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CALIFORNIA LEGAL INFORMATION
Forming a Corporation--Law and Links
California Corporate Code.
California "Statement of Information" form.
California Articles of Incorporation.
California online corporate name search.
Selected California Corporate Statutes
- Corporate Code Section 200.
(a) One or more natural persons, partnerships, associations or
corporations, domestic or foreign, may form a corporation under this
division by executing and filing articles of incorporation.
(b) If initial directors are named in the articles, each director
named in the articles shall sign and acknowledge the articles; if
initial directors are not named in the articles, the articles shall
be signed by one or more persons described in subdivision (a) who
thereupon are the incorporators of the corporation.
(c) The corporate existence begins upon the filing of the articles
and continues perpetually, unless otherwise expressly provided by
law or in the articles.
- Corporate Code Section 201.
(a) The Secretary of State shall not file articles setting
forth a name in which "bank," "trust," "trustee" or related words
appear, unless the certificate of approval of the Commissioner of
Financial Institutions is attached thereto. This subdivision does
not apply to the articles of any corporation subject to the Banking
Law on which is endorsed the approval of the Commissioner of
Financial Institutions.
(b) The Secretary of State shall not file articles which set forth
a name which is likely to mislead the public or which is the same
as, or resembles so closely as to tend to deceive, the name of a
domestic corporation, the name of a foreign corporation which is
authorized to transact intrastate business or has registered its name
pursuant to Section 2101, a name which a foreign corporation has
assumed under subdivision (b) of Section 2106, a name which will
become the record name of a domestic or foreign corporation upon the
effective date of a filed corporate instrument where there is a
delayed effective date pursuant to subdivision (c) of Section 110 or
subdivision (c) of Section 5008, or a name which is under reservation
for another corporation pursuant to this section, Section 5122,
Section 7122, or Section 9122, except that a corporation may adopt a
name that is substantially the same as an existing domestic
corporation or foreign corporation which is authorized to transact
intrastate business or has registered its name pursuant to Section
2101, upon proof of consent by such domestic or foreign corporation
and a finding by the Secretary of State that under the circumstances
the public is not likely to be misled.
The use by a corporation of a name in violation of this section
may be enjoined notwithstanding the filing of its articles by the
Secretary of State.
(c) Any applicant may, upon payment of the fee prescribed therefor
in the Government Code, obtain from the Secretary of State a
certificate of reservation of any name not prohibited by subdivision
(b), and upon the issuance of the certificate the name stated therein
shall be reserved for a period of 60 days. The Secretary of State
shall not, however, issue certificates reserving the same name for
two or more consecutive 60-day periods to the same applicant or for
the use or benefit of the same person, partnership, firm or
corporation; nor shall consecutive reservations be made by or for the
use or benefit of the same person, partnership, firm or corporation
of names so similar as to fall within the prohibitions of subdivision
(b).
- Corporate Code Section 201.5. The Secretary of State shall not file articles in which the business is to be an insurer unless the certificate of the Insurance
Commissioner approving the corporate name is attached thereto.
- Corporate Code Section 202. The articles of incorporation shall set forth:
(a) The name of the corporation; provided, however, that in order
for the corporation to be subject to the provisions of this division
applicable to a close corporation (Section 158), the name of the
corporation must contain the word "corporation", "incorporated" or
"limited" or an abbreviation of one of such words.
(b)
- The applicable one of the following statements:
- The purpose of the corporation is to engage in any lawful act
or activity for which a corporation may be organized under the
General Corporation Law of California other than the banking
business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code; or
- The purpose of the corporation is to engage in the profession
of ____ (with the insertion of a profession permitted to be
incorporated by the California Corporations Code) and any other
lawful activities (other than the banking or trust company business)
not prohibited to a corporation engaging in such profession by
applicable laws and regulations.
- In case the corporation is a corporation subject to the
Banking Law, the articles shall set forth a statement of purpose
which is prescribed in the applicable provision of the Banking Law.
- In case the corporation is a corporation subject to the
Insurance Code as an insurer, the articles shall additionally state
that the business of the corporation is to be an insurer.
- If the corporation is intended to be a "professional
corporation" within the meaning of the Moscone-Knox Professional
Corporation Act (Part 4 (commencing with Section 13400) of Division
3), the articles shall additionally contain the statement required by
Section 13404.
