,
as to those matters, a majority or other proportion of the votes
entitled to be cast. Whenever in Part 2 (commencing with Section
5110) or Part 3 (commencing with Section 7110) members are
disqualified from voting on any matter, their memberships shall not
be counted for the determination of a quorum at any meeting to act
upon, or the required vote to approve action upon, that matter under
any other provision of Part 2 (commencing with Section 5110) or Part
3 (commencing with Section 7110) or the articles or bylaws.




5011.  All references in Part 3 (commencing with Section 7110) to
the voting of memberships include the voting of securities given
voting rights in the articles pursuant to paragraph (3) of
subdivision (a) of Section 7132.



5012.  All references in this part, Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), or Part 4 (commencing
with Section 9110) to financial statements of a corporation mean
statements prepared in conformity with generally accepted accounting
principles or some other basis of accounting which reasonably sets
forth the assets and liabilities and the income and expenses of the
corporation and discloses the accounting basis used in their
preparation.


5013.  As used in this part, Part 2 (commencing with Section 5110),
Part 3 (commencing with Section 7110), or Part 4 (commencing with
Section 9110), "independent accountant" means a certified public
accountant or public accountant who is independent of the
corporation, as determined in accordance with generally accepted
auditing standards, and who is engaged to audit financial statements
of the corporation or perform other accounting services.



5014.  Any requirement in Part 3 (commencing with Section 7110) for
a vote of each class of members means such a vote regardless of
limitations or restrictions upon the voting rights thereof, unless
expressly limited to voting memberships.




5015.  Any reference in this part, Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), Part 4 (commencing with
Section 9110), or Part 5 (commencing with Section 9910) to the time
a notice is given or sent means, unless otherwise expressly provided,
(a) the time a written notice by mail is deposited in the United
States mails, postage prepaid; or (b) the time any other written
notice, including facsimile, telegram, or other electronic mail
message, is personally delivered to the recipient or is delivered to
a common carrier for transmission, or actually transmitted by the
person giving the notice by electronic means, to the recipient; or
(c) the time any oral notice is communicated, in person or by
telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, or wireless,
to the recipient, including the recipient's designated voice mailbox
or address on such a system, or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.



5016.  A notice or report mailed or delivered as part of a
newsletter, magazine or other organ regularly sent to members shall
constitute written notice or report pursuant to this division when
addressed and mailed or delivered to the member, or in the case of
members who are residents of the same household and who have the same
address on the books of the corporation, when addressed and mailed
or delivered to one of such members, at the address appearing on the
books of the corporation.



5030.  "Acknowledged" means that an instrument is either:
   (a) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code; or
   (b) Accompanied by a declaration in writing signed by the persons
executing the same that they are such persons and that the instrument
is the act and deed of the person or persons executing the same.
   Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.



5031.  A corporation is an "affiliate" of, or a corporation is
"affiliated" with, another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the other specified
corporation.



5032.  "Approved by (or approval of) the board" means approved or
ratified by the vote of the board or by the vote of a committee
authorized to exercise the powers of the board, except as to matters
not within the competence of the committee under Section 5212,
Section 7212, or Section 9212.



5033.  "Approval by (or approval of) a majority of all members"
means approval by an affirmative vote (or written ballot in
conformity with Section 5513, Section 7513, or Section 9413) of a
majority of the votes entitled to be cast. Such approval shall
include the affirmative vote of a majority of the outstanding
memberships of each class, unit, or grouping of members entitled, by
any provision of the articles or bylaws or of Part 2, Part 3, Part 4
or Part 5 to vote as a class, unit, or grouping of members on the
subject matter being voted upon and shall also include the
affirmative vote of such greater proportion, including all, of the
votes of the memberships of any class, unit, or grouping of members
if such greater proportion is required by the bylaws (subdivision (e)
of Section 5151, subdivision (e) of Section 7151, or subdivision (e)
of Section 9151) or Part 2, Part 3, Part 4 or Part 5.



5034.  "Approval by (or approval of) the members" means approved or
ratified by the affirmative vote of a majority of the votes
represented and voting at a duly held meeting at which a quorum is
present (which affirmative votes also constitute a majority of the
required quorum) or written ballot in conformity with Section 5513,
7513, or 9413 or by the affirmative vote or written ballot of such
greater proportion, including all of the votes of the memberships of
any class, unit, or grouping of members as may be provided in the
bylaws (subdivision (e) of Section 5151, subdivision (e) of Section
7151, or subdivision (e) of Section 9151) or in Part 2, Part 3, Part
4 or Part 5 for all or any specified member action.




5035.  "Articles" includes the articles of incorporation, amendments
thereto, amended articles, restated articles, and certificates of
incorporation.


5036.  (a) Except as provided in subdivision (b) or (c), "authorized
number" means 5 percent of the voting power.
   (b) Where (disregarding any provision for cumulative voting which
would otherwise apply) the total number of votes entitled to be cast
for a director is 1,000 or more, but less than 5,000 the authorized
number shall be 2 1/2 percent of the voting power, but not less than
50.
   (c) Where (disregarding any provision for cumulative voting which
would otherwise apply) the total number of votes entitled to be cast
for a director is 5,000 or more, the authorized number shall be
one-twentieth of 1 percent of the voting power, but not less than
125.
   (d) Any right under Part 2, Part 3, or Part 4 which may be
exercised by the authorized number, or some multiple thereof, may be
exercised by a member with written authorizations obtained within any
11-month period from members who, in the aggregate, hold the
equivalent voting power. Any such authorization shall specify the
right to be exercised thereunder and the duration thereof (which
shall not exceed three years).
   (e) Where any provision of Part 2, Part 3, or Part 4 specifies
twice the authorized number, that means two times the number
calculated according to subdivision (a), (b) or (c).



