Section 3502.

(a) Nothing contained in subdivision (b) of Section 3500 or Section 3501 shall require a detailing or itemization of every relevant expenditure incurred, or planned or action taken or planned, by the corporation. Management and the board shall use their discretion in providing that information, including the reasonable detail that a reasonable investor would consider important in understanding the corporation's objectives, actions, impacts, measures, rationale, and results of operations as they relate to the nature and achievement of the special purpose objectives.

(b) Where best practices emerge for providing the information required by subdivision (b) of Section 3500 or Section 3501, use of those best practices shall create a presumption that the flexible purpose corporation caused all the information required by those provisions to be provided. This presumption can only be rebutted by showing that the reporting contained either a misstatement of a material fact or omission of a material fact.

(c) Notwithstanding subdivision (b) of Section 3500 and Section 3501, under no circumstances shall the flexible purpose corporation be required to provide information that would result in a violation of state or federal securities laws or other applicable laws.

(d) The flexible purpose corporation and its officers and directors are expressly excluded from liability for any and all forward looking statements supplied in the report required by subdivision (b) of Section 3500 and Section 3501, so long as those statements are supplied in good faith. Statements are deemed to be forward looking as that term is defined in the federal securities laws.

(e) The special purpose MD&A and any special purpose current report shall be written in plain English and shall be provided in an efficient and understandable manner, avoiding repetition and disclosure of immaterial information.

(f) Unless otherwise provided by the articles or bylaws, and if approved by the board of directors, the reports specified in subdivision (b) of Section 3500 and Section 3501 and any accompanying material sent pursuant to this section may be sent by electronic transmission by the corporation.

(g) The financial statements of any flexible purpose corporation with fewer than 100 holders of record of its shares, determined as provided in Section 605, required to be furnished by subdivision (b) of Section 3500 and Section 3501 are not required to be prepared in conformity with generally accepted accounting principles if they reasonably set forth the assets and liabilities and the income and expense of the flexible purpose corporation and disclose the accounting basis used in their preparation.

(h) Any corporation with fewer than 100 holders of record of its shares, determined as provided in Section 605, shall not be required to prepare and furnish the reports required by subdivision (b) of Section 3500 and Section 3501, if and only if, the flexible purpose corporation holds unrevoked waivers of such compliance executed by shareholders holding two-thirds of the outstanding shares. That waiver shall remain valid and in effect for each fiscal year that the flexible purpose corporation provides each waiving shareholder with notice, prior to the end of that year, that the shareholder may revoke the waiver and, on the 30th day following the end of the fiscal year, the flexible purpose corporation holds unrevoked waivers to that compliance executed by shareholders holding two-thirds of the outstanding shares. The shareholder notice may be sent by electronic transmission pursuant to Section 20.

(i) The requirements described in Section 3500 shall be satisfied if a corporation with an outstanding class of securities registered under Section 12 of the Securities Exchange Act of 1934 both complies with Section 240.14a-16 o, as amended from time to time, with respect to the obligation of a corporation to furnish an annual report to shareholders pursuant to Section 240.14a-3(b) o, and includes the information required by subdivision (b) of Section 3500 in the annual report.

(j) The requirements described in Section 3501 shall be satisfied if a corporation with an outstanding class of securities registered under Section 12 of the Securities Exchange Act of 1934 both complies with Section 240.13a-13 o, as amended from time to time, with respect to the obligation of a corporation to furnish a quarterly report to shareholders, and includes the information required by subdivision (b) of Section 3501 in the quarterly report.

(k) In addition to the penalties provided for in this division, the superior court of the proper county shall enforce the duty of making and mailing or delivering the information and financial statements required by subdivision (b) of Section 3500 and Section 3501 and, for good cause shown, may extend the time therefor.

(l) In any action or proceeding with respect to Section 3500 or 3501, if the court finds the failure of the flexible purpose corporation to comply with the requirements of those sections to have been without justification, the court may award an amount sufficient to reimburse the shareholder for the reasonable expenses incurred by the shareholder, including attorney's fees, in connection with the action or proceeding.

(m) Subdivision (b) of Section 3500 and Section 3501 apply to any domestic flexible purpose corporation and also to a foreign flexible purpose corporation having its principal executive office in this state or customarily holding meetings of its board in this state.

(n) All reports and notices required by subdivision (b) of Section 3500 and Section 3501 shall be maintained by the flexible purpose corporation, in an electronic form for a period of not less than 10 years.

(Added by Stats. 2011, Ch. 740, Sec. 12. Effective January 1, 2012.)