Electronic Communications – California Nonprofits

California law regarding electronic transmissions by a corporation will change on January 1, 2010 as a result of the passage of Assembly Bill 285.  Corporations Code Section 20 currently provides that an electronic transmission by a corporation to an individual shareholder or member is not authorized unless, among other things, it satisfies the federal Electronic Signatures in Global and National Commerce Act (ESIGN).  AB 285 eliminates the requirement to satisfy ESIGN and replaces it with the following:

… an electronic transmission under this code by a corporation to an individual shareholder or member of the corporation who is a natural person, and if an officer or director of the corporation, only if communicated to the recipient in that person's capacity as a shareholder or member, is not authorized unless, in addition to satisfying the requirements of [Corporations Code Section 20], the consent to the transmission has been preceded by or includes a clear written statement to the recipient as to

(a) any right of the recipient to have the record provided or made available on paper or in nonelectronic form,

(b) whether the consent applies only to that transmission, to specified categories of communications, or to all communications from the corporation, and

(c) the procedures the recipient must use to withdraw consent.

AB 285 was sponsored by the Nonprofit and Unincorporated Organizations Committee of the Business Law Section of the State Bar of California.  A statement of position sent by the Committee to Assemblymember Van Tran is available here.

The Committee's September 10, 2009 Legislative Update written by exempt organizations attorney Cherie Evans is available on the Evans & Rosen LLP website here.