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S.B. 61
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5 AN ACT RELATING TO CORPORATIONS; ENACTING A NEW NONPROFIT
6 CORPORATIONS ACT; ESTABLISHING GENERAL PROVISIONS; ADDRESSING
7 INCORPORATION; ADDRESSING POWERS AND PURPOSES; ADDRESSING NAMES;
8 ADDRESSING OFFICE AND AGENTS; ADDRESSING MEMBERSHIP; ADDRESSING
9 MEETINGS AND VOTING OF MEMBERS; ADDRESSING DIRECTORS AND OFFICERS;
10 ADDRESSING INDEMNIFICATION; ADDRESSING AMENDMENTS TO ARTICLES OF
11 INCORPORATION OR BYLAWS; ADDRESSING MERGERS; ADDRESSING SALES OF
12 PROPERTY; ADDRESSING DISTRIBUTIONS; ADDRESSING DISSOLUTION;
13 ADDRESSING FOREIGN NONPROFIT CORPORATIONS; ADDRESSING RECORDS,
14 INFORMATION, AND REPORTS; ADDRESSING TRANSITION; MAKING TECHNICAL
15 CHANGES; AND PROVIDING AN EFFECTIVE DATE.
16 This act affects sections of Utah Code Annotated 1953 as follows:
17 AMENDS:
18 3-1-25, as last amended by Chapter 66, Laws of Utah 1987
19 3-1-30, as last amended by Chapter 203, Laws of Utah 1994
20 3-1-31, as last amended by Chapter 203, Laws of Utah 1994
21 3-1-44, as enacted by Chapter 204, Laws of Utah 1994
22 7-5-2, as last amended by Chapter 6, Laws of Utah 1982
23 9-13-201, as enacted by Chapter 76, Laws of Utah 1999
24 11-32-3, as last amended by Chapter 235, Laws of Utah 1995
25 11-32-8, as enacted by Chapter 143, Laws of Utah 1987
26 16-7-13, as enacted by Chapter 48, Laws of Utah 1993
27 16-7-14, as enacted by Chapter 48, Laws of Utah 1993
28 17A-3-903, as renumbered and amended by Chapter 186, Laws of Utah 1990
29 21-1-2, as last amended by Chapter 313, Laws of Utah 1994
30 21-1-2.5, as last amended by Chapter 313, Laws of Utah 1994
31 31A-5-101, as last amended by Chapter 6, Laws of Utah 1992, Third Special Session
32 31A-5-102, as last amended by Chapter 131, Laws of Utah 1999
33 31A-5-104, as last amended by Chapter 277, Laws of Utah 1992
34 31A-5-203, as last amended by Chapter 344, Laws of Utah 1995
35 31A-5-219, as last amended by Chapter 277, Laws of Utah 1992
36 31A-5-404, as last amended by Chapter 277, Laws of Utah 1992
37 31A-5-405, as last amended by Chapter 95, Laws of Utah 1987
38 31A-5-407, as last amended by Chapter 277, Laws of Utah 1992
39 31A-5-409, as last amended by Chapter 22, Laws of Utah 1989
40 31A-5-410, as last amended by Chapter 277, Laws of Utah 1992
41 31A-5-415, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
42 31A-5-503, as enacted by Chapter 242, Laws of Utah 1985
43 31A-5-504, as last amended by Chapter 277, Laws of Utah 1992
44 31A-5-508, as last amended by Chapter 20, Laws of Utah 1995
45 31A-7-103, as last amended by Chapter 277, Laws of Utah 1992
46 31A-7-201, as last amended by Chapter 344, Laws of Utah 1995
47 31A-7-202, as last amended by Chapter 91, Laws of Utah 1987
48 31A-7-303, as last amended by Chapter 91, Laws of Utah 1987
49 31A-7-304, as enacted by Chapter 242, Laws of Utah 1985
50 31A-7-313, as enacted by Chapter 242, Laws of Utah 1985
51 31A-8-103, as last amended by Chapter 44, Laws of Utah 1997
52 31A-8-204, as last amended by Chapter 79, Laws of Utah 1996
53 31A-8-406, as enacted by Chapter 204, Laws of Utah 1986
54 31A-9-101, as last amended by Chapter 108, Laws of Utah 1990
55 31A-9-105, as last amended by Chapter 277, Laws of Utah 1992
56 31A-9-204, as last amended by Chapter 91, Laws of Utah 1987
57 31A-9-212, as last amended by Chapter 91, Laws of Utah 1987
58 31A-9-405, as enacted by Chapter 242, Laws of Utah 1985
59 31A-9-406, as enacted by Chapter 242, Laws of Utah 1985
60 31A-9-502, as enacted by Chapter 242, Laws of Utah 1985
61 31A-11-105, as last amended by Chapter 277, Laws of Utah 1992
62 31A-14-205, as last amended by Chapter 9, Laws of Utah 1996, Second Special Session
63 31A-22-1305, as enacted by Chapter 204, Laws of Utah 1986
64 31A-27-335, as last amended by Chapter 131, Laws of Utah 1999
65 31A-34-105, No change since 1953
66 31A-34-108, No change since 1953
67 41-22-2, as last amended by Chapter 73, Laws of Utah 1999
68 48-2b-106, as last amended by Chapter 38, Laws of Utah 1999
69 53B-5-114, as enacted by Chapter 86, Laws of Utah 1998
70 59-8-103, as last amended by Chapter 278, Laws of Utah 1995
71 63-11-3.1, as enacted by Chapter 225, Laws of Utah 1998
72 ENACTS:
73 16-6a-101, Utah Code Annotated 1953
74 16-6a-102, Utah Code Annotated 1953
75 16-6a-103, Utah Code Annotated 1953
76 16-6a-104, Utah Code Annotated 1953
77 16-6a-105, Utah Code Annotated 1953
78 16-6a-106, Utah Code Annotated 1953
79 16-6a-107, Utah Code Annotated 1953
80 16-6a-108, Utah Code Annotated 1953
81 16-6a-109, Utah Code Annotated 1953
82 16-6a-110, Utah Code Annotated 1953
83 16-6a-111, Utah Code Annotated 1953
84 16-6a-112, Utah Code Annotated 1953
85 16-6a-113, Utah Code Annotated 1953
86 16-6a-114, Utah Code Annotated 1953
87 16-6a-115, Utah Code Annotated 1953
88 16-6a-116, Utah Code Annotated 1953
89 16-6a-117, Utah Code Annotated 1953
90 16-6a-118, Utah Code Annotated 1953
91 16-6a-201, Utah Code Annotated 1953
92 16-6a-202, Utah Code Annotated 1953
93 16-6a-203, Utah Code Annotated 1953
94 16-6a-204, Utah Code Annotated 1953
95 16-6a-205, Utah Code Annotated 1953
96 16-6a-206, Utah Code Annotated 1953
97 16-6a-207, Utah Code Annotated 1953
98 16-6a-301, Utah Code Annotated 1953
99 16-6a-302, Utah Code Annotated 1953
100 16-6a-303, Utah Code Annotated 1953
101 16-6a-304, Utah Code Annotated 1953
102 16-6a-401, Utah Code Annotated 1953
103 16-6a-402, Utah Code Annotated 1953
104 16-6a-403, Utah Code Annotated 1953
105 16-6a-501, Utah Code Annotated 1953
106 16-6a-502, Utah Code Annotated 1953
107 16-6a-503, Utah Code Annotated 1953
108 16-6a-504, Utah Code Annotated 1953
109 16-6a-601, Utah Code Annotated 1953
110 16-6a-602, Utah Code Annotated 1953
111 16-6a-603, Utah Code Annotated 1953
112 16-6a-604, Utah Code Annotated 1953
113 16-6a-605, Utah Code Annotated 1953
114 16-6a-606, Utah Code Annotated 1953
115 16-6a-607, Utah Code Annotated 1953
116 16-6a-608, Utah Code Annotated 1953
117 16-6a-609, Utah Code Annotated 1953
118 16-6a-610, Utah Code Annotated 1953
119 16-6a-611, Utah Code Annotated 1953
120 16-6a-612, Utah Code Annotated 1953
121 16-6a-613, Utah Code Annotated 1953
122 16-6a-701, Utah Code Annotated 1953
123 16-6a-702, Utah Code Annotated 1953
124 16-6a-703, Utah Code Annotated 1953
125 16-6a-704, Utah Code Annotated 1953
126 16-6a-705, Utah Code Annotated 1953
127 16-6a-706, Utah Code Annotated 1953
128 16-6a-707, Utah Code Annotated 1953
129 16-6a-708, Utah Code Annotated 1953
130 16-6a-709, Utah Code Annotated 1953
131 16-6a-710, Utah Code Annotated 1953
132 16-6a-711, Utah Code Annotated 1953
133 16-6a-712, Utah Code Annotated 1953
134 16-6a-713, Utah Code Annotated 1953
135 16-6a-714, Utah Code Annotated 1953
136 16-6a-715, Utah Code Annotated 1953
137 16-6a-716, Utah Code Annotated 1953
138 16-6a-717, Utah Code Annotated 1953
139 16-6a-718, Utah Code Annotated 1953
140 16-6a-801, Utah Code Annotated 1953
141 16-6a-802, Utah Code Annotated 1953
142 16-6a-803, Utah Code Annotated 1953
143 16-6a-804, Utah Code Annotated 1953
144 16-6a-805, Utah Code Annotated 1953
145 16-6a-806, Utah Code Annotated 1953
146 16-6a-807, Utah Code Annotated 1953
147 16-6a-808, Utah Code Annotated 1953
148 16-6a-809, Utah Code Annotated 1953
149 16-6a-810, Utah Code Annotated 1953
150 16-6a-811, Utah Code Annotated 1953
151 16-6a-812, Utah Code Annotated 1953
152 16-6a-813, Utah Code Annotated 1953
153 16-6a-814, Utah Code Annotated 1953
154 16-6a-815, Utah Code Annotated 1953
155 16-6a-816, Utah Code Annotated 1953
156 16-6a-817, Utah Code Annotated 1953
157 16-6a-818, Utah Code Annotated 1953
158 16-6a-819, Utah Code Annotated 1953
159 16-6a-820, Utah Code Annotated 1953
160 16-6a-821, Utah Code Annotated 1953
161 16-6a-822, Utah Code Annotated 1953
162 16-6a-823, Utah Code Annotated 1953
163 16-6a-824, Utah Code Annotated 1953
164 16-6a-825, Utah Code Annotated 1953
165 16-6a-826, Utah Code Annotated 1953
166 16-6a-901, Utah Code Annotated 1953
167 16-6a-902, Utah Code Annotated 1953
168 16-6a-903, Utah Code Annotated 1953
169 16-6a-904, Utah Code Annotated 1953
170 16-6a-905, Utah Code Annotated 1953
171 16-6a-906, Utah Code Annotated 1953
172 16-6a-907, Utah Code Annotated 1953
173 16-6a-908, Utah Code Annotated 1953
174 16-6a-909, Utah Code Annotated 1953
175 16-6a-910, Utah Code Annotated 1953
176 16-6a-1001, Utah Code Annotated 1953
177 16-6a-1002, Utah Code Annotated 1953
178 16-6a-1003, Utah Code Annotated 1953
179 16-6a-1004, Utah Code Annotated 1953
180 16-6a-1005, Utah Code Annotated 1953
181 16-6a-1006, Utah Code Annotated 1953
182 16-6a-1007, Utah Code Annotated 1953
183 16-6a-1008, Utah Code Annotated 1953
184 16-6a-1009, Utah Code Annotated 1953
185 16-6a-1010, Utah Code Annotated 1953
186 16-6a-1011, Utah Code Annotated 1953
187 16-6a-1012, Utah Code Annotated 1953
188 16-6a-1013, Utah Code Annotated 1953
189 16-6a-1014, Utah Code Annotated 1953
190 16-6a-1101, Utah Code Annotated 1953
191 16-6a-1102, Utah Code Annotated 1953
192 16-6a-1103, Utah Code Annotated 1953
193 16-6a-1104, Utah Code Annotated 1953
194 16-6a-1105, Utah Code Annotated 1953
195 16-6a-1201, Utah Code Annotated 1953
196 16-6a-1202, Utah Code Annotated 1953
197 16-6a-1301, Utah Code Annotated 1953
198 16-6a-1302, Utah Code Annotated 1953
199 16-6a-1401, Utah Code Annotated 1953
200 16-6a-1402, Utah Code Annotated 1953
201 16-6a-1403, Utah Code Annotated 1953
202 16-6a-1404, Utah Code Annotated 1953
203 16-6a-1405, Utah Code Annotated 1953
204 16-6a-1406, Utah Code Annotated 1953
205 16-6a-1407, Utah Code Annotated 1953
206 16-6a-1408, Utah Code Annotated 1953
207 16-6a-1409, Utah Code Annotated 1953
208 16-6a-1410, Utah Code Annotated 1953
209 16-6a-1411, Utah Code Annotated 1953
210 16-6a-1412, Utah Code Annotated 1953
211 16-6a-1413, Utah Code Annotated 1953
212 16-6a-1414, Utah Code Annotated 1953
213 16-6a-1415, Utah Code Annotated 1953
214 16-6a-1416, Utah Code Annotated 1953
215 16-6a-1417, Utah Code Annotated 1953
216 16-6a-1418, Utah Code Annotated 1953
217 16-6a-1419, Utah Code Annotated 1953
218 16-6a-1501, Utah Code Annotated 1953
219 16-6a-1502, Utah Code Annotated 1953
220 16-6a-1503, Utah Code Annotated 1953
221 16-6a-1504, Utah Code Annotated 1953
222 16-6a-1505, Utah Code Annotated 1953
223 16-6a-1506, Utah Code Annotated 1953
224 16-6a-1507, Utah Code Annotated 1953
225 16-6a-1508, Utah Code Annotated 1953
226 16-6a-1509, Utah Code Annotated 1953
227 16-6a-1510, Utah Code Annotated 1953
228 16-6a-1511, Utah Code Annotated 1953
229 16-6a-1512, Utah Code Annotated 1953
230 16-6a-1513, Utah Code Annotated 1953
231 16-6a-1514, Utah Code Annotated 1953
232 16-6a-1515, Utah Code Annotated 1953
233 16-6a-1516, Utah Code Annotated 1953
234 16-6a-1517, Utah Code Annotated 1953
235 16-6a-1518, Utah Code Annotated 1953
236 16-6a-1601, Utah Code Annotated 1953
237 16-6a-1602, Utah Code Annotated 1953
238 16-6a-1603, Utah Code Annotated 1953
239 16-6a-1604, Utah Code Annotated 1953
240 16-6a-1605, Utah Code Annotated 1953
241 16-6a-1606, Utah Code Annotated 1953
242 16-6a-1607, Utah Code Annotated 1953
243 16-6a-1608, Utah Code Annotated 1953
244 16-6a-1609, Utah Code Annotated 1953
245 16-6a-1701, Utah Code Annotated 1953
246 16-6a-1702, Utah Code Annotated 1953
247 16-6a-1703, Utah Code Annotated 1953
248 16-6a-1704, Utah Code Annotated 1953
249 REPEALS:
250 16-6-18, as enacted by Chapter 17, Laws of Utah 1963
251 16-6-19, as last amended by Chapter 108, Laws of Utah 1990
252 16-6-20, as last amended by Chapter 48, Laws of Utah 1993
253 16-6-21, as last amended by Chapter 143, Laws of Utah 1996
254 16-6-22, as enacted by Chapter 17, Laws of Utah 1963
255 16-6-23, as enacted by Chapter 17, Laws of Utah 1963
256 16-6-24, as last amended by Chapter 86, Laws of Utah 1998
257 16-6-25, as last amended by Chapter 48, Laws of Utah 1990
258 16-6-25.1, as last amended by Chapter 108, Laws of Utah 1990
259 16-6-25.2, as last amended by Chapter 108, Laws of Utah 1990
260 16-6-25.3, as enacted by Chapter 178, Laws of Utah 1985
261 16-6-26, as enacted by Chapter 17, Laws of Utah 1963
262 16-6-27, as enacted by Chapter 17, Laws of Utah 1963
263 16-6-28, as enacted by Chapter 17, Laws of Utah 1963
264 16-6-29, as enacted by Chapter 17, Laws of Utah 1963
265 16-6-30, as enacted by Chapter 17, Laws of Utah 1963
266 16-6-31, as enacted by Chapter 17, Laws of Utah 1963
267 16-6-32, as enacted by Chapter 17, Laws of Utah 1963
268 16-6-33, as last amended by Chapter 66, Laws of Utah 1984
269 16-6-34, as enacted by Chapter 17, Laws of Utah 1963
270 16-6-35, as enacted by Chapter 17, Laws of Utah 1963
271 16-6-36, as enacted by Chapter 17, Laws of Utah 1963
272 16-6-37, as last amended by Chapter 79, Laws of Utah 1996
273 16-6-38, as enacted by Chapter 17, Laws of Utah 1963
274 16-6-39, as enacted by Chapter 17, Laws of Utah 1963
275 16-6-40, as enacted by Chapter 17, Laws of Utah 1963
276 16-6-41, as enacted by Chapter 17, Laws of Utah 1963
277 16-6-42, as last amended by Chapter 222, Laws of Utah 1988
278 16-6-43, as enacted by Chapter 17, Laws of Utah 1963
279 16-6-44, as enacted by Chapter 17, Laws of Utah 1963
280 16-6-45, as last amended by Chapter 178, Laws of Utah 1985
281 16-6-46, as last amended by Chapter 178, Laws of Utah 1985
282 16-6-47, as last amended by Chapter 178, Laws of Utah 1985
283 16-6-48, as enacted by Chapter 17, Laws of Utah 1963
284 16-6-49, as last amended by Chapter 277, Laws of Utah 1992
285 16-6-50, as enacted by Chapter 17, Laws of Utah 1963
286 16-6-51, as last amended by Chapter 178, Laws of Utah 1985
287 16-6-52, as last amended by Chapter 178, Laws of Utah 1985
288 16-6-53, as last amended by Chapter 66, Laws of Utah 1984
289 16-6-53.5, as enacted by Chapter 97, Laws of Utah 1989
290 16-6-54, as enacted by Chapter 17, Laws of Utah 1963
291 16-6-55, as enacted by Chapter 17, Laws of Utah 1963
292 16-6-56, as last amended by Chapter 68, Laws of Utah 1987
293 16-6-57, as last amended by Chapter 178, Laws of Utah 1985
294 16-6-58, as last amended by Chapter 66, Laws of Utah 1984
295 16-6-59, as enacted by Chapter 17, Laws of Utah 1963
296 16-6-60, as last amended by Chapter 277, Laws of Utah 1992
297 16-6-61, as last amended by Chapter 68, Laws of Utah 1987
298 16-6-62, as last amended by Chapter 68, Laws of Utah 1987
299 16-6-63, as last amended by Chapter 222, Laws of Utah 1988
300 16-6-64, as enacted by Chapter 17, Laws of Utah 1963
301 16-6-65, as last amended by Chapter 66, Laws of Utah 1984
302 16-6-66, as last amended by Chapter 178, Laws of Utah 1985
303 16-6-67, as last amended by Chapter 178, Laws of Utah 1985
304 16-6-68, as last amended by Chapter 108, Laws of Utah 1990
305 16-6-69, as last amended by Chapter 30, Laws of Utah 1992
306 16-6-70, as enacted by Chapter 17, Laws of Utah 1963
307 16-6-71, as enacted by Chapter 17, Laws of Utah 1963
308 16-6-72, as enacted by Chapter 17, Laws of Utah 1963
309 16-6-73, as enacted by Chapter 17, Laws of Utah 1963
310 16-6-74, as enacted by Chapter 17, Laws of Utah 1963
311 16-6-75, as last amended by Chapter 66, Laws of Utah 1984
312 16-6-76, as last amended by Chapter 10, Laws of Utah 1997
313 16-6-77, as last amended by Chapter 66, Laws of Utah 1984
314 16-6-78, as last amended by Chapter 66, Laws of Utah 1984
315 16-6-79, as last amended by Chapter 66, Laws of Utah 1984
316 16-6-80, as enacted by Chapter 17, Laws of Utah 1963
317 16-6-82, as enacted by Chapter 17, Laws of Utah 1963
318 16-6-83, as last amended by Chapter 178, Laws of Utah 1985
319 16-6-84, as last amended by Chapter 108, Laws of Utah 1990
320 16-6-85, as last amended by Chapter 66, Laws of Utah 1984
321 16-6-86, as last amended by Chapter 66, Laws of Utah 1987
322 16-6-87, as last amended by Chapter 108, Laws of Utah 1990
323 16-6-88, as last amended by Chapter 178, Laws of Utah 1985
324 16-6-89, as last amended by Chapter 66, Laws of Utah 1984
325 16-6-90, as last amended by Chapter 66, Laws of Utah 1984
326 16-6-91, as last amended by Chapter 178, Laws of Utah 1985
327 16-6-92, as last amended by Chapter 66, Laws of Utah 1984
328 16-6-93, as last amended by Chapter 178, Laws of Utah 1985
329 16-6-94, as last amended by Chapter 222, Laws of Utah 1988
330 16-6-95, as last amended by Chapter 66, Laws of Utah 1984
331 16-6-96, as enacted by Chapter 17, Laws of Utah 1963
332 16-6-97, as last amended by Chapter 66, Laws of Utah 1987
333 16-6-98, as last amended by Chapter 108, Laws of Utah 1990
334 16-6-99, as last amended by Chapter 28, Laws of Utah 1995
335 16-6-99.1, as last amended by Chapter 313, Laws of Utah 1994
336 16-6-100, as last amended by Chapter 313, Laws of Utah 1994
337 16-6-100.5, as last amended by Chapter 313, Laws of Utah 1994
338 16-6-101, as last amended by Chapter 313, Laws of Utah 1994
339 16-6-102, as last amended by Chapter 66, Laws of Utah 1984
340 16-6-103, as last amended by Chapter 161, Laws of Utah 1987
341 16-6-104, as last amended by Chapter 66, Laws of Utah 1984
342 16-6-105, as last amended by Chapter 66, Laws of Utah 1984
343 16-6-106, as enacted by Chapter 17, Laws of Utah 1963
344 16-6-107, as last amended by Chapter 166, Laws of Utah 1987
345 16-6-108, as last amended by Chapter 10, Laws of Utah 1997
346 16-6-109, as last amended by Chapter 66, Laws of Utah 1984
347 16-6-110, as enacted by Chapter 17, Laws of Utah 1963
348 16-6-112, as enacted by Chapter 66, Laws of Utah 1987
349 Be it enacted by the Legislature of the state of Utah:
350 Section 1. Section 3-1-25 is amended to read:
351 3-1-25. Filing of annual reports.
352 Domestic associations and foreign associations admitted to do business in this state shall
353 file an annual report in accordance with [
354 Section 2. Section 3-1-30 is amended to read:
355 3-1-30. Authorization for merger or consolidation with other associations or
356 corporations -- Laws governing surviving or new corporation.
357 (1) Pursuant to a plan approved under this chapter, an agricultural cooperative association
358 may merge or consolidate with:
359 (a) one or more agricultural cooperative associations;
360 (b) one or more domestic corporations governed by:
361 (i) Title 16, Chapter 10a, Utah Revised Business Corporation Act; or
362 (ii) Title 16, Chapter [
363
364 (c) any combination of associations or corporations referred to in Subsection (1)(a) or (b).
365 (2) The surviving or new corporation shall be governed by:
366 (a) the Uniform Agricultural Cooperative Association Act; or
367 (b) Title 16, Chapter [
368
369 Section 3. Section 3-1-31 is amended to read:
370 3-1-31. Contents and approval of plan of merger or consolidation.
371 (1) The board of directors, board of trustees, or other governing board of each party to the
372 merger or consolidation shall, by resolution adopted by each board, approve a plan of merger or
373 consolidation.
374 (2) The plan shall contain:
375 (a) the name of:
376 (i) each association or corporation proposing to merge or consolidate; and
377 (ii) (A) the association or corporation into which they propose to merge or consolidate,
378 also referred to as the surviving corporation; or
379 (B) the new corporation;
380 (b) the terms and conditions of the proposed merger or consolidation;
381 (c) the manner and basis of converting stock or shares of each party to the merger or
382 consolidation, into stock, shares, or other securities or obligations of the surviving or new
383 corporation;
384 (d) the manner and basis of converting membership interests of each party to the merger
385 into membership interests, stock, shares, or other securities or obligations of the surviving or new
386 corporation;
387 (e) the manner and basis of converting any certificates of interest, patronage refund
388 certificates, or other interests in any fund, capital investment, savings, or reserve of each party to
389 the merger or consolidation into stock, shares, or other securities or obligations of or certificates
390 of interest, patronage refund certificates, or other interests in any fund, capital investment, savings
391 or reserve of the surviving or new corporation, including any changes to be made in the time and
392 manner of payment of the certificates or interests;
393 (f) a statement electing whether the surviving or new corporation shall be governed by:
394 (i) the Uniform Agricultural Cooperative Association Act; or [
395 (ii) Title 16, Chapter [
396
397 (g) a statement of any changes in the articles of incorporation of the surviving or new
398 corporation effected by the merger or consolidation, including changes required by the law
399 governing the surviving or new corporation; and
400 (h) any other provision relating to the proposed merger or consolidation considered to be
401 necessary or desirable.
402 Section 4. Section 3-1-44 is amended to read:
403 3-1-44. Registered office and agent.
404 (1) An association shall continuously maintain a registered office in this state. The
405 registered office may be the principal place of business of the association.
406 (2) (a) An association shall designate a registered agent.
407 (b) The registered agent may be a person residing in this state, a domestic corporation, or
408 a foreign corporation authorized to transact business in this state.
409 (c) The registered agent's address shall be the same as that of the registered office.
410 (3) (a) An association shall file a statement with the Division of Corporations and
411 Commercial Code designating or changing its registered office, its registered agent, or both.
412 (b) The statement in Subsection (3)(a) shall set forth:
413 (i) the name of the association;
414 (ii) the address of the association's registered office;
415 (iii) the name of the association's registered agent and [
416 and
417 (iv) a statement that the designation or change was authorized by a resolution of the board
418 of directors.
419 (4) (a) A registered agent of an association may resign by filing with the division a signed
420 written notice of resignation, including a statement that a signed copy of the notice has been given
421 to the association at its principal place of business.
422 (b) The appointment of the agent terminates 30 days after notice is filed with the division.
423 (5) Service of process, notice, or any demand upon an association shall be made as
424 provided in Section [
425 Section 5. Section 7-5-2 is amended to read:
426 7-5-2. Permit required to engage in trust business -- Exceptions.
427 (1) No trust company shall accept any appointment to act in any agency or fiduciary
428 capacity, such as but not limited to that of personal representative, executor, administrator,
429 conservator, guardian, assignee, receiver, depositary, or trustee under order or judgment of any
430 court or by authority of any law of this state or as trustee for any purpose permitted by law or
431 otherwise engage in the trust business in this state, unless and until it has obtained from the
432 commissioner a permit to act under this chapter. This provision shall not apply to any bank or other
433 corporation authorized to engage and lawfully engaged in the trust business in this state before July
434 1, 1981.
435 (2) Nothing in this chapter prohibits:
436 (a) any corporation organized under Title 16, Chapter [
437 trustee of any employee benefit trust established for the employees of the corporation or the
438 employees of one or more other corporations affiliated with the corporation;
439 (b) any corporation organized under Title 16, Chapter [
440 Corporation Act, and owned or controlled by a charitable, benevolent, eleemosynary or religious
441 organization from acting as a trustee for that organization or members of that organization but not
442 offering trust services to the general public;
443 (c) any corporation organized under Title 16, Chapter [
444 a fiduciary capacity the controlling shares of another corporation but not offering trust services to
445 the general public; or
446 (d) any depository institution from holding in an agency or fiduciary capacity individual
447 retirement accounts or Keogh plan accounts established under Section 401 (a) or 408 (a) of Title
448 26 of the United States Code.
449 Section 6. Section 9-13-201 is amended to read:
450 9-13-201. Utah Technology Finance Corporation -- Independent public corporation.
451 (1) There is created an independent public corporation known as the "Utah Technology
452 Finance Corporation."
453 (2) (a) The corporation shall operate as a nonprofit corporation in accordance with Title
454 16, Chapter [
455 extent that Title 16, Chapter [
456 (b) The corporation shall file with the Division of Corporations and Commercial Code:
457 (i) articles of incorporation; and
458 (ii) any amendment to its articles of incorporation.
459 (c) In addition to the articles of incorporation, the corporation may adopt bylaws and
460 operational policies that are consistent with this chapter.
461 (3) This chapter is a recodification of the repealed Title 9, Chapter 2, Part 7, Utah
462 Technology Finance Corporation Act, and does not create a new corporation. The corporation
463 referred to in this chapter is the ongoing enterprise of the Utah Technology Finance Corporation
464 and this recodification does not impair any existing contractual relationships of the corporation.
465 Section 7. Section 11-32-3 is amended to read:
466 11-32-3. Creation of county interlocal finance authority as nonprofit corporation --
467 Organization -- Acquisition of delinquent tax receivables -- Personnel -- Duties of elected
468 attorney and treasurer.
469 (1) The governing body of any county within the state may, by resolution, organize a
470 nonprofit corporation as the financing authority for the county on behalf of public bodies within
471 the county under this chapter, following the procedures set out in Title 16, Chapter [
472 Revised Nonprofit Corporation [
473 accomplishing the public purposes for which the public bodies exist by financing the sale or
474 assignment of the delinquent tax receivables within the county to the financing authority. The
475 authority shall be known as the "Interlocal Finance Authority of (name of county)."
476 (2) If the governing body of any county creates an authority on behalf of any other public
477 body within the county, the resolution shall further state the name or names of the other public
478 bodies. A certified copy of the resolution creating the authority shall be delivered to the governing
479 body of the other public bodies. The governing bodies of each of the other public bodies shall
480 either approve or reject the creation of the authority, but if no action has been taken within 30 days
481 of delivery of the certified copy of the resolution to the governing body it shall be deemed rejected.
482 (3) Following the approval, rejection, or deemed rejection of the resolution by the
483 governing bodies of each of the public bodies listed in the initial resolution, the county shall then
484 amend the resolution to delete the public bodies rejecting the resolution and shall list the
485 participant members of the authority.
486 (4) The governing bodies of the participant members shall approve the articles of
487 incorporation and bylaws of the authority. Members of governing bodies of each of the participant
488 members, or a paid employee of the governing body designated by the member, shall be selected
489 to form and shall act as the board of trustees of the authority. The powers of the board of trustees
490 may be vested in an executive committee to be selected from among the board of trustees by the
491 members of the board of trustees. The articles of incorporation and bylaws shall provide that the
492 members of the board of trustees of the authority may be removed and replaced by the governing
493 body from which such member was selected at any time in its discretion. A majority of the
494 governing bodies of the participant members, based upon a percentage of the property taxes levied
495 for the year preceding the then current year, within the county may, alter or change the structure,
496 organization, programs, or activities of the financing authority, subject to the rights of the holders
497 of the authority's bonds and parties to its other obligations.
498 (5) Each financing authority may acquire by assignment the delinquent tax receivables of
499 the participant members creating the financing authority, in accordance with the procedures and
500 subject to the limitations of this chapter, in order to accomplish the public purposes for which the
501 participant members exist.
502 (6) Except as limited by Subsection (7), a financing authority may contract for or employ
503 all staff and other personnel necessary for the purpose of performing its functions and activities,
504 including contracting with the participant members within the county that created it to utilize any
505 of the personnel, property, or facilities of any of the participant members for that purpose. The
506 authority may be reimbursed for such costs by the participant member as provided in its articles
507 of incorporation or bylaws.
508 (7) (a) With respect to any county that creates a financing authority and which has an
509 elected attorney or treasurer, or both, the elected attorney shall be the legal advisor to and provide
510 all legal services for the authority, and the elected treasurer shall provide all accounting services
511 for the authority. The authority shall reimburse the county for legal and accounting services so
512 furnished by the county, based upon the actual cost of the services, including reasonable amounts
513 allocated by the county for overhead, employee fringe benefits, and general and administrative
514 expenses.
515 (b) The provisions of Subsection (7) may not prevent the financing authority from
516 obtaining the accounting or auditing services from outside accountants or auditors with the consent
517 of the elected treasurer and the governing bodies or from obtaining legal services from outside
518 attorneys with the consent of the elected attorney and the governing bodies. The provisions of this
519 subsection may not prevent the authority from obtaining the opinions of outside attorneys or
520 accountants which are necessary for the issuance of the bonds of the authority.
521 (c) If 50% or more of the governing bodies of the participant members, based upon
522 property taxes charged for the preceding year as a percentage of all of the property taxes charged
523 within the county for that year, find it advisable that the authority retain legal or accounting
524 services other than as described in Subsection (7)(a) they may direct the board of trustees to do so.
525 Section 8. Section 11-32-8 is amended to read:
526 11-32-8. Dissolution of financing authority.
527 (1) The governing body of a county may at any time dissolve a financing authority created
528 by the county in the manner then provided in Title 16, Chapter [
529 Corporation [
530 (2) A financing authority may not be dissolved unless all outstanding bonds and other
531 obligations of the authority are paid in full as to principal, interest, and redemption premiums, if
532 any, or unless provision for the payment of them when due has been made.
533 (3) Upon the dissolution of a financing authority all assets and moneys of the authority
534 remaining after a provision has been made for the payment of all outstanding bonds and
535 obligations of the authority shall be transferred to the participant members as described in Section
536 11-32-15 or as agreed upon between the county and the other participant members.
537 Section 9. Section 16-6a-101 is enacted to read:
538
539
540 16-6a-101. Title.
541 This chapter is known as the "Utah Revised Nonprofit Corporation Act."
542 Section 10. Section 16-6a-102 is enacted to read:
543 16-6a-102. Definitions.
544 As used in this chapter:
545 (1) (a) "Address" means a location where mail can be delivered by the United States Postal
546 Service.
547 (b) "Address" includes:
548 (i) a post office box number;
549 (ii) a rural free delivery route number; and
550 (iii) a street name and number.
551 (2) "Affiliate" means a person that directly or indirectly through one or more
552 intermediaries controls, or is controlled by, or is under common control with, the person specified.
553 (3) "Assumed corporate name" means the name assumed for use in this state:
554 (a) by a:
555 (i) foreign corporation pursuant to Section 16-10a-1506 ; or
556 (ii) a foreign nonprofit corporation pursuant to Section 16-6a-1506 ; and
557 (b) because the corporate name of the foreign corporation described in Subsection (3)(a)
558 is not available for use in this state.
559 (4) "Articles of incorporation" include:
560 (a) amended articles of incorporation;
561 (b) restated articles of incorporation;
562 (c) articles of merger; and
563 (d) a document of a similar import to the documents described in Subsection (4)(a) or (b).
564 (5) (a) Except as provided in Subsection (5)(b), "board of directors" means the body
565 authorized to manage the affairs of the domestic or foreign nonprofit corporation.
566 (b) Notwithstanding Subsection (5)(a), a person may not be considered the board of
567 directors because of powers delegated to that person pursuant to Subsection 16-6a-801 (2).
568 (6) (a) "Bylaws" means the one or more codes of rules, other than the articles of
569 incorporation, adopted pursuant to this chapter for the regulation or management of the affairs of
570 the domestic or foreign nonprofit corporation irrespective of the name or names by which the
571 codes of rules are designated.
572 (b) "Bylaws" includes:
573 (i) amended bylaws; and
574 (ii) restated bylaws.
575 (7) (a) "Cash" or "money" means:
576 (i) legal tender;
577 (ii) a negotiable instrument; or
578 (iii) other cash equivalent readily convertible into legal tender.
579 (b) "Cash" and "money" are used interchangeably in this chapter.
580 (8) (a) "Class" refers to a group of memberships that have the same rights with respect to
581 voting, dissolution, redemption, transfer, or other characteristics.
582 (b) For purposes of Subsection (8)(a), rights are considered the same if they are determined
583 by a formula applied uniformly to a group of memberships.
584 (9) (a) "Conspicuous" means so written that a reasonable person against whom the writing
585 is to operate should have noticed it.
586 (b) "Conspicuous" includes printing or typing in:
587 (i) italics;
588 (ii) boldface;
589 (iii) contrasting color;
590 (iv) capitals; or
591 (v) underlining.
592 (10) "Control" or a "controlling interest" means the direct or indirect possession of the
593 power to direct or cause the direction of the management and policies of an entity by:
594 (a) the ownership of voting shares;
595 (b) contract; or
596 (c) means other than those specified in Subsection (10)(a) or (b).
597 (11) "Cooperative nonprofit corporation" or "cooperative" means a nonprofit corporation
598 organized or existing under this chapter subject to Section 16-6a-207 .
599 (12) "Corporate name" means:
600 (a) the name of a domestic corporation as stated in the domestic corporation's articles of
601 incorporation;
602 (b) the name of a domestic nonprofit corporation as stated in the domestic nonprofit
603 corporation's articles of incorporation;
604 (c) the name of a foreign corporation as stated in the foreign corporation's:
605 (i) articles of incorporation; or
606 (ii) document of similar import to articles of incorporation; or
607 (d) the name of a foreign nonprofit corporation as stated in the foreign nonprofit
608 corporation's:
609 (i) articles of incorporation; or
610 (ii) document of similar import to articles of incorporation.
611 (13) "Corporation" or "domestic corporation" means a corporation for profit, which is not
612 a foreign corporation, incorporated under or subject to Chapter 10a, Utah Revised Business
613 Corporation Act.
614 (14) "Delegate" means any person elected or appointed to vote in a representative
615 assembly:
616 (a) for the election of a director; or
617 (b) on matters other than the election of a director.
618 (15) "Deliver" includes delivery by mail and any other means of transmission authorized
619 by Section 16-6a-103 , except that delivery to the division means actual receipt by the division.
620 (16) "Director" means a member of the board of directors.
621 (17) (a) "Distribution" means the payment of a dividend or any part of the income or profit
622 of a nonprofit corporation to the nonprofit corporation's:
623 (i) members;
624 (ii) directors; or
625 (iii) officers.
626 (b) "Distribution" does not include fair-value payments for:
627 (i) goods sold; or
628 (ii) services received.
629 (18) "Division" means the Division of Corporations and Commercial Code.
630 (19) "Effective date," when referring to a document filed by the division, means the time
631 and date determined in accordance with Section 16-6a-108 .
632 (20) "Effective date of notice" means the date notice is effective as provided in Section
633 16-6a-103 .
634 (21) (a) "Employee" includes an officer but not a director of a nonprofit corporation.
635 (b) Notwithstanding Subsection (21)(a), a director may accept duties that make that
636 director an employee of a nonprofit corporation.
637 (22) "Executive director" means the executive director of the Department of Commerce.
638 (23) "Entity" includes:
639 (a) a domestic or foreign corporation;
640 (b) a domestic or foreign nonprofit corporation;
641 (c) a limited liability company;
642 (d) a profit or nonprofit unincorporated association;
643 (e) a business trust;
644 (f) an estate;
645 (g) a partnership;
646 (h) a trust;
647 (i) two or more persons having a joint or common economic interest;
648 (j) a state;
649 (k) the United States; or
650 (l) a foreign government.
651 (24) "Foreign corporation" means a corporation for profit incorporated under a law other
652 than the laws of this state.
653 (25) "Foreign nonprofit corporation" means an entity:
654 (a) incorporated under a law other than the laws of this state; and
655 (b) that would be a nonprofit corporation if formed under the laws of this state.
656 (26) "Governmental subdivision" means:
657 (a) a county;
658 (b) a city;
659 (c) a town; or
660 (d) any other type of governmental subdivision authorized by the laws of this state.
661 (27) "Individual" means:
662 (a) a natural person;
663 (b) the estate of an incompetent individual; or
664 (c) the estate of a deceased individual.
665 (28) "Internal Revenue Code" means the federal "Internal Revenue Code of 1986," as
666 amended from time to time, or to corresponding provisions of subsequent internal revenue laws
667 of the United States of America.
668 (29) (a) "Mail," "mailed," or "mailing" means deposit, deposited, or depositing in the
669 United States mail, properly addressed, first class postage prepaid.
670 (b) "Mail," "mailed," or "mailing" includes registered or certified mail for which the proper
671 fee has been paid.
672 (30) (a) "Member" means one or more persons identified as a member of a domestic or
673 foreign nonprofit corporation in the articles of incorporation or bylaws of the nonprofit corporation
674 pursuant to a procedure set forth:
675 (i) in the articles of incorporation;
676 (ii) in the bylaws; or
677 (iii) by a resolution of the board of directors.
678 (b) "Member" includes "voting member."
679 (31) "Membership" refers to the rights and obligations of a member or members.
680 (32) "Nonprofit corporation" or "domestic nonprofit corporation" means an entity, which
681 is not a foreign nonprofit corporation, incorporated under or subject to the provisions of this
682 chapter.
683 (33) "Notice" is as provided in Section 16-6a-103 .
684 (34) "Principal office" means:
685 (a) the office, in or out of this state, designated by a domestic or foreign nonprofit
686 corporation as its principal office in the most recent document on file with the division providing
687 that information, including:
688 (i) an annual report;
689 (ii) an application for a certificate of authority; or
690 (iii) a notice of change of principal office; or
691 (b) if no principal office can be determined, a domestic or foreign nonprofit corporation's
692 registered office.
693 (35) "Proceeding" includes:
694 (a) a civil suit;
695 (b) arbitration;
696 (c) mediation;
697 (d) a criminal action;
698 (e) an administrative action; or
699 (f) an investigatory action.
700 (36) "Receive," when used in reference to receipt of a writing or other document by a
701 domestic or foreign nonprofit corporation, means the writing or other document is actually
702 received:
703 (a) by the domestic or foreign nonprofit corporation at:
704 (i) its registered office in this state; or
705 (ii) its principal office;
706 (b) by the secretary of the domestic or foreign nonprofit corporation, wherever the
707 secretary is found; or
708 (c) by any other person authorized by the bylaws or the board of directors to receive the
709 writing or other document, wherever that person is found.
710 (37) (a) "Record date" means the date established under Part 6 or 7 on which a nonprofit
711 corporation determines the identity of its members.
712 (b) The determination described in Subsection (37)(a) shall be made as of the close of
713 business on the record date unless another time for doing so is specified when the record date is
714 fixed.
715 (38) "Registered agent" means the registered agent of:
716 (a) a domestic nonprofit corporation required to be maintained pursuant to Subsection
717 16-6a-501 (1)(b); or
718 (b) a foreign nonprofit corporation required to be maintained pursuant to Subsection
719 16-6a-1508 (1)(b).
720 (39) "Registered office" means the office within this state designated by a domestic or
721 foreign nonprofit corporation as its registered office in the most recent document on file with the
722 division providing that information, including:
723 (a) articles of incorporation;
724 (b) an application for a certificate of authority; or
725 (c) a notice of change of registered office.
726 (40) "Related party to a director" means:
727 (a) the spouse of the director;
728 (b) a child of the director;
729 (c) a grandchild of the director;
730 (d) a sibling of the director;
731 (e) a parent of the director;
732 (f) the spouse of an individual described in Subsections (40)(b) through (e);
733 (g) an individual having the same home as the director;
734 (h) a trust or estate of which the director or any other individual specified in this
735 Subsection (40) is a substantial beneficiary; or
736 (i) any of the following of which the director is a fiduciary:
737 (i) a trust;
738 (ii) an estate;
739 (iii) an incompetent;
740 (iv) a conservatee; or
741 (v) a minor.
742 (41) "Secretary" means the corporate officer to whom the bylaws or the board of directors
743 has delegated responsibility under Subsection 16-6a-818 (3) for:
744 (a) the preparation and maintenance of:
745 (i) minutes of the meetings of:
746 (A) the board of directors; or
747 (B) the members; and
748 (ii) the other records and information required to be kept by the nonprofit corporation
749 pursuant to Section 16-6a-1601 ; and
750 (b) authenticating records of the nonprofit corporation.
