Following are summaries of bills enacted into law that may directly affect filings made and business conducted with the Secretary of State’s office. Unless otherwise indicated, these measures took effect on January 1, 2007. To research any legislation or existing law, please refer to the California Legislative Information website.
Business Entities
Chapter 773 (AB 2341 Villines)
Effective September 29, 2006
This act, effective September 29, 2006 as a tax levy, amended California law relating to the filing requirements of a terminating or merging corporation, limited liability company and limited liability partnership. This act:
- Eliminates the requirement of a terminating corporation, limited liability company or limited liability partnership to obtain a Tax Clearance Certificate from the Franchise Tax Board. This act also requires the termination document filed with the Secretary of State to include a statement that the final franchise tax return, as described by § 23332 of the Revenue and Taxation Code, has been or will be filed with the Franchise Tax Board as required under Part 10.2 (commencing with § 18401) of Division 2 of the Revenue and Taxation Code. Updated forms are available on our Form, Samples & Fees webpage;
- Eliminates the requirement of a merging corporation, limited liability company or limited liability partnership to obtain a Tax Clearance Certificate from the Franchise Tax Board;
- Adds a new provision that all domestic stock corporations that have filed a Certificate of Dissolution without a Tax Clearance Certificate ("conditionally dissolved") shall be finally dissolved as of the date of filing of the Certificate of Dissolution if a Tax Clearance Certificate has not been issued as of the effective date of the Act; and
- Allows entities to avoid the minimum franchise tax or annual tax for the current taxable year if 1) the entity files a final tax return; 2) the entity does not conduct any business after the end of the preceding taxable year; and 3) within 12 months of the filing date of the final tax return, the entity files appropriate paperwork with the California Secretary of State to terminate the entity.
Questions regarding franchise tax requirements must be directed to the Franchise Tax Board, or call the Franchise Tax Board at (800) 852–5711 (from within the U.S.) or (916) 845–6500 (from outside the U.S.).
Chapter 426 (AB 2914 Leno)
This act extends the sunset date of January 1, 2007 on licensed architects' ability to organize as limited liability partnerships (LLPs) to January 1, 2012. This act provides that, on and after January 1, 2008, the total aggregate limit of liability under the policy or policies of insurance or the amount of security for those partnerships providing architectural services with 5 or fewer licensed persons shall be $1,000,000, and for partnerships with more than 5 licensees, shall be an additional $100,000 for each additional licensee, up to the $5,000,000 maximum. This act also incorporates additional changes to § 16101 of the Corporations Code, proposed by AB 339.
Chapter 495 (AB 339 Harman)
Effective January 1, 2008
This act established the Uniform Limited Partnership Act of 2008 (the Act of 2008), which provides the organization and governing provisions for a domestic (California) limited partnership (LP) and foreign (out–of–state or out–of–country) LP. Limited partnerships filed prior to January 1, 2008 will continue to be governed under the Uniform Limited Partnership Act and the California Revised Limited Partnership Act, unless the limited partnership elects to be governed by the new act or until January 1, 2010 when the Act of 2008 will govern all limited partnerships. The Act of 2008 can be found in the California Corporations Code commencing with § 15900.
Chapter 324 (AB 2588 Runner)
This act requires the Secretary of State to reinstate a terminated business entity to active status upon a court finding that factual representations in support of the termination document are materially false or the submission of the termination document for filing with the Secretary of State is fraudulent or upon other grounds warranting reinstatement. As defined by this bill, the term "termination document" means: "the certificate or other document required by the Corporations Code that is the last certificate or document filed with the Secretary of State to effect the final dissolution, surrender, or cancellation of the business entity." The Secretary of State shall notify the Franchise Tax Board of the reinstatement of the business entity.
Chapter 57 (SB 1183 Ackerman)
This act eliminates a two–year sunset provision for a filed amendment to articles of incorporation that imposes a "supermajority vote." This act also provides that a foreign corporation shall not be considered to be transacting intrastate business merely because of its status as an owner of various types of interests in business entities, which are transacting intrastate business.
Special Filings
Chapter 605 (AB 630 Chu)
This act requires the Secretary of State to conduct background checks on immigration consultants and to disqualify those who have been convicted of a felony, certain misdemeanor offenses, or who have failed to disclose certain arrests or convictions on a form filed with the Secretary of State. The background check is required for every person engaged in the business or acting in the capacity of an immigration consultant who was bonded and qualified as such on or before December 31, 2006 and from all new immigration consultants. This act requires that the photograph of the immigration consultant who has complied with all requirements be posted on the Secretary of State’s website. This act also requires the Secretary of State to issue a cease and desist order to a person who fails to comply with the bonding requirements of the law or who does not satisfactorily pass the back ground check and to notify the Attorney General of the person’s noncompliance.
