California · Chapter CORP
Nonprofit Mutual Benefit Corporation Law — Plain-English Summary
Every section of this body of law translated into plain English for California board members and homeowners.
General Provisions
-
§15
'Shall' is mandatory and 'may' is permissive throughout the Corporations Code.
-
§20
Defines when a corporation may send notices and other communications electronically. Member consent (or the equivalent Davis-Stirling rule) is required.
-
§21
Defines when a communication from a member to the corporation sent electronically is effective.
Dissolution
-
§8610
A mutual benefit corporation may elect to wind up and dissolve by the vote of a majority of the members, or by the board if the corporation has no members. A…
-
§8724
A corporation formed to manage a common interest development may not be dissolved except as provided in this section — typically requiring disposition of the…
Nonprofit Definitions
-
§5012
Defines 'financial statements' for nonprofit corporations: balance sheet, income statement, and statement of changes in financial position, prepared in accor…
-
§5016
A notice or report mailed or delivered as part of a newsletter, magazine, or other publication satisfies the Corporations Code if it is addressed or delivere…
-
§5033
Approval of a majority of members means the affirmative vote of a majority of the votes entitled to be cast, not just of those who vote.
-
§5034
Approval of members (without 'a majority of') means the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a …
-
§5036
The 'authorized number' of directors is the number set in the articles or bylaws.
-
§5047
A director is a natural person designated, elected, or appointed to act as a member of the board.
-
§5047.5
California's policy is to protect uncompensated volunteer directors and officers of nonprofit corporations from personal liability when they perform their du…
-
§5078
'Voting power' means the power to vote for the election of directors at the time the determination of voting power is made, excluding shares or memberships t…
Mutual Benefit Corporations
-
§7110
This part is the Nonprofit Mutual Benefit Corporation Law — the corporate statute almost every California HOA, condo, and stock co-op is formed under.
-
§7121
An unincorporated association may incorporate as a nonprofit mutual benefit corporation under this section, bringing the CID under the Corporations Code as w…
-
§7130
The articles of a mutual benefit corporation must state the corporation's name, that it is a nonprofit mutual benefit corporation, and the other required sta…
-
§7140
A mutual benefit corporation may sue and be sued, enter contracts, borrow, own and convey property, and exercise the other corporate powers this section list…
-
§7150
Bylaws may be adopted, amended, or repealed by the board or by the members, as the articles or bylaws provide. A bylaw changing the number of directors typic…
-
§7152
The bylaws may provide for a delegate system under which geographic or other groups of members elect delegates who then vote in place of the members.
Directors and Officers
-
§7210
The activities and affairs of the corporation shall be conducted, and all corporate powers shall be exercised, by or under the direction of the board. The bo…
-
§7211
A majority of the directors then in office is a quorum unless the bylaws say otherwise (not less than one-fifth, and never less than two). Notice, waiver, an…
-
§7212
The board may create committees that exercise board authority if they have at least two directors. Committees cannot, among other things, fill board vacancie…
-
§7213
A mutual benefit corporation shall have a chair of the board or a president, a secretary, and a chief financial officer (often called treasurer). One person …
-
§7214
An instrument signed by the chair or president and the secretary (or others this section names) is binding on the corporation in favor of a good-faith third …
-
§7215
The minutes of meetings, or a board resolution, if purporting to be signed by the secretary or other authorized person, are prima facie evidence of the matte…
-
§7220
Directors hold office for the term in the articles or bylaws, not to exceed four years (except as this section allows). Staggered terms are permitted. Direct…
-
§7221
The board may declare vacant the office of a director who has been declared of unsound mind, convicted of a felony, or found by a court to have breached a du…
-
§7222
A director may be removed without cause by the members (the vote required depends on whether the corporation has cumulative voting and on the size of the boa…
-
§7223
The Attorney General or, in some cases, members may petition the superior court to remove a director for fraudulent or dishonest acts, gross abuse of authori…
-
§7224
A director may resign by giving written notice. Vacancies may be filled by the board unless the articles or bylaws give that power to the members. A vacancy …
-
§7225
If the directors are deadlocked and the corporation's business can no longer be conducted to advantage, the superior court may appoint a provisional director.
-
§7231
A director shall perform duties in good faith, in a manner the director believes to be in the corporation's best interests, and with the care an ordinarily p…
-
§7231.5
A volunteer director or volunteer executive officer of a nonprofit mutual benefit corporation has no liability for a failure to discharge duties if the perso…
-
§7233
A contract between the corporation and a director (or an entity in which the director has a material financial interest) is not void if it is approved in goo…
-
§7234
Interested directors may be counted in determining a quorum, even though they cannot vote on the interested transaction.
