Expanded Disclosure Requirements Under California Corporate Disclosure Act
By Michael G. McKinnon
On September 28, 2002, Governor Gray Davis signed into law the California Corporate Disclosure Act, changing requirements for statements of information filed by California corporations or foreign corporations qualified to do business in California. Existing California law requires both domestic and foreign corporations doing business in California, whether private or publicly traded, to file a one page information statement with the Secretary of State within 90 days after first filing its original articles or foreign corporation filing, and every two years thereafter. Under the Act, effective January 1, 2003, these information statements must be filed annually. Further, publicly traded companies, as defined in the Act, must include additional disclosures regarding any non-audit services performed by the company’s auditors, the auditor’s report, director and officer compensation as well as past bankruptcy, fraud or securities laws violations. A key purpose of the Act is to make this information publicly available on the Secretary of State’s web site. Notably, only forprofit corporations are affected by the Act, which excludes from the Act’s coverage other business entities such as limited liability companies, limited partnerships, general partnerships and non-profit corporations.