700-711
CORPORATIONS CODE
SECTION 700-711
700. (a) Except as provided in Section 708 and except as may be
otherwise provided in the articles, each outstanding share,
regardless of class, shall be entitled to one vote on each matter
submitted to a vote of shareholders.
(b) Any holder of shares entitled to vote on any matter may vote
part of the shares in favor of the proposal and refrain from voting
the remaining shares or vote them against the proposal, other than
elections to office, but, if the shareholder fails to specify the
number of shares such shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with
respect to all shares such shareholder is entitled to vote.
701. (a) In order that the corporation may determine the
shareholders entitled to notice of any meeting or to vote or entitled
to receive payment of any dividend or other distribution or
allotment of any rights or entitled to exercise any rights in respect
of any other lawful action, the board may fix, in advance, a record
date, which shall not be more than 60 nor less than 10 days prior to
the date of such meeting nor more than 60 days prior to any other
action.
(b) If no record date is fixed:
(1) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the business day next preceding the day on which
notice is given or, if notice is waived, at the close of business on
the business day next preceding the day on which the meeting is
held.
(2) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no
prior action by the board has been taken, shall be the day on which
the first written consent is given.
(3) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the
board adopts the resolution relating thereto, or the 60th day prior
to the date of such other action, whichever is later.
(c) A determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting unless the board fixes a new record date
for the adjourned meeting, but the board shall fix a new record date
if the meeting is adjourned for more than 45 days from the date set
for the original meeting.
(d) Shareholders at the close of business on the record date are
entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the
case may be, notwithstanding any transfer of any shares on the books
of the corporation after the record date, except as otherwise
provided in the articles or by agreement or in this division.
702. (a) Subject to subdivision (c) of Section 703, shares held by
an administrator, executor, guardian, conservator or custodian may be
voted by such holder either in person or by proxy, without a
transfer of such shares into the holder's name; and shares standing
in the name of a trustee may be voted by the trustee, either in
person or by proxy, but no trustee shall be entitled to vote shares
held by such trustee without a transfer of such shares into the
trustee's name.
(b) Shares standing in the name of a receiver may be voted by such
receiver; and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into the
receiver's name if authority to do so is contained in the order of
the court by which such receiver was appointed.
(c) Subject to the provisions of Section 705 and except where
otherwise agreed in writing between the parties, a shareholder whose
shares are pledged shall be entitled to vote such shares until the
shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so
transferred.
(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by
the minor, in person or by proxy, whether or not the corporation has
notice, actual or constructive, of the nonage, unless a guardian of
the minor's property has been appointed and written notice of such
appointment given to the corporation.
(e) If authorized to vote the shares by the power of attorney by
which the attorney in fact was appointed, shares held by or under the
control of an attorney in fact may be voted and the corporation may
treat all rights incident thereto as exercisable by the attorney in
fact, in person or by proxy, without the transfer of the shares into
the name of the attorney in fact.
703. (a) Shares standing in the name of another corporation,
domestic or foreign, may be voted by an officer, agent, or
proxyholder as the bylaws of the other corporation may prescribe or,
in the absence of such provision, as the board of the other
corporation may determine or, in the absence of that determination,
by the chairman of the board, president or any vice president of the
other corporation, or by any other person authorized to do so by the
chairman of the board, president, or any vice president of the other
corporation. Shares which are purported to be voted or any proxy
purported to be executed in the name of a corporation (whether or not
any title of the person signing is indicated) shall be presumed to
be voted or the proxy executed in accordance with the provisions of
this subdivision, unless the contrary is shown.
(b) Shares of a corporation owned by its subsidiary shall not be
entitled to vote on any matter.
(c) Shares held by the issuing corporation in a fiduciary
capacity, and shares of an issuing corporation held in a fiduciary
capacity by its subsidiary, shall not be entitled to vote on any
matter, except as follows:
(1) To the extent that the settlor or beneficial owner possesses
and exercises a right to vote or to give the corporation binding
instructions as to how to vote such shares.
(2) Where there are one or more cotrustees who are not affected by
the prohibition of this subdivision, in which case the shares may be
voted by the cotrustees as if it or they are the sole trustee.
704. If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by
the entirety, voting trustees, persons entitled to vote under a
shareholder voting agreement or otherwise, or if two or more persons
(including proxyholders) have the same fiduciary relationship
respecting the same shares, unless the secretary of the corporation
is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to
voting shall have the following effect:
(1) If only one votes, such act binds all;
(2) If more than one vote, the act of the majority so voting
binds all;
(3) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows
that any such tenancy is held in unequal interests, a majority or
even split for the purpose of this section shall be a majority or
even split in interest.