751 (42) "State," when referring to a part of the United States, includes:
752 (a) a state;
753 (b) a commonwealth;
754 (c) the District of Columbia;
755 (d) an agency or governmental and political subdivision of a state, commonwealth, or
756 District of Columbia;
757 (e) territory or insular possession of the United States; or
758 (f) an agency or governmental and political subdivision of a territory or insular possession
759 of the United States.
760 (43) "Street address" means:
761 (a) (i) street name and number;
762 (ii) city or town; and
763 (iii) United States post office zip code designation; or
764 (b) if, by reason of rural location or otherwise, a street name, number, city, or town does
765 not exist, an appropriate description other than that described in Subsection (43)(a) fixing as nearly
766 as possible the actual physical location but only if the information includes:
767 (i) the rural free delivery route;
768 (ii) the county; and
769 (iii) the United States post office zip code designation.
770 (44) "United States" includes any district, authority, office, bureau, commission,
771 department, and any other agency of the United States of America.
772 (45) "Vote" includes authorization by:
773 (a) written ballot; and
774 (b) written consent.
775 (46) (a) "Voting group" means all the members of one or more classes of members or
776 directors that, under this chapter, the articles of incorporation, or the bylaws, are entitled to vote
777 and be counted together collectively on a matter.
778 (b) All members or directors entitled by this chapter, the articles of incorporation, or the
779 bylaws to vote generally on a matter are for that purpose a single voting group.
780 (47) (a) "Voting member" means one or more persons who are entitled to vote for all
781 matters required or permitted under this chapter to be submitted to a vote of the members, except
782 as otherwise provided in the articles of incorporation or bylaws.
783 (b) A person is not a voting member solely because of:
784 (i) a right the person has as a delegate;
785 (ii) a right the person has to designate a director; or
786 (iii) a right the person has as a director.
787 Section 11. Section 16-6a-103 is enacted to read:
788 16-6a-103. Notice.
789 (1) Notice given under this chapter shall be in writing unless oral notice is reasonable
790 under the circumstances.
791 (2) (a) Notice may be communicated:
792 (i) in person;
793 (ii) by telephone;
794 (iii) by any form of electronic communication; or
795 (iv) by mail or private carrier.
796 (b) If the forms of personal notice described in Subsection (2)(a) are impracticable, notice
797 may be communicated by:
798 (i) a newspaper of general circulation in the county or similar governmental subdivision
799 in which the corporation's principal or registered office is located; or
800 (ii) radio, television, or other form of public broadcast communication in the county or
801 similar governmental subdivision in which the corporation's principal or registered office is
802 located.
803 (3) Written notice to a domestic or foreign nonprofit corporation authorized to conduct
804 affairs in this state may be addressed to:
805 (a) its registered agent at its registered office; or
806 (b) the corporation's secretary at its principal office.
807 (4) (a) Written notice by a domestic or foreign nonprofit corporation to its members, is
808 effective as to each member when mailed, if:
809 (i) in a comprehensible form; and
810 (ii) addressed to the member's address shown in the domestic or foreign nonprofit
811 corporation's current record of members.
812 (b) If three successive notices given to a member pursuant to Subsection (5) have been
813 returned as undeliverable, further notices to that member are not necessary until another address
814 of the member is made known to the nonprofit corporation.
815 (5) Except as provided in Subsection (4), written notice, if in a comprehensible form, is
816 effective at the earliest of the following:
817 (a) when received;
818 (b) five days after it is mailed; or
819 (c) on the date shown on the return receipt if:
820 (i) sent by registered or certified mail;
821 (ii) sent return receipt requested; and
822 (iii) the receipt is signed by or on behalf of the addressee.
823 (6) Oral notice is effective when communicated if communicated in a comprehensible
824 manner.
825 (7) Notice by publication is effective on the date of first publication.
826 (8) A written notice or report delivered as part of a newsletter, magazine, or other
827 publication regularly sent to members shall constitute a written notice or report if:
828 (a) addressed or delivered to the member's address shown in the nonprofit corporation's
829 current list of members; or
830 (b) if two or more members are residents of the same household and have the same address
831 in the nonprofit corporation's current list of members, addressed or delivered to one of the
832 members at the address appearing on the current list of members.
833 (9) (a) If this chapter prescribes notice requirements for particular circumstances, the
834 notice requirements for the particular circumstances govern.
835 (b) If articles of incorporation or bylaws prescribe notice requirements not inconsistent
836 with this section or other provisions of this chapter, the notice requirements of the articles of
837 incorporation or bylaws govern.
838 Section 12. Section 16-6a-104 is enacted to read:
839 16-6a-104. Powers of the division.
840 The division has the power reasonably necessary to perform the duties required of the
841 division under this chapter.
842 Section 13. Section 16-6a-105 is enacted to read:
843 16-6a-105. Filing requirements.
844 (1) To be entitled to filing by the division, a document shall satisfy the requirements of:
845 (a) this section; and
846 (b) any other section of this chapter that adds to or varies the requirements of this section.
847 (2) This chapter shall require or permit filing the document with the division.
848 (3) (a) A document shall contain the information required by this chapter.
849 (b) In addition to the document information required by this chapter, it may contain other
850 information.
851 (4) A document shall be:
852 (a) typewritten; or
853 (b) machine printed.
854 (5) (a) A document shall be in the English language.
855 (b) A corporate name need not be in English if written in:
856 (i) English letters; or
857 (ii) Arabic or Roman numerals.
858 (c) Notwithstanding Subsection (5)(a), a certificate of existence required of a foreign
859 nonprofit corporation need not be in English if accompanied by a reasonably authenticated English
860 translation.
861 (6) (a) A document shall be:
862 (i) executed by a person in Subsection (6)(b); or
863 (ii) a true copy made by photographic, xerographic, electronic, or other process that
864 provides similar copy accuracy of a document that has been executed by a person listed in
865 Subsection (6)(b).
866 (b) A document shall be executed by:
867 (i) the chair of the board of directors of a domestic or foreign nonprofit corporation;
868 (ii) all of the directors of a domestic or foreign nonprofit corporation;
869 (iii) an officer of the domestic or foreign nonprofit corporation;
870 (iv) if directors have not been selected or the domestic or foreign nonprofit corporation has
871 not been formed, an incorporator;
872 (v) if the domestic or foreign nonprofit corporation is in the hands of a receiver, trustee,
873 or other court-appointed fiduciary, that receiver, trustee, or court-appointed fiduciary; or
874 (vi) if the document is that of a registered agent:
875 (A) the registered agent, if the person is an individual; or
876 (B) a person authorized by the registered agent to execute the document, if the registered
877 agent is an entity.
878 (7) A document shall state beneath or opposite the signature of the person executing the
879 document:
880 (a) the signer's name; and
881 (b) the capacity in which the document is signed.
882 (8) A document may contain:
883 (a) the corporate seal;
884 (b) an attestation by the secretary or an assistant secretary; or
885 (c) an acknowledgment, verification, or proof.
886 (9) The signature of each person signing a document, whether or not the document
887 contains an acknowledgment, verification, or proof permitted by Subsection (8), shall constitute
888 the affirmation or acknowledgment of the person, under penalties of perjury, that:
889 (a) the document is:
890 (i) the person's act and deed; or
891 (ii) the act and deed of the entity on behalf of which the document is executed; and
892 (b) the facts stated in the document are true.
893 (10) If the division has prescribed a mandatory form or cover sheet for the document under
894 Section 16-6a-106 , a document shall be:
895 (a) in or on the prescribed form; or
896 (b) have the required cover sheet.
897 (11) A document shall be:
898 (a) delivered to the division for filing; and
899 (b) accompanied by:
900 (i) one exact or conformed copy, except as provided in Sections 16-6a-503 and
901 16-6a-1510 ;
902 (ii) the correct filing fee; and
903 (iii) any franchise tax, license fee, or penalty required by this chapter or other law.
904 (12) Except with respect to filings pursuant to Section 16-6a-503 or 16-6a-1510 , a
905 document shall state, or be accompanied by a writing stating, the address to which the division may
906 send a copy upon completion of the filing.
907 Section 14. Section 16-6a-106 is enacted to read:
908 16-6a-106. Forms.
909 (1) (a) The division may prescribe forms or cover sheets for documents required or
910 permitted to be filed by this chapter.
911 (b) If the division prescribes a form or cover sheet pursuant to Subsection (1)(a), the
912 division shall provide the form or cover sheet on request.
913 (2) Notwithstanding Subsection (1):
914 (a) the use of a form or cover sheet is not mandatory unless the division specifically
915 requires the use of the form or cover sheet; and
916 (b) a requirement that a form or cover sheet be used may not:
917 (i) preclude in any way the inclusion in any document of any item that is not prohibited to
918 be included by this chapter; or
919 (ii) require the inclusion with the filed document of any item that is not otherwise required
920 by this chapter.
921 Section 15. Section 16-6a-107 is enacted to read:
922 16-6a-107. Fees.
923 (1) Unless otherwise provided by statute, the division shall charge and collect a fee for
924 services established by the division in accordance with Section 63-38-3.2 including fees:
925 (a) for furnishing a certified copy of any document, instrument, or paper relating to a
926 domestic or foreign nonprofit corporation; and
927 (b) for the certificate and affixing the seal to a certified copy described in Subsection
928 (1)(a).
929 (2) (a) The division shall provide expedited, 24-hour processing of any item under this
930 section upon request.
931 (b) The division shall charge and collect additional fees established by the division in
932 accordance with Section 63-38-3.2 for expedited service provided under Subsection (2)(a).
933 (3) (a) The division shall charge and collect a fee determined by the division in accordance
934 with Section 63-38-3.2 at the time of any service of process on the director of the division as
935 resident agent of a corporation.
936 (b) The fee paid under Subsection (3)(a) may be recovered as taxable costs by the party
937 to the suit or action causing the service to be made if the party prevails in the suit or action.
938 Section 16. Section 16-6a-108 is enacted to read:
939 16-6a-108. Effective time and date of filed documents.
940 (1) (a) Except as provided in Subsection (2) and Subsection 16-6a-109 (4), a document
941 submitted to the division for filing under this chapter is effective:
942 (i) at the time of filing; and
943 (ii) on the date it is filed.
944 (b) The division's endorsement on the document as described in Subsection 16-6a-110 (2)
945 is evidence of the time and date of filing.
946 (2) (a) Unless otherwise provided in this chapter, a document, other than an application
947 for a reserved or registered name, may specify conspicuously on its face:
948 (i) a delayed effective time;
949 (ii) a delayed effective date; or
950 (iii) both a delayed effective time and date.
951 (b) If in accordance with Subsection (2)(a), a delayed time, date, or both, is specified, the
952 document becomes effective as provided in this Subsection (2).
953 (c) If both a delayed effective time and date are specified, the document becomes effective
954 as specified.
955 (d) If a delayed effective time but no date is specified, the document is effective on the
956 date it is filed, as that date is specified in the division's time and date endorsement on the
957 document, at the later of:
958 (i) the time specified on the document as its effective time; or
959 (ii) the time specified in the time and date endorsement.
960 (e) If a delayed effective date but no time is specified, the document is effective at the
961 close of business on the date specified as the delayed effective date.
962 (f) Notwithstanding the other provisions of this Subsection (2), a delayed effective date
963 for a document may not be later than 90 days after the date the document is filed. If a document
964 specifies a delayed effective date that is more than 90 days after the date the document is filed, the
965 document is effective 90 days after the day the document is filed.
966 (3) If a document specifies a delayed effective date pursuant to Subsection (2), the
967 document may be prevented from becoming effective by the same domestic or foreign nonprofit
968 corporation that originally submitted the document for filing delivering to the division, prior to the
969 specified effective date of the document, a certificate of withdrawal:
970 (a) executed:
971 (i) on behalf of the same domestic or foreign nonprofit corporation that originally
972 submitted the document for filing; and
973 (ii) in the same manner as the document being withdrawn;
974 (b) stating that:
975 (i) the document has been revoked by:
976 (A) appropriate corporate action; or
977 (B) court order or decree pursuant to Section 16-6a-1007 ; and
978 (ii) the document is void; and
979 (c) if a court order or decree pursuant to Section 16-6a-1007 revokes the document, the
980 court order or decree was entered by a court having jurisdiction of the proceeding for the
981 reorganization of the nonprofit corporation under a specified statute of the United States.
982 Section 17. Section 16-6a-109 is enacted to read:
983 16-6a-109. Correcting filed documents.
984 (1) A domestic or foreign nonprofit corporation may correct a document filed with the
985 division if the document:
986 (a) contains an incorrect statement; or
987 (b) was defectively executed, attested, sealed, verified, or acknowledged.
988 (2) A document is corrected by delivering to the division for filing articles of correction
989 that:
990 (a) (i) describe the document, including its filing date; or
991 (ii) have attached a copy of the document;
992 (b) specify:
993 (i) (A) the incorrect statement; and
994 (B) the reason it is incorrect; or
995 (ii) the manner in which the execution, attestation, sealing, verification, or
996 acknowledgment was defective; and
997 (c) correct:
998 (i) the incorrect statement; or
999 (ii) defective execution, attestation, sealing, verification, or acknowledgment.
1000 (3) Articles of correction may be executed by any person:
1001 (a) designated in Subsection 16-6a-105 (6); or
1002 (b) who executed the document that is corrected.
1003 (4) (a) Articles of correction are effective on the effective date of the document they
1004 correct except as to a person:
1005 (i) relying on the uncorrected document; and
1006 (ii) adversely affected by the correction.
1007 (b) As to a person described in Subsection (4)(a), the articles of correction are effective
1008 when filed.
1009 Section 18. Section 16-6a-110 is enacted to read:
1010 16-6a-110. Filing duty of division.
1011 (1) If a document delivered to the division for filing satisfies the requirements of Section
1012 16-6a-105 , the division shall file the document.
1013 (2) (a) The division files a document by stamping or otherwise endorsing "Filed" together
1014 with the name of the division and the date and time of acceptance for filing on both the document
1015 and the accompanying copy.
1016 (b) After filing a document, except as provided in Sections 16-6a-503 , 16-6a-1510 , and
1017 16-6a-1608 , the division shall deliver the accompanying copy, with the receipt for any filing fees:
1018 (i) (A) to the domestic or foreign nonprofit corporation for which the filing is made; or
1019 (B) to the representative of the domestic or foreign nonprofit corporation for which the
1020 filing is made; and
1021 (ii) at the address:
1022 (A) indicated on the filing; or
1023 (B) that the division determines to be appropriate.
1024 (3) (a) If the division refuses to file a document, the division within ten days after the day
1025 the document is delivered to the division shall return to the person requesting the filing:
1026 (i) the document; and
1027 (ii) a written notice providing a brief explanation of the reason for the refusal to file.
1028 (4) (a) The division's duty to file a document under this section is ministerial.
1029 (b) Except as otherwise specifically provided in this chapter, the division's filing or refusal
1030 to file a document does not:
1031 (i) affect the validity or invalidity of the document in whole or in part;
1032 (ii) relate to the correctness or incorrectness of information contained in the document; or
1033 (iii) create a presumption that:
1034 (A) the document is valid or invalid; or
1035 (B) information contained in the document is correct or incorrect.
1036 Section 19. Section 16-6a-111 is enacted to read:
1037 16-6a-111. Appeal from division's refusal to file document.
1038 If the division refuses to file a document delivered to it for filing, in accordance with Title
1039 63, Chapter 46b, Administrative Procedures Act, the following may appeal the refusal to the
1040 executive director:
1041 (1) the domestic or foreign nonprofit corporation for which the filing was requested; or
1042 (2) the representative of the domestic or foreign nonprofit corporation for which filing was
1043 requested.
1044 Section 20. Section 16-6a-112 is enacted to read:
1045 16-6a-112. Evidentiary effect of copy of filed document.
1046 One or more of the following is conclusive evidence that the original document has been
1047 filed with the division:
1048 (1) a certificate attached to a copy of a document filed by the division; or
1049 (2) an endorsement, seal, or stamp placed on the copy by the division.
1050 Section 21. Section 16-6a-113 is enacted to read:
1051 16-6a-113. Certificates issued by the division.
1052 (1) Any person may apply to the division for:
1053 (a) a certificate of existence for a domestic nonprofit corporation;
1054 (b) a certificate of authorization for a foreign nonprofit corporation; or
1055 (c) a certificate that sets forth any facts of record in the division.
1056 (2) A certificate of existence or certificate of authorization sets forth:
1057 (a) (i) the domestic nonprofit corporation's corporate name; or
1058 (ii) the foreign nonprofit corporation's corporate name registered in this state;
1059 (b) that:
1060 (i) (A) (I) the domestic nonprofit corporation is incorporated under the law of this state;
1061 and
1062 (II) the date of its incorporation; or
1063 (B) the foreign nonprofit corporation is authorized to conduct affairs in this state;
1064 (c) that all fees, taxes, and penalties owed to this state have been paid, if:
1065 (i) payment is reflected in the records of the division; and
1066 (ii) nonpayment affects the existence or authorization of the domestic or foreign nonprofit
1067 corporation;
1068 (d) that the domestic or foreign nonprofit corporation's most recent annual report required
1069 by Section 16-6a-1607 has been filed by the division;
1070 (e) that articles of dissolution have not been filed by the division; and
1071 (f) other facts of record in the division that may be requested by the applicant.
1072 (3) Subject to any qualification stated in the certificate, a certificate issued by the division
1073 may be relied upon as conclusive evidence of the facts set forth in the certificate.
1074 Section 22. Section 16-6a-114 is enacted to read:
1075 16-6a-114. Penalty for signing false documents.
1076 (1) It is unlawful for a person to sign a document:
1077 (a) knowing it to be false in any material respect; and
1078 (b) with intent that the document be delivered to the division for filing.
1079 (2) An offense under this section is a class A misdemeanor punishable by a fine not to
1080 exceed the fine specified in Section 76-3-301 .
1081 Section 23. Section 16-6a-115 is enacted to read:
1082 16-6a-115. Liability to third parties.
1083 The directors, officers, employees, and members of a nonprofit corporation are not,
1084 personally liable in their capacity as directors, officers, employees, and members for the acts,
1085 debts, liabilities, or obligations of a nonprofit corporation.
1086 Section 24. Section 16-6a-116 is enacted to read:
1087 16-6a-116. Private foundations.
1088 Except as otherwise specified in the articles of incorporation, a nonprofit corporation that
1089 is a private foundation as defined in Section 509(a), Internal Revenue Code:
1090 (1) shall make distributions for each taxable year at the time and in the manner as not to
1091 subject the nonprofit corporation to tax under Section 4942, Internal Revenue Code;
1092 (2) may not engage in any act of self-dealing as defined in Section 4941(d), Internal
1093 Revenue Code;
1094 (3) may not retain any excess business holdings as defined in Section 4943(c), Internal
1095 Revenue Code;
1096 (4) may not make any investments that would subject the nonprofit corporation to taxation
1097 under Section 4944, Internal Revenue Code; and
1098 (5) may not make any taxable expenditures as defined in Section 4945(d), Internal
1099 Revenue Code.
1100 Section 25. Section 16-6a-117 is enacted to read:
1101 16-6a-117. Judicial relief.
1102 (1) (a) A director, officer, delegate, or member may petition the applicable district court
1103 to take an action provided in Subsection (1)(b) if for any reason it is impractical or impossible for
1104 a nonprofit corporation in the manner prescribed by this chapter, its articles of incorporation, or
1105 bylaws to:
1106 (i) call or conduct a meeting of its members, delegates, or directors; or
1107 (ii) otherwise obtain the consent of its members, delegates, or directors.
1108 (b) If a petition is filed under Subsection (1)(a) the applicable district court, in the manner
1109 it finds fair and equitable under the circumstances, may order that:
1110 (i) a meeting be called; or
1111 (ii) a written consent or other form of obtaining the vote of members, delegates, or
1112 directors be authorized.
1113 (c) For purposes of this section, the applicable district court is:
1114 (i) the district court of the county in this state where the nonprofit corporation's principal
1115 office is located; or
1116 (ii) if the nonprofit corporation has no principal office in this state:
1117 (A) the district court of the county in which the registered office is located; or
1118 (B) if the nonprofit corporation has no registered office in this state, the district court in
1119 and for Salt Lake County.
1120 (2) (a) A court specified in Subsection (1) shall, in an order issued pursuant to this section,
1121 provide for a method of notice reasonably designed to give actual notice to all persons who would
1122 be entitled to notice of a meeting held pursuant to this chapter, the articles of incorporation, or
1123 bylaws.
1124 (b) The method of notice described in Subsection (1) complies with this section whether
1125 or not the method of notice:
1126 (i) results in actual notice to all persons described in Subsection (2)(a); or
1127 (ii) conforms to the notice requirements that would otherwise apply.
1128 (c) In a proceeding under this section, the court may determine who are the members or
1129 directors of a nonprofit corporation.
1130 (3) An order issued pursuant to this section may dispense with any requirement relating
1131 to the holding of or voting at meetings or obtaining votes that would otherwise be imposed by this
1132 chapter, the articles of incorporation, or bylaws, including any requirement as to:
1133 (a) quorums; or
1134 (b) the number or percentage of votes needed for approval.
1135 (4) (a) Whenever practical, any order issued pursuant to this section shall limit the subject
1136 matter of a meeting or other form of consent authorized to items the resolution of which will or
1137 may enable the nonprofit corporation to continue managing its affairs without further resort to this
1138 section, including amendments to the articles of incorporation or bylaws.
1139 (b) Notwithstanding Subsection (4)(a), an order under this section may authorize the
1140 obtaining of whatever votes and approvals are necessary for the dissolution, merger, or sale of
1141 assets of a nonprofit corporation.
1142 (5) A meeting or other method of obtaining the vote of members, delegates, or directors
1143 conducted pursuant to and that complies with an order issued under this section:
1144 (a) is for all purposes a valid meeting or vote, as the case may be; and
1145 (b) shall have the same force and effect as if it complied with every requirement imposed
1146 by this chapter, the articles of incorporation, or bylaws.
1147 (6) In addition to a meeting held under this section, a court ordered meeting may be held
1148 pursuant to Section 16-6a-703 .
1149 Section 26. Section 16-6a-118 is enacted to read:
1150 16-6a-118. Electronic documents.
1151 (1) Notwithstanding the other requirements of this chapter except subject to Section
1152 16-6a-106 , the division may by rule permit a writing required or permitted to be filed with the
1153 division under this chapter:
1154 (a) to be delivered, mailed, or filed:
1155 (i) in an electronic medium; or
1156 (ii) by electronic transmission; or
1157 (b) to be signed by photographic, electronic, or other means prescribed by rule, except that
1158 a writing signed in an electronic medium shall be signed by digital signature in accordance with
1159 Title 46, Chapter 3, Utah Digital Signature Act.
1160 (2) The division may by rule provide for any writing required or permitted to be prepared,
1161 delivered, or mailed by the division under this chapter to be prepared, delivered, or mailed:
1162 (a) in an electronic medium; or
1163 (b) by electronic transmission.
1164 Section 27. Section 16-6a-201 is enacted to read:
1165
1166 16-6a-201. Incorporators.
1167 (1) One or more persons may act as incorporators of a nonprofit corporation by delivering
1168 to the division for filing articles of incorporation meeting the requirements of Section 16-6a-202 .
1169 (2) An incorporator who is a natural person shall be 18 years of age or older.
1170 Section 28. Section 16-6a-202 is enacted to read:
1171 16-6a-202. Articles of incorporation.
1172 (1) The articles of incorporation shall set forth:
1173 (a) one or more purposes for which the nonprofit corporation is organized;
1174 (b) a corporate name for the nonprofit corporation that satisfies the requirements of Section
1175 16-6a-401 ;
1176 (c) the street address of the nonprofit corporation's initial registered office;
1177 (d) the name and signature of its initial registered agent at the office listed in Subsection
1178 (1)(c), which registered agent shall meet the requirements of Section 16-6a-501 ;
1179 (e) the name and address of each incorporator;
1180 (f) whether or not the nonprofit corporation will have voting members;
1181 (g) if the nonprofit corporation is to issue shares of stock evidencing membership in the
1182 nonprofit corporation or interests in water or other property rights:
1183 (i) the aggregate number of shares that the nonprofit corporation has authority to issue; and
1184 (ii) if the shares are to be divided into classes:
1185 (A) the number of shares of each class;
1186 (B) the designation of each class; and
1187 (C) a statement of the preferences, limitations, and relative rights of the shares of each
1188 class; and
1189 (h) provisions not inconsistent with law regarding the distribution of assets on dissolution.
1190 (2) The articles of incorporation may but need not set forth:
1191 (a) the names and addresses of the one or more individuals who are to serve as the initial
1192 directors;
1193 (b) provisions not inconsistent with law regarding:
1194 (i) managing the business and regulating the affairs of the nonprofit corporation;
1195 (ii) defining, limiting, and regulating the powers of:
1196 (A) the nonprofit corporation;
1197 (B) the board of directors of the nonprofit corporation; and
1198 (C) the members of the nonprofit corporation or any class of members;
1199 (iii) whether cumulative voting will be permitted; and
1200 (iv) the characteristics, qualifications, rights, limitations, and obligations attaching to each
1201 or any class of members; and
1202 (c) any provision that under this chapter is permitted to be in the articles of incorporation
1203 or required or permitted to be set forth in the bylaws, including elective provisions that in
1204 accordance with this chapter shall be included in the articles of incorporation to be effective.
1205 (3) (a) It is sufficient under Subsection (1)(a) to state, either alone or with other purposes,
1206 that the purpose of the corporation is to engage in any lawful act for which a nonprofit corporation
1207 may be organized under this chapter.
1208 (b) If the articles of incorporation include the statement described in Subsection (3)(a) all
1209 lawful acts and activities shall be within the purposes of the nonprofit corporation, except for
1210 express limitations, if any.
1211 (4) The articles of incorporation need not set forth any corporate power enumerated in this
1212 chapter.
1213 (5) The articles of incorporation shall:
1214 (a) be signed by each incorporator; and
1215 (b) meet the filing requirements of Section 16-6a-105 .
1216 (6) The appointment of the registered agent shall be signed by the registered agent on:
1217 (a) the articles of incorporation; or
1218 (b) an acknowledgment attached to the articles of incorporation.
1219 (7) (a) If this chapter conditions any matter upon the presence of a provision in the bylaws,
1220 the condition is satisfied if the provision is present either:
1221 (i) in the articles of incorporation; or
1222 (ii) the bylaws.
1223 (b) If this chapter conditions any matter upon the absence of a provision in the bylaws, the
1224 condition is satisfied only if the provision is absent from both:
1225 (i) the articles of incorporation; and
1226 (ii) the bylaws.
1227 Section 29. Section 16-6a-203 is enacted to read:
1228 16-6a-203. Incorporation.
1229 (1) A nonprofit corporation is incorporated, and its corporate existence begins:
1230 (a) when the articles of incorporation are filed by the division; or
1231 (b) if a delayed effective date is specified pursuant to Subsection 16-6a-108 (2), on the
1232 delayed effective date, unless a certificate of withdrawal is filed prior to the delayed effective date.
1233 (2) The filing of the articles of incorporation by the division is conclusive proof that all
1234 conditions precedent to incorporation have been satisfied, except in a proceeding by the state to:
1235 (a) cancel or revoke the incorporation; or
1236 (b) involuntarily dissolve the nonprofit corporation.
1237 Section 30. Section 16-6a-204 is enacted to read:
1238 16-6a-204. Liability for preincorporation transactions.
1239 All persons purporting to act as or on behalf of a nonprofit corporation, knowing there is
1240 no incorporation under this chapter, are jointly and severally liable for all liabilities created while
1241 so acting.
1242 Section 31. Section 16-6a-205 is enacted to read:
1243 16-6a-205. Organization of the corporation.
1244 (1) After incorporation:
1245 (a) if initial directors are named in the articles of incorporation, the initial directors may
1246 hold an organizational meeting, at the call of a majority of the initial directors, to complete the
1247 organization of the nonprofit corporation by:
1248 (i) appointing officers;
1249 (ii) adopting bylaws, if desired; and
1250 (iii) carrying on any other business brought before the meeting; or
1251 (b) if initial directors are not named in the articles of incorporation, until directors are
1252 elected, the incorporators may hold an organizational meeting at the call of a majority of the
1253 incorporators to do whatever is necessary and proper to complete the organization of the nonprofit
1254 corporation, including:
1255 (i) the election of directors and officers;
1256 (ii) the appointment of members; and
1257 (iii) the adoption and amendment of bylaws.
1258 (2) Action required or permitted by this chapter to be taken by incorporators at an
1259 organizational meeting may be taken without a meeting if the action taken is evidenced by one or
1260 more written consents that:
1261 (a) describe the action taken; and
1262 (b) are signed by each incorporator.
1263 (3) An organizational meeting may be held in or out of this state.
1264 Section 32. Section 16-6a-206 is enacted to read:
1265 16-6a-206. Bylaws.
1266 (1) (a) The board of directors of a nonprofit corporation may adopt initial bylaws for the
1267 nonprofit corporation.
1268 (b) If no directors of the nonprofit corporation have been elected, the incorporators may
1269 adopt initial bylaws for the nonprofit corporation.
1270 (c) If neither the incorporators nor the board of directors have adopted initial bylaws, the
1271 members, if any, may adopt initial bylaws.
1272 (2) The bylaws of a nonprofit corporation may contain any provision for managing the
1273 business and regulating the affairs of the nonprofit corporation that is not inconsistent with law or
1274 the articles of incorporation, including management and regulation of the nonprofit corporation
1275 in the event of an emergency.
1276 Section 33. Section 16-6a-207 is enacted to read:
1277 16-6a-207. Incorporation of co-operative association.
1278 (1) (a) If a co-operative association meets the requirements of Subsection (1)(b), it may:
1279 (i) be incorporated under this chapter; and
1280 (ii) use the word "co-operative" as part of its corporate or business name.
1281 (b) A co-operative association described in Subsection (1)(a):
1282 (i) may not be:
1283 (A) an association subject to the insurance or credit union laws of this state;
1284 (B) a health insurance purchasing association as defined in Section 31A-34-103 ; or
1285 (C) a health insurance purchasing alliance licensed under Title 31A, Chapter 34, Voluntary
1286 Health Insurance Purchasing Alliance Act; and
1287 (ii) shall state in its articles of incorporation that:
1288 (A) a member may not have more than one vote regardless of the number or amount of
1289 stock or membership capital owned by the member unless voting is based in whole or in part on
1290 the volume of patronage of the member with the co-operative association; and
1291 (B) savings in excess of dividends and additions to reserves and surplus shall be
1292 distributed or allocated to members or patrons on the basis of patronage.
1293 (2) (a) Any co-operative association incorporated in accordance with Subsection (1):
1294 (i) shall have all the rights and be subject to the limitations provided in Section 3-1-11 ; and
1295 (ii) may pay dividends on its stock, if it has stock, subject to the limitations of Section
1296 3-1-11 .
1297 (b) The articles of incorporation or the bylaws of a co-operative association incorporated
1298 in accordance with Subsection (1) may provide for:
1299 (i) the establishment and alteration of voting districts;
1300 (ii) the election of delegates to represent:
1301 (A) the districts described in Subsection (2)(b)(i); and
1302 (B) the members of the districts described in Subsection (2)(b)(i);
1303 (iii) the establishment and alteration of director districts; and
1304 (iv) the election of directors to represent the districts described in Subsection (2)(b)(ii)
1305 by:
1306 (A) the members of the districts; or
1307 (B) delegates elected by the members.
1308 (3) (a) A corporation organized under Title 3, Chapter 1, Uniform Agricultural
1309 Co-operative Association Act, may convert itself into a co-operative association subject to this
1310 chapter by adopting appropriate amendments to its articles of incorporation by which:
1311 (i) it elects to become subject to this chapter; and
1312 (ii) makes changes in its articles of incorporation that are:
1313 (A) required by this chapter; and
1314 (B) any other changes permitted by this chapter.
1315 (b) The amendments described in Subsection (3)(a) shall be adopted and filed in the
1316 manner provided by the law then applicable to the co-operative nonprofit corporation.
1317 (4) Notwithstanding Subsection (1), a health insurance purchasing association may not use
1318 the word "co-operative" or "alliance" but may use the word "association."
1319 (5) Except as otherwise provided in this Section 16-6a-207 , a co-operative nonprofit
1320 corporation shall be subject to this chapter.
1321 Section 34. Section 16-6a-301 is enacted to read:
1322
1323 16-6a-301. Purposes.
1324 (1) Every nonprofit corporation incorporated under this chapter that in its articles of
1325 incorporation has a statement meeting the requirements of Subsection 16-6a-202 (3)(a) may engage
1326 in any lawful activity except for express limitations set forth in the articles of incorporation.
1327 (2) (a) A nonprofit corporation engaging in an activity that is subject to regulation under
1328 another statute of this state may incorporate under this chapter only if permitted by, and subject
1329 to all limitations of, the other statute.
1330 (b) Without limiting Subsection (2)(a) and subject to Subsection (2)(c), an organization
1331 may not be organized under this chapter if the organization is subject to the:
1332 (i) insurance laws of this state; or
1333 (ii) laws governing depository institutions as defined in Section 7-1-103 .
1334 (c) Notwithstanding Subsection (2)(b), the following may be organized under this
1335 chapter:
1336 (i) a health insurance purchasing association as defined in Section 31A-34-103 ; and
1337 (ii) a health insurance purchasing alliance licensed under Title 31A, Chapter 34, Voluntary
1338 Health Insurance Purchasing Alliance Act.
1339 Section 35. Section 16-6a-302 is enacted to read:
1340 16-6a-302. General powers.
1341 Unless its articles of incorporation provide otherwise, and except as restricted by the Utah
1342 Constitution, every nonprofit corporation has:
1343 (1) perpetual duration and succession in its corporate name; and
1344 (2) the same powers as an individual to do all things necessary or convenient to carry out
1345 its permitted activities and affairs, including without limitation the power to:
1346 (a) sue and be sued, complain and defend in its corporate name;
1347 (b) (i) have a corporate seal, that may be altered at will; and
1348 (ii) use the corporate seal, or a facsimile of the corporate seal, by impressing or affixing
1349 it or in any other manner reproducing it;
1350 (c) make and amend bylaws, not inconsistent with its articles of incorporation or with the
1351 laws of this state, for managing and regulating the affairs of the nonprofit corporation;
1352 (d) purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and
1353 otherwise deal with, real or personal property, or any legal or equitable interest in property,
1354 wherever located;
1355 (e) sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part
1356 of its property and assets;
1357 (f) purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell,
1358 mortgage, lend, pledge, or otherwise dispose of, and deal in and with shares or other interests in,
1359 or obligations of, any other entity;
1360 (g) make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds,
1361 and other obligations and secure any of its obligations by mortgage or pledge of any of its property,
1362 assets, franchises, or income;
1363 (h) lend money, invest and reinvest its funds, and receive and hold real and personal
1364 property as security for repayment, except that a nonprofit corporation may not lend money to or
1365 guarantee the obligation of a director or officer of the nonprofit corporation;
1366 (i) be an agent, associate, fiduciary, manager, member, partner, promoter, or trustee of, or
1367 to hold any similar position with, any entity;
1368 (j) conduct its business, locate offices, and exercise the powers granted by this chapter
1369 within or without this state;
1370 (k) (i) elect directors and appoint officers, employees, and agents of the nonprofit
1371 corporation;
1372 (ii) define the duties of the directors, officers, employees, and agents; and
1373 (iii) fix the compensation of the directors, officers, employees, and agents;
1374 (l) pay compensation in a reasonable amount to its directors, officers, or members for
1375 services rendered, including:
1376 (i) payment of advances for expenses reasonably expected to be incurred; and
1377 (ii) expenses relating to relocation of directors, officers, or employees of a nonprofit
1378 corporation;
1379 (m) pay pensions and establish pension plans, pension trusts, profit sharing plans, share
1380 bonus plans, share option plans, and benefit or incentive plans for any or all of its current or former
1381 directors, officers, employees, and agents;
1382 (n) make contributions to or for any person for:
1383 (i) the public welfare;
1384 (ii) charitable, religious, scientific, or educational purposes; or
1385 (iii) for other purposes that further the corporate interest;
1386 (o) pursue any lawful activity that will aid governmental policy;
1387 (p) make payments or do any other act, not inconsistent with law, that furthers the business
1388 and affairs of the nonprofit corporation;
1389 (q) establish rules governing the conduct of the business and affairs of the nonprofit
1390 corporation in the event of an emergency;
1391 (r) impose dues, assessments, admission fees, and transfer fees upon its members;
1392 (s) (i) establish conditions for admission of members;
1393 (ii) admit members; and
1394 (iii) issue or transfer membership;
1395 (t) carry on a business;
1396 (u) indemnify current or former directors, officers, employees, fiduciaries, or agents as
1397 provided in this chapter;
1398 (v) limit the liability of its directors as provided in Subsection 16-6a-823 (1);
1399 (w) cease its corporate activities and dissolve; and
1400 (x) issue certificates or stock evidencing:
1401 (i) membership in the nonprofit corporation; or
1402 (ii) interests in water or other property rights.
1403 Section 36. Section 16-6a-303 is enacted to read:
1404 16-6a-303. Emergency powers.
1405 (1) In anticipation of or during an emergency defined in Subsection (4), the board of
1406 directors may:
1407 (a) modify lines of succession to accommodate the incapacity of any director, officer,
1408 employee, or agent;
1409 (b) adopt bylaws to be effective only in an emergency; and
1410 (c) (i) relocate the principal office;
1411 (ii) designate an alternative principal office or regional office; or
1412 (iii) authorize officers to relocate or designate an alternative principal office or regional
1413 office.
1414 (2) During an emergency as defined in Subsection (4), unless emergency bylaws provide
1415 otherwise:
1416 (a) notice of a meeting of the board of directors:
1417 (i) need be given only to those directors whom it is practicable to reach; and
1418 (ii) may be given in any practicable manner, including by publication or radio; and
1419 (b) the officers of the nonprofit corporation present at a meeting of the board of directors
1420 may be considered to be directors for the meeting, in order of rank and within the same rank in
1421 order of seniority, as necessary to achieve a quorum.
1422 (3) Corporate action taken in good faith during an emergency under this section to further
1423 the ordinary business affairs of the nonprofit corporation:
1424 (a) binds the nonprofit corporation; and
1425 (b) may not be the basis for the imposition of liability on any director, officer, employee,
1426 or agent of the nonprofit corporation on the ground that the action was not an authorized corporate
1427 action.
1428 (4) An emergency exists for purposes of this section if a quorum of the directors cannot
1429 readily be obtained because of a catastrophic event.
1430 Section 37. Section 16-6a-304 is enacted to read:
1431 16-6a-304. Ultra vires.
1432 (1) Except as provided in Subsection (2), the validity of corporate action may not be
1433 challenged on the ground that the nonprofit corporation lacks or lacked power to act.
1434 (2) A nonprofit corporation's power to act may be challenged:
1435 (a) in a proceeding against the nonprofit corporation to enjoin the act brought by:
1436 (i) a director; or
1437 (ii) one or more voting members in a derivative proceeding;
1438 (b) in a proceeding by or in the right of the nonprofit corporation, whether directly,
1439 derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or
1440 former director, officer, employee, or agent of the nonprofit corporation; or
1441 (c) in a proceeding by the attorney general under Section 16-6a-1414 .
1442 (3) In a proceeding under Subsection (2)(a) to enjoin an unauthorized corporate act, the
1443 court may:
1444 (a) enjoin or set aside the act, if:
1445 (i) it would be equitable to do so; and
1446 (ii) all affected persons are parties to the proceeding; and
1447 (b) award damages for loss, including anticipated profits, suffered by the nonprofit
1448 corporation or another party because of an injunction issued under this section.
1449 Section 38. Section 16-6a-401 is enacted to read:
1450
1451 16-6a-401. Corporate name.
1452 (1) The corporate name of a nonprofit corporation:
1453 (a) may, but need not contain:
1454 (i) the word "corporation," "incorporated," or "company"; or
1455 (ii) an abbreviation of "corporation," "incorporated," or "company";
1456 (b) may not contain any word or phrase that indicates or implies that it is organized for any
1457 purpose other than one or more of the purposes contained in Section 16-6a-301 and its articles of
1458 incorporation;
1459 (c) except as authorized by the division under Subsection (2), shall be distinguishable, as
1460 defined in Section 16-10a-401 , from:
1461 (i) the name of any domestic corporation incorporated in this state;
1462 (ii) the name of any foreign corporation authorized to conduct affairs in this state;
1463 (iii) the name of any domestic nonprofit corporation incorporated in this state;
1464 (iv) the name of any foreign nonprofit corporation authorized to conduct affairs in this
1465 state;
1466 (v) the name of any domestic limited liability company formed in this state;
1467 (vi) the name of any foreign limited liability company authorized to conduct affairs in this
1468 state;
1469 (vii) the name of any limited partnership formed or authorized to conduct affairs in this
1470 state;
1471 (viii) any name that is reserved under Section 16-6a-402 or 16-10a-402 ;
1472 (ix) the name of any entity that has registered its name under Section 42-2-5 ;
1473 (x) the name of any trademark or service mark registered by the division; or
1474 (xi) any assumed name filed under Section 42-2-5 ;
1475 (d) shall be, for purposes of recordation, either translated into English or transliterated into
1476 letters of the English alphabet if it is not in English;
1477 (e) without the written consent of the United States Olympic Committee, may not contain
1478 the words:
1479 (i) "Olympic";
1480 (ii) "Olympiad"; or
1481 (iii) "Citius Altius Fortius"; and
1482 (f) without the written consent of the State Board of Regents issued in accordance with
1483 Section 53B-5-114 , may not contain the words:
1484 (i) "university";
1485 (ii) "college"; or
1486 (iii) "institute."
1487 (2) The division may authorize the use of the name applied for if:
1488 (a) the name is distinguishable from one or more of the names and trademarks described
1489 in Subsection (1)(c) that are on the division's records; or
1490 (b) if the applicant delivers to the division a certified copy of the final judgment of a court
1491 of competent jurisdiction establishing the applicant's right to use the name applied for in this state
1492 registered or reserved with the division pursuant to the laws of this state.
1493 (3) A corporation may use the name of another domestic or foreign corporation that is used
1494 in this state if:
1495 (a) the other corporation is incorporated or authorized to conduct affairs in this state; and
1496 (b) the proposed user corporation:
1497 (i) has merged with the other corporation;
1498 (ii) has been formed by reorganization of the other corporation; or
1499 (iii) has acquired all or substantially all of the assets, including the corporate name, of the
1500 other corporation.
1501 (4) (a) A nonprofit corporation may apply to the division for authorization to file its
1502 articles of incorporation under, or to register or reserve, a name that is not distinguishable upon
1503 the division's records from one or more of the names described in Subsection (1).
1504 (b) The division shall approve the application filed under Subsection (4)(a) if:
1505 (i) the other person whose name is not distinguishable from the name under which the
1506 applicant desires to file, or which the applicant desires to register or reserve:
1507 (A) consents to the filing, registration, or reservation in writing; and
1508 (B) submits an undertaking in a form satisfactory to the division to change its name to a
1509 name that is distinguishable from the name of the applicant; or
1510 (ii) the applicant delivers to the division a certified copy of the final judgment of a court
1511 of competent jurisdiction establishing the applicant's right to make the requested filing in this state
1512 under the name applied for.
1513 (5) Only names of corporations may contain the:
1514 (a) words "corporation," or "incorporated"; or
1515 (b) abbreviation "corp." or "inc."
1516 (6) The division may not issue a certificate of incorporation to any association violating
1517 the provisions of this section.
1518 Section 39. Section 16-6a-402 is enacted to read:
1519 16-6a-402. Reserved name.
