The COVID-19 pandemic has revealed the need for technology and innovation to play a critical role in conducting business throughout the past few years. Unfortunately, corporations in many states, including California, found themselves restricted by antiquated laws requiring in-person meetings and voting in all or most situations during the pandemic, which underscored the need for systemic change. The California legislature now has acted in response to these restrictions in the state’s Corporations Code and changes in the ability of corporations to conduct business by remote means.
Understanding Assembly Bill 663
California Governor Gavin Newsom signed Assembly Bill 663 into law on October 5, 2021, to help alleviate some of the problems that corporations experienced while attempting to conduct regular business during the COVID-19 pandemic. These changes will allow corporations to continue to operate more smoothly in times of emergency and take advantage of available technologies.
This law allows corporations greater latitude to hold membership meetings virtually during emergencies, which now include pandemics. Previously, emergencies referred only to attacks against the state or country by enemies.
AB 663 also permits remote participation during in-person meetings, even outside of emergencies. Finally, boards of directors of corporations will have greater powers to act during emergencies.
These changes affect both for-profit and nonprofit corporations. The law goes into effect on January 1, 2022.
Changes to the Powers of Boards of Directors
Previously, boards of directors only had the power to take actions during emergencies that were in the ordinary course of business. Under AB 663, these boards are no longer limited to actions that are in the ordinary course of business but may take actions that are necessary to:
- Respond to emergencies
- Mitigate the effects of emergencies
- Comply with lawful government orders
Your Response to AB 663
As a result of the Governor signing AB 663 into law, California nonprofit corporations should examine and reevaluate their governing documents, including charters and bylaws, to reflect these new flexibilities. Incorporating these changes will allow nonprofits to take advantage of expanded board of directors powers and virtual meetings in specific situations.
Contact Us Today for Legal Assistance
Church Law Center gears its practice to legal matters that affect nonprofit organizations, churches, and other religious organizations. This focus allows us to concentrate our efforts on keeping abreast of the ever-changing laws and policies as they develop over time. We are here to represent your interests throughout every stage of your legal matter. Call us today at (949) 245-3177 or visit us online here and see what we can do for you.