705. (a) Every person entitled to vote shares may authorize another
person or persons to act by proxy with respect to such shares. Any
proxy purporting to be executed in accordance with the provisions of
this division shall be presumptively valid.
(b) No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy
continues in full force and effect until revoked by the person
executing it prior to the vote pursuant thereto, except as otherwise
provided in this section. Such revocation may be effected by a
writing delivered to the corporation stating that the proxy is
revoked or by a subsequent proxy executed by the person executing the
prior proxy and presented to the meeting, or as to any meeting by
attendance at such meeting and voting in person by the person
executing the proxy. The dates contained on the forms of proxy
presumptively determine the order of execution, regardless of the
postmark dates on the envelopes in which they are mailed.
(c) A proxy is not revoked by the death or incapacity of the maker
unless, before the vote is counted, written notice of such death or
incapacity is received by the corporation.
(d) Except when other provision shall have been made by written
agreement between the parties, the recordholder of shares which such
person holds as pledgee or otherwise as security or which belong to
another shall issue to the pledgor or to the owner of such shares,
upon demand therefor and payment of necessary expenses thereof, a
proxy to vote or take other action thereon.
(e) A proxy which states that it is irrevocable is irrevocable for
the period specified therein (notwithstanding subdivision (c)) when
it is held by any of the following or a nominee of any of the
following:
(1) A pledgee.
(2) A person who has purchased or agreed to purchase or holds an
option to purchase the shares or a person who has sold a portion of
such person's shares in the corporation to the maker of the proxy.
(3) A creditor or creditors of the corporation or the shareholder
who extended or continued credit to the corporation or the
shareholder in consideration of the proxy if the proxy states that it
was given in consideration of such extension or continuation of
credit and the name of the person extending or continuing credit.
(4) A person who has contracted to perform services as an employee
of the corporation, if a proxy is required by the contract of
employment and if the proxy states that it was given in consideration
of such contract of employment, the name of the employee and the
period of employment contracted for.
(5) A person designated by or under an agreement under Section
706.
(6) A beneficiary of a trust with respect to shares held by the
trust.
Notwithstanding the period of irrevocability specified, the proxy
becomes revocable when the pledge is redeemed, the option or
agreement to purchase is terminated or the seller no longer owns any
shares of the corporation or dies, the debt of the corporation or the
shareholder is paid, the period of employment provided for in the
contract of employment has terminated, the agreement under Section
706 has terminated, or the person ceases to be a beneficiary of the
trust. In addition to the foregoing clauses (1) through (5), a proxy
may be made irrevocable (notwithstanding subdivision (c)) if it is
given to secure the performance of a duty or to protect a title,
either legal or equitable, until the happening of events which, by
its terms, discharge the obligations secured by it.
(f) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a transferee of shares without knowledge of the
existence of the provision unless the existence of the proxy and its
irrevocability appears, in the case of certificated securities, on
the certificate representing such shares, or in the case of
uncertificated securities, on the initial transaction statement and
written statements.
706. (a) Notwithstanding any other provision of this division, an
agreement between two or more shareholders of a corporation, if in
writing and signed by the parties thereto, may provide that in
exercising any voting rights the shares held by them shall be voted
as provided by the agreement, or as the parties may agree or as
determined in accordance with a procedure agreed upon by them, and
the parties may but need not transfer the shares covered by such an
agreement to a third party or parties with authority to vote them in
accordance with the terms of the agreement. Such an agreement shall
not be denied specific performance by a court on the ground that the
remedy at law is adequate or on other grounds relating to the
jurisdiction of a court of equity.
(b) Shares in any corporation may be transferred by written
agreement to trustees in order to confer upon them the right to vote
and otherwise represent the shares for such period of time, not
exceeding 10 years, as may be specified in the agreement. The
validity of a voting trust agreement, otherwise lawful, shall not be
affected during a period of 10 years from the date when it was
created or last extended as hereinafter provided by the fact that
under its terms it will or may last beyond such 10-year period. At
any time within two years prior to the time of expiration of any
voting trust agreement as originally fixed or as last extended as
provided in this subdivision, one or more beneficiaries under the
voting trust agreement may, by written agreement and with the written
consent of the voting trustee or trustees, extend the duration of
the voting trust agreement with respect to their shares for an
additional period not exceeding 10 years from the expiration date of
the trust as originally fixed or as last extended as provided in this
subdivision. A duplicate of the voting trust agreement and any
extension thereof shall be filed with the secretary of the
corporation and shall be open to inspection by a shareholder, a
holder of a voting trust certificate or the agent of either, upon the
same terms as the record of shareholders of the corporation is open
to inspection.
