D R A F T
FOR APPROVAL
HARMONIZED REVISED UNIFORM
UNINCORPORATED NONPROFIT ASSOCIATION ACT
(Amendments to Revised Uniform Unincorporated
Nonprofit Association Act (2008))
___________________________________________________
NATIONAL
CONFERENCE OF COMMISSIONERS
ON
UNIFORM STATE LAWS
___________________________________________________
AMERICAN
BAR ASSOCIATION
___________________________________________________
MEETING
IN ITS ONE-HUNDRED-AND-TWENTIETH YEAR
VAIL,
COLORADO
JULY
7 - JULY 13, 2011
HARMONIZED REVISED UNIFORM
UNINCORPORATED NONPROFIT ASSOCIATION ACT
(Amendments to Revised Uniform Unincorporated
Nonprofit Association Act (2008))
WITHOUT PREFATORY NOTES OR COMMENTS, BUT
WITH REPORTERS’ NOTES
Copyright © 2007, 2008,
2009, 2011
Jointly By
NATIONAL CONFERENCE OF
COMMISSIONERS ON UNIFORM STATE LAWS
and
AMERICAN BAR ASSOCIATION
The ideas and conclusions set forth in this draft,
including the proposed statutory language and any comments or reporter’s notes,
have not been passed upon by the National Conference of Commissioners on
Uniform State Laws or the Drafting Committee.
They do not necessarily reflect the views of the Conference and its
Commissioners and the Drafting Committee and its Members and Reporter. Proposed statutory language may not be used
to ascertain the intent or meaning of any promulgated final statutory proposal.
May 31, 2011
DRAFTING
COMMITTEE ON HARMONIZATION OF BUSINESS ENTITY ACTS
The Committee appointed by and
representing the National Conference of Commissioners on Uniform State Laws in
preparing this Act consists of the following individuals:
HARRY J.
HAYNSWORTH, 2200 IDS Center, 80 S. 8th St., Minneapolis, MN 55402, Chair
WILLIAM H. CLARK,
JR., One Logan Square, 18th and Cherry Sts., Philadelphia, PA 19103-6996, Vice-Chair
ANN E. CONAWAY,
Widener University School of Law, 4601 Concord Pike, Wilmington, DE 19803
THOMAS E. GEU,
University of South Dakota School of Law, 414 Clark St., Suite 214, Vermillion,
SD 57069-2390
DALE G. HIGER,
1302 Warm Springs Ave., Boise, ID 83712
JAMES C. MCKAY,
JR., Office of the Attorney General for the District of Columbia, 441 Fourth
St. NW, 6th Floor S., Washington, DC 20001
MARILYN E.
PHELAN, 306 Peninsula Ct., Granbury, TX 76048
WILLIAM J.
QUINLAN, Two First National Plaza, 20 S. Clark St., Suite 2900, Chicago, IL
60603
KEVIN P. SUMIDA,
735 Bishop St., Suite 411, Honolulu, HI 96813
JUSTIN L. VIGDOR,
2400 Chase Sq., Rochester, NY 14604
DAVID S. WALKER,
Drake University Law School, 2507 University Ave., Des Moines, IA 50311
CARTER G. BISHOP,
Suffolk University Law School, 120 Tremont St., Boston, MA 02108-4977, Co-Reporter
DANIEL S.
KLEINBERGER, William Mitchell College of Law, 875 Summit Ave., St. Paul, MN
55105, Co-Reporter
EX OFFICIO
ROBERT A. STEIN,
University of Minnesota Law School, 229 19th Ave. S., Minneapolis, MN 55455, President
MARILYN E.
PHELAN, 306 Peninsula Ct., Granbury, TX 76048, Division Chair
AMERICAN BAR
ASSOCIATION ADVISOR
ROBERT R.
KEATINGE, 555 17th St., Suite 3200, Denver, CO 80202-3979, ABA Advisor
WILLIAM J.
CALLISON, 3200 Wells Fargo Center, 1700 Lincoln St., Denver, CO 80203, ABA Section Advisor
ALLAN G. DONN,
Wells Fargo Center, 440 Monticello Ave., Suite 2200, Norfolk, VA 23510-2243, ABA Section Advisor
WILLIAM S.
