H 4905 Session 112 (1997-1998)
H 4905 General Bill, By Fleming and Barfield
Similar(S 1076)
A BILL TO AMEND TITLE 33, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO
PARTNERSHIPS, CORPORATIONS, AND ASSOCIATIONS, BY ADDING CHAPTER 36 SO AS TO
INCLUDE NONPROFIT CORPORATIONS FINANCED BY BOTH FEDERAL AND STATE LOANS AND TO
PROVIDE FOR INCORPORATION, MEMBERSHIP, SALE, CONSOLIDATION, MERGER, AND
DISSOLUTION OF CORPORATIONS NOT-FOR-PROFIT; TO AMEND SECTIONS 33-20-103, AS
AMENDED, AND 33-31-1708, RELATING TO EXEMPTION OF CERTAIN NONPROFIT
CORPORATIONS FROM THE PROVISIONS OF CHAPTERS 1 THROUGH 20 AND CHAPTER 31 OF
TITLE 33, SO AS TO EXEMPT NONPROFIT CORPORATIONS ORGANIZED PURSUANT TO CHAPTER
36; TO REPEAL CHAPTER 35 OF TITLE 33 RELATING TO NONPROFIT CORPORATIONS
FINANCED BY FEDERAL LOANS; AND TO AMEND SECTION 6-13-120, RELATING TO
DISSOLUTION OF A WATER DISTRICT, SECTION 6-19-10, RELATING TO STATE AUTHORITY
TO MAKE GRANTS TO WATER AND SEWER AUTHORITIES OR DISTRICTS; SECTION 12-6-550,
RELATING TO CORPORATIONS EXEMPT FROM STATE INCOME TAXES, SECTION 12-37-2120,
RELATING TO EXEMPTIONS FROM SALES AND USE TAXES, AND SECTION 12-37-220, AS
AMENDED, RELATING TO EXEMPTIONS FROM PROPERTY TAX, ALL SO AS TO CHANGE
CROSS-REFERENCES TO REFLECT REPEAL OF CHAPTER 35 AND ADDITION OF CHAPTER 36.
03/26/98 House Introduced and read first time HJ-27
03/26/98 House Referred to Committee on Judiciary HJ-28
04/14/98 House Member(s) added as co-sponsor(s): Rep(s) Barfield HJ-29
A BILL
TO AMEND TITLE 33, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO PARTNERSHIPS,
CORPORATIONS, AND ASSOCIATIONS, BY ADDING
CHAPTER 36 SO AS TO INCLUDE NONPROFIT
CORPORATIONS FINANCED BY BOTH FEDERAL AND
STATE LOANS AND TO PROVIDE FOR INCORPORATION,
MEMBERSHIP, SALE, CONSOLIDATION, MERGER, AND
DISSOLUTION OF CORPORATIONS NOT-FOR-PROFIT; TO
AMEND SECTIONS 33-20-103, AS AMENDED, AND 33-31-1708,
RELATING TO EXEMPTION OF CERTAIN NONPROFIT
CORPORATIONS FROM THE PROVISIONS OF CHAPTERS 1
THROUGH 20 AND CHAPTER 31 OF TITLE 33, SO AS TO
EXEMPT NONPROFIT CORPORATIONS ORGANIZED
PURSUANT TO CHAPTER 36; TO REPEAL CHAPTER 35 OF
TITLE 33 RELATING TO NONPROFIT CORPORATIONS
FINANCED BY FEDERAL LOANS; AND TO AMEND SECTION
6-13-120, RELATING TO DISSOLUTION OF A WATER
DISTRICT, SECTION 6-19-10, RELATING TO STATE
AUTHORITY TO MAKE GRANTS TO WATER AND SEWER
AUTHORITIES OR DISTRICTS, SECTION 12-6-550, RELATING
TO CORPORATIONS EXEMPT FROM STATE INCOME TAXES,
SECTION 12-36-2120, RELATING TO EXEMPTIONS FROM
SALES AND USE TAXES, AND SECTION 12-37-220, AS
AMENDED, RELATING TO EXEMPTIONS FROM PROPERTY
TAX, ALL SO AS TO CHANGE CROSS-REFERENCES TO
REFLECT REPEAL OF CHAPTER 35 AND ADDITION OF
CHAPTER 36.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. (A)(1) This act must be construed liberally. The
enumeration of any object, purposes, power, manner, method, or
thing does not exclude like or similar objects, purposes, powers,
manners, methods, or things.
