California clubs governed by the Unincorporated Associations Act

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Often a club or the like will start informally without formal incorporation. In California, such unincorporated club or group, whether organized for profit or not, is classified as an “unincorporated association” and will be governed by California unincorporated association law. Cal. Company Code § 18000 and following. If the club’s primary common purpose is other than the operation of a for-profit business, it is defined as a “non-profit association” under the UAL. Cal. Company Code § 18020(a). Although UAL provides rudimentary provisions governing ownership and liability, some clubs may eventually desire a more formal corporate structure.

Sections 5121, 7121, and 9121 of the Not-for-Profit Corporations Act allow an existing unincorporated association to change its status to that of a corporation. All that is required is “proper authorization” for this change “in accordance with its rules and procedures” and the filing statutes. The articles of association must be accompanied by a verified statement from two officers or members of the board of directors of the association stating that the constitution has been approved “in accordance with its rules and procedures”. “Yes, that’s the problem”. An unincorporated association is unlikely to have rules and procedures specifying how it can be incorporated. The UAL provides that if an association’s governing principles do not provide a procedure for amending the association’s governing documents, the governing documents may be amended by a vote of the members. Cal. Corp. Code § 18340. Assuming this law applies to incorporation under the Not-for-Profit Corporations Act, the law does not specify the number of votes required. Is it the majority of the members? A majority of members at a meeting? Something else? Given this uncertainty, some may be reluctant to sign such a verification.

AB 979 Judge Rules Unconstitutional

Because AB 979 (Holden) imposes arbitrary racial, ethnic, and sexual orientation quotas, its constitutional infirmity was evident. Yet I was the only person to testify before the legislature that the bill was “divisive, arbitrary and unconstitutional.” As I reported last Friday, California Superior Court Judge Terry Green has now declared AB 979 unconstitutional. Crest vs. Padilla (#20ST-CV-37513).

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 94

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