Contact us with your California corporate & securities law questions (949) 353-6347 or Contact us here

Why The General Corporation Law Still Prohibits The Issuance Of Money By Corporations

Five years ago, I noted that Section 107 of the California Corporations Code prohibits any corporation, flexible purpose corporation, association or individual from issuing or putting in circulation, as money, anything but the lawful money of the United States.  The following year, Forbes reported that "California Gov. Jerry Brown signed a law repealing a section of the state’s corporation code that prohibited the issuance of currencies other than the dollar".  Forbes was not the only publication to announce the demise of Section 107.  The Los Angeles Times, for example, wrote "AB 129 will allow Bitcoins and other digital currency to be legally used in transactions in California by repealing a provision of state law that bars the use of 'anything but the lawful money of the United States.'"

AB 129 (Dickinson) was indeed enacted by the legislature and signed by the Governor.  As chaptered, the bill included but one section providing "Section 107 of the Corporations Code is repealed."  Even though no court has found AB 129 to be unconstitutional, Section 107 remains a part of the California Corporations Code.  Why?

What happened is that the legislature also enacted SB 1301 (DeSaulnier) which renamed amended Section 701 to include a reference to social purpose corporations.  AB 129 was enacted and signed by the Governor in June 2014 and SB 1301 was not enacted and signed by the Governor until September 2014.  Consequently, AB 129 was "chaptered out" pursuant  to Government Code § 9605:

"In the absence of any express provision to the contrary in the statute which is enacted last, it shall be conclusively presumed that the statute which is enacted last is intended to prevail over statutes which are enacted earlier at the same session and, in the absence of any express provision to the contrary in the statute which has a higher chapter number, it shall be presumed that a statute which has a higher chapter number was intended by the Legislature to prevail over a statute which is enacted at the same session but has a lower chapter number."

Having been enacted earlier the same year, AB 129 received a much lower chapter number (74) than SB 1301 (694) (the Secretary of State assigns chapter numbers not based on the date of passage or gubernatorial signature but on the date received). 

One might have expected the bill's author, Assemblymember Roger Dickinson, to sort matters out when the legislature returned.  He wasn't able to do so because that same fall he lost his bid to be elected to the California Senate.  Apparently, no one else was sufficiently motivated to repeal Section 107 and so it remains a fully effective statute, notwithstanding its near brush with mortality.

Share on:

California Corporations Code

ANY QUESTIONS REGARDING CALIFORNIA CORPORATE AND SECURITIES LAW? CONTACT US DIRECTLY

We offer expert advice with the intricacies of California law.

Our years of experience and expertise allow us to help clients navigate the business laws in California.

CONTACT US

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

ABOUT OUR AUTHOR

30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
 Contact me
Learn More About Keith

nominee-badge

Get the latest news and analysis about California Corporate & Securities law. Subscribe to our newsletter today!

We respect your email privacy

CATEGORIES

see all

RECOGNITION

YOUTUBE

FACEBOOK