(a)
Written Notice to Attorney General of Self-Dealing Transaction.
Corporations Code section 5233, subdivision (e), provides
that an action under section 5233, subdivision (c), seeking remedies for a
self-dealing transaction must be filed within two years after written notice
setting forth the material facts of the transaction and the director's interest
is filed with the Attorney General in accordance with regulations adopted by
the Attorney General.
For purposes of section 5233, subdivision (e), a written
notice of a self-dealing transaction shall be deemed filed with the Attorney
General when it is submitted in accordance with section
328, subdivision (a), of these
regulations.
The written notice of a self-dealing transaction to the
Attorney General shall contain the following:
(1) A letter signed on behalf of the
corporation by an authorized director or officer thereof, or by or on behalf of
a director or officer of the corporation setting forth a detailed description
of the self-dealing transaction, the extent to which any director has a
material financial interest in the self-dealing transaction, and all material
facts concerning the self-dealing transaction. "Material facts" are defined in
section
328, subdivision (c), of these
regulations.
(2) A copy of the
corporation's current financial statement as of a date within ninety days
preceding the filing of the notice or request, except to the extent already on
file with the Registry of Charities and Fundraisers.
(3) A copy of the articles of incorporation
and amendments thereto, except to the extent already on file with the Registry
of Charities and Fundraisers.
(b) Written Request for Attorney General's
Approval of Self-Dealing Transaction.
Corporations Code section 5233, subdivision (d), provides
that no remedies shall be granted in any action for a self-dealing transaction
if the Attorney General or the court has approved the transaction before or
after it was consummated.
A request for approval by the Attorney General of a
self-dealing transaction shall be submitted in writing in accordance with
section 328, subdivision (a), of these
regulations.
A request for approval by the Attorney General of a
self-dealing transaction shall contain the following:
(1) A letter signed on behalf of the
corporation by an authorized director or officer thereof, or by or on behalf of
a director of the corporation, setting forth a detailed description of the
self-dealing transaction, the extent to which any director has a material
financial interest in the self-dealing transaction, and all material facts
concerning the self-dealing transaction. "Material facts" are defined in
section
328, subdivision (c), of these
regulations.
(2) A copy of the
corporation's current financial statement as of a date within ninety days
preceding the filing of the notice or request, except to the extent already on
file with the Registry of Charities and Fundraisers.
(3) A copy of the articles of incorporation
and amendments thereto, except to the extent already on file with the Registry
of Charities and Fundraisers.
(4) A
copy of the bylaws and amendments thereto, except to the extent already on file
with the Registry of Charities and Fundraisers.
(5) Copies of all minutes of meetings of the
board of directors and committees of the board of directors that reflect any
discussions or evaluations of the self-dealing transaction.
(6) A letter signed by the interested
director setting forth a description of the director's material financial
interest in the self-dealing transaction, listing all material facts, as
defined in section
328, subdivision (c), of these
regulations, concerning the transaction, and all facts disclosed by the
interested director to the board of directors concerning the transaction.
(Note: Disclosure of this information in the corporation's letter, pursuant to
subdivision (b)(1), may eliminate the need for the letter from the interested
director, to the extent the information in the interested director's letter
would duplicate information in the corporation's letter.)
(7) The Attorney General may require
submission of additional information by the corporation and its directors in
order to complete an analysis of the self-dealing
transaction.
(c) Attorney
General's Approval of Loans or Guarantees to a Director.
Corporations Code section 5236 prohibits a public benefit
corporation from making any loan or guaranty to any director or officer, unless
approved by the Attorney General.
For purposes of section 5236, a request for the Attorney
General's approval of a loan or guaranty to a director or officer shall be
submitted in writing in accordance with section
328, subdivision (a), of these
regulations.
The written request for Attorney General's approval of a
loan or guaranty shall contain the following:
(1) A letter signed on behalf of the
corporation by an authorized director or officer thereof, or by or on behalf of
a director or officer of the corporation, setting forth a detailed description
of the loan or guaranty and all material facts concerning the loan or guaranty.
"Material facts" are defined in section
328, subdivision (c), of these
regulations.
(2) Copies of the loan
or guaranty agreement, note and related security agreements;
(3) A copy of the corporation's current
financial statement as of a date within ninety days preceding the filing of the
notice or request, except to the extent already on file with the Registry of
Charities and Fundraisers.
(4) A
copy of the articles of incorporation and amendments thereto, except to the
extent already on file with the Registry of Charities and
Fundraisers.