The articles shall not set forth any further or additional
statement with respect to the purposes or powers of the corporation,
except by way of limitation or except as expressly required by any
law of this state other than this division or any federal or other
statute or regulation (including the Internal Revenue Code and
regulations thereunder as a condition of acquiring or maintaining a
particular status for tax purposes).
(c) The name and address in this state of the corporation's
initial agent for service of process in accordance with subdivision
(b) of Section 1502.
(d) If the corporation is authorized to issue only one class of
shares, the total number of shares which the corporation is
authorized to issue.
(e) If the corporation is authorized to issue more than one class
of shares, or if any class of shares is to have two or more series:
- The total number of shares of each class the corporation is
authorized to issue, and the total number of shares of each series
which the corporation is authorized to issue or that the board is
authorized to fix the number of shares of any such series;
- The designation of each class, and the designation of each
series or that the board may determine the designation of any such
series; and
- The rights, preferences, privileges and restrictions granted
to or imposed upon the respective classes or series of shares or the
holders thereof, or that the board, within any limits and
restrictions stated, may determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly
unissued class of shares or any wholly unissued series of any class
of shares. As to any series the number of shares of which is
authorized to be fixed by the board, the articles may also authorize
the board, within the limits and restrictions stated therein or
stated in any resolution or resolutions of the board originally
fixing the number of shares constituting any series, to increase or
decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such series subsequent to
the issue of shares of that series. In case the number of shares of
any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption
of the resolution originally fixing the number of shares of such
series.
- Corporate Code Section 203. Except as specified in the articles or in any shareholders' agreement, no distinction shall exist between classes or series of
shares or the holders thereof.
- Corporate Code Section 204. The articles of incorporation may set forth:
(a) Any or all of the following provisions, which shall not be
effective unless expressly provided in the articles:
- Granting, with or without limitations, the power to levy
assessments upon the shares or any class of shares.
- Granting to shareholders preemptive rights to subscribe to any
or all issues of shares or securities.
- Special qualifications of persons who may be shareholders.
- A provision limiting the duration of the corporation's
existence to a specified date.
- A provision requiring, for any or all corporate actions
(except as provided in Section 303, subdivision (b) of Section 402.5,
subdivision (c) of Section 708 and Section 1900) the vote of a
larger proportion or of all of the shares of any class or series, or
the vote or quorum for taking action of a larger proportion or of all
of the directors, than is otherwise required by this division.
- A provision limiting or restricting the business in which the
corporation may engage or the powers which the corporation may
exercise or both.
- A provision conferring upon the holders of any evidences of
indebtedness, issued or to be issued by the corporation, the right to
vote in the election of directors and on any other matters on which
shareholders may vote.
- A provision conferring upon shareholders the right to
determine the consideration for which shares shall be issued.
- A provision requiring the approval of the shareholders
(Section 153) or the approval of the outstanding shares (Section 152)
for any corporate action, even though not otherwise required by this
division.
- Provisions eliminating or limiting the personal liability of
a director for monetary damages in an action brought by or in the
right of the corporation for breach of a director's duties to the
corporation and its shareholders, as set forth in Section 309,
provided, however, that (A) such a provision may not eliminate or
limit the liability of directors (i) for acts or omissions that
involve intentional misconduct or a knowing and culpable violation of
law, (ii) for acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders
or that involve the absence of good faith on the part of the
director, (iii) for any transaction from which a director derived an
improper personal benefit, (iv) for acts or omissions that show a
reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or
should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the corporation or
its shareholders, (v) for acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the
director's duty to the corporation or its shareholders, (vi) under
Section 310, or (vii) under Section 316, (B) no such provision shall
eliminate or limit the liability of a director for any act or
omission occurring prior to the date when the provision becomes
effective, and (C) no such provision shall eliminate or limit the
liability of an officer for any act or omission as an officer,
notwithstanding that the officer is also a director or that his or
her actions, if negligent or improper, have been ratified by the
directors.
- A provision authorizing, whether by bylaw, agreement, or
otherwise, the indemnification of agents (as defined in Section 317)
in excess of that expressly permitted by Section 317 for those agents
of the corporation for breach of duty to the corporation and its
stockholders, provided, however, that the provision may not provide
for indemnification of any agent for any acts or omissions or
transactions from which a director may not be relieved of liability
as set forth in the exception to paragraph (10) or as to
circumstances in which indemnity is expressly prohibited by Section
317.
