(a) A benefit corporation may terminate its status as a benefit corporation and cease to be subject to this part by amending the corporation’s articles to delete the provision required by Section 14602. The amendment shall not be effective unless the amendment is adopted by at least the minimum status vote. If the amendment is adopted, a shareholder of the corporation may, by complying with Chapter 13 (commencing with Section 1300) of Division 1, require the corporation to purchase at their fair market value the shares owned by the shareholder which are dissenting shares as defined in subdivision (b) of Section 1300 in accordance with the procedures in that chapter.

(b) If a reorganization (Section 181) would have the effect of terminating the status of a corporation as a benefit corporation, the reorganization shall not be effective unless the reorganization is approved by at least the minimum status vote.

Terms Used In California Corporations Code 14604

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Benefit corporation: means a corporation organized under the General Corporation Law that has elected to become subject to this part and whose status as a benefit corporation has not been terminated as provided in this part. See California Corporations Code 14601
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Minimum status vote: means that:

    California Corporations Code 14601

(c) If a benefit corporation is the converting corporation (Section 1150) in a conversion (Section 161.9), the conversion shall not be effective unless the conversion is approved by at least the minimum status vote.

(d) A sale, lease, conveyance, exchange, transfer, or other disposition of all or substantially all of the assets of a benefit corporation, unless the transaction is in the usual and ordinary course of business of the benefit corporation, shall not be effective unless the transaction is approved by at least the minimum status vote. If the transaction is approved, a shareholder of the corporation may, by complying with Chapter 13 (commencing with Section 1300) of Division 1, require the corporation to purchase at their fair market value the shares owned by the shareholder which are dissenting shares as defined in subdivision (b) of Section 1300 in accordance with the procedures in that chapter, as if the transaction were a reorganization to which that chapter applies.

(Added by Stats. 2011, Ch. 728, Sec. 1. (AB 361) Effective January 1, 2012.)

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