DISCLAIMER:
Thanx for your inquiry. Before you set up a fictitious entity outside
of the state in which you inhabit or conduct business, there are some
important aspects you should know. Since we are based in California,
the information gathered from California law would be found in
parallel laws within your state, as it regards to operating a foreign
corporation (see explanation below). California is not business
friendly, so for the past 10 years, there has been a mass exodus of
businesses to more affordable states. Since Nevada is our neighbor,
many of the businesses have found it very lucrative to terminate their
California operations and move their operations to Nevada. This is
the basis for the information below.
Do I have to register (qualify) my out of state (or country)
corporation in California?
A foreign (out of state or country) corporation transacting intrastate
business in the State of California must qualify to do so with the
Secretary of State's Office. "Transacting intrastate business" is
defined as entering into repeated and successive transactions of a
corporation’’s business in this state, other than interstate or
foreign commerce. See Section 191 of the California Corporations Code.
If you are unable to make a determination based upon the contents of
Corporations Code Section 191, you will need to consult private legal
counsel. The Secretary of State’’s Office cannot provide legal advice
concerning a corporation's need to qualify to transact intrastate
business in California.
In addition to the annual filing of the Statement and Designation by
Foreign Corporation, the California Franchise Tax Board does assess
each foreign corporation an annual fee of $800 for the privilege of
doing business in this state.
Requirements For Qualification
of Foreign Stock Corporations
Foreign stock corporations must file a signed statement consistent
with the requirements of California Corporations Code Section 2105 to
qualify to transact intrastate business in California. The
downloadable Statement and Designation by Foreign Corporation form in
Adobe PDF has been designed for compliance with these requirements.
The form can be viewed, filled in and printed using your Web browser
and Adobe's Acrobat Reader 5.0.5 or higher. The current version of
Acrobat is available free from Adobe's website.
An original certificate by an authorized public official of the state
or place of incorporation, to the effect that the corporation is an
existing corporation in good standing status in that state or place,
must be attached to the Statement and Designation by Foreign
Corporation form at the time of filing. A certified copy of the
Articles of Incorporation does not meet statutory requirements and
cannot be accepted in lieu of the required original certificate.
Upon the filing of the Statement and Designation by Foreign
Corporation form, a Certificate of Qualification will be issued to the
corporation. The certificate is issued only at the time of
qualification and will not be reissued if lost or misplaced.
The fee for filing the Statement and Designation by Foreign
Corporation for a stock (profit) corporation is $100.00. Check(s)
should be made payable to the Secretary of State.
PLEASE NOTE: Corporations qualified to transact intrastate business in
California are subject to California corporation franchise tax
requirements until such time as they formally surrender their right to
transact intrastate business. Information regarding franchise tax
requirements can be obtained from the Franchise Tax Board's Internet
website or by calling the Franchise Tax Board at 1-800-852-5711.
