§ 5017. — 5017. (Added by Stats. 2023, Ch. 151, Sec. 2.)

California § 5017.

• Jurisdiction: California
• Code CORP: Corporations Code - CORP
• Div.: 2.
• Title 1.: DIVISION 2. NONPROFIT CORPORATION LAW
• Part 1.: PART 1. GENERAL PROVISIONS AND DEFINITIONS GOVERNING PARTS 1 THROUGH 5

Text

(a)
(1)
Otherwise lawful corporate actions not in compliance, or purportedly not in compliance, with this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the corporate action, may be ratified, or validated by the superior court, in accordance with the provisions of this section.
(2)
Except as otherwise determined by the superior court pursuant to subdivision (e), a ratification or validation of a corporate action in accordance with this section is conclusive in the absence of fraud.
(3)
This section does not limit the authority of the board, the members, or the corporation to effect any other
lawful means of ratification or validation of a corporate action or correction of a record.
(4)
No corporate action may be ratified under subdivision (b) by a dissolved corporation or a foreign corporation, and no petition may be filed under subdivision (e) in respect of any corporate action of such a corporation.
(5)
This section shall not be used to ratify or validate any corporate action in respect of any of the following:
(A)
Noncompliance with subdivision (a) of Section 5231, 7231, or 9241.
(B)
Noncompliance with Section 5234, subdivision (a) or (b) of Section 7233, or Section 9244.
(C)
Noncompliance with Section 5236 or 7235.
(D)
Transactions covered by Section 5233.
(E)
Transactions covered by Section 9243.
(b)
(1)
A ratification of a corporate action pursuant to this section, other than a ratification relating to the election of the initial directors pursuant to paragraph (2) of this subdivision, shall be approved by the board and, as applicable, approved by the members in accordance with any provision set forth in this division or the articles, bylaws, or a plan or agreement to which the corporation is a party that is applicable to the type of corporate action proposed to be ratified and in effect at the time of the ratification, unless there are no members entitled to vote on the ratification at the time of the ratification, in which case the ratification shall be approved solely by the board, or a higher approval standard that was or would have been applicable to
the original taking or purported taking of the corporate action, in which case the ratification shall be approved in accordance with such higher approval standard. In order to approve a ratification of a corporate action pursuant to this paragraph, the board and, as applicable, the members shall adopt resolutions setting forth all of the following:
(A)
Each corporate action to be ratified.
(B)
The date when each such corporate action was purportedly taken, and the date any such corporate action shall be deemed to have become effective pursuant to this section if different than the date the corporate action was purportedly taken.
(C)
The nature of the noncompliance or purported noncompliance of each such corporate action.
(D)
A statement that the
ratification of each such corporate action is approved.
(2)
If the corporate action to be ratified relates to the election of the initial directors pursuant to Section 5134, 7134, or 9134, a majority of the persons who, at the time of the ratification, are exercising the powers of directors may approve that ratification by adopting resolutions setting forth all of the following:
(A)
The name of the person or persons who first took action in the name of the corporation as the initial directors of the corporation.
(B)
The earlier of the date on which such persons first took such action or were purported to have been elected as the initial directors, and the date on which such person or persons shall be deemed to have become the initial directors of the corporation pursuant to this section if different than the date of
such first action or purported election, as applicable.
(C)
That the ratification of the election of such person or persons as the initial directors is approved.
(c)
Notice of any ratification of a corporate action pursuant to this section shall be given promptly after ratification pursuant to subdivision (b) to each member, regardless of whether approval of the members is required for the ratification. The notice shall be given as provided in subdivision (b) of Section 5511 or 7511 or subdivision (a) of Section 9411, as applicable, and shall include a copy of any resolutions adopted pursuant to subdivision (b) and a copy of this section.
(d)
(1)
If a corporate action ratified pursuant to this section would have required the filing of an instrument with the Secretary of State pursuant to the
provisions of this division, or if such ratification would cause any instrument previously filed with the Secretary of State to be inaccurate or incomplete in any material respect after giving effect to the ratification, the corporation shall file a certificate of ratification to make, amend, or correct each such instrument. The certificate of ratification shall have the effect as specified therein, and shall be filed with the Secretary of State. A certificate of ratification shall consist of an officers’ certificate setting forth all of the following:
(A)
The name of the corporation and the Secretary of State’s file number of the corporation.
(B)
The title of any such instrument whose making, amendment, or correction is being effected by the certificate of ratification.
(C)
The date any such instrument was filed
with the Secretary of State, or a statement that any such instrument was not previously filed with the Secretary of State and, as applicable, a statement that the ratification approved pursuant to the resolutions set forth in the certificate of ratification would cause any such instrument to be inaccurate or incomplete in any material respect after giving effect to the ratification.
(D)
The date any such instrument shall be deemed to have become effective pursuant to this section, which may be prior to or after the filing date.
(E)
A statement that the certificate of ratification is making, amending, or correcting any such instrument, as applicable, and a copy of any such instrument containing all of the information required to be included under this division for such instrument to be so made, amended, or corrected. An instrument attached to a certificate of ratification pursuant
to this subparagraph need not be separately executed and acknowledged and need not include any statement required by any other section of this division that such instrument has been approved and adopted in accordance with the provisions of such other section.
(F)
A statement that the ratification has been approved pursuant to subdivision (b), a copy of the resolutions adopted pursuant to subdivision (b) in respect of the ratification.
(2)
The office of the Secretary of State may, in its discretion, refuse to file any certificate of ratification if the instrument would render prior filings with the Secretary of State inaccurate, ambiguous, or unintelligible. Upon refusal of the Secretary of State to file a certificate of ratification pursuant to this subdivision, the corporation shall seek validation pursuant to subdivision (e).
(e)
(1)
Upon the filing of a petition by an authorized person, the superior court of the proper county shall have jurisdiction in equity to determine the validity of any corporate action (whether or not such corporate action is a ratification or has been the subject of any ratification), validate and declare effective any such corporate action, and declare the date any such corporate action shall be deemed to have become effective or valid, as applicable, pursuant to this section.
(2)
This section does not prescribe or circumscribe the facts and circumstances the superior court may consider or which remedies the superior court may grant in exercising its jurisdiction under this section, except as described in this subdivision. The superior court may make any order concerning the corporate action as justice and equity may require.
(3)
Any petition
relating to a ratification taken or proposed to be taken pursuant to this section shall be filed not later than 180 days after the notice required by subdivision (c) is given, except this paragraph shall not apply to an action asserting that a ratification was not accomplished in accordance with this section or to any person to whom notice of the ratification was required to have been given pursuant to subdivision (c), but to whom such notice was not given.
(4)
For purposes of this subdivision, the proper county shall be the county where the principal office of the corporation is located or, if the principal office is not located in this state, in the county in which the corporation’s agent for service of process is located.
(5)
Service of the petition under paragraph (1) upon the registered agent of the corporation shall be deemed to be service upon the corporation, and no other
party need be joined in order for the superior court to adjudicate the matter. The superior court may require notice of the action to be provided to other persons specified by the court and permit those other persons to intervene in the action.
(6)
For purposes of this subdivision, “authorized person” means the corporation, any successor entity to the corporation, any director, any member, or any other person, so long as the other person claims to be substantially and adversely affected by the ratification of a corporate action pursuant to this section.
(7)
Any petition seeking validation of a corporate action shall identify every pending legal proceeding of which the petitioner is aware and in which (A) the validity of the corporate action is being directly challenged or (B) the validation of the corporate action would result in the dismissal of the proceeding in whole or in
part. If the petitioner becomes aware of any additional such legal proceeding, the petitioner shall amend, or, to the extent required by applicable rules, move for leave to amend, the petition within 10 court days to identify each such proceeding. Identification of a proceeding shall include the venue or forum in which the proceeding was filed, any case number or other unique identifier assigned to the proceeding in that venue or forum, the names of the parties to the proceeding, and the date on which the proceeding was filed.