Notwithstanding this subdivision, in the case of a close
corporation any of the provisions referred to above may be validly
included in a shareholders' agreement. Notwithstanding this
subdivision, bylaws may require for all or any actions by the board
the affirmative vote of a majority of the authorized number of
directors. Nothing contained in this subdivision shall affect the
enforceability, as between the parties thereto, of any lawful
agreement not otherwise contrary to public policy.
(b) Reasonable restrictions upon the right to transfer or
hypothecate shares of any class or classes or series, but no
restriction shall be binding with respect to shares issued prior to
the adoption of the restriction unless the holders of such shares
voted in favor of the restriction.
(c) The names and addresses of the persons appointed to act as
initial directors.
(d) Any other provision, not in conflict with law, for the
management of the business and for the conduct of the affairs of the
corporation, including any provision which is required or permitted
by this division to be stated in the bylaws.
- Corporate Code Section 204.5.
(a) If the articles of a corporation include a provision reading substantially as follows: "The liability of the directors of
the corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law"; the corporation
shall be considered to have adopted a provision as authorized by
paragraph (10) of subdivision (a) of Section 204 and more specific
wording shall not be required.
(b) This section shall not be construed as setting forth the
exclusive method of adopting an article provision as authorized by
paragraph (10) of subdivision (a) of Section 204.
(c) This section shall not change the otherwise applicable
standards or duties to make full and fair disclosure to shareholders
when approval of such a provision is sought.
- Corporate Code Section 210. If initial directors have not been named in the articles, the incorporator or incorporators, until the directors are elected, may
do whatever is necessary and proper to perfect the organization of
the corporation, including the adoption and amendment of bylaws of
the corporation and the election of directors and officers.
- Corporate Code Section 211. Bylaws may be adopted, amended or repealed either by approval of the outstanding shares (Section 152) or by the approval of the
board, except as provided in Section 212. Subject to subdivision (a)
(5) of Section 204, the articles or bylaws may restrict or eliminate
the power of the board to adopt, amend or repeal any or all bylaws.
- Corporate Code Section 212.
(a) The bylaws shall set forth (unless such provision is
contained in the articles, in which case it may only be changed by an
amendment of the articles) the number of directors of the
corporation; or that the number of directors shall be not less than a
stated minimum nor more than a stated maximum (which in no case
shall be greater than two times the stated minimum minus one), with
the exact number of directors to be fixed, within the limits
specified, by approval of the board or the shareholders (Section 153)
in the manner provided in the bylaws, subject to paragraph (5) of
subdivision (a) of Section 204. The number or minimum number of
directors shall not be less than three; provided, however, that (1)
before shares are issued, the number may be one, (2) before shares
are issued, the number may be two, (3) so long as the corporation has
only one shareholder, the number may be one, (4) so long as the
corporation has only one shareholder, the number may be two, and (5)
so long as the corporation has only two shareholders, the number may
be two. After the issuance of shares, a bylaw specifying or changing
a fixed number of directors or the maximum or minimum number or
changing from a fixed to a variable board or vice versa may only be
adopted by approval of the outstanding shares (Section 152);
provided, however, that a bylaw or amendment of the articles reducing
the fixed number or the minimum number of directors to a number less
than five cannot be adopted if the votes cast against its adoption
at a meeting or the shares not consenting in the case of action by
written consent are equal to more than 162/3 percent of the
outstanding shares entitled to vote.
(b) The bylaws may contain any provision, not in conflict with law
or the articles for the management of the business and for the
conduct of the affairs of the corporation, including but not limited
to:
- Any provision referred to in subdivision (b), (c) or (d) of
Section 204.
- The time, place and manner of calling, conducting and giving
notice of shareholders', directors' and committee meetings.
- The manner of execution, revocation and use of proxies.
- The qualifications, duties and compensation of directors; the
time of their annual election; and the requirements of a quorum for
directors' and committee meetings.
- The appointment and authority of committees of the board.
- The appointment, duties, compensation and tenure of officers.
- The mode of determination of holders of record of its shares.
- The making of annual reports and financial statements to the
shareholders.
- Corporate Code Section 300.