CORPORATIONS CODE SECTION 100-195
191. (a) For the purposes of Chapter 21 (commencing with Section
2100), "transact intrastate business" means entering into repeated and
successive transactions of its business in this state, other than
interstate or foreign commerce. (b) A foreign corporation shall not be
considered to be transacting intrastate business merely because its
subsidiary transacts intrastate business. (c) Without excluding other
activities which may not constitute transacting intrastate business, a
foreign corporation shall not be considered to be transacting
intrastate business within the meaning of subdivision (a) solely by
reason of carrying on in this state any one or more of the following
activities: (1) Maintaining or defending any action or suit or any
administrative or arbitration proceeding, or effecting the settlement
thereof or the settlement of claims or disputes. (2) Holding meetings
of its board or shareholders or carrying on other activities
concerning its internal affairs. (3) Maintaining bank accounts. (4)
Maintaining offices or agencies for the transfer, exchange and
registration of its securities or depositaries with relation to its
securities. (5) Effecting sales through independent contractors. (6)
Soliciting or procuring orders, whether by mail or through employees
or agents or otherwise, where such orders require acceptance without
this state before becoming binding contracts. (7) Creating evidences
of debt or mortgages, liens or security interests on real or personal
property. (8) Conducting an isolated transaction completed within a
period of 180 days and not in the course of a number of repeated
transactions of like nature. (d) Without excluding other activities
which may not constitute transacting intrastate business, any foreign
lending institution, including, but not limited to: any foreign
banking corporation, any foreign corporation all of the capital stock
of which is owned by one or more foreign banking corporations, any
foreign savings and loan association, any foreign insurance company or
any foreign corporation or association authorized by its charter to
invest in loans secured by real and personal property, whether
organized under the laws of the United States or of any other state,
district or territory of the United States, shall not be considered to
be doing, transacting or engaging in business in this state solely by
reason of engaging in any or all of the following activities either on
its own behalf or as a trustee of a pension plan, employee profit
sharing or retirement plan, testamentary or inter vivos trust, or in
any other fiduciary capacity: (1) The acquisition by purchase, by
contract to purchase, by making of advance commitments to purchase or
by assignment of loans, secured or unsecured, or any interest therein,
if such activities are carried on from outside this state by the
lending institution. (2) The making by an officer or employee of
physical inspections and appraisals of real or personal property
securing or proposed to secure any loan, if the officer or employee
making any physical inspection or appraisal is not a resident of and
does not maintain a place of business for such purpose in this state.
(3) The ownership of any loans and the enforcement of any loans by
trustee's sale, judicial process or deed in lieu of foreclosure or
otherwise. (4) The modification, renewal, extension, transfer or sale
of loans or the acceptance of additional or substitute security
therefor or the full or partial release of the security therefor or
the acceptance of substitute or additional obligors thereon, if the
activities are carried on from outside this state by the lending
institution. (5) The engaging by contractual arrangement of a
corporation, firm or association, qualified to do business in this
state, which is not a subsidiary or parent of the lending institution
and which is not under common management with the lending institution,
to make collections and to service loans in any manner whatsoever,
including the payment of ground rents, taxes, assessments, insurance
and the like and the making, on behalf of the lending institution, of
physical inspections and appraisals of real or personal property
securing any loans or proposed to secure any loans, and the
performance of any such engagement. (6) The acquisition of title to
the real or personal property covered by any mortgage, deed of trust
or other security instrument by trustee's sale, judicial sale,
foreclosure or deed in lieu of foreclosure, or for the purpose of
transferring title to any federal agency or instrumentality as the
insurer or guarantor of any loan, and the retention of title to any
real or personal property so acquired pending the orderly sale or
other disposition thereof. (7) The engaging in activities necessary or
appropriate to carry out any of the foregoing activities. Nothing
contained in this subdivision shall be construed to permit any foreign
banking corporation to maintain an office in this state otherwise than
as provided by the laws of this state or to limit the powers conferred
upon any foreign banking corporation as set forth in the laws of this
state or to permit any foreign lending institution to maintain an
office in this state except as otherwise permitted under the laws of
this state.
