Recently, I wrote that California Senator Monique Limón had introduced legislation, SB 1168, that would allow the Secretary of State to cancel the articles of incorporation or the filing of a statement and designation by a foreign corporation upon reasonable belief of any of the following:
- The entity was created for an unlawful, false, or fraudulent purpose.
- The entity was created to promote or conduct an illegitimate object or purpose.
- The entity was created in bad faith.
- The entity was created for the purpose of harassing or defrauding a person or entity.
SB 1168 does not allow the Secretary of State to cancel "offensive" business entities based on their names, but it does allow cancellation of entities that were created to promote or conduct an "illegitimate" object or purpose. This standard invites the Secretary of State to cancel entities based on their speech. The danger of constitutional violations is compounded by the vagueness of the term "illegitimate". Because the bill separately allows cancellation for an "unlawful" and "illegitimate" purposes, it would appear that illegitimate purposes encompass more than unlawful purposes. Suppose a corporation is formed to promote the expanded use of fossil fuels, could a Secretary of State concerned with the effects of greenhouse gas emissions cancel the corporation on the basis that the corporation was formed to promote an "illegitimate" purpose?
Update/Correction
After posting this blog, I heard from Simon Tam, the named plaintiff in Matal v. Tam. He informed me that he is not and was not the lead singer in the group, The Slants. He is and was the founder and bassist of the group. Apparently, the USPTO made this error and it was carried over into the Supreme Court's opinion. Incidentally, Mr. Tam has written a memoir of his Supreme Court experience: Slanted: How an Asian American Troublemaker Took on the Supreme Court. I always appreciate hearing from readers and especially appreciate corrections.