Corporations: ratification or validation of noncompliant corporate actions.

The General Corporation Law provides for the formation of domestic general corporations by the execution and filing of articles of incorporation with the Secretary of State. Under that law, the business and affairs of these corporations are generally managed by, and all corporate powers are exercised by or under, the direction of their boards of directors, and each director is elected by shareholder vote, with certain exceptions, as specified. Existing law requires the Secretary of State, upon receipt of any instrument for filing, to file and provide the date of endorsed filing, if that instrument conforms to law. Existing law permits an instrument that does not conform to law to be resubmitted in accordance with specified procedures. Existing law also permits an agreement, certificate, or other instrument relating to a domestic or foreign corporation filed under the General Corporation Law to be corrected with respect to any misstatement of fact contained therein, as provided. This bill, except as provided, would authorize otherwise lawful corporate actions, as defined, not in compliance, or purportedly not in compliance, with the General Corporation Law or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of a corporate action, to be ratified, or validated by the superior court, in conformity with certain procedures. The bill would require, among other things, that the ratification of a corporate action pursuant to the bill's provisions be approved by the board and, as applicable, approved by the shareholders or approved by the outstanding shares in accordance with the General Corporation Law and the articles, bylaws, and any plan or agreement to which the corporation is a party in effect at the time of ratification, except as specified. The bill would require a corporation, if a corporate action ratified or validated would have required the filing of an instrument with the Secretary of State or if the ratification or validation would cause any instrument previously filed with the Secretary of State to be inaccurate or incomplete in any material respect, to file a certificate of ratification or certificate of validation to make, amend, or correct those instruments. The bill would also make conforming changes.