1520 (1) (a) Any person may apply for the reservation of the exclusive use of a corporate name
1521 by delivering an application for reservation of name to the division for filing, setting forth:
1522 (i) the name and address of the applicant; and
1523 (ii) the name proposed to be reserved.
1524 (b) (i) If the division finds that the name applied for would be available for corporate use,
1525 the division shall reserve the name for the applicant's exclusive use for 120 days from the day the
1526 division receives the application under Subsection (1)(a).
1527 (ii) A reservation may be renewed.
1528 (2) The owner of a reserved corporate name may transfer the reservation to any other
1529 person by delivery to the division for filing of a notice of the transfer that has been executed by the
1530 owner and states:
1531 (a) the reserved name;
1532 (b) the name of the owner; and
1533 (c) the name and address of the transferee.
1534 (3) (a) The corporate name set forth in a document described in Subsection (3)(b) is
1535 reserved until the document:
1536 (i) becomes effective pursuant to Subsection 16-6a-108 (2); or
1537 (ii) is withdrawn under Subsection 16-6a-108 (3).
1538 (b) Subsection (3)(a) applies to a document that:
1539 (i) is one of the following:
1540 (A) articles of incorporation;
1541 (B) articles of amendment to articles of incorporation;
1542 (C) restated articles of incorporation; or
1543 (D) articles of merger;
1544 (ii) specifies a delayed effective date pursuant to Subsection 16-6a-108 (2);
1545 (iii) sets forth a new corporate name; and
1546 (iv) is filed by the division.
1547 Section 40. Section 16-6a-403 is enacted to read:
1548 16-6a-403. Corporate name -- Limited rights.
1549 The authorization granted by the division to file articles of incorporation under a corporate
1550 name or to reserve a name does not:
1551 (1) abrogate or limit the law governing unfair competition or unfair trade practices;
1552 (2) derogate from the common law the principles of equity or the statutes of this state or
1553 of the United States with respect to the right to acquire and protect names and trademarks; or
1554 (3) create an exclusive right in geographic or generic terms contained within a name.
1555 Section 41. Section 16-6a-501 is enacted to read:
1556
1557 16-6a-501. Registered office and registered agent.
1558 (1) A nonprofit corporation shall continuously maintain in this state:
1559 (a) a registered office; and
1560 (b) a registered agent.
1561 (2) The registered agent required under Subsection (1) shall be:
1562 (a) an individual:
1563 (i) who resides in this state; and
1564 (ii) whose business office is identical with the registered office;
1565 (b) a domestic corporation or domestic nonprofit corporation whose business office is
1566 identical with the registered office;
1567 (c) a foreign corporation or foreign nonprofit corporation:
1568 (i) authorized to conduct affairs in this state; and
1569 (ii) whose business office is identical with the registered office; or
1570 (iii) a domestic limited liability company or foreign limited liability company:
1571 (A) authorized to conduct affairs in this state; and
1572 (B) whose business office is identical with the registered office.
1573 (3) A corporation may not serve as its own registered agent.
1574 Section 42. Section 16-6a-502 is enacted to read:
1575 16-6a-502. Change of registered office or registered agent.
1576 (1) (a) A nonprofit corporation may change its registered office or registered agent by
1577 delivering to the division for filing a statement of change that sets forth:
1578 (i) the name of the nonprofit corporation;
1579 (ii) the street address of its current registered office;
1580 (iii) if the registered office is to be changed, the street address of the new registered office;
1581 (iv) the name of its current registered agent;
1582 (v) if the registered agent is to be changed:
1583 (A) the name of the new registered agent; and
1584 (B) the new registered agent's signed written consent to the appointment; and
1585 (vi) that, after the change or changes are made, the street addresses of its registered office
1586 and the business office of its registered agent will be identical.
1587 (b) Notwithstanding Subsection (1)(a)(v), the new registered agent's signed written consent
1588 to the appointment may be:
1589 (i) on the statement of change; or
1590 (ii) in a document accompanying the statement of change.
1591 (2) If the street address of a registered agent's business office is changed, the street address
1592 of the registered office of any nonprofit corporation for which the person is the registered agent
1593 may be changed by:
1594 (a) giving written notice to the nonprofit corporation of the change; and
1595 (b) delivering to the division for filing a statement of change that:
1596 (i) complies with the requirements of Subsection (1);
1597 (ii) recites that the nonprofit corporation has been notified of the change, as provided in
1598 Section 16-6a-103 ; and
1599 (iii) is signed by the registered agent.
1600 Section 43. Section 16-6a-503 is enacted to read:
1601 16-6a-503. Resignation of registered agent.
1602 (1) (a) A registered agent of a nonprofit corporation may resign the agency appointment
1603 by delivering to the division for filing a statement of resignation pursuant to this section.
1604 (b) The statement of resignation required by Subsection (1)(a) shall be:
1605 (i) signed by the resigning registered agent; and
1606 (ii) accompanied by two exact or conformed copies of the statement of resignation.
1607 (c) The statement of resignation may include a statement that the registered office is also
1608 discontinued.
1609 (d) The statement of resignation shall include a declaration that notice of the resignation
1610 has been given to the nonprofit corporation at the principal office shown on the most recent annual
1611 report of the nonprofit corporation on file with the division.
1612 (2) After filing the statement of resignation required by Subsection (1), the division shall
1613 mail:
1614 (a) one copy of the statement of resignation to the registered office of the corporation; and
1615 (b) one copy of the statement of resignation to the nonprofit corporation at the principal
1616 office if known by the division.
1617 (3) Thirty-one days after the date on which the statement of resignation is filed:
1618 (a) the agency appointment is terminated; and
1619 (b) the registered office is discontinued, if so provided.
1620 Section 44. Section 16-6a-504 is enacted to read:
1621 16-6a-504. Service on corporation.
1622 (1) A nonprofit corporation's registered agent is the nonprofit corporation's agent for
1623 service of process, notice, or demand required or permitted by law to be served on the nonprofit
1624 corporation.
1625 (2) (a) If a nonprofit corporation has no registered agent, or the agent cannot with
1626 reasonable diligence be served, the nonprofit corporation may be served by registered or certified
1627 mail, return receipt requested, addressed to the nonprofit corporation at its principal office, if
1628 known by the division.
1629 (b) Service is perfected under this Subsection (2) at the earliest of:
1630 (a) the date the nonprofit corporation receives the process, notice, or demand;
1631 (b) the date shown on the return receipt, if signed on behalf of the nonprofit corporation;
1632 or
1633 (c) five days after mailing.
1634 (3) This section does not prescribe the only means, or necessarily the required means, of
1635 serving a nonprofit corporation.
1636 Section 45. Section 16-6a-601 is enacted to read:
1637
1638 16-6a-601. No requirement of members.
1639 A nonprofit corporation is not required to have members.
1640 Section 46. Section 16-6a-602 is enacted to read:
1641 16-6a-602. Number and classes.
1642 (1) A nonprofit corporation may have:
1643 (a) one or more classes of voting or nonvoting members; and
1644 (b) one or more members in each class described in Subsection (1)(a).
1645 (2) The bylaws may designate:
1646 (a) the class or classes of members; and
1647 (b) the qualifications and rights of the members of each class of members including the
1648 matters or items for which voting members may vote.
1649 Section 47. Section 16-6a-603 is enacted to read:
1650 16-6a-603. Admission.
1651 (1) The bylaws may establish criteria or procedures for admission of members.
1652 (2) A person may not be admitted as a member without the person's consent.
1653 (3) A nonprofit corporation may issue certificates evidencing membership in the nonprofit
1654 corporation.
1655 Section 48. Section 16-6a-604 is enacted to read:
1656 16-6a-604. Consideration.
1657 Unless otherwise provided by the bylaws, a nonprofit corporation may admit members:
1658 (1) for no consideration; or
1659 (2) for such consideration as is determined by the board of directors.
1660 Section 49. Section 16-6a-605 is enacted to read:
1661 16-6a-605. Differences in rights and obligations of members.
1662 Unless otherwise provided by this chapter or the bylaws:
1663 (1) all voting members shall have the same rights and obligations with respect to voting
1664 and all other matters that this chapter specifically reserves to voting members; and
1665 (2) with respect to matters not reserved under Subsection (1), all members, including
1666 voting members, shall have the same rights and obligations.
1667 Section 50. Section 16-6a-606 is enacted to read:
1668 16-6a-606. Transfers.
1669 (1) Unless otherwise provided by the bylaws, a member of a nonprofit corporation may
1670 not transfer:
1671 (a) a membership; or
1672 (b) any right arising from a membership.
1673 (2) Where transfer rights have been provided, a restriction on transfer rights may not be
1674 binding with respect to a member holding a membership issued prior to the adoption of the
1675 restriction, unless the restriction is approved by the affected member.
1676 Section 51. Section 16-6a-607 is enacted to read:
1677 16-6a-607. Creditor's action against member.
1678 A proceeding may not be brought by a creditor to reach the liability, if any, of a member
1679 to the nonprofit corporation unless:
1680 (1) (a) final judgment has been rendered in favor of the creditor against the nonprofit
1681 corporation; and
1682 (b) execution has been returned unsatisfied in whole or in part; or
1683 (2) a proceeding described in Subsection (1) would be useless.
1684 Section 52. Section 16-6a-608 is enacted to read:
1685 16-6a-608. Resignation.
1686 (1) Unless otherwise provided by the bylaws, a member may resign at any time.
1687 (2) The resignation of a member does not relieve the member from any obligation or
1688 commitment the member may have to the nonprofit corporation incurred or made prior to
1689 resignation.
1690 Section 53. Section 16-6a-609 is enacted to read:
1691 16-6a-609. Termination, expulsion, or suspension.
1692 (1) Unless otherwise provided by the bylaws, except pursuant to a procedure that is fair
1693 and reasonable:
1694 (a) a member of a nonprofit corporation may not be expelled or suspended; and
1695 (b) membership in a nonprofit corporation may not be terminated or suspended.
1696 (2) For purposes of this section, a procedure is fair and reasonable when either:
1697 (a) the bylaws or a written policy of the board of directors set forth a procedure that
1698 provides:
1699 (i) not less than 15 days prior written notice of:
1700 (A) the expulsion, suspension, or termination; and
1701 (B) the reasons for the expulsion, suspension, or termination; and
1702 (ii) an opportunity for the member to be heard:
1703 (A) orally or in writing;
1704 (B) not less than five days before the effective date of the expulsion, suspension, or
1705 termination; and
1706 (C) by one or more persons authorized to decide that the proposed expulsion, termination,
1707 or suspension not take place; or
1708 (b) it is fair and reasonable taking into consideration all of the relevant facts and
1709 circumstances.
1710 (3) For purposes of this section, any written notice given by mail shall be given by
1711 first-class or certified mail sent to the last address of the member shown on the nonprofit
1712 corporation's records.
1713 (4) Unless otherwise provided by the bylaws, any proceeding challenging an expulsion,
1714 suspension, or termination, including a proceeding in which defective notice is alleged, shall be
1715 commenced within one year after the effective date of the expulsion, suspension, or termination.
1716 (5) Unless otherwise provided by the bylaws, a member who has been expelled or
1717 suspended may be liable to the nonprofit corporation for dues, assessments, or fees as a result of
1718 an obligation incurred or commitment made prior to the effective date of the expulsion or
1719 suspension.
1720 Section 54. Section 16-6a-610 is enacted to read:
1721 16-6a-610. Purchase of memberships.
1722 (1) Unless otherwise provided by the bylaws, a nonprofit corporation may not purchase
1723 the membership of a member:
1724 (a) who resigns; or
1725 (b) whose membership is terminated.
1726 (2) (a) If so authorized, a nonprofit corporation may purchase the membership of a member
1727 who resigns or whose membership is terminated for the amount and pursuant to the conditions set
1728 forth in or authorized by:
1729 (i) its bylaws; or
1730 (ii) agreement with the affected member.
1731 (b) A payment permitted under Subsection (2)(a) may not violate:
1732 (i) Section 16-6a-1301 ; or
1733 (ii) any other provision of this chapter.
1734 Section 55. Section 16-6a-611 is enacted to read:
1735 16-6a-611. No property right.
1736 A member does not have a vested property right resulting from any provision in the articles
1737 of incorporation or the bylaws, including any provision relating to management, control, purpose,
1738 or duration of the nonprofit corporation.
1739 Section 56. Section 16-6a-612 is enacted to read:
1740 16-6a-612. Derivative suits.
1741 (1) Without affecting the right of a member or director to bring a proceeding against a
1742 nonprofit corporation or its directors or officers, a proceeding may be brought in the right of a
1743 nonprofit corporation to procure a judgment in its favor by:
1744 (a) a voting member; or
1745 (b) a director.
1746 (2) In a proceeding described in Subsection (1), each complainant shall be a voting
1747 member or director at the time of bringing the proceeding.
1748 (3) (a) A complaint in a proceeding brought in the right of a nonprofit corporation shall
1749 be verified and allege with particularity:
1750 (i) the demand made, if any, to obtain action by the directors; and
1751 (ii) (A) why the complainant could not obtain the action; or
1752 (B) why the complainant did not make the demand.
1753 (b) If a demand for action was made and the nonprofit corporation's investigation of the
1754 demand is in progress when the proceeding is filed, the court may stay the suit until the
1755 investigation is completed.
1756 (4) (a) (i) In any action instituted in the right of a nonprofit corporation by one or more
1757 voting members, the court having jurisdiction over the matter may, at any time before final
1758 judgment, require the plaintiff to give security for the costs and reasonable expenses that may be:
1759 (A) directly attributable to and incurred by the nonprofit corporation in the defense of the
1760 action; or
1761 (B) incurred by other parties named as defendant for which the nonprofit corporation may
1762 become legally liable.
1763 (ii) Notwithstanding Subsection (4)(a)(i) the security for the costs and reasonable expenses
1764 may not include fees of attorneys.
1765 (b) The amount of the security permitted under this Subsection (4) may from time to time
1766 be increased or decreased, in the discretion of the court, upon showing that the security provided
1767 has or may become inadequate or excessive.
1768 (c) If the court finds that the action was commenced without reasonable cause, the
1769 nonprofit corporation shall have recourse to the security permitted under this Subsection (4) in the
1770 amount the court shall determine upon the termination of the action.
1771 (5) A procedure pursuant to this section shall comply with the applicable rules set forth
1772 in the Utah Rules of Civil Procedure, as amended from time to time.
1773 (6) An action may not be commenced in this state by a member of a foreign nonprofit
1774 corporation in the right of a foreign nonprofit corporation unless the action is permitted by the laws
1775 of the state under which the foreign nonprofit corporation is incorporated.
1776 Section 57. Section 16-6a-613 is enacted to read:
1777 16-6a-613. Delegates.
1778 (1) A nonprofit corporation may provide in its bylaws for delegates having some or all of
1779 the authority of members.
1780 (2) The bylaws may set forth provisions relating to:
1781 (a) the characteristics, qualifications, rights, limitations, and obligations of delegates,
1782 including their selection and removal;
1783 (b) calling, noticing, holding, and conducting meetings of delegates; and
1784 (c) carrying on corporate activities during and between meetings of delegates.
1785 Section 58. Section 16-6a-701 is enacted to read:
1786
1787 16-6a-701. Annual and regular meetings.
1788 (1) Unless the bylaws eliminate the requirement for holding an annual meeting, a nonprofit
1789 corporation that has voting members shall hold a meeting of the voting members annually:
1790 (a) at a time and date stated in or fixed in accordance with the bylaws; or
1791 (b) if a time and date is not stated in or fixed in accordance with the bylaws, at a time and
1792 date stated in or fixed in accordance with a resolution of the board of directors.
1793 (2) A nonprofit corporation with members may hold regular membership meetings at:
1794 (a) a time and date stated in or fixed in accordance with the bylaws; or
1795 (b) if a time and date is not stated in or fixed in accordance with the bylaws, at a time and
1796 date stated in or fixed in accordance with a resolution of the board of directors.
1797 (3) (a) Annual and regular membership meetings may be held in or out of this state:
1798 (i) at the place stated in or fixed in accordance with the bylaws; or
1799 (ii) if no place is stated in or fixed in accordance with the bylaws, at a place stated in or
1800 fixed in accordance with a resolution of the board of directors.
1801 (b) If no place is stated or fixed in accordance with Subsection (3)(a), annual and regular
1802 meetings shall be held at the nonprofit corporation's principal office.
1803 (4) The failure to hold an annual or regular meeting at the time and date determined
1804 pursuant to Subsection (1) does not:
1805 (a) affect the validity of any corporate action; or
1806 (b) work a forfeiture or dissolution of the nonprofit corporation.
1807 Section 59. Section 16-6a-702 is enacted to read:
1808 16-6a-702. Special meetings.
1809 (1) A nonprofit corporation shall hold a special meeting of its members:
1810 (a) on call of:
1811 (i) its board of directors; or
1812 (ii) the person or persons authorized by the bylaws or resolution of the board of directors
1813 to call a special meeting; or
1814 (b) unless otherwise provided by the bylaws, if the nonprofit corporation receives one or
1815 more written demands for the meeting, that:
1816 (i) state the purpose or purposes for which the meeting is to be held; and
1817 (ii) are signed and dated by members holding at least 10% of all the votes entitled pursuant
1818 to the bylaws to be cast on any issue proposed to be considered at the meeting.
1819 (2) If not otherwise fixed under Section 16-6a-703 or 16-6a-706 , the record date for
1820 determining the members entitled to demand a special meeting pursuant to Subsection (1)(b) is the
1821 later of the date of:
1822 (a) the earliest of any of the demands pursuant to which the meeting is called; or
1823 (b) the date that is 60 days before the date the first of the demands is received by the
1824 nonprofit corporation.
1825 (3) If a notice for a special meeting demanded pursuant to Subsection (1)(b) is not given
1826 pursuant to Section 16-6a-704 within 30 days after the date the written demand is delivered to a
1827 corporate officer, regardless of the requirements of Subsection (4), a person signing the demand
1828 may:
1829 (a) set the time and place of the meeting; and
1830 (b) give notice pursuant to Section 16-6a-704 .
1831 (4) (a) A special meeting of the members may be held in or out of this state:
1832 (i) at the place stated in or fixed in accordance with the bylaws; or
1833 (ii) if a place is not stated in or fixed in accordance with the bylaws, at a place stated in
1834 or fixed in accordance with a resolution of the board of directors.
1835 (b) If no place is stated or fixed in accordance with Subsections (3)(a) or (4)(a), a special
1836 meeting of the members shall be held at the nonprofit corporation's principal office.
1837 (5) Unless otherwise provided by the bylaws, only business within the purposes described
1838 in the notice of the meeting required by Subsection 16-6a-704 (3) may be conducted at a special
1839 meeting of the members.
1840 Section 60. Section 16-6a-703 is enacted to read:
1841 16-6a-703. Court-ordered meeting.
1842 (1) (a) Upon an application described in Subsection (1)(b) the holding of a meeting of the
1843 members may be summarily ordered by:
1844 (i) the district court of the county in this state where the nonprofit corporation's principal
1845 office is located; or
1846 (ii) if the nonprofit corporation has no principal office in this state:
1847 (A) by the district court of the county in which its registered office is located; or
1848 (B) if the nonprofit corporation has no registered office, by the district court in and for Salt
1849 Lake County.
1850 (b) Subsection (1)(a) applies to an application by:
1851 (i) any voting member entitled to participate in an annual meeting if an annual meeting
1852 was required to be held and was not held within 15 months after:
1853 (A) the corporation's last annual meeting; or
1854 (B) if there has been no annual meeting, the date of incorporation; or
1855 (ii) any person who participated in a call of or demand for a special meeting effective
1856 under Subsection 16-6a-702 (1), if:
1857 (A) notice of the special meeting was not given within 30 days after:
1858 (I) the date of the call; or
1859 (II) the date the last of the demands necessary to require the calling of the meeting was
1860 received by the nonprofit corporation pursuant to Subsection 16-6a-702 (1)(b); or
1861 (B) the special meeting was not held in accordance with the notice.
1862 (2) A court that orders a meeting under Subsection (1) may:
1863 (a) fix the time and place of the meeting;
1864 (b) determine the members entitled to participate in the meeting;
1865 (c) specify a record date for determining members entitled to notice of and to vote at the
1866 meeting;
1867 (d) prescribe the form and content of the notice of the meeting;
1868 (e) (i) fix the quorum required for specific matters to be considered at the meeting; or
1869 (ii) direct that the votes represented at the meeting constitute a quorum for action on the
1870 specific matters to be considered at the meeting; and
1871 (f) enter other orders necessary or appropriate to accomplish the holding of the meeting.
1872 Section 61. Section 16-6a-704 is enacted to read:
1873 16-6a-704. Notice of meeting.
1874 (1) A nonprofit corporation shall give to each member entitled to vote at the meeting
1875 notice consistent with its bylaws of meetings of members in a fair and reasonable manner.
1876 (2) Any notice that conforms to the requirements of Subsection (3) is fair and reasonable,
1877 but other means of giving notice may also be fair and reasonable when all the circumstances are
1878 considered.
1879 (3) Notice is fair and reasonable if:
1880 (a) the nonprofit corporation notifies its members of the place, date, and time of each
1881 annual, regular, and special meeting of members:
1882 (i) no fewer than ten days before the meeting;
1883 (ii) if notice is mailed by other than first class or registered mail, no fewer than 30 days,
1884 nor more than 60 days before the meeting date; and
1885 (iii) if notice is given by newspaper as provided in Subsection 16-6a-103 (2), by publication
1886 three separate times with:
1887 (A) the first of the publications no more than 60 days before the meeting date; and
1888 (B) the last of the publications no fewer than ten days before the meeting date;
1889 (b) the notice of an annual or regular meeting includes a description of any matter or
1890 matters that:
1891 (i) must be approved by the members; or
1892 (ii) for which the members' approval is sought under Sections 16-6a-825 , 16-6a-910 ,
1893 16-6a-1003 , 16-6a-1010 , 16-6a-1102 , 16-6a-1202 , and 16-6a-1402 ; and
1894 (c) unless otherwise provided by this chapter or the bylaws, the notice of a special meeting
1895 includes a description of the purpose or purposes for which the meeting is called.
1896 (4) (a) Unless otherwise provided by the bylaws, if an annual, regular, or special meeting
1897 of members is adjourned to a different date, time, or place, notice need not be given of the new
1898 date, time, or place, if the new date, time, or place is announced at the meeting before adjournment.
1899 (b) Notwithstanding Subsection (4)(a), if a new record date for the adjourned meeting is
1900 or shall be fixed under Section 16-6a-617 , notice of the adjourned meeting shall be given under
1901 this section to the members of record as of the new record date.
1902 (5) When giving notice of an annual, regular, or special meeting of members, a nonprofit
1903 corporation shall give notice of a matter a member intends to raise at the meeting if:
1904 (a) requested in writing to do so by a person entitled to call a special meeting; and
1905 (b) the request is received by the secretary or president of the nonprofit corporation at least
1906 ten days before the nonprofit corporation gives notice of the meeting.
1907 Section 62. Section 16-6a-705 is enacted to read:
1908 16-6a-705. Waiver of notice.
1909 (1) (a) A member may waive any notice required by this chapter or by the bylaws, whether
1910 before or after the date or time stated in the notice as the date or time when any action will occur
1911 or has occurred.
1912 (b) A waiver described in Subsection (1) shall be:
1913 (i) in writing;
1914 (ii) signed by the member entitled to the notice; and
1915 (iii) delivered to the nonprofit corporation for:
1916 (A) inclusion in the minutes; or
1917 (B) filing with the corporate records.
1918 (c) The delivery and filing required under Subsection (1)(b) may not be conditions of the
1919 effectiveness of the waiver.
1920 (2) A member's attendance at a meeting:
1921 (a) waives objection to lack of notice or defective notice of the meeting, unless the
1922 member at the beginning of the meeting objects to holding the meeting or transacting business at
1923 the meeting because of lack of notice or defective notice; and
1924 (b) waives objection to consideration of a particular matter at the meeting that is not within
1925 the purpose or purposes described in the meeting notice, unless the member objects to considering
1926 the matter when it is presented.
1927 Section 63. Section 16-6a-706 is enacted to read:
1928 16-6a-706. Record date -- Determining members entitled to notice and vote.
1929 (1) (a) The bylaws may fix or provide the manner of fixing a date as the record date for
1930 determining the members entitled to notice of a members' meeting.
1931 (b) If the bylaws do not fix or provide for fixing a record date described in Subsection
1932 (1)(a), the board of directors may fix a future date as the record date.
1933 (c) If a record date is not fixed in accordance with Subsection (1)(a) or (b), members
1934 entitled to notice of the meeting are the members of the nonprofit corporation:
1935 (i) at the close of business on the business day preceding the day on which notice is given;
1936 or
1937 (ii) if notice is waived, at the close of business on the business day preceding the day on
1938 which the meeting is held.
1939 (2) (a) The bylaws may fix or provide the manner of fixing a date as the record date for
1940 determining the members entitled to vote at a members' meeting.
1941 (b) If the bylaws do not fix or provide for fixing a record date described in Subsection
1942 (2)(a), the board may fix a future date as the record date.
1943 (c) If a record date is not fixed in accordance with Subsection (2)(a) or (b), members
1944 entitled to vote at the meeting are the members of the nonprofit corporation:
1945 (i) on the date of the meeting; and
1946 (ii) who are otherwise eligible to vote.
1947 (3) (a) The bylaws may fix or provide the manner for determining a date as the record date
1948 for the purpose of determining the members entitled to exercise any rights in respect of any other
1949 lawful action.
1950 (b) If the bylaws do not fix or provide for fixing a record date described in Subsection
1951 (3)(a), the board of directors may fix a future date as the record date.
1952 (c) If a record date is not fixed in accordance with Subsection (3)(a) or (b), members
1953 entitled to exercise the right are members of the corporation at the later of:
1954 (i) the close of business on the day on which the board adopts the resolution relating to the
1955 exercise of the right; or
1956 (ii) the close of business on the 60th day before the date of the exercise of the right.
1957 (4) A record date fixed under this section may not be more than 70 days before the meeting
1958 or action requiring a determination of members occurs.
1959 (5) (a) A determination of members entitled to notice of or to vote at a meeting of
1960 members is effective for any adjournment of the meeting unless the board of directors fixes a new
1961 date for determining the right to notice or the right to vote.
1962 (b) The board of directors shall fix a new date for determining the right to notice or the
1963 right to vote if the meeting is adjourned to a date more than 120 days after the record date for
1964 determining members entitled to notice of the original meeting.
1965 (6) If a court orders a meeting adjourned to a date more than 120 days after the date fixed
1966 for the original meeting, the court may:
1967 (a) provide that the original record date for notice or voting continues in effect; or
1968 (b) fix a new record date for notice or voting.
1969 Section 64. Section 16-6a-707 is enacted to read:
1970 16-6a-707. Action without meeting.
1971 (1) Unless otherwise provided in the articles of incorporation and Subsection (5), and
1972 subject to the limitations of Subsection 16-6a-1705 (3), any action that may be taken at any annual
1973 or special meeting of members may be taken without a meeting and without prior notice, if one
1974 or more consents in writing, setting forth the action taken, are signed by the members having not
1975 less than the minimum voting power that would be necessary to authorize or take the action at a
1976 meeting at which all members entitled to vote on the action were present and voted.
1977 (2) (a) Unless the written consents of all members entitled to vote have been obtained,
1978 notice of any member approval without a meeting shall be given at least ten days before the
1979 consummation of the transaction, action, or event authorized by the member action to:
1980 (i) those members entitled to vote who have not consented in writing; and
1981 (ii) those members:
1982 (A) not entitled to vote; and
1983 (B) to whom this chapter requires that notice of the proposed action be given.
1984 (b) The notice required pursuant to Subsection (2)(a) shall contain or be accompanied by
1985 the same material that under this chapter would have been required to be sent in a notice of
1986 meeting at which the proposed action would have been submitted to the members for action.
1987 (3) Any member giving a written consent, or the member's proxyholder or a personal
1988 representative of the member or their respective proxyholder, may revoke the consent by a signed
1989 writing:
1990 (a) describing the action;
1991 (b) stating that the member's prior consent is revoked; and
1992 (c) that is received by the nonprofit corporation prior to the effectiveness of the action.
1993 (4) (a) A member action taken pursuant to this section is not effective unless all written
1994 consents on which the nonprofit corporation relies for the taking of an action pursuant to
1995 Subsection (1) are:
1996 (i) received by the nonprofit corporation within a 60-day period; and
1997 (ii) not revoked pursuant to Subsection (3).
1998 (b) Action taken by the members pursuant to this section is effective:
1999 (i) as of the date the last written consent necessary to effect the action is received by the
2000 nonprofit corporation; or
2001 (ii) if all of the written consents necessary to effect the action specify a later date as the
2002 effective date of the action, the later date specified in the consents.
2003 (c) If the nonprofit corporation has received written consents in accordance with
2004 Subsection (1) signed by all members entitled to vote with respect to the action, the effective date
2005 of the member action may be any date that is specified in all the written consents as the effective
2006 date of the member action.
2007 (d) Unless otherwise provided by the bylaws, a written consent under this Subsection (4)
2008 may be received by the nonprofit corporation by electronically transmitted facsimile or other form
2009 of communication providing the corporation with a complete copy of the written consent,
2010 including a copy of the signature to the written consent.
2011 (5) Notwithstanding Subsection (1), directors may not be elected by written consent except
2012 by unanimous written consent of all shares entitled to vote for the election of directors.
2013 (6) If not otherwise determined under Section 16-6a-703 or 16-6a-706 , the record date for
2014 determining the members entitled to take action without a meeting or entitled to be given notice
2015 under Subsection (2) of action taken without a meeting is the date the first member delivers to the
2016 nonprofit corporation a writing upon which the action is taken pursuant to Subsection (1).
2017 (7) Action taken under this section has the same effect as action taken at a meeting of
2018 members and may be so described in any document.
2019 Section 65. Section 16-6a-708 is enacted to read:
2020 16-6a-708. Meetings by telecommunication.
2021 (1) Unless otherwise provided in the bylaws, any or all of the members may participate in
2022 an annual, regular, or special meeting of the members by, or the meeting may be conducted
2023 through the use of, any means of communication by which all persons participating in the meeting
2024 may hear each other during the meeting.
2025 (2) A member participating in a meeting by a means permitted under Subsection (1) is
2026 considered to be present in person at the meeting.
2027 Section 66. Section 16-6a-709 is enacted to read:
2028 16-6a-709. Action by written ballot.
2029 (1) Unless otherwise provided by the bylaws, any action that may be taken at any annual,
2030 regular, or special meeting of members may be taken without a meeting if the nonprofit
2031 corporation delivers a written ballot to every member entitled to vote on the matter.
2032 (2) A written ballot described in Subsection (1) shall:
2033 (a) set forth each proposed action; and
2034 (b) provide an opportunity to vote for or against each proposed action.
2035 (3) Approval by written ballot pursuant to this section shall be valid only when:
2036 (a) the number of votes cast by ballot equals or exceeds the quorum required to be present
2037 at a meeting authorizing the action; and
2038 (b) the number of approvals equals or exceeds the number of votes that would be required
2039 to approve the matter at a meeting at which the total number of votes cast was the same as the
2040 number of votes cast by ballot.
2041 (4) All solicitations for votes by written ballot shall:
2042 (a) indicate the number of responses needed to meet the quorum requirements;
2043 (b) state the percentage of approvals necessary to approve each matter other than election
2044 of directors;
2045 (c) specify the time by which a ballot must be received by the nonprofit corporation in
2046 order to be counted; and
2047 (d) be accompanied by written information sufficient to permit each person casting the
2048 ballot to reach an informed decision on the matter.
2049 (5) Unless otherwise provided by the bylaws, a written ballot may not be revoked.
2050 (6) Action taken under this section has the same effect as action taken at a meeting of
2051 members and may be described as such in any document.
2052 Section 67. Section 16-6a-710 is enacted to read:
2053 16-6a-710. Members list for meeting and action by written ballot.
2054 (1) (a) Unless otherwise provided by the bylaws, after fixing a record date for a notice of
2055 a meeting or for determining the members entitled to take action by written ballot, a nonprofit
2056 corporation shall prepare a list of the names of all its members who are:
2057 (i) (A) entitled to notice of the meeting; and
2058 (B) to vote at the meeting; or
2059 (ii) to take the action by written ballot.
2060 (b) The list required by Subsection (1) shall:
2061 (i) be arranged by voting group;
2062 (ii) be alphabetical within each voting group;
2063 (iii) show the address of each member entitled to notice of, and to vote at, the meeting or
2064 to take such action by written ballot; and
2065 (iv) show the number of votes each member is entitled to vote at the meeting or by written
2066 ballot.
2067 (2) (a) If prepared in connection with a meeting of the members, the members' list required
2068 by Subsection (1) shall be available for inspection by any member entitled to vote at the meeting:
2069 (i) (A) beginning the earlier of:
2070 (I) ten days before the meeting for which the list was prepared; or
2071 (II) two business days after notice of the meeting is given; and
2072 (B) continuing through the meeting, and any adjournment of the meeting; and
2073 (ii) (A) at the nonprofit corporation's principal office; or
2074 (B) at a place identified in the notice of the meeting in the city where the meeting will be
2075 held.
2076 (b) (i) The nonprofit corporation shall make the members' list required by Subsection (1)
2077 available at the meeting.
2078 (ii) Any member entitled to vote at the meeting or an agent or attorney of a member
2079 entitled to vote at the meeting is entitled to inspect the members' list at any time during the meeting
2080 or any adjournment.
2081 (c) A member entitled to vote at the meeting, or an agent or attorney of a member entitled
2082 to vote at the meeting, is entitled on written demand to inspect and, subject to Subsections
2083 16-6a-1602 (3), 16-6a-1603 (2), and 16-6a-1603 (3), to copy a members' list required by Subsection
2084 (1):
2085 (i) during:
2086 (A) regular business hours; and
2087 (B) the period it is available for inspection; and
2088 (ii) at the member's expense.
2089 (3) (a) On application of a member a nonprofit corporation, the applicable district court
2090 may take an action described in Subsection (3)(b) if the nonprofit corporation refuses to allow a
2091 member entitled to vote at the meeting or by the written ballot, or an agent or attorney of a member
2092 entitled to vote at the meeting or by the written ballot, to inspect or copy the members' list during
2093 the period it is required to be available for inspection under Subsection (2).
2094 (b) Under Subsection (3)(a), the applicable court may:
2095 (i) summarily order the inspection or copying of the members' list at the nonprofit
2096 corporation's expense; and
2097 (ii) until the inspection or copying is complete:
2098 (A) postpone or adjourn the meeting for which the members list was prepared; or
2099 (B) postpone the time when the nonprofit corporation must receive written ballots in
2100 connection with which the members' list was prepared.
2101 (c) For purposes of this Subsection (3), the applicable court is:
2102 (i) the district court of the county in this state where the nonprofit corporation's principal
2103 office is located; or
2104 (ii) if the nonprofit corporation has no principal office in this state:
2105 (A) the district court of the county where its registered office is located; or
2106 (B) if the nonprofit corporation has no registered office in this state, the district court in
2107 and for Salt Lake County.
2108 (4) If a court orders inspection or copying of a members' list pursuant to Subsection (3),
2109 unless the nonprofit corporation proves that it refused inspection or copying of the list in good faith
2110 because it had a reasonable basis for doubt about the right of the member or the agent or attorney
2111 of the member to inspect or copy the members' list:
2112 (a) the court shall order the nonprofit corporation to pay the member's costs, including
2113 reasonable counsel fees, incurred in obtaining the order;
2114 (b) the court may order the nonprofit corporation to pay the member for any damages the
2115 member incurred; and
2116 (c) the court may grant the member any other remedy afforded the member by law.
2117 (5) If a court orders inspection or copying of a members' list pursuant to Subsection (3),
2118 the court may impose reasonable restrictions on the use or distribution of the list by the member.
2119 (6) Failure to prepare or make available the members' list does not affect the validity of
2120 action taken at the meeting or by means of the written ballot.
2121 Section 68. Section 16-6a-711 is enacted to read:
2122 16-6a-711. Voting entitlement generally.
2123 (1) Unless otherwise provided by the bylaws:
2124 (a) only voting members shall be entitled to vote with respect to any matter required or
2125 permitted under this chapter to be submitted to a vote of the members;
2126 (b) all references in this chapter to votes of or voting by the members shall be considered
2127 to permit voting only by the voting members; and
2128 (c) voting members shall be entitled to vote with respect to all matters required or
2129 permitted under this chapter to be submitted to a vote of the members.
2130 (2) Unless otherwise provided by the bylaws, each member entitled to vote shall be
2131 entitled to one vote on each matter submitted to a vote of members.
2132 (3) Unless otherwise provided by the bylaws, if a membership stands of record in the
2133 names of two or more persons, the membership's acts with respect to voting shall have the
2134 following effect:
2135 (a) if only one votes, the act binds all; and
2136 (b) if more than one votes, the vote shall be divided on a pro-rata basis.
2137 Section 69. Section 16-6a-712 is enacted to read:
2138 16-6a-712. Proxies.
2139 (1) Unless otherwise provided by the bylaws, a member entitled to vote may vote or
2140 otherwise act in person or by proxy.
2141 (2) Without limiting the manner in which a member may appoint a proxy to vote or
2142 otherwise act for the member, Subsections (2)(a) and (b) constitute valid means of appointing a
2143 proxy:
2144 (a) A member may appoint a proxy by signing an appointment form, either personally or
2145 by the member's attorney-in-fact.
2146 (b) (i) Subject to Subsection (2)(b)(ii) a member may appoint a proxy by transmitting or
2147 authorizing the transmission of a telegram, teletype, facsimile or other electronic transmission
2148 providing a written statement of the appointment to:
2149 (A) the proxy;
2150 (B) a proxy solicitor;
2151 (C) a proxy support service organization;
2152 (D) another person duly authorized by the proxy to receive appointments as agent for the
2153 proxy; or
2154 (E) the nonprofit corporation.
2155 (ii) An appointment transmitted under Subsection (2)(b)(i) shall set forth or be transmitted
2156 with written evidence from which it can be determined that the member transmitted or authorized
2157 the transmission of the appointment.
2158 (3) (a) An appointment of a proxy is effective against the nonprofit corporation when
2159 received by the nonprofit corporation, including receipt by the nonprofit corporation of an
2160 appointment transmitted pursuant to Subsection (2)(b).
2161 (b) An appointment is valid for 11 months unless a different period is expressly provided
2162 in the appointment form.
2163 (4) Any complete copy, including an electronically transmitted facsimile, of an
2164 appointment of a proxy may be substituted for or used in lieu of the original appointment for any
2165 purpose for which the original appointment could be used.
2166 (5) An appointment of a proxy is revocable by the member.
2167 (6) An appointment of a proxy is revoked by the person appointing the proxy:
2168 (a) attending any meeting and voting in person; or
2169 (b) signing and delivering to the secretary or other officer or agent authorized to tabulate
2170 proxy votes:
2171 (i) a writing stating that the appointment of the proxy is revoked; or
2172 (ii) a subsequent appointment form.
2173 (7) The death or incapacity of the member appointing a proxy does not affect the right of
2174 the nonprofit corporation to accept the proxy's authority unless notice of the death or incapacity
2175 is received by the secretary or other officer or agent authorized to tabulate votes before the proxy
2176 exercises the proxy's authority under the appointment.
2177 (8) Subject to Section 16-6a-713 and to any express limitation on the proxy's authority
2178 appearing on the appointment form, a nonprofit corporation is entitled to accept the proxy's vote
2179 or other action as that of the member making the appointment.
2180 Section 70. Section 16-6a-713 is enacted to read:
2181 16-6a-713. Nonprofit corporation's acceptance of votes.
2182 (1) If the name signed on any of the following corresponds to the name of a member, the
2183 nonprofit corporation, if acting in good faith, may accept and give the following effect as the act
2184 of the member:
2185 (a) a vote;
2186 (b) a consent;
2187 (c) a written ballot;
2188 (d) a waiver;
2189 (e) a proxy appointment; or
2190 (f) a proxy appointment revocation.
2191 (2) If the name signed on any writing listed in Subsection (1) does not correspond to the
2192 name of a member, the nonprofit corporation, if acting in good faith, may accept the writing and
2193 give it effect as the act of the member if:
2194 (a) (i) the member is an entity; and
2195 (ii) the name signed purports to be that of an officer or agent of the entity;
2196 (b) (i) the name signed purports to be that of an administrator, executor, guardian, or
2197 conservator representing the member; and
2198 (ii) evidence of fiduciary status acceptable to the nonprofit corporation with respect to the
2199 writing listed in Subsection (1) that:
2200 (A) has been requested by the nonprofit corporation; and
2201 (B) is presented to the nonprofit corporation;
2202 (c) (i) the name signed purports to be that of a receiver or trustee in bankruptcy of the
2203 member; and
2204 (ii) evidence of this status acceptable to the nonprofit corporation with respect to the
2205 writing listed in Subsection (1) that:
2206 (A) has been requested by the nonprofit corporation; and
2207 (B) is presented to the nonprofit corporation;
2208 (d) (i) the name signed purports to be that of a pledgee, beneficial owner, or
2209 attorney-in-fact of the member; and
2210 (ii) evidence acceptable to the nonprofit corporation of the signatory's authority to sign for
2211 the member has been presented with respect to the writing listed in Subsection (1) that:
2212 (A) has been requested by the nonprofit corporation; and
2213 (B) is presented to the nonprofit corporation;
2214 (e) (i) two or more persons are the member as cotenants or fiduciaries;
2215 (ii) the name signed purports to be the name of at least one of the cotenants or fiduciaries;
2216 and
2217 (iii) the person signing appears to be acting on behalf of all the cotenants or fiduciaries;
2218 or
2219 (f) the acceptance of the writing listed in Subsection (1) is otherwise proper under rules
2220 established by the nonprofit corporation that are not inconsistent with this Subsection (2).
2221 (3) The nonprofit corporation is entitled to reject a writing listed in Subsection (1) if the
2222 secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable
2223 basis for doubt about:
2224 (a) the validity of the signature on it; or
2225 (b) the signatory's authority to sign for the member.
2226 (4) The nonprofit corporation and its officer or agent who accepts or rejects a writing listed
2227 in Subsection (1) in good faith and in accordance with the standards of this section are not liable
2228 in damages for the consequences of the acceptance or rejection.
2229 (5) Corporate action based on the acceptance or rejection of a writing listed in Subsection
2230 (1) under this section is valid unless a court of competent jurisdiction determines otherwise.
2231 Section 71. Section 16-6a-714 is enacted to read:
2232 16-6a-714. Quorum and voting requirements for voting groups.
2233 (1) (a) Members entitled to vote as a separate voting group may take action on a matter at
2234 a meeting only if a quorum of those members exists with respect to that matter.
2235 (b) Unless otherwise provided in this chapter or the bylaws, a majority of the votes entitled
2236 to be cast on the matter by the voting group constitutes a quorum of that voting group for action
2237 on that matter.
2238 (2) Once a member is represented for any purpose at a meeting, including the purpose of
2239 determining that a quorum exists, the member is considered present for quorum purposes:
2240 (a) for the remainder of the meeting; and
2241 (b) for any adjournment of that meeting, unless:
2242 (i) otherwise provided in the bylaws; or
2243 (ii) a new record date is or shall be set for that adjourned meeting.
2244 (3) Action on a matter other than the election of directors by a voting group is approved
2245 if:
2246 (a) a quorum exists;
2247 (b) the votes cast within the voting group favoring the action exceed the votes cast within
2248 the voting group opposing the action; and
2249 (c) a greater number of affirmative votes is not required by this chapter or the bylaws.
2250 (4) The election of directors is governed by Section 16-6a-717 .
2251 Section 72. Section 16-6a-715 is enacted to read:
2252 16-6a-715. Action by single and multiple voting groups.
2253 (1) If this chapter or the bylaws provide for voting by a single voting group on a matter,
2254 action on that matter is taken when voted upon by that voting group as provided in Section
2255 16-6a-714 .
