SECTIONS 1500-1512 - California Statutes

CORPORATIONS CODE

SECTION 1500-1512

1500. Each corporation shall keep adequate and correct books and
records of account and shall keep minutes of the proceedings of its
shareholders, board and committees of the board and shall keep at its
principal executive office, or at the office of its transfer agent
or registrar, a record of its shareholders, giving the names and
addresses of all shareholders and the number and class of shares held
by each. Those minutes and other books and records shall be kept
either in written form or in another form capable of being converted
into clearly legible tangible form or in any combination of the
foregoing. When minutes and other books and records are kept in a
form capable of being converted into clearly legible paper form, the
clearly legible paper form into which those minutes and other books
and records are converted shall be admissible in evidence, and
accepted for all other purposes, to the same extent as an original
paper record of the same information would have been, provided that
the paper form accurately portrays the record.

1501. (a) (1) The board shall cause an annual report to be sent to
the shareholders not later than 120 days after the close of the
fiscal year, unless in the case of a corporation with less than 100
holders of record of its shares (determined as provided in Section
605) this requirement is expressly waived in the bylaws. Unless
otherwise provided by the articles or bylaws and if approved by the
board of directors, that report and any accompanying material sent
pursuant to this section may be sent by electronic transmission by
the corporation (Section 20). This report shall contain a balance
sheet as of the end of that fiscal year and an income statement and a
statement of cashflows for that fiscal year, accompanied by any
report thereon of independent accountants or, if there is no report,
the certificate of an authorized officer of the corporation that the
statements were prepared without audit from the books and records of
the corporation.
(2) Unless so waived, the report specified in paragraph (1) shall
be sent to the shareholders at least 15 (or, if sent by third-class
mail, 35) days prior to the annual meeting of shareholders to be held
during the next fiscal year, but this requirement shall not limit
the requirement for holding an annual meeting as required by Section
600.
(3) Notwithstanding Section 114, the financial statements of any
corporation with fewer than 100 holders of record of its shares
(determined as provided in Section 605) required to be furnished by
this subdivision and subdivision (c) are not required to be prepared
in conformity with generally accepted accounting principles if they
reasonably set forth the assets and liabilities and the income and
expense of the corporation and disclose the accounting basis used in
their preparation.
(4) The requirements described in paragraphs (1) and (2) shall be
satisfied if a corporation with an outstanding class of securities
registered under Section 12 of the Securities Exchange Act of 1934
complies with Section 240.14a-16 of Title 17 of the Code of Federal
Regulations, as it may be amended from time to time, with respect to
the obligation of a corporation to furnish an annual report to
shareholders pursuant to Section 240.14a-3(b) of Title 17 of the Code
of Federal Regulations.
(b) In addition to the financial statements required by
subdivision (a), the annual report of any corporation having 100 or
more holders of record of its shares (determined as provided in
Section 605) either not subject to the reporting requirements of
Section 13 of the Securities Exchange Act of 1934, or exempted from
those reporting requirements by Section 12(g)(2) of that act, shall
also describe briefly both of the following:
(1) Any transaction (excluding compensation of officers and
directors) during the previous fiscal year involving an amount in
excess of forty thousand dollars ($40,000) (other than contracts let
at competitive bid or services rendered at prices regulated by law)
to which the corporation or its parent or subsidiary was a party and
in which any director or officer of the corporation or of a
subsidiary or (if known to the corporation or its parent or
subsidiary) any holder of more than 10 percent of the outstanding
voting shares of the corporation had a direct or indirect material
interest, naming the person and stating the person's relationship to
the corporation, the nature of the person's interest in the
transaction and, where practicable, the amount of the interest;
provided that in the case of a transaction with a partnership of
which the person is a partner, only the interest of the partnership
need be stated; and provided further that no report need be made in
the case of any transaction approved by the shareholders (Section
153).
(2) The amount and circumstances of any indemnification or
advances aggregating more than ten thousand dollars ($10,000) paid
during the fiscal year to any officer or director of the corporation
pursuant to Section 317; provided that no report need be made in the
case of indemnification approved by the shareholders (Section 153)
under paragraph (2) of subdivision (e) of Section 317.
(c) If no annual report for the last fiscal year has been sent to
shareholders, the corporation shall, upon the written request of any
shareholder made more than 120 days after the close of that fiscal
year, deliver or mail to the person making the request within 30 days
thereafter the financial statements required by subdivision (a) for
that year. A shareholder or shareholders holding at least 5 percent
of the outstanding shares of any class of a corporation may make a
written request to the corporation for an income statement of the
corporation for the three-month, six-month, or nine-month period of
the current fiscal year ended more than 30 days prior to the date of
the request and a balance sheet of the corporation as of the end of
the period and, in addition, if no annual report for the last fiscal
year has been sent to shareholders, the statements referred to in
subdivision (a) for the last fiscal year. The statements shall be
delivered or mailed to the person making the request within 30 days
thereafter. A copy of the statements shall be kept on file in the
principal office of the corporation for 12 months and it shall be
exhibited at all reasonable times to any shareholder demanding an
examination of the statements or a copy shall be mailed to the
shareholder.
(d) The quarterly income statements and balance sheets referred to
in this section shall be accompanied by the report thereon, if any,
of any independent accountants engaged by the corporation or the
certificate of an authorized officer of the corporation that the
financial statements were prepared without audit from the books and
records of the corporation.
(e) In addition to the penalties provided for in Section 2200, the
superior court of the proper county shall enforce the duty of making
and mailing or delivering the information and financial statements
required by this section and, for good cause shown, may extend the
time therefor.
(f) In any action or proceeding under this section, if the court
finds the failure of the corporation to comply with the requirements
of this section to have been without justification, the court may
award an amount sufficient to reimburse the shareholder for the
reasonable expenses incurred by the shareholder, including attorney's
fees, in connection with the action or proceeding.
(g) This section applies to any domestic corporation and also to a
foreign corporation having its principal executive office in this
state or customarily holding meetings of its board in this state.

