HB-6375, As Passed House, September 7, 2006

HOUSE BILL No. 6375

August 30, 2006, Introduced by Reps. Emmons, Farhat, Nitz, Mortimer and Moore and referred to the Committee on Higher Education and Career Preparation.

     A bill to amend 1931 PA 327, entitled

"An act to provide for the organization, regulation and

classification of corporations; to provide their rights, powers and

immunities; to prescribe the conditions on which corporations may

exercise their powers; to provide for the inclusion of certain

existing corporations within the provisions of this act; to

prescribe the terms and conditions upon which foreign corporations

may be admitted to do business within this state; to require

certain annual reports to be filed by corporations; to prescribe

penalties for the violations of the provisions of this act; and to

repeal certain acts and parts of acts relating to corporations,"

by amending sections 171, 172, 173, and 177 (MCL 450.171, 450.172,

450.173, and 450.177).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 171. (1) For the purposes of this act, educational

corporations  shall be  are classified as  follows  1 of the

following:

(a)  (w) Those  Class (w): those having a capital of not less

than $500,000.00.  ;

(b)  (x) Those  Class (x): those having a capital of not less

than $100,000.00  , and less than $500,000.00.  ;  Class (x) also

includes an institution known as a kindergarten institution formed

under former 1913 PA 359.

(c)  (y) Those  Class (y): those having a capital of

$1,000,000.00 or more.  ;

(d)  (z) Those  Class (z): those instituted and maintained by

any  an ecclesiastical or religious order, society, corporation, or

corporations  , retaining  that retain control of  such  the

institution for denominational purposes. Class (z) educational

corporations include, but are not limited to, all of the following:

     (i) A school, academy, or college founded under former 1899 PA

135 and known under that act as an "Ursuline academy".

     (ii) A school, academy, or college founded under former 1915 PA

121 and known under that act as an "ecclesiastical seminary".

     (iii) A school, academy, or college founded under former 1901 PA

28 and known under that act as an "Evangelical Lutheran deaf mute

institution".

     (iv) A school, academy, or college founded under former 1867 PA

135 and known under that act as an "industrial and charitable

school".

     (v) A school, academy, or college organized under paragraph

(c), subdivision 1, chapter 2, part 4, of former 1921 PA 84.

     (vi) A school, college, institution, or educational program of

like character and purpose to an educational corporation, school,

academy, or college described in this subdivision and formed under

any law of this state for educational purposes.

(2) Every educational corporation, before being authorized to

file its articles of incorporation,  shall be  is required to

present a written statement to the  Michigan corporation and

securities commission in writing  department of labor and economic

growth, from the state board of education that  (1) the  approves

all of the following:

     (a) The housing space and administration facilities  which

that it possesses or proposes to provide for its declared field or

fields of education are adequate.  , (2) its

     (b) Its proposed educational program leading to the diplomas

or degrees  which  that it proposes to offer is adequate.  , (3)

its

     (c) The laboratory, library, and other teaching facilities

which  that it possesses or proposes to provide are adequate.  ,

(4) it

     (d) It has or proposes to employ an adequate staff, fully

trained, for the instruction proposed.  , and (5) at

     (e) At least 50% of its capital, whether consisting of stock

or in gifts, devises, legacies, bequests or other contributions of

money or property, has been paid in or  reduced to  is in its

possession.

(3) In determining whether any educational corporation

satisfies the conditions specified in  classes (w), (x), (y) and

(z) of this section  subsection (1), the state board of education

may treat as a credit to the capital of  such  the corporation the

guaranteed annual income of that corporation to the extent that it

deems such  considers that guaranteed income the equivalent of all

or any part of the required endowment.

(4) The use of the word "college" or "university" in the name

of any group, organization, or association  hereafter formed in

this state after September 18, 1931 is limited to those educational

corporations complying with the requirements for class (w) or class

(y) educational corporations or to  such  any educational

corporations of class (z)  as shall  that satisfy the requirements

set up  established for class (y) corporations.  : Provided,

however, That the  The words "junior college" may be used by

educational corporations of class (x).  Whenever  If this provision

is violated, it  shall be  is the duty of the prosecuting attorney,

in the county where the  organization  educational corporation is

located, to bring proceedings to enjoin the further use of  such  a

name in violation of this  act  subsection.

(5)  No  An educational corporation  shall be  is not

permitted to expand its program beyond that specified in its

articles of incorporation until it  has presented to the Michigan

corporation and securities commission a statement in writing

presents a written statement to the department of labor and

economic growth from the state board of education approving the

facilities, equipment, and staff or the proposed facilities,

equipment, and staff as adequate for the offering of the additional

educational program.

     Sec. 172. (1)  (a) Educational corporations of class (w) as

defined in section 171 of this act shall have authority to An

educational corporation classified as class (w) under section

171(1) may establish and conduct  general colleges a general

college for furnishing higher learning and to confer  such any

degrees and honors  as shall be  approved by the state board of

education prior to the filing of articles of incorporation.  ; and

For purposes of this section, the term "college"  as herein used

shall be construed to include includes a preparatory school or any

college, university, or other institution where the arts, sciences,

professions, and higher learning are taught and degrees and honors

therein in those areas are conferred.  Such colleges may also 

include preparatory schools as commonly understood; 

(2)  (b) Educational corporations of class (x), as defined in

section 171, shall have authority to An educational corporation

classified as class (x) under section 171(1) may establish and

conduct a junior  colleges, seminaries, academies college,

seminary, academy, or preparatory  schools school, as determined

and approved by the state board of education, but not a general

colleges or universities as defined college or university

described in subsection  (a) hereof; (1).

