citation: CORP § 705

text:
(a) Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares. Any proxy purporting to be executed in accordance with the provisions of this division shall be presumptively valid.

(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

(c) A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

(d) Except when other provision shall have been made by written agreement between the parties, the recordholder of shares which such person holds as pledgee or otherwise as security or which belong to another shall issue to the pledgor or to the owner of such shares, upon demand therefor and payment of necessary expenses thereof, a proxy to vote or take other action thereon.

(e) A proxy which states that it is irrevocable is irrevocable for the period specified therein (notwithstanding subdivision (c)) when it is held by any of the following or a nominee of any of the following:

(1) A pledgee.

(2) A person who has purchased or agreed to purchase or holds an option to purchase the shares or a person who has sold a portion of such person’s shares in the corporation to the maker of the proxy.

(3) A creditor or creditors of the corporation or the shareholder who extended or continued credit to the corporation or the shareholder in consideration of the proxy if the proxy states that it was given in consideration of such extension or continuation of credit and the name of the person extending or continuing credit.

(4) A person who has contracted to perform services as an employee of the corporation, if a proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for.

(5) A person designated by or under an agreement under Section 706.

(6) A beneficiary of a trust with respect to shares held by the trust.

Notwithstanding the period of irrevocability specified, the proxy becomes revocable when the pledge is redeemed, the option or agreement to purchase is terminated or the seller no longer owns any shares of the corporation or dies, the debt of the corporation or the shareholder is paid, the period of employment provided for in the contract of employment has terminated, the agreement under Section 706 has terminated, or the person ceases to be a beneficiary of the trust. In addition to the foregoing clauses (1) through (5), a proxy may be made irrevocable (notwithstanding subdivision (c)) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which, by its terms, discharge the obligations secured by it.

(f) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a transferee of shares without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability appears, in the case of certificated securities, on the certificate representing such shares, or in the case of uncertificated securities, on the initial transaction statement and written statements.

history: (History: Amended by Stats. 1986, Ch. 766, Sec. 22.)

title: 1. CORPORATIONS


kind: section

code: CORP

citation: CORP § 706

text:
(a) Notwithstanding any other provision of this division, an agreement between two or more shareholders of a corporation, if in writing and signed by the parties thereto, may provide that in exercising any voting rights the shares held by them shall be voted as provided by the agreement, or as the parties may agree or as determined in accordance with a procedure agreed upon by them, and the parties may but need not transfer the shares covered by such an agreement to a third party or parties with authority to vote them in accordance with the terms of the agreement. Such an agreement shall not be denied specific performance by a court on the ground that the remedy at law is adequate or on other grounds relating to the jurisdiction of a court of equity.

(b) Shares in any corporation may be transferred by written agreement to trustees in order to confer upon them the right to vote and otherwise represent the shares for such period of time, not exceeding 10 years, as may be specified in the agreement. The validity of a voting trust agreement, otherwise lawful, shall not be affected during a period of 10 years from the date when it was created or last extended as hereinafter provided by the fact that under its terms it will or may last beyond such 10-year period. At any time within two years prior to the time of expiration of any voting trust agreement as originally fixed or as last extended as provided in this subdivision, one or more beneficiaries under the voting trust agreement may, by written agreement and with the written consent of the voting trustee or trustees, extend the duration of the voting trust agreement with respect to their shares for an additional period not exceeding 10 years from the expiration date of the trust as originally fixed or as last extended as provided in this subdivision. A duplicate of the voting trust agreement and any extension thereof shall be filed with the secretary of the corporation and shall be open to inspection by a shareholder, a holder of a voting trust certificate or the agent of either, upon the same terms as the record of shareholders of the corporation is open to inspection.

(c) No agreement made pursuant to subdivision (a) shall be held to be invalid or unenforceable on the ground that it is a voting trust that does not comply with subdivision (b) or that it is a proxy that does not comply with Section 705.

(d) This section shall not invalidate any voting or other agreement among shareholders or any irrevocable proxy complying with subdivision (e) of Section 705, which agreement or proxy is not otherwise illegal.

history: (History: Amended by Stats. 1997, Ch. 136, Sec. 3. Effective January 1, 1998.)

division: 1. GENERAL CORPORATION LAW

title: 1. CORPORATIONS

chapter: 7. Voting of Shares

path: 1. CORPORATIONS > 1. GENERAL CORPORATION LAW > 7. Voting of Shares


citation: CORP § 707

text:
(a) In advance of any meeting of shareholders the board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairperson of any meeting of shareholders may, and on the request of any shareholder or a shareholder’s proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed.

(b) The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders.

(c) The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 16. (SB 1202) Effective January 1, 2023.)

title: 1. CORPORATIONS


citation: CORP § 708

text:
(a) Except as provided in Sections 301.5 and 708.5, every shareholder complying with subdivision (b) and entitled to vote at any election of directors may cumulate such shareholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder’s shares are normally entitled, or distribute the shareholder’s votes on the same principle among as many candidates as the shareholder thinks fit.

(b) No shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes that the shareholder normally is entitled to cast) unless the candidate or candidates’ names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting prior to the voting of the shareholder’s intention to cumulate the shareholder’s votes. If any one shareholder has given that notice, all shareholders may cumulate their votes for candidates in nomination.

(c) Except as provided in Section 708.5, in any election of directors, the candidates receiving the highest number of affirmative votes of the shares entitled to be voted for them up to the number of directors to be elected by those shares are elected; votes against the director and votes withheld shall have no legal effect.

(d) Subdivision (a) applies to the shareholders of any mutual water company organized or existing for the purpose of delivering water to its shareholders at cost on lands located within the boundaries of one or more reclamation districts now or hereafter legally existing in this state and created by or formed under the provisions of any statute of this state, but does not otherwise apply to the shareholders of mutual water companies unless their articles or bylaws so provide.

(e) Elections for directors need not be by ballot unless a shareholder demands election by ballot at the meeting and before the voting begins or unless the bylaws so require.

history: (History: Amended by Stats. 2006, Ch. 871, Sec. 1. Effective January 1, 2007.)

title: 1. CORPORATIONS


citation: CORP § 708.5

text:
(a) For purposes of this section,the following definitions shall apply:

(1) “Uncontested election” means an election of directors in which, at the expiration of the time fixed under the articles of incorporation or bylaws requiring advance notification of director candidates or, absent such a provision in the articles of incorporation or bylaws, at a time fixed by the board of directors that is not more than 14 days before notice is given of the meeting at which the election is to occur, the number of candidates for election does not exceed the number of directors to be elected by the shareholders at that election.

(2) “Listed corporation” means a domestic corporation that qualifies as a listed corporation under subdivision (d) of Section 301.5.

(b) Notwithstanding paragraph (5) of subdivision (a) of Section 204, a listed corporation that has eliminated cumulative voting pursuant to subdivision (a) of Section 301.5 may amend its articles of incorporation or bylaws to provide that, in an uncontested election, approval of the shareholders, as specified in Section 153, shall be required to elect a director.