(2) The provisions of this chapter may not be repealed by
implication. If they conflict with other provisions of the 1976 Code,
the provisions of this chapter prevail.
(3) The powers and authorities conferred by this chapter may be
added to and supplemented by any other general law.
(B) The General Assembly finds that corporations not-for-profit
established pursuant to this chapter have been authorized to provide
the local governmental functions of water service or sewage
treatment or a combination of both, fire protection service, ambulance
service, and medical clinic facilities. Corporations not-for-profit
exist for a public purpose, and the General Assembly declares that
corporations not-for-profit must be treated like special purpose
districts for purposes of Chapter 78 of Title 15, Chapter 56 of Title
12, and Sections 56-3-780 and 58-31-30(23) of the 1976 Code.
Corporations not-for-profit may participate, under the same
conditions as afforded special purpose districts, in the State
Retirement System, the State Health Insurance System, state
purchasing programs, and Sections 1-11-140 and 1-11-141 of the
1976 Code.
SECTION 2. Title 33 of the 1976 Code is amended by adding:
"CHAPTER 36
Corporations Not-for-Profit Financed
by Federal or State Loans
Article 1
General Provisions
Section 33-36-10. As used in this chapter 'corporation
not-for-profit' means a corporation which, upon its original
organization, is financed in whole or in part by a loan made under the
provisions of the Consolidated Farmers Home Administration Act of
1962 and acts amending it and by the State Revolving Fund for
Water or Sewer.
Section 33-36-20. A corporation incorporated pursuant to this
chapter may not own or issue shares of stock representing ownership
interests in the corporation itself. A corporation incorporated
pursuant to this chapter may pay compensation in a reasonable
amount to its members, board members, and officers for services
rendered, and may confer benefits upon its members in conformity
with its purposes. Upon dissolution or final liquidation of the
corporation incorporated pursuant to this chapter, the residual assets
must be disposed of in the manner required for organizations exempt
from federal income tax as described in Section 501(c)(12) of the
Internal Revenue Code of 1986.
Article 2
Incorporation
Section 33-36-210. (A) Corporations not-for-profit may be
organized pursuant to this chapter by any three or more persons who
make, subscribe, acknowledge, and file articles of incorporation with
the Secretary of State, and obtain approval from the Secretary of
State when the articles of incorporation comply with this chapter.
The written articles of incorporation must contain:
(1) the name of the proposed corporation, which must include
the word 'Incorporated' or 'Inc.'. The name may not be the same as,
or deceptively similar to, the name of another domestic corporation,
or a foreign corporation authorized to do business in this State.
(2) the purpose for which the corporation is organized;
(3) the qualification of members and the manner of their
admission;
(4) the term for which the corporation is to exist, which may be
perpetual;
(5) by what officers the affairs of the corporation are to be
managed, and the times at which they are to be elected or appointed;
(6) the names of the officers who are to serve until the first
election or appointment pursuant to the articles of incorporation;
(7) the number of persons constituting the first governing board,
which may not be less than three, and the names and addresses of the
persons who are to serve as board members, managers, or officers
until the first election;
(8) by whom the bylaws of the corporation are to be made,
altered, or rescinded;
(9) by whom and in what manner amendments to the articles of
incorporation may be proposed and adopted;
(10) the name and address of the corporation's registered agent
for service of process;
(11) any provision which the incorporators choose to insert for
the conduct of the affairs of the corporation and any provision
creating, dividing, limiting, and regulating the powers of the
corporation, the board members, managers, or officers not in conflict
with this chapter, except that the articles of incorporation do not need
to enumerate the powers in Sections 33-36-260 and 33-36-270; and
(12) the signatures of not less than three natural persons
competent to contract and an acknowledgment by all of the
subscribers before an officer authorized to take acknowledgments.
(B) The articles of incorporation must be filed with the Secretary
of State for approval. A duplicate copy, signed and acknowledged,
also may be filed.
Section 33-36-220. When the articles of incorporation
conforming to Section 33-36-210 have been filed with the Secretary
of State and the specified filing fee has been paid, the subscribers and
their associates and successors constitute a corporation. A duplicate
received with the original must be endorsed, certified, and returned
to the person from whom it was received upon payment of the fee
required for certified copies.
