Do These 2022 Legislative Changes Require A Bylaw Refresh?

Allen Matkins
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Allen Matkins

During the 2021-2022 legislative session, the California Secretary of State sponsored legislation, 2022 Cal. Stats. ch. 617, making numerous changes to the Corporations Code in anticipation of the implementation of its California Business Connect automated filing system.  Although extensive, these changes were described in the Senate Floor Analysis as "technical" and "minor".   However technical or minor these changes may be, they are nonetheless extensive and California corporations may want to consider updating their bylaws accordingly.

One of the most wide ranging changes was to replace the term "principal executive office" with "principal office" in numerous provisions of the General Corporation Law.   For example, Section 213 formerly required corporations to keep the original or a copy of their bylaws at its principal executive office in California.  Many bylaws reiterate this requirement.  Other provisions that formerly referred to a corporation's "principal executive office" included: Sections 109.5 (facts ascertainable outside filed instrument); 177 (definition of "proper county"); 423 (notice of levy of assessment); 509 (notice of redemption); 600 (location of shareholder meetings); 601 (notice of shareholder meetings); 1500 (shareholder record); 1503 (resignation of agent for service of process); 1600 (shareholder list inspection); and 1702 (service of process).

Is this a substantive change?  It is hard to say as the General Corporation Law does not define either "principal executive office" or "principal office".   If there is a distinction, then the change could be significant.  For example, Section 177 previously defined "proper county" by reference to the location of a corporation's principal executive office.  If a corporation's principal executive office is in one county and its principal office located in a different county, then the venue of some proceedings (e.g., an action to enforce a right of inspection pursuant to Section 1603) will be different. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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