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California And Joint Stock Associations

Occasionally, I have devoted space to the topic of unincorporated associations.  See Thinking About Joining A Club? You May Want To Consider These Corporations Code Provisions FirstFederal Court Allows Reverse Veil Piercing Of Unincorporated Association and Court Rules California Unincorporated Association Is A South Dakota Citizen.  California's statutory provisions pertaining to unincorporated associations can be found in Title 3 of the Corporations Code.  Part 3 of Title 3 is devoted to criminalizing various activities on the part of directors, officers and agents of joint stock associations.  Nowhere, however, Part 3 define what constitutes a joint stock association.  Nor does it appear that there are any decisions citing these statutes.  The mystery of what exactly constitutes a joint stock association is deepened by the existence of other provisions within the Corporations Code that refer to joint stock companies (e.g., §§ 5065, 25013, and 29514).  Is a "joint stock association" a "joint stock company" by another name or an entirely different entity?

According to a 1916 law review article, a joint stock association at common law was "a group of individuals organized for certain purposes into an association similar to a partnership, but, unlike a partnership, having a capital stock divided into shares transferable by the owner".  I. Maurice Wormser, The Legal Status of Joint Stock Associations, 3 Fordham L. Rev. 1 (1916).  At one time, joint stock associations were even mentioned in California's Constitution.  Prior to its repeal on November 4, 1930, article XII, section 3, of the Constitution, read in part as follows:

"Each stockholder of a corporation, or joint-stock association, shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred, during the time he was a stockholder, as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock or shares of the corporation or association."

It does strike me as odd that California continues to criminalize activities by persons associated with an undefined form of entity.  How would a person even know that he or she is an officer, director or agent of such an entity?

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California Corporations Code


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30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
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