2256 (2) (a) If this chapter or the bylaws provide for voting by two or more voting groups on
2257 a matter, action on that matter is taken only when voted upon by each of those voting groups
2258 counted separately as provided in Section 16-6a-714 .
2259 (b) One voting group may vote on a matter even though no action is taken by another
2260 voting group entitled to vote on the matter.
2261 Section 73. Section 16-6a-716 is enacted to read:
2262 16-6a-716. Greater quorum or voting requirements.
2263 (1) The articles of incorporation or bylaws may provide for a greater:
2264 (a) quorum requirement for members or voting groups than is provided for by this chapter;
2265 or
2266 (b) voting requirement for members or voting groups than is provided by this chapter.
2267 (2) An amendment to the articles of incorporation or the bylaws that adds, changes, or
2268 deletes a greater quorum or voting requirement shall meet the same quorum requirement and be
2269 adopted by the same vote and voting groups required to take action under the greater of the quorum
2270 and voting requirements:
2271 (a) then in effect; or
2272 (b) proposed to be adopted.
2273 Section 74. Section 16-6a-717 is enacted to read:
2274 16-6a-717. Voting for directors -- Cumulative voting.
2275 (1) If the bylaws provide for cumulative voting for directors by the voting members, voting
2276 members may cumulatively vote, by:
2277 (a) multiplying the number of votes the voting members are entitled to cast by the number
2278 of directors for whom they are entitled to vote; and
2279 (b) (i) casting the product for a single candidate; or
2280 (ii) distributing the product among two or more candidates.
2281 (2) Cumulative voting is not authorized at a particular meeting unless:
2282 (a) the meeting notice or statement accompanying the notice states that cumulative voting
2283 will take place; or
2284 (b) (i) a voting member gives notice during the meeting and before the vote is taken of the
2285 voting member's intent to cumulate votes; and
2286 (ii) if one voting member gives this notice, all other voting members participating in the
2287 election are entitled to cumulate their votes without giving further notice.
2288 (3) (a) In an election of multiple directors, that number of candidates equaling the number
2289 of directors to be elected, having the highest number of votes cast in favor of their election, are
2290 elected to the board of directors.
2291 (b) When only one director is being voted upon, the affirmative vote of a majority of the
2292 members constituting a quorum at the meeting at which the election occurs shall be required for
2293 election to the board of directors.
2294 Section 75. Section 16-6a-718 is enacted to read:
2295 16-6a-718. Voting agreements.
2296 (1) Two or more members may provide for the manner in which they will vote by signing
2297 an agreement for that purpose.
2298 (2) A voting agreement created under this section is specifically enforceable.
2299 Section 76. Section 16-6a-801 is enacted to read:
2300
2301 16-6a-801. Requirement for board of directors.
2302 (1) A nonprofit corporation shall have a board of directors.
2303 (2) (a) Except as provided in this chapter or Subsection (2)(b), all corporate powers shall
2304 be exercised by or under the authority of, and the business and affairs of the nonprofit corporation
2305 managed under the direction of, the board of directors.
2306 (b) (i) The articles of incorporation may authorize one or more persons to exercise some
2307 or all of the powers that would otherwise be exercised by the board of directors.
2308 (ii) To the extent the articles of incorporation authorize a person other than the board of
2309 directors to have the authority and perform a duty of the board of directors, the directors shall be
2310 relieved to that extent from such authority and duty.
2311 Section 77. Section 16-6a-802 is enacted to read:
2312 16-6a-802. Qualifications of directors.
2313 (1) A director shall be:
2314 (a) a natural person; and
2315 (b) 18 years of age or older.
2316 (2) The bylaws may prescribe other qualifications for directors in addition to the
2317 requirements under Subsection (1).
2318 (3) A director need not be a resident of this state or a member of the nonprofit corporation
2319 unless required by the bylaws.
2320 Section 78. Section 16-6a-803 is enacted to read:
2321 16-6a-803. Number of directors.
2322 (1) A board of directors shall consist of three or more directors, with the number specified
2323 in, or fixed in accordance with, the bylaws.
2324 (2) (a) The bylaws may establish, or permit the voting members or the board of directors
2325 to establish, a range for the size of the board of directors by fixing a minimum and maximum
2326 number of directors.
2327 (b) If a range for the size of the board of directors is established in accordance with
2328 Subsection (2)(a), the number of directors may be fixed or changed from time to time within the
2329 range by:
2330 (i) the voting members; or
2331 (ii) the board of directors.
2332 Section 79. Section 16-6a-804 is enacted to read:
2333 16-6a-804. Election, appointment, and designation of directors.
2334 (1) (a) All directors except the initial directors shall be elected, appointed, or designated
2335 as provided in the bylaws.
2336 (b) If no method of election, appointment, or designation is set forth in the bylaws, the
2337 directors other than the initial directors shall be elected as follows:
2338 (i) if the nonprofit corporation has voting members, all directors except the initial directors
2339 shall be elected by the voting members at each annual meeting of the voting members; and
2340 (ii) if the nonprofit corporation does not have voting members, all directors except the
2341 initial directors shall be elected by the board of directors.
2342 (2) (a) The bylaws may authorize the election of all or a specified number or portion of
2343 directors, except the initial directors, by:
2344 (i) the members of one or more voting groups of voting members; or
2345 (ii) the directors of one or more authorized classes of directors.
2346 (b) A class of voting members or directors entitled to elect one or more directors is a
2347 separate voting group for purposes of the election of directors.
2348 (3) The bylaws may authorize the appointment of one or more directors by one or more
2349 persons, or by the holder of the office or position, as the bylaws shall specify.
2350 (4) The bylaws may provide for election of directors by voting members or delegates:
2351 (a) on the basis of chapter or other organizational unit;
2352 (b) by region or other geographic unit;
2353 (c) by preferential voting; or
2354 (d) by any other reasonable method.
2355 (5) For purposes of this chapter, designation occurs when the bylaws:
2356 (a) name an individual as a director; or
2357 (b) designate the holder of some office or position as a director.
2358 Section 80. Section 16-6a-805 is enacted to read:
2359 16-6a-805. Terms of directors generally.
2360 (1) (a) The bylaws may specify the terms of directors.
2361 (b) In the absence of any term specified in the bylaws, the term of each director shall be
2362 one year.
2363 (c) Unless otherwise provided in the bylaws, directors may be elected for successive terms.
2364 (2) Unless otherwise provided in the bylaws, the terms of the initial directors of a nonprofit
2365 corporation expire at the first meeting at which directors are elected or appointed.
2366 (3) A decrease in the number of directors or in the term of office does not shorten an
2367 incumbent director's term.
2368 (4) Unless otherwise provided in the bylaws, the term of a director filling a vacancy
2369 expires at the end of the unexpired term that the director is filling, except that if a director is
2370 elected to fill a vacancy created by reason of an increase in the number of directors, the term of the
2371 director shall expire on the later of:
2372 (a) the next meeting at which directors are elected; or
2373 (b) the term, if any, designated for the director at the time of the creation of the position
2374 being filled.
2375 (5) Despite the expiration of a director's term, a director continues to serve until:
2376 (a) the director's successor is elected, appointed, or designated and qualifies; or
2377 (b) there is a decrease in the number of directors.
2378 (6) A director whose term has expired may deliver to the division for filing a statement to
2379 that effect pursuant to Section 16-6a-1608 .
2380 Section 81. Section 16-6a-806 is enacted to read:
2381 16-6a-806. Staggered terms for directors.
2382 (1) The bylaws may provide for staggering the terms of directors by dividing the total
2383 number of directors into any number of groups.
2384 (2) The terms of office of the several groups permitted under Subsection (1) need not be
2385 uniform.
2386 Section 82. Section 16-6a-807 is enacted to read:
2387 16-6a-807. Resignation of directors.
2388 (1) A director may resign at any time by giving written notice of resignation to the
2389 nonprofit corporation.
2390 (2) A resignation of a director is effective when the notice is received by the nonprofit
2391 corporation unless the notice specifies a later effective date.
2392 (3) A director who resigns may deliver to the division for filing a statement that the
2393 director resigns pursuant to Section 16-6a-1608 .
2394 (4) The failure to attend or meet obligations shall be effective as a resignation at the time
2395 of the board of director vote to confirm the failure if:
2396 (a) at the beginning of a director's term on the board, the bylaws provide that a director
2397 may be considered to have resigned for failing to:
2398 (i) attend a specified number of board meetings; or
2399 (ii) meet other specified obligations of directors; and
2400 (b) the failure to attend or meet obligations is confirmed by an affirmative vote of the
2401 board of directors.
2402 Section 83. Section 16-6a-808 is enacted to read:
2403 16-6a-808. Removal of directors.
2404 (1) Directors elected by voting members or directors may be removed as provided in
2405 Subsections (1)(a) through (g).
2406 (a) The voting members may remove one or more directors elected by them with or
2407 without cause unless the bylaws provide that directors may be removed only for cause.
2408 (b) If a director is elected by a voting group, only that voting group may participate in the
2409 vote to remove that director.
2410 (c) A director may be removed only if the number of votes cast to remove the director
2411 would be sufficient to elect the director at a meeting to elect directors.
2412 (d) A director elected by voting members may be removed by the voting members only:
2413 (i) at a meeting called for the purpose of removing that director; and
2414 (ii) if the meeting notice states that the purpose, or one of the purposes, of the meeting is
2415 removal of the director.
2416 (e) An entire board of directors may be removed under Subsections (1)(a) through (d).
2417 (f) (i) Except as provided in Subsection (1)(f)(ii), a director elected by the board of
2418 directors may be removed with or without cause by the vote of a majority of the directors then in
2419 office or such greater number as is set forth in the bylaws.
2420 (ii) A director elected by the board of directors to fill the vacancy of a director elected by
2421 the voting members may be removed without cause by the voting members but not the board of
2422 directors.
2423 (g) A director who is removed pursuant to this section may deliver to the division for filing
2424 a statement to that effect pursuant to Section 16-6a-1608 .
2425 (2) Unless otherwise provided in the bylaws:
2426 (a) an appointed director may be removed without cause by the person appointing the
2427 director;
2428 (b) the person described in Subsection (2)(a) shall remove the director by giving written
2429 notice of the removal to:
2430 (i) the director; and
2431 (ii) the nonprofit corporation; and
2432 (c) unless the written notice described in Subsection (2)(b) specifies a future effective date,
2433 a removal is effective when the notice is received by both:
2434 (i) the director to be removed; and
2435 (ii) the nonprofit corporation.
2436 (3) A designated director, as provided in Subsection 16-6a-804 (5), may be removed by an
2437 amendment to the bylaws deleting or changing the designation.
2438 Section 84. Section 16-6a-809 is enacted to read:
2439 16-6a-809. Removal of directors by judicial proceeding.
2440 (1) (a) The applicable court may remove a director in a proceeding commenced either by
2441 the nonprofit corporation or by voting members holding at least 10% of the votes entitled to be cast
2442 in the election of the director's successor if the court finds that:
2443 (i) the director engaged in:
2444 (A) fraudulent or dishonest conduct; or
2445 (B) gross abuse of authority or discretion with respect to the nonprofit corporation; or
2446 (ii) (A) a final judgment has been entered finding that the director has violated a duty set
2447 forth in Part 4; and
2448 (B) removal is in the best interests of the nonprofit corporation.
2449 (b) For purposes of this Subsection (1), the applicable court is the:
2450 (i) district court of the county in this state where a nonprofit corporation's principal office
2451 is located; or
2452 (ii) if the nonprofit corporation has no principal office in this state:
2453 (A) the district court of the county in which its registered office is located; or
2454 (B) if the nonprofit corporation has no registered office, the district court for Salt Lake
2455 County.
2456 (2) The court that removes a director may bar the director from reelection for a period
2457 prescribed by the court.
2458 (3) If voting members commence a proceeding under Subsection (1), the voting members
2459 shall make the nonprofit corporation a party defendant.
2460 (4) A director who is removed pursuant to this section may deliver to the division for filing
2461 a statement to that effect pursuant to Section 16-6a-1608 .
2462 Section 85. Section 16-6a-810 is enacted to read:
2463 16-6a-810. Vacancy on board.
2464 (1) Unless otherwise provided in the bylaws, if a vacancy occurs on a board of directors,
2465 including a vacancy resulting from an increase in the number of directors:
2466 (a) the voting members, if any, may fill the vacancy;
2467 (b) the board of directors may fill the vacancy; or
2468 (c) if the directors remaining in office constitute fewer than a quorum of the board of
2469 directors, the remaining directors may fill the vacancy by the affirmative vote of a majority of all
2470 the directors remaining in office.
2471 (2) Notwithstanding Subsection (1), unless otherwise provided in the bylaws, if the vacant
2472 office was held by a director elected by a voting group of voting members:
2473 (a) if one or more of the remaining directors were elected by the same voting group of
2474 voting members:
2475 (i) only the directors elected by the same voting group of voting members are entitled to
2476 vote to fill the vacancy if it is filled by directors; and
2477 (ii) the directors elected by the same voting group of voting members may fill the vacancy
2478 by the affirmative vote of a majority of the directors remaining in office; and
2479 (b) only that voting group is entitled to vote to fill the vacancy if it is filled by the voting
2480 members.
2481 (3) Notwithstanding Subsection (1) and unless otherwise provided in the bylaws, only the
2482 directors elected by the same voting group of directors are entitled to vote to fill the vacancy if:
2483 (a) the vacant office was held by a director elected by a voting group of directors; and
2484 (b) any persons in that voting group remain as directors.
2485 (4) Unless otherwise provided in the bylaws, if a vacant office was held by an appointed
2486 director, only the person who appointed the director may fill the vacancy.
2487 (5) (a) If a vacant office was held by a designated director, as provided in Subsection
2488 16-6a-804 (5), the vacancy shall be filled as provided in the bylaws.
2489 (b) In the absence of an applicable bylaw provision, the vacancy may not be filled by the
2490 board.
2491 (6) A vacancy that will occur at a specific later date by reason of a resignation effective
2492 at a later date under Subsection 16-6a-807 (2) or otherwise, may be filled before the vacancy
2493 occurs, but the new director may not take office until the vacancy occurs.
2494 Section 86. Section 16-6a-811 is enacted to read:
2495 16-6a-811. Compensation of directors.
2496 Unless otherwise provided in the bylaws, the board of directors may authorize and fix the
2497 compensation of directors.
2498 Section 87. Section 16-6a-812 is enacted to read:
2499 16-6a-812. Meetings.
2500 (1) The board of directors may hold regular or special meetings in or out of this state.
2501 (2) (a) Unless otherwise provided in the bylaws, the board of directors may permit any
2502 director to participate in a regular or special meeting by, or conduct the meeting through the use
2503 of, any means of communication by which all directors participating may hear each other during
2504 the meeting.
2505 (b) A director participating in a meeting by a means permitted under Subsection (1) is
2506 considered to be present in person at the meeting.
2507 Section 88. Section 16-6a-813 is enacted to read:
2508 16-6a-813. Action without meeting.
2509 (1) Unless otherwise provided in the bylaws, any action required or permitted by this
2510 chapter to be taken at a board of directors' meeting may be taken without a meeting if each and
2511 every member of the board in writing either:
2512 (a) votes for the action; or
2513 (b) (i) (A) votes against the action; or
2514 (B) abstains from voting; and
2515 (ii) waives the right to demand that action not be taken without a meeting.
2516 (2) Action is taken under this section only if the affirmative vote for the action equals or
2517 exceeds the minimum number of votes that would be necessary to take the action at a meeting at
2518 which all of the directors then in office were present and voted.
2519 (3) (a) An action taken pursuant to this section may not be effective unless the nonprofit
2520 corporation receives writings:
2521 (i) describing the action taken;
2522 (ii) otherwise satisfying the requirements of Subsection (1);
2523 (iii) signed by all directors; and
2524 (iv) not revoked pursuant to Subsection (4).
2525 (b) Unless otherwise provided by the bylaws, a writing described in Subsection (3)(a) may
2526 be received by the nonprofit corporation by electronically transmitted facsimile or other form of
2527 wire or wireless communication providing the nonprofit corporation with a complete copy of the
2528 document, including a copy of the signature on the document.
2529 (c) A director's right to demand that action not be taken without a meeting shall be
2530 considered to have been waived if the nonprofit corporation receives a writing satisfying the
2531 requirements of Subsection (1) that has been signed by the director and not revoked pursuant to
2532 Subsection (4).
2533 (d) Action taken pursuant to this section shall be effective when the last writing necessary
2534 to effect the action is received by the nonprofit corporation, unless the writings describing the
2535 action taken set forth a different effective date.
2536 (4) If the writing is received by the nonprofit corporation before the last writing necessary
2537 to effect the action is received by the nonprofit corporation, any director who has signed a writing
2538 pursuant to this section may revoke the writing by a writing signed and dated by the director:
2539 (a) describing the action; and
2540 (b) stating that the director's prior vote with respect the writing is revoked.
2541 (5) Action taken pursuant to this section:
2542 (a) has the same effect as action taken at a meeting of directors; and
2543 (b) may be described as an action taken at a meeting of directors in any document.
2544 Section 89. Section 16-6a-814 is enacted to read:
2545 16-6a-814. Notice of meeting.
2546 (1) Unless otherwise provided in this chapter or in the bylaws, regular meetings of the
2547 board of directors may be held without notice of the date, time, place, or purpose of the meeting.
2548 (2) (a) Unless the bylaws provide for a longer or shorter period, special meetings of the
2549 board of directors shall be preceded by at least two days notice of the date, time, and place of the
2550 meeting.
2551 (b) The notice required by Subsection (2)(a) need not describe the purpose of the special
2552 meeting unless otherwise required by this chapter or the bylaws.
2553 Section 90. Section 16-6a-815 is enacted to read:
2554 16-6a-815. Waiver of notice.
2555 (1) (a) A director may waive any notice of a meeting before or after the time and date of
2556 the meeting stated in the notice.
2557 (b) Except as provided by Subsection (2), the waiver shall:
2558 (i) be in writing;
2559 (ii) signed by the director entitled to the notice;
2560 (iii) be delivered to the nonprofit corporation for filing with the corporate records.
2561 (c) The delivery and filing required by Subsection (1)(b) may not be conditions of the
2562 effectiveness of the waiver.
2563 (2) A director's attendance at or participation in a meeting waives any required notice to
2564 that director of the meeting unless:
2565 (a) (i) at the beginning of the meeting or promptly upon the director's later arrival, the
2566 director objects to holding the meeting or transacting business at the meeting because of lack of
2567 notice or defective notice; and
2568 (ii) after objecting, the director does not vote for or assent to action taken at the meeting;
2569 or
2570 (b) if special notice was required of a particular purpose pursuant to Subsection
2571 16-6a-814 (2):
2572 (i) the director objects to transacting business with respect to the purpose for which the
2573 special notice was required; and
2574 (ii) after objecting, the director does not vote for or assent to action taken at the meeting
2575 with respect to the purpose.
2576 Section 91. Section 16-6a-816 is enacted to read:
2577 16-6a-816. Quorum and voting.
2578 (1) Unless a greater or lesser number is required by the bylaws, a quorum of a board of
2579 directors consists of a majority of the number of directors in office immediately before the meeting
2580 begins.
2581 (2) The bylaws may authorize a quorum of a board of directors to consist of:
2582 (a) no fewer than one-third of the number of directors fixed if the corporation has a fixed
2583 board size; or
2584 (b) if a range for the size of the board is established pursuant to Subsection 16-6a-803 (2),
2585 no fewer than one-third of the number of directors:
2586 (i) fixed in accordance with Subsection 16-6a-803 (2); or
2587 (ii) in office immediately before the meeting begins, if no number is fixed in accordance
2588 with Subsection 16-6a-803 (2).
2589 (3) If a quorum is present when a vote is taken, the affirmative vote of a majority of
2590 directors present is the act of the board of directors unless the vote of a greater number of directors
2591 is required by this chapter or the bylaws.
2592 (4) (a) If provided in the bylaws, for purposes of determining a quorum with respect to a
2593 particular proposal, and for purposes of casting a vote for or against a particular proposal, a
2594 director may be considered to be present at a meeting and to vote if the director has granted a
2595 signed written proxy:
2596 (i) to another director who is present at the meeting; and
2597 (ii) authorizing the other director to cast the vote that is directed to be cast by the written
2598 proxy with respect to the particular proposal that is described with reasonable specificity in the
2599 proxy.
2600 (b) Except as provided in this Subsection (4) and as permitted by Section 16-6a-813 ,
2601 directors may not vote or otherwise act by proxy.
2602 (5) A director who is present at a meeting of the board of directors when corporate action
2603 is taken is considered to have assented to all action taken at the meeting unless:
2604 (a) (i) the director objects at the beginning of the meeting, or promptly upon the director's
2605 arrival, to holding the meeting or transacting business at the meeting; and
2606 (ii) after objecting, the director does not vote for or assent to any action taken at the
2607 meeting;
2608 (b) the director contemporaneously requests that the director's dissent or abstention as to
2609 any specific action taken be entered in the minutes of the meeting; or
2610 (c) the director causes written notice of the director's dissent or abstention as to any
2611 specific action to be received by:
2612 (i) the presiding officer of the meeting before adjournment of the meeting; or
2613 (ii) the nonprofit corporation promptly after adjournment of the meeting.
2614 (6) The right of dissent or abstention pursuant to Subsection (5) as to a specific action is
2615 not available to a director who votes in favor of the action taken.
2616 Section 92. Section 16-6a-817 is enacted to read:
2617 16-6a-817. Committees of the board.
2618 (1) Unless otherwise provided in the bylaws and subject to the provisions of Section
2619 16-6a-906 , the board of directors may:
2620 (a) create one or more committees of the board; and
2621 (b) appoint one or more directors to serve on the committees created under Subsection
2622 (1)(a).
2623 (2) Unless otherwise provided in the bylaws, the creation of a committee of the board and
2624 appointment of directors to it shall be approved by the greater of:
2625 (a) a majority of all the directors in office when the action is taken; or
2626 (b) the number of directors required by the bylaws to take action under Section 16-6a-816 .
2627 (3) Unless otherwise provided in the bylaws, a committee of the board and the members
2628 of the committee are subject to Sections 16-6a-812 through 16-6a-816 , which govern:
2629 (a) meetings;
2630 (b) action without meeting;
2631 (c) notice;
2632 (d) waiver of notice; and
2633 (e) quorum and voting requirements.
2634 (4) To the extent specified in the bylaws or by the board of directors, each committee of
2635 the board shall have the authority of the board of directors under Section 16-6a-801 .
2636 (5) The creation of, delegation of authority to, or action by a committee does not alone
2637 constitute compliance by a director with the standards of conduct described in Section 16-6a-822 .
2638 (6) (a) Subject to Subsection (6)(b), nothing in this part shall prohibit or restrict a nonprofit
2639 corporation from establishing in its bylaws or by action of the board of directors or otherwise one
2640 or more committees, advisory boards, auxiliaries, or other bodies of any kind:
2641 (i) having the members and rules of procedure as the bylaws or board of directors may
2642 provide;
2643 (ii) established to provide the advice, service, and assistance to the nonprofit corporation
2644 as may be specified in the bylaws or by the board of directors; and
2645 (iii) established to carry out the duties and responsibilities for the nonprofit corporation,
2646 as may be specified in the bylaws or by the board of directors.
2647 (b) Notwithstanding Subsection (6)(a), if any committee or other body established under
2648 Subsection (6)(a) has one or more members who are entitled to vote on committee matters and who
2649 are not then also directors, the committee or other body may not exercise any power or authority
2650 reserved to the board of directors, in this chapter or in the bylaws.
2651 Section 93. Section 16-6a-818 is enacted to read:
2652 16-6a-818. Officers.
2653 (1) (a) A nonprofit corporation shall have the officers designated:
2654 (i) in its bylaws; or
2655 (ii) by the board of directors in a manner not inconsistent with the bylaws.
2656 (b) An officer shall be:
2657 (i) a natural person; and
2658 (ii) 18 years of age or older.
2659 (c) An officer need not be a director or a member of the nonprofit corporation, unless the
2660 bylaws so prescribe.
2661 (2) (a) An officer may be appointed by the board of directors or in such other manner as
2662 the board of directors or bylaws may provide.
2663 (b) An appointed officer may appoint one or more officers or assistant officers if
2664 authorized by:
2665 (i) the bylaws; or
2666 (ii) the board of directors.
2667 (3) The bylaws or the board of directors shall delegate to the secretary or to one or more
2668 other persons responsibility for:
2669 (a) the preparation and maintenance of:
2670 (i) minutes of the directors' and members' meetings; and
2671 (ii) other records and information required to be kept by the nonprofit corporation under
2672 Section 16-6a-1601 ; and
2673 (b) authenticating records of the nonprofit corporation.
2674 (4) The same individual may simultaneously hold more than one office in a nonprofit
2675 corporation.
2676 Section 94. Section 16-6a-819 is enacted to read:
2677 16-6a-819. Duties of officers.
2678 Each officer shall have the authority and shall perform the duties set forth with respect to
2679 the office:
2680 (1) in the bylaws; or
2681 (2) to the extent not inconsistent with the bylaws, prescribed with respect to the office by:
2682 (a) the board of directors; or
2683 (b) an officer authorized by the board of directors.
2684 Section 95. Section 16-6a-820 is enacted to read:
2685 16-6a-820. Resignation and removal of officers.
2686 (1) An officer may resign at any time by giving written notice of resignation to the
2687 nonprofit corporation.
2688 (2) A resignation of an officer is effective when the notice is received by the nonprofit
2689 corporation unless the notice specifies a later effective date.
2690 (3) If a resignation is made effective at a later date, the board of directors may:
2691 (a) (i) permit the officer to remain in office until the effective date; and
2692 (ii) fill the pending vacancy before the effective date if the successor does not take office
2693 until the effective date; or
2694 (b) (i) remove the officer at any time before the effective date; and
2695 (ii) fill the vacancy created by the removal.
2696 (4) (a) Unless otherwise provided in the bylaws, the board of directors may remove any
2697 officer at any time with or without cause.
2698 (b) The bylaws or the board of directors may make provisions for the removal of officers
2699 by:
2700 (i) other officers; or
2701 (ii) the voting members.
2702 (5) An officer who resigns, is removed, or whose appointment has expired may deliver to
2703 the division for filing a statement to that effect pursuant to Section 16-6a-1608 .
2704 Section 96. Section 16-6a-821 is enacted to read:
2705 16-6a-821. Contract rights with respect to officers.
2706 (1) The appointment of an officer does not itself create contract rights.
2707 (2) (a) An officer's removal does not affect the officer's contract rights, if any, with the
2708 nonprofit corporation.
2709 (b) An officer's resignation does not affect the nonprofit corporation's contract rights, if
2710 any, with the officer.
2711 Section 97. Section 16-6a-822 is enacted to read:
2712 16-6a-822. General standards of conduct for directors and officers.
2713 (1) (a) A director shall discharge the director's duties as a director, including the director's
2714 duties as a member of a committee of the board, in accordance with Subsection (2).
2715 (b) An officer with discretionary authority shall discharge the officer's duties under that
2716 authority in accordance with Subsection (2).
2717 (2) A director or an officer described in Subsection (1) shall discharge the director or
2718 officer's duties:
2719 (a) in good faith;
2720 (b) with the care an ordinarily prudent person in a like position would exercise under
2721 similar circumstances; and
2722 (c) in a manner the director or officer reasonably believes to be in the best interests of the
2723 nonprofit corporation.
2724 (3) In discharging duties, a director or officer is entitled to rely on information, opinions,
2725 reports, or statements, including financial statements and other financial data, if prepared or
2726 presented by:
2727 (a) one or more officers or employees of the nonprofit corporation whom the director or
2728 officer reasonably believes to be reliable and competent in the matters presented;
2729 (b) legal counsel, a public accountant, or another person as to matters the director or
2730 officer reasonably believes are within the person's professional or expert competence;
2731 (c) religious authorities or ministers, priests, rabbis, or other persons:
2732 (i) whose position or duties in the nonprofit corporation, or in a religious organization with
2733 which the nonprofit corporation is affiliated, the director or officer believes justify reliance and
2734 confidence; and
2735 (ii) who the director or officer believes to be reliable and competent in the matters
2736 presented; or
2737 (d) in the case of a director, a committee of the board of directors of which the director is
2738 not a member if the director reasonably believes the committee merits confidence.
2739 (4) A director or officer is not acting in good faith if the director or officer has knowledge
2740 concerning the matter in question that makes reliance otherwise permitted by Subsection (3)
2741 unwarranted.
2742 (5) A director, regardless of title, may not be considered to be a trustee with respect to:
2743 (a) the nonprofit corporation; or
2744 (b) any property held or administered by the nonprofit corporation including property that
2745 may be subject to restrictions imposed by the donor or transferor of the property.
2746 (6) A director or officer is not liable to the nonprofit corporation, its members, or any
2747 conservator or receiver, or any assignee or successor-in-interest of the nonprofit corporation or
2748 member, for any action taken, or any failure to take any action, as an officer or director, as the case
2749 may be, unless:
2750 (a) the director or officer has breached or failed to perform the duties of the office as set
2751 forth in this section; and
2752 (b) the breach or failure to perform constitutes:
2753 (i) gross negligence;
2754 (ii) willful misconduct; or
2755 (iii) intentional infliction of harm on:
2756 (A) the nonprofit corporation; or
2757 (B) the members of the nonprofit corporation.
2758 Section 98. Section 16-6a-823 is enacted to read:
2759 16-6a-823. Limitation of liability of directors.
2760 (1) (a) Except as provided in Subsection (1)(b) and without limiting the generality of
2761 Subsection 16-6a-822 (6), a nonprofit corporation may eliminate or limit the liability of a director
2762 to the nonprofit corporation or to its members for monetary damages for any action taken or any
2763 failure to take any action as a director, if:
2764 (i) so provided in:
2765 (A) the articles of incorporation;
2766 (B) the bylaws; or
2767 (C) a resolution; and
2768 (ii) to the extent permitted in Subsection (3).
2769 (b) Subsection (1)(a) does not permit a nonprofit corporation from eliminating or limiting
2770 the liability of a director for:
2771 (i) the amount of a financial benefit received by a director to which the director is not
2772 entitled;
2773 (ii) an intentional infliction of harm on:
2774 (A) the nonprofit corporation; or
2775 (B) the members of a nonprofit corporation;
2776 (iii) an intentional violation of criminal law; or
2777 (iv) a violation of Section 16-6a-824 .
2778 (2) A provision authorized under this section may not eliminate or limit the liability of a
2779 director for any act or omission occurring prior to the date when the provision becomes effective.
2780 (3) Any provision authorized under this section to be included in the articles of
2781 incorporation may be adopted in the bylaws or by resolution, but only if the provision is approved
2782 by the same percentage of members of each voting group as would be required to approve an
2783 amendment to the articles of incorporation including the provision.
2784 Section 99. Section 16-6a-824 is enacted to read:
2785 16-6a-824. Liability of directors for unlawful distributions.
2786 (1) (a) A director who votes for or assents to a distribution made in violation of Section
2787 16-6a-1301 or the articles of incorporation is personally liable to the corporation for the amount
2788 of the distribution that exceeds what could have been distributed without violating Section
2789 16-6a-1301 or the articles of incorporation, if it is established that the director's duties were not
2790 performed in compliance with Section 16-6a-822 .
2791 (b) In any proceeding commenced under this section, a director has all of the defenses
2792 ordinarily available to a director.
2793 (2) A director held liable under Subsection (1) for an unlawful distribution is entitled to
2794 contribution:
2795 (a) from every other director who could be held liable under Subsection (1) for the
2796 unlawful distribution; and
2797 (b) from each member who accepted the distribution knowing the distribution was made
2798 in violation of Section 16-6a-1301 or the articles of incorporation.
2799 (3) The amount of the contribution from each member under Subsection (2)(b) is the
2800 amount of the distribution to the member multiplied by the percentage of the amount of
2801 distribution to all members that exceeded what could have been distributed to members without
2802 violating Section 16-6a-1301 or the articles of incorporation.
2803 Section 100. Section 16-6a-825 is enacted to read:
2804 16-6a-825. Conflicting interest transaction.
2805 (1) As used in this section, "conflicting interest transaction" means a contract, transaction,
2806 or other financial relationship between a nonprofit corporation and:
2807 (a) a director of the nonprofit corporation;
2808 (b) a party related to a director; or
2809 (c) an entity in which a director of the nonprofit corporation:
2810 (i) is a director or officer; or
2811 (ii) has a financial interest.
2812 (2) Except as otherwise provided in this section, upon the finding of a conflicting interest
2813 transaction, in an action properly brought before it, a court may:
2814 (a) rule that the conflicting interest transaction is void or voidable;
2815 (b) enjoin or set aside the conflict of interest transaction; or
2816 (c) determine that the conflicting interest transaction gives rise to an award of damages or
2817 other sanctions.
2818 (3) (a) A loan may not be made by a corporation to its directors or officers.
2819 (b) A director or officer who assents to or participates in the making of a loan in violation
2820 of Subsection (3)(a) shall be liable to the corporation for the amount of the loan until the
2821 repayment of the loan.
2822 (4) (a) If the conditions of Subsection (4)(b) are met, a conflicting interest transaction may
2823 not be void or voidable or be enjoined, set aside, or give rise to an award of damages or other
2824 sanctions in a proceeding by a member or by or in the right of the nonprofit corporation, solely
2825 because:
2826 (i) the conflicting interest transaction involves:
2827 (A) a director of the nonprofit corporation;
2828 (B) a party related to a director; or
2829 (C) an entity in which a director of the nonprofit corporation is a director or officer or has
2830 a financial interest;
2831 (ii) the director is present at or participates in the meeting of the nonprofit corporation's
2832 board of directors or of the committee of the board of directors that authorizes, approves, or ratifies
2833 the conflicting interest transaction; or
2834 (iii) the director's vote is counted for the purpose described in Subsection (4)(a)(ii).
2835 (b) Subsection (4)(a) applies if:
2836 (i) (A) the material facts as to the director's relationship or interest and as to the conflicting
2837 interest transaction are disclosed or are known to the board of directors or the committee; and
2838 (B) the board of directors or committee in good faith authorizes, approves, or ratifies the
2839 conflicting interest transaction by the affirmative vote of a majority of the disinterested directors,
2840 even though the disinterested directors are less than a quorum;
2841 (ii) (A) the material facts as to the director's relationship or interest and as to the
2842 conflicting interest transaction are disclosed or are known to the members entitled to vote on the
2843 conflicting interest transaction; and
2844 (B) the conflicting interest transaction is specifically authorized, approved, or ratified in
2845 good faith by a vote of the members entitled to vote thereon; or
2846 (iii) the conflicting interest transaction is fair as to the nonprofit corporation.
2847 (5) Common or interested directors may be counted in determining the presence of a
2848 quorum at a meeting of the board of directors or of a committee that authorizes, approves, or
2849 ratifies the conflicting interest transaction.
2850 Section 101. Section 16-6a-826 is enacted to read:
2851 16-6a-826. Common members, directors or officers.
2852 (1) Two or more nonprofit corporations may have members, directors or officers that are
2853 common to each nonprofit corporation.
2854 (2) The fact of common members, directors or officers in one or more nonprofit
2855 corporations may not, by itself, create an inference that the nonprofit corporations individually or
2856 collectively:
2857 (a) are agents or alter egos of one another; or
2858 (b) have been formed or availed of for an improper purpose.
2859 (3) The doctrine of "piercing the corporate veil" may not be applied to one or more
2860 nonprofit corporations solely because of the fact of common members, directors or officers.
2861 Section 102. Section 16-6a-901 is enacted to read:
2862
2863 16-6a-901. Indemnification definitions.
2864 As used in this part:
2865 (1) (a) "Director" means an individual who:
2866 (i) is or was a director of a nonprofit corporation; or
2867 (ii) while a director of a nonprofit corporation at the nonprofit corporation's request, is or
2868 was serving as a director, officer, partner, member, manager, trustee, employee, fiduciary, or agent
2869 of:
2870 (A) another domestic or foreign corporation;
2871 (B) another nonprofit corporation;
2872 (C) another person; or
2873 (D) an employee benefit plan.
2874 (b) A director is considered to be serving an employee benefit plan at the nonprofit
2875 corporation's request if the director's duties to the nonprofit corporation also impose duties on, or
2876 otherwise involve services by, the director to the employee benefit plan or to participants in or
2877 beneficiaries of the employee benefit plan.
2878 (c) "Director" includes, unless the context requires otherwise, the estate or personal
2879 representative of a director.
2880 (2) "Expenses" includes attorneys' fees.
2881 (3) "Liability" means the obligation incurred with respect to a proceeding to pay a
2882 judgment, settlement, penalty, or fine, including:
2883 (a) an excise tax assessed with respect to an employee benefit plan; or
2884 (b) reasonable expenses.
2885 (4) "Nonprofit corporation" includes any domestic or foreign entity that is a predecessor
2886 of a nonprofit corporation by reason of a merger or other transaction in which the predecessor's
2887 existence ceased upon consummation of the transaction.
2888 (5) (a) "Officer," "employee," "fiduciary," and "agent" include any person who, while
2889 serving the indicated relationship to the nonprofit corporation, at the nonprofit corporation's
2890 request, is or was serving as a director, officer, partner, trustee, employee, fiduciary, or agent of:
2891 (i) another domestic or foreign corporation;
2892 (ii) another person; or
2893 (iii) an employee benefit plan.
2894 (b) An officer, employee, fiduciary, or agent is considered to be serving an employee
2895 benefit plan at the nonprofit corporation's request if that person's duties to the nonprofit
2896 corporation also impose duties on, or otherwise involve services by, that person to the plan or
2897 participants in, or beneficiaries of the plan.
2898 (c) Unless the context requires otherwise, "officer," "employee," "fiduciary," and "agent"
2899 include the estates or personal representatives of the officer, employee, fiduciary, or agent.
2900 (6) (a) "Official capacity" means:
2901 (i) when used with respect to a director, the office of director in a corporation; and
2902 (ii) when used with respect to a person other than a director, as contemplated in Section
2903 16-6a-907 , the office in a corporation held by the officer or the employment, fiduciary, or agency
2904 relationship undertaken by the person on behalf of the corporation.
2905 (b) "Official capacity" does not include service for any:
2906 (i) other foreign or domestic corporation;
2907 (ii) other person; or
2908 (iii) employee benefit plan.
2909 (7) "Party" includes an individual who was, is, or is threatened to be made a named
2910 defendant or respondent in a proceeding.
2911 (8) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding,
2912 whether civil, criminal, administrative, or investigative and whether formal or informal.
2913 Section 103. Section 16-6a-902 is enacted to read:
2914 16-6a-902. Authority to indemnify directors.
2915 (1) Except as provided in Subsection (4), a nonprofit corporation may indemnify an
2916 individual made a party to a proceeding because the individual is or was a director, against liability
2917 incurred in the proceeding if:
2918 (a) the individual's conduct was in good faith;
2919 (b) the individual reasonably believed that the individual's conduct was in, or not opposed
2920 to, the corporation's best interests; and
2921 (c) in the case of any criminal proceeding, the individual had no reasonable cause to
2922 believe the individual's conduct was unlawful.
2923 (2) A director's conduct with respect to any employee benefit plan for a purpose the
2924 director reasonably believed to be in or not opposed to the interests of the participants in and
2925 beneficiaries of the plan is conduct that satisfies the requirement of Subsection (1)(b).
2926 (3) The termination of a proceeding by judgment, order, settlement, conviction, or upon
2927 a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not
2928 meet the standard of conduct described in this section.
2929 (4) A nonprofit corporation may not indemnify a director under this section:
2930 (a) in connection with a proceeding by or in the right of the nonprofit corporation in which
2931 the director was adjudged liable to the nonprofit corporation; or
2932 (b) in connection with any other proceeding charging that the director derived an improper
2933 personal benefit, whether or not involving action in the director's official capacity, in which
2934 proceeding the director was adjudged liable on the basis that the director derived an improper
2935 personal benefit.
2936 (5) Indemnification permitted under this section in connection with a proceeding by or in
2937 the right of the nonprofit corporation is limited to reasonable expenses incurred in connection with
2938 the proceeding.
2939 Section 104. Section 16-6a-903 is enacted to read:
2940 16-6a-903. Mandatory indemnification of directors.
2941 (1) Unless limited by its articles of incorporation, a nonprofit corporation shall indemnify
2942 a director described in Subsection (2) against reasonable expenses incurred by the director in
2943 connection with the proceeding or claim with respect to which the director has been successful.
2944 (2) Subsection (1) applies to a director who was successful, on the merits or otherwise, in
2945 the defense of:
2946 (a) any proceeding to which the director was a party because the director is or was a
2947 director of the nonprofit corporation; or
2948 (b) any claim, issue, or matter in the proceeding, to which the director was a party because
2949 the director is or was a director of the nonprofit corporation.
2950 Section 105. Section 16-6a-904 is enacted to read:
2951 16-6a-904. Advance of expenses for directors.
2952 (1) A nonprofit corporation may pay for or reimburse the reasonable expenses incurred by
2953 a director who is a party to a proceeding in advance of final disposition of the proceeding if:
2954 (a) the director furnishes the nonprofit corporation a written affirmation of the director's
2955 good faith belief that the director has met the applicable standard of conduct described in Section
2956 16-6a-902 ;
2957 (b) the director furnishes the nonprofit corporation a written undertaking, executed
2958 personally or on the director's behalf, to repay the advance if it is ultimately determined that the
2959 director did not meet the standard of conduct; and
2960 (c) a determination is made that the facts then known to those making the determination
2961 would not preclude indemnification under this part.
2962 (2) The undertaking required by Subsection (1)(b):
2963 (a) shall be an unlimited general obligation of the director;
2964 (b) need not be secured; and
2965 (c) may be accepted without reference to financial ability to make repayment.
2966 (3) Determinations and authorizations of payments under this section shall be made in the
2967 manner specified in Section 16-6a-906 .
2968 Section 106. Section 16-6a-905 is enacted to read:
2969 16-6a-905. Court-ordered indemnification of directors.
2970 (1) Unless a nonprofit corporation's articles of incorporation provide otherwise, a director
2971 of the nonprofit corporation who is or was a party to a proceeding may apply for indemnification
2972 to:
2973 (a) the court conducting the proceeding; or
2974 (b) another court of competent jurisdiction.
2975 (2) On receipt of an application described in Subsection (1), the court, after giving any
2976 notice the court considers necessary, may order indemnification in the following manner:
2977 (a) if the court determines that the director is entitled to mandatory indemnification under
2978 Section 16-6a-903 , the court shall:
2979 (i) order indemnification; and
2980 (ii) order the nonprofit corporation to pay the director's reasonable expenses incurred to
2981 obtain court-ordered indemnification; and
2982 (b) if the court determines that the director is fairly and reasonably entitled to
2983 indemnification in view of all the relevant circumstances, whether or not the director met the
2984 applicable standard of conduct set forth in Section 16-6a-902 or was adjudged liable as described
2985 in Subsection 16-6a-902 (4), the court may order indemnification as the court determines to be
2986 proper, except that the indemnification with respect to any proceeding in which liability has been
2987 adjudged in the circumstances described in Subsection 16-6a-902 (4) is limited to reasonable
2988 expenses incurred.
2989 Section 107. Section 16-6a-906 is enacted to read:
2990 16-6a-906. Determination and authorization of indemnification of directors.
2991 (1) (a) A nonprofit corporation may not indemnify a director under Section 16-6a-902
2992 unless authorized in the specific case after a determination has been made that indemnification of
2993 the director is permissible in the circumstances because the director has met the standard of
2994 conduct set forth in Section 16-6a-902 .
2995 (b) A nonprofit corporation may not advance expenses to a director under Section
2996 16-6a-904 unless:
2997 (i) authorized in the specific case after the written affirmation and undertaking required
2998 by Subsections 16-6a-904 (1)(a) and (1)(b) are received; and
2999 (ii) the determination required by Subsection 16-6a-904 (1)(c) has been made.