5037.  "Bylaws" includes amendments thereto and amended bylaws.



5038.  "Board" means the board of directors of the corporation.



5039.  "Business corporation" means a corporation as defined in
Section 162 of the General Corporation Law.



5039.5.  The term "chair" includes "chairperson," "chairman," and
"chairwoman." All references in this division to "chairman" shall be
deemed to refer to "chair."



5040.  "Chapter" refers to a chapter of Part 2 (commencing with
Section 5110), Part 3 (commencing with Section 7110), or Part 4
(commencing with Section 9110) unless otherwise expressly stated.



5041.  "Class" refers to those memberships which: (a) are identified
in the articles or bylaws as being a different type of membership;
or (b) have the same rights with respect to voting, dissolution,
redemption and transfer. For the purpose of this section, rights
shall be considered the same if they are determined by a formula
applied uniformly.



5043.  "Common shares," as used in Part 3 (commencing with Section
7110), means shares which have no preference over any other shares
with respect to distribution of assets on liquidation or with respect
to payment of dividends.


5044.  "Constituent corporation" means a corporation which is merged
with one or more other corporations and includes the surviving
corporation.


5045.  "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a corporation.


5046.  (a) "Corporation" as used in this part and Part 5 (commencing
with Section 9910), refers to corporations defined in subdivisions
(b), (c), and (d).
   (b) "Corporation," as used in Part 2 (commencing with Section
5110), means a nonprofit public benefit corporation as defined in
Section 5060.
   (c) "Corporation," as used in Part 3 (commencing with Section
7110) means a nonprofit mutual benefit corporation as defined in
Section 5059.
   (d) "Corporation," as used in Part 4 (commencing with Section
9110), including those provisions of Part 2 (commencing with Section
5110) made applicable pursuant to Chapter 6 (commencing with Section
9610) of Part 4, means a nonprofit religious corporation as defined
in Section 5061.



5047.  Except where otherwise expressly provided, "directors" means
natural persons, designated in the articles or bylaws or elected by
the incorporators, and their successors and natural persons
designated, elected or appointed by any other name or title to act as
members of the governing body of the corporation. A person who does
not have authority to act as a member of the governing body of the
corporation, including through voting rights as a member of the
governing body, is not a director as that term is used in this
division regardless of title. However, if the articles or bylaws
designate that a natural person is a director or a member of the
governing body of the corporation by reason of occupying a specified
position within or outside the corporation, that person shall be a
director for all purposes and shall have the same rights and
obligations, including voting rights, as the other directors.



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



5048.  "Disappearing corporation" means a constituent corporation
which is not the surviving corporation.



5049.  "Distribution" means the distribution of any gains, profits
or dividends to any member as such. As used in this section, "member"
means any person who is a member as defined in Section 5056 and any
person who is referred to as a member as authorized by subdivision
(a) of Sections 5332, 7333 and 9332.


5050.  "Domestic corporation" means a corporation formed under the
laws of this state.



5051.  "Filed," unless otherwise expressly provided, means filed in
the office of the Secretary of State.



5052.  "Foreign business corporation," as used in Part 3 (commencing
with Section 7110), means a foreign corporation as defined in
Section 171 except that it does not include a foreign corporation as
defined in Section 5053.


5053.  "Foreign corporation" means any corporation incorporated in a
jurisdiction other than California pursuant to that jurisdiction's
law for the incorporation of nonprofit corporations; except that as
used in subdivision (b) of Section 5122, in subdivision (c) of
Section 7122, and in subdivision (b) of Section 9122, "foreign
corporation" means a corporation described in Section 171.



5054.  "Incentive and benefit plans," as used in Section 5140, in
Section 7140, and in Section 9140 includes, but is not limited to,
any plan or agreement under which the compensation of officers or
employees is fixed, in full or in part, by reference to the financial
performance of the corporation.



5055.  "Liquidating price" or "liquidation preference," as used in
Part 3 (commencing with Section 7110), means amounts payable on
memberships of any class, upon voluntary or involuntary dissolution,
winding up or distribution of the entire assets of the corporation,
in priority to amounts payable to members of another class or
classes.



5056.  (a) "Member" means any person who, pursuant to a specific
provision of a corporation's articles or bylaws, has the right to
vote for the election of a director or directors or on a disposition
of all or substantially all of the assets of a corporation or on a
merger or on a dissolution unless the provision granting such right
to vote is only effective as a result of paragraph (2) of subdivision
(a) of Section 7132. "Member" also means any person who is
designated in the articles or bylaws as a member and, pursuant to a
specific provision of a corporation's articles or bylaws, has the
right to vote on changes to the articles or bylaws.
   (b) The articles or bylaws may confer some or all of the rights of
a member, set forth in this part and in Parts 2 through 5 of this
division, upon any person or persons who do not have any of the
voting rights referred to in subdivision (a).
   (c) Where a member of a corporation is not a natural person, such
member may authorize in writing one or more natural persons to vote
on its behalf on any or all matters which may require a vote of the
members.
   (d) A person is not a member by virtue of any of the following:
   (1) Any rights such person has as a delegate.
   (2) Any rights such person has to designate or select a director
or directors.
   (3) Any rights such person has as a director.