Section 33-36-230. Upon filing articles of incorporation or
amendments, or other paper relating to the incorporation, merger,
consolidation, or dissolution of a corporation not-for-profit with the
Secretary of State, the following fees must be paid:
(1) a filing fee of ten dollars for the filing and approval of articles
of incorporation;
(2) a fee of one dollar for the first page, fifty cents for each
additional page, and two dollars for authentication for furnishing
certified copies of articles of incorporation or other documents
concerning a corporation not-for-profit;
(3) a fee of five dollars in each case for filing papers relating to
dissolution or amendment of articles of incorporation.
Section 33-36-240. A corporation incorporated pursuant to this
chapter may amend its charter as provided in its bylaws. The articles
of incorporation may be amended and the amendment incorporated
into the articles only if the amendment has been filed with the
Secretary of State and all filing fees have been paid.
Section 33-36-250. The Secretary of State shall conform articles
of incorporation supplied by his office for 'corporations not-for-profit'
to the provisions of Sections 33-36-10 and 33-36-20.
Section 33-36-260. A corporation not-for-profit organized
pursuant to this chapter, unless otherwise provided in its articles of
incorporation or by law, has the power to:
(1) have succession by its corporate name for the period provided
for in its articles of incorporation;
(2) sue and be sued and appear and defend in all actions and
proceedings in its corporate name to the same extent as a natural
person;
(3) adopt and use and alter a common corporate seal;
(4) elect or appoint officers and agents as its affairs require and
allow them reasonable compensation;
(5) adopt, change, amend, and repeal bylaws, not inconsistent with
law or its articles of incorporation, for the administration of the
affairs of the corporation and the exercise of its corporate powers;
(6) increase, by vote of its members cast as the bylaws direct, the
numbers of its board members, managers, or officers so that the
number is not less than three;
(7) make contracts and incur liabilities, borrow money at the rates
of interest the corporation determines, issue its notes, bonds, and
other obligations, secure its obligations by mortgage, and pledge all
or any of its property, franchises, or income;
(8) conduct its affairs, carry on its operations, and have offices and
exercise the powers granted by this chapter in any state, territory,
district, or possession of the United States or any foreign country;
(9) purchase, take, receive, lease, take by gift, devise or bequest,
or otherwise acquire, own, hold, improve, use, or otherwise deal in
and with real or personal property, or any interest in it, wherever
situated.
(10) acquire, enjoy, utilize, and dispose of patents, copyrights, and
trademarks and licenses and other rights or interests in them;
(11) sell, convey, mortgage, pledge, lease, exchange, transfer, or
otherwise dispose of all or part of its property and assets;
(12) purchase, take, receive, subscribe for, or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge, or
otherwise dispose of and otherwise use and deal in and with shares
and other interests in, or obligations of, other domestic or foreign
corporations, whether for profit or not for profit, associations,
partnerships, or individuals, or direct or indirect obligations of the
United States, or other government, state, territory, governmental
district, municipality, or an instrumentality of them;
(13) lend money for its corporate purposes, invest and reinvest its
funds, and take and hold real and personal property as security for the
payment of funds loaned or invested;
(14) make donations for the public welfare or for religious,
charitable, scientific, educational, or other similar purposes;
(15) have and exercise all powers necessary or convenient to effect
the purposes for which the corporation is organized.
Section 33-36-270. (A) In addition to the general powers of
nonprofit corporations contained within Section 33-36-260, nonprofit
corporations created pursuant to this chapter may:
(1) engage in the business of supplying water or sewage
disposal, or a combination of water and sewer services, and provide
other services and facilities, including but not limited to fire
protection services, ambulance services, and medical clinic facilities
to individuals, corporations, and political subdivisions within the
geographical area specified within the articles of incorporation,
including water districts;
(2) exercise, in connection with water or sewage disposal
business, the power of eminent domain as prescribed in Section
6-13-50(19);
(3) borrow funds and contract with municipalities, counties, and
other political subdivisions for the provision of services and facilities
including, but not limited to, fire protection services, ambulance
services, and medical clinic facilities in accordance with this chapter
and the Rural Development Act of 1972.
(B) Counties, municipalities, and other political subdivisions may
contract with nonprofit corporations for those purposes, and water
and sewer authorities also may make provision for fire protection.