     (3)  (c) Educational corporations of class (z) as defined in

said section 171 shall embrace such schools, academies, or colleges

as have been heretofore founded under Act 135, Public Acts 1899,

known thereunder as "Ursuline academies"; those founded under Act

121, Public Acts 1915, and known thereunder as "ecclesiastical

seminaries"; those founded under Act 28, Public Acts 1901, and

known thereunder as "Evangelical Lutheran deaf mute institutions";

those founded under Act 135, Public Acts 1867, known as "industrial

and charitable schools"; those organized under paragraph (c),

subdivision 1, chapter 2, part 4, of Act 84, Public Acts 1921, and

such other schools, colleges and institutions of like character and

purpose as may be formed under any law of this state for

educational purposes shall have An educational corporation

classified as class (w), (x), (y), or (z) under section 171(1) and

formed under another act or former act of this state has all the

rights, powers, privileges, and immunities enjoyed under its act of

incorporation and without regard to the classification made in this

act, and upon complying with the provisions  hereof shall have 

such of this act has any additional rights, powers, privileges,

and immunities  as are  conferred  hereunder under this act

according to  the classifications prescribed in this act: Provided

further, That any corporation heretofore formed under Act 359,

Public Acts 1913, and known thereunder as "kindergarten

institutions" shall hereafter be classified under class (x) of

sections 171 and 172 of this act: Provided further, That any

corporation of class (z) hereafter organized under this act may

enjoy its classification under section 171(1).

     (4) An educational corporation classified as class (z) under

section 171(1) and organized under this act has the privileges

provided  under classes (w), (x) and (y) of section 171, on

condition that it satisfies the requirements set up for

corporations of these respective classes to an educational

institution classified as class (w), (x), or (y).

(5)  (d) Educational corporations of class (y) as defined in

section 171 shall have authority to An educational institution

classified as class (y) under section 171(1) may establish and

conduct  colleges or universities a college or university of a

graduate rank with programs of studies of 5 years or more.

     Sec. 173.  Same; articles of incorporation. The articles of

incorporation of every educational corporation shall clearly set

forth the educational system of the institution to be founded and

the character of the degrees, honors, diplomas, or certificates

which it proposes to grant.  , and same  Articles of incorporation

of an educational corporation shall be approved by the state board

of education prior to the filing of the articles of incorporation.

If  The articles of incorporation of a college or university  , the

articles shall state the number and name of the faculties to be

established.  ; and if  The articles of incorporation of a

denominational religious school or college  ,  shall state the name

of  such  the denomination and the body supporting or controlling

the  same  denomination.  Such articles  Articles of incorporation

shall be filed as provided in  section 5 of this act  the nonprofit

corporation act, 1982 PA 162, MCL 450.2101 to 450.3192.  Any such

corporation may, by  By increasing its capital to a higher class

and amending its articles, an educational corporation may assume

the powers and privileges of  such  the higher classification  as

it may thereby be  it is entitled to.  as defined in this act.

     Sec. 177. (1)  Same; inspection by state board of education;

annual report. Every  such educational corporation shall be

visited and inspected by the  state board of education

superintendent of public instruction, in person or through visitors

or inspectors appointed by  them  the superintendent of public

instruction, at least once every 3 years.  Said state board of

education  The superintendent of public instruction shall at the

time of visitation ascertain and publish information upon all

matters pertaining to the condition, management, instruction, and

practices of  such corporations  the educational corporation, and

shall file a copy of  their  the report with the  Michigan

corporation and securities commission  department of labor and

economic growth.

     (2) Upon evidence that the property is at any time less than

is required by law, or that  any such  an educational corporation

is not otherwise complying with the provisions of this act,  they

the superintendent of public instruction shall serve notice on

such  the corporation to remedy the defects within a reasonable

time  to be fixed in  such  the notice.  , and in case  If the

deficiency is not corrected within the time fixed by  them, they

the superintendent of public instruction, he or she may institute

proceedings at law for the dissolution of  such  the educational

corporation.  Such trustees shall be

     (3) The trustees of an educational corporation are required,

on or before the first day of December, annually, to provide a

report to the  state board of education, a statement of

superintendent of public instruction that includes the name of each

trustee, officer, and teacher and the number of students of  such

the institution;  , with a statement of its property;  ,  the

amount of stock subscribed, donated,  and  or bequeathed;  , and

the amount actually paid in;  , and such  and any other information

as will tend to exhibit its condition and operations.

     Enacting section 1. This amendatory act is intended to

transfer back to the state board of education and the

superintendent of public instruction certain powers, duties, and

functions that were transferred to the former department of career

development by Executive Reorganization Order No. 1999-7, MCL

388.995.