California Public Contract Code Section 10286.1
(a) For purposes of this part, except as otherwiseprovided in subdivisions (b) and (c), a state agency shall not enterinto any contract with an expatriate corporation or its subsidiaries. (b) (1) For purposes of this article, an expatriate corporationmeans a foreign incorporated entity that is publicly traded in theUnited States to which all of the following apply: (A) The United States is the principal market for the publictrading of the foreign incorporated entity. (B) The foreign incorporated entity has no substantial businessactivities in the place of incorporation. (C) Either clause (i) or clause (ii) applies: (i) The foreign entity was established in connection with atransaction or series of related transactions pursuant to which (I)the foreign entity directly or indirectly acquired substantially allof the properties held by a domestic corporation or all of theproperties constituting a trade or business of a domestic partnershipor related foreign partnership, and (II) immediately after theacquisition, more than 50 percent of the publicly traded stock, byvote or value, of the foreign entity is held by former shareholdersof the domestic corporation or by former partners of the domesticpartnership or related foreign partnership. For purposes of subclause(II), any stock sold in a public offering related to the transactionor a series of transactions is disregarded. (ii) The foreign entity was established in connection with atransaction or series of related transactions pursuant to which (I)the foreign entity directly or indirectly acquired substantially allof the properties held by a domestic corporation or all of theproperties constituting a trade or business of a domestic partnershipor related foreign partnership, and (II) the acquiring foreignentity is more than 50 percent owned, by vote or value, by domesticshareholders or partners. (iii) For purposes of this subparagraph, indirect acquisition ofproperty includes the acquisition of a stock share, or any portionthereof, of the owner of that property. (2) Notwithstanding subdivision (a), a state agency may contractwith an expatriate corporation, or its subsidiary, if it was anexpatriate corporation before January 1, 2004, to which both of thefollowing apply: (A) The foreign entity provides, by operation of law, byprovisions of its governing documents, by resolution of its board ofdirectors, or in any other manner, at least the followingshareholders' rights: (i) Shareholders of the entity have the right to inspect, at aprincipal place of business in the United States, copies of theentity's books and records, including, but not limited to,shareholder names, addresses, and shareholdings in accordance withthe corporation law, as amended from time to time and as that law isinterpreted by the courts, of the United States jurisdiction in whichthe entity was previously incorporated, or, if the entity was notpreviously incorporated, in accordance with the terms set forth inthe Model Business Corporation Act, as that act may be amended fromtime to time, provided that, if the corporate law of the UnitedStates jurisdiction in which the entity was previously incorporatedor the Model Business Corporation Act does not provide access to theshareholder names, addresses, and shareholdings, these books andrecords are available for inspection by shareholders for purposesproperly related to their status as shareholders of the entity. (ii) The entity permits its shareholders to bring derivativeproceedings on behalf of the entity, provided that these derivativeproceedings are brought on a basis and under the terms applicableunder the law, as amended from time to time and as interpreted by, orrequired by, the courts of the United States jurisdiction in whichthe entity was previously incorporated, or, if the entity was notpreviously incorporated, on a basis and under the terms set forth inthe Model Business Corporations Act as that act may be amended fromtime to time and as it is interpreted by, or required by, the courts. (iii) Entity transactions in which any director is interested areapproved in accordance with the applicable law, as amended from timeto time and as interpreted by the courts, of the United Statesjurisdiction in which the entity was previously incorporated, or, ifthe entity was not previously incorporated, in accordance with theterms set forth in the Model Business Corporations Act, as may beamended from time to time and as interpreted by the courts. (iv) The entity has consented to the jurisdiction, for anyotherwise available cause of action by or on behalf of the entity'sshareholders, including any pendent state causes of action, of all ofthe following courts: (I) The state courts of one or more states. (II) The United States federal courts in any state in which theentity consents to the jurisdiction of that state's courts pursuantto subclause (I). (v) The entity has appointed an agent for service of process inthe state or states in which the entity has consented tojurisdiction, as