5057.  A "membership" refers to the rights a member has pursuant to
a corporation's articles, bylaws and this division.



5058.  "Membership certificate," as used in Part 3 (commencing with
Section 7110), means a document evidencing a transferable property
interest in a corporation.



5059.  "Nonprofit mutual benefit corporation" or "mutual benefit
corporation" means a corporation which is organized under Part 3
(commencing with Section 7110), or subject to Part 3 under the
provisions of subdivision (a) of Section 5003.




5060.  "Nonprofit public benefit corporation" or "public benefit
corporation" means a corporation which is organized under Part 2
(commencing with Section 5110) or subject to Part 2 under the
provisions of subdivision (a) of Section 5003.


5061.  "Nonprofit religious corporation" or "religious corporation"
means a corporation which is organized under Part 4 (commencing with
Section 9110) or subject to Part 4 pursuant to subdivision (a) of
Section 5003.


5062.  "Officer's certificate" means a certificate signed and
verified by the chair of the board, the president or any vice
president and by the secretary, the chief financial officer, the
treasurer or any assistant secretary or assistant treasurer.




5063.  "On the certificate," as used in Part 3 (commencing with
Section 7110), means that a statement appears on the face of a
certificate or on the reverse thereof with a reference thereto on the
face.


5063.5.  "Other business entity" means a domestic or foreign limited
liability company, limited partnership, general partnership,
business trust, real estate investment trust, unincorporated
association, or a domestic reciprocal insurer organized after 1974 to
provide medical malpractice insurance as set forth in Article 16
(commencing with Section 1550) of Chapter 3 of Part 2 of Division 1
of the Insurance Code. As used herein, "general partnership" means a
"partnership" as defined in subdivision (9) 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.



5064.  A "parent" of a specified corporation is an affiliate
controlling such corporation directly or indirectly through one or
more intermediaries.


5064.5.  "Parent party" means the corporation in control of any
constituent domestic or foreign corporation or other business entity
and whose equity securities are issued, transferred, or exchanged in
a merger pursuant to Section 6019.1 or 8019.1.



5065.  "Person," in addition to those entities specified in Section
18 and unless otherwise expressly provided, includes any association,
business corporation, company, corporation, corporation sole,
domestic corporation, estate, foreign corporation, foreign business
corporation, individual, joint stock company, joint venture, mutual
benefit corporation, public benefit corporation, religious
corporation, partnership, government or political subdivision, agency
or instrumentality of a government.



5067.  "Preferred shares," as used in Part 3 (commencing with
Section 7110), means shares other than common shares.



5068.  "Proper county" means the county where the corporation's
principal office in this state is located or, if the corporation has
no such office, the County of Sacramento.



5069.  "Proxy" means a written authorization signed by a member or
the member's attorney in fact giving another person or persons power
to vote on behalf of such member. "Signed" for the purpose of this
section means the placing of the member's name on the proxy (whether
by manual signature, typewriting, telegraphic transmission or
otherwise) by the member or such member's attorney in fact.



5070.  "Proxyholder" means the person or persons to whom a proxy is
given.


5071.  "Shareholder," as used in Part 3 (commencing with Section
7110), means one who is a holder of record of shares.



5072.  "Shares," as used in Part 3 (commencing with Section 7110),
means the units into which the proprietary interests in a business
corporation or foreign business corporation are divided in the
articles.


5073.  (a) Except as provided in subdivision (b), "subsidiary" of a
specified corporation means a corporation more than 50 percent of the
voting power of which is owned directly, or indirectly through one
or more subsidiaries, by the specified corporation.
   (b) For the purpose of Section 7315, "subsidiary" of a specified
corporation means a corporation more than 25 percent of the voting
power of which is owned directly, or indirectly through one or more
subsidiaries as defined in subdivision (a), by the specified
corporation.


5074.  "Surviving corporation" means a corporation into which one or
more other corporations are merged.



5075.  "Vacancy" when used with respect to the board means any
authorized position of director which is not then filled, whether the
vacancy is caused by death, resignation, removal, change in the
number of directors authorized in the articles or bylaws (by the
board or the members) or otherwise.



5076.  "Verified" means that the statements contained in a
certificate or other document are declared to be true of the own
knowledge of the persons executing the same in either:
   (a) An affidavit signed by them under oath before an officer
authorized by the laws of this state or of the place where it is
executed to administer oaths; or
   (b) A declaration in writing executed by them under penalty of
perjury and stating the date and place (whether within or without
this state) of execution.
   Any affidavit sworn to without this state before a notary public
or a judge or clerk of a court of record having an official seal need
not be further authenticated.



5077.  "Vote" includes, but is not limited to, authorization by
written consent pursuant to subdivision (b) of Section 5211,
subdivision (b) of Section 7211, or subdivision (b) of Section 9211
and authorization by written ballot pursuant to Section 5513, Section
7513, or Section 9413.