(a) Subject to the provisions of this division and any
limitations in the articles relating to action required to be
approved by the shareholders (Section 153) or by the outstanding
shares (Section 152), or by a less than majority vote of a class or
series of preferred shares (Section 402.5), the business and affairs
of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board. The board may
delegate the management of the day-to-day operation of the business
of the corporation to a management company or other person provided
that the business and affairs of the corporation shall be managed and
all corporate powers shall be exercised under the ultimate direction
of the board.
(b) Notwithstanding subdivision (a) or any other provision of this
division, but subject to subdivision (c), no shareholders'
agreement, which relates to any phase of the affairs of a close
corporation, including but not limited to management of its business,
division of its profits or distribution of its assets on
liquidation, shall be invalid as between the parties thereto on the
ground that it so relates to the conduct of the affairs of the
corporation as to interfere with the discretion of the board or that
it is an attempt to treat the corporation as if it were a partnership
or to arrange their relationships in a manner that would be
appropriate only between partners. A transferee of shares covered by
such an agreement which is filed with the secretary of the
corporation for inspection by any prospective purchaser of shares,
who has actual knowledge thereof or notice thereof by a notation on
the certificate pursuant to Section 418, is bound by its provisions
and is a party thereto for the purposes of subdivision (d). Original
issuance of shares by the corporation to a new shareholder who does
not become a party to the agreement terminates the agreement, except
that if the agreement so provides it shall continue to the extent it
is enforceable apart from this subdivision. The agreement may not be
modified, extended or revoked without the consent of such a
transferee, subject to any provision of the agreement permitting
modification, extension or revocation by less than unanimous
agreement of the parties. A transferor of shares covered by such an
agreement ceases to be a party thereto upon ceasing to be a
shareholder of the corporation unless the transferor is a party
thereto other than as a shareholder. An agreement made pursuant to
this subdivision shall terminate when the corporation ceases to be a
close corporation, except that if the agreement so provides it shall
continue to the extent it is enforceable apart from this subdivision.
This subdivision does not apply to an agreement authorized by
subdivision (a) of Section 706.
(c) No agreement entered into pursuant to subdivision (b) may
alter or waive any of the provisions of Sections 158, 417, 418, 500,
501, and 1111, subdivision (e) of Section 1201, Sections 2009, 2010,
and 2011, or of Chapters 15 (commencing with Section 1500), 16
(commencing with Section 1600), 18 (commencing with Section 1800),
and 22 (commencing with Section 2200). All other provisions of this
division may be altered or waived as between the parties thereto in a
shareholders' agreement, except the required filing of any document
with the Secretary of State.
(d) An agreement of the type referred to in subdivision (b) shall,
to the extent and so long as the discretion or powers of the board
in its management of corporate affairs is controlled by such
agreement, impose upon each shareholder who is a party thereto
liability for managerial acts performed or omitted by such person
pursuant thereto that is otherwise imposed by this division upon
directors, and the directors shall be relieved to that extent from
such liability.
(e) The failure of a close corporation to observe corporate
formalities relating to meetings of directors or shareholders in
connection with the management of its affairs, pursuant to an
agreement authorized by subdivision (b), shall not be considered a
factor tending to establish that the shareholders have personal
liability for corporate obligations.
- Corporate Code Section 301.
(a) Except as provided in Section 301.5, at each annual
meeting of shareholders, directors shall be elected to hold office
until the next annual meeting. However, to effectuate a voting shift
(Section 194.7) the articles may provide that directors hold office
for a shorter term. The articles may provide for the election of one
or more directors by the holders of the shares of any class or
series voting as a class or series.
(b) Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
- Corporate Code Section 302. The board may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a
felony.
- Corporate Code Section 303.
(a) Any or all of the directors may be removed without cause
if the removal is approved by the outstanding shares (Section 152),
subject to the following:
- Except for a corporation to which paragraph (3) is
applicable, no director may be removed (unless the entire board is
removed) when the votes cast against removal, or not consenting in
writing to the removal, would be sufficient to elect the director if
voted cumulatively at an election at which the same total number of
votes were cast (or, if the action is taken by written consent, all
shares entitled to vote were voted) and the entire number of
directors authorized at the time of the director's most recent
election were then being elected.
- When by the provisions of the articles the holders of the
shares of any class or series, voting as a class or series, are
entitled to elect one or more directors, any director so elected may
be removed only by the applicable vote of the holders of the shares
of that class or series.