FORSBERG, 150 S. Fifth St., Suite 2300, Minneapolis, MN 55402-4238, ABA Section Advisor
BARRY B. NEKRITZ,
8000 Willis Tower, 233 S. Wacker Dr., Chicago, IL 60606, ABA Section Advisor
JAMES J. WHEATON,
222 Central Park Ave., Suite 2000, Virginia Beach, VA 23462, ABA Section Advisor
EXECUTIVE DIRECTOR
JOHN A. SEBERT,
111 N. Wabash Ave., Suite 1010, Chicago, IL 60602, Executive Director
Copies of this Act may be obtained from:
NATIONAL
CONFERENCE OF COMMISSIONERS
ON
UNIFORM STATE LAWS
111 N. Wabash
Ave., Suite 1010
Chicago,
Illinois 60602
312/450-6600
www.uniformlaws.org
HARMONIZED REVISED UNIFORM
unincorporated nonprofit association act
TABLE OF CONTENTS
Introductory
Reporters’ Note......................................................................................................... 1
SECTION 1. SHORT TITLE....................................................................................................... 2
SECTION 2. DEFINITIONS....................................................................................................... 2
SECTION 3. RELATION TO OTHER LAW............................................................................. 4
SECTION 4. GOVERNING LAW............................................................................................. 4
SECTION 5. LEGAL ENTITY; PERPETUAL EXISTENCE;
POWERS................................. 4
SECTION 6. OWNERSHIP AND TRANSFER OF PROPERTY............................................. 5
SECTION 7. STATEMENT OF AUTHORITY AS TO REAL PROPERTY............................ 5
SECTION 8. LIABILITY............................................................................................................ 6
SECTION 9. ASSERTION AND DEFENSE OF CLAIMS...................................................... 7
SECTION 10. EFFECT OF
JUDGMENT OR ORDER........................................................ 7
SECTION 11. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF
PROCESS......... 7
[SECTION 12. SERVICE OF PROCESS].................................................................................. 8
SECTION 13. ACTION OR
PROCEEDING NOT ABATED BY CHANGE.................... 8
[SECTION 14. VENUE].............................................................................................................. 8
SECTION 15. MEMBER NOT AGENT..................................................................................... 9
SECTION 16. APPROVAL BY MEMBERS............................................................................. 9
SECTION 17. MEMBER MEETINGS OF MEMBERS;
VOTING, NOTICE, AND QUORUM PROCEDURAL REQUIREMENTS................................................................................ 9
SECTION 18. DUTIES OF MEMBER..................................................................................... 10
SECTION 19. ADMISSION, SUSPENSION, DISMISSAL, OR
EXPULSION OF MEMBERS. 10
SECTION 20. MEMBER’S RESIGNATION........................................................................... 11
SECTION 21. MEMBERSHIP INTEREST NOT TRANSFERABLE.................................... 11
SECTION 22. SELECTION OF MANAGERS; MANAGEMENT RIGHTS OF
MANAGERS. 11
SECTION 23. DUTIES OF MANAGERS................................................................................ 12
SECTION 24. NOTICE
AND QUORUM PROCEDURAL REQUIREMENTS
FOR MANAGER MEETINGS OF MANAGERS....................................................................................... 13
SECTION 25. RIGHT OF MEMBER OR MANAGER TO INFORMATION....................... 13
SECTION 26. DISTRIBUTIONS PROHIBITED; COMPENSATION AND
OTHER PERMITTED PAYMENTS.................................................................................................................... 14
SECTION 27. REIMBURSEMENT; INDEMNIFICATION; ADVANCEMENT
OF EXPENSES. 15
SECTION 28. DISSOLUTION................................................................................................. 16
SECTION 29. WINDING UP AND TERMINATION............................................................ 16
SECTION 30. MERGERS....................................................................................................... 17
[SECTION 31. TRANSITION CONCERNING REAL AND PERSONAL
PROPERTY].... 22
SECTION 32. UNIFORMITY OF APPLICATION AND CONSTRUCTION...................... 23
SECTION 33. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL
AND NATIONAL COMMERCE ACT.......................................................................................................... 23
SECTION 34.
SEVERABILITY CLAUSE................................................................................... 23
SECTION 34 35. SAVINGS CLAUSE..................................................................................... 23
SECTION 35 36. REPEALS...................................................................................................... 23
SECTION 36 37. EFFECTIVE DATE...................................................................................... 23
HARMONIZED REVISED UNIFORM UNINCORPORATED NONPROFIT ASSOCIATION ACT
The
proposed revisions to the text of the act set forth in this document have been
prepared as part of a project that has two purposes: (i) to harmonize the
language of all of the unincorporated entity laws, and (ii) to revise the
language of each of those acts in a manner that permits their integration into
a single code of entity laws.
The
Comments to the act have been omitted from this document to reduce its
length. Following the approval of the
changes in this document by the Conference, the Comments will be restored with
appropriate changes.
The
harmonization process has involved the revision of the following acts:
Business Organizations Act (the
“HUB”)
Model Entity Transactions Act
(“META”)
Model Registered Agents Act
Uniform Partnership Act (1997)
Uniform Limited Partnership Act
(2001)
Uniform Limited Liability Company
Act (2006)
Uniform Statutory Trust Entity
Act
Uniform Limited Cooperative
Association Act
Uniform Unincorporated Nonprofit
Association Act (2008)
Changes
to the currently effective text of the act are shown by striking through
text to be deleted and underlining text to be added. Changes that adopt language from the HUB or
META, or are merely relocations of current language or corrections to cross references are shown in regular type. Changes
that adopt language from other unincorporated entity laws are shown in italics. Changes
that do not have a source in one of the existing unincorporated entity laws are
shown in small caps.