(c) No agreement made pursuant to subdivision (a) shall be held to
be invalid or unenforceable on the ground that it is a voting trust
that does not comply with subdivision (b) or that it is a proxy that
does not comply with Section 705.
(d) This section shall not invalidate any voting or other
agreement among shareholders or any irrevocable proxy complying with
subdivision (e) of Section 705, which agreement or proxy is not
otherwise illegal.
707. (a) In advance of any meeting of shareholders the board may
appoint inspectors of election to act at the meeting and any
adjournment thereof. If inspectors of election are not so appointed,
or if any persons so appointed fail to appear or refuse to act, the
chairman of any meeting of shareholders may, and on the request of
any shareholder or a shareholder's proxy shall, appoint inspectors of
election (or persons to replace those who so fail or refuse) at the
meeting. The number of inspectors shall be either one or three. If
appointed at a meeting on the request of one or more shareholders or
proxies, the majority of shares represented in person or by proxy
shall determine whether one or three inspectors are to be appointed.
(b) The inspectors of election shall determine the number of
shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies, receive votes, ballots
or consents, hear and determine all challenges and questions in any
way arising in connection with the right to vote, count and tabulate
all votes or consents, determine when the polls shall close,
determine the result and do such acts as may be proper to conduct the
election or vote with fairness to all shareholders.
(c) The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three inspectors of
election, the decision, act or certificate of a majority is effective
in all respects as the decision, act or certificate of all. Any
report or certificate made by the inspectors of election is prima
facie evidence of the facts stated therein.
708. (a) Except as provided in Sections 301.5 and 708.5, every
shareholder complying with subdivision (b) and entitled to vote at
any election of directors may cumulate such shareholder's votes and
give one candidate a number of votes equal to the number of directors
to be elected multiplied by the number of votes to which the
shareholder's shares are normally entitled, or distribute the
shareholder's votes on the same principle among as many candidates as
the shareholder thinks fit.
(b) No shareholder shall be entitled to cumulate votes (i.e., cast
for any candidate a number of votes greater than the number of votes
that the shareholder normally is entitled to cast) unless the
candidate or candidates' names have been placed in nomination prior
to the voting and the shareholder has given notice at the meeting
prior to the voting of the shareholder's intention to cumulate the
shareholder's votes. If any one shareholder has given that notice,
all shareholders may cumulate their votes for candidates in
nomination.
(c) Except as provided in Section 708.5, in any election of
directors, the candidates receiving the highest number of affirmative
votes of the shares entitled to be voted for them up to the number
of directors to be elected by those shares are elected; votes against
the director and votes withheld shall have no legal effect.
(d) Subdivision (a) applies to the shareholders of any mutual
water company organized or existing for the purpose of delivering
water to its shareholders at cost on lands located within the
boundaries of one or more reclamation districts now or hereafter
legally existing in this state and created by or formed under the
provisions of any statute of this state, but does not otherwise apply
to the shareholders of mutual water companies unless their articles
or bylaws so provide.
(e) Elections for directors need not be by ballot unless a
shareholder demands election by ballot at the meeting and before the
voting begins or unless the bylaws so require.
708.5. (a) For purposes of this section,the following definitions
shall apply:
(1) "Uncontested election" means an election of directors in
which, at the expiration of the time fixed under the articles of
incorporation or bylaws requiring advance notification of director
candidates or, absent such a provision in the articles of
incorporation or bylaws, at a time fixed by the board of directors
that is not more than 14 days before notice is given of the meeting
at which the election is to occur, the number of candidates for
election does not exceed the number of directors to be elected by the
shareholders at that election.
(2) "Listed corporation" means a domestic corporation that
qualifies as a listed corporation under subdivision (d) of Section
301.5.
(b) Notwithstanding paragraph (5) of subdivision (a) of Section
204, a listed corporation that has eliminated cumulative voting
pursuant to subdivision (a) of Section 301.5 may amend its articles
of incorporation or bylaws to provide that, in an uncontested
election, approval of the shareholders, as specified in Section 153,
shall be required to elect a director.
