Nonprofit Corporation Law

Title 1, Division 2, Part 1 of the Corporations Code deals with general provisions and definitions governing the nonprofit corporation law in California.

Section 5002 provides that the general provisions and definitions set forth in this part govern the construction of this part.

Section 5003 requires the provisions of this part apply to five specified corporations.

(b) The existence of corporations formed or existing on the date of enactment or reenactment of this part, Part 2, Part 3, Part 4 or Part 5 shall not be affected by the enactment or reenactment of such parts or by any change in the requirements for the formation of corporations or by the amendment or repeal of the laws under which they were formed or created.

Section 5004 provides that a corporation may be sued as provided in the Code of Civil Procedure.

Section 5005 requires any corporation to be subject to the Code of Civil Procedures as a condition of its existence as a corporation.

Section 5005.1 provides that an authorized corporation may do any of five specified actions of insuring.

Section 5006 states that the fees of the Secretary of State for filing instruments by or on behalf of corporations are prescribed in the Government Code.

Section 5007 provides that any agreement, certificate or other instrument relating to a domestic corporation, a foreign corporation, or a foreign business corporation filed may be corrected with respect to any misstatement of fact, any defect in the execution, or any other error or defect contained. 

Section 5008 states that any instrument received by the Secretary of State is to be filed in the office of the Secretary of State and the date of filing endorsed thereon.

Section 5008.5 authorizes the Secretary of State to cancel the filing of articles if a check or other remittance accepted in payment of the filing fee or franchise tax is not paid upon presentation.

Section 5009 provides that any reference in specified parts of this law to mailing means first-, second-, or third-class mail, postage prepaid, unless registered mail is specified. Registered mail includes certified mail.

Section 5013 defines the term “independent accountant.”

Section 5016 provides that a notice or report mailed or delivered as part of a newsletter, magazine or other organ regularly sent to members must constitute written notice or report pursuant to this division when addressed and mailed or delivered to the member.

Section 5017 explains that otherwise lawful corporate actions not in compliance, or purportedly not in compliance, with this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the corporate action, may be ratified, or validated by the superior court, in accordance with the provisions of this section.

Section 5030 defines the term “acknowledged.”

Section 5031 defines the term “affiliate.”

Section 5032 defines the term “approved by (or approval of) the board.”

Section 5033 defines the term “approval by (or approval of) a majority of all members.”

Section 5034 defines the term “approval by (or approval of) the members.”

Section 5035 defines the term “articles.”

Section 5036 defines the term “authorized number.”

Section 5037 defines the term “bylaws.”

Section 5038 defines the term “board.”

Section 5039 defines the term “business corporation.”

Section 5039.5 defines the term “chairperson of the board.”

Section 5040 defines the term “chapter.”

Section 5041 defines the term “class.”

Section 5043 defines the term “common shares.”

Section 5044 defines the term “constituent corporation.”

Section 5045 defines the term “control.”

Section 5046 defines the term “corporation.”

Section 5047 defines the term “directors.”

Section 5047.5 contains several legislative findings and declarations. Except as provided in this section, no cause of action for monetary damages arises against any person serving without compensation as a director or officer of a nonprofit corporation on account of any negligent act or omission occurring in four specified instances.

This section does not limit the liability of a director or officer for seven specified actions. This section only applies to nonprofit corporations organized to provide religious, charitable, literary, educational, scientific, social, or other forms of public service that are exempt from federal income taxation under the Internal Revenue Code. Also, this section applies only if the nonprofit corporation maintains a liability insurance policy with an amount of coverage of at least the specified amounts.

Section 5048 defines the term “disappearing corporation.”

Section 5049 defines the term “distribution.”

Section 5050 defines the term “domestic corporation.”

Section 5051 defines the term “filed.”

Section 5052 defines the term “foreign business corporation.”

Section 5053 defines the term “foreign corporation.”

Section 5054 defines the term “incentive and benefit plans.”

Section 5055 defines the terms “liquidating price” and “liquidation preference.”

Section 5056 defines the term “member.”

Section 5057 defines the term “membership.”

Section 5058 defines the term “membership certificate.”

Section 5059 defines the terms “nonprofit mutual benefit corporation” and “mutual benefit corporation.”

Section 5060 defines the terms “nonprofit public benefit corporation” and “public benefit corporation.”

Section 5061 defines the terms “nonprofit religious corporation” and “religious corporation.”

Section 5062 defines the term “officer’s certificate.”

Section 5063 defines the term “on the certificate.”

Section 5063.5 defines the term “other business entity.”

Section 5064 defines the term “parent.”

Section 5064.5 defines the term “parent party.”

Section 5065 defines the term “person.”

Section 5067 defines the term “preferred shares.”

Section 5068 defines the term “proper county.”

Section 5069 defines the term “proxy.”

Section 5070 defines the term “proxyholder.”

Section 5071 defines the term “shareholder.”

Section 5072 defines the term “shares.”

Section 5073 defines the term “subsidiary.”

Section 5074 defines the term “surviving corporation.”

Section 5075 defines the term “vacancy.”

Section 5076 defines the term “verified.”

Section 5077 defines the term “vote.”

Section 5078 defines the term “voting power.”

Section 5079 defines the terms “written” and “in writing.”

Section 5080 defines the term “written ballot.”

Title 1, Division 2, Part 2 deals with nonprofit public benefit corporations. Article 1 deals with title and purposes. Section 5110 names this part the Nonprofit Public Benefit Corporation Law. Section 5111 allows a corporation to be formed under this part for any public or charitable purposes.

Article 2 deals with formation. Section 5120 provides that one or more persons may form a corporation under this part by executing and filing articles of incorporation. 

Section 5121 provides that, in the case of an existing unincorporated association, the association may change its status to that of a corporation upon a proper authorization for such by the association in accordance with its rules and procedures.

Section 5122 prohibits the Secretary of State from filing articles setting forth a name in which “bank,” “trust,” “trustee,” or related words appear, unless the certificate of approval of the Commissioner of Financial Protection and Innovation is attached. The name of a corporation cannot be a name that the Secretary of State determines is likely to mislead the public and be distinguishable in the records of the Secretary of State.

Section 5122.5 prohibits the Secretary of State from reserving a corporate name or file articles using the name Golden State Energy unless those articles are for Golden State Energy, incorporated and operating under the Public Utilities Code.