5078.  "Voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and
does not include the right to vote upon the happening of some
condition or event which has not yet occurred. In any case where
different classes of memberships are entitled to vote as separate
classes for different members of the board, the determination of
percentage of voting power shall be made on the basis of the
percentage of the total number of authorized directors which the
memberships in question (whether of one or more classes) have the
power to elect in an election at which all memberships then entitled
to vote for the election of any directors are voted.



5079.  "Written" or "in writing" includes facsimile, telegraphic,
and other electronic communication as authorized by this code,
including an electronic transmission by a corporation that satisfies
the requirements of Section 20.


5080.  "Written ballot" does not include a ballot distributed at a
special or regular meeting of members.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Corp > 5002-5080

CORPORATIONS CODE
SECTION 5002-5080



5002.  Unless the provisions or the context otherwise requires, the
general provisions and definitions set forth in this part govern the
construction of this part and of Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), Part 4 (commencing with
Section 9110), and Part 5 (commencing with Section 9910) of this
division.



5003.  (a) The provisions of this part apply to:
   (1) Corporations organized under Part 2, Part 3, and Part 4 of
this division;
   (2) Corporations expressly subject to Part 2, Part 3 or Part 4 of
this division pursuant to a particular provision of this division or
Division 3 (commencing with Section 12000) or other specific
statutory provision;
   (3) Corporations which pursuant to the express provisions of Part
1, Division 2 (commencing with Section 9000) in effect immediately
prior to January 1, 1980, are subject to the provisions of Part 1 of
Division 2 and which, on or after January 1, 1980, are subject to the
Nonprofit Public Benefit Corporation Law, the Nonprofit Mutual
Benefit Corporation Law or the Nonprofit Religious Corporation Law,
pursuant to Section 9912.
   (4) Corporations expressly subject to Part 1, Division 2
(commencing with Section 9000) in effect immediately prior to January
1, 1980, pursuant to a particular provision of this division or
Division 3 (commencing with Section 12000) or other specific
statutory provision in effect immediately prior to January 1, 1980,
and which, on or after January 1, 1980, are subject to the Nonprofit
Public Benefit Corporation Law, the Nonprofit Mutual Benefit
Corporation Law, or the Nonprofit Religious Corporation Law, pursuant
to Section 9912; and
   (5) Corporations incorporated as permitted by subdivision (d) of
Section 9911.
   (b) The existence of corporations formed or existing on the date
of enactment or reenactment of this part, Part 2, Part 3, Part 4 or
Part 5 shall not be affected by the enactment or reenactment of such
parts or by any change in the requirements for the formation of
corporations or 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 part or of Part 2, Part 3, Part 4 or Part 5, nor the
amendment thereof shall impair or take away any existing liability or
cause of action against any corporation, its members, directors or
officers incurred prior to the time of such enactment, reenactment or
amendment.



5004.  A corporation may be sued as provided in the Code of Civil
Procedure.


5005.  Any corporation 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.



5005.1.  (a) Except for a liability which may be insured against
pursuant to Division 4 (commencing with Section 3200) of the Labor
Code, an authorized corporation may do any of the following:
   (1) Insure itself against all or any part of any tort liability.
   (2) Insure any employee of the corporation against all or any part
of his or her liability for injury resulting from an act or omission
in the scope of employment.
   (3) Insure any board member, officer, or volunteer of the
corporation against any liability that may arise from any act or
omission in the scope of participation with the corporation.
   (4) Insure itself against any loss arising from physical damage to
motor vehicles owned or operated by the corporation.
   (b) The insurance authorized pursuant to this section shall only
be available to an authorized corporation where that corporation has
joined with two or more other authorized corporations in an
arrangement providing for the pooling of self-insured claims or
losses. The pooling arrangement shall not be considered insurance nor
be subject to regulation under the Insurance Code.
   (c) Nothing in this section shall be construed to authorize a
corporation organized pursuant to this division to pay for, or to
insure, contract, or provide for payment for, any part of a claim or
judgment against an employee of the corporation for punitive or
exemplary damages.
   (d) Any insurance pool established pursuant to this section shall
have initial pooled resources of not less than two hundred fifty
thousand dollars ($250,000).
   (e) All participating corporations in any pool established
pursuant to this section must agree to pay premiums or make other
mandatory financial contributions or commitments necessary to ensure
a financially sound risk pool.
   (f) For the purpose of this section, an authorized "corporation"
means any corporation that meets all of the following criteria:
   (1) Is organized chiefly to provide or fund health or human
services, but does not include a hospital.
   (2) Is exempt from taxation under paragraph (3) of subsection (c)
of Section 501 of the United States Internal Revenue Code.




5006.  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.