described in clause (iv), and the entity meets atleast one of the following conditions: (I) The entity has unencumbered assets in the United States, whichassets may include equity or debt investments in United Statescompanies, with a book value in excess of fifty million dollars($50,000,000), and the entity delivers to the Secretary of State anopinion of an attorney licensed in the United States that judgmentsrendered against the entity may be satisfied by using these assets. (II) The entity posts a bond or similar security in an amount ofat least fifty million dollars ($50,000,000). (III) The entity has directors' and officers' insurance in anamount of at least fifty million dollars ($50,000,000). (vi) The entity agrees that, in connection with any lawsuitbrought against it by its shareholders in any court in which theentity has consented to jurisdiction as described in clause (iv), theentity will provide to the court notice of the manner in which theentity complied with clause (v) and, if the entity complied with thatclause in the manner specified in subclause (I) of clause (v), acopy of the opinion described in that subclause. (vii) Shareholder approval is required for any sale of all orsubstantially all of the entity's assets in accordance with the law,as amended from time to time and as it is interpreted by the courts,of the United States jurisdiction in which it was previouslyincorporated, or, if it was not previously incorporated, inaccordance with the terms set forth in the Model BusinessCorporations Act, as it may be amended from time to time. (viii) The directors and officers of the entity occupy a fiduciaryrelationship with the entity and its shareholders and thesedirectors and officers, in performing their duties, act in good faithin a manner that a director or officer believes to be in the bestinterests of the entity and its shareholders, as that standard ofcare is interpreted by the courts. (ix) The entity agrees to hold no more than one of every fourannual shareholder meetings in a location outside the United Statesand, in the event that the entity holds an annual meeting outside theUnited States, the entity agrees to provide access to that meetingthrough a Web cast or other technology that allows the entity'sshareholders to do both of the following: (I) Listen to the meeting, watch the meeting, or both. (II) Send questions that will be addressed at the meeting. (x) The entity provides a description of the shareholder rightsdescribed in clauses (i) to (ix), inclusive, and any subsequentchanges to these rights, on the entity's Web site or in its 10Kfilings with the United States Securities and Exchange Commission. (B) The entity uses worldwide combined reporting to calculate theincome on which it pays taxes to the state. (c) The chief executive officer of a state agency or his or herdesignee may waive the prohibition specified in subdivision (a) ifthe executive officer or his or her designee has made a writtenfinding that the contract is necessary to meet a compelling publicinterest. For purposes of this section, a compelling public interestincludes, but is not limited to, ensuring the provision of essentialservices, ensuring the public health and safety, or an emergency asdefined in Section 1102. If a waiver is granted to a vendor pursuantto this subdivision, the requirement to submit a declaration ofcompliance, as set forth in paragraph (1) of subdivision (d), doesnot apply to that vendor. (d) (1) For purposes of this chapter, state agency means everystate office, department, division, bureau, board, commission, andthe California State University, but does not include the Universityof California, the Legislature, the courts, or any agency in thejudicial branch of government. (2) On or after January 1, 2004, all state agencies shall, as acondition of the contract, require any vendor that is offered acontract to do business with the state to submit a declarationstating that the vendor is eligible to contract with the statepursuant to this section. (3) A vendor that declares as true any material matter in adeclaration described in this subdivision that he or she knows to befalse is guilty of a misdemeanor. (e) (1) Except as provided in paragraph (2) and subdivision (f),this section applies to contracts that are entered into on or afterJanuary 1, 2004. (2) With respect to an entity that was an expatriate corporation,as defined in paragraph (1) of subdivision (b), before January 1,2004, this section applies to contracts that are entered into on orafter April 1, 2004. (f) (1) The declaration requirement set forth in subdivision (d)does not apply to a credit card purchase of goods of two thousandfive hundred dollars ($2,500) or less. (2) The total amount of exemption authorized herein shall notexceed seven thousand five hundred dollars ($7,500) per year for eachcompany from which a state agency is purchasing goods by creditcard. It shall be the responsibility of each state agency to monitorthe use of this exemption and adhere to these restrictions on thesepurchases.