Before providing any of the services authorized in this section, a
nonprofit corporation or a group intending to organize a nonprofit
corporation must notify the governing body of the county or
municipality in which the service is to be provided of its intention
and the nature of the service. The governing body shall have a period
of ninety days from the date of the notification to approve the request
to provide the services or inform the person requesting permission to
provide the service that the governing body intends to provide for the
service as a public function of government. The notification of intent
by the governing body must include a detailed description of the area
to be served, the services to be provided, and the time schedule under
which the service will be available from the county or municipality.
Failure to notify the corporation within ninety days of the governing
body's approval or intent to serve is considered approval.
Section 33-36-280. The rates charged for services furnished by
a nonprofit corporation created for the purpose of providing water
supply or sewage disposal, or a combination of those services, are not
subject to supervision or regulation by a state board, commission, or
agency or department or division of it.
Section 33-36-290. An irregularity in complying with the
provisions of this chapter does not vitiate the incorporation until a
direct proceeding to set aside and annul the charter is instituted by the
proper authorities of the State. All acts done and contracts entered
into have the same force and effect as if no irregularity had existed.
Section 33-36-300. The original bylaws of a corporation
not-for-profit must be adopted by its incorporators. After that,
bylaws must be adopted, amended, or repealed by the members,
except that the corporation's governing body may enact emergency
bylaws in the same manner as provided for nonprofit corporations in
Section 33-31-207. The governing board also may adopt changes to
the bylaws by a two-thirds vote when necessary to conform with state
or federal laws governing the operation of the corporation or the
services provided by the corporation. This power to amend the
bylaws by the board may not be used to conform to permissive
powers granted in state or federal legislation or to undertake services
not already provided by the corporation.
Article 3
Members
Section 33-36-410. A person who is not an incorporator may not
become a member of a corporation not-for-profit unless the person
agrees to use the services furnished by the corporation when the
service is available through its facilities. The bylaws of a corporation
not-for-profit may provide that a person, including an incorporator,
ceases to be a member if he fails or refuses to use the services made
available by the corporation. The bylaws may prescribe additional
qualifications and limitations in respect to membership.
Section 33-36-420. (A) An annual meeting of the membership
of a corporation not-for-profit must be held at times provided in the
bylaws. A special meeting of the membership may be called by a
majority of its governing board, by not less than ten percent of the
membership, or by the principal officer of its governing board.
(B) Meetings must be held at places provided in the bylaws, and
in the absence of a provision, the principal office of the corporation
is the location of all meetings.
(C) Except as otherwise provided, written or printed notice stating
the time and place of each meeting of members and, in the case of a
special meeting, the purpose for which the meeting is called, must be
given to each member, personally or by mail, not less than ten nor
more than twenty-five days before the date of the meeting.
Section 33-36-430. A quorum must be provided in the bylaws,
except that the number required by the bylaws may not be less than
the number of the governing board who conduct the business of the
corporation between meetings of the membership.
Section 33-36-440. Each member is entitled to one vote on each
matter submitted to a vote at a membership meeting. Voting must be
in person, unless the bylaws provide specifically for voting by proxy
and the conditions under which proxy voting may be exercised.
Section 33-36-450. (A) Notwithstanding another provision of
this chapter, any proposition embodied in a petition signed by at least
ten percent of the members of the corporation, except for dissolution
or sale of a substantial portion of the assets of the corporation, must
be submitted to the members of the corporation. The submission to
the membership must occur at a special meeting of the membership
held within forty-five days after the presentation of the petition unless
the next annual meeting of members falls within ninety days after the
presentation or unless the petition requests the issue be raised at the
annual meeting.
(B) The approval of the board is not required for a proposition
signed by ten percent of the membership, except for dissolution or the
vote to sell a substantial portion of the assets of the corporation, to be
submitted to the membership for vote and adopted at a regular or
special meeting.
(C) The board must exercise its best efforts to carry out the
directives of the membership which are adopted pursuant to a ten
percent or greater membership petition, and failure by a board
member to exercise his best efforts to carry out the directive is just
cause for removal from the board.
Section 33-36-460. The private property of the members of a
corporation not-for-profit is exempt from execution for the debts of
the corporation, and a member is not liable or responsible for debts
of the corporation.
Article 4
Governing Board
Section 33-36-610. (A) The business and affairs of the
corporation must be managed by a board of not less than three
persons, each of whom must be a member of the corporation or an
agent of a corporation which is a member. If a husband and wife
hold a joint membership in a corporation not-for-profit one, but not
both, may be elected to the board.