5007.  Any agreement, certificate or other instrument relating to a
domestic corporation, a foreign corporation, or a foreign business
corporation filed pursuant to the provisions of this part, Part 2,
Part 3, Part 4 or Part 5 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 the corporation or
corporations)"; provided, however, that no such certificate of
correction shall alter the wording of any resolution which was in
fact adopted by the board or the members or delegates or effect a
corrected amendment of articles which amendment as so corrected would
not in all respects have complied with the requirements of this
part, Part 2, Part 3, Part 4 or Part 5 at the time of filing of the
agreement, certificate or other instrument being corrected. Such
certificate of correction shall be signed and verified or
acknowledged as provided in this part with respect to the agreement,
certificate or other instrument being corrected. It shall set forth
the following:
   (a) The name or names of the corporation or corporations.
   (b) The date the agreement, certificate or other instrument being
corrected was filed.
   (c) The provision in the agreement, certificate or other
instrument as corrected and, if the execution was defective, wherein
it was defective.
   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 such right
has not detrimentally relied on the original instrument.




5008.  (a) Upon receipt of any instrument by the Secretary of State
for filing pursuant to this part, Part 2, Part 3, Part 4 or Part 5,
if it conforms to law, it shall be filed by, and in the office of the
Secretary of State and the date of filing endorsed thereon. Except
for instruments filed pursuant to Section 6210, 8210, or 9660 the
date of filing shall be the date the instrument is received by the
Secretary of State unless 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 such fee does not exceed the limits
established by the policy of the Secretary of State for extending
credit in such 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 a member of the State
Bar of California submitting the instrument, or representing the
person submitting it, to the effect that the specific provision of
the instrument objected to by the Secretary of State does conform to
law and stating the points and authorities upon which the opinion is
based. The Secretary of State shall rely, with respect to any
disputed point of law (other than the application of Section 5122,
7122, or 9122), upon such written opinion in determining whether the
instrument conforms to law. The date of filing in such 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, such
certificate revoking the earlier filing need only be executed on
behalf of one of the constituent corporations. If no such revocation
certificate is filed, the instrument becomes effective on the date
specified.


5008.5.  The Secretary of State may cancel the filing of articles if
a check or other remittance accepted in payment of the filing fee or
franchise tax is not paid upon presentation. 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.



5008.6.  (a) A corporation that (1) fails to file a statement
pursuant to Section 6210, 8210, or 9660 for an applicable filing
period, (2) has not filed a statement pursuant to Section 6210, 8210,
or 9660 during the preceding 24 months, and (3) was certified for
penalty pursuant to Section 6810, 8810, or 9690 for the same filing
period, shall be subject to suspension pursuant to this section
rather than to penalty under Section 6810 or 8810.
   (b) When subdivision (a) is applicable, the Secretary of State
shall mail a notice to the corporation informing the corporation that
its corporate powers, rights, and privileges will be suspended 60
days from the date of the notice if the corporation does not file the
statement required by Section 6210, 8210, or 9660.
   (c) If the 60-day period expires without the delinquent
corporation filing the required statement, the Secretary of State
shall notify the Franchise Tax Board of the suspension, and mail a
notice of the suspension to the corporation. Thereupon, except for
the purpose of filing an application for exempt status or amending
the articles of incorporation as necessary either to perfect that
application or to set forth a new name, the corporate powers, rights,
and privileges of the corporation are suspended.
   (d) A statement required by Section 6210, 8210, or 9660 may be
filed, notwithstanding suspension of the corporate powers, rights,
and privileges under this section or under provisions of the Revenue
and Taxation Code. Upon the filing of a statement under Section 6210,
8210, or 9660, by a corporation that has suffered suspension under
this section, the Secretary of State shall certify that fact to the
Franchise Tax Board and the corporation may thereupon be relieved
from suspension, unless the corporation is held in suspension by the
Franchise Tax Board because of Section 23301, 23301.5, or 23775 of
the Revenue and Taxation Code.



5009.  Except as otherwise required, any reference in this part,
Part 2, Part 3, Part 4 or Part 5 to mailing means first-, second-, or
third-class mail, postage prepaid, unless registered mail is
specified. Registered mail includes certified mail.




5010.  If the articles or bylaws provide for more or less than one
vote for any membership on any matter, the references in Sections
5033 and 5034 to a majority or other proportion of memberships mean,
as to those matters, a majority or other proportion of the votes
entitled to be cast. Whenever in Part 2 (commencing with Section
5110) or Part 3 (commencing with Section 7110) members are
disqualified from voting on any matter, their memberships shall not
be counted for the determination of a quorum at any meeting to act
upon, or the required vote to approve action upon, that matter under
any other provision of Part 2 (commencing with Section 5110) or Part
3 (commencing with Section 7110) or the articles or bylaws.




5011.  All references in Part 3 (commencing with Section 7110) to
the voting of memberships include the voting of securities given
voting rights in the articles pursuant to paragraph (3) of
subdivision (a) of Section 7132.



5012.  All references in this part, Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), or Part 4 (commencing
with Section 9110) to financial statements of a corporation mean
statements prepared in conformity with generally accepted accounting
principles or some other basis of accounting which reasonably sets
forth the assets and liabilities and the income and expenses of the
corporation and discloses the accounting basis used in their
preparation.


5013.  As used in this part, Part 2 (commencing with Section 5110),
Part 3 (commencing with Section 7110), or Part 4 (commencing with
Section 9110), "independent accountant" means a certified public
accountant or public accountant who is independent of the
corporation, as determined in accordance with generally accepted
auditing standards, and who is engaged to audit financial statements
of the corporation or perform other accounting services.



