Social Purpose Corporations Act

Title 1, Division 1.5 of the Corporations Code deals with social purpose corporations in California. Chapter 1 contains general provisions and definitions.

Section 2500 names this division as the Social Purpose Corporations Act.

Section 2501 defines the following terms: “close corporation,” “constituent corporation,” “corporation,” “disappearing corporation,” “domestic corporation,” “foreign corporation,” and “surviving corporation.”

Section 2502 applies this division to social purpose corporations organized expressly under this division whether organized or existing under this division or amended, merged or converted into a social purpose corporation in accordance with law.

Section 2502.01 provides that every social purpose corporation organized under the laws of this state or similar foreign social purpose corporation, all of the capital stock of which is beneficially owned by the United States, an agency or instrumentality of the United States or any social purpose corporation or similar foreign social purpose corporation the whole of the capital stock of which is owned by the United States or by an agency or instrumentality of the United States, is conclusively presumed to be an agency and instrumentality of the United States.

Section 2502.02 explains that whenever reference is made in this division to any other state or federal statute, that reference is to that statute as it may be amended from time to time, whether before or after the enactment of this division.

Section 2502.03 allows a social purpose corporation to be sued in the same manner as a corporation as provided in the Code of Civil Procedure.

Section 2502.04 requires a social purpose corporation formed under this division to, in respect of its property, as a condition of its existence as a social purpose corporation, be subject, in the same manner as a corporation, to the provisions of the Code of Civil Procedure authorizing the attachment of corporate property.

Section 2502.05 requires the fees of the Secretary of State for filing instruments by or on behalf of social purpose corporations to be the same fees prescribed for corporations in the Government Code.

Section 2502.06 explains that any of the terms of an agreement of merger may be made dependent upon facts ascertainable outside of that agreement, if the manner in which those facts shall operate upon the terms of the agreement is clearly and expressly set forth in the agreement of merger. The term “referenced agreement” is defined.

Section 2503 defines the term “annual report.”

Section 2503.1 defines the term “close social purpose corporation.”

Section 2504 defines the term “constituent social purpose corporation.”

Section 2505 defines the term “conversion.”

Section 2506 defines the term “disappearing social purpose corporation.”

Section 2507 defines the term “domestic social purpose corporation.”

Section 2509 defines the term “social purpose corporation.”

Section 2510 defines the term “social purpose corporation subject to the Banking Law.”

Section 2510.1 defines the term “social purpose corporation subject to the Insurance Code as an insurer.”

Section 2511 defines the term “reorganization.”

Section 2512 defines the term “share exchange tender offer.”

Section 2513 defines the term “special purpose.”

Section 2514 defines the term “special purpose current report.”

Section 2515 defines the term “special purpose MD&A.”

Section 2516 defines the term “special purpose objectives.”

Section 2516 defines the term “surviving social purpose corporation.”

Chapter 2 deals with organization and bylaws. Section 2600 provides that one or more natural persons, partnerships, associations, social purpose corporations, or corporations, domestic or foreign, may form a social purpose corporation under this division by executing and filing articles of incorporation.

Section 2600.5 provides 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 two-thirds of the outstanding voting shares of beneficial interest.

Section 2601 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 to the articles.

Section 2602 requires the articles of incorporation to set forth detailed information as specified in this section.

Section 2603 allows the articles of incorporation to set forth the ten items of information specified in this section.

Section 2604 states that any social purpose corporation other than a social purpose corporation subject to the Banking Law or a professional social purpose corporation may engage in any business activity. A social purpose corporation subject to the Banking Law or a professional social purpose corporation may engage in any business activity not prohibited by the respective statutes and regulations to which it is subject.

Section 2605 states that, subject to any limitations contained in the articles, to compliance with other provisions of this division and any other applicable laws, and to consistency with the special purpose of the social purpose corporation, a social purpose corporation has all the powers of a natural person in carrying out its business activities, including the power to do eight specified actions.