CORPORATIONS CODE SECTION 2100-2117
Foreign Corporations Transacting intrastate business
2100. This chapter applies only to foreign corporations transacting
intrastate business, except as otherwise expressly provided. 2101. (a)
Any foreign corporation (other than a foreign association) not
transacting intrastate business may register its corporate name with
the Secretary of State, provided its corporate name would be available
pursuant to Section 201 to a new corporation organized under this
division at the time of such registration. (b) Such registration may
be made by filing (1) an application for registration signed by a
corporate officer stating the name of the corporation, the state or
place under the laws of which it is incorporated, the date of its
incorporation, and that it desires to register its name under this
section; and (2) a certificate of an authorized public official of the
state or place in which it is organized stating that such corporation
is in good standing under those laws. Such registration shall be
effective until the close of the calendar year in which the
application for registration is filed. (c) A corporation which has in
effect a registration of its corporate name may renew such
registration from year to year by annually filing an application for
renewal setting forth the facts required to be set forth in an
original application for registration and a certificate of good
standing as required for the original registration between the first
day of October and the 31st day of December in each year. Such renewal
application shall extend the registration for the following calendar
year. 2102. A foreign corporation which has filed a designation of an
agent for the service of process, pursuant to the requirements of any
law relating to the qualification of foreign corporations in force at
the time of the filing, need not file the statement provided for in
Section 2105, but shall file an amended statement and designation when
required by Section 2107. 2103. Nothing in this chapter repeals,
alters or amends the provisions of Sections 1600 to 1607, inclusive,
of the Insurance Code or prevents any foreign insurance company from
carrying out contracts made before the surrender of its right to
engage in intrastate business or contracts made with citizens of other
states who subsequently become citizens of or residents in this state. 2104. Any foreign lending institution which has not qualified to do
business in this state and which engages in any of the activities set
forth in subdivision (d) of Section 191 shall be considered by such
activities to have appointed the Secretary of State as its agent for
service of process for any action arising out of any such activities,
and, on or before June 30th of each year, shall file a statement
showing the address to which any notice or process may be sent in the
manner and with the effect provided in Section 2111. No foreign
lending institution solely by reason of engaging in any one or more of
the activities set forth in subdivision (d) of Section 191 shall be
required to qualify to do business in this state nor be subject to (a)
any of the provisions of the Bank and Corporation Tax Law (commencing
with Section 23001) of the Revenue and Taxation Code or (b) any of the
provisions of this code or the Financial Code or Insurance Code
relating to qualifications for doing or transacting business in this
state or to requirements pertaining thereto or to the effects or
results of failure to qualify to do business in this state. 2105. (a)
A foreign corporation shall not transact intrastate business without
having first obtained from the Secretary of State a certificate of
qualification. To obtain that certificate it shall file, on a form
prescribed by the Secretary of State, a statement and designation
signed by a corporate officer stating: (1) Its name and the state or
place of its incorporation or organization. (2) The address of its
principal executive office. (3) The address of its principal office
within this state, if any. (4) The name of an agent upon whom process
directed to the corporation may be served within this state. Such
designation shall comply with the provisions of subdivision (b) of
Section 1502. (5) (A) Its irrevocable consent to service of process
directed to it upon the agent designated and to service of process on
the Secretary of State if the agent so designated or the agent's
successor is no longer authorized to act or cannot be found at the
address given. (B) Consent under this paragraph extends to service of
process directed to the foreign corporation's agent in California for
a search warrant issued pursuant to Section 1524.2 of the Penal Code,
for records or documents that are in the possession of the foreign
corporation and are located outside of this state. This subparagraph
shall apply to a foreign corporation that is a party or a nonparty to
the matter for which the search warrant is sought. (6) If it is a
corporation which will be subject to the Insurance Code as an insurer,
it shall so state that fact. (b) Annexed to that statement and
designation shall be a certificate by an authorized public official of
the state or place of incorporation of the corporation to the effect
that such corporation is an existing corporation in good standing in
that state or place or, in the case of an association, an officers'
certificate stating that it is a validly organized and existing
business association under the laws of a specified foreign