HARMONIZED REVISED UNIFORM
unincorporated nonprofit association act
SECTION 1. SHORT
TITLE. This [act]
may be cited as the Revised Uniform Unincorporated Nonprofit Association [Act.]
SECTION 2. DEFINITIONS. In
this [act]:
(1)
“Established practices” means the practices used by an unincorporated nonprofit
association without material change during the most recent five years of its
existence, or if it has existed for less than five years, during its entire
existence.
(2)
“Governing principles” means the agreements, whether oral, in a record, or
implied from its established practices, or in any combination thereof, that which govern the purpose or operation of
an unincorporated nonprofit association and the rights and obligations of its
members and managers. The term includes
any amendment or restatement of the agreements constituting the governing
principles.
(3)
“Manager” means a person that is responsible, alone or in concert with others,
for the management of an unincorporated nonprofit association.
(4) “Member” means a person that, under the governing principles, may participate in
the selection of persons authorized to manage the affairs of the unincorporated
nonprofit association or in the development of the policies and activities
of the association.
(5)
“Person” means an individual, business corporation, business trust,
statutory entity trust, estate, trust, nonprofit
corporation, partnership,
limited partnership, limited liability company, [general
cooperative association,] limited cooperative
association, unincorporated
nonprofit association,
statutory trust, business trust, common-law business
trust, estate, trust, association, joint venture, public corporation,
government or governmental subdivision, agency, or instrumentality, or any
other legal or commercial entity.
(6)
“Property” means all property, whether real, personal, or mixed or tangible or intangible, or any right or interest therein.
(6) (7) “Record”, used as
a noun, means
information that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable form.
(8) “Sign” means, with present
intent to authenticate or adopt a record:
(A) to execute or adopt a tangible symbol; or
(B) to attach to or logically associate with the record an
electronic symbol, sound, symbol, or process.
(7) (9) “State” means a state of the United
States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the United
States.
(10) “Transfer” includes:
(A) an assignment;
(B) a conveyance;
(C) a sale;
(D) a lease;
(E) an encumbrance, including a mortgage or security interest;
(F) a gift; and
(G) a transfer by operation of law.
(8) (11) “Unincorporated nonprofit association” means an unincorporated
organization consisting of [two] or more members joined
under an agreement that is oral, in a record, or implied from conduct, for one
or more common, nonprofit purposes. The term does not include:
(A) a
trust;
(B) a
marriage, domestic partnership, common law domestic relationship, civil union,
or other domestic living arrangement;
(C) an
organization formed under any other statute that governs the organization and
operation of unincorporated associations;
(D)
a joint tenancy, tenancy in common, or tenancy by the entireties
even if the co-owners share use of the property for a nonprofit purpose; or
(E)
a relationship under an agreement in a record that
expressly provides that the relationship between the parties does not create an
unincorporated nonprofit association.
SECTION 3. RELATION TO OTHER LAW.
(a) Principles Unless
displaced by particular provisions of this [act], the principles of law and
equity supplement this [act] unless displaced by a particular provision of
it.
(b) A statute governing a specific
type of unincorporated nonprofit association prevails over an inconsistent
provision in this [act], to the extent of the inconsistency.
(c)
This [act] supplements the law of this state that applies to nonprofit
associations operating in this state. If
a conflict exists, that law applies.
SECTION 4. GOVERNING LAW.
(a) Except as otherwise provided in
subsection (b), the law of this state governs the operation in this state of all
an
unincorporated nonprofit associations association formed or operating in this
state.
(b)
Unless the governing principles specify a different jurisdiction, the law of
the jurisdiction in which an unincorporated nonprofit association has its main
place of activities governs the internal affairs of the association.
SECTION 5. LEGAL ENTITY; PERPETUAL EXISTENCE; POWERS.
(a) An unincorporated nonprofit association is a legal an entity
distinct from its members and managers.
(b) An
unincorporated nonprofit association has perpetual duration unless the
governing principles specify otherwise.
(c) An unincorporated nonprofit
association has the same powers as an individual to do all things necessary or
convenient to carry on its purposes.
(d) An unincorporated nonprofit association may engage in
profit-making activities but profits from any activities must be used or set
aside for the association’s nonprofit purposes.
SECTION 6. OWNERSHIP AND TRANSFER OF PROPERTY.
(a)
An unincorporated nonprofit association may acquire, hold,
encumber, or transfer in its name an interest in real or personal
property.
(b)
An unincorporated nonprofit association may be a
beneficiary of a trust or contract, a legatee, or a devisee.
SECTION 7. STATEMENT OF AUTHORITY AS TO REAL PROPERTY.
(a)
In this section, “statement of authority” means a statement authorizing a person
to transfer an interest in real property held in the name of an
unincorporated nonprofit association.
(b)
An interest in real property held in the name of an unincorporated nonprofit
association may be transferred by a person authorized to do so in a statement
of authority [filed] [recorded] by the association in the office in the
[county] in which a transfer of the property would be
[filed] [recorded].