- A director of a corporation whose board of directors is
classified pursuant to Section 301.5 may not be removed if the votes
cast against removal of the director, or not consenting in writing to
the removal, would be sufficient to elect the director if voted
cumulatively (without regard to whether shares may otherwise be voted
cumulatively) at an election at which the same total number of votes
were cast (or, if the action is taken by written consent, all shares
entitled to vote were voted) and either the number of directors
elected at the most recent annual meeting of shareholders, or if
greater, the number of directors for whom removal is being sought,
were then being elected.
(b) Any reduction of the authorized number of directors or
amendment reducing the number of classes of directors does not
remove any director prior to the expiration of the director's term of
office.
(c) Except as provided in this section and Sections 302 and 304, a
director may not be removed prior to the expiration of the director'
s term of office.
- Corporate Code Section 310.
(a) No contract or other transaction between a corporation and
one or more of its directors, or between a corporation and any
corporation, firm or association in which one or more of its
directors has a material financial interest, is either void or
voidable because such director or directors or such other
corporation, firm or association are parties or because such director
or directors are present at the meeting of the board or a committee
thereof which authorizes, approves or ratifies the contract or
transaction, if (1) The material facts as to the transaction and as
to such director's interest are fully disclosed or known to the
shareholders and such contract or transaction is approved by the
shareholders (Section 153) in good faith, with the shares owned by
the interested director or directors not being entitled to vote
thereon, or (2) The material facts as to the transaction and as to
such director's interest are fully disclosed or known to the board or
committee, and the board or committee authorizes, approves or
ratifies the contract or transaction in good faith by a vote
sufficient without counting the vote of the interested director or
directors and the contract or transaction is just and reasonable as
to the corporation at the time it is authorized, approved or
ratified, or (3) As to contracts or transactions not approved as
provided in paragraph (1) or (2) of this subdivision, the person
asserting the validity of the contract or transaction sustains the
burden of proving that the contract or transaction was just and
reasonable as to the corporation at the time it was authorized,
approved or ratified. A mere common directorship does not constitute
a material financial interest within the meaning of this
subdivision. A director is not interested within the meaning of this
subdivision in a resolution fixing the compensation of another
director as a director, officer or employee of the corporation,
notwithstanding the fact that the first director is also receiving
compensation from the corporation.
(b) No contract or other transaction between a corporation and any
corporation or association of which one or more of its directors are
directors is either void or voidable because such director or
directors are present at the meeting of the board or a committee
thereof which authorizes, approves or ratifies the contract or
transaction, if
- The material facts as to the transaction and as to such
director's other directorship are fully disclosed or known to the
board or committee, and the board or committee authorizes, approves
or ratifies the contract or transaction in good faith by a vote
sufficient without counting the vote of the common director or
directors or the contract or transaction is approved by the
shareholders (Section 153) in good faith, or
- As to contracts or transactions not approved as provided in
paragraph (1) of this subdivision, the contract or transaction is
just and reasonable as to the corporation at the time it is
authorized, approved or ratified.
This subdivision does not apply to contracts or transactions
covered by subdivision (a).
(c) Interested or common directors may be counted in determining
the presence of a quorum at a meeting of the board or a committee
thereof which authorizes, approves or ratifies a contract or
transaction.
- Corporate Code Section 312.
(a) A corporation shall have a chairman of the board or a
president or both, a secretary, a chief financial officer and such
other officers with such titles and duties as shall be stated in the
bylaws or determined by the board and as may be necessary to enable
it to sign instruments and share certificates. The president, or if
there is no president the chairman of the board, is the general
manager and chief executive officer of the corporation, unless
otherwise provided in the articles or bylaws. Any number of offices
may be held by the same person unless the articles or bylaws provide
otherwise.
(b) Except as otherwise provided by the articles or bylaws,
officers shall be chosen by the board and serve at the pleasure of
the board, subject to the rights, if any, of an officer under any
contract of employment. Any officer may resign at any time upon
written notice to the corporation without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a
party.
- Corporate Code Section 400.