1502. (a) Every corporation shall file, within 90 days after the
filing of its original articles and annually thereafter during the
applicable filing period, on a form prescribed by the Secretary of
State, a statement containing all of the following:
(1) The names and complete business or residence addresses of its
incumbent directors.
(2) The number of vacancies on the board, if any.
(3) The names and complete business or residence addresses of its
chief executive officer, secretary, and chief financial officer.
(4) The street address of its principal executive office.
(5) The mailing address of the corporation, if different from the
street address of its principal executive office.
(6) If the address of its principal executive office is not in
this state, the street address of its principal business office in
this state, if any.
(7) A statement of the general type of business that constitutes
the principal business activity of the corporation (for example,
manufacturer of aircraft; wholesale liquor distributor; or retail
department store).
(b) The statement required by subdivision (a) shall also
designate, as the agent of the corporation for the purpose of service
of process, a natural person residing in this state or a corporation
that has complied with Section 1505 and whose capacity to act as an
agent has not terminated. If a natural person is designated, the
statement shall set forth that person's complete business or
residence street address. If a corporate agent is designated, no
address for it shall be set forth.
(c) If there has been no change in the information in the last
filed statement of the corporation on file in the Secretary of State'
s office, the corporation may, in lieu of filing the statement
required by subdivisions (a) and (b), advise the Secretary of State,
on a form prescribed by the Secretary of State, that no changes in
the required information have occurred during the applicable filing
period.
(d) For the purposes of this section, the applicable filing period
for a corporation shall be the calendar month during which its
original articles were filed and the immediately preceding five
calendar months. The Secretary of State shall mail a notice for
compliance with this section to each corporation approximately three
months prior to the close of the applicable filing period. The notice
shall state the due date for compliance and shall be mailed to the
last address of the corporation according to the records of the
Secretary of State. The failure of the corporation to receive the
notice is not an excuse for failure to comply with this section.
(e) Whenever any of the information required by subdivision (a) is
changed, the corporation may file a current statement containing all
the information required by subdivisions (a) and (b). In order to
change its agent for service of process or the address of the agent,
the corporation must file a current statement containing all the
information required by subdivisions (a) and (b). Whenever any
statement is filed pursuant to this section, it supersedes any
previously filed statement and the statement in the articles as to
the agent for service of process and the address of the agent.
(f) The Secretary of State may destroy or otherwise dispose of any
statement filed pursuant to this section after it has been
superseded by the filing of a new statement.
(g) This section shall not be construed to place any person
dealing with the corporation on notice of, or under any duty to
inquire about, the existence or content of a statement filed pursuant
to this section.
(h) The statement required by subdivision (a) shall be available
and open to the public for inspection. The Secretary of State shall
provide access to all information contained in this statement by
means of an online database.
(i) In addition to any other fees required, a corporation shall
pay a five-dollar ($5) disclosure fee when filing the statement
required by subdivision (a). One-half of the fee shall be utilized to
further the provisions of this section, including the development
and maintenance of the online database required by subdivision (h),
and one-half shall be deposited into the Victims of Corporate Fraud
Compensation Fund established in Section 1502.5.
(j) A corporation shall certify that the information it provides
pursuant to subdivisions (a) and (b) is true and correct. No claim
may be made against the state for inaccurate information contained in
the statements.