jurisdiction. (c) Before it may be designated by any foreign
corporation as its agent for service of process, any corporate agent
must comply with Section 1505. 2106. (a) Subject to the provisions of
subdivision (b), upon payment of the fees required by law the
Secretary of State shall file the statement and designation prescribed
in Section 2105 and shall issue to the corporation a certificate of
qualification stating the date of filing of said statement and
designation and that the corporation is qualified to transact
intrastate business, subject, however, to any licensing requirements
otherwise imposed by the laws of this state. (b) No foreign
corporation having a name which would not be available pursuant to
subdivision (b) of Section 201 to a new corporation organized under
this division shall transact intrastate business in this state or
qualify to do so under this chapter or file an amended statement and
designation containing such name unless either: (1) it obtains and
files an order from a court of competent jurisdiction permanently
enjoining the other corporation having a conflicting name from doing
business in this state under that name; or (2) the Secretary of State
finds, upon proof by affidavit or otherwise as the Secretary of State
may determine, that the business to be conducted in this state by the
foreign corporation is not the same as or similar to the business
being conducted by the corporation (or to be conducted by the proposed
corporation) with whose name it may conflict and that the public is
not likely to be deceived, and the foreign corporation agrees that it
will transact business in this state under an assumed name disclosed
to the Secretary of State and that it will use such assumed name in
all of its dealings with the Secretary of State and in the conduct of
its affairs in this state. Such assumed name may be its name with the
addition of some distinguishing word or words acceptable to the
Secretary of State or a name available for the name of a domestic
corporation pursuant to subdivision (b) of Section 201. A corporation
which has made such an agreement with the Secretary of State shall not
do business in this state except under the name agreed upon, so long
as the agreement remains in effect. This subdivision shall not apply
to any corporation which is subject to the Insurance Code as an
insurer unless the insurer has first obtained from the Insurance
Commissioner a certificate approving the assumed name. 2106.5. The
Secretary of State shall not file any statement and designation
pursuant to Section 2106 or any amended statement and designation
pursuant to Section 2107, where it appears that the business is that
of an insurer subject to the Insurance Code unless a certificate of
the Insurance Commissioner approving the corporate name is attached
thereto. 2107. (a) If any foreign corporation (but not a foreign
association) qualified to transact intrastate business shall change
its name or make a change affecting an assumed name under Section
2106, it shall file, on a form prescribed by the Secretary of State,
an amended statement signed by a corporate officer setting forth the
change made. The amended statement shall set forth the name
relinquished as well as the new name assumed and there shall be
annexed to the amended statement a certificate of an authorized public
official of its state or place of incorporation that the change of
name was made in accordance with the laws of that state or place. Upon
the filing of the amended statement, the Secretary of State shall
issue a new certificate of qualification. (b) If any foreign
association qualified to transact intrastate business shall change its
name, the address of its principal office in this state, the address
of its principal executive office or its agent for the service of
process, or if the stated address of any natural person designated as
agent is changed, it shall file, on a form prescribed by the Secretary
of State, an amended statement and designation signed by an officer
setting forth the change or changes made. In the case of a change of
name, the amended statement and designation shall set forth the name
relinquished as well as the new name assumed and there shall be
annexed to the amended statement and designation an officer's
certificate stating that such change of name was made in accordance
with its declaration of trust. If the change includes a change of
name, or a change affecting an assumed name pursuant to Section 2106,
upon the filing of the amended statement, the Secretary of State shall
issue a new certificate of qualification. (c) If the change includes a
change of name of an insurer subject to the Insurance Code, the form
shall include a statement that the corporation is such an insurer if
it does not already so appear. (d) If a foreign corporation qualified
to transact business in this state shall change the address of its
principal office in this state, the address of its principal executive
office, or its agent for the service of process, or if the stated
address of any natural person designated as agent is changed, the
filing of a statement pursuant to Section 2117 shall supersede the
statement and designation with respect thereto. 2110. Delivery by hand
of a copy of any process against a foreign corporation (a) to any
officer of the corporation or its general manager in this state, or if
the corporation is a bank to a cashier or an assistant cashier, (b) to