(c) Notwithstanding subdivision (b) of Section 301, if an
incumbent director fails to be elected by approval of the
shareholders (Section 153) in an uncontested election of a listed
corporation that has amended its articles of incorporation or bylaws
pursuant to subdivision (b), then, unless the incumbent director has
earlier resigned, the term of the incumbent director shall end on the
date that is the earlier of 90 days after the date on which the
voting results are determined pursuant to Section 707 or the date on
which the board of directors selects a person to fill the office held
by that director pursuant to subdivision (d).
(d) Any vacancy on the board of directors resulting from any
failure of a candidate to be elected by approval of the shareholders
(Section 153) in an uncontested election of a listed corporation that
has amended its articles of incorporation or bylaws pursuant to
subdivision (b) shall be filled in accordance with the procedures set
forth in Section 305.
709. (a) Upon the filing of an action therefor by any shareholder
or by any person who claims to have been denied the right to vote,
the superior court of the proper county shall try and determine the
validity of any election or appointment of any director of any
domestic corporation, or of any foreign corporation if the election
was held or the appointment was made in this state. In the case of a
foreign corporation the action may be brought at the option of the
plaintiff in the county in which the corporation has its principal
office in this state or in the county in which the election was held
or the appointment was made.
(b) Upon the filing of the complaint, and before any further
proceedings are had, the court shall enter an order fixing a date for
the hearing, which shall be within five days unless for good cause
shown a later date is fixed, and requiring notice of the date for the
hearing and a copy of the complaint to be served upon the
corporation and upon the person whose purported election or
appointment is questioned and upon any person (other than the
plaintiff) whom the plaintiff alleges to have been elected or
appointed, in the manner in which a summons is required to be served,
or, if the court so directs, by registered mail; and the court may
make such further requirements as to notice as appear to be proper
under the circumstances.
(c) The court may determine the person entitled to the office of
director or may order a new election to be held or appointment to be
made, may determine the validity, effectiveness and construction of
voting agreements and voting trusts, the validity of the issuance of
shares and the right of persons to vote and may direct such other
relief as may be just and proper.
710. (a) This section applies to a corporation with outstanding
shares held of record by 100 or more persons (determined as provided
in Section 605) that files an amendment of articles or certificate of
determination containing a "supermajority vote" provision on or
after January 1, 1989. This section shall not apply to a corporation
that files an amendment of articles or certificate of determination
on or after January 1, 1994, if, at the time of filing, the
corporation has (1) outstanding shares of more than one class or
series of stock, (2) no class of equity securities registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and
(3) outstanding shares held of record by fewer than 300 persons
determined as provided by Section 605.
(b) A "supermajority vote" is a requirement set forth in the
articles or in a certificate of determination authorized under any
provision of this division that specified corporate action or actions
be approved by a larger proportion of the outstanding shares than a
majority, or by a larger proportion of the outstanding shares of a
class or series than a majority, but no supermajority vote that is
subject to this section shall require a vote in excess of 66 2/3
percent of the outstanding shares or 66 2/3 percent of the
outstanding shares of any class or series of those shares.
(c) An amendment of the articles or a certificate of determination
that includes a supermajority vote requirement shall be approved by
at least as large a proportion of the outstanding shares (Section
152) as is required pursuant to that amendment or certificate of
determination for the approval of the specified corporate action or
actions.
(d) The amendments made to this section by the act amending this
section in the 2001-02 Regular Session shall not affect the rights of
minority shareholders existing under law.
711. (a) The Legislature finds and declares that:
Many of the residents of this state are the legal and beneficial
owners or otherwise the ultimate beneficiaries of shares of stock of
domestic and foreign corporations, title to which may be held by a
variety of intermediate owners as defined in subdivision (b). The
informed and active involvement of such beneficial owners and
beneficiaries in holding legal owners and, through them, management,
accountable in their exercise of corporate power is essential to the
interest of those beneficiaries and beneficial owners and to the
economy and well-being of this state.
The purpose of this section is to serve the public interest by
ensuring that voting records are maintained and disclosed as provided
in this section. In the event that by statute or regulation pursuant
to the federal Employee Retirement Income Security Act of 1974 (29
U.S.C. Sec. 1001 et seq.), there are imposed upon investment managers
as defined in Sec. 2(38) thereof, duties substantially the same as
those set forth in this section, compliance with those statutory or
regulatory requirements by persons subject to this section shall be
deemed to fulfill the obligations contained in this section.
