California Assembly Bill AB283

California 2021-2022 Regular Session

• Introduced: 1/21/21
• Refer: 1/28/21
• Report Pass: 4/19/21
• Refer: 4/19/21
• Report Pass: 4/28/21
• Engrossed: 5/6/21
• Refer: 5/6/21
• Refer: 5/19/21
• Report Pass: 6/9/21
• Refer: 6/9/21
• Report Pass: 6/23/21
• Refer: 6/23/21
• Enrolled: 8/31/21
• Chaptered: 10/5/21
• Passed: 10/5/21

Caption

Corporate securities: exemption from requirements.

Impact

The amendment facilitates more flexible investment options in cooperative corporations, which traditionally benefit communities by enabling local operations and projects. By raising the permissible investment limit and expanding the definition of exempt securities to include capital credits, the bill aims to bolster cooperative growth while maintaining investor protections. Under the new law, individuals can invest more readily without navigating through extensive regulatory requirements.

Summary

Assembly Bill No. 283, authored by Chen, amends Section 25100 of the Corporations Code concerning corporate securities. The bill expands existing exemptions to include credits to a member's capital issued to shareholders or members of corporations formed under the Cooperative Corporation Law, provided their total investment does not exceed $1,000. This addition aims to simplify the regulatory environment for small investments in cooperatives, thereby encouraging participation in these entities.

Sentiment

General sentiment around AB283 has been positive, particularly among advocates for cooperative enterprises. Supporters regard the legislative change as a pragmatic shift that supports economic participation at the community level. The sentiment reflects a progressive approach to enhancing access to cooperative ownership, especially for smaller investors. However, concerns were raised by some regulatory bodies who feel that such exemptions could inadvertently reduce scrutiny over the financial practices of these corporations, potentially risking investor protections.

Contention

Key points of contention stem from concerns about ensuring adequate protections for investors in cooperative settings, where individuals might have limited visibility into the operational management of their investments. Some regulators worry that expanding exemptions might lead to abuses or unintentional consequences, such as inadequate financial transparency or governance failures in cooperatives. This ongoing discussion highlights a delicate balance between promoting cooperative engagement and maintaining robust investor protections.