(B) The board may exercise all the powers of a corporation
not-for-profit except those powers conferred upon the members by
this chapter, its articles of incorporation, or bylaws.
(C) The bylaws must prescribe the number of board members, their
qualifications other than those provided for in this chapter, the
manner of holding meetings of the board, and the filling of vacancies
on the board. The bylaws also may provide for the removal of a
board member from office and for the election of his successors.
Section 33-36-620. A majority of the board constitutes a quorum,
unless otherwise specified in the bylaws.
Section 33-36-630. Unless limited by its articles of incorporation,
a corporation not-for-profit must indemnify against reasonable
expenses incurred by a board member who is successful on the merits
or otherwise in the defense of a proceeding to which he is a party
because of his board membership.
Section 33-36-640. General standards for board members are the
same as those required of directors of nonprofit corporations under
Section 33-31-830.
Section 33-36-650. The bylaws may provide for the division of
the service area of the corporation into two or more districts for
designating seats on its governing board. The bylaws also may
provide that a district have two or more seats on its governing board.
One or more members may be elected from each district to fill the
seats designated for the district. The entire membership must vote on
election of board members even though only members from certain
geographic districts are qualified candidates for district board seats.
The bylaws may provide, further, that board elections be staggered
so that no less than one-third or more than one-half of all board
members' terms expire each year.
Section 33-36-660. All board members of corporations
not-for-profit are immune from suits arising from the conduct of the
affairs of the corporation, unless conduct amounts to wilful, wanton,
or gross negligence. Nothing in this article grants immunity to a
corporation not-for-profit.
Section 33-36-670. A corporation not-for-profit has the officers
described in its bylaws, and they are chosen by the board in
accordance with the bylaws. A duly appointed officer may have one
or more assistant officers if authorized by the bylaws. The bylaws of
the corporation must delegate to one officer the customary
responsibilities of an officer commonly known as 'president', to one
officer the customary responsibilities of an officer known as
'secretary', and one officer the customary responsibilities of an officer
commonly known as 'treasurer'. The responsibilities of secretary and
treasurer may be held by the same person. An officer may be
removed from office and his successor selected in the manner
prescribed by the bylaws.
Article 5
Sale, Consolidation, and Mergers
Section 33-36-810. (A) A corporation not-for-profit may sell its
assets. A 'sale' means a sale, lease, exchange, donation, or other
disposition of assets, except a mortgage of or other security interest
in the assets.
(B) A sale of all or substantially all the property and assets, with
or without the goodwill of a corporation not-for-profit, may be made
upon terms and conditions and for consideration, which may consist
in whole or in part of money or property, real or personal, including
shares of any other corporation, domestic or foreign, as are
authorized, in the following manner:
(1) Two-thirds of the board must adopt a resolution
recommending the sale and directing the submission of it to a vote at
a special or annual meeting of members.
(2) Written or printed notice must be given to each member of
record entitled to vote at the meeting, within the time and in the
manner provided for the giving of notice of meetings of members,
and must state that the purpose of the meeting is to consider the
proposed sale.
(3) At the meeting the members may authorize the sale by an
affirmative vote of at least two-thirds of all the members, and may
fix, or authorize the board to fix, the terms and conditions of the sale
and the consideration to be received by the corporation.
Section 33-36-820. Two or more corporations not-for-profit, each
of which is designated a 'consolidating corporation', may consolidate
into a new corporation not-for-profit, designated the 'new
corporation', by complying with the following requirements:
(1) The proposition for consolidating into a new corporation and
proposed articles of consolidation must be approved first by the board
of each consolidating corporation. The proposed articles of
consolidation must recite in the caption that they are executed
pursuant to this chapter and must state:
(a) the name of each consolidating corporation, the address of
its principal office, and the date of the filing of its articles of
incorporation with the Secretary of State;
(b) the name of the new corporation and the address of its
principal office;
(c) the names and addresses of the persons who constitute the
first board of the new corporation;
(d) the terms and conditions of the consolidation and the mode
of effecting it, including the manner and basis of converting
memberships in each consolidating corporation into memberships in
the new corporation and the issuance of certificates of membership
for the converted memberships; and
(e) any provisions not inconsistent with this chapter considered
necessary or advisable for the conduct of the business and affairs of
the new corporation.