any natural person designated by it as agent for the service of
process, or (c), if the corporation has designated a corporate agent,
to any person named in the latest certificate of the corporate agent
filed pursuant to Section 1505 shall constitute valid service on the
corporation. A copy of the statement and designation, or a copy of the
latest statement filed pursuant to Section 2117, certified by the
Secretary of State, is sufficient evidence of the appointment of an
agent for the service of process. 2110.1. In addition to the
provisions of Chapter 4 (commencing with Section 413.10) of Title 5 of
Part 2 of the Code of Civil Procedure, process may be served upon a
foreign corporation as provided in this chapter. 2111. (a) If the
agent designated for the service of process is a natural person and
cannot be found with due diligence at the address stated in the
designation or if the agent is a corporation and no person can be
found with due diligence to whom the delivery authorized by Section
2110 may be made for the purpose of delivery to the corporate agent,
or if the agent designated is no longer authorized to act, or if no
agent has been designated and if no one of the officers or agents of
the corporation specified in Section 2110 can be found after diligent
search and it is so shown by affidavit to the satisfaction of the
court, then the court may make an order that service be made by
personal delivery to the Secretary of State or to an assistant or
deputy secretary of state of two copies of the process together with
two copies of the order, except that if the corporation to be served
has not filed the statement required to be filed by Section 2105 then
only one copy of the process and order need be delivered but the order
shall include and set forth an address to which the process shall be
sent by the Secretary of State. Service in this manner is deemed
complete on the 10th day after delivery of the process to the
Secretary of State. (b) Upon receipt of the process and order and the
fee therefor the Secretary of State forthwith shall give notice to the
corporation of the service of the process by forwarding by registered
or certified mail, with request for return receipt, a copy of the
process and order to the address specified in the order if the
corporation has not filed the statement required by Section 2105 or to
the two stated addresses of the corporation set forth in the latest
statement filed pursuant to Section 2105 or 2117, or if only one
address is set forth in the latest statement, to the sole stated
address of the corporation. (c) The Secretary of State shall keep a
record of all process served upon the Secretary of State and shall
record therein the time of service and the Secretary of State's action
with respect thereto. The certificate of the Secretary of State, under
the Secretary of State's official seal, certifying to the receipt of
process, the giving of notice thereof to the corporation, and the
forwarding of the process pursuant to this section, shall be competent
and prima facie evidence of the matters stated therein. 2112. (a)
Subject to Section 2113, a foreign corporation which has qualified to
transact intrastate business may surrender its right to engage in that
business within this state by filing a certificate of surrender signed
by a corporate officer stating: (1) The name of the corporation as
shown on the records of the Secretary of State, and the state or place
of incorporation or organization. (2) That it revokes its designation
of agent for service of process. (3) That it surrenders its authority
to transact intrastate business. (4) That it consents that process
against it in any action upon any liability or obligation incurred
within this state prior to the filing of the certificate of withdrawal
may be served upon the Secretary of State. (5) A post office address
to which the Secretary of State may mail a copy of any process against
the corporation that is served upon the Secretary of State, which
address or the name to which the process should be sent may be changed
from time to time by filing a statement signed by a corporate officer
stating the new address or name or both. (b) A tax clearance
certificate issued by the Franchise Tax Board pursuant to Section
23334 of the Revenue and Taxation Code shall be filed with the
certificate of surrender. 2113. (a) The filing of an agreement of
merger of a foreign disappearing corporation qualified to transact
intrastate business in this state pursuant to Section 1103, or the
filing pursuant to subdivision (d) of Section 1108 of an agreement,
certificate, or other document as to a merger that includes a
disappearing foreign corporation qualified to transact intrastate
business, or the filing of a certificate of ownership as to a foreign
subsidiary corporation qualified to transact intrastate business in
this state pursuant to Section 1110, or the filing by a foreign
corporation qualified to transact intrastate business in this state of
an organizational document containing a statement of conversion
pursuant to Section 15677.8, 16908, or 17540.8, constitutes the
surrender by the foreign corporation of its right to engage in
intrastate business within this state. (b) With respect to
corporations for which documents have not been filed as provided in
subdivision (a), a certificate of surrender as prescribed by Section
2112 shall be filed by a foreign corporation qualified to transact
intrastate business upon its merger into another foreign corporation.
