Unincorporated Associations

Earlier this week, I wrote this post about California' unincorporated association law.   An unincorporated association is a group of two or more "persons" (Section 18030) joined by mutual consent for a common lawful purpose, whether organized for profit or not.  Corporations Code Section 18035(a).  Joint tenancy, tenancy in common, community property or other form or property tenure does not by itself establish an unincorporated association, even if co-owners share ownership of the property for a common purpose.  Also, a marriage or registered domestic partnership does not by itself create an unincorporated association.  Since the definition of "person" is not limited to natural persons, it is possible to be an unincorporated association of two corporations or a corporation and a government agency.  Unincorporated associations may file a Statement of Unincorporated Association, Form UA-100, with the office of the Secretary of State.  Corporations Code Section 18200.  I asked the Secretary of State's office how many of these statements were filed last calendar year.  The answer I received was 294.

A Glitch in AB 571

Earlier this month, I wrote about changes to Chapter 5 of the California Corporations Code which governs a corporation's distributions to its shareholders (Section 166).  Unfortunately, there was a drafting oversight.  Corporations Code Section 402.5 provides that "preferred" or "preference" shares may provide that "Section 502 or 503 not apply in whole or in part with respect to distributions on shares junior to the class or series".  With the enactment of AB 571 (Hagman), Section 502 will soon be no more and Section 503 will be totally different.  As a result, some California corporations will soon have articles of incorporation or certificates of determination that no longer make sense.