3000 (2) (a) The determinations required by Subsection (1) shall be made:
3001 (i) by the board of directors by a majority vote of those present at a meeting at which a
3002 quorum is present if only those directors not parties to the proceeding are counted in satisfying the
3003 quorum;
3004 (ii) if a quorum cannot be obtained under Subsection (2)(a)(i), by a majority vote of a
3005 committee of the board of directors:
3006 (A) designated by the board of directors; and
3007 (B) consisting of two or more directors not parties to the proceeding; or
3008 (iii) by persons listed in Subsection (3).
3009 (b) The directors who are parties to the proceeding may participate in the designation of
3010 directors for the committee described in Subsection (2)(a)(ii).
3011 (3) (a) The determination required to be made by Subsection (1) shall be made by a person
3012 described in Subsection (3)(a) if:
3013 (i) (A) a quorum cannot be obtained in accordance with Subsection (2)(a)(i); and
3014 (B) a committee cannot be established under Subsection (2)(a)(ii); or
3015 (ii) even if a quorum is obtained or a committee is designated, a majority of the directors
3016 constituting the quorum or committee directs.
3017 (b) If a condition described in Subsection (3)(a) is met, the determination required to be
3018 made by Subsection (1) shall be made:
3019 (i) by independent legal counsel selected by:
3020 (A) a vote of the board of directors or the committee in the manner specified in Subsection
3021 (2)(a)(i) or (ii); or
3022 (B) if a quorum of the full board cannot be obtained and a committee cannot be
3023 established, by independent legal counsel selected by a majority vote of the full board of directors;
3024 or
3025 (ii) by the voting members, but a voting member may not vote on the determination if the
3026 voting member is:
3027 (A) a director; and
3028 (B) at the time seeking indemnification.
3029 (4) (a) Except as provided in Subsection (4)(b), an authorization of indemnification and
3030 advance of expenses shall be made in the same manner as the determination that indemnification
3031 or advance of expenses is permissible.
3032 (b) Notwithstanding Subsection (4)(a), if the determination that indemnification or
3033 advance of expenses is permissible is made by independent legal counsel, authorization of
3034 indemnification and advance of expenses shall be made by the body that selected the independent
3035 legal counsel.
3036 Section 108. Section 16-6a-907 is enacted to read:
3037 16-6a-907. Indemnification of officers, employees, fiduciaries, and agents.
3038 Unless a nonprofit corporation's articles of incorporation provide otherwise:
3039 (1) to the same extent as a director, an officer of the nonprofit corporation is entitled to:
3040 (a) mandatory indemnification under Section 16-6a-903 ; and
3041 (b) apply for court-ordered indemnification under Section 16-6a-905 ;
3042 (2) the nonprofit corporation may indemnify and advance expenses to an officer,
3043 employee, fiduciary, or agent of the corporation to the same extent as to a director; and
3044 (3) a nonprofit corporation may indemnify and advance expenses to an officer, employee,
3045 fiduciary, or agent who is not a director to a greater extent if:
3046 (a) not inconsistent with public policy; and
3047 (b) provided for by:
3048 (i) its articles of incorporation or bylaws;
3049 (ii) general or specific action of its board of directors; or
3050 (iii) contract.
3051 Section 109. Section 16-6a-908 is enacted to read:
3052 16-6a-908. Insurance.
3053 (1) A nonprofit corporation may purchase and maintain liability insurance:
3054 (a) on behalf of a person who:
3055 (i) is or was a director, officer, employee, fiduciary, or agent of the nonprofit corporation;
3056 or
3057 (ii) while serving as a director, officer, employee, fiduciary, or agent of the nonprofit
3058 corporation at the request of the nonprofit corporation, is or was serving as a director, officer,
3059 partner, trustee, employee, fiduciary, or agent of:
3060 (A) another foreign or domestic nonprofit corporation;
3061 (B) other person; or
3062 (C) an employee benefit plan; and
3063 (b) against liability asserted against or incurred by the person in that capacity or arising
3064 from the person's status as a director, officer, employee, fiduciary, or agent, whether or not the
3065 nonprofit corporation would have power to indemnify the person against the same liability under
3066 Section 16-6a-902 , 16-6a-903 , or 16-6a-907 .
3067 (2) Insurance may be procured from any insurance company designated by the board of
3068 directors, whether the insurance company is formed under the laws of this state or any other
3069 jurisdiction of the United States or elsewhere, including any insurance company in which the
3070 nonprofit corporation has an equity or any other interest through stock ownership or otherwise.
3071 Section 110. Section 16-6a-909 is enacted to read:
3072 16-6a-909. Limitations on indemnification of directors.
3073 (1) (a) A provision treating a nonprofit corporation's indemnification of, or advance for
3074 expenses to, directors that is contained in the following is valid only if and to the extent the
3075 provision is not inconsistent with this part:
3076 (i) the articles of incorporation or bylaws of the nonprofit corporation;
3077 (ii) a resolution of the nonprofit corporation's members or board of directors;
3078 (iii) a contract, except an insurance policy; or
3079 (iv) other writing.
3080 (b) If the articles of incorporation limit indemnification or advance of expenses,
3081 indemnification and advance of expenses are valid only to the extent not inconsistent with the
3082 articles of incorporation.
3083 (2) This part does not limit a nonprofit corporation's power to pay or reimburse expenses
3084 incurred by a director in connection with the director's appearance as a witness in a proceeding at
3085 a time when the director has not been made a named defendant or respondent to the proceeding.
3086 Section 111. Section 16-6a-910 is enacted to read:
3087 16-6a-910. Notice to voting members of indemnification of director.
3088 (1) If a nonprofit corporation indemnifies or advances expenses to a director under this part
3089 in connection with a proceeding by or in the right of the nonprofit corporation, the nonprofit
3090 corporation shall give written notice of the indemnification or advance to the voting members with
3091 or before the notice of the next voting members' meeting.
3092 (2) If the next voting member action after the indemnification or advance is taken without
3093 a meeting at the instigation of the board of directors, the notice shall be given to the voting
3094 members at or before the time the first voting member signs a writing consenting to the action.
3095 Section 112. Section 16-6a-1001 is enacted to read:
3096
3097 16-6a-1001. Authority to amend articles of incorporation.
3098 (1) A nonprofit corporation may amend its articles of incorporation at any time to:
3099 (a) add or change a provision that is required or permitted in the articles of incorporation;
3100 or
3101 (b) delete a provision not required in the articles of incorporation.
3102 (2) Whether a provision is required or permitted in the articles of incorporation is
3103 determined as of the effective date of the amendment.
3104 Section 113. Section 16-6a-1002 is enacted to read:
3105 16-6a-1002. Amendment of articles of incorporation by board of directors or
3106 incorporators.
3107 (1) Unless otherwise provided in the articles of incorporation, the board of directors may
3108 adopt, without member approval, one or more amendments to the articles of incorporation to:
3109 (a) delete the names and addresses of the initial directors;
3110 (b) delete the name and address of the initial registered agent or registered office, if a
3111 statement of change is on file with the division;
3112 (c) change the corporate name by:
3113 (i) substituting the word "corporation," "incorporated," "company," "limited," or an
3114 abbreviation of any such word for a similar word or abbreviation in the name; or
3115 (ii) adding, deleting, or changing a geographical attribution; or
3116 (d) make any other change expressly permitted by this chapter to be made without member
3117 action.
3118 (2) The board of directors may adopt, without member action, one or more amendments
3119 to the articles of incorporation to change the corporate name, if necessary, in connection with the
3120 reinstatement of a nonprofit corporation pursuant to Section 16-6a-1412 .
3121 (3) (a) Subject to any approval required pursuant to Section 16-6a-1012 , if a nonprofit
3122 corporation has no members, no members entitled to vote on amendments, or no members yet
3123 admitted to membership, one or more amendments to the nonprofit corporation's articles of
3124 incorporation may be adopted by:
3125 (i) its incorporators until directors have been chosen; or
3126 (ii) its directors after the directors have been chosen.
3127 (b) A nonprofit corporation described in Subsection (3)(a) shall provide notice of any
3128 meeting at which an amendment is to be voted upon.
3129 (c) The notice required by Subsection (3)(b) shall:
3130 (i) be in accordance with Section 16-6a-814 ;
3131 (ii) state that the purpose, or one of the purposes, of the meeting is to consider a proposed
3132 amendment to the articles of incorporation; and
3133 (iii) (A) contain or be accompanied by a copy or summary of the amendment; or
3134 (B) state the general nature of the amendment.
3135 (d) An amendment described in Subsection (3)(a) shall be approved:
3136 (i) by a majority of the incorporators, until directors have been chosen; or
3137 (ii) after directors are chosen by a majority of the directors in office at the time the
3138 amendment is adopted.
3139 Section 114. Section 16-6a-1003 is enacted to read:
3140 16-6a-1003. Amendment of articles of incorporation by board of directors and
3141 members.
3142 (1) The board of directors or the members representing at least 10% of all of the votes
3143 entitled to be cast on the amendment may propose an amendment to the articles of incorporation
3144 for submission to the members unless a different vote or voting class is required by:
3145 (a) this chapter;
3146 (b) the articles of incorporation;
3147 (c) the bylaws; or
3148 (d) the members or the board of directors acting pursuant to Subsection (5).
3149 (2) For an amendment to the articles of incorporation to be adopted pursuant to Subsection
3150 (1):
3151 (a) the board of directors shall recommend the amendment to the members unless:
3152 (i) the amendment is proposed by members; or
3153 (ii) the board of directors:
3154 (A) determines that because of conflict of interest or other special circumstances it should
3155 make no recommendation; and
3156 (B) communicates the basis for its determination to the members with the amendment; and
3157 (b) the members entitled to vote on the amendment shall approve the amendment as
3158 provided in Subsection (5).
3159 (3) The proposing board of directors or the proposing members may condition the
3160 effectiveness of the amendment on any basis.
3161 (4) (a) The nonprofit corporation shall give notice, in accordance with Section 16-6a-704 ,
3162 to each member entitled to vote on the amendment of the members' meeting at which the
3163 amendment will be voted upon.
3164 (b) The notice required by Subsection (4)(a) shall:
3165 (i) state that the purpose, or one of the purposes, of the meeting is to consider the
3166 amendment; and
3167 (ii) (A) contain or be accompanied by a copy or a summary of the amendment; or
3168 (B) shall state the general nature of the amendment.
3169 (5) The amendment shall be approved by the votes required by Sections 16-6a-714 and
3170 16-6a-715 by every voting group entitled to vote on the amendment unless a greater vote is
3171 required by:
3172 (a) this chapter;
3173 (b) the articles of incorporation;
3174 (c) bylaws adopted by the members; or
3175 (d) the proposing board of directors or the proposing members acting pursuant to
3176 Subsection (3).
3177 (6) If the board of directors or the members seek to have the amendment approved by the
3178 members by written consent, the material soliciting the approval shall contain or be accompanied
3179 by a copy or summary of the amendment.
3180 Section 115. Section 16-6a-1004 is enacted to read:
3181 16-6a-1004. Voting on amendments of articles of incorporation by voting groups.
3182 (1) Unless otherwise provided by this chapter or the articles of incorporation, if
3183 membership voting is otherwise required by this chapter, the members of a class who are entitled
3184 to vote are entitled to vote as a separate voting group on an amendment to the articles of
3185 incorporation if the amendment would:
3186 (a) affect the rights, privileges, preferences, restrictions, or conditions of that class as to
3187 voting, dissolution, redemption, or transfer of memberships in a manner different than the
3188 amendment would affect another class;
3189 (b) change the rights, privileges, preferences, restrictions, or conditions of that class as to
3190 voting, dissolution, redemption, or transfer by changing the rights, privileges, preferences,
3191 restrictions, or conditions of another class;
3192 (c) increase or decrease the number of memberships authorized for that class;
3193 (d) increase the number of memberships authorized for another class;
3194 (e) effect an exchange, reclassification, or termination of the memberships of that class;
3195 or
3196 (f) authorize a new class of memberships.
3197 (2) If a class is to be divided into two or more classes as a result of an amendment to the
3198 articles of incorporation, the amendment shall be approved by the members of each class that
3199 would be created by the amendment.
3200 Section 116. Section 16-6a-1005 is enacted to read:
3201 16-6a-1005. Articles of amendment to articles of incorporation.
3202 A nonprofit corporation amending its articles of incorporation shall deliver to the division
3203 for filing articles of amendment setting forth:
3204 (1) the name of the nonprofit corporation;
3205 (2) the text of each amendment adopted;
3206 (3) the date of each amendment's adoption;
3207 (4) if the amendment was adopted by the board of directors or incorporators without
3208 member action, a statement to that effect and that:
3209 (a) the nonprofit corporation does not have members; or
3210 (b) member action was not required;
3211 (5) if the amendment was adopted by the members, a statement that the number of votes
3212 cast for the amendment by the members or by each voting group entitled to vote separately on the
3213 amendment was sufficient for approval by the members or voting group respectively; and
3214 (6) if approval of the amendment by some person or persons other than the members, the
3215 board of directors, or the incorporators is required pursuant to Section 16-6a-1013 , a statement that
3216 the approval was obtained.
3217 Section 117. Section 16-6a-1006 is enacted to read:
3218 16-6a-1006. Restated articles of incorporation.
3219 (1) (a) The board of directors may restate the articles of incorporation at any time with or
3220 without member action.
3221 (b) The incorporators of a nonprofit corporation may restate the articles of incorporation
3222 at any time if the nonprofit corporation:
3223 (i) has no members; and
3224 (ii) no directors have been chosen.
3225 (2) (a) The restatement may include one or more amendments to the articles of
3226 incorporation.
3227 (b) Notwithstanding Subsection (1), if the restatement includes an amendment requiring
3228 member approval, it shall be adopted as provided in Section 16-6a-1003 .
3229 (3) (a) If the board of directors submits a restatement for member action, the nonprofit
3230 corporation shall give notice, in accordance with Section 16-6a-704 , to each member entitled to
3231 vote on the restatement of the members' meeting at which the restatement will be voted upon.
3232 (b) The notice required by Subsection (3)(a) shall:
3233 (i) state that the purpose, or one of the purposes, of the meeting is to consider the
3234 restatement; and
3235 (ii) contain or be accompanied by a copy of the restatement that identifies any amendment
3236 or other change it would make in the articles of incorporation.
3237 (4) A nonprofit corporation restating its articles of incorporation shall deliver to the
3238 division for filing articles of restatement setting forth:
3239 (a) the name of the nonprofit corporation;
3240 (b) the text of the restated articles of incorporation;
3241 (c) if the restatement contains an amendment to the articles of incorporation that was
3242 adopted by the members, the information required by Subsection 16-6a-1005 (1)(e); and
3243 (d) if the restatement was adopted by the board of directors or incorporators without
3244 member action, a statement to that effect and that member action was not required.
3245 (5) Upon filing by the division or at any later effective date determined pursuant to Section
3246 16-6a-108 , restated articles of incorporation supersede the original articles of incorporation and
3247 all prior amendments to the original articles of incorporation.
3248 Section 118. Section 16-6a-1007 is enacted to read:
3249 16-6a-1007. Amendment of articles of incorporation pursuant to reorganization.
3250 (1) Articles of incorporation may be amended, without action by the board of directors or
3251 members, to carry out a plan of reorganization ordered or decreed by a court of competent
3252 jurisdiction under a statute of this state or of the United States if the articles of incorporation after
3253 amendment contain only provisions required or permitted by Section 16-6a-202 .
3254 (2) For an amendment to the articles of incorporation to be made pursuant to Subsection
3255 (1), one or more individuals designated by the court shall deliver to the division for filing articles
3256 of amendment setting forth:
3257 (a) the name of the nonprofit corporation;
3258 (b) the text of each amendment approved by the court;
3259 (c) the date of the court's order or decree approving the articles of amendment;
3260 (d) the title of the reorganization proceeding in which the order or decree was entered; and
3261 (e) a statement that the court had jurisdiction of the proceeding under a specified statute
3262 of this state or of the United States.
3263 (3) This section does not apply after entry of a final decree in the reorganization
3264 proceeding even though the court retains jurisdiction of the proceeding for limited purposes
3265 unrelated to consummation of the reorganization plan.
3266 Section 119. Section 16-6a-1008 is enacted to read:
3267 16-6a-1008. Conversion to a corporation.
3268 (1) (a) A domestic nonprofit corporation may convert to a corporation subject to Title 16,
3269 Chapter 10a, Utah Revised Business Corporation Act, by filing amendment of its articles of
3270 incorporation with the division pursuant to this section.
3271 (b) The day on which a nonprofit domestic corporation files amendments under this
3272 section, the domestic nonprofit corporation becomes a corporation subject to Title 16, Chapter 10a,
3273 Utah Revised Business Corporation Act.
3274 (2) (a) The amendment of the articles of incorporation to convert to a corporation shall:
3275 (i) revise the statement of purpose;
3276 (ii) delete:
3277 (A) the authorization for members; and
3278 (B) any other provisions relating to memberships;
3279 (iii) authorize shares:
3280 (A) stating the number of shares; and
3281 (B) including the information required by Section 16-10a-601 with respect to each class
3282 of shares the corporation is to be authorized to issue;
3283 (iv) make such other changes as may be necessary or desired; and
3284 (v) if the corporation has any members, provide for:
3285 (A) the cancellation of the memberships; or
3286 (B) the conversion of the memberships to shares of the corporation.
3287 (3) If the nonprofit corporation has any voting members, an amendment to convert to a
3288 corporation shall be approved by all of the members regardless of limitations or restrictions on the
3289 voting rights of the members.
3290 (4) If an amendment to the articles of incorporation filed pursuant to this section is
3291 included in a merger agreement, this section applies, except that any provisions for cancellation
3292 or conversion of memberships:
3293 (a) shall be in the merger agreement; and
3294 (b) may not be in the amendment of the articles of incorporation.
3295 Section 120. Section 16-6a-1009 is enacted to read:
3296 16-6a-1009. Effect of amendment of articles of incorporation.
3297 (1) An amendment to the articles of incorporation does not affect:
3298 (a) any existing right of persons other than members;
3299 (b) any cause of action existing against or in favor of the nonprofit corporation; or
3300 (c) any proceeding to which the nonprofit corporation is a party.
3301 (2) An amendment changing a nonprofit corporation's corporate name does not abate a
3302 proceeding brought by or against a nonprofit corporation in its former corporate name.
3303 Section 121. Section 16-6a-1010 is enacted to read:
3304 16-6a-1010. Amendment of bylaws by board of directors or members.
3305 (1) The board of directors may amend the bylaws at any time to add, change, or delete a
3306 provision, unless:
3307 (a) this chapter or the articles of incorporation or bylaws:
3308 (i) reserve the power exclusively to the members in whole or part; or
3309 (ii) otherwise prohibit the board of directors from amending the bylaws to add, change,
3310 or delete a provision; or
3311 (b) it would result in a change of the rights, privileges, preferences, restrictions, or
3312 conditions of a membership class as to voting, dissolution, redemption, or transfer by changing the
3313 rights, privileges, preferences, restrictions, or conditions of another class.
3314 (2) (a) The members may amend the bylaws even though the bylaws may also be amended
3315 by the board of directors.
3316 (b) Amendments to the bylaws by members shall be made in accordance with Sections
3317 16-6a-1003 and 16-6a-1004 as if each reference in Sections 16-6a-1003 and 16-6a-1004 to the
3318 article of incorporation was a reference to the bylaws.
3319 Section 122. Section 16-6a-1011 is enacted to read:
3320 16-6a-1011. Bylaw changing quorum or voting requirement for members.
3321 (1) (a) If authorized by the articles of incorporation, the members may adopt, amend, or
3322 repeal bylaws that fix a greater quorum or voting requirement for members, or voting groups of
3323 members, than is required by this chapter.
3324 (b) An action by the members under Subsection (1)(a) is subject to Parts 6 and 7.
3325 (2) Bylaws that fix a lesser or greater quorum requirement or a greater voting requirement
3326 for members pursuant to Section 16-6a-716 may not be amended by the board of directors.
3327 Section 123. Section 16-6a-1012 is enacted to read:
3328 16-6a-1012. Bylaw changing quorum or voting requirement for directors.
3329 (1) Bylaws that fix a greater quorum or voting requirement for the board of directors may
3330 be amended:
3331 (a) if adopted by the members, only by the members; or
3332 (b) if adopted by the board of directors, by:
3333 (i) the members; or
3334 (ii) the board of directors.
3335 (2) Bylaws adopted or amended by the members that fix a greater quorum or voting
3336 requirement for the board of directors may provide that the bylaws may be amended only by a
3337 specified vote of:
3338 (a) the members; or
3339 (b) the board of directors.
3340 (3) Action by the board of directors under Subsection (1)(b) to adopt or amend bylaws that
3341 change the quorum or voting requirement for the board of directors shall meet the greater of the
3342 quorum and voting requirement for taking the action:
3343 (a) then in effect; or
3344 (b) proposed to be adopted.
3345 Section 124. Section 16-6a-1013 is enacted to read:
3346 16-6a-1013. Approval by third persons.
3347 (1) The articles of incorporation may require an amendment to the articles of incorporation
3348 or bylaws to be approved in writing by a specified person or persons other than the board of
3349 directors.
3350 (2) A provision permitted under Subsection (2) may only be amended with the approval
3351 in writing of the person or persons specified in the provision.
3352 Section 125. Section 16-6a-1014 is enacted to read:
3353 16-6a-1014. Amendment terminating members or redeeming or canceling
3354 memberships.
3355 (1) An amendment to the articles of incorporation or bylaws of a nonprofit corporation
3356 shall meet the requirements of this chapter and this section if the amendment would:
3357 (a) terminate all members or any class of members; or
3358 (b) redeem or cancel all memberships or any class of memberships.
3359 (2) Before adopting a resolution proposing an amendment as described in Subsection (1),
3360 the board of directors of a nonprofit corporation shall give notice of the general nature of the
3361 amendment to the members.
3362 Section 126. Section 16-6a-1101 is enacted to read:
3363
3364 16-6a-1101. Merger.
3365 (1) One or more nonprofit corporations may merge into another nonprofit corporation if:
3366 (a) the board of directors of each nonprofit corporation adopts a plan of merger; and
3367 (b) required by Section 16-6a-1102 , the members of the nonprofit corporation entitled to
3368 vote on the plan of merger, approve the plan of merger.
3369 (2) The plan of merger required by Subsection (1) shall set forth:
3370 (a) the name of each nonprofit corporation planning to merge;
3371 (b) the name of the surviving nonprofit corporation into which each nonprofit corporation
3372 plans to merge;
3373 (c) the terms and conditions of the merger;
3374 (d) the manner and basis of converting in whole or part the memberships of each nonprofit
3375 corporation, if any, into memberships, obligations, or other interests of:
3376 (i) the surviving nonprofit corporation;
3377 (ii) any other entity; or
3378 (iii) into money or other property; and
3379 (e) any amendments to the articles of incorporation of the surviving nonprofit corporation
3380 to be effected by the merger.
3381 (3) In addition to the provisions required by Subsection (2), the plan of merger may set
3382 forth other provisions relating to the merger.
3383 Section 127. Section 16-6a-1102 is enacted to read:
3384 16-6a-1102. Action on plan of merger.
3385 (1) After adopting the plan of merger, the board of directors of each nonprofit corporation
3386 that is a party to the merger shall submit the plan of merger to its members, if any are entitled to
3387 vote on the plan of merger, for approval.
3388 (2) If the nonprofit corporation has members entitled to vote with respect to the approval
3389 of a plan of merger, a plan of merger is approved by the members if:
3390 (a) (i) the board of directors recommends the plan of merger to the members entitled to
3391 vote on the plan of merger; or
3392 (ii) (A) the board of directors determines that, because of conflict of interest or other
3393 special circumstances, it should make no recommendation; and
3394 (B) communicates the basis for its determination to the members with the plan; and
3395 (b) the members entitled to vote on the plan of merger approve the plan as provided in
3396 Subsection (7).
3397 (3) After adopting the plan of merger, the board of directors of each nonprofit corporation
3398 party to the merger shall submit the plan of merger for written approval by any person or persons:
3399 (a) whose approval is required by the articles of incorporation of the nonprofit corporation;
3400 and
3401 (b) as required by Section 16-6a-1013 for an amendment to the articles of incorporation
3402 or bylaws.
3403 (4) (a) If the nonprofit corporation does not have members entitled to vote on a merger,
3404 the merger shall be approved and adopted by a majority of the directors elected and in office at the
3405 time the plan of merger is considered by the board of directors.
3406 (b) The nonprofit corporation shall provide notice of any meeting of the board of directors
3407 at which the approval described in Subsection (4)(a) is to be obtained in accordance with Section
3408 16-6a-814 .
3409 (c) The notice required by Subsection (4)(b) shall state that the purpose, or one of the
3410 purposes, of the meeting is to consider the proposed merger.
3411 (5) The board of directors may condition the effectiveness of the plan of merger on any
3412 basis.
3413 (6) (a) The nonprofit corporation shall give notice, in accordance with Section 16-6a-704 ,
3414 to each member entitled to vote on the plan of merger of the members' meeting at which the plan
3415 will be voted on.
3416 (b) The notice required by Subsection (6)(a) shall:
3417 (i) state that the purpose, or one of the purposes, of the meeting is to consider the plan of
3418 merger; and
3419 (ii) contain or be accompanied by a copy of the plan of merger or a summary of the plan
3420 of merger.
3421 (7) The plan of merger shall be approved by the votes required by Sections 16-6a-714 and
3422 16-6a-715 by every voting group entitled to vote on the plan of merger unless a greater vote is
3423 required by:
3424 (a) this chapter;
3425 (b) the articles of incorporation;
3426 (c) bylaws adopted by the members; or
3427 (d) the board of directors acting pursuant to Subsection (5).
3428 (8) Separate voting by voting groups is required on a plan of merger if the plan contains
3429 a provision that, if contained in an amendment to the articles of incorporation, would require action
3430 by one or more separate voting groups on the amendment.
3431 Section 128. Section 16-6a-1103 is enacted to read:
3432 16-6a-1103. Articles of merger.
3433 (1) After a plan of merger is approved, pursuant to Section 16-6a-1102 , the surviving
3434 nonprofit corporation shall deliver to the division for filing articles of merger setting forth:
3435 (a) the plan of merger;
3436 (b) if member approval was not required:
3437 (i) a statement to the effect that member approval was not required; and
3438 (ii) a statement that the plan of merger was approved by a sufficient vote of the board of
3439 directors of the nonprofit corporation;
3440 (c) if approval of the members of one or more nonprofit corporations party to the merger
3441 was required, a statement that the number of votes cast for the plan by each voting group entitled
3442 to vote separately on the merger was sufficient for approval by that voting group; and
3443 (d) if approval of the plan by some person or persons other than the members or the board
3444 of directors is required pursuant to Subsection 16-6a-1102 (3), a statement that the approval was
3445 obtained.
3446 (2) A merger takes effect upon the effective date stated in the articles of merger, which
3447 may not be prior to the date the articles of merger are filed.
3448 (3) Articles of merger shall be executed by each party to the merger.
3449 Section 129. Section 16-6a-1104 is enacted to read:
3450 16-6a-1104. Effect of merger.
3451 (1) When a merger takes effect:
3452 (a) every other nonprofit corporation party to the merger merges into the surviving
3453 nonprofit corporation;
3454 (b) the separate existence of every nonprofit corporation party to the merger except the
3455 surviving nonprofit corporation ceases;
3456 (c) the title to all real estate and other property owned by each other nonprofit corporation
3457 party to the merger is transferred to and vested in the surviving nonprofit corporation without
3458 reversion or impairment;
3459 (d) the surviving nonprofit corporation has all liabilities of each nonprofit corporation
3460 party to the merger;
3461 (e) (i) a proceeding pending by or against any nonprofit corporation party to the merger
3462 may be continued as if the merger did not occur; or
3463 (ii) the surviving nonprofit corporation may be substituted in the proceeding for the
3464 nonprofit corporation whose existence ceased;
3465 (f) the articles of incorporation of the surviving nonprofit corporation are amended to the
3466 extent provided in the plan of merger; and
3467 (g) the memberships of each nonprofit corporation party to the merger that are to be
3468 converted into memberships, obligations, or other interests of the surviving nonprofit corporation
3469 or into money or other property are converted, and the former holders of the memberships are
3470 entitled only to the rights provided in the articles of merger.
3471 (2) (a) A transfer to and vesting in the surviving nonprofit corporation described in
3472 Subsection (1)(c) occurs by operation of law.
3473 (b) Consent or approval of any other person may not be required in connection with any
3474 transfer or vesting unless the consent or approval is specifically required in the event of merger by:
3475 (i) law; or
3476 (ii) express provision in any contract, agreement, decree, order, or other instrument to
3477 which any of the nonprofit corporations so merged is a party or by which it is bound.
3478 Section 130. Section 16-6a-1105 is enacted to read:
3479 16-6a-1105. Merger with foreign nonprofit corporation.
3480 (1) One or more domestic nonprofit corporations may merge with one or more foreign
3481 nonprofit corporations if:
3482 (a) the merger is permitted by the law of the state or country under whose law each foreign
3483 nonprofit corporation is incorporated;
3484 (b) each foreign nonprofit corporation complies with the provisions of the law described
3485 in Subsection (1)(a) in effecting the merger;
3486 (c) if the foreign corporation is the surviving nonprofit corporation of the merger, the
3487 foreign corporation:
3488 (i) complies with Section 16-6a-1103 ; and
3489 (ii) in addition to the information required by Section 16-6a-103 , provides the address of
3490 its principal office; and
3491 (d) each domestic nonprofit corporation complies with:
3492 (i) the applicable provisions of Sections 16-6a-1101 and 16-6a-1102 ; and
3493 (ii) if it is the surviving nonprofit corporation of the merger, with Section 16-6a-1103 .
3494 (2) Upon the merger taking effect, a surviving foreign nonprofit corporation of a merger
3495 shall:
3496 (a) (i) maintain a registered agent to accept service in any proceeding based on a cause of
3497 action arising with respect to any domestic nonprofit corporation that is merged into the foreign
3498 nonprofit corporation; or
3499 (ii) be considered to have authorized service of process on it in connection with any
3500 proceeding described in Subsection (2)(a)(i) by registered or certified mail, return receipt
3501 requested, to the address of its principal office as:
3502 (A) set forth in the articles of merger; or
3503 (B) last change in a notice delivered to the division; and
3504 (b) shall comply with this chapter if it is to conduct affairs in this state.
3505 (3) Service effected pursuant to Subsection (2)(a)(ii) is perfected at the earliest of:
3506 (a) the date the foreign nonprofit corporation receives the process, notice, or demand;
3507 (b) the date shown on the return receipt, if signed on behalf of the foreign nonprofit
3508 corporation; or
3509 (c) five days after mailing.
3510 (4) Subsection (2) does not prescribe the only means, or necessarily the required means,
3511 of serving a surviving foreign nonprofit corporation of a merger.
3512 Section 131. Section 16-6a-1201 is enacted to read:
3513
3514 16-6a-1201. Sale of property.
3515 (1) Unless the bylaws otherwise provide, a nonprofit corporation may, as authorized by
3516 the board of directors:
3517 (a) sell, lease, exchange, or otherwise dispose of all or substantially all of its property in
3518 the usual and regular course of business; or
3519 (b) mortgage, pledge, dedicate to the repayment of indebtedness, whether with or without
3520 recourse, or otherwise encumber all or substantially all of its property whether or not in the usual
3521 and regular course of business.
3522 (2) Unless otherwise provided in the bylaws, approval of a transaction described in this
3523 section by the members is not required.
3524 Section 132. Section 16-6a-1202 is enacted to read:
3525 16-6a-1202. Sale of property other than in regular course of activities.
3526 (1) (a) A nonprofit corporation may sell, lease, exchange, or otherwise dispose of all, or
3527 substantially all, of its property, with or without its good will, other than in the usual and regular
3528 course of business on the terms and conditions and for the consideration determined by the board
3529 of directors, if:
3530 (i) the board of directors proposes the transaction; and
3531 (ii) the members entitled to vote on the transaction approve the transaction.
3532 (b) A sale, lease, exchange, or other disposition of all, or substantially all, of the property
3533 of a nonprofit corporation, with or without its good will, in connection with its dissolution, other
3534 than in the usual and regular course of business, and other than pursuant to a court order, shall be
3535 subject to this section.
3536 (c) A sale, lease, exchange, or other disposition of all, or substantially all, of the property
3537 of a nonprofit corporation, with or without its good will, pursuant to a court order is not subject
3538 to this section.
3539 (2) (a) A nonprofit corporation shall comply with Subsection (2)(b) to vote or otherwise
3540 consent with respect to the sale, lease, exchange, or other disposition of all, or substantially all, of
3541 the property with or without the good will of another entity that the nonprofit corporation controls
3542 if:
3543 (i) the nonprofit corporation is entitled to vote or otherwise consent; and
3544 (ii) the property interests held by the nonprofit corporation in the other entity constitute
3545 all, or substantially all, of the property of the nonprofit corporation.
3546 (b) A nonprofit corporation may vote or otherwise consent to a transaction described in
3547 Subsection (2)(a) only if:
3548 (i) the board of the directors of the nonprofit corporation proposes the vote or consent; and
3549 (ii) the members, if any are entitled to vote on the vote or consent, approve giving the vote
3550 or consent.
3551 (3) For a transaction described in Subsection (1) or a consent described in Subsection (2)
3552 to be approved by the members:
3553 (a) (i) the board of directors shall recommend the transaction or the consent to the
3554 members; or
3555 (ii) the board of directors shall:
3556 (A) determine that because of a conflict of interest or other special circumstance it should
3557 make no recommendation; and
3558 (B) communicate the basis for its determination to the members at a membership meeting
3559 with the submission of the transaction or consent; and
3560 (b) the members entitled to vote on the transaction or the consent shall approve the
3561 transaction or the consent as provided in Subsection (6).
3562 (4) The board of directors may condition the effectiveness of the transaction or the consent
3563 on any basis.
3564 (5) (a) The nonprofit corporation shall give notice, in accordance with Section 16-6a-704
3565 to each member entitled to vote on the transaction described in Subsection (1) or the consent
3566 described in Subsection (2), of the members' meeting at which the transaction or the consent will
3567 be voted upon.
3568 (b) The notice required by Subsection (1) shall:
3569 (i) state that the purpose, or one of the purposes, of the meeting is to consider:
3570 (A) in the case of action pursuant to Subsection (1), the sale, lease, exchange, or other
3571 disposition of all, or substantially all, of the property of the nonprofit corporation; or
3572 (B) in the case of action pursuant to Subsection (2), the nonprofit corporation's consent to
3573 the sale, lease, exchange, or other disposition of all, or substantially all, of the property of another
3574 entity, the property interests of which:
3575 (I) are held by the nonprofit corporation; and
3576 (II) constitute all, or substantially all, of the property of the nonprofit corporation;
3577 (ii) contain or be accompanied by a description of:
3578 (A) the transaction, in the case of action pursuant to Subsection (1); or
3579 (B) the transaction underlying the consent, in the case of action pursuant to Subsection (2);
3580 and
3581 (iii) in the case of action pursuant to Subsection (2), identify the entity whose property is
3582 the subject of the transaction.
3583 (6) The transaction described in Subsection (1) or the consent described in Subsection (2)
3584 shall be approved by the votes required by Sections 16-6a-714 and 16-6a-715 by every voting
3585 group entitled to vote on the transaction or the consent unless a greater vote is required by:
3586 (a) this chapter;
3587 (b) the articles of incorporation;
3588 (c) bylaws adopted by the members; or
3589 (d) the board of directors acting pursuant to Subsection (4).
3590 (7) After a transaction described in Subsection (1) or a consent described in Subsection
3591 (2) is authorized, the transaction may be abandoned or the consent withheld or revoked, subject
3592 to any contractual rights or other limitations on such abandonment, withholding, or revocation,
3593 without further action by the members.
3594 (8) A transaction that constitutes a distribution is governed by Part 13 and not by this
3595 section.
3596 Section 133. Section 16-6a-1301 is enacted to read:
3597
3598 16-6a-1301. Distributions prohibited.
3599 Except as authorized by Section 16-6a-1302 , a nonprofit corporation may not make a
3600 distribution.
3601 Section 134. Section 16-6a-1302 is enacted to read:
3602 16-6a-1302. Authorized distributions.
3603 (1) A nonprofit corporation may:
3604 (a) make distributions of its income or assets to a member that is a domestic or foreign
3605 nonprofit corporation;
3606 (b) pay compensation in a reasonable amount to its members, directors, or officers for
3607 services rendered;
3608 (c) if a co-operative nonprofit corporation, make distributions consistent with its purposes;
3609 and
3610 (d) confer benefits upon its members in conformity with its purposes.
3611 (2) A nonprofit corporation may make distributions upon dissolution in conformity with
3612 this chapter.
3613 Section 135. Section 16-6a-1401 is enacted to read:
3614
3615 16-6a-1401. Dissolution by incorporators or directors if no members.
3616 (1) If a nonprofit corporation has no members, the following may authorize the dissolution
3617 of the nonprofit corporation:
3618 (a) a majority of its directors; or
3619 (b) if it has no directors, a majority of its incorporators.
3620 (2) The directors or incorporators in approving dissolution shall adopt a plan of dissolution
3621 indicating to whom the assets owned or held by the nonprofit corporation will be distributed after
3622 all creditors have been paid.
3623 Section 136. Section 16-6a-1402 is enacted to read:
3624 16-6a-1402. Dissolution by directors and members.
3625 (1) If a nonprofit corporation has members, dissolution of a nonprofit corporation may be
3626 authorized in the manner provided in Subsection (2).
3627 (2) For a proposal to dissolve the nonprofit corporation to be authorized:
3628 (a) the board of directors shall adopt the proposal to dissolve;
3629 (b) the board of directors shall:
3630 (i) recommend the proposal to dissolve to the members; or
3631 (ii) (A) determine that because of a conflict of interest or other special circumstance, it
3632 should make no recommendation; and
3633 (B) communicate the basis for its determination to the members; and
3634 (c) the members entitled to vote on the proposal to dissolve shall approve the proposal to
3635 dissolve as provided in Subsection (5).
3636 (3) The board of directors may condition the effectiveness of the dissolution, and the
3637 members may condition their approval of the dissolution, on any basis.
3638 (4) (a) The nonprofit corporation shall give notice, in accordance with Section 16-6a-704 ,
3639 to each member entitled to vote on the proposal of the members' meeting at which the proposal to
3640 dissolve will be voted on.
3641 (b) The notice required by Subsection (4)(a) shall:
3642 (i) state that the purpose, or one of the purposes, of the meeting is to consider the proposal
3643 to dissolve the nonprofit corporation; and
3644 (ii) contain or be accompanied by a copy of the proposal or a summary of the proposal.
3645 (5) The proposal to dissolve shall be approved by the votes required by Sections 16-6a-714
3646 and 16-6a-715 by every voting group entitled to vote on the proposal to dissolve unless a greater
3647 vote is required by:
3648 (a) this chapter;
3649 (b) the articles of incorporation;
3650 (c) bylaws adopted by the members; or
3651 (d) the board of directors acting pursuant to Subsection (3).
3652 (6) The plan of dissolution shall indicate to whom the assets owned or held by the
3653 nonprofit corporation will be distributed after all creditors have been paid.
3654 Section 137. Section 16-6a-1403 is enacted to read:
3655 16-6a-1403. Articles of dissolution.
3656 (1) At any time after dissolution is authorized, the nonprofit corporation may dissolve by
3657 delivering to the division for filing articles of dissolution setting forth:
3658 (a) the name of the nonprofit corporation;
3659 (b) (i) (A) the address of the nonprofit corporation's principal office; or
3660 (B) if a principal office is not to be maintained, a statement that the nonprofit corporation
3661 will not maintain a principal office; and
3662 (ii) if different from the address of the principal office or if no principal office is to be
3663 maintained, the address to which service of process may be mailed pursuant to Section 16-6a-1409 ;
3664 (c) the date dissolution was authorized;
3665 (d) if dissolution was authorized by the directors or the incorporators pursuant to Section
3666 16-6a-1401 , a statement to that effect;
3667 (e) if dissolution was approved by the members pursuant to Section 16-6a-1402 , a
3668 statement that the number of votes cast for the proposal to dissolve by each voting group entitled
3669 to vote separately on the proposal was sufficient for approval by that voting group; and
3670 (f) any additional information as the division determines is necessary or appropriate.
3671 (2) A nonprofit corporation is dissolved upon the effective date of its articles of
3672 dissolution.
3673 (3) Articles of dissolution need not be filed by a nonprofit corporation that is dissolved
3674 pursuant to Section 16-6a-1418 .
3675 Section 138. Section 16-6a-1404 is enacted to read:
3676 16-6a-1404. Revocation of dissolution.
3677 (1) A nonprofit corporation may revoke its dissolution within 120 days after the effective
3678 date of the dissolution.
3679 (2) (a) Except as provided in Subsection (2)(b) revocation of dissolution shall be
3680 authorized in the same manner as the dissolution was authorized.
3681 (b) The board of directors may revoke the dissolution without member action if:
3682 (i) the dissolution is authorized pursuant to Section 16-6a-1402 ; and
3683 (ii) the authorization permitted revocation by action of the board of directors alone.
3684 (3) (a) After the revocation of dissolution is authorized, the nonprofit corporation may
3685 revoke the dissolution by delivering to the division for filing, within 120 days after the effective
3686 date of dissolution:
3687 (i) articles of revocation of dissolution; and
3688 (ii) a copy of its articles of dissolution.
3689 (b) The articles of revocation of dissolution shall set forth:
3690 (i) the name of the nonprofit corporation;
3691 (ii) the effective date of the dissolution that was revoked;
3692 (iii) the date that the revocation of dissolution was authorized;
3693 (iv) if, pursuant to Subsection (2), the directors or the incorporators revoked a dissolution
3694 authorized under Section 16-6a-1401 , a statement that the revocation of dissolution was authorized
3695 by the directors or the incorporators, as the case may be;
3696 (v) if, pursuant to Subsection (2), the directors revoked a dissolution approved by the
3697 members, a statement that the revocation was permitted by action of the directors pursuant to that
3698 approval; and
3699 (vi) if the revocation of dissolution was approved pursuant to Subsection (2) by the
3700 members, a statement that the number of votes cast for revocation of dissolution by each voting
3701 group entitled to vote separately on the proposal to dissolve was sufficient for approval by that
3702 voting group.
3703 (4) (a) Revocation of dissolution is effective as provided in Subsection 16-6a-108 (1).
3704 (b) A delayed effective date may not be specified pursuant to Subsection 16-6a-108 (2).
3705 (5) When the revocation of dissolution is effective:
3706 (a) the revocation relates back to and takes effect as of the effective date of the dissolution;
3707 and
3708 (b) the nonprofit corporation may carry on its activities and use its corporate name as if
3709 dissolution had never occurred.
3710 Section 139. Section 16-6a-1405 is enacted to read:
3711 16-6a-1405. Effect of dissolution.
3712 (1) A dissolved nonprofit corporation continues its corporate existence but may not carry
3713 on any activities except as is appropriate to wind up and liquidate its affairs, including:
3714 (a) collecting its assets;
3715 (b) returning, transferring, or conveying assets held by the nonprofit corporation upon a
3716 condition requiring return, transfer, or conveyance, which condition occurs by reason of the
3717 dissolution, in accordance with the condition;
3718 (c) transferring, subject to any contractual or legal requirements, its assets as provided in
3719 or authorized by its articles of incorporation or bylaws;
3720 (d) discharging or making provision for discharging its liabilities; and
3721 (e) doing every other act necessary to wind up and liquidate its assets and affairs.
