Sacramento – Two measures authored by Senator Brian W. Jones (R-Santee) and coauthored by Senator Dave Min (D-Irvine), aimed at assisting small businesses, were approved unanimously by the Senate Banking and Financial Institutions Committee.
“We want California small businesses to not just survive but to thrive, for their owners, employees and the community,” stated Senator Brian W. Jones. “These measures make it as straightforward as possible for business owners to correct technical, non-compliant paperwork issues as well as helping new businesses make California their headquarters.”
Specifically, Senate Bill 218 amends the California Corporations Code so businesses can directly ratify (or petition the superior court to ratify) noncompliant, but otherwise lawful, corporate actions.
Unlike large corporations, which often have in-house counsel, small businesses usually handle most of their own regulatory paperwork. As these small businesses grow, the owner’s role may expand into new activities, such as seeking outside funding, acquiring other businesses, selling a line of the business (or the entire corporation), or undertaking an initial public offering. In these activities, minor, unintentional, and technically “non-compliant” issues may occur. SB 218 would provide an easy pathway for the business to correct the issue, return to compliance, and get back to running their business.
SB 288 encourages new businesses to incorporate in California, rather than another state, by streamlining the corporate conversion process so California is competitive with other states.
The California Corporations Code currently provides partnerships and limited liability companies (LLCs) with a simple process to convert their form of organization, but does not provide that same flexibility to corporations. As a result, many new California-based corporations will initially choose to incorporate out of California in states that have a more flexible corporate conversion process. SB 288 remedies this by simply streamlining the corporate conversion process.
Both SB 218 and SB 288 are sponsored by the California Lawyers Association and are now awaiting hearing in the Senate Judiciary Committee.