Organizations and Bylaws

Title 1, Division 1, Chapter 2 deals with organization and bylaws under California’s General Corporation Law.

Section 200 provides that 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.

Section 200.5 states that an existing business association organized as a trust under the laws of this state or of a foreign jurisdiction may incorporate under this division upon approval by its board of trustees or similar governing body and approval by the affirmative vote of a majority of the outstanding voting shares of beneficial interest and the filing of articles of incorporation with certificate attached pursuant to this chapter.

Section 201 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 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 Protection and Innovation.

Section 201.5 prohibits the Secretary of State from filing articles in which the business is to be an insurer unless the certificate of the Insurance Commissioner approving the corporate name is attached.

Section 201.6 states that, when an insurer has been approved by the Insurance Commissioner to redomesticate to this state, the redomesticating insurer is required to file with the Secretary of State articles of incorporation that include a provision setting forth all of the specified information.

An insurer that has filed articles of incorporation in this state and has been approved by the Insurance Commissioner pursuant to Section 709.5 of the Insurance Code to redomesticate to another jurisdiction, shall file with the Secretary of State a statement of redomestication, on a form prescribed by the Secretary of State, containing all of the specified information.

Section 202 requires the articles of incorporation to set forth seven specified items, including required statements.

Section 203 prohibits any distinction between classes or series of shares or the holders thereof.

Section 203.5 states that, if the articles include the designation and number of shares of one or more series within a class, the stated number of shares for all series within the class cannot exceed, and may be less than, the stated number of shares for the class.

Section 204 allows the articles of incorporation to set forth eleven specified provisions, which are not effective unless expressly provided in the articles. Reasonable restrictions upon the right to transfer or hypothecate shares of any class or classes or series, but no restriction is 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.

Section 204.5 provides that, if the articles of a corporation include a provision reading substantially as specified, then the corporation is considered to have adopted a provision as authorized by law and more specific wording shall not be required.

Section 205 states that, solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of a corporation, all authorized shares of a corporation organized under this division are to be deemed to have a nominal or par value of $1 per share. If any federal or other statute or regulation applicable to a particular corporation requires that the shares of such corporation have a par value, the shares have the par value determined by the board in order to satisfy the requirements of such statute or regulation.

Section 206 provides that any corporation other than a corporation subject to the Banking Law or a professional corporation may engage in any business activity.

Section 207 states that a corporation has all of the powers of a natural person in carrying out its business activities, including, without limitation, there are eight specified powers.

Section 209 states that, for all purposes other than an action in the nature of quo warranto, a copy of the articles of a corporation duly certified by the Secretary of State is conclusive evidence of the formation of the corporation and prima facie evidence of its corporate existence.

Section 210 says that, 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.

Section 211 allows bylaws to be adopted, amended or repealed either by approval of the outstanding shares or by the approval of the board.

Section 212 requires the bylaws to set forth the number of directors of the corporation; or that the number of directors is not less than a stated minimum nor more than a stated maximum, with the exact number of directors to be fixed, within the limits specified, by approval of the board or the shareholders in the manner provided in the bylaws.

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 eight specified items.

Section 213 requires every corporation to keep at its principal office in this state, or if its principal office is not in this state at its principal business office in this state, the original or a copy of its bylaws as amended to date, which must be open to inspection by the shareholders at all reasonable times during office hours.