3722 (2) (a) Unless otherwise provided in the articles of incorporation or bylaws, upon
3723 dissolution of a nonprofit corporation described under Section 501(c)(3), Internal Revenue Code,
3724 and exempt from tax under Section 501(a), Internal Revenue Code, or corresponding section of
3725 any future federal tax code, the assets of the nonprofit corporation shall be distributed:
3726 (i) for one or more exempt purposes under Section 501, Internal Revenue Code;
3727 (ii) to the federal government for a public purpose; or
3728 (iii) to a state or local government, for a public purpose.
3729 (b) Any assets not disposed of under Subsection (2)(a) shall be disposed of by the district
3730 court for the county in which the principal office of the nonprofit corporation is then located,
3731 exclusively as determined by the court:
3732 (i) for one or more exempt purposes under Section 501, Internal Revenue Code; or
3733 (ii) to organizations that are organized and operated exclusively for exempt or public
3734 purposes.
3735 (3) Dissolution of a nonprofit corporation does not:
3736 (a) transfer title to the nonprofit corporation's property;
3737 (b) subject its directors or officers to standards of conduct different from those prescribed
3738 in this chapter;
3739 (c) change quorum or voting requirements for its board of directors or members;
3740 (d) change provisions for selection, resignation, or removal of its directors or officers, or
3741 both;
3742 (e) change provisions for amending its bylaws or its articles of incorporation;
3743 (f) prevent commencement of a proceeding by or against the nonprofit corporation in its
3744 corporate name; or
3745 (g) abate or suspend a proceeding pending by or against the nonprofit corporation on the
3746 effective date of dissolution.
3747 Section 140. Section 16-6a-1406 is enacted to read:
3748 16-6a-1406. Disposition of known claims by notification.
3749 (1) A dissolved nonprofit corporation may dispose of the known claims against it by
3750 following the procedures described in this section.
3751 (2) A dissolved nonprofit corporation electing to dispose of known claims pursuant to this
3752 section may give written notice of the dissolution to known claimants at any time after the effective
3753 date of the dissolution. The written notice shall:
3754 (a) describe the information that shall be included in a claim;
3755 (b) provide an address to which written notice of any claim shall be given to the nonprofit
3756 corporation;
3757 (c) state the deadline by which the dissolved nonprofit corporation shall receive a claim,
3758 which may not be fewer than 120 days after the effective date of the notice; and
3759 (d) state that unless sooner barred by any other state statute limiting actions, a claim will
3760 be barred if not received by the deadline stated in Subsection (2)(d).
3761 (3) Unless sooner barred by any other statute limiting actions, a claim against the dissolved
3762 nonprofit corporation is barred if:
3763 (a) (i) a claimant was given notice under Subsection (2); and
3764 (ii) the claim is not received by the dissolved nonprofit corporation by the deadline stated
3765 in the notice; or
3766 (b) (i) the dissolved nonprofit corporation delivers to the claimant written notice of
3767 rejection of the claim within 90 days after receipt of the claim; and
3768 (ii) the claimant whose claim was rejected by the dissolved nonprofit corporation does not
3769 commence a proceeding to enforce the claim within 90 days after the effective date of the rejection
3770 notice.
3771 (4) Claims that are not rejected by the dissolved nonprofit corporation in writing within
3772 90 days after receipt of the claim by the dissolved nonprofit corporation shall be considered
3773 accepted.
3774 (5) The failure of the dissolved nonprofit corporation to give notice to any known claimant
3775 pursuant to Subsection (2) does not affect the disposition under this section of any claim held by
3776 any other known claimant.
3777 (6) For purposes of this section:
3778 (a) "claim" does not include:
3779 (i) a contingent liability; or
3780 (ii) a claim based on an event occurring after the effective date of dissolution; and
3781 (b) an action to enforce a claim includes:
3782 (i) any civil action; and
3783 (ii) any arbitration under any agreement for binding arbitration between the dissolved
3784 nonprofit corporation and the claimant.
3785 Section 141. Section 16-6a-1407 is enacted to read:
3786 16-6a-1407. Disposition of claims by publication.
3787 (1) A dissolved nonprofit corporation may publish notice of its dissolution and request that
3788 persons with claims against the nonprofit corporation present them in accordance with the notice.
3789 (2) The notice described in Subsection (1) shall:
3790 (a) be published one time in a newspaper of general circulation in the county where:
3791 (i) the dissolved nonprofit corporation's principal office is located; or
3792 (ii) if the dissolved nonprofit corporation has no principal office in this state, its registered
3793 office is or was last located;
3794 (b) describe the information that shall be included in a claim;
3795 (c) provide an address at which any claim shall be given to the nonprofit corporation; and
3796 (d) state that unless sooner barred by any other statute limiting actions, a claim will be
3797 barred if an action to enforce the claim is not commenced within three years after publication of
3798 the notice.
3799 (3) If the dissolved nonprofit corporation publishes a newspaper notice in accordance with
3800 Subsection (2), then unless sooner barred under Section 16-6a-1406 or under any other statute
3801 limiting actions, the claim of any claimant against the dissolved nonprofit corporation is barred
3802 unless the claimant commences an action to enforce the claim against the dissolved nonprofit
3803 corporation within three years after the publication date of the notice.
3804 (4) For purposes of this section:
3805 (a) "claim" means any claim, including claims of this state, whether:
3806 (i) known;
3807 (ii) due or to become due;
3808 (iii) absolute or contingent;
3809 (iv) liquidated or unliquidated;
3810 (v) founded on contract, tort, or other legal basis; or
3811 (vi) otherwise; and
3812 (b) an action to enforce a claim includes:
3813 (i) any civil action; and
3814 (ii) any arbitration under any agreement for binding arbitration between the dissolved
3815 nonprofit corporation and the claimant.
3816 Section 142. Section 16-6a-1408 is enacted to read:
3817 16-6a-1408. Enforcement of claims against dissolved nonprofit corporation.
3818 (1) Subject to Subsection (2), a claim may be enforced under Section 16-6a-1406 or
3819 16-6a-1407 :
3820 (a) against the dissolved nonprofit corporation to the extent of its undistributed assets; and
3821 (b) if assets have been distributed in liquidation, against any person, other than a creditor
3822 of the nonprofit corporation, to whom the nonprofit corporation distributed its property.
3823 (2) Notwithstanding Subsection (1), a distributee's total liability for all claims under this
3824 section may not exceed the total value of assets distributed to the distributee, as the value is
3825 determined at the time of distribution.
3826 (3) (a) A distributee required to return any portion of the value of assets received by the
3827 distributee in liquidation shall be entitled to contribution from all other distributees.
3828 (b) Each contribution under Subsection (3)(a):
3829 (i) shall be in accordance with the contributing distributee's rights and interests; and
3830 (ii) may not exceed the value of the assets received by the contributing distributee in
3831 liquidation.
3832 Section 143. Section 16-6a-1409 is enacted to read:
3833 16-6a-1409. Service on dissolved nonprofit corporation.
3834 (1) A dissolved nonprofit corporation shall:
3835 (a) maintain a registered agent to accept service of process on its behalf; or
3836 (b) be considered to have authorized service of process on it by registered or certified mail,
3837 return receipt requested, to:
3838 (i) the address of its principal office, if any:
3839 (A) as set forth in its articles of dissolution; or
3840 (B) as last changed by notice delivered to the division for filing; or
3841 (ii) the address for service of process that:
3842 (A) is stated in its articles of dissolution; or
3843 (B) as last changed by notice delivered to the division for filing.
3844 (2) Service effected pursuant to Subsection (1)(b) is perfected at the earliest of:
3845 (a) the date the dissolved nonprofit corporation receives the process, notice, or demand;
3846 (b) the date shown on the return receipt, if signed on behalf of the dissolved nonprofit
3847 corporation; or
3848 (c) five days after mailing.
3849 (3) Subsection (1) does not prescribe the only means, or necessarily the required means,
3850 of serving a dissolved nonprofit corporation.
3851 Section 144. Section 16-6a-1410 is enacted to read:
3852 16-6a-1410. Grounds for administrative dissolution.
3853 The division may commence a proceeding under Section 16-6a-1411 for administrative
3854 dissolution of a nonprofit corporation if:
3855 (1) the nonprofit corporation does not pay when they are due any taxes, fees, or penalties
3856 imposed by this chapter or other applicable laws of this state;
3857 (2) the nonprofit corporation does not deliver its annual report to the division when it is
3858 due;
3859 (3) the nonprofit corporation is without:
3860 (a) a registered agent; or
3861 (b) a registered office;
3862 (4) the nonprofit corporation does not give notice to the division that:
3863 (a) its registered agent or registered office has been changed;
3864 (b) its registered agent has resigned;
3865 (c) its registered office has been discontinued; or
3866 (d) the nonprofit corporation's period of duration stated in its articles of incorporation
3867 expires.
3868 Section 145. Section 16-6a-1411 is enacted to read:
3869 16-6a-1411. Procedure for and effect of administrative dissolution.
3870 (1) If the division determines that one or more grounds exist under Section 16-6a-1410 for
3871 dissolving a nonprofit corporation, the division shall mail to the nonprofit corporation written
3872 notice of the determination, stating the one or more grounds for administrative dissolution.
3873 (2) (a) If the nonprofit corporation does not correct each ground for dissolution, or
3874 demonstrate to the reasonable satisfaction of the division that each ground determined by the
3875 division does not exist, within 60 days after mailing of the notice contemplated in Subsection (1),
3876 the division shall administratively dissolve the nonprofit corporation.
3877 (b) If a nonprofit corporation is dissolved under Subsection (2)(a), the division shall mail
3878 written notice of the administrative dissolution to the dissolved nonprofit corporation stating the
3879 date of dissolution specified in Subsection (2)(d).
3880 (c) The division shall mail written notice of the administrative dissolution to:
3881 (i) the last registered agent of the dissolved nonprofit corporation; or
3882 (ii) if there is no registered agent of record, at least one officer of the nonprofit corporation.
3883 (d) A nonprofit corporation's date of dissolution is five days after the date the division
3884 mails written notice of dissolution under Subsection (2)(b).
3885 (3) A nonprofit corporation administratively dissolved continues its corporate existence
3886 but may not carry on any activities except as is appropriate to:
3887 (a) wind up and liquidate its affairs under Section 16-6a-1405 ; and
3888 (b) to give notice to claimants in the manner provided in Sections 16-6a-1406 and
3889 16-6a-1407 .
3890 (4) The administrative dissolution of a nonprofit corporation does not terminate the
3891 authority of its registered agent.
3892 (5) (a) Upon the administrative dissolution of a nonprofit corporation, the division shall
3893 be the dissolved nonprofit corporation's agent for service of process.
3894 (b) Service of process on the division under this Subsection (5) is service on the dissolved
3895 nonprofit corporation.
3896 (c) Upon receipt of process, the division shall deliver a copy of the process to the dissolved
3897 nonprofit corporation at its principal office.
3898 (6) A notice mailed under this section shall be:
3899 (a) mailed first class, postage prepaid; and
3900 (b) addressed to the most current mailing address appearing on the records of the division
3901 for:
3902 (i) the registered agent of the nonprofit corporation, if the notice is required to be mailed
3903 to the registered agent; or
3904 (ii) the officer of the nonprofit corporation that is mailed the notice if the notice is required
3905 to be mailed to an officer of the nonprofit corporation.
3906 Section 146. Section 16-6a-1412 is enacted to read:
3907 16-6a-1412. Reinstatement following administrative dissolution.
3908 (1) A nonprofit corporation administratively dissolved under Section 16-6a-1411 may
3909 apply to the division for reinstatement within two years after the effective date of dissolution by
3910 delivering to the division for filing an application for reinstatement that states:
3911 (a) the effective date of its administrative dissolution and its corporate name on the
3912 effective date of dissolution;
3913 (b) that the ground or grounds for dissolution:
3914 (i) did not exist; or
3915 (ii) have been eliminated;
3916 (c) (i) The corporate name under which the nonprofit corporation is being reinstated; and
3917 (ii) the corporate name that satisfies the requirements of Section 16-6a-401 ;
3918 (d) that all taxes, fees, or penalties imposed pursuant to this chapter, otherwise owed by
3919 the nonprofit corporation to the State Tax Commission, or otherwise imposed by the applicable
3920 laws of this state have been paid;
3921 (e) the address of its registered office;
3922 (f) the name of its registered agent at the office stated in Subsection (1)(e); and
3923 (g) the additional information as the division determines is necessary or appropriate.
3924 (2) The nonprofit corporation shall include in or with the application for reinstatement:
3925 (a) the written consent to appointment by the designated registered agent; and
3926 (b) a certificate from the State Tax Commission reciting that all taxes owed by the
3927 nonprofit corporation have been paid.
3928 (3) (a) The division shall revoke the administrative dissolution if:
3929 (i) the division determines that the application for reinstatement contains the information
3930 required by Subsections (1) and (2); and
3931 (ii) that the information is correct.
3932 (b) The division shall mail written notice of the revocation to the nonprofit corporation in
3933 the manner provided in Subsection 16-6a-1411 (6) stating the effective date of the dissolution.
3934 (4) When the reinstatement is effective:
3935 (a) it relates back to and takes effect as of the effective date of the administrative
3936 dissolution; and
3937 (b) the nonprofit corporation may carry on its activities, under the name stated pursuant
3938 to Subsection (1)(c), as if the administrative dissolution had never occurred.
3939 Section 147. Section 16-6a-1413 is enacted to read:
3940 16-6a-1413. Appeal from denial of reinstatement.
3941 (1) If the division denies a nonprofit corporation's application for reinstatement following
3942 administrative dissolution under Section 16-6a-1411 , the division shall mail to the nonprofit
3943 corporation in the manner provided in Subsection 16-6a-1411 (6) written notice:
3944 (a) setting forth the reasons for denying the application; and
3945 (b) stating that the nonprofit corporation has the right to appeal the division's
3946 determination to the executive director as provided in Subsection (2).
3947 (2) If the division denies a nonprofit corporation's application for reinstatement following
3948 administrative dissolution, in accordance with Title 63, Chapter 46b, Administrative Procedures
3949 Act, the following may appeal the denial to the executive director:
3950 (a) the nonprofit corporation for which the reinstatement was requested; or
3951 (b) the representative of the nonprofit corporation for which reinstatement.
3952 Section 148. Section 16-6a-1414 is enacted to read:
3953 16-6a-1414. Grounds for judicial dissolution.
3954 (1) A nonprofit corporation may be dissolved in a proceeding by the attorney general or
3955 the division director if it is established that:
3956 (a) the nonprofit corporation obtained its articles of incorporation through fraud; or
3957 (b) the nonprofit corporation has continued to exceed or abuse the authority conferred
3958 upon it by law.
3959 (2) A nonprofit corporation may be dissolved in a proceeding by a member or director if
3960 it is established that:
3961 (a) (i) the directors are deadlocked in the management of the corporate affairs;
3962 (ii) the members, if any, are unable to break the deadlock; and
3963 (iii) irreparable injury to the nonprofit corporation is threatened or being suffered;
3964 (b) the directors or those in control of the nonprofit corporation have acted, are acting, or
3965 will act in a manner that is illegal, oppressive, or fraudulent;
3966 (c) the members are deadlocked in voting power and have failed, for a period that includes
3967 at least two consecutive annual meeting dates, to elect successors to directors whose terms have
3968 expired or would have expired upon the election of their successors; or
3969 (d) the corporate assets are being misapplied or wasted.
3970 (3) A nonprofit corporation may be dissolved in a proceeding by a creditor if it is
3971 established that:
3972 (a) (i) the creditor's claim has been reduced to judgment;
3973 (ii) the execution on the judgment has been returned unsatisfied; and
3974 (iii) the nonprofit corporation is insolvent; or
3975 (b) (i) the nonprofit corporation is insolvent; and
3976 (ii) the nonprofit corporation has admitted in writing that the creditor's claim is due and
3977 owing.
3978 (4) (a) If a nonprofit corporation has been dissolved by voluntary or administrative action
3979 taken under this part:
3980 (i) the nonprofit corporation may bring a proceeding to wind up and liquidate its business
3981 and affairs under judicial supervision in accordance with Section 16-6a-1405 ; and
3982 (ii) the attorney general, a director, a member, or a creditor may bring a proceeding to wind
3983 up and liquidate the affairs of the nonprofit corporation under judicial supervision in accordance
3984 with Section 16-6a-1405 , upon establishing the grounds set forth in Subsections (1) through (3).
3985 (b) As used in Sections 16-6a-1415 through 16-6a-1417 :
3986 (i) a "judicial proceeding to dissolve the nonprofit corporation" includes a proceeding
3987 brought under this Subsection (4); and
3988 (ii) a "decree of dissolution" includes an order of court entered in a proceeding under this
3989 Subsection (4) that directs that the affairs of a nonprofit corporation shall be wound up and
3990 liquidated under judicial supervision.
3991 Section 149. Section 16-6a-1415 is enacted to read:
3992 16-6a-1415. Procedure for judicial dissolution.
3993 (1) (a) A proceeding by the attorney general or director of the division to dissolve a
3994 nonprofit corporation shall be brought in:
3995 (i) the district court of the county in this state where the nonprofit corporation's principal
3996 office or registered office is located; or
3997 (ii) if the nonprofit corporation has no principal or registered office in this state, in the
3998 district court in and for Salt Lake County.
3999 (b) A proceeding brought by a party that is not listed in Subsection (1)(a) but is named in
4000 Section 16-6a-1414 shall be brought in:
4001 (i) the district court of the county in this state where the nonprofit corporation's principal
4002 office is located; or
4003 (ii) if it has no principal office in this state, in the district court of the county where its
4004 registered office is or was last located.
4005 (2) It is not necessary to make directors or members parties to a proceeding to dissolve a
4006 nonprofit corporation unless relief is sought against the directors or members individually.
4007 (3) A court in a proceeding brought to dissolve a nonprofit corporation may:
4008 (a) issue injunctions;
4009 (b) appoint a receiver or custodian pendente lite with all powers and duties the court
4010 directs; or
4011 (c) take other action required to preserve the corporate assets wherever located, and carry
4012 on the activities of the nonprofit corporation until a full hearing can be held.
4013 Section 150. Section 16-6a-1416 is enacted to read:
4014 16-6a-1416. Receivership or custodianship.
4015 (1) (a) A court in a judicial proceeding brought to dissolve a nonprofit corporation may
4016 appoint:
4017 (i) one or more receivers to wind up and liquidate the affairs of the nonprofit corporation;
4018 or
4019 (ii) one or more custodians to manage the affairs of the nonprofit corporation.
4020 (b) Before appointing a receiver or custodian, the court shall hold a hearing, after giving
4021 notice to:
4022 (i) all parties to the proceeding; and
4023 (ii) any interested persons designated by the court.
4024 (c) The court appointing a receiver or custodian has exclusive jurisdiction over the
4025 nonprofit corporation and all of its property, wherever located.
4026 (d) The court may appoint as a receiver or custodian:
4027 (i) an individual;
4028 (ii) a domestic or foreign corporation authorized to conduct affairs in this state; or
4029 (iii) a domestic or foreign nonprofit corporation authorized to conduct affairs in this state.
4030 (e) The court may require the receiver or custodian to post bond, with or without sureties,
4031 in an amount specified by the court.
4032 (2) The court shall describe the powers and duties of the receiver or custodian in its
4033 appointing order that may be amended from time to time. Among other powers the receiver shall
4034 have the power to:
4035 (a) dispose of all or any part of the property of the nonprofit corporation, wherever located:
4036 (i) at a public or private sale; and
4037 (ii) if authorized by the court; and
4038 (b) sue and defend in the receiver's own name as receiver of the nonprofit corporation in
4039 all courts.
4040 (4) The custodian may exercise all of the powers of the nonprofit corporation, through or
4041 in place of its board of directors or officers, to the extent necessary to manage the affairs of the
4042 nonprofit corporation in the best interests of its members and creditors.
4043 (5) If doing so is in the best interests of the nonprofit corporation and its members and
4044 creditors, the court may:
4045 (a) during a receivership, redesignate the receiver as a custodian; and
4046 (b) during a custodianship, redesignate the custodian as a receiver.
4047 (6) The court from time to time during the receivership or custodianship may order
4048 compensation paid and expense disbursements or reimbursements made from the assets of the
4049 nonprofit corporation or proceeds from the sale of the assets to:
4050 (a) the receiver;
4051 (b) the custodian; or
4052 (c) the receiver's or custodian's attorney.
4053 Section 151. Section 16-6a-1417 is enacted to read:
4054 16-6a-1417. Decree of dissolution.
4055 (1) If after a hearing the court determines that one or more grounds for judicial dissolution
4056 described in Section 16-6a-1414 exist:
4057 (a) the court may enter a decree:
4058 (i) dissolving the nonprofit corporation; and
4059 (ii) specifying the effective date of the dissolution; and
4060 (b) the clerk of the court shall deliver a certified copy of the decree to the division which
4061 shall file it accordingly.
4062 (2) After entering the decree of dissolution, the court shall direct:
4063 (a) the winding up and liquidation of the nonprofit corporation's affairs in accordance with
4064 Section 16-6a-1405 ; and
4065 (b) the giving of notice to:
4066 (i) (A) the nonprofit corporation's registered agent; or
4067 (B) the division if it has no registered agent; and
4068 (ii) to claimants in accordance with Sections 16-6a-1406 and 16-6a-1407 .
4069 (3) The court's order or decision may be appealed as in other civil proceedings.
4070 Section 152. Section 16-6a-1418 is enacted to read:
4071 16-6a-1418. Dissolution upon expiration of period of duration.
4072 (1) A nonprofit corporation shall be dissolved upon and by reason of the expiration of its
4073 period of duration, if any, stated in its articles of incorporation.
4074 (2) For purposes of this section:
4075 (a) a provision in the articles of incorporation is considered a provision for a period of
4076 duration if it is to the effect that the nonprofit corporation or its existence shall be terminated:
4077 (i) at a specified date;
4078 (ii) after a stated period of time;
4079 (iii) upon a contingency; or
4080 (iv) any event similar to those described in Subsections (2)(a)(i) through (iii); and
4081 (b) the following shall be considered to be the expiration of the nonprofit corporation's
4082 period of duration:
4083 (i) the occurrence of the specified date;
4084 (ii) the expiration of the stated period of time;
4085 (iii) the occurrence of the contingency; or
4086 (iv) the satisfaction of the provision described in Subsection (2)(a)(iv).
4087 Section 153. Section 16-6a-1419 is enacted to read:
4088 16-6a-1419. Deposit with state treasurer.
4089 Assets of a dissolved nonprofit corporation that should be transferred to a creditor,
4090 claimant, or member of the nonprofit corporation shall be reduced to cash and deposited with the
4091 state treasurer in accordance with Title 67, Chapter 4a, Unclaimed Property Act, if the creditor,
4092 claimant or member:
4093 (1) cannot be found; or
4094 (2) is not legally competent to receive the assets.
4095 Section 154. Section 16-6a-1501 is enacted to read:
4096
4097 16-6a-1501. Authority to conduct affairs required.
4098 (1) (a) A foreign nonprofit corporation may not conduct affairs in this state until its
4099 application for authority to conduct affairs is filed by the division.
4100 (b) This part shall be applicable to foreign nonprofit corporations that conduct affairs
4101 governed by other statutes of this state only to the extent this part is not inconsistent with such
4102 other statutes.
4103 (2) A foreign nonprofit corporation may not be considered to be conducting affairs in this
4104 state within the meaning of Subsection (1) by reason of carrying on in this state any one or more
4105 of the following activities:
4106 (a) maintaining, defending, or settling in its own behalf any proceeding or dispute;
4107 (b) holding meetings of its board of directors or members or carrying on other activities
4108 concerning internal corporate affairs;
4109 (c) maintaining bank accounts;
4110 (d) maintaining offices or agencies for the transfer, exchange, and registration of
4111 memberships or securities;
4112 (e) maintaining trustees or depositaries with respect to the memberships or securities
4113 described in Subsection (2)(d);
4114 (f) selling through independent contractors;
4115 (g) soliciting or obtaining orders, if the orders require acceptance outside this state before
4116 they become contracts, whether by mail or through employees or agents or otherwise;
4117 (h) creating, as borrower or lender, or acquiring indebtedness, mortgages, or other security
4118 interests in real or personal property;
4119 (i) securing or collecting debts in its own behalf or enforcing mortgages or security
4120 interests in property securing the debts;
4121 (j) owning, without more, real or personal property;
4122 (k) conducting an isolated transaction that is:
4123 (i) completed within 30 days; and
4124 (ii) not one in the course of repeated transactions of a like nature;
4125 (l) conducting affairs in interstate commerce;
4126 (m) granting funds;
4127 (n) distributing information to its members; or
4128 (o) any other activity not considered to constitute conducting affairs in this state in the
4129 discretion of the division.
4130 (3) The list of activities in Subsection (2) is not exhaustive.
4131 (4) Nothing in this section shall limit or affect the right to subject a foreign nonprofit
4132 corporation that does not, or is not required to, have authority to conduct affairs in this state:
4133 (a) to the jurisdiction of the courts of this state; or
4134 (b) to serve upon any foreign nonprofit corporation any process, notice, or demand
4135 required or permitted by law to be served upon a nonprofit corporation pursuant to:
4136 (i) any applicable provision of law; or
4137 (ii) any applicable rules of civil procedure.
4138 Section 155. Section 16-6a-1502 is enacted to read:
4139 16-6a-1502. Consequences of conducting affairs without authority.
4140 (1) A foreign nonprofit corporation, its successor, or anyone acting on its behalf,
4141 conducting affairs in this state without authority may not be permitted to maintain a proceeding
4142 in any court in this state until an application for authority to conduct affairs is filed.
4143 (2) (a) A foreign nonprofit corporation or successor that conducts affairs in this state
4144 without authority shall be liable to this state in an amount equal to the sum of:
4145 (i) all fees imposed by this chapter or prior law that would have been paid for all years or
4146 portions of years during which it conducted affairs in this state without authority; and
4147 (ii) all penalties imposed by the division for failure to pay the fees described in Subsection
4148 (2)(a)(i).
4149 (b) An application for authority to conduct affairs may not be filed until payment of the
4150 amounts due under this Subsection (2) is made.
4151 (3) (a) A court may stay a proceeding commenced by a foreign nonprofit corporation, its
4152 successor, or assignee until it determines whether the foreign corporation, its successor, or assignee
4153 is required to file an application for authority to conduct affairs.
4154 (b) If the court determines that a foreign nonprofit corporation, its successor, or assignee
4155 is required to file an application for authority to conduct affairs, the court may further stay the
4156 proceeding until the required application for authority to conduct affairs has been filed with the
4157 division.
4158 (4) (a) A foreign nonprofit corporation that conducts affairs in this state without authority
4159 is subject to a civil penalty, payable to this state, of $100 for each day in which it transacts business
4160 in this state without authority.
4161 (b) Notwithstanding Subsection (4)(a), the civil penalty imposed under Subsection (4)(a)
4162 may not exceed a total of $5,000 for each year.
4163 (c) The following are subject to a civil penalty payable to the state not exceeding $1,000:
4164 (i) each officer of a foreign nonprofit corporation who authorizes, directs, or participates
4165 in the conducting of affairs in this state without authority; and
4166 (ii) each agent of a foreign nonprofit corporation who transacts business in this state on
4167 behalf of a foreign nonprofit corporation that is not authorized.
4168 (d) The division may make rules to carry out the provisions of this Subsection (4),
4169 including procedures to request the division to abate a penalty imposed.
4170 (e) If the division imposes a civil penalty under this Subsection (4) on a foreign nonprofit
4171 corporation, in accordance with Title 63, Chapter 46b, Administrative Procedures Act, the
4172 following may appeal the civil penalty to the executive director:
4173 (i) the foreign nonprofit corporation; or
4174 (ii) the representative of the foreign nonprofit corporation.
4175 (5) (a) The civil penalties set forth in Subsection (4) may be recovered in an action
4176 brought:
4177 (i) in an appropriate court in Salt Lake County; or
4178 (ii) in any other county in this state in which the foreign nonprofit corporation:
4179 (A) has a registered, principal, or business office; or
4180 (B) has conducted affairs.
4181 (b) Upon a finding by the court that a foreign nonprofit corporation or any of its officers
4182 or agents have conducted affairs in this state in violation of this part, in addition to or instead of
4183 a civil penalty, the court shall issue an injunction restraining:
4184 (i) the further conducting of affairs of the foreign nonprofit corporation; and
4185 (ii) the further exercise of any corporate rights and privileges in this state.
4186 (c) Upon issuance of the injunction described in Subsection (5)(b), the foreign nonprofit
4187 corporation shall be enjoined from conducting affairs in this state until:
4188 (i) all civil penalties have been paid, plus any interest and court costs assessed by the court;
4189 and
4190 (ii) the foreign nonprofit corporation has otherwise complied with the provisions of this
4191 part.
4192 (6) Notwithstanding Subsections (1) and (2), the failure of a foreign corporation to have
4193 authority to conduct affairs in this state does not:
4194 (a) impair the validity of its corporate acts; or
4195 (b) prevent the foreign nonprofit corporation from defending any proceeding in this state.
4196 Section 156. Section 16-6a-1503 is enacted to read:
4197 16-6a-1503. Application for authority to conduct affairs.
4198 (1) A foreign nonprofit corporation may apply for authority to conduct affairs in this state
4199 by delivering to the division for filing an application for authority to conduct affairs setting forth:
4200 (a) its corporate name and its assumed corporate name, if any;
4201 (b) the name of the state or country under whose law it is incorporated;
4202 (c) its date of incorporation;
4203 (d) its period of duration;
4204 (e) the street address of its principal office;
4205 (f) the address of its registered office;
4206 (g) the name of its registered agent at the office listed in Subsection (1)(f);
4207 (h) the names and usual business addresses of its current directors and officers;
4208 (i) the date it commenced or expects to commence conducting affairs in this state; and
4209 (j) such additional information as the division determines is necessary or appropriate to
4210 determine whether the application for authority to conduct affairs should be filed.
4211 (2) With the completed application required by Subsection (1) the foreign nonprofit
4212 corporation shall deliver to the division for a certificate of existence, or a document of similar
4213 import that is:
4214 (a) authenticated by the division or other official having custody of corporate records in
4215 the state or country under whose law it is incorporated; and
4216 (b) dated within 90 days before the filing of the application for authority to conduct affairs.
4217 (3) The foreign nonprofit corporation shall include in the application for authority to
4218 conduct affairs, or in an accompanying document, written consent to appointment by its designated
4219 registered agent.
4220 Section 157. Section 16-6a-1504 is enacted to read:
4221 16-6a-1504. Amended application for authority to conduct affairs.
4222 (1) A foreign nonprofit corporation authorized to conduct affairs in this state shall deliver
4223 an amended application for authority to conduct affairs to the division for filing if the foreign
4224 nonprofit corporation changes:
4225 (a) its corporate name;
4226 (b) its assumed corporate name;
4227 (c) the period of its duration; or
4228 (d) the state or country of its incorporation.
4229 (2) The requirements of Section 16-6a-1503 for filing an original application for authority
4230 to conduct affairs apply to filing an amended application for authority to conduct affairs under this
4231 section.
4232 Section 158. Section 16-6a-1505 is enacted to read:
4233 16-6a-1505. Effect of filing an application for authority to conduct affairs.
4234 (1) Filing an application for authority to conduct affairs authorizes the foreign nonprofit
4235 corporation to conduct affairs in this state, subject to the right of the state to revoke the authority
4236 as provided in this part.
4237 (2) A foreign nonprofit corporation that has authority to conduct affairs in this state:
4238 (a) has the same rights and privileges as, but no greater rights or privileges than, a
4239 domestic nonprofit corporation of like character; and
4240 (b) except as otherwise provided by this chapter, is subject to the same duties, restrictions,
4241 penalties, and liabilities imposed on or later to be imposed on, a domestic nonprofit corporation
4242 of like character.
4243 (3) This chapter does not authorize this state to regulate the organization or internal affairs
4244 of a foreign nonprofit corporation authorized to conduct affairs in this state.
4245 Section 159. Section 16-6a-1506 is enacted to read:
4246 16-6a-1506. Corporate name and assumed corporate name of foreign nonprofit
4247 corporation.
4248 (1) (a) Except as provided in Subsection (2), if the corporate name of a foreign nonprofit
4249 corporation does not satisfy the requirements of Section 16-6a-401 , to obtain authority to conduct
4250 affairs in this state, the corporation shall assume for use in this state a name that satisfies the
4251 requirements of Section 16-6a-401 .
4252 (b) Section 16-6a-401 applies to domestic corporations.
4253 (2) A foreign nonprofit corporation may obtain authority to conduct affairs in this state
4254 with a name that does not meet the requirements of Subsection (1) because it is not distinguishable
4255 as required under Subsection 16-6a-401 (2), if the foreign nonprofit corporation delivers to the
4256 division for filing either:
4257 (a) (i) a written consent to the foreign nonprofit corporation's use of the name, given and
4258 signed by the other person entitled to the use of the name; and
4259 (ii) a written undertaking by the other person, in a form satisfactory to the division, to
4260 change its name to a name that is distinguishable from the name of the applicant; or
4261 (b) a certified copy of a final judgment of a court of competent jurisdiction establishing
4262 the prior right of the foreign nonprofit corporation to use the requested name in this state.
4263 (3) A foreign nonprofit corporation may use in this state the name, including the fictitious
4264 name, of another domestic or foreign nonprofit corporation that is used or registered in this state
4265 if:
4266 (a) the other corporation is incorporated or authorized to conduct affairs in this state; and
4267 (b) the foreign nonprofit corporation:
4268 (i) has merged with the other corporation; or
4269 (ii) has been formed by reorganization of the other corporation.
4270 (4) If a foreign nonprofit corporation authorized to conduct affairs in this state, whether
4271 under its corporate name or an assumed corporate name, changes its corporate name to one that
4272 does not satisfy the requirements of Subsections (1) through (3), or the requirements of Section
4273 16-10a-401 , the foreign nonprofit corporation:
4274 (a) may not conduct affairs in this state under the changed name;
4275 (b) shall use an assumed corporate name that does meet the requirements of this section;
4276 and
4277 (c) shall deliver to the division for filing an amended application for authority to conduct
4278 affairs pursuant to Section 16-10a-1504 .
4279 Section 160. Section 16-6a-1507 is enacted to read:
4280 16-6a-1507. Registered name of foreign nonprofit corporation.
4281 (1) (a) A foreign nonprofit corporation may register its corporate name as provided in this
4282 section if the name would be available for use as a corporate name for a domestic nonprofit
4283 corporation under Section 16-10a-401 .
4284 (b) If the foreign nonprofit corporation's corporate name would not be available for use
4285 as a corporate name for a domestic nonprofit corporation, the foreign nonprofit corporation may
4286 register its corporate name modified by the addition of any of the following words or
4287 abbreviations, if the modified name would be available for use under Section 16-6a-401 :
4288 (i) "corporation";
4289 (ii) "incorporated";
4290 (iii) "company";
4291 (iv) "corp.";
4292 (v) "inc."; or
4293 (vi) "co."
4294 (2) A foreign nonprofit corporation registers its corporate name, or its corporate name with
4295 any addition permitted by Subsection (1), by delivering to the division for filing an application for
4296 registration:
4297 (a) setting forth:
4298 (i) its corporate name;
4299 (ii) the name to be registered that shall meet the requirements of Section 16-10a-401 that
4300 apply to domestic nonprofit corporations;
4301 (iii) the state or country and date of incorporation; and
4302 (iv) a brief description of the nature of the business in which it is engaged; and
4303 (b) accompanied by a certificate of existence, or a document of similar import from the
4304 state or country of incorporation as evidence that the foreign corporation is in existence or has
4305 authority to conduct affairs under the laws of the state or country in which it is organized.
4306 (3) (a) A name is registered for the applicant upon the effective date of the application.
4307 (b) An initial registration is effective for one year.
4308 (4) (a) A foreign nonprofit corporation that has in effect a registration of its corporate
4309 name as permitted by Subsection (1) may renew the registration by delivering to the division for
4310 filing a renewal application for registration, that complies with the requirements of Subsection (2).
4311 (b) When filed, the renewal application for registration renews the registration for the year
4312 following filing.
4313 (5) (a) A foreign nonprofit corporation that has in effect registration of its corporate name
4314 may:
4315 (i) apply for authority to conduct affairs in this state under the registered name in
4316 accordance with the procedure set forth in this part; or
4317 (ii) assign the registration to another foreign nonprofit corporation by delivering to the
4318 division for filing an assignment of the registration that states:
4319 (A) the registered name;
4320 (B) the name of the assigning foreign nonprofit corporation; and
4321 (C) the name of the assignee; and
4322 (D) the assignee's application for registration of the name.
4323 (b) The assignee's application for registration of the name required by Subsection (5)(a)
4324 shall meet the requirements of this part.
4325 (6) (a) A foreign nonprofit corporation that has in effect registration of its corporate name
4326 may terminate the registration at any time by delivering to the division for filing a statement of
4327 termination:
4328 (i) setting forth the corporate name; and
4329 (ii) stating that the registration is terminated.
4330 (b) A registration automatically terminates upon the filing of an application for authority
4331 to conduct affairs in this state under the registered name.
4332 (7) The registration of a corporate name under Subsection (1) constitutes authority by the
4333 division to file an application meeting the requirements of this part for authority to conduct affairs
4334 in this state under the registered name, but the authorization is subject to the limitations applicable
4335 to corporate names as set forth in Section 16-6a-403 .
4336 Section 161. Section 16-6a-1508 is enacted to read:
4337 16-6a-1508. Registered office and registered agent of foreign nonprofit corporation.
4338 (1) Each foreign nonprofit corporation authorized to conduct affairs in this state shall
4339 continuously maintain in this state:
4340 (a) a registered office; and
4341 (b) a registered agent, who shall be:
4342 (i) an individual:
4343 (A) who resides in this state; and
4344 (B) whose business office is identical with the registered office;
4345 (ii) a domestic corporation or domestic nonprofit corporation whose business office is
4346 identical with the registered office;
4347 (iii) a foreign corporation or foreign nonprofit corporation:
4348 (A) authorized to conduct affairs in this state; and
4349 (B) whose business office is identical with the registered office; or
4350 (iv) a domestic limited liability company or foreign limited liability company:
4351 (A) authorized to conduct affairs in this state; and
4352 (B) whose business office is identical with the registered office.
4353 (2) A foreign nonprofit corporation may not serve as its own registered agent.
4354 Section 162. Section 16-6a-1509 is enacted to read:
4355 16-6a-1509. Change of registered office or registered agent of foreign nonprofit
4356 corporation.
4357 (1) A foreign nonprofit corporation authorized to conduct affairs in this state may change
4358 its registered office or its registered agent by delivering to the division for filing a statement of
4359 change that sets forth:
4360 (a) its corporate name and its assumed corporate name, if any;
4361 (b) the street addresses of its current registered office;
4362 (c) the street address of the new registered office if the registered office is to be changed;
4363 (d) the name of its current registered agent;
4364 (e) if the registered agent is to be changed:
4365 (i) the name of the new registered agent; and
4366 (ii) the new registered agent's written consent to the appointment, either on the statement
4367 of change or in an accompanying document; and
4368 (f) that the street addresses of its registered office and the business office of its registered
4369 agent will be identical after the change or changes reflected in the statement are made.
4370 (2) If the street address of a registered agent's business office is changed, the registered
4371 agent may change the street address of the registered office of any foreign nonprofit corporation
4372 for which the registered agent is the registered agent by:
4373 (a) giving written notice to the foreign nonprofit corporation of the change; and
4374 (b) signing and delivering to the division for filing a statement of change that:
4375 (i) complies with the requirements of Subsection (1); and
4376 (ii) recites that the foreign nonprofit corporation has been given notice of the change.
4377 Section 163. Section 16-6a-1510 is enacted to read:
4378 16-6a-1510. Resignation of registered agent of foreign nonprofit corporation.
4379 (1) (a) The registered agent of a foreign nonprofit corporation authorized to conduct affairs
4380 in this state may resign the agency appointment by delivering to the division for filing a statement
4381 of resignation, that shall:
4382 (i) be signed by the resigning registered agent; and
4383 (ii) be accompanied by two exact or conformed copies of the statement of resignation; and
4384 (iii) include a declaration that notice of the resignation has been given to the foreign
4385 nonprofit corporation.
4386 (b) The statement of resignation may include a statement that the registered office is also
4387 discontinued.
4388 (2) After filing the statement of resignation, the division shall deliver:
4389 (a) one copy of the statement of resignation to the registered office of the foreign nonprofit
4390 corporation; and
4391 (b) one copy of the statement of resignation to its principal office, if known.
4392 (3) The agency appointment terminates, and the registered office discontinues if so
4393 provided, 31 days after the filing date of the statement of resignation.
4394 Section 164. Section 16-6a-1511 is enacted to read:
4395 16-6a-1511. Service on foreign nonprofit corporation.
4396 (1) The registered agent of a foreign nonprofit corporation authorized to conduct affairs
4397 in this state is the foreign corporation's agent for service of process, notice, or demand required or
4398 permitted by law to be served on the foreign nonprofit corporation.
4399 (2) (a) If a foreign nonprofit corporation authorized to conduct affairs in this state has no
4400 registered agent or if the registered agent cannot with reasonable diligence be served, the foreign
4401 nonprofit corporation may be served by registered or certified mail, return receipt requested,
4402 addressed to the foreign nonprofit corporation at its principal office.
4403 (b) Service is perfected under this Subsection (2) at the earliest of:
4404 (i) the date the foreign nonprofit corporation receives the process, notice, or demand;
4405 (ii) the date shown on the return receipt, if signed on behalf of the foreign nonprofit
4406 corporation; or
4407 (iii) five days after mailing.
4408 (3) This section does not prescribe the only means, or necessarily the required means, of
4409 serving a foreign nonprofit corporation authorized to conduct affairs in this state.
4410 Section 165. Section 16-6a-1512 is enacted to read:
4411 16-6a-1512. Merger of foreign nonprofit corporations authorized to conduct affairs
4412 in this state.
4413 (1) If two or more foreign nonprofit corporations authorized to conduct affairs in this state
4414 are a party to a statutory merger permitted by the laws of the state or country under the laws of
4415 which they are incorporated within 30 days after the merger becomes effective, the surviving
4416 nonprofit corporation shall file with the division a certificate of fact of merger certified by the
4417 proper officer of the state or country under the laws of which the statutory merger was effected.
4418 (2) It is not necessary for a foreign nonprofit corporation authorized to conduct affairs in
4419 this state that is a party to a statutory merger described in Subsection (1) to procure a new or
4420 amended certificate of authority to conduct affairs in this state unless the name of the surviving
4421 nonprofit corporation is changed by the statutory merger.
4422 Section 166. Section 16-6a-1513 is enacted to read:
4423 16-6a-1513. Withdrawal of foreign nonprofit corporation.
4424 (1) A foreign nonprofit corporation authorized to conduct affairs in this state may not
4425 withdraw from this state until its application for withdrawal has been filed by the division.
4426 (2) A foreign nonprofit corporation authorized to conduct affairs in this state may apply
4427 for withdrawal by delivering to the division for filing an application for withdrawal setting forth:
4428 (a) its corporate name and its assumed name, if any;
4429 (b) the name of the state or country under whose law it is incorporated;
4430 (c) (i) (A) the address of its principal office; or
4431 (B) if a principal office is not to be maintained, a statement that the foreign nonprofit
4432 corporation will not maintain a principal office; and
4433 (ii) if different from the address of the principal office or if no principal office is to be
4434 maintained, the address to which service of process may be mailed pursuant to Section 16-6a-1514 ;
4435 (d) that the foreign nonprofit corporation is not conducting affairs in this state;
4436 (e) that it surrenders its authority to conduct affairs in this state;
4437 (f) whether its registered agent will continue to be authorized to accept service on its
4438 behalf in any proceeding based on a cause of action arising during the time it was authorized to
4439 conduct affairs in this state; and
4440 (g) any additional information that the division determines is necessary or appropriate to:
4441 (i) determine whether the foreign nonprofit corporation is entitled to withdraw; and
4442 (ii) determine and assess any unpaid taxes, fees, and penalties payable by the foreign
4443 nonprofit corporation as prescribed by this chapter.