(c) A
statement of authority must set forth:
(1)
the name of the unincorporated nonprofit association;
(2) the address in this state,
including the street address, if any, of the association or, if the association
does not have an address in this state, its out-of-state address;
(3)
that the association is an unincorporated nonprofit
association; and
(4)
the name, title, or
position of a person authorized to transfer an interest in real property held
in the name of the association.
(d) A
statement of authority must be executed in the same manner as [a deed] [an
affidavit] by a person other than the person authorized in the statement to
transfer the interest.
(e) A
filing officer may collect a fee for [filing] [recording] a statement of
authority in the amount authorized for [filing] [recording] a transfer of real
property.
(f) A
document amending, revoking, or canceling a statement of authority or stating
that the statement is unauthorized or erroneous must meet the requirements for
executing and [filing] [recording] an original statement.
(g) Unless
canceled earlier, a [filed] [recorded] statement of authority and its most
recent amendment expire [five] years after the date of the most recent [filing]
[recording].
(h)
If the record title to real property is in the name of an unincorporated
nonprofit association and the statement of authority is [filed] [recorded] in
the office of the [county] in which a transfer of the property would be [filed]
[recorded], the authority of the person named in the statement to transfer is
conclusive in favor of a person that gives value without notice that the person
lacks authority.
SECTION 8. LIABILITY.
(a)
A debt, obligation, or other liability of an unincorporated nonprofit
association, whether
arising in contract, tort, or otherwise:
(1)
is solely the debt, obligation, or
other liability of the association; and
(2)
does not become a debt, obligation, or
other liability of a member or manager solely because the member acts as a
member or the manager acts as a manager.
(b) A
person’s status as a member or manager does not prevent or restrict law other
than this [act] from imposing liability on the person or the association
because of the person’s conduct.
SECTION 9. ASSERTION
AND DEFENSE OF CLAIMS.
(a) An unincorporated nonprofit association may
sue or be sued in its own name.
(b) A member or manager may assert a
claim the member or manager has against the unincorporated nonprofit
association. An association may assert a
claim it has against a member or manager.
SECTION 10. EFFECT OF JUDGMENT OR ORDER. A
judgment or order against an unincorporated nonprofit association is not by
itself a judgment or order against a member or manager.
SECTION 11. APPOINTMENT OF AGENT TO
RECEIVE SERVICE OF PROCESS.
(a)
An unincorporated nonprofit association may file in the office of deliver
to the [Secretary of State] for filing a statement appointing an
agent authorized to receive service of process.
(b) A
statement appointing an agent must set forth state:
(1)
the name of the unincorporated nonprofit association;
and
(2)
the name of the person in this state authorized to
receive service of process and the person’s address, including the street
address, in this state.
(c) A
statement appointing an agent must be signed and [acknowledged] [sworn to]
by a person authorized to manage the affairs of the unincorporated nonprofit
association and by the person appointed as the agent. By signing and [acknowledging] [swearing
to] the statement the person becomes the agent. The signing of the
statement is an affirmation of fact that the person is authorized to manage the
affairs of the unincorporated nonprofit association and that the agent has
consented to serve.
(d) An amendment to or cancellation of a statement appointing
an agent to receive service of process must meet the requirements for executing of signing an
original statement. An agent may resign by filing
delivering a resignation in to the office of the
[Secretary of State] for filing and giving notice to the association.
(e) The
[Secretary of State]
may collect a fee for filing a statement appointing an agent to
receive service of process, an amendment, a cancellation, or a resignation in
the amount charged for filing similar documents.
(f) A statement appointing an
agent to receive service of process takes effect on filing by the [Secretary of
State] and is effective for five years after the date of filing unless canceled
or terminated earlier.
(g) A statement appointing an
agent to receive service of process may not be rejected for filing because the
name of the unincorporated nonprofit association signing the statement is not
distinguishable on the records of the [Secretary of State] from the name of
another entity appearing in those records.
The filing of such a statement does not make the name of the
unincorporated nonprofit association signing the statement unavailable for use
by another entity.
[SECTION 12. SERVICE
OF PROCESS. In an action or proceeding against an
unincorporated nonprofit association, process may be served on an agent
authorized by appointment to receive service of process, on a manager of the
association, or in any other manner authorized by the law of this state.]
SECTION 13. ACTION OR PROCEEDING NOT ABATED BY CHANGE. An action or
proceeding against an unincorporated nonprofit
association does not abate merely because of a change in its members or managers.
[SECTION 14. VENUE. Unless otherwise provided by law other
than this [act], venue of an action against an unincorporated nonprofit
association brought in this state is determined under the statutes applicable
to an action brought in this state against a corporation.]
SECTION 15. MEMBER
NOT AGENT. A member is not an agent of the
association solely by reason of being a member.
SECTION
16. APPROVAL
BY MEMBERS.
