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HomeCorporations CodeCh. 13Art. 2§ 12592 Annual Member Disclosure Statement

§ 12592 Annual Member Disclosure Statement

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 12592 Annual Member Disclosure Statement

This law says that companies must tell their members and directors every year about certain big money deals or loans involving people in charge or big shareholders. If they don't send a yearly report, they have to send this info separately within 120 days after their money year ends.

Key Takeaways

  • •Companies must tell members about big money deals involving bosses or big shareholders every year.
  • •If a company doesn't send a yearly report, they have to send this info within 120 days after their money year ends.
  • •They have to say who was involved, what the deal was, and how much money was involved if it's more than $1,000.
  • •They also have to tell about any loans or money promises over $1,000 given to bosses or directors.

Example

Imagine you're part of a small local club that's set up like a company. The club's president, who is also a member, decides to sell his old boat to the club for $5,000.

The club must tell all its members about this deal in their yearly report. They have to say who the president is, that he sold his boat to the club, and how much money was involved.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 12592 Annual Member Disclosure Statement

(a) Any provision of the articles or bylaws notwithstanding, every corporation shall furnish annually to its members and directors a statement of any transaction or indemnification of a kind described in subdivision (d) or (e), if any such transaction or indemnification took place. If the corporation issues an annual report to all members, this subdivision shall be satisfied by including the required information in the annual report. A corporation which does not issue an annual report to all members, pursuant to subdivision (c) of Section 12591, shall satisfy this section by mailing or delivering to its members the required statement within 120 days after the close of the corporation’s fiscal year. Unless otherwise provided by the articles or bylaws and if approved by the board of directors, that statement may be sent by electronic transmission by the corporation (Section 20). (b) Except as provided in subdivision (c), a covered transaction under this section is a transaction in which the corporation, its parent, or its subsidiary was a party, and in which either of the following had a direct or indirect material financial interest: (1) Any director or officer of the corporation, or its parent or subsidiary. (2) Any holder of more than 10 percent of the voting power of the corporation, its parent or its subsidiary. For the purpose of subdivision (d), an “interested person” is any person described in paragraph (1) or (2). (c) Transactions approved by the members of a corporation, under subdivision (a) of Section 12373, are not covered transactions. For the purpose of subdivision (b), neither a mere common directorship nor a member-patron relationship on terms available to all members constitutes a material financial interest. (d) The statement required by subdivision (a) shall describe briefly: (1) Any covered transaction (excluding compensation of officers and directors) during the previous fiscal year involving more than one thousand dollars ($1,000), or which was one of a number of covered transactions in which the same interested person had a direct or indirect material financial interest, and which transactions in the aggregate involved more than one thousand dollars ($1,000). (2) The names of the interested persons involved in such transactions, stating such person’s relationship to the corporation, the nature of such person’s interest in the transaction and, where practicable, the amount of such interest; provided, that in the case of a transaction with a partnership of which such person is a partner, only the interest of the partnership need be stated. (e) The statement required by subdivision (a) shall describe briefly the amount and circumstances of any loans, guaranties, indemnifications, or advances aggregating more than one thousand dollars ($1,000) paid or made during the fiscal year to any officer or director of the corporation pursuant to Section 12377; provided that no such report need be made in the case of a loan, guaranty, or indemnification approved by the members under paragraph (2) of subdivision (e) of Section 12377 or a loan or guaranty not subject to the provisions of subdivision (a) of Section 12375. (Amended by Stats. 2004, Ch. 254, Sec. 43. Effective January 1, 2005.)

Last verified: January 10, 2026

Key Terms

covered transactioninterested personmaterial financial interestannual reportindemnification

Related Statutes

  • § 6321 Annual Corporate Financial Report
  • § 6324 Corporate Reporting Requirements
  • § 8322 Annual Transaction Disclosure Requirement
  • § 8324 Charitable Trust Reporting Requirements
  • § 12590 Corporate Records Maintenance

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 12592.
View Official Source