Friday, October 14, 2011

Round Up of 2011 California Nonprofit Legislation

Round'em up!
Governor Jerry Brown signed into law hundreds of pieces of legislation these past few weeks. Most of these laws will go into effect January 1, 2011. The following laws, in particular, impact nonprofit and tax-exempt organizations in some manner:
  • AB 289, Cedillo - Extends the sales and use tax exemption for retail items sold by thrift stores operated by nonprofit organizations to assist individuals with HIV and AIDS.
  • AB 657, Gordon - Allows businesses (including nonprofit corporations) to elect to receive email notices from the Secretary of State, in lieu of hard copy mailings. The bill also standardizes the filing requirements for different types of business entities and makes other technical changes to improve the Secretary of State's ability to administer the law.
  • AB 703, Gordon - Extends the property tax exemption t 2022 for certain lands acquired by nonprofit organizations for natural resource preservation and open-space purposes
  • AB 997, Wagner - Exempts certain qualified nonprofit corporations and charitable trusts from the requirements of the Professional Fiduciaries Act.
  • AB 1163, Brownly - Expands the law to allow the California Educational Facilities Authority to act as a conduit issuer of tax exempt bonds for private religious colleges.
  • AB 1211, Silva - As previously discussed here, makes various changes to the Corporations Code to make the law more clear with regard to the obligations and requirements for nonprofit corporations and unincorporated associations.
  • SB 436, Kehoe - Authorizes state or local agencies to allow qualified and approved nonprofits or special districts to hold property and long-term stewardship funds to mitigate adverse impacts caused by development projects
  • SB 668, Evans - Allows cities and counties to accept contributions from nonprofit or public agencies for specific land that is under a Williamson Act contract to supplement forgone property tax revenues.
In addition to the above bills, two separate bills were passed enacting new corporate forms that blend business (for-profit) corporations with nonprofit purposes:
  •  AB 361, Huffman - Authorizes the creation of a new corporate form called a "benefit corporation" and provides the rules that must be followed by these types of entities. See the press release here from B Lab, a primary proponent of the bill.
  • SB 201, DeSaulnier - Authorizes the creation of a new corporate form called a "flexible purpose corporation" and provides for the rules that must be followed by these types of entities. For a thorough discussion of the flexible purpose corporation, see the FAQs from the California Working Group for New Corporate Forms, who drafted the legislation, available at the Business for Good Blog of R.Todd Johnson, one of the working group members. (h/t Gene Takagi)
For the complete text and current status information for these or any other bills in the California legislature, go to the Bill Information page of the Official California Legislative Information website,

Monday, October 3, 2011

Governor Brown Signs AB 1211 - Changes to California Nonprofit Corporation Law

Governor Brown signed AB 1211 today, and this bill will become effective January 1, 2012.  AB 1211 was proposed and sponsored by the Nonprofit Organizations Committee of the Business Law Section of the State Bar of California and authored by Assembly Member Jim Silva.  Much like AB 1233 , the NPO Committee sponsored bill from the prior 2009-2010 legislative session,  AB 1211 makes primarily technical, clarifying and non-controversial changes to the California Nonprofit Corporation law.  Among the specific changes enacted by this bill:

1. AB 1211 will make it clearer as to when the vote of an interested director is not required for a unanimous written consent. This is important because "interested directors" of public benefit corporations who vote on a transaction in which they are interested face certain liabilities, and the transaction itself may be void or voidable. The amendments in AB1211 clarify the law so that nonprofit corporations know who is an "interested director" and whether their vote is required for the corporation to act by written consent.

2. AB 1211 will exempt ballot measure committees formed as public benefit corporations from the Attorney General's supervision upon dissolution. The current Corporations Code requires all public benefit corporations to obtain a waiver from the Attorney General's office in order to file dissolution documents with the Secretary of State. Ballot measure corporations are not currently exempted from this requirement, despite the fact that the primary oversight of them is by the California Fair Political Practices Commission. The result has been that public benefit ballot measure corporations have to submit substantial documentation to the Attorney General's office in order to obtain the waiver letter, essentially a formality. This has needlessly involved the waste of time, resources, attention, and money by the Attorney General's office and the dissolving public benefit ballot measure corporation.

3. Finally, AB 1211 would provide cross-references to various other California Code sections that apply to nonprofit corporations and unincorporated associations. In particular, the bill adds references to the provisions of Government Code Section 12586. These provisions affecting the organization, governance and reporting obligations of nonprofit organizations are within the subject matter scope of existing sections of the Corporations Code, but were codified in the Government Code in the 2004 California Nonprofit Integrity Act. These cross-references in the Corporations Code will help make nonprofit organizations and practitioners aware of these significant obligations.