5014.  Any requirement in Part 3 (commencing with Section 7110) for
a vote of each class of members means such a vote regardless of
limitations or restrictions upon the voting rights thereof, unless
expressly limited to voting memberships.




5015.  Any reference in this part, Part 2 (commencing with Section
5110), Part 3 (commencing with Section 7110), Part 4 (commencing with
Section 9110), or Part 5 (commencing with Section 9910) to the time
a notice is given or sent means, unless otherwise expressly provided,
(a) the time a written notice by mail is deposited in the United
States mails, postage prepaid; or (b) the time any other written
notice, including facsimile, telegram, or other electronic mail
message, is personally delivered to the recipient or is delivered to
a common carrier for transmission, or actually transmitted by the
person giving the notice by electronic means, to the recipient; or
(c) the time any oral notice is communicated, in person or by
telephone, including a voice messaging system or other system or
technology designed to record and communicate messages, or wireless,
to the recipient, including the recipient's designated voice mailbox
or address on such a system, or to a person at the office of the
recipient who the person giving the notice has reason to believe will
promptly communicate it to the recipient.



5016.  A notice or report mailed or delivered as part of a
newsletter, magazine or other organ regularly sent to members shall
constitute written notice or report pursuant to this division when
addressed and mailed or delivered to the member, or in the case of
members who are residents of the same household and who have the same
address on the books of the corporation, when addressed and mailed
or delivered to one of such members, at the address appearing on the
books of the corporation.



5030.  "Acknowledged" means that an instrument is either:
   (a) Formally acknowledged as provided in Article 3 (commencing
with Section 1180) of Chapter 4 of Title 4 of Part 4 of Division 2 of
the Civil Code; or
   (b) Accompanied by a declaration in writing signed by the persons
executing the same that they are such persons and that the instrument
is the act and deed of the person or persons executing the same.
   Any certificate of acknowledgment taken without this state before
a notary public or a judge or clerk of a court of record having an
official seal need not be further authenticated.



5031.  A corporation is an "affiliate" of, or a corporation is
"affiliated" with, another specified corporation if it directly, or
indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the other specified
corporation.



5032.  "Approved by (or approval of) the board" means approved or
ratified by the vote of the board or by the vote of a committee
authorized to exercise the powers of the board, except as to matters
not within the competence of the committee under Section 5212,
Section 7212, or Section 9212.



5033.  "Approval by (or approval of) a majority of all members"
means approval by an affirmative vote (or written ballot in
conformity with Section 5513, Section 7513, or Section 9413) of a
majority of the votes entitled to be cast. Such approval shall
include the affirmative vote of a majority of the outstanding
memberships of each class, unit, or grouping of members entitled, by
any provision of the articles or bylaws or of Part 2, Part 3, Part 4
or Part 5 to vote as a class, unit, or grouping of members on the
subject matter being voted upon and shall also include the
affirmative vote of such greater proportion, including all, of the
votes of the memberships of any class, unit, or grouping of members
if such greater proportion is required by the bylaws (subdivision (e)
of Section 5151, subdivision (e) of Section 7151, or subdivision (e)
of Section 9151) or Part 2, Part 3, Part 4 or Part 5.



5034.  "Approval by (or approval of) the members" means approved or
ratified by the affirmative vote of a majority of the votes
represented and voting at a duly held meeting at which a quorum is
present (which affirmative votes also constitute a majority of the
required quorum) or written ballot in conformity with Section 5513,
7513, or 9413 or by the affirmative vote or written ballot of such
greater proportion, including all of the votes of the memberships of
any class, unit, or grouping of members as may be provided in the
bylaws (subdivision (e) of Section 5151, subdivision (e) of Section
7151, or subdivision (e) of Section 9151) or in Part 2, Part 3, Part
4 or Part 5 for all or any specified member action.




5035.  "Articles" includes the articles of incorporation, amendments
thereto, amended articles, restated articles, and certificates of
incorporation.


5036.  (a) Except as provided in subdivision (b) or (c), "authorized
number" means 5 percent of the voting power.
   (b) Where (disregarding any provision for cumulative voting which
would otherwise apply) the total number of votes entitled to be cast
for a director is 1,000 or more, but less than 5,000 the authorized
number shall be 2 1/2 percent of the voting power, but not less than
50.
   (c) Where (disregarding any provision for cumulative voting which
would otherwise apply) the total number of votes entitled to be cast
for a director is 5,000 or more, the authorized number shall be
one-twentieth of 1 percent of the voting power, but not less than
125.
   (d) Any right under Part 2, Part 3, or Part 4 which may be
exercised by the authorized number, or some multiple thereof, may be
exercised by a member with written authorizations obtained within any
11-month period from members who, in the aggregate, hold the
equivalent voting power. Any such authorization shall specify the
right to be exercised thereunder and the duration thereof (which
shall not exceed three years).
   (e) Where any provision of Part 2, Part 3, or Part 4 specifies
twice the authorized number, that means two times the number
calculated according to subdivision (a), (b) or (c).



5037.  "Bylaws" includes amendments thereto and amended bylaws.



5038.  "Board" means the board of directors of the corporation.



5039.  "Business corporation" means a corporation as defined in
Section 162 of the General Corporation Law.