(5) A copy of the
bylaws and amendments thereto, except to the extent already on file with the
Registry of Charities and Fundraisers.
(6) Copies of all minutes of meetings of the
board of directors and committees of the board of directors that reflect any
discussions or evaluations of the loan or guaranty.
(7) A letter signed by the interested
director setting forth a description of the director's material financial
interest in the loan or guaranty, listing all material facts, as defined in
section
328, subdivision (c), of these
regulations, concerning the transaction, and all facts disclosed by the
interested director to the board of directors concerning the transaction.
(Note: Disclosure of this information in the corporation's letter, pursuant to
subdivision (c)(1), may eliminate the need for the letter from the interested
director, to the extent the information in the interested director's letter
would duplicate information in the corporation's letter.)
(8) The Attorney General may require
submission of additional information by the corporation and its directors in
order to complete an analysis of the loan or guaranty.
(d) Request for Attorney General's Ruling on
Amendment of Corporate Articles of Incorporation.
Corporations Code section 5820 provides that the Attorney
General may, at the corporation's request, give rulings as to whether the
Attorney General will or may oppose a proposed amendment to the articles of
incorporations, as inconsistent with or proscribed by the requirement of a
charitable trust.
For purposes of section 5820, a request for the Attorney
General's ruling on a proposed amendment to the articles of incorporation shall
be submitted in writing in accordance with section
328, subdivision (a), of these
regulations.
The written request for the Attorney General's ruling shall
contain the following:
(1) A letter
signed on behalf of the corporation by any officer or director thereof setting
forth a detailed description of the proposed amendment to the articles of
incorporation and all material facts concerning the amendment. Material facts
shall include the reasons for the amendment, the benefit such amendment will
confer upon the corporation, whether the board of directors has approved the
amendment, and the criteria used by the board to evaluate and approve the
amendment.
(2) A copy of the
corporation's current financial statement as of a date within ninety days
preceding the filing of the notice or request, except to the extent already on
file with the Registry of Charities and Fundraisers.
(3) A copy of the articles of incorporation
and amendments thereto, except to the extent already on file with the Registry
of Charities and Fundraisers.
(4) A
copy of the bylaws and amendments thereto, except to the extent already on file
with the Registry of Charities and Fundraisers.
(5) Copies of all minutes of meetings of the
board of directors and committees of the board of directors that reflect any
discussions or evaluations of the article amendment to the articles of
incorporation.
(6) The Attorney
General may require submission of additional information by the corporation and
its directors in order to complete an analysis of the article
amendment.
(e) Giving
Notice to the Attorney General; Attorney General's Involvement.
The following sections of the Corporations Code provide for
the involvement of the Attorney General, and, where appropriate, for notice to
the Attorney General, in certain actions and proceedings by, or relating to, a
public benefit corporation:
Corporations Code section 5142 (action for breach of
trust)
Corporations Code section 5223 (removal for fraud)
Corporations Code section 5225 (deadlock)
Corporations Code section 5226 (resignation by last
director)
Corporations Code section 5233 (self-dealing)
Corporations Code section 5236 (loan to a director or
officer)
Corporations Code section 5238, subdivision (c)(3)
(indemnity)
Corporations Code section 5617, subdivision (b) (validity
of election)
Corporations Code section 5813.5, subdivision (b)
(conversion)
Corporations Code section 5913 (sale of assets)
Corporations Code section 5914 (proposed transfer of health
facilities)
Corporations Code section 5920 (proposed transfer of health
facilities)
Corporations Code section 6010 (merger)
Corporations Code sections 6510, subdivision (d), 6716,
subdivisions (b) and (c) (involuntary dissolution)
Corporations Code sections 6611, subdivision (a), 6612,
subdivision (a), 6613, subdivision (c), 6617, subdivision (b), 6716,
subdivisions (b) and (c) (voluntary dissolution)
Corporations Code section 6721, subdivisions (a) and (b)
(recovery of distribution)
Communications and notices to the Attorney General pursuant
to the foregoing sections shall be submitted in writing in accordance with
section 328, subdivision (a), of these
regulations.
In addition to the information required in the Corporations
Code and in these regulations for communications and notices to the Attorney
General under specific circumstances, notice to the Attorney General pursuant
to the foregoing sections of the Corporations Code shall contain written
information sufficient to enable the Attorney General to review and evaluate
the action or proceeding, the time, date and place at which the action or
proceeding will occur, or has occurred, and a statement indicating whether an
approval, ruling, waiver or other action by the Attorney General is
sought.
