On July 9, 2012, Governor Jerry Brown signed AB 2668, a bill drafted by Gary Wollberg (partner, San Diego) for the Nonprofit Organizations Committee of the Business Law Section of the California State Bar. AB 2668 provides technical corrections to several sections of the Nonprofit Corporations Law which authorize nonprofit corporations to indemnify fiduciaries of employee benefit plans.
Prior to AB 2668, Corporations Code Sections 5238(j), 7237(j), 9246(j), and 12377(j) in the Nonprofit Corporations Law applied, without modification, the indemnification standards from the General Corporation Law (Corporations Code Section 207(f)) to any trustee, investment manager or other fiduciary of an employee benefit plan when acting in that capacity on behalf of a nonprofit public benefit, mutual benefit, religious and consumer cooperative corporation, respectively. This created several ambiguities. For example, following the General Corporation Law the prior statutes allowed indemnification for the fiduciaries of a profit sharing plan even though such a plan would be inappropriate for a nonprofit corporation. AB 2668 removed from the Nonprofit Corporation Law references to the types of employee benefit plans that would not exist in a nonprofit corporation (profit sharing, share bonus, share purchase, and share option plans).
AB 2668 also eliminates ambiguity arising from the internal cross-reference to a section of the General Corporation Law (Corp. Code §207(f)) where an analogous statute already exists in the Nonprofit Corporation Law (Corp. Code §§5140(f), 7140(e), and 9140(f)) and the Consumer Cooperative Corporation Law (Corp. Code §12320(e)).