5039.5.  The term "chair" includes "chairperson," "chairman," and
"chairwoman." All references in this division to "chairman" shall be
deemed to refer to "chair."



5040.  "Chapter" refers to a chapter of Part 2 (commencing with
Section 5110), Part 3 (commencing with Section 7110), or Part 4
(commencing with Section 9110) unless otherwise expressly stated.



5041.  "Class" refers to those memberships which: (a) are identified
in the articles or bylaws as being a different type of membership;
or (b) have the same rights with respect to voting, dissolution,
redemption and transfer. For the purpose of this section, rights
shall be considered the same if they are determined by a formula
applied uniformly.



5043.  "Common shares," as used in Part 3 (commencing with Section
7110), means shares which have no preference over any other shares
with respect to distribution of assets on liquidation or with respect
to payment of dividends.


5044.  "Constituent corporation" means a corporation which is merged
with one or more other corporations and includes the surviving
corporation.


5045.  "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a corporation.


5046.  (a) "Corporation" as used in this part and Part 5 (commencing
with Section 9910), refers to corporations defined in subdivisions
(b), (c), and (d).
   (b) "Corporation," as used in Part 2 (commencing with Section
5110), means a nonprofit public benefit corporation as defined in
Section 5060.
   (c) "Corporation," as used in Part 3 (commencing with Section
7110) means a nonprofit mutual benefit corporation as defined in
Section 5059.
   (d) "Corporation," as used in Part 4 (commencing with Section
9110), including those provisions of Part 2 (commencing with Section
5110) made applicable pursuant to Chapter 6 (commencing with Section
9610) of Part 4, means a nonprofit religious corporation as defined
in Section 5061.



5047.  Except where otherwise expressly provided, "directors" means
natural persons, designated in the articles or bylaws or elected by
the incorporators, and their successors and natural persons
designated, elected or appointed by any other name or title to act as
members of the governing body of the corporation. A person who does
not have authority to act as a member of the governing body of the
corporation, including through voting rights as a member of the
governing body, is not a director as that term is used in this
division regardless of title. However, if the articles or bylaws
designate that a natural person is a director or a member of the
governing body of the corporation by reason of occupying a specified
position within or outside the corporation, that person shall be a
director for all purposes and shall have the same rights and
obligations, including voting rights, as the other directors.



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



5048.  "Disappearing corporation" means a constituent corporation
which is not the surviving corporation.



5049.  "Distribution" means the distribution of any gains, profits
or dividends to any member as such. As used in this section, "member"
means any person who is a member as defined in Section 5056 and any
person who is referred to as a member as authorized by subdivision
(a) of Sections 5332, 7333 and 9332.


5050.  "Domestic corporation" means a corporation formed under the
laws of this state.



5051.  "Filed," unless otherwise expressly provided, means filed in
the office of the Secretary of State.



5052.  "Foreign business corporation," as used in Part 3 (commencing
with Section 7110), means a foreign corporation as defined in
Section 171 except that it does not include a foreign corporation as
defined in Section 5053.


5053.  "Foreign corporation" means any corporation incorporated in a
jurisdiction other than California pursuant to that jurisdiction's
law for the incorporation of nonprofit corporations; except that as
used in subdivision (b) of Section 5122, in subdivision (c) of
Section 7122, and in subdivision (b) of Section 9122, "foreign
corporation" means a corporation described in Section 171.



5054.  "Incentive and benefit plans," as used in Section 5140, in
Section 7140, and in Section 9140 includes, but is not limited to,
any plan or agreement under which the compensation of officers or
employees is fixed, in full or in part, by reference to the financial
performance of the corporation.



5055.  "Liquidating price" or "liquidation preference," as used in
Part 3 (commencing with Section 7110), means amounts payable on
memberships of any class, upon voluntary or involuntary dissolution,
winding up or distribution of the entire assets of the corporation,
in priority to amounts payable to members of another class or
classes.



5056.  (a) "Member" means any person who, pursuant to a specific
provision of a corporation's articles or bylaws, has the right to
vote for the election of a director or directors or on a disposition
of all or substantially all of the assets of a corporation or on a
merger or on a dissolution unless the provision granting such right
to vote is only effective as a result of paragraph (2) of subdivision
(a) of Section 7132. "Member" also means any person who is
designated in the articles or bylaws as a member and, pursuant to a
specific provision of a corporation's articles or bylaws, has the
right to vote on changes to the articles or bylaws.
   (b) The articles or bylaws may confer some or all of the rights of
a member, set forth in this part and in Parts 2 through 5 of this
division, upon any person or persons who do not have any of the
voting rights referred to in subdivision (a).
   (c) Where a member of a corporation is not a natural person, such
member may authorize in writing one or more natural persons to vote
on its behalf on any or all matters which may require a vote of the
members.
   (d) A person is not a member by virtue of any of the following:
   (1) Any rights such person has as a delegate.
   (2) Any rights such person has to designate or select a director
or directors.
   (3) Any rights such person has as a director.



5057.  A "membership" refers to the rights a member has pursuant to
a corporation's articles, bylaws and this division.



5058.  "Membership certificate," as used in Part 3 (commencing with
Section 7110), means a document evidencing a transferable property
interest in a corporation.