1502.1. (a) In addition to the statement required pursuant to
Section 1502, every publicly traded corporation shall file annually,
within 150 days after the end of its fiscal year, a statement, on a
form prescribed by the Secretary of State, that includes all of the
following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the corporation's annual financial
statements.
(2) A description of other services, if any, performed for the
corporation during its two most recent fiscal years and the period
between the end of its most recent fiscal year and the date of the
statement by the foregoing independent auditor, by its parent
corporation, or by a subsidiary or corporate affiliate of the
independent auditor or its parent corporation.
(3) The name of the independent auditor employed by the
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The compensation for the most recent fiscal year of the
corporation paid to each member of the board of directors and paid to
each of the five most highly compensated executive officers of the
corporation who are not members of the board of directors, including
the number of any shares issued, options for shares granted, and
similar equity-based compensation granted to each of those persons.
If the chief executive officer is not among the five most highly
compensated executive officers of the corporation, the compensation
paid to the chief executive officer shall also be included.
(5) A description of any loan, including the amount and terms of
the loan, made to any member of the board of directors by the
corporation during the corporation's two most recent fiscal years at
an interest rate lower than the interest rate available from
unaffiliated commercial lenders generally to a similarly-situated
borrower.
(6) A statement indicating whether an order for relief has been
entered in a bankruptcy case with respect to the corporation, its
executive officers, or members of the board of directors of the
corporation during the 10 years preceding the date of the statement.
(7) A statement indicating whether any member of the board of
directors or executive officer of the corporation was convicted of
fraud during the 10 years preceding the date of the statement, if the
conviction has not been overturned or expunged.
(8) A description of any material pending legal proceedings, other
than ordinary routine litigation incidental to the business, to
which the corporation or any of its subsidiaries is a party or of
which any of their property is the subject, as specified by Item 103
of Regulation S-K of the Securities Exchange Commission (Section
229.103 of Title 12 of the Code of Federal Regulations). A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the five years
preceding the date of the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded corporation" means a corporation, as defined
in Section 162, that is an issuer as defined in Section 3 of the
Securities Exchange Act of 1934, as amended (15 U.S.C. Sec. 78c), and
has at least one class of securities listed or admitted for trading
on a national securities exchange, on the OTC Bulletin Board, or on
the electronic service operated by Pink OTC Markets Inc.
(2) "Executive officer" means the chief executive officer,
president, any vice president in charge of a principal business unit,
division, or function, any other officer of the corporation who
performs a policymaking function, or any other person who performs
similar policymaking functions for the corporation.
(3) "Compensation" as used in paragraph (4) of subdivision (a)
means all plan and nonplan compensation awarded to, earned by, or
paid to the person for all services rendered in all capacities to the
corporation and to its subsidiaries, as the compensation is
specified by Item 402 of Regulation S-K of the Securities and
Exchange Commission (Section 229.402 of Title 17 of the Code of
Federal Regulations).
(4) "Loan" as used in paragraph (5) of subdivision (a) excludes an
advance for expenses permitted under subdivision (d) of Section 315,
the corporation's payment of life insurance premiums permitted under
subdivision (e) of Section 315, and an advance of expenses permitted
under Section 317.
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A corporation shall certify that the information it provides
pursuant to this section is true and correct. No claim may be made
against the state for inaccurate information contained in statements
filed under this section with the Secretary of State.