(a) Except as otherwise provided in the governing
principles, an unincorporated nonprofit association must have the approval of
its members to:
(1) admit, suspend, dismiss, or expel a
member;
(2) select or dismiss a manager;
(3) adopt, amend, or repeal the governing
principles;
(4) sell, lease, exchange, or otherwise
dispose of all, or substantially all, of the association’s property, with or
without the association’s goodwill, outside the ordinary course of its
activities;
(5) dissolve under section 28(2) Section 28(a)(2) or merge under section Section 30;
(6) undertake any other act outside the ordinary
course of the association’s activities; or
(7) determine the policy and purposes of the
association.
(b) An
unincorporated nonprofit association must have the approval of the members to
do any other act or exercise a right that the governing principles require to
be approved by members.
SECTION 17. MEMBER MEETINGS OF
MEMBERS; VOTING, NOTICE, AND QUORUM PROCEDURAL REQUIREMENTS.
(a) Unless the governing principles
provide otherwise:
(1) approval
of a matter by the members requires an
affirmative majority of the votes cast at a meeting of members; and
(2) each
member is entitled to one vote on each matter that is submitted for approval by
the members.
(b) Notice and
quorum requirements for member meetings and the conduct of meetings of members
are determined by the governing principles. The governing principles may provide for the:
(1)
calling, location, and timing of member meetings;
(2)
notice and quorum requirements for member meetings;
(3)
conduct of member meetings;
(4)
taking of action by the members by consent without a meeting or casting ballots;
and
(5)
participation by members in a member meeting by telephone or other means of
electronic communication.
(c)
If the governing principles do not provide for a matter described in subsection
(b), customary usages and principles of parliamentary law and procedure apply.
SECTION 18. DUTIES OF MEMBER.
(a)
A member does not have a any fiduciary duty to an unincorporated
nonprofit association or to another member solely by reason
of being a member.
(b)
A member shall discharge the duties to the unincorporated nonprofit association
and the other members and exercise any rights under this [act] consistent with
the governing principles and the contractual
obligation of good faith and fair dealing.
SECTION 19. ADMISSION, SUSPENSION, DISMISSAL, OR EXPULSION OF MEMBERS.
(a) A person becomes a member and
may be suspended, dismissed, or expelled in accordance with the association’s
governing principles. If there are no
applicable governing principles, a person may become a member or be suspended,
dismissed, or expelled from an association only by a vote of its members. A person may not be admitted as a member
without the person’s consent.
(b) Unless the governing principles
provide otherwise, the suspension, dismissal, or expulsion of a member does not
relieve the member from any unpaid capital contribution, dues, assessments,
fees, or other obligation incurred or commitment made by the member before the
suspension, dismissal, or expulsion.
SECTION 20. MEMBER’S RESIGNATION.
(a) A member may resign as a member
in accordance with the governing principles.
In the absence of applicable governing principles, a member may resign
at any time.
(b) Unless the governing principles
provide otherwise, resignation of a member does not relieve the member from any
unpaid capital contribution, dues, assessments, fees, or other obligation
incurred or commitment made by the member before resignation.
SECTION
21. MEMBERSHIP INTEREST NOT
TRANSFERABLE. Except as otherwise provided in the governing principles, a
member’s interest or any right under the governing principles is not
transferable.
SECTION
22. SELECTION OF MANAGERS;
MANAGEMENT RIGHTS OF MANAGERS. Except as otherwise provided in this [act] or the
governing principles:
(1) only
the members may select a manager or managers;
(2) a
manager may be a member or a nonmember;
(3) if a
manager is not selected, all members are managers;
(4) each
manager has equal rights in the management and conduct of the association’s
activities;
(5) all matters relating to the
association’s activities are decided by its managers except for matters
reserved for approval by members in section 16; and
(6) a difference among managers is decided
by a majority of the managers.
SECTION 23. DUTIES OF MANAGERS.
(a) A manager owes to the
unincorporated nonprofit association and to its members the fiduciary duties of loyalty and care.
(b) A manager shall manage the
unincorporated nonprofit association in good faith, in a manner the manager
reasonably believes to be in the best interests of the association, and with
such care, including reasonable inquiry, as a prudent person would reasonably
exercise in a similar position and under similar circumstances. A manager may rely in good faith upon any
opinion, report, statement, or other information provided by another person
that the manager reasonably believes is a competent and reliable source for the
information.
(c) After full disclosure of all
material facts, a specific act or transaction that would otherwise violate the fiduciary duty of loyalty by a manager may be
authorized or ratified by a majority of the members that are not interested
directly or indirectly in the act or transaction.
(d) A manager
that makes a business judgment in good faith satisfies the duties specified in
subsection (a) if the manager:
(1) is not interested,
directly or indirectly, in the subject of the business judgment and is
otherwise able to exercise independent judgment;
(2) is informed with respect to the subject
of the business judgment to the extent the manager reasonably believes to be
appropriate under the circumstances; and
(3) believes that the business judgment is in the best interests
of the unincorporated nonprofit association and in accordance with its
purposes.