(c) Notwithstanding subdivision (b) of Section 301, if an incumbent director fails to be elected by approval of the shareholders (Section 153) in an uncontested election of a listed corporation that has amended its articles of incorporation or bylaws pursuant to subdivision (b), then, unless the incumbent director has earlier resigned, the term of the incumbent director shall end on the date that is the earlier of 90 days after the date on which the voting results are determined pursuant to Section 707 or the date on which the board of directors selects a person to fill the office held by that director pursuant to subdivision (d).

(d) Any vacancy on the board of directors resulting from any failure of a candidate to be elected by approval of the shareholders (Section 153) in an uncontested election of a listed corporation that has amended its articles of incorporation or bylaws pursuant to subdivision (b) shall be filled in accordance with the procedures set forth in Section 305.

history: (History: Added by Stats. 2006, Ch. 871, Sec. 2. Effective January 1, 2007.)

title: 1. CORPORATIONS


citation: CORP § 709

text:
(a) Upon the filing of an action therefor by any shareholder or by any person who claims to have been denied the right to vote, the superior court of the proper county shall try and determine the validity of any election or appointment of any director of any domestic corporation, or of any foreign corporation if the election was held or the appointment was made in this state. In the case of a foreign corporation the action may be brought at the option of the plaintiff in the county in which the corporation has its principal office in California or in the county in which the election was held or the appointment was made.

(b) Upon the filing of the complaint, and before any further proceedings are had, the court shall enter an order fixing a date for the hearing, which shall be within five days unless for good cause shown a later date is fixed, and requiring notice of the date for the hearing and a copy of the complaint to be served upon the corporation and upon the person whose purported election or appointment is questioned and upon any person (other than the plaintiff) whom the plaintiff alleges to have been elected or appointed, in the manner in which a summons is required to be served, or, if the court so directs, by registered mail; and the court may make such further requirements as to notice as appear to be proper under the circumstances.

(c) The court may determine the person entitled to the office of director or may order a new election to be held or appointment to be made, may determine the validity, effectiveness and construction of voting agreements and voting trusts, the validity of the issuance of shares and the right of persons to vote and may direct such other relief as may be just and proper.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 17. (SB 1202) Effective January 1, 2023.)

title: 1. CORPORATIONS


citation: CORP § 710

text:
(a) This section applies to a corporation with outstanding shares held of record by 100 or more persons (determined as provided in Section 605) that files an amendment of articles or certificate of determination containing a “supermajority vote” provision on or after January 1, 1989. This section shall not apply to a corporation that files an amendment of articles or certificate of determination on or after January 1, 1994, if, at the time of filing, the corporation has (1) outstanding shares of more than one class or series of stock, (2) no class of equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and (3) outstanding shares held of record by fewer than 300 persons determined as provided by Section 605.

(b) A “supermajority vote” is a requirement set forth in the articles or in a certificate of determination authorized under any provision of this division that specified corporate action or actions be approved by a larger proportion of the outstanding shares than a majority, or by a larger proportion of the outstanding shares of a class or series than a majority, but no supermajority vote that is subject to this section shall require a vote in excess of 6623 percent of the outstanding shares or 6623 percent of the outstanding shares of any class or series of those shares.

(c) An amendment of the articles or a certificate of determination that includes a supermajority vote requirement shall be approved by at least as large a proportion of the outstanding shares (Section 152) as is required pursuant to that amendment or certificate of determination for the approval of the specified corporate action or actions.

(d) The amendments made to this section by the act amending this section in the 2001–02 Regular Session shall not affect the rights of minority shareholders existing under law.

history: (History: Amended by Stats. 2006, Ch. 57, Sec. 2. Effective January 1, 2007.)

title: 1. CORPORATIONS


citation: CORP § 711

text:
(a) The Legislature finds and declares that:

Many of the residents of this state are the legal and beneficial owners or otherwise the ultimate beneficiaries of shares of stock of domestic and foreign corporations, title to which may be held by a variety of intermediate owners as defined in subdivision (b). The informed and active involvement of such beneficial owners and beneficiaries in holding legal owners and, through them, management, accountable in their exercise of corporate power is essential to the interest of those beneficiaries and beneficial owners and to the economy and well-being of this state.

The purpose of this section is to serve the public interest by ensuring that voting records are maintained and disclosed as provided in this section. In the event that by statute or regulation pursuant to the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.), there are imposed upon investment managers as defined in Sec. 2(38) thereof, duties substantially the same as those set forth in this section, compliance with those statutory or regulatory requirements by persons subject to this section shall be deemed to fulfill the obligations contained in this section.

This section shall be construed liberally to achieve that purpose.

(b) For purposes of this section, a person on whose behalf shares are voted includes, but is not limited to:

(1) A participant or beneficiary of an employee benefit plan with regard to shares held for the benefit of the participant or beneficiary.

(2) A shareholder, beneficiary, or contract owner of any entity (or of any portfolio of any entity) as defined in Section 3(a) of the federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), as amended, to the extent the entity (or portfolio) holds the shares for which the record is requested.

(c) For the purposes of this section, a person on whose behalf shares are voted does not include:

(1) A person who possesses the right to terminate or withdraw from the shareholder, contract owner, participant, or beneficiary relationship with any entity (or any portfolio of any entity) defined in subdivision (b). This exclusion does not apply in the event the right of termination or withdrawal cannot be exercised without automatic imposition of a tax penalty. The right to substitute a relationship with an entity or portfolio, the shares of which are voted by or subject to the direction of the investment adviser (as defined in Section 2 of the federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), as amended), of the prior entity or portfolio, or an affiliate of the investment adviser, shall not be deemed to be a right of termination or withdrawal within the meaning of this subdivision.

(2) A person entitled to receive information about a trust pursuant to Section 16061 of the Probate Code.

(3) A beneficiary, participant, contract owner, or shareholder whose interest is funded through the general assets of a life insurance company authorized to conduct business in this state.

(d) Every person possessing the power to vote shares of stock on behalf of another shall maintain a record of the manner in which the shares were voted. The record shall be maintained for a period of 12 consecutive months from the effective date of the vote.

(e) Upon a reasonable written request, the person possessing the power to vote shares of stock on behalf of another, or a designated agent, shall disclose the voting record with respect to any matter involving a specific security or securities in accordance with the following procedures:

(1) Except as set forth in paragraph (2), disclosure shall be made to the person making the request. The person making the disclosure may require identification sufficient to identify the person making the request as a person on whose behalf the shares were voted. A request for identification, if made, shall be reasonable, shall be made promptly, and may include a request for the person’s social security number.

(2) If the person possessing the power to vote shares on behalf of another holds that power pursuant to an agreement entered into with a party other than the person making the request for disclosure, the person maintaining and disclosing the record pursuant to this section may, instead, make the requested disclosure to that party. Disclosure to that party shall be deemed compliance with the disclosure requirement of this section. If disclosure is made to that party and not to the person making the request, subdivision (i) shall not apply. However, nothing herein shall prohibit that party and the person possessing the power to vote on shares from entering into an agreement between themselves for the payment or assessment of a reasonable charge to defray expenses of disclosing the record.

(f) Where the entity subject to the requirements of this section is organized as a unit investment trust as defined in Section 4(2) of the federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), the open-ended investment companies underlying the unit investment trust shall promptly make available their proxy voting records to the unit investment trust upon evidence of a bona fide request for voting record information pursuant to subdivision (e).