1502.5. The Victims of Corporate Fraud Compensation Fund is hereby
established in the State Treasury. The fund shall be administered by
the Secretary of State who shall adopt regulations regarding the
administration of the fund and the eligibility of victims to receive
compensation from the fund. The money in the fund shall be used for
the sole purpose of providing restitution to the victims of a
corporate fraud. Notwithstanding Section 13340 of the Government
Code, the money in the fund is continuously appropriated to the
Secretary of State for the purposes authorized by this section.

1503. (a) An agent designated for service of process pursuant to
Section 202, 1502, 2105, or 2117 may file a signed and acknowledged
written statement of resignation as such agent. Thereupon the
authority of the agent to act in such capacity shall cease and the
Secretary of State forthwith shall give written notice of the filing
of the statement of resignation by mail to the corporation addressed
to its principal executive office.
(b) Under regulations adopted by the Secretary of State, the
resignation of an agent may be effective if the agent disclaims
having been properly appointed as the agent. Similarly, a person
named as an officer or director may indicate that the person was
never properly appointed as the officer or director.

1504. If a natural person who has been designated agent for service
of process pursuant to Section 202, 1502, 2105, or 2117 dies or
resigns or no longer resides in the state or if the corporate agent
for such purpose resigns, dissolves, withdraws from the state,
forfeits its right to transact intrastate business, has its corporate
rights, powers and privileges suspended or ceases to exist, the
corporation shall forthwith file a designation of a new agent
conforming to the requirements of Section 1502 or 2117.

1505. (a) Any domestic or foreign corporation, before it may be
designated as the agent for the purpose of service of process of any
entity pursuant to any law which refers to this section, shall file a
certificate executed in the name of the corporation by an officer
thereof stating all of the following:
(1) The complete address of its office or offices in this state,
wherein any entity designating it as such agent may be served with
process.
(2) The name of each person employed by it at each such office to
whom it authorizes the delivery of a copy of any such process.
(3) Its consent that delivery thereof to any such person at the
office where the person is employed shall constitute delivery of any
such copy to it, as such agent.
(b) Any corporation which has filed the certificate provided for
in subdivision (a) may file any number of supplemental certificates
containing all the statements provided for in subdivision (a), which,
upon the filing thereof, shall supersede the statements contained in
the original or in any supplemental certificate previously filed.
(c) No domestic or foreign corporation may file a certificate
pursuant to this section unless it is currently authorized to engage
in business in this state and is in good standing on the records of
the Secretary of State.

1506. Upon request of an assessor, a domestic or foreign
corporation owning, claiming, possessing or controlling property in
this state subject to local assessment shall make available at the
corporation's principal office in California or at a place mutually
acceptable to the assessor and the corporation a true copy of
business records relevant to the amount, cost and value of all
property that it owns, claims, possesses or controls within the
county.