(f)
If a corporate action validated by the superior court pursuant to this section would have required the filing of an instrument with the Secretary of State pursuant to the provisions of this division, or if such validation would cause any instrument previously filed with the Secretary of State to be inaccurate or incomplete in any material respect after giving effect to the validation, the corporation shall file a
certificate of validation to make, amend, or correct each such instrument. The certificate of validation shall have the effect as specified therein, and shall be filed with the Secretary of State. A certificate of validation shall consist of an officers’ certificate setting forth all of the following:
(1)
The name of the corporation and the Secretary of State’s file number of the corporation.
(2)
The title of any such instrument whose making, amendment, or correction is being effected by the certificate of validation.
(3)
The date any such instrument was filed with the Secretary of State, or a statement that any such instrument was not previously filed with the Secretary of State and, as applicable, a statement that the validation ordered pursuant to the superior court order set forth in the certificate of validation
would cause any such instrument to be inaccurate or incomplete in any material respect after giving effect to the validation.
(4)
The date any such instrument shall be deemed to have become effective pursuant to this section, which may be prior to or after the filing date.
(5)
A statement that the certificate of validation is making, amending, or correcting any such instrument, as applicable, and a copy of any such instrument containing all of the information required to be included under this division for such instrument to be so made, amended, or corrected. An instrument attached to a certificate of validation pursuant to this paragraph need not be separately executed and acknowledged and need not include any statement required by any other section of this division that such instrument has been approved and adopted in accordance with the provisions of such other section.
(6)
A statement that the validation has been ordered pursuant to subdivision (e), and a copy of the superior court order issued pursuant to subdivision (e) in respect of such validation.
(g)
Unless otherwise stated in resolutions adopted pursuant to subdivision (b) or determined by the superior court pursuant to subdivision (e), a corporate action or security of the corporation ratified or validated in accordance with this section relates back to the date of the original corporate action.
(h)
As used in this section:
(1)
“Corporate action” means any of the following:
(A)
Any action or purported action of the board.
(B)
Any
action or purported action of the members.
(C)
Any other action or transaction taken, or purportedly taken, by or on behalf of the corporation.
(2)
“Higher approval standard” means any provision set forth in this division or the articles, bylaws, or a plan or agreement to which the corporation was a party in effect at the time of the original taking or purported taking of a corporate action:
(A)
Requiring action of the board or members, at a meeting or by written consent, to be taken by a proportion greater than would have been required pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section.
(B)
Requiring a
greater proportion of the directors or members to constitute a quorum for the transaction of business at a meeting than would have been required pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section.
(C)
Requiring, prohibiting, or prescribing conditions on action of the board or members at a meeting or by written consent, which would not have been required, prohibited, or prescribed pursuant to this division or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section.
(D)
Requiring separate action of any specified person or persons, which would not have been required pursuant to this division or the articles, bylaws, or a
plan or agreement to which the corporation is a party in effect at the time of the ratification of the corporate action pursuant to this section.
(i)
The corporation shall retain all records related to the ratification or validation of a corporate action under this section in accordance with Section 6320, 8320, or 9510.
(j)
If the corporation is a party to a pending legal proceeding in which (1) the validity of a corporate action sought to be ratified or validated pursuant to this section is at issue or (2) the ratification or validation of a corporate action pursuant to this section would result in the dismissal in whole or in part of the proceeding, the corporation shall notify the judge, arbitrator, or other person presiding over the proceeding at least 10 court days prior to adopting resolutions pursuant to subdivision (b) or filing a petition pursuant to subdivision (e) with
respect to that corporate action. That person shall have power to stay the ratification or validation as justice and equity may require.

Legislative History

Added by Stats. 2023, Ch. 151, Sec. 2. (SB 446) Effective January 1, 2024.