(c) In lieu of a signature as prescribed by Section 2112, a
certificate of surrender pursuant to subdivision (b) for a merged
foreign corporation may be signed in the name of the surviving
corporation by an officer thereof. In that case, the certificate of
surrender shall be accompanied by a certificate of an authorized
public official of the state or place of incorporation of the merged
foreign corporation stating that the corporation has been merged into
another foreign corporation and setting forth the name and state or
place of incorporation of the surviving foreign corporation. 2114. (a)
A foreign corporation that has transacted intrastate business and has
thereafter withdrawn from business in this state may be served with
process in the manner provided in this chapter in any action brought
in this state arising out of that business, whether or not it has ever
complied with the requirements of this chapter. (b) A foreign
corporation that has surrendered its right to transact intrastate
business pursuant to Section 2112 or 2113 may be served with process
in any action upon a liability or obligation incurred within this
state prior to that surrender by delivery of the process to the
Secretary of State, or an assistant or a deputy to the Secretary of
State pursuant to this chapter and no court order authorizing this
service shall be required. The process shall be mailed in the manner
prescribed in this chapter except that it shall be sent to the address
to which process is authorized to be sent in the certificate of
surrender or to the address of the surviving domestic corporation in
the case of a surrender under Section 2113. (c) If a foreign
corporation that is qualified to transact intrastate business has its
right to transact such business forfeited by the Franchise Tax Board
pursuant to the Bank and Corporation Tax Law (Part 11 (commencing with
Section 23001) of Division 2 of the Revenue and Taxation Code),
service of process on that corporation may be effected in the manner
set forth in Sections 2110 and 2111, as if the right to transact
intrastate business had not been forfeited. (d) The fact that a
corporation ceases to transact intrastate business without filing a
certificate of surrender does not revoke the appointment of any agent
for the service of process. 2115. (a) A foreign corporation (other
than a foreign association or foreign nonprofit corporation but
including a foreign parent corporation even though it does not itself
transact intrastate business) is subject to the requirements of
subdivision (b) commencing on the date specified in subdivision (d)
and continuing until the date specified in subdivision (e) if: (1) the
average of the property factor, the payroll factor, and the sales
factor (as defined in Sections 25129, 25132, and 25134 of the Revenue
and Taxation Code) with respect to it is more than 50 percent during
its latest full income year and (2) more than one-half of its
outstanding voting securities are held of record by persons having
addresses in this state appearing on the books of the corporation on
the record date for the latest meeting of shareholders held during its
latest full income year or, if no meeting was held during that year,
on the last day of the latest full income year. The property factor,
payroll factor, and sales factor shall be those used in computing the
portion of its income allocable to this state in its franchise tax
return or, with respect to corporations the allocation of whose income
is governed by special formulas or that are not required to file
separate or any tax returns, which would have been so used if they
were governed by this three-factor formula. The determination of these
factors with respect to any parent corporation shall be made on a
consolidated basis, including in a unitary computation (after
elimination of intercompany transactions) the property, payroll, and
sales of the parent and all of its subsidiaries in which it owns
directly or indirectly more than 50 percent of the outstanding shares
entitled to vote for the election of directors, but deducting a
percentage of the property, payroll, and sales of any subsidiary equal
to the percentage minority ownership, if any, in the subsidiary. For
the purpose of this subdivision, any securities held to the knowledge
of the issuer in the names of broker-dealers, nominees for
broker-dealers (including clearing corporations), or banks,
associations, or other entities holding securities in a nominee name
or otherwise on behalf of a beneficial owner (collectively "nominee
holders"), shall not be considered outstanding. However, if the
foreign corporation requests all nominee holders to certify, with
respect to all beneficial owners for whom securities are held, the
number of shares held for those beneficial owners having addresses (as
shown on the records of the nominee holder) in this state and outside
of this state, then all shares so certified shall be considered
outstanding and held of record by persons having addresses either in
this state or outside of this state as so certified, provided that the