5059.  "Nonprofit mutual benefit corporation" or "mutual benefit
corporation" means a corporation which is organized under Part 3
(commencing with Section 7110), or subject to Part 3 under the
provisions of subdivision (a) of Section 5003.




5060.  "Nonprofit public benefit corporation" or "public benefit
corporation" means a corporation which is organized under Part 2
(commencing with Section 5110) or subject to Part 2 under the
provisions of subdivision (a) of Section 5003.


5061.  "Nonprofit religious corporation" or "religious corporation"
means a corporation which is organized under Part 4 (commencing with
Section 9110) or subject to Part 4 pursuant to subdivision (a) of
Section 5003.


5062.  "Officer's certificate" means a certificate signed and
verified by the chair of the board, the president or any vice
president and by the secretary, the chief financial officer, the
treasurer or any assistant secretary or assistant treasurer.




5063.  "On the certificate," as used in Part 3 (commencing with
Section 7110), means that a statement appears on the face of a
certificate or on the reverse thereof with a reference thereto on the
face.


5063.5.  "Other business entity" means a domestic or foreign limited
liability company, limited partnership, general partnership,
business trust, real estate investment trust, unincorporated
association, or a domestic reciprocal insurer organized after 1974 to
provide medical malpractice insurance as set forth in Article 16
(commencing with Section 1550) of Chapter 3 of Part 2 of Division 1
of the Insurance Code. As used herein, "general partnership" means a
"partnership" as defined in subdivision (9) 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.



5064.  A "parent" of a specified corporation is an affiliate
controlling such corporation directly or indirectly through one or
more intermediaries.


5064.5.  "Parent party" means the corporation in control of any
constituent domestic or foreign corporation or other business entity
and whose equity securities are issued, transferred, or exchanged in
a merger pursuant to Section 6019.1 or 8019.1.



5065.  "Person," in addition to those entities specified in Section
18 and unless otherwise expressly provided, includes any association,
business corporation, company, corporation, corporation sole,
domestic corporation, estate, foreign corporation, foreign business
corporation, individual, joint stock company, joint venture, mutual
benefit corporation, public benefit corporation, religious
corporation, partnership, government or political subdivision, agency
or instrumentality of a government.



5067.  "Preferred shares," as used in Part 3 (commencing with
Section 7110), means shares other than common shares.



5068.  "Proper county" means the county where the corporation's
principal office in this state is located or, if the corporation has
no such office, the County of Sacramento.



5069.  "Proxy" means a written authorization signed by a member or
the member's attorney in fact giving another person or persons power
to vote on behalf of such member. "Signed" for the purpose of this
section means the placing of the member's name on the proxy (whether
by manual signature, typewriting, telegraphic transmission or
otherwise) by the member or such member's attorney in fact.



5070.  "Proxyholder" means the person or persons to whom a proxy is
given.


5071.  "Shareholder," as used in Part 3 (commencing with Section
7110), means one who is a holder of record of shares.



5072.  "Shares," as used in Part 3 (commencing with Section 7110),
means the units into which the proprietary interests in a business
corporation or foreign business corporation are divided in the
articles.


5073.  (a) Except as provided in subdivision (b), "subsidiary" of a
specified corporation means a corporation more than 50 percent of the
voting power of which is owned directly, or indirectly through one
or more subsidiaries, by the specified corporation.
   (b) For the purpose of Section 7315, "subsidiary" of a specified
corporation means a corporation more than 25 percent of the voting
power of which is owned directly, or indirectly through one or more
subsidiaries as defined in subdivision (a), by the specified
corporation.


5074.  "Surviving corporation" means a corporation into which one or
more other corporations are merged.



5075.  "Vacancy" when used with respect to the board means any
authorized position of director which is not then filled, whether the
vacancy is caused by death, resignation, removal, change in the
number of directors authorized in the articles or bylaws (by the
board or the members) or otherwise.



5076.  "Verified" means that the statements contained in a
certificate or other document are declared to be true of the own
knowledge of the persons executing the same in either:
   (a) An affidavit signed by them under oath before an officer
authorized by the laws of this state or of the place where it is
executed to administer oaths; or
   (b) A declaration in writing executed by them under penalty of
perjury and stating the date and place (whether within or without
this state) of execution.
   Any affidavit sworn to without this state before a notary public
or a judge or clerk of a court of record having an official seal need
not be further authenticated.



5077.  "Vote" includes, but is not limited to, authorization by
written consent pursuant to subdivision (b) of Section 5211,
subdivision (b) of Section 7211, or subdivision (b) of Section 9211
and authorization by written ballot pursuant to Section 5513, Section
7513, or Section 9413.



5078.  "Voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and
does not include the right to vote upon the happening of some
condition or event which has not yet occurred. In any case where
different classes of memberships are entitled to vote as separate
classes for different members of the board, the determination of
percentage of voting power shall be made on the basis of the
percentage of the total number of authorized directors which the
memberships in question (whether of one or more classes) have the
power to elect in an election at which all memberships then entitled
to vote for the election of any directors are voted.



5079.  "Written" or "in writing" includes facsimile, telegraphic,
and other electronic communication as authorized by this code,
including an electronic transmission by a corporation that satisfies
the requirements of Section 20.


5080.  "Written ballot" does not include a ballot distributed at a
special or regular meeting of members.