(e) The governing principles in a
record may limit or eliminate the liability of a manager to the unincorporated
nonprofit association or its members for damages for any action taken, or for
failure to take any action, as a manager, except liability for:
(1) the
amount of financial benefit improperly received by a manager;
(2) an
intentional infliction of harm on the association or one or more of its
members;
(3) an
intentional violation of criminal law;
(4) breach
of the fiduciary duty of
loyalty; or
(5) improper
distributions.
SECTION
24. NOTICE AND QUORUM PROCEDURAL
REQUIREMENTS FOR MANAGER MEETINGS OF MANAGERS. Notice and quorum
requirements for meetings of managers and the conduct of meetings of managers
are determined by the
(a) The governing principles may provide for the:
(1) calling, location,
and timing of manager meetings;
(2) notice and quorum
requirements for manager meetings;
(3) conduct of
manager meetings;
(4) taking of action
by the managers by consent without a meeting; and
(5) participation by
managers in a manager meeting by telephone or other means of electronic
communication.
(b) If the governing principles
do not provide for a matter described in subsection (a), customary usages and
principles of parliamentary law and procedure apply.
SECTION 25. RIGHT OF MEMBER OR MANAGER
TO INFORMATION.
(a) On reasonable notice, a member or
manager of an unincorporated nonprofit association may inspect and copy during
the unincorporated nonprofit association’s regular operating hours, at a
reasonable location specified by the association, any record maintained by the
association regarding its activities, financial condition, and other
circumstances, to the extent the information is material to the member’s or
manager’s rights and duties under the governing principles.
(b) An unincorporated nonprofit
association may impose reasonable restrictions on access to and use of
information to be furnished under this section, including designating the
information confidential and imposing obligations of nondisclosure and
safeguarding on the recipient.
(c) An unincorporated nonprofit association may charge a
person that makes a demand under this section reasonable copying costs, limited
to the costs of labor and materials.
(d) A former member or manager is entitled to information
to which the member or manager was entitled while a member or manager if the
information pertains to the period during which the person was a member or
manager, the former member or manager seeks the information in good faith, and
the former member or manager satisfies subsections (a) through (c).
SECTION 26. DISTRIBUTIONS PROHIBITED; COMPENSATION AND
OTHER PERMITTED PAYMENTS.
(a) Except as otherwise provided in
subsection (b), an unincorporated nonprofit association may not pay dividends
or make distributions to a member or manager.
(b) An unincorporated nonprofit association
may:
(1) pay reasonable compensation or reimburse
reasonable expenses to a member or manager for services rendered;
(2) confer benefits on a
member or manager in conformity with its nonprofit purposes;
(3) repurchase a membership and repay a capital
contribution made by a member to the extent authorized by its governing
principles; or
(4) make distributions of property to members
upon winding up and termination to the extent permitted by section Section 29.
SECTION 27. REIMBURSEMENT; INDEMNIFICATION;
ADVANCEMENT OF EXPENSES.
(a) Except as otherwise provided in
the governing principles, an unincorporated nonprofit association shall
reimburse a member or manager for authorized expenses reasonably incurred in
the course of the member’s or manager’s activities on behalf of the
association.
(b) An unincorporated nonprofit association may indemnify a member or
manager for any debt, obligation, or other liability incurred in the course of
the member’s or manager’s activities on behalf of the association if the person
seeking indemnification has complied with Sections 18 and 23. Governing principles in a record may broaden
or limit indemnification.
(c) If a person is made or
threatened to be made a party in an action or
proceeding based on that
person’s activities on behalf of an unincorporated nonprofit association and
the person makes a request in a record to the association, a majority of the
disinterested managers may approve in a record advance payment, or
reimbursement, by the association, of all or a part of the reasonable expenses,
including attorney’s fees and costs, incurred by the person before the final
disposition of the proceeding. To be
entitled to an advance payment or reimbursement, the person must state in a
record that the person has a good faith belief that the criteria for
indemnification in subsection (b) have been satisfied and that the person will
repay the amounts advanced or reimbursed if the criteria for payment have not
been satisfied.
The governing principles in a record may broaden or limit the advance
payments or reimbursements.
(d)
An unincorporated nonprofit association may purchase insurance on behalf of a
member or manager for liability asserted against or incurred by the member or
manager in the capacity of a member or manager, whether or not the association
has authority under this [act] to reimburse, indemnify, or advance expenses to the member or
manager against the liability.
(e)
The rights of reimbursement, indemnification, and advancement of expenses under
this section apply to a former member or manager for an activity undertaken on
behalf of the unincorporated nonprofit association while a member or
manager.
SECTION
28. DISSOLUTION.
(a) An
unincorporated nonprofit association may be dissolved as follows:
(1) if the governing principles provide a
time or method for dissolution, at that time or by that method;
(2) if the governing principles do not
provide a time or method for dissolution, upon approval by the members;
(3) if no member can be located and the
association’s operations have been discontinued for at least three years, by
the managers or, if the association has no current manager, by its last
manager;
(4) by court order; or
(5) under
law other than this [act].