This section shall be construed liberally to achieve that purpose.
(b) For purposes of this section, a person on whose behalf shares
are voted includes, but is not limited to:
(1) A participant or beneficiary of an employee benefit plan with
regard to shares held for the benefit of the participant or
beneficiary.
(2) A shareholder, beneficiary, or contract owner of any entity
(or of any portfolio of any entity) as defined in Section 3(a) of the
federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et
seq.), as amended, to the extent the entity (or portfolio) holds the
shares for which the record is requested.
(c) For the purposes of this section, a person on whose behalf
shares are voted does not include:
(1) A person who possesses the right to terminate or withdraw from
the shareholder, contract owner, participant, or beneficiary
relationship with any entity (or any portfolio of any entity) defined
in subdivision (b). This exclusion does not apply in the event the
right of termination or withdrawal cannot be exercised without
automatic imposition of a tax penalty. The right to substitute a
relationship with an entity or portfolio, the shares of which are
voted by or subject to the direction of the investment adviser (as
defined in Section 2 of the federal Investment Company Act of 1940
(15 U.S.C. Sec. 80a-1 et seq.), as amended), of the prior entity or
portfolio, or an affiliate of the investment adviser, shall not be
deemed to be a right of termination or withdrawal within the meaning
of this subdivision.
(2) A person entitled to receive information about a trust
pursuant to Section 16061 of the Probate Code.
(3) A beneficiary, participant, contract owner, or shareholder
whose interest is funded through the general assets of a life
insurance company authorized to conduct business in this state.
(d) Every person possessing the power to vote shares of stock on
behalf of another shall maintain a record of the manner in which the
shares were voted. The record shall be maintained for a period of 12
consecutive months from the effective date of the vote.
(e) Upon a reasonable written request, the person possessing the
power to vote shares of stock on behalf of another, or a designated
agent, shall disclose the voting record with respect to any matter
involving a specific security or securities in accordance with the
following procedures:
(1) Except as set forth in paragraph (2), disclosure shall be made
to the person making the request. The person making the disclosure
may require identification sufficient to identify the person making
the request as a person on whose behalf the shares were voted. A
request for identification, if made, shall be reasonable, shall be
made promptly, and may include a request for the person's social
security number.
(2) If the person possessing the power to vote shares on behalf of
another holds that power pursuant to an agreement entered into with
a party other than the person making the request for disclosure, the
person maintaining and disclosing the record pursuant to this section
may, instead, make the requested disclosure to that party.
Disclosure to that party shall be deemed compliance with the
disclosure requirement of this section. If disclosure is made to that
party and not to the person making the request, subdivision (i)
shall not apply. However, nothing herein shall prohibit that party
and the person possessing the power to vote on shares from entering
into an agreement between themselves for the payment or assessment of
a reasonable charge to defray expenses of disclosing the record.
(f) Where the entity subject to the requirements of this section
is organized as a unit investment trust as defined in Section 4(2) of
the federal Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et
seq.), the open-ended investment companies underlying the unit
investment trust shall promptly make available their proxy voting
records to the unit investment trust upon evidence of a bona fide
request for voting record information pursuant to subdivision (e).
(g) Signing a proxy on another's behalf and forwarding it for
disposition or receiving voting instructions does not constitute the
power to vote. A person forwarding proxies or receiving voting
instructions shall disclose the identity of the person having the
power to vote shares upon reasonable written request by a person
entitled to request a voting record under subdivision (c).
(h) For purposes of this section, if one or more persons has the
power to vote shares on behalf of another, unless a governing
instrument provides otherwise, the person or persons may designate an
agent who shall maintain and disclose the record in accordance with
subdivisions (b) and (c).
(i) Except as provided in paragraph (2) of subdivision (e), or as
otherwise provided by law or a governing instrument, a person
maintaining and disclosing a record pursuant to this section may
assess a reasonable charge to the requesting person in order to
defray expenses of disclosing the record in accordance with
subdivision (e). Disclosure shall be made within a reasonable period
after payment is received.
(j) Upon the petition of any person who successfully brings an
action pursuant to or to enforce this section, the court may award
costs and reasonable attorney's fees if the court finds that the
defendant willfully violated this section.
(k) The obligation to maintain and disclose a voting record in
accordance with subdivisions (b) and (c) shall commence January 1,
1990.