If you are among the many philanthropic Minnesotans who donated cash, property or time to your favorite charity, you likely have interacted with an entity governed by Minnesota Statutes Chapter 317A, Minnesota’s Nonprofit Corporations Act (“the Act”). The Act governs the structure, governance and other important issues surrounding nonprofits in Minnesota. Minnesota nonprofit corporations must be cognizant of the requirements of the Act while also complying with applicable laws under the United States Internal Revenue Code. The Minnesota Legislature recently passed, and Governor Dayton signed, a law amending the Act.
Highlights of the new legislation are as follows:
- Changing the term “voting members” to “members with voting rights”;
- Adding a provision for conversions and domestications;
- Adding a provision for nonprofit subsidiary mergers;
- Adding a provision allowing nonprofits to establish independent special litigation committees (codification of the holding in Janssen v. Best & Flanagan);
- Adding a provision limiting the authority of nonprofit incorporators to acts taken prior to election of a board of directors and requiring that nonprofits elect directors within a reasonable time after incorporation; and
- Adding a provision allowing for electronic voting methods by a board of directors.
If you are currently involved with a nonprofit as a board member or executive director, what does this change in the law mean for you? The short answer is none of the revisions to Chapter 317A fundamentally change the way current nonprofits operate and no specific action is likely required to address the amendments. Many nonprofit boards already utilize electronic voting methods as they were not specifically prohibited by the previous version of 317A. The new language simply reflects the reality of the societal and technological changes faced by Minnesota nonprofits and provides greater transparency as to what is and is not sanctioned under the law. Similarly, the other revisions are meant to clarify parts of 317A (changing the term “voting members” to “members with voting rights” for example) and to better align 317A with its for-profit counterpart, Section 302A.
About the Author:
Minnesota business attorney Nicholas N. Sperling advises clients on corporate and business law matters such as limited liability company formation, corporate governance, and business disputes for both nonprofit and for profit corporations. Nick may be reached at 612.455.6241 or firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota business law firm located in Minneapolis, Minnesota.