4444 (3) A foreign nonprofit corporation's application for withdrawal may not be filed by the
4445 division until:
4446 (a) all outstanding fees and state tax obligations have been paid; and
4447 (b) the division has received a certificate from the State Tax Commission reciting that all
4448 taxes owed by the foreign nonprofit corporation have been paid.
4449 Section 167. Section 16-6a-1514 is enacted to read:
4450 16-6a-1514. Service on withdrawn foreign nonprofit corporation.
4451 (1) A foreign nonprofit corporation that has withdrawn from this state pursuant to Section
4452 16-6a-1513 shall:
4453 (a) maintain a registered agent in this state to accept service on its behalf in any proceeding
4454 based on a cause of action arising during the time it was authorized to conduct affairs in this state,
4455 in which case:
4456 (i) the continued authority of the registered agent shall be specified in the application for
4457 withdrawal; and
4458 (ii) any change shall be governed by the procedure set forth in Section 16-6a-1509 which
4459 applies to foreign nonprofit corporations authorized to conduct affairs in this state; or
4460 (b) be considered to have authorized service of process on it in connection with any cause
4461 of action by registered or certified mail, return receipt requested, to:
4462 (i) the address of its principal office, if any:
4463 (A) set forth in its application for withdrawal; or
4464 (B) as last changed by notice delivered to the division for filing; or
4465 (ii) the address for service of process:
4466 (A) that is stated in its application for withdrawal; or
4467 (B) as last changed by notice delivered to the division for filing.
4468 (2) Service effected pursuant to Subsection (1)(b) is perfected at the earliest of:
4469 (a) the date the withdrawn foreign nonprofit corporation receives the process, notice, or
4470 demand;
4471 (b) the date shown on the return receipt, if signed on behalf of the withdrawn foreign
4472 nonprofit corporation; or
4473 (c) five days after mailing.
4474 (3) Subsection (1) does not prescribe the only means, or necessarily the required means,
4475 of serving a withdrawn foreign nonprofit corporation.
4476 Section 168. Section 16-6a-1515 is enacted to read:
4477 16-6a-1515. Grounds for revocation.
4478 The division may commence a proceeding under Section 16-6a-1516 to revoke the
4479 authority of a foreign nonprofit corporation to conduct affairs in this state if:
4480 (1) the foreign nonprofit corporation does not deliver its annual report to the division when
4481 it is due;
4482 (2) the foreign nonprofit corporation does not pay when they are due any taxes, fees, or
4483 penalties imposed by this chapter or other applicable laws of this state;
4484 (3) the foreign nonprofit corporation is without a registered agent or registered office in
4485 this state;
4486 (4) the foreign nonprofit corporation does not inform the division under Section
4487 16-6a-1509 or 16-6a-1510 that:
4488 (a) its registered agent or registered office has changed;
4489 (b) its registered agent has resigned; or
4490 (c) its registered office has been discontinued;
4491 (5) an incorporator, director, officer, or agent of the foreign nonprofit corporation signs
4492 a document knowing it is false in any material respect with intent that the document be delivered
4493 to the division for filing; or
4494 (6) the division receives a duly authenticated certificate from the division or other official
4495 having custody of corporate records in the state or country under whose law the foreign nonprofit
4496 corporation is incorporated stating that the foreign nonprofit corporation has dissolved or
4497 disappeared as the result of a merger.
4498 Section 169. Section 16-6a-1516 is enacted to read:
4499 16-6a-1516. Procedure for and effect of revocation.
4500 (1) If the division determines that one or more grounds exist under Section 16-6a-1515 for
4501 revoking the authority of a foreign nonprofit corporation to conduct affairs in this state, the
4502 division shall mail to the foreign nonprofit corporation with written notice of the division's
4503 determination stating the grounds.
4504 (2) (a) If the foreign nonprofit corporation does not correct each ground for revocation or
4505 demonstrate to the reasonable satisfaction of the division that each ground determined by the
4506 division does not exist, within 60 days after mailing of the notice under Subsection (1), the
4507 division shall revoke the foreign nonprofit corporation's authority to conduct affairs in this state.
4508 (b) If a foreign corporation's authority to conduct affairs in this state is revoked under
4509 Subsection (2)(a), the division shall:
4510 (i) mail a written notice of the revocation to the foreign nonprofit corporation stating the
4511 effective date of the revocation; and
4512 (ii) mail a copy of the notice to:
4513 (A) the last registered agent of the foreign nonprofit corporation; or
4514 (B) if there is no registered agent of record, at least one officer of the corporation.
4515 (3) The authority of a foreign nonprofit corporation to conduct affairs in this state ceases
4516 on the date shown on the division's certificate revoking the foreign nonprofit corporation's
4517 certificate of authority.
4518 (4) Revocation of a foreign nonprofit corporation's authority to conduct affairs in this state
4519 does not terminate the authority of the registered agent of the foreign nonprofit corporation.
4520 (5) (a) Upon the revocation of a foreign nonprofit corporation's authority to conduct affairs
4521 in this state, the division becomes an agent for the foreign nonprofit corporation for service of
4522 process in any proceeding based on a cause of action which arose during the time the foreign
4523 nonprofit corporation conducted affairs in this state or was authorized to conduct affairs in this
4524 state.
4525 (b) Service of process on the division under this Subsection (5) is service on the foreign
4526 nonprofit corporation.
4527 (c) Upon receipt of process, the division shall mail a copy of the process to the foreign
4528 nonprofit corporation at its principal office, if known.
4529 (6) A notice mailed under this section shall be:
4530 (a) mailed first class, postage prepaid; and
4531 (b) addressed to the most current mailing address appearing on the records of the division
4532 for:
4533 (i) the registered agent of the nonprofit corporation, if the notice is required to be mailed
4534 to the registered agent; or
4535 (ii) the officer of the nonprofit corporation that is mailed the notice if the notice is required
4536 to be mailed to an officer of the nonprofit corporation.
4537 Section 170. Section 16-6a-1517 is enacted to read:
4538 16-6a-1517. Appeal from revocation.
4539 If the division revokes the authority of a foreign nonprofit corporation to conduct affairs
4540 in this state, in accordance with Title 63, Chapter 46b, Administrative Procedures Act, the
4541 following may appeal the refusal to the executive director:
4542 (1) the foreign nonprofit corporation; or
4543 (2) the representative of the foreign nonprofit corporation.
4544 Section 171. Section 16-6a-1518 is enacted to read:
4545 16-6a-1518. Domestication of foreign nonprofit corporations.
4546 (1) (a) Any foreign nonprofit corporation may become a domestic nonprofit corporation:
4547 (i) by delivering to the division for filing articles of domestication meeting the
4548 requirements of Subsection (2);
4549 (ii) if the board of directors of the foreign nonprofit corporation adopts the articles of
4550 domestication; and
4551 (iii) its members, if any, approve, the domestication.
4552 (b) The adoption and approval of the domestication shall be in accordance with the consent
4553 requirements of Section 16-6a-1003 for amending articles of incorporation.
4554 (2) (a) The articles of domestication shall meet the requirements applicable to articles of
4555 incorporation set forth in Sections 16-6a-105 and 16-6a-202 , except that:
4556 (i) the articles of domestication need not name, or be signed by, the incorporators of the
4557 foreign nonprofit corporation; and
4558 (ii) any reference to the foreign nonprofit corporation's registered office, registered agent,
4559 or directors shall be to:
4560 (A) the registered office and agent in Utah; and
4561 (B) the directors in office at the time of filing the articles of domestication.
4562 (b) The articles of domestication shall set forth:
4563 (i) the date on which and jurisdiction where the foreign nonprofit corporation was first
4564 formed, incorporated, or otherwise came into being;
4565 (ii) the name of the foreign nonprofit corporation immediately prior to the filing of the
4566 articles of domestication;
4567 (iii) any jurisdiction that constituted the seat, location of incorporation, principal place of
4568 business, or central administration of the foreign nonprofit corporation immediately prior to the
4569 filing of the articles of domestication; and
4570 (iv) a statement that the articles of domestication were:
4571 (A) adopted by the foreign nonprofit corporation's board of directors; and
4572 (B) approved by its members, if any.
4573 (3) (a) Upon the filing of articles of domestication with the division, the foreign nonprofit
4574 corporation shall:
4575 (i) be domesticated in this state;
4576 (ii) be subject to all of the provisions of this chapter after the date of filing the articles of
4577 domestication; and
4578 (iii) continue as if it had been incorporated under this chapter.
4579 (b) Notwithstanding any other provisions of this chapter, the existence of the foreign
4580 nonprofit corporation shall be considered to have commenced on the date the foreign nonprofit
4581 corporation commenced its existence in the jurisdiction in which the foreign nonprofit corporation
4582 was first formed, incorporated, or otherwise came into being.
4583 (4) The articles of domestication, upon filing with the division, shall:
4584 (a) become the articles of incorporation of the foreign nonprofit corporation; and
4585 (b) be subject to amendments or restatement the same as any other articles of incorporation
4586 under this chapter.
4587 (5) The domestication of any foreign nonprofit corporation in this state may not be
4588 considered to affect any obligation or liability of the foreign nonprofit corporation incurred prior
4589 to its domestication.
4590 (6) The filing of the articles of domestication may not affect the choice of law applicable
4591 to the foreign nonprofit corporation, except that from the date the articles of domestication are
4592 filed, the law of Utah, including the provisions of this chapter, shall apply to the foreign nonprofit
4593 corporation to the same extent as if the foreign nonprofit corporation had been incorporated as a
4594 domestic nonprofit corporation of this state on that date.
4595 Section 172. Section 16-6a-1601 is enacted to read:
4596
4597 16-6a-1601. Corporate records.
4598 (1) A nonprofit corporation shall keep as permanent records:
4599 (a) minutes of all meetings of its members and board of directors;
4600 (b) a record of all actions taken by the members or board of directors without a meeting;
4601 (c) a record of all actions taken by a committee of the board of directors in place of the
4602 board of directors on behalf of the nonprofit corporation; and
4603 (d) a record of all waivers of notices of meetings of members and of the board of directors
4604 or any committee of the board of directors.
4605 (2) A nonprofit corporation shall maintain appropriate accounting records.
4606 (3) A nonprofit corporation or its agent shall maintain a record of its members in a form
4607 that permits preparation of a list of the name and address of all members:
4608 (a) in alphabetical order, by class; and
4609 (b) showing the number of votes each member is entitled to vote.
4610 (4) A nonprofit corporation shall maintain its records in written form or in another form
4611 capable of conversion into written form within a reasonable time.
4612 (5) A nonprofit corporation shall keep a copy of each of the following records at its
4613 principal office:
4614 (a) its articles of incorporation;
4615 (b) its bylaws;
4616 (c) resolutions adopted by its board of directors relating to the characteristics,
4617 qualifications, rights, limitations, and obligations of members or any class or category of members;
4618 (d) the minutes of all members' meetings for a period of three years;
4619 (e) records of all action taken by members without a meeting, for a period of three years;
4620 (f) all written communications to members generally as members for a period of three
4621 years;
4622 (g) a list of the names and business or home addresses of its current directors and officers;
4623 (h) a copy of its most recent annual report delivered to the division under Section
4624 16-6a-1607 ; and
4625 (i) all financial statements prepared for periods ending during the last three years that a
4626 member could have requested under Section 16-6a-1606 .
4627 Section 173. Section 16-6a-1602 is enacted to read:
4628 16-6a-1602. Inspection of records by directors and members.
4629 (1) A director or member is entitled to inspect and copy, any of the records of the nonprofit
4630 corporation described in Subsection 16-6a-1601 (5):
4631 (a) during regular business hours;
4632 (b) at the nonprofit corporation's principal office; and
4633 (c) if the director or member gives the nonprofit corporation written demand, at least five
4634 business days before the date on which the member wishes to inspect and copy the records.
4635 (2) In addition to the rights set forth in Subsection (1), a director or member is entitled to
4636 inspect and copy any of the other records of the nonprofit corporation:
4637 (a) during regular business hours;
4638 (b) at a reasonable location specified by the nonprofit corporation; and
4639 (c) at least five business days before the date on which the member wishes to inspect and
4640 copy the records, if the director or member:
4641 (i) meets the requirements of Subsection (3); and
4642 (ii) gives the nonprofit corporation written demand.
4643 (3) A director or member may inspect and copy the records described in Subsection (2)
4644 only if:
4645 (a) the demand is made:
4646 (i) in good faith; and
4647 (ii) for a proper purpose;
4648 (b) the director or member describes with reasonable particularity the purpose and the
4649 records the director or member desires to inspect; and
4650 (c) the records are directly connected with the described purpose.
4651 (4) Notwithstanding Section 16-6a-102 , for purposes of this section:
4652 (a) "member" includes:
4653 (i) a beneficial owner whose membership interest is held in a voting trust; and
4654 (ii) any other beneficial owner of a membership interest who establishes beneficial
4655 ownership; and
4656 (b) "proper purpose" means a purpose reasonably related to the demanding member's
4657 interest as a member.
4658 (5) The right of inspection granted by this section may not be abolished or limited by the
4659 articles of incorporation or bylaws.
4660 (6) This section does not affect:
4661 (a) the right of a director or member to inspect records under Section 16-6a-701 ;
4662 (b) the right of a member to inspect records to the same extent as any other litigant if the
4663 member is in litigation with the nonprofit corporation; or
4664 (c) the power of a court, independent of this chapter, to compel the production of corporate
4665 records for examination.
4666 (7) A director or member may not use any information obtained through the inspection or
4667 copying of records permitted by Subsection (2) for any purposes other than those set forth in a
4668 demand made under Subsection (3).
4669 Section 174. Section 16-6a-1603 is enacted to read:
4670 16-6a-1603. Scope of member's inspection right.
4671 (1) A director or member's agent or attorney has the same inspection and copying rights
4672 as the director or member.
4673 (2) The right to copy records under Section 16-6a-1602 includes, if reasonable, the right
4674 to receive copies made by photographic, xerographic, electronic, or other means.
4675 (3) Except as provided in Section 16-6a-1606 , the nonprofit corporation may impose a
4676 reasonable charge, covering the costs of labor and material, for copies of any documents provided
4677 to the director or member. The charge may not exceed the estimated cost of production and
4678 reproduction of the records.
4679 (4) The nonprofit corporation may comply with a director's or member's demand to inspect
4680 the record of members under Subsection 16-6a-1601 (3) by furnishing to the director or member
4681 a list of directors or members that:
4682 (a) complies with Subsection 16-6a-1601 (3); and
4683 (b) is compiled no earlier than the date of the director's or member's demand.
4684 Section 175. Section 16-6a-1604 is enacted to read:
4685 16-6a-1604. Court-ordered inspection of corporate records.
4686 (1) (a) A director or member may petition the applicable court if:
4687 (i) a nonprofit corporation refuses to allow a director or member, or the director's or
4688 member's agent or attorney, to inspect or copy any records that the director or member is entitled
4689 to inspect or copy under Subsection 16-6a-1602 (1); and
4690 (ii) the director or member complies with Subsection 16-6a-1602 (1).
4691 (b) If petitioned under Subsection (1)(a), the court may summarily order the inspection or
4692 copying of the records demanded at the nonprofit corporation's expense on an expedited basis.
4693 (2) (a) A director or member may petition the applicable court if:
4694 (i) a nonprofit corporation refuses to allow a director or member, or the director's or
4695 member's agent or attorney, to inspect or copy any records that the director or member is entitled
4696 to inspect or copy pursuant to Subsections 16-6a-1602 (2) and (3) within a reasonable time
4697 following the director's or member's demand; and
4698 (ii) the director or member complies with Subsections 16-6a-1602 (2) and (3).
4699 (b) If the court is petitioned under Subsection (2)(a), the court may summarily order the
4700 inspection or copying of the records demanded.
4701 (3) If a court orders inspection or copying of the records demanded under Subsection (1)
4702 or (2), unless the nonprofit corporation proves that it refused inspection or copying in good faith
4703 because it had a reasonable basis for doubt about the right of the director or member, or the
4704 director's or member's agent or attorney, to inspect or copy the records demanded:
4705 (a) the court shall also order the nonprofit corporation to pay the director's or member's
4706 costs, including reasonable counsel fees, incurred to obtain the order;
4707 (b) the court may order the nonprofit corporation to pay the director or member for any
4708 damages the member incurred;
4709 (c) if inspection or copying is ordered pursuant to Subsection (2), the court may order the
4710 nonprofit corporation to pay the director's or member's inspection and copying expenses; and
4711 (d) the court may grant the director or member any other remedy provided by law.
4712 (4) If a court orders inspection or copying of records demanded, it may impose reasonable
4713 restrictions on the use or distribution of the records by the demanding director or member.
4714 (5) For purposes of this section, the applicable court is:
4715 (a) the district court of the county in this state where the nonprofit corporation's principal
4716 office is located; or
4717 (b) if the nonprofit corporation has no principal office in this state:
4718 (i) the district court of the county in which its registered office is located; or
4719 (ii) if the nonprofit corporation has no registered office, the district court in and for Salt
4720 Lake County.
4721 Section 176. Section 16-6a-1605 is enacted to read:
4722 16-6a-1605. Limitations on use of membership list.
4723 (1) Without consent of the board of directors, a membership list or any part of a
4724 membership list may not be obtained or used by any person for any purpose unrelated to a
4725 member's interest as a member.
4726 (2) Without limiting the generality of Subsection (1), without the consent of the board of
4727 directors a membership list or any part of a membership list may not be:
4728 (a) used to solicit money or property unless the money or property will be used solely to
4729 solicit the votes of the members in an election to be held by the nonprofit corporation;
4730 (b) used for any commercial purpose; or
4731 (c) sold to or purchased by any person.
4732 Section 177. Section 16-6a-1606 is enacted to read:
4733 16-6a-1606. Financial statements.
4734 Upon the written request of any member, a nonprofit corporation shall mail to the member
4735 the following that show in reasonable detail the assets and liabilities and results of the operations
4736 of the nonprofit corporation:
4737 (1) its most recent annual financial statements, if any; and
4738 (2) its most recently published financial statements, if any.
4739 Section 178. Section 16-6a-1607 is enacted to read:
4740 16-6a-1607. Annual report for division.
4741 (1) Each domestic nonprofit corporation, and each foreign nonprofit corporation
4742 authorized to conduct affairs in this state, shall deliver to the division for filing an annual report
4743 on a form provided by the division that sets forth:
4744 (a) (i) the corporate name of the domestic or foreign nonprofit corporation; and
4745 (ii) any assumed corporate name of the foreign nonprofit corporation;
4746 (b) the state or country under whose law it is incorporated;
4747 (c) the street address of its registered office in this state;
4748 (d) the name of its registered agent at the office listed in Subsection (1)(c);
4749 (e) the street address of its principal office;
4750 (f) the names and addresses of its directors and principal officers; and
4751 (g) a brief description of the nature of its business.
4752 (2) The division shall deliver a copy of the prescribed form of annual report to each
4753 domestic nonprofit corporation and each foreign nonprofit corporation authorized to conduct
4754 affairs in this state.
4755 (3) Information in the annual report shall be current as of the date the annual report is
4756 executed on behalf of the nonprofit corporation.
4757 (4) (a) The annual report of a domestic or foreign nonprofit corporation shall be delivered
4758 annually to the division no later than the end of the second calendar month following the calendar
4759 month in which the report form is mailed by the division.
4760 (b) Proof to the satisfaction of the division that the nonprofit corporation has mailed an
4761 annual report form is considered in compliance with this Subsection (4).
4762 (5) (a) If an annual report contains the information required by this section, the division
4763 shall file it.
4764 (b) If an annual report does not contain the information required by this section, the
4765 division shall promptly notify the reporting domestic or foreign nonprofit corporation in writing
4766 and return the annual report to it for correction.
4767 (c) If an annual the report rejected under Subsection (5)(b) was otherwise timely filed and
4768 is corrected to contain the information required by this section and delivered to the division within
4769 30 days after the effective date of the notice of rejection, the annual report is considered to be
4770 timely filed.
4771 (6) The fact that an individual's name is signed on an annual report form is prima facie
4772 evidence for division purposes that the individual is authorized to certify the report on behalf of
4773 the nonprofit corporation.
4774 (7) The annual report form provided by the division may be designed to provide a
4775 simplified certification by the nonprofit corporation if no changes have been made in the required
4776 information from the last preceding report filed.
4777 (8) A domestic or foreign nonprofit corporation may, but may not be required to, deliver
4778 to the division for filing an amendment to its annual report reflecting any change in the information
4779 contained in its annual report as last amended.
4780 Section 179. Section 16-6a-1608 is enacted to read:
4781 16-6a-1608. Statement of person named as director or officer.
4782 Any person named as a director or officer of a domestic or foreign nonprofit corporation
4783 in an annual report or other document on file with the division may, if that person does not hold
4784 the named position, deliver to the division for filing a statement setting forth:
4785 (1) that person's name;
4786 (2) the domestic or foreign nonprofit corporation's name;
4787 (3) information sufficient to identify the report or other document in which the person is
4788 named as a director or officer; and
4789 (4) (a) the date on which the person ceased to be a director or officer of the domestic or
4790 foreign nonprofit corporation; or
4791 (b) a statement that the person did not hold the position for which the person was named
4792 in the corporate report or other document.
4793 Section 180. Section 16-6a-1609 is enacted to read:
4794 16-6a-1609. Interrogatories by division.
4795 (1) (a) The division may give interrogatories reasonably necessary to ascertain whether the
4796 nonprofit corporation has complied with the provisions of this chapter applicable to the nonprofit
4797 corporation to:
4798 (i) any domestic or foreign nonprofit corporation subject to the provisions of this chapter;
4799 and
4800 (ii) to any officer or director of a corporation described in Subsection (1)(a)(i).
4801 (b) The interrogatories described in Subsection (1) shall be answered within:
4802 (i) 30 days after the mailing of the interrogatories; or
4803 (ii) additional time as fixed by the division.
4804 (c) The answers to the interrogatories shall be:
4805 (i) full and complete; and
4806 (ii) made in writing.
4807 (d) (i) If the interrogatories are directed to an individual, the interrogatories shall be
4808 answered by the individual.
4809 (ii) If directed to a nonprofit corporation, the interrogatories shall be answered by:
4810 (A) the chair of the board of directors of the nonprofit corporation;
4811 (B) all of its directors;
4812 (C) one of its officers; or
4813 (D) any other person authorized to answer the interrogatories as the nonprofit corporation's
4814 agent.
4815 (e) (i) The division need not file any document to which the interrogatories relate until the
4816 interrogatories are answered as provided in this section.
4817 (ii) Notwithstanding Subsection (1)(e)(i), the division need not file a document to which
4818 the interrogator relates if the answers to the interrogatory disclose that the document is not in
4819 conformity with the provisions of this chapter.
4820 (f) The division shall certify to the attorney general, for such action as the attorney general
4821 considers appropriate, all interrogatories and answers to interrogatories that disclose a violation
4822 of this chapter.
4823 (2) (a) Interrogatories given by the division under Subsection (1), and the answers to
4824 interrogatories, may not be open to public inspection.
4825 (b) The division may not disclose any facts or information obtained from the
4826 interrogatories or answers to the interrogatories, except:
4827 (i) as the official duties of the division may require the facts or information to be made
4828 public; or
4829 (ii) in the event the interrogatories or the answers to the interrogatories are required for
4830 evidence in any criminal proceedings or in any other action by this state.
4831 (3) Each domestic or foreign nonprofit corporation that fails or refuses to answer truthfully
4832 and fully, within the time prescribed by Subsection (1), interrogatories given to the domestic or
4833 foreign nonprofit corporation by the division in accordance with Subsection (1) is guilty of a class
4834 C misdemeanor and, upon conviction, shall be punished by a fine of not more than $500.
4835 (4) Each officer and director of a domestic or foreign nonprofit corporation who fails or
4836 refuses to answer truthfully and fully, within the time prescribed by Subsection (1), interrogatories
4837 given to the officer or director by the division in accordance with Subsection (1) is guilty of a class
4838 B misdemeanor and, upon conviction, shall be punished by a fine of not more than $1,000.
4839 (5) The attorney general may enforce this section in an action brought in:
4840 (a) the district court of the county in this state where the nonprofit corporation's principal
4841 office or registered office is located; or
4842 (b) if the nonprofit corporation has no principal or registered office in this state, in the
4843 district court in and for Salt Lake County.
4844 Section 181. Section 16-6a-1701 is enacted to read:
4845
4846 16-6a-1701. Application to existing domestic nonprofit corporations -- Reports
4847 domestic and foreign nonprofit corporation.
4848 (1) Except as otherwise provided in Section 16-6a-1704 , this chapter applies to domestic
4849 nonprofit corporations as follows:
4850 (a) domestic nonprofit corporations in existence on July 1, 2000, that were incorporated
4851 under any general statute of this state providing for incorporation of nonprofit corporations,
4852 including all nonprofit corporations organized under any former provisions of Title 16, Chapter
4853 6;
4854 (b) mutual irrigation, canal, ditch, reservoir, and water companies and water users'
4855 associations organized and existing under the laws of this state on July 1, 2000;
4856 (c) corporations organized under the provisions of Title 16, Chapter 7, Corporations Sole,
4857 for purposes of applying all provisions relating to merger or consolidation; and
4858 (d) to actions taken by the directors, officers, and members of the entities described in
4859 Subsections (1)(a), (b) and (c) after July 1, 2000.
4860 (2) Domestic nonprofit corporations to which this chapter applies, that are organized and
4861 existing under the laws of this state on July 1, 2000:
4862 (a) shall continue in existence with all the rights and privileges applicable to nonprofit
4863 corporations organized under this chapter; and
4864 (b) from July 1, 2000 shall have all the rights and privileges and shall be subject to all the
4865 remedies, restrictions, liabilities, and duties prescribed in this chapter except as otherwise
4866 specifically provided in this chapter.
4867 (3) Every existing domestic nonprofit corporation and foreign nonprofit corporation
4868 qualified to conduct affairs in this state on July 1, 2000 shall file an annual report with the division
4869 setting forth the information prescribed by Section 16-6a-1607 . The annual report shall be filed
4870 at such time as would have been required had this chapter not taken effect and shall be filed
4871 annually thereafter as required in Section 16-6a-1607 .
4872 Section 182. Section 16-6a-1702 is enacted to read:
4873 16-6a-1702. Application to foreign nonprofit corporations.
4874 (1) A foreign corporation authorized to conduct affairs in this state on July 1, 2000, is
4875 subject to this chapter, but is not required to obtain a new certificate of authority to conduct affairs
4876 under this chapter.
4877 (2) Foreign nonprofit corporations that qualified to do business in this state under the
4878 provisions of Title 16, Chapter 8, which provisions were repealed by Chapter 28, Laws of Utah
4879 1961, shall be authorized to transact business in this state subject to all of the limitations,
4880 restrictions, liabilities, and duties prescribed in this chapter.
4881 (3) This chapter shall apply to all foreign corporations sole qualified to do business in this
4882 state with respect to mergers and consolidations.
4883 Section 183. Section 16-6a-1703 is enacted to read:
4884 16-6a-1703. Nonapplicability of chapter.
4885 This chapter does not apply to:
4886 (1) corporations sole, except with respect to mergers and consolidations; or
4887 (2) domestic or foreign nonprofit corporations governed by Title 3, Chapter 1, Uniform
4888 Agricultural Cooperative Association Act.
4889 Section 184. Section 16-6a-1704 is enacted to read:
4890 16-6a-1704. Saving provisions.
4891 (1) (a) Except as provided in Subsection (2), the repeal of any statute by this act does not
4892 affect:
4893 (i) the operation of the statute or any action taken under it before its repeal;
4894 (ii) any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or
4895 incurred under the statute before its repeal;
4896 (iii) any violation of the statute, or any penalty, forfeiture, or punishment incurred because
4897 of the violation of the statute before its repeal; or
4898 (iv) any proceeding, reorganization, or dissolution commenced under the statute before its
4899 repeal.
4900 (b) A proceeding, reorganization, or dissolution described in Subsection (1)(a)(iv) may be
4901 completed in accordance with the repealed statute as if the statute had not been repealed.
4902 (2) If a penalty or punishment imposed for violation of a statute repealed by this act is
4903 reduced by this act, the penalty or punishment if not already imposed shall be imposed in
4904 accordance with this act.
4905 (3) Section 16-6a-707 does not operate to permit a corporation in existence prior to July
4906 1, 2000, to take action by the written consent of fewer than all of the members entitled to vote with
4907 respect to the subject matter of the action, until the date a resolution providing otherwise is
4908 approved either:
4909 (a) by a consent in writing:
4910 (i) setting forth the proposed resolution; and
4911 (ii) signed by all of the members entitled to vote with respect to the subject matter of the
4912 resolution; or
4913 (b) at a duly convened meeting of members, by the vote of the same percentage of
4914 members of each voting group as would be required to include the resolution in an amendment to
4915 the corporation's articles of incorporation.
4916 Section 185. Section 16-7-13 is amended to read:
4917 16-7-13. Merger and consolidation.
4918 (1) As long as the surviving corporation qualifies for tax exempt status under Internal
4919 Revenue Code Section 501(c)(3), any corporation organized under this chapter may merge with
4920 one or more domestic or foreign corporations organized or authorized to do business in this state
4921 under this title, or with one or more nonprofit domestic or foreign corporations organized or
4922 authorized to do business in this state under this title.
4923 (2) (a) Articles of merger or consolidation shall be adopted by the appropriate incorporator
4924 or the successor to an incorporator as described in Section 16-7-2 . If there is no such incorporator
4925 or successor, the articles shall be signed by the officer or official authorized to administer the
4926 affairs and property of the corporation according to the practices and procedures of the church,
4927 denomination, or religious society.
4928 (b) The articles of merger or consolidation shall be adopted by any merging or
4929 consolidating corporation organized under Title 16, Chapter [
4930 Corporation [
4931 16-6a-1101 and 16-6a-1102 .
4932 (3) The effect of a merger or consolidation under this section is the same as provided in
4933 Section [
4934 Section 186. Section 16-7-14 is amended to read:
4935 16-7-14. Restatement of articles of incorporation.
4936 (1) A corporation sole organized under this chapter may restate its articles of incorporation
4937 in the same manner allowed nonprofit corporations under Section [
4938 (2) The restated articles shall be adopted on behalf of the corporation by the appropriate
4939 incorporator or the successor to an incorporator as described in Section 16-7-2 . If there is no such
4940 incorporator or successor, the articles shall be signed by the officer or official authorized to
4941 administer the affairs and property of the corporation according to the practices and procedures of
4942 the church, denomination, or religious society.
4943 Section 187. Section 17A-3-903 is amended to read:
4944 17A-3-903. Organization of non-profit corporation as building authority -- Powers
4945 and duties.
4946 (1) The governing body of a public body may organize a non-profit corporation as the
4947 building authority for the public body under this part, following the procedures set out in [
4948 16, Chapter 6a, Utah Revised Nonprofit Corporation [
4949
4950 the public body exists by acquiring, improving, or extending one or more projects and financing
4951 their costs on behalf of the public body. The authority shall be known as the "Municipal Building
4952 Authority of (name of public body)." The governing body shall approve the articles of
4953 incorporation and bylaws of the authority and shall act as the members of the board of trustees of
4954 the authority. The articles of incorporation and bylaws shall provide that members of the board
4955 of trustees of the authority may be removed and replaced by the governing authority at any time
4956 in its discretion. The governing body may, at its sole discretion and at any time, alter or change
4957 the structure, organization, programs, or activities of the building authority, subject to the rights
4958 of holders of the authority's bonds and parties to its other obligations.
4959 (2) Each building authority is authorized to acquire, improve, or extend one or more
4960 projects and to finance their costs on behalf of the public body that created it, in accordance with
4961 the procedures and subject to the limitations of this part, in order to accomplish the public purposes
4962 for which the public body exists.
4963 (3) Except as limited by Subsection (4), a building authority may contract for or employ
4964 all staff and other personnel necessary for the purpose of performing its functions and activities,
4965 including contracting with the public body that created it to utilize the personnel, property, or
4966 facilities of the public body for that purpose, and may include the costs of the contracted services
4967 and employed staff and personnel in the rentals and charges payable to it under leases or
4968 agreements between it and the public body.
4969 (4) (a) With respect to any public body that creates a building authority and which has an
4970 elected attorney or auditor, or both, the elected attorney shall be the legal advisor to and provide
4971 all legal services for the authority, and the elected auditor shall provide all accounting and auditing
4972 services for the authority. The authority shall reimburse the public body for legal, accounting, and
4973 auditing services so furnished by the public body, based upon the actual cost of the services
4974 including reasonable amounts allocated by the public body for overhead, employee fringe benefits,
4975 and general and administrative expenses.
4976 (b) The provisions of this Subsection (4) shall not prevent the building authority from
4977 obtaining accounting or auditing services from outside accountants or auditors with the consent
4978 of the elected auditor and the governing body or from obtaining legal services from outside
4979 attorneys with the consent of the elected attorney and the governing body, nor shall the provisions
4980 of this Subsection (4) prevent the authority from obtaining the opinions of outside attorneys or
4981 accountants which are necessary for the issuance of the bonds of the authority.
4982 (c) Except those services that are paid for from bond proceeds, the building authority may
4983 include the cost of legal, accounting, and auditing services in the rentals and charges payable to
4984 it under leases or agreements between it and the public body.
4985 Section 188. Section 21-1-2 is amended to read:
4986 21-1-2. Fees of lieutenant governor.
4987 In addition to the fees prescribed by Title 16, Chapter 6a, Utah Revised Nonprofit
4988 Corporation Act, and Title 16, Chapter 10a, Utah Revised Business Corporation Act, [
4989
4990 governor shall receive and determine fees pursuant to Section 63-38-3.2 for the following:
4991 (1) for a copy of any law, resolution, record, or other document or paper on file in [
4992 lieutenant governor's office, other than documents or papers filed under Title 16, Chapter 6a, Utah
4993 Revised Nonprofit Corporation Act, and Title 16, Chapter 10a, Utah Revised Business Corporation
4994 Act[
4995 (2) for affixing certificate and the Great Seal of the state, except on documents filed under
4996 Title 16, Chapter 6a, Utah Revised Nonprofit Corporation Act, and Title 16, Chapter 10a, Utah
4997 Revised Business Corporation Act[
4998
4999 (3) for each commission signed by the governor, except that no charge may be made for
5000 commissions to public officers serving without compensation;
5001 (4) for each warrant of arrest issued by the governor and attested by the lieutenant governor
5002 upon the requisition of any other state or territory;
5003 (5) for recording miscellaneous papers or documents;
5004 (6) for filing any paper or document not otherwise provided for; and
5005 (7) for searching records and archives of the state, except that no member of the
5006 Legislature or other state or county officer may be charged for any search relative to matters
5007 appertaining to the duties of his office or for a certified copy of any law or resolution relative to
5008 his official duties passed by the Legislature.
5009 Section 189. Section 21-1-2.5 is amended to read:
5010 21-1-2.5. Fees of Division of Corporations and Commercial Code.
5011 In addition to the fees prescribed by Title 16, Chapter 6a, Utah Revised Nonprofit
5012 Corporation Act, and Title 16, Chapter 10a, Utah Revised Business Corporation Act, [
5013
5014 Corporations and Commercial Code shall receive and determine fees pursuant to Section 63-38-3.2
5015 for filing articles of incorporation or amendments of insurance corporations, of canal or irrigation
5016 corporations organized for furnishing water to lands owned by the members thereof exclusively,
5017 or of water users' associations organized in conformity with the requirements of the United States
5018 under the Reclamation Act of June 17, 1902, and which are authorized to furnish water only to
5019 their stockholders. No license fee may be imposed on insurance corporations, canal or irrigation
5020 corporations organized for furnishing water to lands owned by the members thereof exclusively,
5021 or water users' associations organized in conformity with the requirements of the United States
5022 under the Reclamation Act of June 17, 1902, and which are authorized to furnish water only to the
5023 stockholders at the time any such corporation files its articles of incorporation, articles of
5024 amendment increasing the number of authorized shares, or articles of merger or consolidation, any
5025 provision of Title 16, Chapter 10a, Utah Revised Business Corporation Act, to the contrary
5026 notwithstanding.
5027 Section 190. Section 31A-5-101 is amended to read:
5028 31A-5-101. Definitions.
5029 In this chapter, unless the context requires otherwise:
5030 (1) The definitions applicable to the Utah Revised Business Corporation Act in
5031 Subsections 16-10a-102 (2), (22), and (23) apply to stock corporations.
5032 (2) The definitions applicable to nonprofit corporations in Subsections [
5033
5034 (3) "Promoter securities" are securities issued by a stock insurer to the incorporators,
5035 directors, officers, or their families or nominees at any time prior to, and up to one year following,
5036 the issuance of a certificate of authority to the stock insurer.
5037 Section 191. Section 31A-5-102 is amended to read:
5038 31A-5-102. Scope and purposes.
5039 (1) (a) Except as expressly provided otherwise in this title, this chapter applies to all
5040 corporations organized under Utah law and doing an insurance business as defined under Section
5041 31A-1-301 , except those expressly governed by other chapters of this title. This chapter applies
5042 to corporations doing a reinsurance business, whether or not they do other insurance business.
5043 (b) Except as expressly provided otherwise, this chapter does not apply to nondomestic
5044 insurers.
5045 (c) Except as provided otherwise in this title, Title 16, Chapter [
5046 Nonprofit Corporation [
5047 Revised Business Corporation Act, apply to corporations under this chapter.
5048 (d) If Title 16, Chapter [
5049 governs.
5050 (2) The purposes of this chapter include:
5051 (a) to provide a procedure for the formation of insurance corporations;
5052 (b) to assure the solidity of insurance corporations by providing an organizational
5053 framework to facilitate sound management, sound operation, and sound regulation;
5054 (c) to provide fair means of corporate transformation; and
5055 (d) where feasible, to strengthen internal corporate democracy through enhancing
5056 shareholder and policyholder participation.
5057 Section 192. Section 31A-5-104 is amended to read:
5058 31A-5-104. General corporate powers and procedures.
5059 (1) (a) Subject to other provisions of this code, Section 16-10a-302 applies to stock and
5060 mutual insurance corporations.
5061 (b) Subject to other specific provisions of this title, a domestic insurance corporation may
5062 participate in any activity permitted as a promoter, partner, member, associate, or manager of any
5063 partnership, joint venture, trust, or other enterprise.
5064 (2) Subsections 16-10a-303 (2)(a) and (b) apply to stock corporations, and Section
5065 16-10a-622 applies to mutuals.
5066 (3) Whenever a seal is required on a corporate document, writing or printing the word
5067 "Seal" constitutes a valid seal.
5068 (4) In waiving notice and in informal actions by shareholders, members, or directors,
5069 Sections 16-10a-704 , 16-10a-706 , and 16-10a-823 apply to stock corporations, and Sections
5070 [
5071 (5) A life insurance corporation may hold assets under Section 31A-22-410 as general
5072 corporate assets or as trustee.
5073 Section 193. Section 31A-5-203 is amended to read:
5074 31A-5-203. Articles and bylaws.
5075 (1) The articles of incorporation requirements in Section 16-10a-202 apply to the articles
5076 of a stock corporation, except that:
5077 (a) the name of the corporation shall comply with Sections 16-10a-401 and 31A-1-109 and
5078 the name of any new or renamed corporation shall include the word "insurance" or a term of
5079 equivalent meaning;
5080 (b) authorized shares shall conform to Subsection 31A-5-305 (1) and the capital provided
5081 for shall conform to Section 31A-5-211 ; and
5082 (c) beginning on July 1, 1988, the purposes of the corporation are limited to those
5083 permitted by Section 31A-4-107 .
5084 (2) The articles of incorporation requirements in Section [
5085 Subsections [
5086 except that:
5087 (a) The name of the corporation shall comply with Sections [
5088 31A-1-109 and the name of any new or renamed corporation shall include the words "mutual" and
5089 "insurance" or terms of equivalent meaning.
5090 (b) If any mutual bonds are authorized, they shall comply with Subsection
5091 31A-5-305 (2)(a).
5092 (c) The purposes of the corporation may not include doing a title insurance business, and
5093 shall be limited to those purposes permitted by Section 31A-4-107 .
5094 (d) If assessable policies are permitted, the articles shall contain provisions giving
5095 assessment liabilities and procedures, including a provision specifying the classes of business on
5096 which assessment may be separately levied.
5097 (e) The articles may specify those classes of persons who may be policyholders, or
5098 prescribe the procedure for establishing or removing restrictions on the classes of persons who may
5099 be policyholders. The articles shall also state that each policyholder is a member of the
5100 corporation.
5101 (3) Sections 16-10a-830 and 16-10a-831 apply to stock corporations and Section [
5102 16-6a-818 applies to mutuals. The articles or bylaws shall designate three or more principal
5103 offices the principal officers of the corporation shall hold. The principal offices shall be held by
5104 at least three separate natural persons.
5105 (4) The bylaws of a domestic corporation shall comply with this chapter. A copy of the
5106 bylaws, and any amendments to them, shall be filed with the commissioner within 60 days after
5107 their adoption. Subject to Subsection (4), Subsections 31A-5-204 (2)(c) and (5), Subsection
5108 31A-5-213 (4), and Section 16-10a-206 apply to stock corporations and Section [
5109 16-6a-206 applies to mutuals.
5110 Section 194. Section 31A-5-219 is amended to read:
5111 31A-5-219. Amendment of articles.
5112 (1) Subject to Subsection (3) and to the requirements of the Insurance Code, a stock
5113 corporation may amend its articles under Sections 16-10a-1001 through 16-10a-1009 and a mutual
5114 may amend its articles under Sections [
5115 manner, including substantial changes of its original purposes. No amendment may be made
5116 contrary to Subsections 31A-5-203 (1) through (3).
5117 (2) An amendment becomes effective when the properly adopted and filed articles of
5118 amendment are approved by the commissioner.
5119 (3) Section 16-10a-1009 applies to stock corporations and the second paragraph of Section
5120 [
5121 Section 195. Section 31A-5-404 is amended to read:
5122 31A-5-404. Communications to shareholders, policyholders, and voting members --
5123 Commissioner's attendance at meetings.
5124 (1) (a) Sections 16-10a-1601 through 16-10a-1604 apply to the books and records and their
5125 inspection by shareholders of stock corporations. Section [
5126 books and records and inspection rights of policyholders or voting members of mutuals. However,
5127 the inspection of the records of the names and addresses of policyholders or voting members of
5128 mutuals is permitted only to communicate with other policyholders or voting members regarding
5129 the nomination and election of candidates for the board, or for other corporate matters which may
5130 be submitted to a vote of the policyholders or voting members. No person may, directly or
5131 indirectly, use any information obtained in an inspection for any other purpose.
5132 (b) Any books, records, or minutes may be in written form or in any other form capable
5133 of being converted into written form within a reasonable time.
5134 (c) Any provision of this chapter or of any articles or bylaws of a mutual, which requires
5135 keeping a record of the names and addresses of policyholders entitled to vote or voting members,
5136 is complied with by keeping a record of the names of policyholders or voting members and the
5137 names and addresses of insureds or persons paying premiums. This provision requires mailing or
5138 sending of notices, reports, proposals, ballots, or other materials to policyholders or voting
5139 members of record.
5140 (2) Subject to Subsection (4), the commissioner may by rule prescribe that copies of
5141 specified classes of communications circulated generally by a corporation to shareholders,
5142 policyholders, or voting members be communicated to the commissioner at the same time.