(g) Signing a proxy on another’s behalf and forwarding it for disposition or receiving voting instructions does not constitute the power to vote. A person forwarding proxies or receiving voting instructions shall disclose the identity of the person having the power to vote shares upon reasonable written request by a person entitled to request a voting record under subdivision (c).

(h) For purposes of this section, if one or more persons has the power to vote shares on behalf of another, unless a governing instrument provides otherwise, the person or persons may designate an agent who shall maintain and disclose the record in accordance with subdivisions (b) and (c).

(i) Except as provided in paragraph (2) of subdivision (e), or as otherwise provided by law or a governing instrument, a person maintaining and disclosing a record pursuant to this section may assess a reasonable charge to the requesting person in order to defray expenses of disclosing the record in accordance with subdivision (e). Disclosure shall be made within a reasonable period after payment is received.

(j) Upon the petition of any person who successfully brings an action pursuant to or to enforce this section, the court may award costs and reasonable attorney’s fees if the court finds that the defendant willfully violated this section.

(k) The obligation to maintain and disclose a voting record in accordance with subdivisions (b) and (c) shall commence January 1, 1990.

history: (History: Added by Stats. 1988, Ch. 1360, Sec. 1.)

title: 1. CORPORATIONS


citation: CORP § 800

text:
(a) As used in this section, “corporation” includes an unincorporated association; “board” includes the managing body of an unincorporated association; “shareholder” includes a member of an unincorporated association; and “shares” includes memberships in an unincorporated association.

(b) No action may be instituted or maintained in right of any domestic or foreign corporation by any holder of shares or of voting trust certificates of the corporation unless both of the following conditions exist:

(1) The plaintiff alleges in the complaint that plaintiff was a shareholder, of record or beneficially, or the holder of voting trust certificates at the time of the transaction or any part thereof of which plaintiff complains or that plaintiff’s shares or voting trust certificates thereafter devolved upon plaintiff by operation of law from a holder who was a holder at the time of the transaction or any part thereof complained of; provided, that any shareholder who does not meet these requirements may nevertheless be allowed in the discretion of the court to maintain the action on a preliminary showing to and determination by the court, by motion and after a hearing, at which the court shall consider such evidence, by affidavit or testimony, as it deems material, that (i) there is a strong prima facie case in favor of the claim asserted on behalf of the corporation, (ii) no other similar action has been or is likely to be instituted, (iii) the plaintiff acquired the shares before there was disclosure to the public or to the plaintiff of the wrongdoing of which plaintiff complains, (iv) unless the action can be maintained the defendant may retain a gain derived from defendant’s willful breach of a fiduciary duty, and (v) the requested relief will not result in unjust enrichment of the corporation or any shareholder of the corporation; and

(2) The plaintiff alleges in the complaint with particularity plaintiff’s efforts to secure from the board such action as plaintiff desires, or the reasons for not making such effort, and alleges further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file.

(c) In any action referred to in subdivision (b), at any time within 30 days after service of summons upon the corporation or upon any defendant who is an officer or director of the corporation, or held such office at the time of the acts complained of, the corporation or the defendant may move the court for an order, upon notice and hearing, requiring the plaintiff to furnish a bond as hereinafter provided. The motion shall be based upon one or both of the following grounds:

(1) That there is no reasonable possibility that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the corporation or its shareholders.

(2) That the moving party, if other than the corporation, did not participate in the transaction complained of in any capacity.

The court on application of the corporation or any defendant may, for good cause shown, extend the 30-day period for an additional period or periods not exceeding 60 days.

(d) At the hearing upon any motion pursuant to subdivision (c), the court shall consider such evidence, written or oral, by witnesses or affidavit, as may be material (1) to the ground or grounds upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys’ fees, of the corporation and the moving party which will be incurred in the defense of the action. If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the amount of the bond, not to exceed fifty thousand dollars ($50,000), to be furnished by the plaintiff for reasonable expenses, including attorneys’ fees, which may be incurred by the moving party and the corporation in connection with the action, including expenses for which the corporation may become liable pursuant to Section 317. A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. If the court, upon the motion, makes a determination that a bond shall be furnished by the plaintiff as to any one or more defendants, the action shall be dismissed as to the defendant or defendants, unless the bond required by the court has been furnished within such reasonable time as may be fixed by the court.

(e) If the plaintiff shall, either before or after a motion is made pursuant to subdivision (c), or any order or determination pursuant to the motion, furnish a bond in the aggregate amount of fifty thousand dollars ($50,000) to secure the reasonable expenses of the parties entitled to make the motion, the plaintiff has complied with the requirements of this section and with any order for a bond theretofore made, and any such motion then pending shall be dismissed and no further or additional bond shall be required.

(f) If a motion is filed pursuant to subdivision (c), no pleadings need be filed by the corporation or any other defendant and the prosecution of the action shall be stayed until 10 days after the motion has been disposed of.

history: (History: Amended by Stats. 1982, Ch. 517, Sec. 186.)

title: 1. CORPORATIONS

chapter: 8. Shareholder Derivative Actions

path: 1. CORPORATIONS > 1. GENERAL CORPORATION LAW > 8. Shareholder Derivative Actions


citation: CORP § 900

text:
(a) By complying with the provisions of this chapter, a corporation may amend its articles from time to time, in any and as many respects as may be desired, so long as its articles as amended contain only such provisions as it would be lawful to insert in original articles filed at the time of the filing of the amendment and, if a change in shares or the rights of shareholders or an exchange, reclassification or cancellation of shares or rights of shareholders is to be made, such provisions as may be necessary to effect such change, exchange, reclassification or cancellation. It is the intent of the Legislature in adopting this section to exercise to the fullest extent the reserve power of the state over corporations and to authorize any amendment of the articles covered by the preceding sentence regardless of whether any provision contained in the amendment was permissible at the time of the original incorporation of the corporation.

(b) A corporation shall not amend its articles to add any statement or to alter any statement that may appear in the original articles of the initial street address and initial mailing address of the corporation, the names and addresses of the first directors, or the name and address of the initial agent, except to correct an error in the statement or to delete the information after the corporation has filed a statement under Section 1502.

history: (History: Amended by Stats. 2012, Ch. 494, Sec. 5. (SB 1532) Effective January 1, 2013.)

title: 1. CORPORATIONS

chapter: 9. Amendment of Articles

path: 1. CORPORATIONS > 1. GENERAL CORPORATION LAW > 9. Amendment of Articles


citation: CORP § 901

text: Before any shares have been issued, any amendment of the articles may be adopted by a writing signed by a majority of the incorporators, if directors were not named in the original articles and have not been elected, or, if directors were named in the original articles or have been elected, by a majority of the directors.

history: (History: Added by Stats. 1975, Ch. 682.)

title: 1. CORPORATIONS


citation: CORP § 902

text:
(a) After any shares have been issued, amendments may be adopted if approved by the board and approved by the outstanding shares (Section 152), either before or after the approval by the board.