certification so provided shall be retained with the record of
shareholders and made available for inspection and copying in the same
manner as is provided in Section 1600 with respect to that record. A
current list of beneficial owners of a foreign corporation's
securities provided to the corporation by one or more nominee holders
or their agent pursuant to the requirements of Rule 14b-1(b)(3) or
14b-2(b)(3) as adopted on January 6, 1992, promulgated under the
Securities Exchange Act of 1934, shall constitute an acceptable
certification with respect to beneficial owners for the purposes of
this subdivision. (b) Except as provided in subdivision (c), the
following chapters and sections of this division shall apply to a
foreign corporation as defined in subdivision (a) (to the exclusion of
the law of the jurisdiction in which it is incorporated): Chapter 1
(general provisions and definitions), to the extent applicable to the
following provisions; Section 301 (annual election of directors);
Section 303 (removal of directors without cause); Section 304 (removal
of directors by court proceedings); Section 305, subdivision (c)
(filling of director vacancies where less than a majority in office
elected by shareholders); Section 309 (directors' standard of care);
Section 316 (excluding paragraph (3) of subdivision (a) and paragraph
(3) of subdivision (f)) (liability of directors for unlawful
distributions); Section 317 (indemnification of directors, officers,
and others); Sections 500 to 505, inclusive (limitations on corporate
distributions in cash or property); Section 506 (liability of
shareholder who receives unlawful distribution); Section 600,
subdivisions (b) and (c) (requirement for annual shareholders' meeting
and remedy if same not timely held); Section 708, subdivisions (a),
(b), and (c) (shareholder's right to cumulate votes at any election of
directors); Section 710 (supermajority vote requirement); Section
1001, subdivision (d) (limitations on sale of assets); Section 1101
(provisions following subdivision (e)) (limitations on mergers);
Section 1151 (first sentence only) (limitations on conversions);
Section 1152 (requirements of conversions); Chapter 12 (commencing
with Section 1200) (reorganizations); Chapter 13 (commencing with
Section 1300) (dissenters' rights); Sections 1500 and 1501 (records
and reports); Section 1508 (action by Attorney General); Chapter 16
(commencing with Section 1600) (rights of inspection). (c) This
section does not apply to any corporation (1) with outstanding
securities listed on the New York Stock Exchange or the American Stock
Exchange, or (2) with outstanding securities designated as qualified
for trading on the Nasdaq National Market (or any successor thereto)
of the Nasdaq Stock Market operated by the Nasdaq Stock Market Inc.,
or (3) if all of its voting shares (other than directors' qualifying
shares) are owned directly or indirectly by a corporation or
corporations not subject to this section. (d) For purposes of
subdivision (a), the requirements of subdivision (b) shall become
applicable to a foreign corporation only upon the first day of the
first income year of the corporation (1) commencing on or after the
135th day of the income year immediately following the latest income
year with respect to which the tests referred to in subdivision (a)
have been met or (2) commencing on or after the entry of a final order
by a court of competent jurisdiction declaring that those tests have
been met. (e) For purposes of subdivision (a), the requirements of
subdivision (b) shall cease to be applicable to a foreign corporation
(1) at the end of the first income year of the corporation immediately
following the latest income year with respect to which at least one of
the tests referred to in subdivision (a) is not met or (2) at the end
of the income year of the corporation during which a final order has
been entered by a court of competent jurisdiction declaring that one
of those tests is not met, provided that a contrary order has not been
entered before the end of the income year. (f) Any foreign corporation
that is subject to the requirements of subdivision (b) shall advise
any shareholder of record, any officer, director, employee, or other
agent (within the meaning of Section 317) and any creditor of the
corporation in writing, within 30 days of receipt of written request
for that information, whether or not it is subject to subdivision (b)
at the time the request is received. Any party who obtains a final
determination by a court of competent jurisdiction that the
corporation failed to provide to the party information required to be
provided by this subdivision or provided the party information of the
kind required to be provided by this subdivision that was incorrect,
then the court, in its discretion, shall have the power to include in
its judgment recovery by the party from the corporation of all court
costs and reasonable attorneys' fees incurred in that legal proceeding
to the extent they relate to obtaining that final determination. 2116.