1507. Any officers, directors, employees or agents of a corporation
who do any of the following are liable jointly and severally for all
the damages resulting therefrom to the corporation or any person
injured thereby who relied thereon or to both:
(a) Make, issue, deliver or publish any prospectus, report,
circular, certificate, financial statement, balance sheet, public
notice or document respecting the corporation or its shares, assets,
liabilities, capital, dividends, business, earnings or accounts which
is false in any material respect, knowing it to be false, or
participate in the making, issuance, delivery or publication thereof
with knowledge that the same is false in a material respect.
(b) Make or cause to be made in the books, minutes, records or
accounts of a corporation any entry which is false in any material
particular knowing such entry is false.
(c) Remove, erase, alter or cancel any entry in any books or
records of the corporation, with intent to deceive.

1508. The Attorney General, upon complaint that a foreign or
domestic corporation is failing to comply with the provisions of this
chapter or Chapter 6 (commencing with Section 600), 7 (commencing
with Section 700) or 16 (commencing with Section 1600), may in the
name of the people of the State of California send to the principal
executive office of such corporation notice of the complaint. If the
answer is not satisfactory, the Attorney General may institute,
maintain or intervene in such suits, actions or proceedings of any
type in any court or tribunal of competent jurisdiction or before any
administrative agency for such relief by way of injunction, the
dissolution of entities, the appointment of receivers or any other
temporary, preliminary, provisional or final remedies as may be
appropriate to protect the rights of shareholders or to undo the
consequences of failure to comply with such requirements. In any such
action, suit or proceeding there may be joined as parties all
persons and entities responsible for or affected by such activity.

1509. For a period of 60 days following the conclusion of an
annual, regular, or special meeting of shareholders, a corporation
shall, upon written request from a shareholder, forthwith inform the
shareholder of the result of any particular vote of shareholders
taken at the meeting, including the number of shares voting for, the
number of shares voting against, and the number of shares abstaining
or withheld from voting. If the matter voted on was the election of
directors, the corporation shall report the number of shares (or
votes if voted cumulatively) cast for each nominee for director. If
more than one class or series of shares voted, the report shall state
the appropriate numbers by class and series of shares.

1510. (a) Any foreign corporation qualified to transact intrastate
business in this state shall provide the information specified in
Section 1509, at the request of a shareholder resident in this state.
(b) Any of the following shall be considered to be a shareholder
resident in this state:
(1) A natural person residing in this state.
(2) A bank organized under Division 1 (commencing with Section 99)
of the Financial Code, whether acting for itself, acting as a sole
fiduciary, or acting with one or more other persons as a fiduciary.
(3) A national bank having its head office in this state whether
acting for itself, acting as a sole fiduciary, or acting with one or
more other persons as a fiduciary.
(4) Any retirement fund for public employees established or
authorized by any law of this state.

1511. Any foreign corporation which is not qualified to transact
intrastate business in this state but has one or more subsidiaries
which are domestic corporations or foreign corporations qualified to
transact intrastate business in this state shall provide the
information specified in Section 1509, at the request of a
shareholder resident in this state, as defined by subdivision (b) of
Section 1510.

1512. (a) For the purposes of Sections 1509, 1510, and 1511, a
shareholder includes (1) any person named in a share certificate as a
shareholder or (2) any person named as a shareholder on the records
of a central depository, bank, or broker-dealer with respect to
shares which are subject to the control of the central depository,
bank, or broker-dealer.
(b) A beneficiary of a trust, a beneficiary of the estate of a
decedent, or an employee with respect to a pension, retirement, or
health care trust or fund is not a shareholder of any shares standing
in the name of the trust, the fund, the decedent, or the estate of
the decedent.
(c) A person who is a shareholder by reason of paragraph (2) of
subdivision (a) shall provide the corporation with a photocopy of a
receipt of a statement from the central depository, bank, or
broker-dealer showing the person to be a shareholder and the
corporation shall accept the photocopy as sufficient evidence
thereof.