(b) Notwithstanding subdivision (a), an amendment extending the corporate existence or making the corporate existence perpetual may be adopted by a corporation organized prior to August 14, 1929, with approval by the board alone.

(c) Notwithstanding subdivision (a), unless the corporation has more than one class of shares outstanding, an amendment effecting only a stock split (including an increase in the authorized number of shares in proportion thereto) may be adopted with approval by the board alone.

(d) Notwithstanding subdivision (a), an amendment deleting the initial street address and initial mailing address of the corporation, the names and addresses of the first directors, or the name and address of the initial agent may be adopted with approval by the board alone.

(e) Whenever the articles require for corporate action the vote of a larger proportion or of all of the shares of any class or series, or of a larger proportion or of all of the directors, than is otherwise required by this division, the provision in the articles requiring such greater vote shall not be altered, amended or repealed except by such greater vote unless otherwise provided in the articles.

(f) Notwithstanding subdivision (a), any amendment reducing the vote required for an amendment pursuant to subdivision (c) of Section 158 may not be adopted unless approved by the affirmative vote of at least two-thirds of each class of outstanding shares or such other vote as may then be specified by the articles of the corporation.

history: (History: Amended by Stats. 2012, Ch. 494, Sec. 6. (SB 1532) Effective January 1, 2013.)

title: 1. CORPORATIONS


citation: CORP § 903

text:
(a) A proposed amendment must be approved by the outstanding shares (Section 152) of a class, whether or not such class is entitled to vote thereon by the provisions of the articles, if the amendment would:

(1) Increase or decrease the aggregate number of authorized shares of such class, other than an increase as provided in either subdivision (b) of Section 405 or subdivision (c) of Section 902.

(2) Effect an exchange, reclassification, or cancellation of all or part of the shares of such class, including a reverse stock split but excluding a stock split.

(3) Effect an exchange, or create a right of exchange, of all or part of the shares of another class into the shares of such class.

(4) Change the rights, preferences, privileges or restrictions of the shares of such class.

(5) Create a new class of shares having rights, preferences or privileges prior to the shares of such class, or increase the rights, preferences or privileges or the number of authorized shares of any class having rights, preferences or privileges prior to the shares of such class.

(6) In the case of preferred shares, divide the shares of any class into series having different rights, preferences, privileges or restrictions or authorize the board to do so.

(7) Cancel or otherwise affect dividends on the shares of such class which have accrued but have not been paid.

(b) Different series of the same class shall not constitute different classes for the purpose of voting by classes except when a series is adversely affected by an amendment in a different manner than other shares of the same class.

(c) In addition to approval by a class as provided in subdivision (a), a proposed amendment must also be approved by the outstanding voting shares (Section 152).

history: (History: Amended by Stats. 1997, Ch. 136, Sec. 4. Effective January 1, 1998.)

title: 1. CORPORATIONS


citation: CORP § 904

text:
(a) Except as provided in subdivision (b), if any amendment of the articles would make shares assessable or would authorize remedy by action for the collection of an assessment on fully paid shares, it shall be approved by all of the outstanding shares affected regardless of limitations or restrictions on the voting rights thereof.

(b) If a corporation is a mutual water company within the meaning of Section 2705 of the Public Utilities Code, an amendment of the articles to make the shares assessable or to amend prior article provisions authorizing assessment of shares shall be approved by the holders of at least two-thirds of the outstanding shares of any class affected by the amendment regardless of limitations or restrictions on the voting rights thereof. However, if the amendment would authorize remedy by action for the collection of an assessment on fully paid shares, the amendment shall be approved pursuant to subdivision (a).

history: (History: Amended by Stats. 1990, Ch. 677, Sec. 1.)

title: 1. CORPORATIONS


citation: CORP § 905

text:
In the case of amendments adopted after the corporation has issued any shares, the corporation shall file a certificate of amendment, which shall consist of an officers’ certificate stating:

(a) The wording of the amendment or amended articles in accordance with Section 907;

(b) That the amendment has been approved by the board;

(c) If the amendment is one for which the approval of the outstanding shares (Section 152) is required, that the amendment was approved by the required vote of shareholders in accordance with Section 902, 903 or 904; the total number of outstanding shares of each class entitled to vote with respect to the amendment; and that the number of shares of each class voting in favor of the amendment equaled or exceeded the vote required, specifying the percentage vote required of each class entitled to vote; and

(d) If the amendment is one which may be adopted with approval by the board alone, a statement of the facts entitling the board alone to adopt the amendment.

In the event of an amendment of the articles pursuant to a merger, the filing of the officers’ certificate and agreement pursuant to Section 1103 or a certificate of ownership pursuant to subdivision (d) of Section 1110 shall be in lieu of any filing required under this chapter.

history: (History: Amended by Stats. 1976, Ch. 641.)

title: 1. CORPORATIONS


citation: CORP § 906

text:
In the case of amendments adopted by the incorporators or the board under Section 901, the corporation shall file a certificate of amendment signed and verified by a majority of the incorporators or of the board, as the case may be, which shall state that the signers thereof constitute at least a majority of the incorporators or of the board, that the corporation has issued no shares and that they adopt the amendment or amendments therein set forth. In the case of amendments adopted by the incorporators, the certificate shall also state that directors were not named in the original articles and have not been elected.

In the case of amendments adopted by the board under Section 901, the corporation may file a certificate of amendment pursuant to Section 905 in lieu of a certificate of amendment pursuant to this section.

history: (History: Amended by Stats. 1978, Ch. 370.)

title: 1. CORPORATIONS


citation: CORP § 907

text:
(a) The certificate of amendment shall establish the wording of the amendment or amended articles by one or more of the following means:

(1) By stating that the articles shall be amended to read as therein set forth in full.

(2) By stating that any provision of the articles, which shall be identified by the numerical or other designation given it in the articles or by stating the wording thereof, shall be stricken from the articles or shall be amended to read as set forth in the certificate.

(3) By stating that the provisions set forth therein shall be added to the articles.

(b) If the purpose of the amendment is to effect a stock split or reverse stock split or to reclassify, cancel, exchange, or otherwise change outstanding shares, the amended articles shall state the effect thereof on outstanding shares.

(c) In the event of an amendment to change the statement of authorized shares from a single class of shares to two classes, the shares outstanding immediately prior to the amendment are automatically considered to be the same number of shares of the common stock class. If the designation of only one of the two classes includes “common,” that class is the common stock class. If the designation of both classes or of neither class includes “common” but one of the two classes has limited or no voting rights, the class whose voting rights are not limited is the common stock class for the purpose of this subdivision. This subdivision has no application if the amendment of articles includes a statement of the effect of the amendment on outstanding shares pursuant to subdivision (b).

