1     
WATER LAW - NONPROFIT CORPORATION AMENDMENTS

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Curtis S. Bramble

5     
House Sponsor: ____________

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7     LONG TITLE
8     General Description:
9          This bill modifies the Utah Revised Nonprofit Corporation Act to allow for the transfer
10     of water shares in a mutual benefit corporation and clarifies the property rights of a
11     member of a nonprofit corporation.
12     Highlighted Provisions:
13          This bill:
14          ▸     authorizes a member of a mutual benefit corporation to transfer membership or the
15     rights of membership under certain circumstances;
16          ▸     states that a member of, or shareholder in, a mutual benefit corporation:
17               •     has an undivided real property interest in the water rights, proportional to the
18     member or shareholder's shares, of the mutual benefit corporation; and
19               •     is a person entitled to the use of water under Title 73, Water and Irrigation,
20     including the right to change the use of water; and
21          ▸     makes technical changes.
22     Money Appropriated in this Bill:
23          None
24     Other Special Clauses:
25          None
26     Utah Code Sections Affected:
27     AMENDS:
28          16-6a-606, as enacted by Laws of Utah 2000, Chapter 300
29          16-6a-611, as last amended by Laws of Utah 2015, Chapter 240
30     

31     Be it enacted by the Legislature of the state of Utah:
32          Section 1. Section 16-6a-606 is amended to read:
33          16-6a-606. Transfers.
34          [(1) Unless] (1) (a) Unless otherwise provided by the articles of incorporation or the
35     bylaws, or except as provided in Subsection (2), a member of a nonprofit corporation may not
36     transfer:
37          [(a)] (i) a membership; or
38          [(b)] (ii) any right arising from a membership.
39          [(2)] (b) Where transfer rights have been provided, a restriction on transfer rights may
40     not be binding with respect to a member holding a membership issued prior to the adoption of
41     the restriction, unless the restriction is approved by the affected member.
42          (2) The restriction on transfer described in Subsection (1) does not apply to the transfer
43     of shares of stock in a nonprofit corporation that is also a mutual benefit corporation, as
44     defined in Section 16-6a-102.
45          Section 2. Section 16-6a-611 is amended to read:
46          16-6a-611. Property rights.
47          [A member] (1) Unless otherwise provided by the articles of incorporation or the
48     bylaws, or except as provided in Subsection (2), a member of a nonprofit corporation does not
49     have any vested property right in the nonprofit corporation, including any right relating to
50     management, control, purpose, or duration of the nonprofit corporation[, except as provided
51     by:].
52          [(1) the bylaws of a mutual benefit corporation; or]
53          [(2) other applicable law.]
54          (2) A member or shareholder in a nonprofit corporation that is also a mutual benefit
55     corporation, as defined in Section 16-6a-102:
56          (a) has an undivided interest in real property, proportional to the member or
57     shareholder's shares, in the water rights of the mutual benefit corporation; and
58          (b) is a person entitled to the use of water under Title 73, Water and Irrigation,
59     including the right to change the use of water represented by the member or shareholder's
60     shares, as provided in Section 73-3-3 and subject to the requirements of Section 73-3-3.5.




Legislative Review Note
Office of Legislative Research and General Counsel