(2) Upon approval by the board of each consolidating corporation,
the proposition for consolidating and the proposed articles of
consolidation must be submitted to a vote of the members of each
consolidating corporation at an annual or special meeting, the notice
of which must explain fully the proposed consolidation. The
proposed consolidation and the proposed articles of consolidation are
approved upon the affirmative vote of not less than two-thirds of
those members of each consolidating corporation voting at the
meeting.
(3)(a) Upon approval by the members of the respective
consolidating corporations, articles of consolidation in the approved
form must be executed and acknowledged on behalf of each
consolidating corporation by the officers specified in their bylaws,
and attested under seal by the officer specified in their bylaws.
(b) The chief officer of each consolidating corporation, by
whatever name designated in the bylaws, must execute the articles of
consolidation and make and attach to them an affidavit stating that
the provisions of this section were duly complied with by the
corporation not-for-profit.
(c) The articles of consolidation and affidavits must be
submitted to the Secretary of State for filing as provided in this
chapter.
Section 33-36-830. Any one or more corporations not-for-profit,
each of which is designated a 'merging corporation', may merge into
another corporation not-for-profit, designated the 'surviving
corporation', by complying with the following requirements:
(1) The proposition for merging into a surviving corporation and
proposed articles of merger must be approved first by the board of
each merging corporation and by the board of the surviving
corporation. The proposed articles of merger must recite in the
caption that they are executed pursuant to this chapter and must state:
(a) the name of each merging corporation, the address of its
principal office, and the date of the filing of its articles of
incorporation with the Secretary of State;
(b) the name of the surviving corporation and the address of its
principal office;
(c) a statement that each merging corporation elects to be
merged into the surviving corporation;
(d) the terms and conditions of the merger and the mode of
effecting it, including the manner and basis of converting the
memberships in the merging corporation or corporations into
memberships in the surviving corporation and the issuance of
certificates of membership for the converted memberships; and
(e) any provisions not inconsistent with this chapter considered
necessary or advisable for the conduct of the business and affairs of
the surviving corporation.
(2) After approval by the boards of the respective parties to the
proposed merger, the proposition for merging into a surviving
corporation and the proposed articles of merger must be submitted to
a vote of the members of each corporation at an annual or special
meeting, the notice of which must explain fully the proposed merger.
The proposed merger and the proposed articles of merger are
approved upon the affirmative vote of not less than two-thirds of
those members of each corporation voting at the meeting.
(3)(a) Upon approval by the members of the respective parties to
the proposed merger, articles of merger in the approved form must be
executed and acknowledged on behalf of each such corporation by its
chief officer, by whatever name designated in its bylaws, and attested
under seal by the officer specified in its bylaws.
(b) The chief officer of each corporation executing the articles
of merger also must make and attach to them an affidavit stating that
the provisions of this section were duly complied with by the
corporation.
(c) The articles of merger and affidavits must be submitted to
the Secretary of State for filing as provided in this chapter.
Section 33-36-840. The effect of consolidation or merger is as
follows:
(1) The several parties to the consolidation or merger are a single
corporation not-for-profit. In the case of a consolidation, it is the new
corporation provided for in the articles of consolidation and, in the
case of a merger, it is the surviving corporation. The separate
existence of all corporate parties to the consolidation or merger,
except the new or surviving corporation, ceases.
(2) The new or surviving corporation has all the rights, privileges,
immunities, and powers and is subject to all the duties and liabilities
of a corporation not-for-profit organized pursuant to this chapter, and
possesses all the rights, privileges, immunities, and franchises of a
public or private nature, and all property, real and personal,
applications for membership, all debts due on whatever account, and
all other choses in action of each of the consolidating or merging
corporations. Every interest of, or belonging or due to, each of the
consolidating or merging corporations are transferred to and vested
in the new or surviving corporation without further act or deed. The
title to real estate, or an interest in real estate, vested in a
consolidating or merging corporation does not revert or is not
impaired by reason of the consolidation or merger.
(3) The new or surviving corporation is responsible and liable for
all of the liabilities and obligations of each of the consolidating or
merging corporations, and a claim existing or action or proceeding
pending by or against any of the corporations may be prosecuted as
if the consolidation or merger had not taken place, except that the
new or surviving corporation may be substituted in its place.
(4) Neither the rights of creditors nor liens upon the property of
consolidating or merging corporations are impaired by consolidation
or merger.