(d) An amendment which adds or eliminates a stated par value or changes the stated par value and which does not also state the effect of the amendment on outstanding shares is not thereby subject to subdivision (b).

history: (History: Amended by Stats. 1985, Ch. 764, Sec. 1.)

title: 1. CORPORATIONS


citation: CORP § 908

text: Upon the filing of the certificate of amendment, the articles shall be amended in accordance with the certificate and any stock split, reverse stock split, reclassification, cancellation, exchange or other change in shares shall be effected, and a copy of the certificate, certified by the Secretary of State, is prima facie evidence of the performance of the conditions necessary to the adoption of the amendment.

history: (History: Amended by Stats. 1979, Ch. 711.)

title: 1. CORPORATIONS


citation: CORP § 909

text: A corporation formed for a limited period may at any time subsequent to the expiration of the term of its corporate existence, if it has continuously acted as a corporation and done business as such, extend the term of its existence by an amendment to its articles removing any provision limiting the term of its existence and providing for perpetual existence. If the filing of the certificate of amendment providing for perpetual existence would be prohibited if it were original articles by the provisions of Section 201, the Secretary of State shall not file such certificate unless by the same or a concurrently filed certificate of amendment the articles of such corporation are amended to adopt a new available name. For the purpose of the adoption of any such amendment, persons who have been functioning as directors of such corporation shall be considered to have been validly elected even though their election may have occurred after the expiration of the original term of the corporate existence. The certificate of amendment shall set forth that the corporation continuously acted as a corporation and did business as such from the expiration of its term of corporate existence to the date of the amendment.

title: 1. CORPORATIONS


citation: CORP § 910

text:
(a) A corporation may restate in a single certificate the entire text of its articles as amended by filing an officers’ certificate or, in circumstances where incorporators or the board may amend a corporation’s articles pursuant to Sections 901 and 906, a certificate signed and verified by a majority of the incorporators or the board, as applicable, entitled Restated Articles of Incorporation, which shall set forth the articles as amended to the date of the filing of the certificate, except that the signatures and acknowledgments of the articles by the incorporators and any statements regarding the effect of any prior amendment upon outstanding shares and any provisions of agreements of merger (other than amendments to the articles of the surviving corporation) and the initial street address and initial mailing address of the corporation and the names and addresses of the first directors and of the initial agent for service of process shall be omitted (except that the initial street address and initial mailing address of the corporation, the names and addresses of the initial agent for service of process and, if previously set forth in the articles, the initial directors, shall not be omitted before the time that the corporation has filed a statement under Section 1502). Such omissions are not alterations or amendments of the articles. The certificate may also itself alter or amend the articles in any respect, in which case the certificate must comply with Section 905 or 906, as the case may be, and Section 907.

(b) If the certificate does not itself alter or amend the articles in any respect, it shall be approved by the board or, before the issuance of any shares and the naming and election of directors, by a majority of the incorporators, and shall be subject to the provisions of this chapter relating to an amendment of the articles not requiring any approval of the outstanding shares (Section 152). If the certificate does itself alter or amend the articles, it shall be subject to the provisions of this chapter relating to the amendment or amendments so made and, except for certificates approved by a majority of the incorporators, the certificate shall also state that the board has approved the restated articles.

(c) Certificates of determination are a part of the articles within the meaning of this section. The provisions of such a certificate shall be given an article designation in the restated articles.

(d) Restated articles of incorporation filed pursuant to this section shall supersede for all purposes the original articles and all amendments and certificates of determination filed prior thereto.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 18. (SB 1202) Effective January 1, 2023.)

title: 1. CORPORATIONS


citation: CORP § 911

text:
(a) A corporation may, by amendment of its articles pursuant to this section, change its status to that of a social purpose corporation, nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation.

(b) The amendment of the articles to change status to a nonprofit corporation shall revise the statement of purpose, delete the authorization for shares and any other provisions relating to authorized or issued shares, make such other changes as may be necessary or desired, and, if any shares have been issued, provide either for the cancellation of those shares or for the conversion of those shares to memberships of the nonprofit corporation. The amendment of the articles to change status to a cooperative corporation shall revise the statement of purpose, make such other changes as may be necessary or desired, and, if any shares have been issued, provide for the cancellation of those shares or for the conversion of those shares to memberships of the cooperative corporation, if necessary.

(c) If shares have been issued, an amendment to change status to a nonprofit corporation shall be approved by all of the outstanding shares of all classes regardless of limitations or restrictions on the voting rights thereof and an amendment to change status to a cooperative corporation shall be approved by the outstanding shares (Section 152) of each class regardless of limitations or restrictions on the voting rights thereof.

(d) In the case of a change of status to a social purpose corporation:

(1) The corporation shall modify the name of the corporation, revise the statement of purpose, include the statement required by subparagraph (B) of paragraph (3) of subdivision (b) of Section 2602, and make such other conforming changes as may be necessary or desired.

(2) The amendment shall be approved by the affirmative vote of at least two-thirds of each class, or a greater vote if required in the articles, of outstanding shares (Section 152) of that changing corporation.

(e) If an amendment pursuant to this section is included in a merger agreement, the provisions of this section apply, except that any provision for cancellation or conversion of shares shall be in the merger agreement rather than in the amendment of the articles.

(f) Notwithstanding subdivision (c), if a corporation is a mutual water company within the meaning of Section 2705 of the Public Utilities Code and under the terms of the status change each outstanding share is converted to a membership of a nonprofit mutual benefit corporation, an amendment to change status to a nonprofit mutual benefit corporation shall be approved by the outstanding shares (Section 152) of each class regardless of limitations or restrictions on the voting rights thereof.

history: (History: Amended by Stats. 2014, Ch. 694, Sec. 4. (SB 1301) Effective January 1, 2015.)

title: 1. CORPORATIONS


citation: CORP § 1000

text: Any mortgage, deed of trust, pledge or other hypothecation of all or any part of the corporation’s property, real or personal, for the purpose of securing the payment or performance of any contract or obligation may be approved by the board. Unless the articles otherwise provide, no approval of shareholders (Section 153) or of the outstanding shares (Section 152) shall be necessary for such action.

title: 1. CORPORATIONS

chapter: 10. Sales of Assets

path: 1. CORPORATIONS > 1. GENERAL CORPORATION LAW > 10. Sales of Assets


citation: CORP § 1001

text:
(a) A corporation may sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets when the principal terms are approved by the board, and, unless the transaction is in the usual and regular course of its business, approved by the outstanding shares (Section 152), either before or after approval by the board and before or after the transaction. A transaction constituting a reorganization (Section 181) is subject to the provisions of Chapter 12 (commencing with Section 1200) and not this section (other than subdivision (d)). A transaction constituting a conversion (Section 161.9) is subject to the provisions of Chapter 11.5 (commencing with Section 1150) and not this section.

(b) Notwithstanding approval of the outstanding shares (Section 152), the board may abandon the proposed transaction without further action by the shareholders, subject to the contractual rights, if any, of third parties.

(c) The sale, lease, conveyance, exchange, transfer, or other disposition may be made upon those terms and conditions and for that consideration as the board may deem in the best interests of the corporation. The consideration may be money, securities, or other property.

(d) If the acquiring party in a transaction pursuant to subdivision (a) of this section or subdivision (g) of Section 2001 is in control of or under common control with the disposing corporation, the principal terms of the sale must be approved by at least 90 percent of the voting power of the disposing corporation unless the disposition is to a domestic or foreign corporation or other business entity in consideration of the nonredeemable common shares or nonredeemable equity securities of the acquiring party or its parent.