(a) A corporation may issue one or more classes or series of
shares or both, with full, limited or no voting rights and with such
other rights, preferences, privileges and restrictions as are stated
or authorized in its articles. No denial or limitation of voting
rights shall be effective unless at the time one or more classes or
series of outstanding shares or debt securities, singly or in the
aggregate, are entitled to full voting rights; and no denial or
limitation of dividend or liquidation rights shall be effective
unless at the time one or more classes or series of outstanding
shares, singly or in the aggregate, are entitled to unlimited
dividend and liquidation rights.
(b) All shares of any one class shall have the same voting,
conversion and redemption rights and other rights, preferences,
privileges and restrictions, unless the class is divided into series.
If a class is divided into series, all the shares of any one series
shall have the same voting, conversion and redemption rights and
other rights, preferences, privileges and restrictions.
- Corporate Code Section 409.
(a) Shares may be issued:
- For such consideration as is determined from time to time by
the board, or by the shareholders if the articles so provide,
consisting of any or all of the following: money paid; labor done;
services actually rendered to the corporation or for its benefit or
in its formation or reorganization; debts or securities canceled; and
tangible or intangible property actually received either by the
issuing corporation or by a wholly owned subsidiary; but neither
promissory notes of the purchaser (unless adequately secured by
collateral other than the shares acquired or unless permitted by
Section 408) nor future services shall constitute payment or part
payment for shares of the corporation; or
- As a share dividend or upon a stock split, reverse stock
split, reclassification of outstanding shares into shares of another
class, conversion of outstanding shares into shares of another class,
exchange of outstanding shares for shares of another class or other
change affecting outstanding shares.
(b) Except as provided in subdivision (d), shares issued as
provided in this section or Section 408 shall be declared and taken
to be fully paid stock and not liable to any further call nor shall
the holder thereof be liable for any further payments under the
provisions of this division. In the absence of fraud in the
transaction, the judgment of the directors as to the value of the
consideration for shares shall be conclusive.
(c) If the articles reserve to the shareholders the right to
determine the consideration for the issue of any shares, such
determination shall be made by approval of the outstanding shares
(Section 152).
(d) A corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the
consideration to be paid therefor. On the certificate issued to
represent any such partly paid shares or, for uncertificated
securities, on the initial transaction statement for such partly paid
shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated. Upon the declaration of
any dividend on fully paid shares, the corporation shall declare a
dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
(e) The board shall state by resolution its determination of the
fair value to the corporation in monetary terms of any consideration
other than money for which shares are issued. This subdivision does
not affect the accounting treatment of any transaction, which shall
be in conformity with generally accepted accounting principles.
- Corporate Code Section 418.
(a) There shall also appear on the certificate, the initial
transaction statement, and written statements (unless stated or
summarized under subdivision (a) or (b) of Section 417) the
statements required by all of the following clauses to the extent
applicable:
- The fact that the shares are subject to restrictions upon
transfer.
- If the shares are assessable or are not fully paid, a
statement that they are assessable or the statements required by
subdivision (d) of Section 409 if they are not fully paid.
- The fact that the shares are subject to a voting agreement
under subdivision (a) of Section 706 or an irrevocable proxy under
subdivision (e) of Section 705 or restrictions upon voting rights
contractually imposed by the corporation.
- The fact that the shares are redeemable.
- The fact that the shares are convertible and the period for
conversion.
Any such statement or reference thereto (Section 174) on the face
of the certificate, the initial transaction statement, and written
statements required by paragraph (1) or (2) shall be conspicuous.
(b) Unless stated on the certificate, the initial transaction
statement, and written statements as required by subdivision (a), no
restriction upon transfer, no right of redemption and no voting
agreement under subdivision (a) of Section 706, no irrevocable proxy
under subdivision (e) of Section 705, and no voting restriction
imposed by the corporation shall be enforceable against a transferee
of the shares without actual knowledge of such restriction, right,
agreement or proxy. With regard only to liability to assessment or
for the unpaid portion of the subscription price, unless stated on
the certificate as required by subdivision (a), that liability shall
not be enforceable against a transferee of the shares. For the
purpose of this subdivision, "transferee" includes a purchaser from
the corporation.
(c) All certificates representing shares of a close corporation
shall contain in addition to any other statements required by this
section, the following conspicuous legend on the face thereof: "This
corporation is a close corporation. The number of holders of record
of its shares of all classes cannot exceed ____ (a number not in
excess of 35). Any attempted voluntary inter vivos transfer which
would violate this requirement is void. Refer to the articles,
bylaws and any agreements on file with the secretary of the
corporation for further restrictions."
