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.

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