PLEASE NOTE: Publication for public comment is not, and shall not, be construed as a recommendation or approval by the Board of Trustees of the materials published.

SUBJECT:

Proposed amendments to the State Bar rules regarding law corporations

BACKGROUND:

The Office of General Counsel has reviewed all State Bar Rules to determine whether there are any material inconsistencies with the related statutes and Rules of Court. This proposal contains proposed rule amendments to remedy inconsistencies in State Bar Rules regarding law corporations.

DISCUSSION/PROPOSAL:

1. Title 3, Division 2, Chapter 3, Rule 3.156
Business and Professions Code section 6163(b) provides that the certificate of registration of a law corporation failing to file an annual report, renew its certificate, and pay the fee therefor and any penalty due thereon for late filing, shall be suspended 60 days following written notice of delinquency. Rule 3.156(B) provides that a law corporation failing to submit a complete annual renewal and fee is suspended, but does not contain the 60-day notice period.

As an operational matter, the State Bar currently provides the 60-day notice before a law corporation is suspended for failure to submit an annual renewal and fee, even though the language is not contained in Rule 3.156. Under this proposal, Rule 3.156(B) would be amended to add language explicitly providing that a certificate of registration of a law corporation that fails to submit a complete annual renewal and fee will be suspended 60 days following written notice of delinquency.

2. Title 3, Division 2, Chapter 3, Rule 3.160
Business and Professions Code section 6169 provides for revocation of a law corporation’s certificate of registration following notice and a hearing. Rule 3.160 provides for termination (the same as revocation) sixty days after notice, but does not reference a hearing.

Under this proposal, Rule 3.160 would be amended to add language explicitly providing for notice and an opportunity for a hearing before the State Bar terminates the certification of a law corporation. Other operational details regarding the termination process would remain in the statute, as they are today. Under the State Bar Rules, Title 1, Division 3, Rule 1.20(K), if a rule cites the authority for the rule, the citation is part of the rule. Rule 3.160 currently cites Business and Professions Code section 6169 as authority, and the proposed amendment to the rule would keep that in place. The combined effect of the statute and amended rule would be the same as it is today.

The amended rule would keep the 60-day notice period in place, and include termination if the law corporation fails to respond to the notice, thereby specifying that notice does not result in an open-ended process. Rule 3.160(B), as proposed to be amended, would correspond to the language of Business and Professions Code section 6169(d), and provide that the rule does not apply to termination resulting from the death of a sole shareholder or failure to submit a complete annual renewal and fee.

ANY KNOWN FISCAL/PERSONNEL IMPACT:

None.

ATTACHMENTS:

Admissions and Education Committee – March 9, 2017 – Agenda Memo

Attachment A - Proposed amendments to the State Bar rules regarding law corporations

SOURCE:

Admissions and Education Committee

DEADLINE:

Monday, May 1, 2017

DIRECT COMMENTS TO:

Saul Bercovitch
The State Bar of California
180 Howard St.
San Francisco, CA 94105
Email: Saul.Bercovitch@calbar.ca.gov