(e) Subdivision (d) does not apply to any transaction if the Commissioner of Financial Protection and Innovation, the Insurance Commissioner, or the Public Utilities Commission has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142 of this code, or Section 1209, 5750, or 5802 of the Financial Code, Section 838.5 of the Insurance Code, or Section 822 of the Public Utilities Code.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 19. (SB 1202) Effective January 1, 2023.)

title: 1. CORPORATIONS


citation: CORP § 1002

text: Any deed or instrument conveying or otherwise transferring any assets of a corporation may have annexed to it the certificate of the secretary or an assistant secretary of the corporation, setting forth that the transaction has been validly approved by the board and (a) stating that the property described in said deed or instrument is less than substantially all of the assets of the corporation or that the transfer is in the usual and regular course of the business of the corporation, if such be the case, or (b) if such property constitutes all or substantially all of the assets of the corporation and the transfer is not in the usual and regular course of the business of the corporation, stating the fact of approval thereof by the outstanding shares (Section 152) pursuant to this chapter or Chapter 12, as the case may be, or that such approval is not required by Chapter 12. Such certificate is prima facie evidence of the existence of the facts authorizing such conveyance or other transfer of the assets and conclusive evidence in favor of any innocent purchaser or encumbrancer for value.

title: 1. CORPORATIONS


citation: CORP § 1100

text: Any two or more corporations may be merged into one of those corporations. A corporation may merge with one or more domestic corporations (Section 167), social purpose corporations (Section 171.08), foreign corporations (Section 171), or other business entities (Section 174.5) pursuant to this chapter. Mergers in which a foreign corporation but no other business entity is a constituent party are governed by Section 1108, mergers in which a social purpose corporation but no other business entity is a constituent party are governed by Section 1112.5, and mergers in which an other business entity is a constituent party are governed by Section 1113.

history: (History: Amended by Stats. 2014, Ch. 694, Sec. 5. (SB 1301) Effective January 1, 2015.)

title: 1. CORPORATIONS

chapter: 11. Merger

path: 1. CORPORATIONS > 1. GENERAL CORPORATION LAW > 11. Merger


citation: CORP § 1101

text:
(a) The board of each corporation that desires to merge shall approve an agreement of merger. The constituent corporations shall be parties to the agreement of merger and other persons, including a parent party (Section 1200), may be parties to the agreement of merger. The agreement shall state all of the following:

(1) The terms and conditions of the merger.

(2) The amendments, subject to Sections 900 and 907, to the articles of the surviving corporation to be effected by the merger, if any. If any amendment changes the name of the surviving corporation the new name may be the same as or similar to the name of a disappearing domestic or foreign corporation, subject to subdivision (b) of Section 201.

(3) The name and place of incorporation of each constituent corporation and which of the constituent corporations is the surviving corporation.

(4) The manner of converting the shares of each of the constituent corporations into shares or other securities of the surviving corporation and, if any shares of any of the constituent corporations are not to be converted solely into shares or other securities of the surviving corporation, the cash, rights, securities, or other property which the holders of those shares are to receive in exchange for the shares, which cash, rights, securities, or other property may be in addition to or in lieu of shares or other securities of the surviving corporation, or that the shares are canceled without consideration.

(5) Other details or provisions as are desired, if any, including, without limitation, a provision for the payment of cash in lieu of fractional shares or for any other arrangement with respect thereto consistent with the provisions of Section 407.

(b) Each share of the same class or series of any constituent corporation (other than the cancellation of shares held by a constituent corporation or its parent or a wholly owned subsidiary of either in another constituent corporation) shall, unless all shareholders of the class or series consent and except as provided in Section 407, be treated equally with respect to any distribution of cash, rights, securities, or other property. Notwithstanding paragraph (4) of subdivision (a), except in a short-form merger, and in the merger of a corporation into its subsidiary in which it owns at least 90 percent of the outstanding shares of each class, the nonredeemable common shares or nonredeemable equity securities of a constituent corporation may be converted only into nonredeemable common shares of the surviving party or a parent party if a constituent corporation or its parent owns, directly or indirectly, before the merger shares of another constituent corporation representing more than 50 percent of the voting power of the other constituent corporation before the merger, unless all of the shareholders of the class consent and except as provided in Section 407.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 20. (SB 1202) Effective January 1, 2023.)

title: 1. CORPORATIONS


text: Subdivision (c) of Section 1113 and subdivision (b) of Section 1101 do not apply to any transaction if the Commissioner of Financial Protection and Innovation, the Insurance Commissioner, or the Public Utilities Commission has approved the terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section 25142 or Section 1209, 5750, or 5802 of the Financial Code, Section 838.5 of the Insurance Code, or Section 822 of the Public Utilities Code.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 21. (SB 1202) Effective January 1, 2023.)

title: 1. CORPORATIONS


citation: CORP § 1102

text: Each corporation shall sign the agreement by its chairperson of the board, president or a vice president and secretary or an assistant secretary acting on behalf of their respective corporations.

history: (History: Amended by Stats. 2015, Ch. 98, Sec. 9. (SB 351) Effective January 1, 2016.)

title: 1. CORPORATIONS


citation: CORP § 1103

text: After approval of a merger by the board and any approval of the outstanding shares (Section 152) required by Chapter 12 (commencing with Section 1200), the surviving corporation shall file a copy of the agreement of merger with an officers’ certificate of each constituent corporation attached stating the total number of outstanding shares of each class entitled to vote on the merger, that the principal terms of the agreement in the form attached were approved by that corporation by a vote of a number of shares of each class which equaled or exceeded the vote required, specifying each class entitled to vote and the percentage vote required of each class, or that the merger agreement was entitled to be and was approved by the board alone under the provisions of Section 1201. If equity securities of a parent of a constituent corporation are to be issued in the merger, the officers’ certificate of that constituent corporation shall state either that no vote of the shareholders of the parent was required or that the required vote was obtained. The merger and any amendment of the articles of the surviving corporation contained in the merger agreement shall thereupon be effective (subject to subdivision (c) of Section 110 and subject to the provisions of Section 1108) and the several parties thereto shall be one corporation. The Secretary of State may certify a copy of the merger agreement separate from the officers’ certificates attached thereto.

history: (History: Amended by Stats. 2006, Ch. 773, Sec. 1. Effective September 29, 2006.)

title: 1. CORPORATIONS


citation: CORP § 1104

text: Any amendment to the agreement may be adopted and the agreement so amended may be approved by the board and, if it changes any of the principal terms of the agreement, by the outstanding shares (Section 152) (if required by Chapter 12) of any constituent corporation in the same manner as the original agreement. If the agreement so amended is approved by the board and the outstanding shares (if required) of each of the corporations, the agreement so amended shall then constitute the agreement of merger.

title: 1. CORPORATIONS


citation: CORP § 1105

text: The board may, in its discretion, abandon a merger, subject to the contractual rights, if any, of third parties, including other constituent corporations, without further approval by the outstanding shares (Section 152), at any time before the merger is effective.

history: (History: Repealed and added by Stats. 1975, Ch. 682.)

title: 1. CORPORATIONS


citation: CORP § 1106

text: A copy of an agreement of merger certified on or after the effective date by an official having custody thereof has the same force in evidence as the original and, except as against the state, is conclusive evidence of the performance of all conditions precedent to the merger, the existence on the effective date of the surviving corporation and the performance of the conditions necessary to the adoption of any amendment to the articles contained in the agreement of merger.

title: 1. CORPORATIONS


citation: CORP § 1107

text:
(a) Upon merger pursuant to this chapter the separate existence of the disappearing corporations ceases and the surviving corporation shall succeed, without other transfer, to all the rights and property of each of the disappearing corporations and shall be subject to all the debts and liabilities of each in the same manner as if the surviving corporation had itself incurred them.