(5) In the case of a consolidation, the articles of consolidation are
the articles of incorporation of the new corporation, and in the case
of a merger, the articles of incorporation of the surviving corporation
are considered to be amended to the extent that the changes are
provided for in the articles of merger.
Article 6
Dissolution
Section 33-36-1010. A corporation not-for-profit which has not
commenced business may dissolve voluntarily by delivering to the
Secretary of State for filing articles of dissolution, executed, and
acknowledged on behalf of the corporation, and stating:
(1) the name of the corporation;
(2) the address of its principal officer;
(3) the date of its incorporation;
(4) that the corporation has not commenced business;
(5) that the amount, if any, actually paid in an amount of
membership fees, less any part disbursed for necessary expenses, has
been returned to those entitled to it;
(6) that no debt of the corporation remains unpaid; and
(7) that a majority of the incorporators elects that the corporation
be dissolved.
Section 33-36-1020. A corporation not-for-profit which has
commenced business may dissolve voluntarily and wind up its affairs
in the following manner:
(1) Two-thirds of the board shall adopt a resolution recommending
dissolution and directing the submission of the question to a vote at
an annual or special meeting of members.
(2) Written or printed notice must be given to each member of
record entitled to vote at the meeting within the time and in the
manner provided for the giving of notice of meetings of members,
and must state that the purpose of the meeting is to consider the
dissolution.
(3) At the meeting the members may authorize the dissolution and
may fix, or authorize the board to fix, its terms and conditions. Each
member may vote and the authorization requires the affirmative vote
of at least two-thirds of all the members.
Section 33-36-1030. (A) Upon meeting the requirements of
Section 33-36-1020, a certificate of election to dissolve must be
executed and acknowledged on behalf of the corporation by its chief
officer, by whatever name designated by the bylaws, and attested
under seal by the officer specified in its bylaws.
(B) The certificate must state:
(1) the name of the corporation;
(2) the address of its principal office;
(3) the names and addresses of its board members; and
(4) the total number of members of the corporation, the number
voting for dissolution, and the number voting against dissolution.
(C) The corporate officer executing the certificate of election to
dissolve also must make, as an attachment to the certificate, an
affidavit stating compliance with the provisions of Section
33-36-1020.
Section 33-36-1040. The certificate of dissolution and affidavit
must be submitted to the Secretary of State for filing and the
corporation not-for-profit must cease to carry on its business, except
as is necessary for the winding up of its business. Its corporate
existence continues until articles of dissolution have been filed by the
Secretary of State.
Section 33-36-1050. The board has full power to wind up and
settle the affairs of the corporation not-for-profit. It shall collect the
debts owing to the corporation, sell and dispose of its property and
assets, and pay, satisfy, and discharge its debts, obligations, and
liabilities. After paying or adequately providing for the payment of
all debts, obligations, and liabilities, the board shall dispose of the
residual assets in accordance with the requirements of 501(c)(12) of
the United States Internal Revenue Code of 1986.
Section 33-36-1060. Upon the filing of the certificate of
dissolution by the Secretary of State, the board immediately shall
cause notice of the winding up proceedings to be mailed to each
known creditor and claimant and to be published once a week for two
successive weeks in a newspaper of general circulation in the county
in which the principal office of the corporation is located.
Section 33-36-1070. (A) When all debts, liabilities, and
obligations of the corporation have been paid and all remaining
property and assets distributed, the board shall authorize the
execution of articles of dissolution, executed and acknowledged on
behalf of the corporation by its chief officer, by whatever name
designated in its bylaws, and attested under seal by the officer
specified in its bylaws.
(B) The articles of dissolution must recite in the caption that they
are executed pursuant to this chapter and must state:
(1) the name of the corporation;
(2) the address of the principal office;
(3) that the corporation has delivered to the Secretary of State
a certificate of election to dissolve and the date on which the
certificate was filed by the Secretary of State in the records of his
office;
(4) that all debts, obligations, and liabilities of the corporation
have been paid and discharged or that adequate provisions have been
made for payment or discharge;
(5) that all residual assets of the corporation have been
distributed in accordance with Section 501(c)(12) of the 1986
Internal Revenue Code;
(6) that no actions or suits are pending against the corporation.