(b)
After dissolution, an unincorporated nonprofit association continues in
existence until its activities have been wound up and it is terminated pursuant
to section Section 29.
SECTION
29. WINDING UP AND TERMINATION. Winding up and termination of an unincorporated nonprofit
association must proceed in accordance with the following rules:
(1) All known debts and liabilities
must be paid or adequately provided for.
(2) Any property subject to a
condition requiring return to the person designated by the donor must be
transferred to that person.
(3) Any property subject to a trust
must be distributed in accordance with the trust agreement.
(4) Any remaining property must be
distributed as follows:
(A) as required by law other than this
[act] that requires assets of an association to be distributed to another
person with similar nonprofit purposes;
(B) in accordance with
the association’s governing principles or in the absence of applicable
governing principles, to the members of the association per capita or as the
members direct; or
(C) if neither subparagraph (A) nor (B)
applies, under [cite the unclaimed property law in this state].
SECTION
30. MERGERS.
(a) In
this section:
(1)
“Constituent organization” means an organization that is merged with one or
more other organizations including the surviving organization.
(2)
“Nonsurviving organization” means a constituent organization that is not the
surviving organization.
(3)
“Organization” means an unincorporated nonprofit association, a general
partnership, including a limited liability partnership, limited partnership,
including a limited liability limited partnership, limited
liability company, business or statutory trust, corporation, or any
other legal or commercial entity having a statute governing its formation and
operation. The term includes a
for-profit or nonprofit organization.
(4)
“Surviving organization” means an organization into which one or more other
organizations are merged.
(1) “Entity”:
(A) means a person that has:
(i)
a legal existence separate from any person that has a right to vote or consent
with respect to any of the entity’s internal affairs; or
(ii)
the power to acquire an interest in real property in
its own name; and
(B) does not include:
(i)
an individual;
(ii) a testamentary or inter vivos trust with a predominantly
donative purpose or a charitable trust;
(iii)
an association or relationship that is not a
partnership solely by reason of [Section 202(c) of the Uniform Partnership Act
(1997)] or a similar provision of the law of another jurisdiction;
(iv)
a decedent’s estate; or
(v)
a government or a governmental subdivision, agency, or
instrumentality.
(2) “Merging entity” means an
entity that is a party to a merger and exists immediately before the merger
becomes effective.
(3) “Organic rules”
means the public organic record and private organic rules of an entity.
(4) “Private organic
rules” means the rules, whether or not in a record, that govern the internal
affairs of an entity, are binding on all its equity owners or persons with the
right to vote or consent with respect to any of its internal affairs, and are
not part of its public organic record, if any.
(5) “Public organic
record” means the record the filing of which by the [Secretary of State] forms
an entity and any amendment to or restatement of that record.
(6)
“Surviving entity” means the entity that continues in existence after or is
created by a merger.
(b) An
unincorporated nonprofit association may merge be a merging entity or
surviving entity in a merger with any organization entity
that is authorized by law to merge with an unincorporated nonprofit
association.
(c) A
merger involving an unincorporated nonprofit association is subject to the following
rules:
(1)
Each constituent organization entity shall comply with its
governing law.
(2)
Each party to the merger shall approve a plan of merger. The plan, which must be in a record, must
include the following provisions:
(A)
the name and form of each organization entity
that is a party to the merger;
(B)
the name and form of the surviving organization
entity and, if the surviving organization entity is to be
created by the merger, a statement to that effect;
(C)
if the surviving organization entity is
to be created by the merger, the surviving organization’s organizational
documents entity’s organic rules that are proposed to be in a
record;
(D)
if the surviving organization entity is not to be created by the
merger, any amendments to be made by the merger to the surviving organization’s
organizational documents entity’s organic rules that are, or are
proposed to be, in a record; and
(E) the terms and conditions of the
merger, including the manner and basis for converting the interests in each constituent
organization merging entity into any combination of money, interests
in the surviving organization entity, and other consideration
except that the plan of merger may not permit members of an unincorporated
nonprofit association to receive merger consideration if a distribution of such
consideration would not be permitted in the absence of a merger under Sections
26 and 29.
(3)
The plan of merger must be approved by the members of each unincorporated
nonprofit association that is a constituent organization in the merger merging
entity. If a plan of merger would
impose personal liability for an obligation of a constituent or surviving
organization an entity on a member of an association that is a party
to the merger merging entity, the plan may not take effect unless it
is approved in a record by the member.
(4)
Subject to the contractual rights of third parties, after a plan of merger is
approved and at any time before the merger is effective, a constituent
organization merging entity may amend the plan or abandon the merger
as provided in the plan, or except as otherwise prohibited in the plan, with
the same consent as was required to approve the plan.