(b) For purposes of subdivision (a), a surviving corporation may succeed without the payment of any local agency transfer fee to all licenses, permits, registrations, and other privileges granted by any local agency provided the merger does not result in a change of ownership. Examples of mergers that do not result in a change of ownership are mergers between any of the following: (1) a corporation and its wholly owned subsidiary; (2) a corporation and the wholly owned subsidiary of that corporation’s wholly owned subsidiary; or (3) two wholly owned subsidiaries of the same parent corporation. The surviving corporation shall be subject to the same duties and obligations in connection with the license, permit, registration, or other privileges acquired from the disappearing corporations.

(c) All rights of creditors and all liens upon the property of each of the constituent corporations shall be preserved unimpaired, provided that any liens upon property of a disappearing corporation shall be limited to the property affected thereby immediately prior to the time the merger is effective.

(d) Any action or proceeding pending by or against any disappearing corporation may be prosecuted to judgment, which shall bind the surviving corporation, or the surviving corporation may be proceeded against or substituted in its place.

(e) Nothing in subdivision (b) shall limit or restrict a tax assessor from reassessing real property upon transfer of title. Privileges granted by any local agency do not include property tax assessments.

(f) Nothing in subdivision (b) shall limit or restrict a local agency from reevaluating privileges received by a successor corporation from disappearing corporations if the local agency determines in its sole discretion that the reevaluation is necessary for public health, safety, or welfare purposes.

(g) For purposes of this section, “local agency” means a county, city, city and county, political subdivision, district, or municipal corporation.

history: (History: Amended by Stats. 1998, Ch. 381, Sec. 1. Effective January 1, 1999.)

title: 1. CORPORATIONS


text:
(a) Upon merger pursuant to this chapter, a surviving domestic or foreign corporation or other business entity shall be deemed to have assumed the liability of each disappearing domestic or foreign corporation or other business entity that is taxed under Part 10 (commencing with Section 17001) of, or under Part 11 (commencing with Section 23001) of, Division 2 of the Revenue and Taxation Code for the following:

(1) To prepare and file, or to cause to be prepared and filed, tax and information returns otherwise required of that disappearing entity as specified in Chapter 2 (commencing with Section 18501) of Part 10.2 of Division 2 of the Revenue and Taxation Code.

(2) To pay any tax liability determined to be due.

(b) If the surviving entity is a domestic limited liability company, domestic corporation, or registered limited liability partnership or a foreign limited liability company, foreign limited liability partnership, or foreign corporation that is registered or qualified to do business in California, the Secretary of State shall notify the Franchise Tax Board of the merger.

history: (History: Amended by Stats. 2006, Ch. 773, Sec. 2. Effective September 29, 2006.)

title: 1. CORPORATIONS


citation: CORP § 1108

text:
(a) The merger of any number of domestic corporations with any number of foreign corporations may be effected if the foreign corporations are authorized by the laws under which they are formed to effect the merger. The surviving corporation may be any one of the constituent corporations and shall continue to exist under the laws of the state or place of its incorporation.

(b) If the surviving corporation is a domestic corporation, the merger proceedings with respect to that corporation and any domestic disappearing corporation shall conform to the provisions of this chapter governing the merger of domestic corporations, but if the surviving corporation is a foreign corporation, then, subject to the requirements of subdivision (d) and of Section 407 and Chapters 12 (commencing with Section 1200) and 13 (commencing with Section 1300) (with respect to any domestic constituent corporations), the merger proceedings may be in accordance with the laws of the state or place of incorporation of the surviving corporation.

(c) If the surviving corporation is a domestic corporation, the agreement and the officers’ certificate of each domestic or foreign constituent corporation shall be filed as provided in Section 1103, or the certificate of ownership shall be filed as provided in Section 1110, and thereupon, subject to subdivision (c) of Section 110, the merger shall be effective as to each domestic constituent corporation; and each foreign disappearing corporation that is qualified for the transaction of intrastate business shall by virtue of the filing, subject to subdivision (c) of Section 110, automatically surrender its right to transact intrastate business.

(d) If the surviving corporation is a foreign corporation, the merger shall become effective in accordance with the law of the jurisdiction in which it is organized, but, except as provided in subdivision (e), the merger shall be effective as to any domestic disappearing corporation as of the time of effectiveness in the foreign jurisdiction upon the filing in this state as required by this subdivision. There shall be filed as to the domestic disappearing corporation or corporations the documents described in any one of the following paragraphs:

(1) A copy of the agreement, certificate or other document filed by the surviving foreign corporation in the state or place of its incorporation for the purpose of effecting the merger, which copy shall be certified by the public officer having official custody of the original.

(2) An executed counterpart of the agreement, certificate or other document filed by the surviving foreign corporation in the state or place of its incorporation for the purpose of effecting the merger.

(3) A copy of the agreement of merger with an officers’ certificate of the surviving foreign corporation and of each constituent domestic corporation attached, which officers’ certificates shall conform to the requirements of Section 1103.

(4) A certificate of ownership pursuant to Section 1110.

(e) If the date of the filing in this state pursuant to subdivision (d) is more than six months after the time of the effectiveness in the foreign jurisdiction, or if the powers of the domestic corporation are suspended at the time of effectiveness in the foreign jurisdiction, the merger shall be effective as to the domestic disappearing corporation or corporations as of the date of filing in this state. Each foreign disappearing corporation that is qualified for the transaction of intrastate business shall, by virtue of the filing pursuant to subdivision (d), automatically surrender its right to transact intrastate business as of the date of filing in this state regardless of the time of effectiveness as to a domestic disappearing corporation.