(C) The officer executing the articles of dissolution also shall make
and attach to them an affidavit stating that the provisions of this
article have been duly complied with. The articles of dissolution and
affidavit, accompanied by proof of the publication required in Section
33-36-1060, must be submitted to the Secretary of State for
filing."
SECTION 3. Section 33-20-103 of the 1976 Code, as last amended
by Act 384 of 1994, is further amended to read:
"Section 33-20-103. Except for corporations organized under
or transacting business pursuant to the provisions of Chapter 49 of
this title, except for corporations organized under or transacting
business pursuant to Chapter 45 of this title or any other provision of
law in this title relating to telephone cooperatives, except for
corporations not-for-profit organized or operating pursuant to
Chapter 36 of this title, and except for those nonprofit
corporations which are governed exclusively by the provisions of
Chapter 31 of this title, Chapters 1 through 20 of this title apply to
every domestic nonprofit corporation and to any other foreign
nonprofit corporation which is authorized to or transacts
business in this State except as otherwise provided in Chapters 1
through 20 of this title or by the law regulating the organization,
qualification, or governance of the nonprofit corporation."
SECTION 4. Section 33-31-1708 of the 1976 Code, as added by
Act 384 of 1994, is amended to read:
"Section 33-31-1708. Other sections of this chapter
notwithstanding, cooperative nonprofit membership corporations
organized under or transacting business pursuant to Chapter 49 of this
title, and telephone cooperatives organized under or
transacting business pursuant to Chapter 45 or any other provision of
law in this title, and corporations not-for-profit organized under
and operating pursuant to Chapter 36 of this title are not subject
to the provisions of this chapter and no provision of this chapter
shall repeal repeals or amend
amends any provision of Chapter 49 of this title, or any
provision of Chapter 45 of this title or any other provision of law in
this title relating to telephone cooperatives, or any provisions of
Chapter 36 of this title."
SECTION 5. Chapter 35 of Title 33 of the 1976 Code is repealed.
SECTION 6. A. Section 6-13-120(A) of the 1976 Code, as added
by Act 6 of 1993, is amended to read:
"(A) For purposes of this section, 'assuming service provider'
includes, but is not limited to, a county, municipality, special purpose
district as defined by Section 6-11-810(d), or corporation not for
profit as defined by Section 33-35-10
33-36-10."
B. Section 6-19-10 of the 1976 Code is amended to read:
"Section 6-19-10. The State may make grants in aid in the
financing of any public water supply authorities or districts, any
sewer authorities or districts, any water and sewer authority, any rural
community water or sewer system legally organized in the State, any
nonprofit corporation organized pursuant to Sections 33-35-10
to 33-35-170 Chapter 36 of Title 33, any general
purpose local government, water or sewer system; or any municipal
water or sewer system in any city, town, or village of less
than one thousand five hundred population in accordance with the
most recent studies conducted by the United States Bureau of the
Census."
C. Section 12-6-550(4) of the 1976 Code, as added by Act 76 of
1995, is amended to read:
"(4) nonprofit corporations organized pursuant to
Sections 33-35-10 through 33-35-170 Chapter 36 of Title
33 for the purpose of providing water supply and sewerage
disposal or a combination of those services;"
D. Section 12-36-2120(12) of the 1976 Code, as added by Act 612
of 1990, is amended to read:
"(12) water sold by public utilities, if rates and charges are of
the kind determined by the Public Service Commission, or water sold
by nonprofit corporations organized pursuant to Sections
33-35-10 to 33-35-170 Chapter 36 to Title 33;"
E. Section 12-37-220(B)(4) of the 1976 Code is amended to read:
"(4) All property of any kind of a nonprofit corporation
created for the purpose of providing water supply or sewage disposal,
or a combination of such services, organized pursuant to Sections
33-35-10 and 33-35-170 Chapter 36 of Title 33."
SECTION 7. Any charter of a corporation not-for-profit filed with
the Secretary of State before the effective date of this act is not
repealed or nullified by this act. If any article, sector, or paragraph
of an existing charter is inconsistent with a provision of this act, the
article, sector, or paragraph is automatically modified to the extent
necessary to conform with this act.
SECTION 8. If a company subject to the provisions of this act fails
to have a registered agent for service of process on the effective date
of this act, the Secretary of State must notify the corporation
not-for-profit, which has sixty days to appoint for the record an agent
or be subject to a fine of five hundred dollars.
SECTION 9. This act takes effect upon approval by the Governor.
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