(5)
Following approval of the plan, a merger under this section is effective:
(A)
if a constituent organization merging entity is required to give
notice to or obtain the approval of a governmental agency or officer in order
to be a party to a merger, when the notice has been given and the approval has
been obtained; and
(B)
if the surviving organization entity:
(i) is an unincorporated nonprofit
association, as specified in the plan of merger and upon compliance by any constituent
organization merging entity that is not an association with any
requirements, including any required filings in the [office of the Secretary of
State], of the organization’s entity’s governing statute; or
(ii) is not an
unincorporated nonprofit association, as provided by the statute governing the
surviving organization entity.
(d) When
a merger becomes effective:
(1)
the surviving organization entity
continues or comes into existence;
(2)
each constituent organization that merges into the
surviving organization merging entity that is not the surviving entity
ceases to exist as a separate entity;
(3)
all property owned by each constituent organization
that ceases to exist of each merging entity vests in the surviving organization
entity without transfer, reversion, or impairment;
(4)
all debts, obligations, or other liabilities of each nonsurviving
organization merging entity continue as debts, obligations, or other
liabilities of the surviving organization entity;
(5)
an action or proceeding pending by or against any nonsurviving organization
may be continued as if the merger had not occurred the name of the
surviving entity may be substituted for the name of any merging entity that is
a party to any pending action or proceeding;
(6)
except as prohibited otherwise provided by law other than this
[act], all of the rights, privileges, immunities, powers, and purposes
of each constituent organization that ceases to exist merging entity
vest in the surviving organization entity;
(7)
except as otherwise provided in the plan of merger,
the terms and conditions of the plan of merger take effect;
(8)
the merger does not affect the personal liability, if any, of a member or
manager of a constituent organization merging entity for a debt,
obligation, or other liability incurred before the merger is effective; and
(9)
a surviving organization entity that is not organized in this
state is subject to the jurisdiction of the courts of this state to enforce any
debt, obligation, or other liability owed by a constituent organization merging
entity, if before the merger the constituent organization merging
entity was subject to suit in this state for the debt, obligation, or other
liability.
(e)
Property held for a charitable purpose under the law of this state by a constituent
organization merging entity immediately before a merger under this
section becomes effective may not, as a result of the merger, be diverted from
the objects for which it was given donated, granted, or devised,
unless, to the extent required by or pursuant to the law of this state
concerning cy pres or other law dealing with nondiversion of charitable assets,
the organization entity obtains an appropriate order of [name
of the appropriate court] [the attorney general Attorney
General] specifying the disposition of the property.
(f) A
bequest, devise, gift, grant, or promise contained in a will or other
instrument of donation, subscription, or conveyance that is made to a nonsurviving
organization merging entity that is not the surviving entity and
that takes effect or remains payable after the merger inures to the surviving organization
entity. A trust obligation that
would govern property if transferred to the nonsurviving organization entity
applies to property that is transferred to the surviving organization entity
under this section.
[SECTION
31. TRANSITION CONCERNING REAL AND PERSONAL PROPERTY.
(a) If,
before [the effective date of this [act]], an interest in property was by terms
of a transfer purportedly transferred to an unincorporated nonprofit
association but under the law of this state the interest did not vest in the
association, or in one or more persons on behalf of the association under
subsection (b), on [the effective date of this [act]] the interest vests in the
association, unless the parties to the transfer have treated the transfer as
ineffective.
(b) If,
before [the effective date of this [act]], an interest in property was by terms
of a transfer purportedly transferred to an unincorporated nonprofit
association but the interest was vested in one or more persons to hold the
interest for members of the association, on or after [the effective date of
this [act]] the persons, or their successors in interest, may transfer the
interest to the association in its name, or the association may require that
the interest be transferred to it in its name.]
SECTION 32. UNIFORMITY
OF APPLICATION AND CONSTRUCTION. In applying and construing this
uniform act, consideration must be given to the need to promote uniformity of
the law with respect to its subject matter among states that enact it.
SECTION 33. RELATION
TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT. This [act] modifies, limits, and
supersedes the federal Electronic Signatures in Global and National
Commerce Act, 15 U.S.C. section Section 7001, et seq., but does
not modify, limit, or supersede section Section 101(c) of that
act, 15 U.S.C. section Section 7001(c), or authorize electronic
delivery of any of the notices described in section Section
103(b) of that act, 15 U.S.C. section Section 7003(b).
SECTION 34. SEVERABILITY CLAUSE. If any provision of this [act] or its
application to any person or circumstance is held invalid, the invalidity does
not affect other provisions or applications of this [act] which can be given
effect without the invalid provision or application, and to this end the
provisions of this [act] are severable.
Legislative Note: Include this section only if this state lacks
a general severability statute or a decision by the highest court of this state
stating a general rule of severability.
SECTION 34 35. SAVINGS CLAUSE. This [act]
does not affect an action or proceeding commenced or right accrued before [the effective
date of this [act]] takes effect.
SECTION 35 36. REPEALS. The following are repealed:
(1)
(2)
(3).
SECTION 36 37. EFFECTIVE
DATE. This [act] takes effect . . .