(d) Any attempted voluntary inter vivos transfer of the shares of
a close corporation which would result in the number of holders of
record of its shares exceeding the maximum number specified in its
articles is void if the certificate contains the legend required by
subdivision (c).
- Corporate Code Section 600.
(a) Meetings of shareholders may be held at such place within
or without this state as may be stated in or fixed in accordance with
the bylaws. If no other place is stated or so fixed, shareholder
meetings shall be held at the principal executive office of the
corporation.
(b) An annual meeting of shareholders shall be held for the
election of directors on a date and at a time stated in or fixed in
accordance with the bylaws. However, if the corporation is a
regulated management company, as defined in Section 23701m of the
Revenue and Taxation Code, a meeting of shareholders shall be held as
required by the Federal Investment Company Act of 1940 (15 U.S.C.
Sec. 80a-1, et seq.). Any other proper business may be transacted at
the annual meeting.
(c) If there is a failure to hold the annual meeting for a period
of 60 days after the date designated therefor or, if no date has been
designated, for a period of 15 months after the organization of the
corporation or after its last annual meeting, the superior court of
the proper county may summarily order a meeting to be held upon the
application of any shareholder after notice to the corporation giving
it an opportunity to be heard. The shares represented at such
meeting, either in person or by proxy, and entitled to vote thereat
shall constitute a quorum for the purpose of such meeting,
notwithstanding any provision of the articles or bylaws or in this
division to the contrary. The court may issue such orders as may be
appropriate, including, without limitation, orders designating the
time and place of such meeting, the record date for determination of
shareholders entitled to vote and the form of notice of such meeting.
(d) Special meetings of the shareholders may be called by the
board, the chairman of the board, the president or the holders of
shares entitled to cast not less than 10 percent of the votes at the
meeting or such additional persons as may be provided in the articles
or bylaws.
- Corporate Code Section 601.
(a) Whenever shareholders are required or permitted to take
any action at a meeting a written notice of the meeting shall be
given not less than 10 (or, if sent by third-class mail, 30) nor more
than 60 days before the date of the meeting to each shareholder
entitled to vote thereat. That notice shall state the place, date
and hour of the meeting and (1) in the case of a special meeting, the
general nature of the business to be transacted, and no other
business may be transacted, or (2) in the case of the annual meeting,
those matters that the board, at the time of the mailing of the
notice, intends to present for action by the shareholders, but
subject to the provisions of subdivision (f) any proper matter may be
presented at the meeting for that action. The notice of any meeting
at which directors are to be elected shall include the names of
nominees intended at the time of the notice to be presented by the
board for election.
(b) Notice of a shareholders' meeting or any report shall be given
either personally or by first-class mail, or, in the case of a
corporation with outstanding shares held of record by 500 or more
persons (determined as provided in Section 605) on the record date
for the shareholders' meeting, notice may be sent third-class mail,
or other means of written communication, addressed to the shareholder
at the address of that shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the
purpose of notice; or if no address appears or is given, at the place
where the principal executive office of the corporation is located
or by publication at least once in a newspaper of general circulation
in the county in which the principal executive office is located.
The notice or report shall be deemed to have been given at the time
when delivered personally or deposited in the mail or sent by other
means of written communication. An affidavit of mailing of any
notice or report in accordance with the provisions of this division,
executed by the secretary, assistant secretary or any transfer agent,
shall be prima facie evidence of the giving of the notice or report.
If any notice or report addressed to the shareholder at the
address of that shareholder appearing on the books of the corporation
is returned to the corporation by the United States Postal Service
marked to indicate that the United States Postal Service is unable to
deliver the notice or report to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given
without further mailing if the same shall be available for the
shareholder upon written demand of the shareholder at the principal
executive office of the corporation for a period of one year from the
date of the giving of the notice or report to all other
shareholders.
(c) Upon request in writing to the chairperson of the board,
president, vice president or secretary by any person (other than the
board) entitled to call a special meeting of shareholders, the
officer forthwith shall cause notice to be given to the shareholders
entitled to vote that a meeting will be held at a time requested by
the person or persons calling the meeting, not less than 35 nor more
than 60 days after the receipt of the request. If the notice is not
given within 20 days after receipt of the request, the persons
entitled to call the meeting may give the notice or the superior
court of the proper county shall summarily order the giving of the
notice, after notice to the corporation giving it an opportunity to
be heard. The procedure provided in subdivision (c) of Section 305
shall apply to that application. The court may issue orders as may
be appropriate, including, without limitation, orders designating the
time and place of the meeting, the record date for determination of
shareholders entitled to vote and the form of notice.
