Cal. Bus. & Prof. Code § 8047 — Shorthand Reporting Corporations

The board may formulate and enforce rules and regulations to carry out the provisions of this article, including rules and regulations requiring (a) that the articles of incorporation or bylaws of a shorthand reporting corporation shall include a provision whereby the capital stock of such corporation owned by a disqualified person, as defined by Section 13401 of the Corporations Code, or a deceased person shall be sold to the corporation or the remaining shareholders within such time as such rules and regulations may provide; and (b) that a shorthand reporting corporation as a condition of obtaining a certificate pursuant to the Moscone-Knox Professional Corporation Act and this article shall provide adequate security by insurance or otherwise for claims against it by its clients for errors and omissions arising out of the rendering of professional services.