(f) The provisions of the last two sentences of Section 1101 and Chapter 12 (commencing with Section 1200) and Chapter 13 (commencing with Section 1300) apply to the rights of the shareholders of any of the constituent corporations that are domestic corporations and of any domestic corporation that is a parent party of any foreign constituent corporation.

history: (History: Amended by Stats. 2006, Ch. 773, Sec. 3. Effective September 29, 2006.)

title: 1. CORPORATIONS


citation: CORP § 1109

text: Whenever a domestic or foreign corporation or domestic or foreign other business entity having any real property in this state merges or consolidates with another domestic or foreign corporation or other business entity pursuant to the laws of this state or of the state or place in which any constituent party to the merger was incorporated or organized, and the laws of the state or place of incorporation or organization (including this state) of any disappearing party to the merger provide substantially that the making and filing of the agreement of merger or consolidation or certificate of ownership or certificate of merger vests in the surviving or consolidated party to the merger all the real property of any disappearing party to the merger, the filing for record in the office of the county recorder of any county in this state in which any of the real property of that disappearing party to the merger is located of a copy of the agreement of merger or consolidation or certificate of ownership or certificate of merger, certified by the Secretary of State or an authorized public official of the state or place pursuant to the laws of which the merger or consolidation is effected, shall evidence record ownership in the surviving or consolidated party to the merger, of all interest of the disappearing party to the merger in and to the real property located in that county.

history: (History: Amended by Stats. 1999, Ch. 437, Sec. 9.5. Effective January 1, 2000.)

title: 1. CORPORATIONS


citation: CORP § 1110

text:
(a) If a domestic corporation owns all the outstanding shares, or owns less than all the outstanding shares but at least 90 percent of the outstanding shares of each class, of a corporation or corporations, domestic or foreign, the merger of the subsidiary corporation or corporations into the parent corporation or the merger into the subsidiary corporation of the parent corporation and any other subsidiary corporation or corporations, may be effected by a resolution or plan of merger adopted and approved by the board of the parent corporation and the filing of a certificate of ownership as provided in subdivision (e). The resolution or plan of merger shall provide for the merger and shall provide that the surviving corporation assumes all the liabilities of each disappearing corporation and shall include any other provisions required by this section.

(b) If the parent corporation owns less than all the outstanding shares but at least 90 percent of the outstanding shares of each class of the subsidiary corporation that is a party to the merger, the resolution or plan of merger also shall set forth the securities, cash, property, or rights to be issued, paid, delivered, or granted upon surrender of each outstanding share of the subsidiary corporation not owned by the parent corporation and the entire resolution or plan of merger as well as the consideration to be received for each share of the subsidiary corporation not owned by the parent corporation, shall be approved by the board of that subsidiary corporation.

(c) If the parent corporation is to be merged into one of its subsidiary corporations, the resolution or plan of merger also shall provide for the pro rata conversion of the outstanding shares of the parent corporation into shares of the surviving subsidiary corporation. In this case, the entire resolution or plan of merger shall be approved by the board of the surviving subsidiary corporation and, if the merger, but for the operation of this section, would be a merger reorganization (Section 181) the principal terms of which would be required to be approved by the outstanding shares (Section 152) of any class of the parent corporation pursuant to subdivision (d) of Section 1201, the principal terms of the resolution or plan of merger shall be approved by the outstanding shares (Section 152) of that same class of the parent corporation.

(d) In any merger pursuant to this section, the resolution or plan of merger may provide for the amendment of the articles of the surviving corporation to change its name, subject to Section 201, regardless of whether the name so adopted is the same as or similar to that of one of the disappearing corporations. The provision shall establish the wording of the amendment pursuant to paragraph (2) of subdivision (a) of Section 907 and the resolution or plan of merger shall not provide for the amendment of the articles of the surviving corporation other than to change its name.

(e) After the required approval or approvals of the resolution or plan of merger, a certificate of ownership consisting of an officers’ certificate of the parent corporation shall be filed, and a copy thereof for each domestic subsidiary corporation and qualified foreign disappearing subsidiary corporation which is a party to the merger shall also be filed. The certificate of ownership shall:

(1) Identify the parent and subsidiary corporation or corporations.

(2) Set forth the share ownership by the parent corporation of each subsidiary corporation as 100 percent of the outstanding shares or as at least 90 percent of the outstanding shares of each class, as the case may be.

(3) Set forth the resolution or plan of merger.

(4) Set forth approval of the resolution or plan of merger by the board of the parent corporation.

(5) Set forth other approvals of the resolution or plan of merger as required under subdivision (b) or (c), if applicable.

(f) Upon the filing of the certificate of ownership, the merger shall be effective and any amendment of the articles of the surviving corporation set forth in the certificate shall be effective.

(g) A merger pursuant to this section may be effected if the parent corporation is a foreign corporation and if at least one subsidiary corporation is a domestic corporation but in such a case the certificate of ownership prepared as in subdivision (e) or the document required by subdivision (d) of Section 1108 shall be filed as to each domestic and qualified foreign subsidiary corporation, but no filing shall be made as to the foreign parent corporation. No merger into or with a foreign corporation may be effected as provided by this section unless the laws of the state or place of its incorporation permit that action.

(h) In the event all of the outstanding shares of a subsidiary domestic corporation party to a merger effected under this section are not owned by the parent corporation immediately prior to the merger, the parent corporation shall, at least 20 days before the effective date of the merger, give notice to each shareholder of such subsidiary corporation that the merger will become effective on or after a specified date. The notice shall contain a copy of the resolution or plan of merger and the information required by subdivision (a) of Section 1301. The notice shall be sent by mail addressed to the shareholder at the address of the shareholder as it appears on the records of the corporation. The shareholder shall have the right to demand payment of cash for the shares of the shareholder pursuant to Chapter 13 (commencing with Section 1300).

(i) If an agreement of merger is entered into between a parent corporation and one or more of its subsidiary corporations and the share ownership requirements of subdivision (a) are met, the agreement of merger may be filed as a plan of merger with a certificate of ownership in accordance with the requirements of this section, in which case Sections 1101, 1102, 1103, 1200, 1201, and 1202 shall not apply; or the agreement of merger may be filed pursuant to Section 1103, in which case this section shall not apply.

history: (History: Amended by Stats. 2006, Ch. 773, Sec. 4. Effective September 29, 2006.)

title: 1. CORPORATIONS


citation: CORP § 1111

text: If any disappearing corporation in a merger is a close corporation and the surviving corporation is not a close corporation, the merger shall be approved by the affirmative vote of at least two-thirds of each class of the outstanding shares of such disappearing corporation; provided, however, that the articles may provide for a lesser vote, but not less than a majority of the outstanding shares of each class.

history: (History: Amended by Stats. 1976, Ch. 641.)

title: 1. CORPORATIONS


citation: CORP § 1112

text: If a disappearing corporation in a merger is a corporation governed by this division and the surviving corporation is a nonprofit public benefit corporation, a nonprofit mutual benefit corporation, or a nonprofit religious corporation, the merger shall be approved by all of the outstanding shares of all classes of the disappearing corporation, regardless of limitations or restrictions on the voting rights thereof, notwithstanding any provision of Chapter 12 (commencing with Section 1200).

history: (History: Added by Stats. 1979, Ch. 711.)

title: 1. CORPORATIONS


text:
If a disappearing corporation in a merger is a corporation governed by this division and the surviving corporation is a social purpose corporation, both of the following shall apply:

(a) The merger shall be approved by the affirmative vote of at least two-thirds of each class, or a greater vote if required in the articles, of the outstanding shares (Section 152) of the disappearing corporation, notwithstanding any provision of Chapter 12 (commencing with Section 1200).

(b) The shareholders of the disappearing corporation shall have all of the rights under Chapter 13 (commencing with Section 1300) of the shareholders of a corporation involved in a reorganization requiring the approval of its outstanding shares (Section 152), and the disappearing corporation shall have all of the obligations under Chapter 13 (commencing with Section 1300) of a corporation involved in the reorganization.

history: (History: Amended by Stats. 2014, Ch. 694, Sec. 6. (SB 1301) Effective January 1, 2015.)

title: 1. CORPORATIONS