The directors of a foreign corporation transacting intrastate business
are liable to the corporation, its shareholders, creditors, receiver,
liquidator or trustee in bankruptcy for the making of unauthorized
dividends, purchase of shares or distribution of assets or false
certificates, reports or public notices or other violation of official
duty according to any applicable laws of the state or place of
incorporation or organization, whether committed or done in this state
or elsewhere. Such liability may be enforced in the courts of this
state. 2117. (a) (1) Every foreign corporation (other than a foreign
association) qualified to transact intrastate business shall file,
annually during the applicable filing period, on a form prescribed by
the Secretary of State, a statement containing: (A) The names and
complete business or residence addresses of its chief executive
officer, secretary, and chief financial officer. (B) The street
address of its principal executive office. (C) The street address of
its principal business office in this state, if any. (D) 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).
(2) In addition to all of the information required by paragraph (1)
every publicly traded company shall also include the following
information in the statement: (A) The name of the independent auditor
used by the corporation and a description of any other services, if
any, performed for the corporation during the previous 24 months by
the independent auditor, by its parent corporation, or by an agent,
subsidiary, corporate partner, or corporate affiliate of the
independent auditor or its parent corporation. (B) The date of the
last report prepared for the corporation by the independent auditor.
The corporation shall attach a copy of the report to the statement.
(C) The annual compensation paid to each member of the board of
directors and each executive officer, including the number of any
shares or options for shares that were not available to other
employees of the corporation. (D) A description of any loans made to a
member of the board of directors by the corporation at a preferential
loan rate during the previous 24 months, including the amount and
terms of the loans. (E) A statement indicating whether any bankruptcy
was filed by the corporation, its executive officers, or members of
the board of directors within the previous 10 years. (F) A statement
indicating whether any member of the board of directors or executive
officer of the corporation was convicted of fraud during the previous
10 years. (G) A statement indicating whether the corporation violated
any federal security laws or any banking or security provision of
California law during the previous 10 years for which the corporation
was found liable in an action before a federal or state court or
regulatory agency or a self-regulatory agency in which a judgment over
ten thousand dollars ($10,000) was entered. If the executive officers
of the corporation use other titles, the statement shall include the
officers performing comparable duties under other titles. If the
corporation has no executive officers, or has no executive officers
who are natural persons, the statement shall include the names of
natural persons performing comparable duties for the corporation
pursuant to a management contract or other arrangement. (3) For
purposes of this section, the following definitions apply: (4)
"Publicly traded company" means a company with securities that are
either listed or admitted to trading on a national or foreign
exchange, or is the subject of two-way quotations, such as both bid
and asked prices, that is regularly published by one or more
broker-dealers in the National Daily Quotation Service or a similar
service. (B) "Executive officer" means the five most highly
compensated officers of the company, excluding any officer that is
also a member of the board of directors. (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 the agent has not terminated. If a natural
person is designated, the statement shall set forth the person's
complete business or residence address. If a corporate agent is
designated, no address for it shall be set forth. (c) The statement
and designation required by subdivision (a) shall be available and
open to the public for inspection. The Secretary of State, no later
than December 31, 2004, shall provide access to all information
contained in the statement and designation by means of an online
database. (d) In addition to any other fees required, a foreign
corporation shall pay a five-dollar ($5) disclosure fee upon filing
the statement and designation 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 (d), and one-half shall be deposited into the
Victims of Corporate Fraud Compensation Fund established in Section
1502.5. (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 shall 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 filing pursuant to
Section 2105. (f) Subdivisions (c), (d), (f), and (g) of Section 1502
apply to statements filed pursuant to this section except that
"articles" shall mean the filing pursuant to Section 2105.