(d) When a shareholders' meeting is adjourned to another time or
place, unless the bylaws otherwise require and except as provided in
this subdivision, notice need not be given of the adjourned meeting
if the time and place thereof are announced at the meeting at which
the adjournment is taken. At the adjourned meeting the corporation
may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than 45 days or if
after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
(e) The transactions of any meeting of shareholders, however
called and noticed, and wherever held, are as valid as though had at
a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after
the meeting, each of the persons entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a consent to
the holding of the meeting or an approval of the minutes thereof.
All those waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall constitute a waiver of
notice of and presence at the meeting, except when the person
objects, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened and
except that attendance at a meeting is not a waiver of any right to
object to the consideration of matters required by this division to
be included in the notice but not so included, if the objection is
expressly made at the meeting. Neither the business to be transacted
at nor the purpose of any regular or special meeting of shareholders
need be specified in any written waiver of notice, consent to the
holding of the meeting or approval of the minutes thereof, unless
otherwise provided in the articles or bylaws, except as provided in
subdivision (f).
(f) Any shareholder approval at a meeting, other than unanimous
approval by those entitled to vote, pursuant to Section 310, 902,
1152, 1201, 1900 or 2007 shall be valid only if the general nature of
the proposal so approved was stated in the notice of meeting or in
any written waiver of notice.
- Corporate Code Section 602.
(a) Unless otherwise provided in the articles, a majority of
the shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the shareholders, but in no
event shall a quorum consist of less than one-third (or, in the case
of a mutual water company, 20 percent) of the shares entitled to vote
at the meeting or, except in the case of a close corporation, of
more than a majority of the shares entitled to vote at the meeting.
Except as provided in subdivision (b), the affirmative vote of a
majority of the shares represented and voting at a duly held meeting
at which a quorum is present (which shares voting affirmatively also
constitute at least a majority of the required quorum) shall be the
act of the shareholders, unless the vote of a greater number or
voting by classes is required by this division or the articles.
(b) The shareholders present at a duly called or held meeting at
which a quorum is present may continue to transact business until
adjournment notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares
required to constitute a quorum or, if required by this division or
the articles, the vote of a greater number or voting by classes.
(c) In the absence of a quorum, any meeting of shareholders may be
adjourned from time to time by the vote of a majority of the shares
represented either in person or by proxy, but no other business may
be transacted, except as provided in subdivision (b).
- Corporate Code Section 603.
(a) Unless otherwise provided in the articles, any action that
may be taken at any annual or special meeting of shareholders may be
taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, shall be signed by the
holders of outstanding shares having not less than the minimum number
of votes that would be necessary to authorize or take that action at
a meeting at which all shares entitled to vote thereon were present
and voted.
(b) Unless the consents of all shareholders entitled to vote have
been solicited in writing, (1) Notice of any shareholder approval
pursuant to Section 310, 317, 1152, 1201 or 2007 without a meeting by
less than unanimous written consent shall be given at least 10 days
before the consummation of the action authorized by that approval,
and (2) Prompt notice shall be given of the taking of any other
corporate action approved by shareholders without a meeting by less
than unanimous written consent, to those shareholders entitled to
vote who have not consented in writing. Subdivision (b) of Section
601 applies to that notice.
(c) Any shareholder giving a written consent, or the shareholder's
proxyholders, or a transferee of the shares or a personal
representative of the shareholder or their respective proxyholders,
may revoke the consent by a writing received by the corporation prior
to the time that written consents of the number of shares required
to authorize the proposed action have been filed with the secretary
of the corporation, but may not do so thereafter. The revocation is
effective upon its receipt by the secretary of the corporation.
(d) Notwithstanding subdivision (a), directors may not be elected
by written consent except by unanimous written consent of all shares
entitled to vote for the election of directors; provided that the
shareholders may elect a director to fill a vacancy, other than a
vacancy created by removal, by the written consent of a majority of
the outstanding shares entitled to vote.
Library of Informational Legal Articles
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