HOUSE BILL No. 4566 April 8, 1997, Introduced by Reps. Llewellyn, Hammerstrom, Kaza and Johnson and referred to the Committee on Commerce. A bill to amend 1982 PA 162, entitled "Nonprofit corporation act," by amending section 301 (MCL 450.2301) and by adding section 301a. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 301. (1) A payment or distribution of any part of the 2 assets, income, or profit of a corporation shall be in conformity 3 with the purposes of the corporation. 4 (2) A corporation may confer benefits on its shareholders or 5 members in conformity with the purposes of the corporation. 6 (3) A corporation shall not pay dividends or distribute any 7 part of its assets, income, or profit to its shareholders, mem- 8 bers, directors, or officers, except as follows: 00196'97 * FDD 2 1 (a) A corporation may pay compensation in a reasonable 2 amount to shareholders, members, directors, or officers for 3 services rendered to the corporation. 4 (b) Upon dissolution as permitted by this act, a corporation 5 may make distributions of assets, other than assets held for 6 charitable purposes, to shareholders or members. 7 (c) The articles of incorporation or bylaws of a corporation 8 whose purposes include providing a benefit to its member or 9 shareholder corporation may provide that the corporation may pay 10 dividends or distribute its income or profit to its member or 11 shareholder corporation. 12 (d) As permitted in subsection (4). 13 (e) If provision for redemption of shares is made pursuant 14 to sections 361 to 365. 15 (4) A corporation whose lawful activities includethe16 chargingoffees or prices for its services or products may 17 receive the income and may make a profit as a result of its 18 receipt.All suchANY resulting profit shall be applied to the 19 maintenance, expansion, or operation of the lawful activities of 20 the corporation and shall not be distributed to the shareholders, 21 members, directors, or officers of the corporation. However, 22 profit derived solely fromthechargingoffees or prices by 23 a corporation to its shareholders or members for its services or 24 products may be distributed to the shareholders or members on the 25 basis of, or in proportion to, the fees or prices paid by share- 26 holders or members to the corporation for its services or 27 products. 00196'97 * 3 1 (5) This actshallDOES notbe deemed topermit assets 2 held by a corporation for charitable purposes to be used, 3 conveyed, or distributed for noncharitable purposes OR FOR A 4 CHARITABLE PURPOSE NOT IN CONFORMITY WITH THE PURPOSES OF THE 5 CORPORATION. 6 SEC. 301A. (1) A CORPORATION SHALL COMPLY WITH ALL OF THE 7 FOLLOWING BEFORE SELLING, CONVEYING, OR DISTRIBUTING A SIGNIFI- 8 CANT CORPORATE ASSET: 9 (A) PUBLIC NOTICE OF A PROPOSED SALE, CONVEYANCE, OR DISTRI- 10 BUTION OF A SIGNIFICANT CORPORATE ASSET AND OF ALL MEETINGS AT 11 WHICH A PROPOSED SALE, CONVEYANCE, OR DISTRIBUTION OF A SIGNIFI- 12 CANT CORPORATE ASSET WILL BE DISCUSSED SHALL BE PROVIDED PURSUANT 13 TO THE OPEN MEETINGS ACT, 1976 PA 267, MCL 15.261 TO 15.275. 14 (B) A MEETING AT WHICH A PROPOSED SALE, CONVEYANCE, OR DIS- 15 TRIBUTION OF A SIGNIFICANT CORPORATE ASSET WILL BE DISCUSSED 16 SHALL BE CONDUCTED PURSUANT TO THE OPEN MEETINGS ACT, 1976 PA 17 267, MCL 15.261 TO 15.275. 18 (C) ALL DOCUMENTS RELATING TO A PROPOSED SALE, CONVEYANCE, 19 OR DISTRIBUTION OF A SIGNIFICANT CORPORATE ASSET SHALL BE MADE 20 AVAILABLE TO THE PUBLIC PURSUANT TO THE FREEDOM OF INFORMATION 21 ACT, 1976 PA 442, MCL 15.231 TO 15.246. 22 (2) A DIRECTOR OF A CORPORATION THAT SELLS, CONVEYS, OR DIS- 23 TRIBUTES A SIGNIFICANT CORPORATE ASSET SHALL NOT DO ANY OF THE 24 FOLLOWING: 25 (A) ACCEPT EMPLOYMENT WITH THE PERSON OR ANY ASSOCIATE OR 26 AFFILIATE OF THE PERSON THAT PURCHASED OR RECEIVED THE 00196'97 * 4 1 SIGNIFICANT CORPORATE ASSET WITHIN 3 YEARS OF THE SALE, 2 CONVEYANCE, OR DISTRIBUTION. 3 (B) PERSONALLY PROFIT FROM THE SALE, CONVEYANCE, OR 4 DISTRIBUTION. 5 (C) BECOME A DIRECTOR OF ANY CORPORATION OR CHARITABLE FOUN- 6 DATION ESTABLISHED TO ADMINISTER THE PROCEEDS OF THE SALE, CON- 7 VEYANCE, OR DISTRIBUTION. 8 (3) A DIRECTOR WHO VIOLATES SUBSECTION (2) IS GUILTY OF A 9 FELONY PUNISHABLE BY IMPRISONMENT FOR NOT MORE THAN 5 YEARS OR A 10 FINE OF NOT MORE THAN $10,000.00, OR BOTH. 11 (4) A CORPORATION SHALL PAY 20% OF THE NET PROCEEDS FROM THE 12 SALE, DISTRIBUTION, OR CONVEYANCE OF A SIGNIFICANT CORPORATE 13 ASSET TO THE STATE TREASURER FOR DEPOSIT INTO THE GENERAL FUND AS 14 A REFUND OF PREVIOUSLY RECEIVED TAX EXEMPTIONS. 15 (5) AS USED IN THIS SECTION, "SIGNIFICANT CORPORATE ASSET" 16 MEANS ANY ASSET OF A CORPORATION WITH A FAIR MARKET VALUE OF MORE 17 THAN 50% OF THE AGGREGATE VALUE OF THAT CORPORATION. A SIGNIFI- 18 CANT CORPORATE ASSET INCLUDES, BUT IS NOT LIMITED TO, THE 19 FOLLOWING: 20 (A) REAL PROPERTY. 21 (B) TANGIBLE PERSONAL PROPERTY. 22 (C) INTANGIBLE PERSONAL PROPERTY. 23 (D) INTELLECTUAL PROPERTY. 00196'97 * Final page. FDD