-
§7237
The corporation may (and in some cases must) indemnify a director, officer, employee, or other agent who is a party to a proceeding because of that role, on …
-
§7238
In a mutual benefit corporation that has members, a director's duty of loyalty runs to the corporation, which exists to benefit the members as a group — not …
Members
-
§7312
No person may hold more than one membership, and no fractional memberships are allowed, unless the articles or bylaws permit it. CID voting still follows the…
-
§7341
A membership may be terminated or suspended only in good faith and in a fair and reasonable manner. 15 days' prior notice, the reasons, and an opportunity to…
Member Meetings and Voting
-
§7510
A regular meeting of members shall be held annually (or as the bylaws provide, at least every 15 months). A special meeting shall be called on written reques…
-
§7511
Notice of a member meeting shall be given not less than 10 nor more than 90 days before the date of the meeting (or not less than 20 days if by electronic tr…
-
§7512
A majority of the voting power constitutes a quorum unless the bylaws provide otherwise, but the bylaws may not set a quorum of less than one-third of the vo…
-
§7513
Members may act by written ballot without a meeting if the corporation solicits ballots from all members, states the number of responses needed for a quorum,…
-
§7514
Any form of proxy or written ballot distributed to 10 or more members shall afford an opportunity to specify approval or disapproval, and shall state that if…
-
§7515
If for any reason it is impractical or unduly difficult to call a meeting or to obtain a written ballot in the manner prescribed, a director, officer, or mem…
-
§7516
Members may take action without a meeting by unanimous written consent, except as this section withholds that method (for example, electing directors in some…
-
§7522
If the bylaws provide a reasonable nomination period and the number of nominees does not exceed the number of seats, the corporation may declare the nominees…
-
§7523
If the corporation publishes material soliciting votes for any nominee in a corporation publication, it shall give other nominees equal access to the same pu…
-
§7525
A corporation that mails election material for one nominee on request must do so for others, at the requester's cost. The corporation is not liable for the c…
-
§7610
Each member is entitled to one vote on each matter, except as the articles or bylaws provide otherwise. CID declarations often allocate voting power by unit …
-
§7611
The bylaws or the board may fix a record date to determine which members may vote or receive notice. If none is fixed, this section supplies default dates. A…
-
§7612
If a membership stands in the names of two or more persons, unless the secretary is given written instructions otherwise, any one of them may vote — but if t…
-
§7613
Any member may authorize another person to vote by proxy. A proxy is not valid after 11 months unless it provides otherwise (and never more than 3 years). Pr…
-
§7615
Cumulative voting for directors is allowed only if the articles or bylaws provide for it. If they do, a member may multiply the number of votes by the number…
-
§7616
A director, member, or other person who has standing may petition the superior court to determine the validity of an election or appointment. The petition mu…
Articles Amendments
-
§7810
The articles may be amended as this chapter provides. Some amendments (name, purpose, adding members' personal liability) have extra member-approval requirem…
-
§7812
An amendment of the articles generally needs approval of the board and of the members (majority of a quorum, unless a greater vote is required). CID secret-b…
-
§7813
An amendment that materially and adversely affects the rights of a class of members requires the approval of that class, even if they would not otherwise vote.
Sale of Assets
-
§7911
A sale, lease, or other disposition of all or substantially all of the corporation's assets, other than in the usual course of business, requires board appro…
Filings and Records
-
§8210
Every mutual benefit corporation shall file a Statement of Information with the Secretary of State at the interval this section requires (every two years for…
-
§8311
A director's or member's inspection rights may be exercised by an agent or attorney, and the right of inspection includes the right to copy and make extracts.
-
§8313
The rights of members and directors to inspect corporate records cannot be limited in the articles or bylaws. Davis-Stirling's record article (Civ. Code §§52…
-
§8320
The corporation shall keep adequate and correct books and records of account, minutes of the proceedings of its members, board, and committees, and a record …
-
§8322
A corporation with more than 10,000 members, or that in the prior fiscal year received $10,000 or more in one contribution, must furnish an annual report to …
-
§8330
A member may demand a copy of the membership list, stating a purpose reasonably related to the member's interest. The corporation shall respond within 5 busi…
-
§8331
The corporation may petition the superior court to set aside a membership-list demand if it believes the demand is for an improper purpose. The petition must…
-
§8333
The accounting books and records and minutes of proceedings shall be open to inspection on the written demand of any member, at any reasonable time, for a pu…
-
§8334
Every director has the absolute right at any reasonable time to inspect and copy all books, records, and documents of every kind and to inspect the physical …
-
§8338
A person who obtained a membership list and uses it for a commercial or other prohibited purpose is liable to the corporation for damages and a civil penalty…
Frequently asked about Chapter CORP
- What is California Chapter CORP?
- California Chapter CORP — the Nonprofit Mutual Benefit Corporation Law — is the body of law that governs how every California nonprofit corporation is structured, operated, and held accountable. It covers governance, voting, records, assessments, fining, and most of the day-to-day legal questions a board will face.
- How many sections are in Chapter CORP?
- Chapter CORP contains 69 sections in this reference. Each is summarized in plain English on its own page, with links to the official text at leginfo.legislature.ca.gov.
- Is the summary on this site legal advice?
- No. These pages are plain-English summaries prepared by SoShiny for board members and managers. For binding legal advice or interpretation of how a section applies to your specific situation, consult a California-licensed attorney.
- How often does California Chapter CORP change?
- The California Legislature can amend any chapter in any session. We update these summaries when we re-import the official text — see the 'Last updated' date on each section page.
- Does SoShiny enforce Chapter CORP for me?
- No software 'enforces' a statute — but SoShiny is built around it. Voting, meeting minutes, records access, fining workflow, and audit trails are designed to meet this body of law's requirements out of the box, so the board can demonstrate good-faith compliance if challenged.
Running a nonprofit corporation in California?
SoShiny is built around Chapter CORP from day one — every feature on every plan.
Start your community free →