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Monday, July 18, 2011

One More Step Towards A California Flexible Purpose Corporation: A Legislative Update and A Great Loss

Legislative Update.

Friday marked a first in recent years: The California Legislature begain it's one-month summer recess! (During the past several years, the summer recess was cancelled while the legislature worked with the Governor to reach a budget compromise.) So, for the next four weeks, there will be no news from Sacramento regarding the two pieces of legislation we've been following: SB 201: The Flexible Purpose Corporation Act, and AB 361 The Benefit Corporation Act.

But Sacramento took one final step before vacating.

On Wednesday, July 13th, the Assembly's Appropriations Committee voted ten to four to pass SB 201, leaving the Felxible Purpose Corporation one vote away from Governor Brown's desk. The full Assembly is expected to vote on the bill shortly upon return to Sacramento.

Word in Sacramento suggests that AB 361 will appear on the Senate Appropriations Committee docket shortly following the summer recess and will also move thereafter to a full Senate vote, and then onto Governor Brown's desk.

So here's the good news:

Before the end of August, we might see both SB 201 and AB 361 ready for Governor Brown's signature.

Stay tuned on what the Governor might do!

A Great Loss.

On the same day that the Assembly Appropriations Committee passed SB 201, we saw the passing of a giant in the California legal community. R. Bradbury Clark, 87, served as an advisor to the California Working Group on New Corporate Forms which drafted SB 201. But this was far from a crowning achievement in his amazing career.

A lawyer at O'Melveny and Meyers from 1951 until the day he passed, R. Bradbury Clark was the primary draftsman of California's General Corproation Law in 1975 and its Nonprofit Corporation Law. He served on the Executive Committee during the first year of the State Bar's Business Law Section (having served previously on the predecessor Corporations Committee) and was a recipient of the Calbar Business Law Section's Lifetime Achievement Award (along with another advisor to the Working Group, Marshall L. Small). (Given how Mr. Clark never mentioned his Purple Heart with Oakleaf Cluster and two Bronze Stars for his service in World War II and his valor at the Battle of the Bulge, I'm guessing that awards such as these were greeted with great humility.)

R. Bradbury Clark represented a great legal mind, but more importantly, a wonderful person who cared deeply about the legal profession and how the law could keep pace to allow for the best of what humanity might achieve. His devoted service in advising on the drafting of SB 201 was simply one small manifestation of the man's remarkable life.

He will be missed!


*Todd is a partner at the law firm of Jones Day, where he founded their Silicon Valley Office and runs their Renewable Energy and Sustainability Practice. The views expressed in this column are solely Todd’s personal views, not the views of Jones Day or its clients, and the information provided as to his affiliation with Jones Day is solely for purposes of identification and may not and should not be construed to imply endorsement or even support by Jones Day of the views expressed herein.

© R. Todd Johnson, 2011. Business for Good.SM is a service mark of R. Todd Johnson. The thoughts, ideas and words expressed in this column are the property of R. Todd Johnson and may not be otherwise used or reprinted without express permission from Todd.



Thursday, July 7, 2011

The Weekly Update on California's FPC and Benefit Corporation

Last week, Sacramento took additional steps towards the ultimate passage of the Flexible Purpose Corporation (SB201) and the Benefit Corporation (AB361). 

SB201 Flexible Purpose Corporation

The Flexible Purpose Corporation came closer to reality last week when the Assembly's Judiciary Committee passed the legislation out of committee on June 28, by a vote of six to three.  The bill has one last stop in the Assembly Appropriations Committee, having already passed the Assembly's Banking and Finance Committee on June 20 by a vote of nine to zero.

At the same time, behind the scenes, the author of the legislation (Senator DeSaulnier) has been in discussions with the California Attorney General's Office and it seems that there may be one last amendment to the bill before passage. (The change would be a technical change making clear that nothing in the legislation is intended to limite the AG's authority when charitable trusts are created.)

Nevertheless, there seems a strong possibility that SB201 could pass the Assembly and head to Governor Brown's desk by the end of the month.  Those working on the legilsation expect passage, given the support, including from the Corproation's Committee and the Nonprofit and Unincorporated Organizations Committee of the Business Law Section of the State Bar of California. Assuming it were signed into law, practitioners can expect a January 1, 2012 effective date, at the worst.

AB361 Benefit Corporation

The Benefit Corporation also moved closer to reality last week, with passage out of the Senate's Banking and Financial Insitutions Committee by a vote of five to one on June 29.  The bill then passed out of the Sentate's Judiciary Committee by a vote of four to zero this week (on July 5) and is bound for its last stop before a Senate vote, at the Appropriations Committee.

No word yet on amendments to AB361 that might be undertaken, given the opposition to the bill by the Corporation's Committee of the Business Law Section of the State Bar of California.


*Todd is a partner at the law firm of Jones Day, where he founded their Silicon Valley Office and runs their Renewable Energy and Sustainability Practice. The views expressed in this column are solely Todd’s personal views, not the views of Jones Day or its clients, and the information provided as to his affiliation with Jones Day is solely for purposes of identification and may not and should not be construed to imply endorsement or even support by Jones Day of the views expressed herein.

© R. Todd Johnson, 2011. Business for Good.SM is a service mark of R. Todd Johnson. The thoughts, ideas and words expressed in this column are the property of R. Todd Johnson and may not be otherwise used or reprinted without express permission from Todd.