5143 (3) Subject to Subsection (4), the commissioner may attend any shareholders',
5144 policyholders', or voting members' meeting as an observer.
5145 (4) Subsection (3) and, so far as it relates to communications to shareholders, Subsection
5146 (2) do not apply to stock corporations whose voting shares are owned by a single person, or whose
5147 shareholders are either members of the board or are explicitly represented on it.
5148 Section 196. Section 31A-5-405 is amended to read:
5149 31A-5-405. Meetings of mutuals and mutual policyholders' and members' voting
5150 rights.
5151 (1) Subject to this section, Sections [
5152 and [
5153 Subject to this section and Section 31A-5-409 , Section [
5154 of members of mutuals.
5155 (2) (a) Policyholders or voting members in all mutuals have the right to vote on
5156 conversion, voluntary dissolution, amendment of the articles, and the election of directors except
5157 public directors appointed under Subsection 31A-5-409 (1). The mutual may adopt reasonable
5158 provisions in its bylaws to determine which individual among joint policyholders may exercise a
5159 voting right and how to deal with cases where the same individual is one of several joint
5160 policyholders in various policies.
5161 (b) The articles of any mutual may give the policyholders or voting members additional
5162 voting rights. These articles may require a greater percentage of affirmative votes to approve an
5163 action than the statutes require.
5164 (3) The articles or bylaws shall contain rules governing voting procedures and voting
5165 eligibility consistent with Subsection (1). No amendment to these rules is effective until at least
5166 30 days after it has been filed with the commissioner.
5167 (4) (a) The articles or bylaws may provide for regular or special meetings of the
5168 policyholders or voting members, and, if meetings are not provided for, then mail elections shall
5169 be provided for in lieu of elections at meetings.
5170 (b) Notice of the time and place of regular meetings or elections shall be given to each
5171 policyholder or voting member in a reasonable manner as the commissioner approves or requires.
5172 Changes may be made by written notice mailed, properly addressed, and stamped, to the
5173 last-known address of all policyholders or voting members.
5174 (5) The articles may provide that representatives or delegates selected by the policyholders
5175 or voting members shall be from specific geographical districts or defined classes of policyholders
5176 or voting members, as determined on a reasonable basis. After the representative assembly has
5177 been selected by the policyholder or voting members, the assembly or the respective classes of
5178 policyholders or voting members may choose replacements for members unable to complete their
5179 terms, if the articles provide for their replacement. The vote of a person holding a valid proxy is
5180 treated as the vote of the policyholders or voting members who gave the proxy.
5181 Section 197. Section 31A-5-407 is amended to read:
5182 31A-5-407. Board of directors.
5183 (1) Subject to this section, Sections 16-10a-801 through 16-10a-803 , 16-10a-805 , and
5184 16-10a-811 apply to the board of directors of a stock corporation and Sections [
5185 and [
5186 (2) A majority of the directors shall be residents of this state unless the commissioner is
5187 satisfied that the corporation's financial condition, management, and other circumstances give
5188 assurance that the interests of insureds and the public will not be endangered by the majority being
5189 nonresidents.
5190 (3) Employees and agents of a corporation that receive more than 10% of their income
5191 from the corporation, and persons related to any of them within the second degree by blood or
5192 marriage, if directors, are considered "inside directors." Inside directors may not constitute a
5193 majority of the corporation's board.
5194 (4) Subsections (2) and (3) and the required number of directors for committees under
5195 Subsection 31A-5-412 (1) do not apply to an insurance subsidiary authorized under Subsection
5196 31A-5-218 (1), nor to a stock insurance corporation, more than 50% of whose outstanding shares
5197 entitled to vote are owned or controlled by a single person or all of whose voting shareholders are
5198 either members of or are individually represented on the board.
5199 (5) If the directors of a corporation are divided into classes by the articles or the bylaws,
5200 no class may contain fewer than one-third of the total number of directors. Subject to this
5201 requirement, Section 16-10a-804 applies to the classification of directors of stock corporations.
5202 When classes of trustees or directors are provided in a mutual corporation, the terms of office of
5203 the several classes need not be uniform.
5204 (6) The board shall manage the business and affairs of the corporation and may not
5205 delegate its power or responsibility, except as authorized by Section 31A-5-412 .
5206 (7) Section 16-10a-824 applies to the determination of a quorum of directors of a stock
5207 corporation and Section [
5208 for a mutual, except as specifically provided otherwise in this title.
5209 (8) (a) Sections 16-10a-820 and 16-10a-821 apply to the meetings and action without a
5210 meeting of the board of directors of stock corporations [
5211 (b) Sections 16-6a-812 through 16-6a-819 apply to the meetings and notice of mutuals.
5212 (9) Sections 16-10a-1601 through 16-10a-1604 apply to stock corporations and Section
5213 [
5214 entities.
5215 Section 198. Section 31A-5-409 is amended to read:
5216 31A-5-409. Selection and removal of directors and officers of mutuals.
5217 (1) The articles of a mutual may provide that any number of the directors are public
5218 directors chosen under a plan proposed by the corporation and approved by the commissioner. The
5219 plan shall assure true public representation on the board. The persons nominated as directors shall
5220 have insurance business or general experience that qualifies them to serve responsibly and
5221 impartially.
5222 (2) Directors not chosen under Subsection (1) are elected by the policyholders or voting
5223 members. If directors are divided into classes, one class shall be elected at least every four years,
5224 for a term not exceeding six years.
5225 (3) A director may be removed from office for cause by an affirmative vote of a majority
5226 of the full board at a meeting of the board called for that purpose.
5227 (4) Subject to Subsections (1), (2), and (3), Section [
5228 vacancies on the governing board.
5229 Section 199. Section 31A-5-410 is amended to read:
5230 31A-5-410. Supervision of management changes.
5231 (1) (a) The name of a person selected as a director or principal officer of a corporation,
5232 together with pertinent biographical and other data the commissioner requires by rule, shall be
5233 reported to the commissioner immediately after the selection.
5234 (b) For five years after the initial issuance of a certificate of authority to a corporation, the
5235 commissioner may, within 30 days after receipt of a report under Subsection (1)(a), disapprove any
5236 person selected who fails to satisfy the commissioner that he is trustworthy and has the competence
5237 and experience necessary to discharge his responsibilities.
5238 (2) Whenever a director or principal officer of a corporation is removed under Section
5239 16-10a-808 or 16-10a-832 , [
5240 16-6a-820 (4) and 31A-5-409 (3), the removal shall be reported to the commissioner immediately,
5241 together with a statement of the reasons for the removal.
5242 (3) If the commissioner finds, after a hearing, that a director or officer is incompetent or
5243 untrustworthy, or has wilfully violated this code, a rule adopted under Subsection 31A-2-201 (3),
5244 or an order issued under Subsection 31A-2-201 (4), and that the incompetence, untrustworthiness,
5245 or the violation endangers the interests of insureds or the public, he may order the removal of the
5246 director or officer.
5247 Section 200. Section 31A-5-415 is amended to read:
5248 31A-5-415. Officers', directors', and employees' liability and indemnification.
5249 (1) Section 16-10a-841 applies to the liabilities of directors of a stock corporation.
5250 [
5251 A director who votes for or assents to a violation of Subsection 16-6a-825 (3) or Section
5252 16-10a-842 [
5253 the distribution.
5254 (2) Part 9, Indemnification, of Title 16, Chapter 10a, Utah Revised Business Corporation
5255 Act, applies to stock and mutual corporations, but no indemnification may be paid until 30 or more
5256 days after sending a notice to the commissioner of the full details of the proposed indemnification.
5257 The commissioner may bring an action in Third Judicial District Court for Salt Lake County to
5258 have such indemnification enjoined. The court may enjoin the indemnification to the extent it
5259 would render the insurer in a hazardous condition, or exacerbate an existing financially hazardous
5260 condition.
5261 Section 201. Section 31A-5-503 is amended to read:
5262 31A-5-503. Merger and consolidation of mutuals.
5263 Any two or more mutuals may merge or consolidate, under the procedures set forth under
5264 Title 16, Chapter [
5265 subject to [
5266 Section 202. Section 31A-5-504 is amended to read:
5267 31A-5-504. Voluntary dissolution of domestic insurance corporations.
5268 (1) Under this section, a domestic stock insurance corporation may dissolve under the
5269 provisions of Sections 16-10a-1401 through 16-10a-1405 . Under this section, a domestic mutual
5270 insurance corporation may dissolve under [
5271
5272 16-6a-1405 .
5273 (2) At least 60 days prior to the submission to shareholders or policyholders of any
5274 proposed voluntary dissolution of an insurance corporation, the plan of dissolution shall be filed
5275 with the commissioner. The commissioner may require the submission of any additional
5276 information that will establish the financial condition of the corporation or other facts relevant to
5277 the proposed dissolution. If the shareholders or policyholders adopt the resolution to dissolve, the
5278 commissioner shall, within 30 days after the adoption of the resolution, begin an examination of
5279 the corporation. He shall approve the dissolution unless he finds, after a hearing, that the
5280 corporation is insolvent or may become insolvent in the process of dissolution. Upon approval,
5281 the corporation may transfer all its obligations under insurance policies to other insurers approved
5282 by the commissioner and then may dissolve under Subsection (1). If the commissioner
5283 disapproves, the commissioner shall petition the court for a liquidation under Section 31A-27-307 .
5284 (3) During the liquidation under Subsection (1), the corporation may apply to the
5285 commissioner to have the liquidation continued under his supervision. After receiving this
5286 application, the commissioner shall apply to the court for a liquidation under Section 31A-27-307 .
5287 (4) If the corporation revokes the voluntary dissolution proceedings under Section
5288 16-6a-1404 or 16-10a-1404 [
5289 dissolution proceedings with the commissioner.
5290 (5) In distributing the assets in the dissolution of a nonlife mutual, Subsection
5291 31A-27-337 (4) applies.
5292 (6) No remedy available to or against the corporation, its directors, officers, or
5293 shareholders is taken away or impaired if an action or other proceeding is brought within two years
5294 after dissolution for any right or claim existing, or any liability incurred, prior to the voluntary
5295 dissolution under this section. This action or proceeding may be prosecuted or defended by the
5296 corporation in its corporate name. The shareholders, directors, and officers may take appropriate
5297 corporate or other action to protect the remedy, right, or claim. A corporation which is dissolved
5298 by the expiration of its period of duration may amend its articles of incorporation during the two
5299 years to provide for perpetual existence.
5300 (7) During the voluntary dissolution of a domestic insurance corporation under this
5301 section, its corporate existence continues to allow the winding up of the corporation's affairs
5302 regarding any property and assets not distributed or otherwise disposed of prior to dissolution. To
5303 effect that purpose, the corporation may sell or otherwise dispose of the property and assets, sue
5304 and be sued, contract, and exercise all other necessary powers.
5305 Section 203. Section 31A-5-508 is amended to read:
5306 31A-5-508. Transfer of business or assets.
5307 (1) In the sale, lease, exchange, or mortgage of assets with or without shareholder action,
5308 and concerning the rights of dissenting shareholders in those transactions, Sections 16-10a-1201 ,
5309 16-10a-1202 , 16-10a-1320 through 16-10a-1328 , 16-10a-1330 , and 16-10a-1331 apply to stock
5310 corporations. In the sale, lease, exchange, or mortgage of assets, Section [
5311 applies to mutuals.
5312 (2) Chapter 16 applies to:
5313 (a) the sale of a domestic insurer's assets or book of business, other than in the ordinary
5314 course of business; or
5315 (b) the insurer entering into contracts of reinsurance which have substantially the same
5316 effect as a merger.
5317 Section 204. Section 31A-7-103 is amended to read:
5318 31A-7-103. Applicability of other provisions.
5319 (1) Except for exemptions specifically granted under this title, nonprofit health service
5320 insurance corporations organized or operating under this chapter are subject to all of the provisions
5321 of this title.
5322 (2) Nonprofit health service corporations are exempt from the provisions of Chapter 5
5323 except where sections or parts are specifically referenced and made applicable in this chapter, in
5324 which case the referenced provisions under Chapter 5 that apply to mutual corporations apply to
5325 nonprofit health service insurance corporations.
5326 (3) Title 16, Chapter [
5327 Chapter 10a, Utah Revised Business Corporation Act, do not apply to nonprofit health service
5328 insurance corporations except as specifically made applicable by:
5329 (a) this chapter;
5330 (b) a provision adopted by reference under this chapter; or
5331 (c) a rule adopted by the commissioner to deal with corporate law issues of nonprofit
5332 health service insurance corporations which are not settled under this chapter.
5333 (4) Any insurer authorized under this chapter that is not in compliance with the applicable
5334 capital and surplus requirements, yet has assets in excess of its liabilities, has until July 1, 1988,
5335 to comply with the applicable capital and surplus requirements. One-half of any shortage in capital
5336 and surplus on July 1, 1986, shall be remedied by July 1, 1987.
5337 Section 205. Section 31A-7-201 is amended to read:
5338 31A-7-201. Organization, incorporation, and licensing.
5339 Part II of Chapter 5 governs the organization, incorporation, and licensing of nonprofit
5340 health service corporations with the following exceptions:
5341 (1) Section [
5342 (2) Sections [
5343 (2) (a).
5344 (3) The last sentence of Subsection 31A-5-203 (2) (e) does not apply.
5345 (4) Sections 31A-5-214 and 31A-5-215 do not apply to nonprofit health service insurance
5346 corporations.
5347 Section 206. Section 31A-7-202 is amended to read:
5348 31A-7-202. Members.
5349 [
5350 organized or operating under this chapter. Sections [
5351 16-6a-702 , 16-6a-704 , 16-6a-711 , and 16-6a-712 apply to corporations organized or operating
5352 under this chapter which have members.
5353 Section 207. Section 31A-7-303 is amended to read:
5354 31A-7-303. Board of directors.
5355 (1) Subject to other provisions under this section, Sections [
5356 [
5357 16-6a-815 , 16-6a-816 apply to the board of directors of insurers organized or operating under this
5358 chapter.
5359 (2) The property and lawful business of every corporation subject to this chapter shall be
5360 held and managed by a governing board of trustees or directors with the powers and authority as
5361 is necessary or incidental to the complete execution of the purposes of each corporation as limited
5362 by its articles of incorporation and bylaws. [
5363 members. A majority of the directors shall be residents of Utah.
5364 (3) Any person employed by or receiving more than 10% of his income from a corporation
5365 licensed under this chapter, and any person related to that person within the second degree by
5366 blood or marriage, is an "insider." Insiders may not constitute a majority of the board of a
5367 corporation organized and operating under this chapter.
5368 (4) The board shall manage the business and affairs of the corporation and may not
5369 delegate its power or responsibility to do so, except to the extent authorized by Section 31A-7-307 .
5370 (5) Section [
5371 (6) Any director may be removed from office for cause by an affirmative vote of a majority
5372 of the full board at a meeting of the board called for that purpose.
5373 Section 208. Section 31A-7-304 is amended to read:
5374 31A-7-304. Waiver and consent.
5375 Sections [
5376 corporations organized or operating under this chapter.
5377 Section 209. Section 31A-7-313 is amended to read:
5378 31A-7-313. Books and records.
5379 Section [
5380 and operating under this chapter.
5381 Section 210. Section 31A-8-103 is amended to read:
5382 31A-8-103. Applicability to other provisions of law.
5383 (1) Except for exemptions specifically granted under this title, organizations are subject
5384 to regulation under all of the provisions of this title. Notwithstanding any provision of this title,
5385 organizations licensed under this chapter are wholly exempt from the provisions of Chapters 7, 9,
5386 10, 11, 12, 13, 19, and 28. In addition, organizations are not subject to:
5387 (a) Chapter 3, except for Part I;
5388 (b) Section 31A-4-107 ;
5389 (c) Chapter 5, except for provisions specifically made applicable by this chapter;
5390 (d) Chapter 14, except for provisions specifically made applicable by this chapter;
5391 (e) Chapters 17 and 18, except as made applicable by the commissioner by rule consistent
5392 with this chapter; and
5393 (f) Chapter 22, except for Parts VI, VII, and XII.
5394 (2) The commissioner may by rule waive other specific provisions of this title that he
5395 considers inapplicable to health maintenance organizations or limited health plans, upon a finding
5396 that such a waiver will not endanger the interests of enrollees, investors, or the public.
5397 (3) Title 16, Chapter [
5398
5399 to organizations except as specifically made applicable by:
5400 (a) this chapter;
5401 (b) a provision referenced under this chapter; or
5402 (c) a rule adopted by the commissioner to deal with corporate law issues of health
5403 maintenance organizations that are not settled under this chapter.
5404 (4) Whenever in this chapter a section, subsection, or paragraph of Chapter 5 or 14 is made
5405 applicable to organizations, the application is of those provisions that apply to mutual corporations
5406 if the organization is nonprofit and of those that apply to stock corporations if the organization is
5407 for profit. Whenever a provision under Chapter 5 or 14 is made applicable to organizations under
5408 this chapter, "mutual" means nonprofit organization.
5409 (5) Solicitation of enrollees by an organization is not a violation of any provision of law
5410 relating to solicitation or advertising by health professionals if that solicitation is made in
5411 accordance with the provisions of this chapter and Chapter 23.
5412 (6) Nothing in this title prohibits any health maintenance organization from meeting the
5413 requirements of any federal law that enables the health maintenance organization to receive federal
5414 funds or to obtain or maintain federal qualification status.
5415 (7) Except as provided in Section 31A-8-501 , organizations are exempt from statutes in
5416 this title or department rules that restrict or limit their freedom of choice in contracting with or
5417 selecting health care providers, including Section 31A-22-618 .
5418 (8) Organizations are exempt from the assessment or payment of premium taxes imposed
5419 by Sections 59-9-101 through 59-9-104 .
5420 Section 211. Section 31A-8-204 is amended to read:
5421 31A-8-204. Articles and bylaws.
5422 (1) The articles of a nonprofit organization shall conform to Subsections [
5423 16-6a-202 (1)(a) through [
5424 conform to Section 16-10a-202 . In addition:
5425 (a) the powers of the corporation shall be limited to those permitted under Section
5426 31A-8-105 ;
5427 (b) the articles shall state whether the organization is a health maintenance organization
5428 or a limited health plan;
5429 (c) the articles shall state the services to be provided or for which indemnity is to be paid,
5430 which services provided and indemnity guaranteed shall be consistent with the organization's
5431 designation under Subsection (1)(b);
5432 (d) the articles shall state that as to health care services for which individual providers are
5433 required to be licensed, the services provided by the organization shall be provided by persons
5434 properly licensed to perform the services;
5435 (e) the articles shall state whether providers of services are subject to assessment or
5436 withholding to pay operating costs or financial deficits;
5437 (f) the articles shall state, for organizations having members, how persons become
5438 members and that only members vote; and
5439 (g) the articles of an organization not having members shall state how the directors of the
5440 organization shall be selected and removed.
5441 (2) The articles or bylaws shall designate three or more officers as the principal officers
5442 of the corporation. The principal offices shall be held by at least three separate natural persons.
5443 (3) Section 31A-5-219 applies to amendments to articles of organizations.
5444 (4) Organizations shall adopt and maintain bylaws. Section [
5445 to organizations, except for the statement that bylaws need not be adopted.
5446 Section 212. Section 31A-8-406 is amended to read:
5447 31A-8-406. Distribution by nonprofit organizations.
5448 A nonprofit organization may pay compensation in a reasonable amount to its members,
5449 trustees, or officers for services rendered, may make reasonable incentive payments to its
5450 providers, may confer benefits upon its members in conformity with its purposes, may pay interest
5451 on certificates of indebtedness issued by it evidencing capital contributions, and upon dissolution
5452 or final liquidation may make distributions to its members as permitted by [
5453 6a, Utah Revised Nonprofit Corporation [
5454
5455 distribution of income. Notwithstanding Section 31A-8-105 , and in addition to the powers granted
5456 in that section, a nonprofit organization has all powers conferred upon it by Section [
5457 16-6a-302 .
5458 Section 213. Section 31A-9-101 is amended to read:
5459 31A-9-101. Definitions.
5460 (1) As used in this chapter:
5461 (a) "Fraternal" or "fraternal benefit society" means a corporation organized or operating
5462 under this chapter that:
5463 (i) has no capital stock;
5464 (ii) exists solely for:
5465 (A) the benefit of its members and their beneficiaries; and
5466 (B) any lawful social, intellectual, educational, charitable, benevolent, moral, fraternal,
5467 patriotic, or religious purpose for the benefit of its members or the public, carried on through
5468 voluntary activity of its members in their local lodges or through institutional programs of the
5469 fraternal or its local lodges;
5470 (iii) has a lodge system;
5471 (iv) has a representative form of government; and
5472 (v) provides insurance benefits authorized under this chapter.
5473 (b) "Laws of a fraternal" include its articles of incorporation and bylaws, however
5474 designated.
5475 (c) "Lodge system" means one in which:
5476 (i) there is a supreme governing body;
5477 (ii) subordinate to the supreme governing body are local lodges, however designated, into
5478 which natural persons are admitted as members in accordance with the laws of the fraternal;
5479 (iii) the local lodges are required by the laws of the fraternal to hold regular meetings at
5480 least monthly; and
5481 (iv) the local lodges regularly engage in programs involving member participation to
5482 implement the purposes of Subsection (1)(a)(ii).
5483 (d) "Representative form of government" means the fraternal complies with Section
5484 31A-9-403 .
5485 (2) In any provisions of law made applicable to fraternals by this chapter, the technical
5486 terms used in those provisions are applicable to fraternals despite the use of other parallel terms
5487 by fraternals.
5488 (3) The definitions provided in Subsections [
5489 16-6a-102 (4), (6), and (30), and Section 31A-1-301 apply to fraternals.
5490 Section 214. Section 31A-9-105 is amended to read:
5491 31A-9-105. General corporate powers and procedures.
5492 (1) Section 16-10a-302 applies to the general powers of fraternals.
5493 (2) [
5494 fraternals.
5495 (3) Subsection 31A-5-104 (3) applies to the omission of a seal in a fraternal.
5496 (4) Sections [
5497 consent to action without a meeting in a fraternal.
5498 (5) Subsection 31A-5-104 (5) applies to the power to hold assets as a trustee in a fraternal.
5499 Section 215. Section 31A-9-204 is amended to read:
5500 31A-9-204. Articles of incorporation and bylaws.
5501 (1) The articles of incorporation shall set forth:
5502 (a) the name of the corporation, which shall include the word "fraternal" or words of
5503 equivalent meaning;
5504 (b) the location of the principal office of the fraternal, which shall be in this state;
5505 (c) the purposes of the corporation, which shall include one or more of the purposes
5506 specified in Subsection 31A-9-101 (1) (a) (ii) (B), but shall otherwise be restricted to those
5507 permitted under Section 31A-4-107 ;
5508 (d) the classes of members, and the qualifications and rights of the members of each class;
5509 (e) a description of the fraternal's representative form of government, conforming to
5510 Section 31A-9-403 ;
5511 (f) the manner in which local lodges or branches may be formed and the powers they shall
5512 have, or a statement that the formation and powers of local lodges or branches is provided for in
5513 the bylaws;
5514 (g) a provision for fraternal bonds, if any are to be authorized, which shall conform to
5515 Section 31A-9-303 ; and
5516 (h) a provision for amendment of the articles, which shall conform to Section 31A-9-213 .
5517 (2) The articles of incorporation are not required to recite the corporate powers enumerated
5518 in this chapter, as these powers are authorized by law.
5519 (3) Section [
5520 shall specifically designate three or more offices, which shall be held by the principal officers of
5521 the fraternal. The principal offices shall be held by at least three separate natural persons.
5522 (4) The bylaws shall comply with the provisions of this chapter. A copy of the bylaws and
5523 any amendments to them shall be filed with the commissioner promptly after their adoption.
5524 Notice of amendments to the bylaws shall be given promptly to members. Subject to this chapter,
5525 Section [
5526 Section 216. Section 31A-9-212 is amended to read:
5527 31A-9-212. Separate accounts and subsidiaries.
5528 (1) Except as provided in Subsections (2) and (3), Sections 31A-5-217 and 31A-5-218
5529 apply to separate accounts and subsidiaries of fraternals. If a fraternal issues contracts on a variable
5530 basis, Subsections 31A-22-902 (2) and (6) and 31A-9-209 (2) do not apply, except that Subsection
5531 31A-9-209 (2) applies to any benefits contained in the variable contracts which are fixed or
5532 guaranteed dollar amounts.
5533 (2) If a fraternal engages in any insurance business other than life, disability, annuities,
5534 property, or liability insurance, it shall do so through a subsidiary under Section 31A-5-218 .
5535 (3) (a) A local lodge may incorporate under Title 16, Chapter [
5536 Nonprofit Corporation Act, or the corresponding law of the state where it is located, to carry out
5537 the noninsurance activities of the local lodge.
5538 (b) Corporations may be formed under Title 16, Chapter [
5539 Corporation Act, to implement Subsection 31A-9-602 (2).
5540 Section 217. Section 31A-9-405 is amended to read:
5541 31A-9-405. Board of directors.
5542 (1) [
5543 that the supreme governing body may act as the board of directors if it meets at least quarterly.
5544 Subsections 31A-5-407 (2) through (9) apply to fraternals, except that the word "mutual" shall be
5545 read "fraternal" and the references to other sections of Chapter 5 shall be to the corresponding
5546 sections of Chapter 9.
5547 (2) The terms of directors and officers may not exceed four years.
5548 Section 218. Section 31A-9-406 is amended to read:
5549 31A-9-406. Removal of directors and filling of vacancies.
5550 (1) A director may be removed from office for cause by an affirmative vote of a majority
5551 of the full board of directors at a meeting of the board called for that purpose or may be removed
5552 under [
5553 (2) Any vacancy occurring in the board, including a vacancy created by an increase in the
5554 number of directors, may be filled by the affirmative vote of a majority of the directors then in
5555 office, although less than a quorum.
5556 (3) If the laws of the fraternal provide that at least two-thirds of the directors are elected
5557 by the members, elected director vacancies may be filled by the board for the remainder of the
5558 terms for which there are vacancies.
5559 (4) If the vacancy is to be filled other than by a regular election, the election by the board
5560 is effective only until a reasonable time has elapsed for choosing the director in that other manner.
5561 (5) If less than two-thirds of the directors are elected by the members, elected director
5562 vacancies may be filled by the directors only until the next succeeding regular election. At that
5563 time, the elected director vacancy may be filled for the remainder of the term for which there is a
5564 vacancy. A director elected under this section to fill the unexpired term of an elected director is
5565 an elected director within the meaning of Subsection 31A-9-403 (1)(a).
5566 (6) If the board ceases to exist, the commissioner shall arrange the necessary procedures
5567 for holding elections to create a new board.
5568 Section 219. Section 31A-9-502 is amended to read:
5569 31A-9-502. Voluntary dissolution of solvent domestic fraternals.
5570 (1) Subject to this section, a domestic fraternal may voluntarily dissolve under Sections
5571 [
5572
5573 (2) The proposal for voluntary dissolution shall be filed with the commissioner at least 60
5574 days prior to the submission of that proposal to the supreme governing body or the members. The
5575 commissioner may require the submission of additional information necessary to establish the
5576 financial condition of the fraternal or other facts relevant to the proposed dissolution. If the
5577 supreme governing body or the members adopt the resolution to dissolve, by a majority of those
5578 voting or a larger number as required by the laws of the fraternal, the commissioner shall, within
5579 30 days after the adoption of the resolution, begin to examine the fraternal. The commissioner shall
5580 approve the dissolution unless he finds, after the examination and a hearing, that it is insolvent or
5581 may become insolvent in the process of dissolution. Upon approval, the fraternal may provide for
5582 a transfer to other fraternals approved by the commissioner of all its obligations under insurance
5583 policies and then may dissolve under Subsection (1). If the commissioner disapproves, he shall
5584 petition the court for liquidation under Section 31A-27-307 .
5585 (3) During the liquidation under Sections [
5586 16-6a-1408 , the fraternal may apply to the commissioner to have the liquidation continued under
5587 the commissioner's supervision. Upon receiving this request, the commissioner shall apply to the
5588 court for liquidation under Section 31A-27-307 .
5589 (4) If the fraternal revokes the voluntary dissolution proceedings under Section [
5590 16-6a-404 , a copy of the revocation of voluntary dissolution proceedings shall be filed with the
5591 commissioner.
5592 (5) Subsections 31A-5-504 (6) and (7) apply to the survival of remedies and continuance
5593 of corporate existence of a voluntarily dissolved fraternal.
5594 Section 220. Section 31A-11-105 is amended to read:
5595 31A-11-105. Application of Title 16 -- Incorporation of domestic motor clubs.
5596 Domestic corporations acting or applying to act as a motor club under this chapter are
5597 subject to Title 16, Chapter 10a, Utah Revised Business Corporation Act, if for profit, or Title 16,
5598 Chapter [
5599 Corporations and Commercial Code in the Department of Commerce issues certificates of
5600 incorporation for domestic corporations acting as motor clubs under this chapter, unless they are
5601 Chapter 5 corporations. This section does not negate the requirement of a motor club obtaining
5602 a certificate of authority from the commissioner. Section [
5603 bar a not-for-profit motor club from organizing under Title 16, Chapter [
5604 Nonprofit Corporation Act.
5605 Section 221. Section 31A-14-205 is amended to read:
5606 31A-14-205. Requirements from other applicable chapters.
5607 (1) A foreign insurer may not be authorized to do business in this state, unless it strictly
5608 complies with the following requirements:
5609 (a) Foreign insurers shall comply with the solvency standard set forth in Chapter 17, Part
5610 6, Risk-Based Capital, including maintenance of minimum capital or permanent surplus under
5611 Section 31A-5-211 .
5612 (b) A foreign insurer proposing to market securities in this state shall comply with Sections
5613 31A-5-301 , 31A-5-302 , and 31A-5-305 , unless this marketing is subject to United States Securities
5614 and Exchange Commission regulation.
5615 (c) Section 16-10a-1506 applies to the corporate name and the change of name of foreign
5616 stock insurers. Section [
5617 insurers.
5618 (d) Subsection 31A-5-203 (2)(c) applies to other business of foreign mutual insurers.
5619 (e) Subsection 31A-5-404 (2), as modified by Subsection 31A-5-404 (4), applies to
5620 communications to shareholders, policyholders, or voting members of mutuals by foreign insurers.
5621 (f) Section 31A-5-413 applies to interlocking directorates of foreign insurers.
5622 (g) Subsection 31A-5-203 (2)(d) applies to assessment liability in foreign insurers issuing
5623 assessable policies in any state.
5624 (2) The commissioner may issue orders imposing and eliminating restrictions to foreign
5625 insurers under Section 31A-5-103 .
5626 (3) After a hearing, the commissioner may by order apply any of the provisions of Sections
5627 31A-5-307 , 31A-5-414 , 31A-5-418 to a foreign corporation after finding that it is necessary for
5628 the protection of the interests of its insureds, creditors, or the public in this state. This subsection
5629 may be applied to a foreign insurer without a hearing if done under a reciprocal agreement with
5630 the domiciliary regulatory authority.
5631 (4) If any provision made applicable to a foreign insurer under this section conflicts with
5632 the law of the insurer's domicile so that it is impossible for the corporation to comply with both
5633 laws, the law of the domicile governs.
5634 (5) This section does not excuse or exempt any foreign insurer from complying with the
5635 provisions of this title which are otherwise applicable to a foreign insurer.
5636 (6) This section does not apply to foreign fraternal insurers.
5637 (7) If a licensed foreign insurer is in rehabilitation or liquidation proceedings or is found
5638 to be insolvent in its state of domicile, the commissioner may, without hearing, suspend the
5639 insurer's certificate of authority to do business in this state.
5640 Section 222. Section 31A-22-1305 is amended to read:
5641 31A-22-1305. Persons authorized to issue annuities.
5642 No person may issue an annuity to another person unless the issuer is:
5643 (1) an insurer authorized to issue annuities under Chapter 5, 9, or 14;
5644 (2) a domestic corporation created under Title 16, Chapter [
5645 Corporation Act, or other applicable law, or a foreign corporation conducted without profit, which
5646 is engaged solely in bona fide charitable, religious, missionary, educational, medical, or
5647 philanthropic activities; or
5648 (3) a natural person who issues an annuity to his spouse, children, grandchildren,
5649 great-grandchildren, parents, grandparents, uncles, aunts, brothers, sisters, nieces, or nephews,
5650 whether those relationships are by birth, marriage, or legal adoption.
5651 Section 223. Section 31A-27-335 is amended to read:
5652 31A-27-335. Priority of distribution.
5653 (1) (a) Every claim in each class of claims from the insurer's estate shall be paid in full or
5654 adequate funds retained for the payment before the members of the next class receive any payment.
5655 (b) Once the funds are retained by the liquidator and approved by the court, the insurer's
5656 estate shall have no further liability to members of that class except to the extent of the retained
5657 funds and any other undistributed funds.
5658 (c) Subclasses may not be established within any class.
5659 (d) A claim by a shareholder, policyholder, or other creditor may not be permitted to
5660 circumvent the priority classes through the use of equitable remedies.
5661 (2) The classes and order of distribution are as described in Subsections (2)(a) through (i).
5662 (a) Class one is the costs and expenses of administration expressly approved by the
5663 liquidator, including:
5664 (i) the actual and necessary costs of preserving or recovering the assets of the insurer;
5665 (ii) compensation for all authorized services rendered in the supervision, rehabilitation,
5666 or liquidation;
5667 (iii) any necessary filing fees;
5668 (iv) the fees and mileage payable to witnesses; and
5669 (v) reasonable attorney's fees and other professional services rendered in the supervision,
5670 rehabilitation, or liquidation.
5671 (b) (i) Class two is the administrative expenses of guaranty associations.
5672 (ii) For purposes of this section, "administrative expenses of a guaranty association" means
5673 the reasonable expenses incurred by a guaranty association:
5674 (A) when the expenses are not payments or expenses that are required to be incurred as
5675 direct policy benefits in fulfillment of the terms of the insurance contract or policy; and
5676 (B) that are of the type and nature that, but for the activities of the guaranty association,
5677 otherwise would have been incurred by the liquidator, including:
5678 (I) evaluations of policy coverage;
5679 (II) activities involved in the adjustment and settlement of claims under policies, including
5680 those of in-house or outside adjusters; and
5681 (III) the reasonable expenses incurred in connection with the arrangements for ongoing
5682 coverage through transfer to other insurers, policy exchanges, or maintaining policies in force.
5683 (iii) The liquidator may in the liquidator's sole discretion approve as an administrative
5684 expense of a guaranty association any other reasonable expenses of the guaranty association if the
5685 liquidator finds:
5686 (A) the expenses are not expenses required to be paid or incurred as direct policy benefits
5687 by the terms of the policy; and
5688 (B) the expenses were incurred in furtherance of activities that provided material economic
5689 benefit to the estate as a whole, irrespective of whether the activities resulted in additional benefits
5690 to covered claimants.
5691 (iv) The court shall approve the expenses approved by the liquidator under Subsection
5692 (2)(b)(iii) unless the court finds the liquidator abused the liquidator's discretion in approving the
5693 expenses.
5694 (c) (i) Class three is all claims under policies for losses incurred including:
5695 (A) claims of the federal, state, or local government;
5696 (B) third party claims;
5697 (C) claims for unearned premiums; and
5698 (D) claims of a guaranty association, other than those included in class two, including
5699 claims for payment of covered claims or covered obligations of the insurer.
5700 (ii) All claims under life and health insurance and annuity policies shall be treated as loss
5701 claims.
5702 (iii) That portion of any loss for which indemnification is provided by other benefits or
5703 advantages recovered or recoverable by the claimant are not included in this class, other than
5704 benefits or advantages recovered or recoverable in discharge of familial obligations of support, by
5705 way of succession at death, as proceeds of life insurance, or as gratuities. A payment made by an
5706 employer to the employer's employee may not be treated as a gratuity.
5707 (iv) Notwithstanding Subsections (2)(c)(i), (ii), and (iii), the following claims shall be
5708 excluded from class three priority:
5709 (A) obligations of the insolvent insurer arising out of reinsurance contracts;
5710 (B) obligations incurred after:
5711 (I) the expiration date of the insurance policy;
5712 (II) the policy has been replaced by the insured;
5713 (III) the policy has been canceled at the insured's request; or
5714 (IV) the policy has been canceled as provided in the chapter;
5715 (C) obligations to insurers, insurance pools, or underwriting associations and their claims
5716 for contribution, indemnity, or subrogation, equitable or otherwise;
5717 (D) any claim that is in excess of any applicable limits provided in the insurance policy
5718 issued by the insolvent insurer;
5719 (E) any amount accrued as punitive or exemplary damages unless expressly covered under
5720 the terms of the policy; and
5721 (F) tort claims of any kind against the insurer, and claims against the insurer for bad faith
5722 or wrongful settlement practices.
5723 (v) Notwithstanding Subsection (2)(c)(iv)(B), unearned premium claims on policies, other
5724 than reinsurance agreements, may not be excluded.
5725 (d) Class four is claims of the federal government other than those claims included under
5726 class three.
5727 (e) (i) Class five is debts due employees for services, benefits, contractual or otherwise
5728 due, arising out of reasonable compensation to employees for services performed:
5729 (A) to the extent that they:
5730 (I) do not exceed two months of monetary compensation; and
5731 (II) represent payment for services performed within six months before the filing of the
5732 petition for liquidation; or
5733 (B) if rehabilitation preceded liquidation, within one year before the filing of the petition
5734 for rehabilitation.
5735 (ii) Principal officers and directors are not entitled to the benefit of class five priority
5736 except as otherwise approved by the liquidator and the court.
5737 (iii) Class five priority shall be in lieu of any other similar priority that may be authorized
5738 by law as to wages or compensation of employees.
5739 (f) (i) Class six is claims of:
5740 (A) any person, including claims of state or local governments, except those specifically
5741 classified elsewhere in this section; or
5742 (B) attorneys for fees and expenses owed them by a person for services rendered in
5743 opposing a formal delinquency proceeding.
5744 (ii) To prove the claim for attorneys' fees and expenses, the claimant shall show that:
5745 (A) the insurer that is the subject of the delinquency proceeding incurred the fees and
5746 expenses based on its best knowledge, information, and belief, formed after reasonable inquiry
5747 indicating opposition was:
5748 (I) in the best interests of the person;
5749 (II) well grounded in fact; and
5750 (III) warranted by existing law or a good faith argument for the extension, modification,
5751 or reversal of existing law; and
5752 (B) opposition was not pursued for any improper purpose, such as to:
5753 (I) harass;
5754 (II) cause unnecessary delay; or
5755 (III) cause needless increase in the cost of litigation.
5756 (g) (i) Class seven is claims of any state or local government for a penalty or forfeiture,
5757 but only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out
5758 of which the penalty or forfeiture arose, including the reasonable and actual costs incurred from
5759 the act, transaction, or proceeding.
5760 (ii) The remainder of the claims shall be postponed to class eight claims.
5761 (h) Class eight is:
5762 (i) surplus or contribution notes or similar obligations;
5763 (ii) premium refunds on assessable policies;
5764 (iii) interest on claims of classes one through seven; and
5765 (iv) any other claims specifically subordinated to this class.
5766 (i) Class nine is claims of shareholders or other owners, including policyholders of a
5767 mutual insurance corporation within the limits of Subsection 31A-27-337 (4)(b) except as they may
5768 be qualified in class three or four.
5769 (3) (a) If the liquidator determines that the assets of the estate will be sufficient to pay all
5770 class one claims in full, class two claims shall be paid currently, only after the liquidator secures
5771 from each of the guaranty associations receiving disbursements under this section an agreement
5772 to return to the liquidator the disbursements, together with investment income actually earned on
5773 the disbursements, as may be required to pay class one claims.
5774 (b) A guaranty association entering into an agreement under Subsection (3)(a) may not be
5775 required to post a bond.
5776 (4) As to a nonprofit corporation organized and operating under Chapter 7 with assets not
5777 fully liquidated under Subsections (1) and (2), the remaining assets shall be distributed under
5778 Subsections [
5779 (5) (a) If any claimant of this state, another state, or foreign country is entitled to or
5780 receives a distribution upon the claimant's claim out of a statutory deposit or the proceeds of any
5781 bond or other asset located in another state or foreign country, unless the deposit or proceeds shall
5782 have been delivered to the domiciliary liquidator, the claimant is not entitled to any further
5783 distribution from the liquidator until and unless all other claimants of the same class, irrespective
5784 of residence or place of the acts or contracts upon which their claims are based, shall have received
5785 an equal distribution upon their claims.
5786 (b) After the equalization under Subsection (5)(a), the claimants of the same class are
5787 entitled to share in the further distributions by the liquidator, along with and like all other creditors
5788 of the same class, wherever the claimants reside.
5789 (6) Upon the declaration of a distribution, the liquidator shall apply the amount of the
5790 distribution against any indebtedness owed to the insurer by the person entitled to the distribution.
5791 There shall be no claim allowed for and deductible charged by a guaranty association or entity
5792 performing a similar function.
5793 (7) This section applies retrospectively to any proceeding under this chapter initiated after
5794 January 1, 1992.
5795 Section 224. Section 31A-34-105 is amended to read:
5796 31A-34-105. Association requirements.
5797 (1) A nonprofit corporation organized under Title 16, Chapter [
5798 Nonprofit Corporation Act, may only hold itself out as a voluntary health insurance purchasing
5799 association if it:
5800 (a) is organized by participating employers;
5801 (b) is governed and controlled by participating employers;
5802 (c) does not bear risk; and
5803 (d) has filed with the commissioner:
5804 (i) its articles of incorporation and bylaws; and
5805 (ii) a completed form provided by the department.
5806 (2) A voluntary health insurance purchasing association is not an alliance under this
5807 chapter, is not exempt from state or federal antitrust laws, and is therefore not subject to the
5808 regulation of this chapter, except as provided in this section.
5809 Section 225. Section 31A-34-108 is amended to read:
5810 31A-34-108. Powers of and restrictions on alliances.
5811 (1) An alliance may only exercise the powers necessary to:
5812 (a) make health insurance available to its members and enrollees from multiple unaffiliated
5813 insurers through the use of coordinated actuarial models, coordinated underwriting, or coordinated
5814 marketing methodologies; and
5815 (b) subject to Subsection (3)(d), make available to its members other related insurance
5816 products and services, including dental, vision, and life insurance.
5817 (2) In addition to the powers granted to a nonprofit corporation in Title 16, Chapter [
5818 Utah Revised Nonprofit Corporation Act, or to the powers of a trust under common law, the
5819 powers of an alliance include:
5820 (a) setting reasonable fees and conditions for membership, which may vary by group size,
5821 to reflect reasonable and necessary costs incurred in administering the alliance;
5822 (b) providing or contracting for premium collection services consistent with the
5823 requirements of Title 31A, Chapter 25; or
5824 (c) contracting with qualified independent third parties for any service necessary to carry
5825 out the powers and duties authorized or required by this chapter.
5826 (3) Notwithstanding Subsection (1), an alliance may not:
5827 (a) purchase health care services;
5828 (b) assume risk for the cost or provision of health services;
5829 (c) contract with health care providers for the provision of health care services to enrollees;
5830 or
5831 (d) condition alliance membership on the purchase or subscription of a product or service
5832 other than health insurance.
5833 Section 226. Section 41-22-2 is amended to read:
5834 41-22-2. Definitions.
5835 As used in this chapter:
5836 (1) "Advisory council" means the Off-highway Vehicle Advisory Council appointed by
5837 the Board of Parks and Recreation.
5838 (2) "All-terrain type I vehicle" means any motor vehicle 50 inches or less in width, having
5839 an unladen dry weight of 800 pounds or less, traveling on three or more low pressure tires, having
5840 a seat designed to be straddled by the operator, and designed for or capable of travel over
5841 unimproved terrain.
5842 (3) "All-terrain type II vehicle" means any other motor vehicle, not defined in Subsection
5843 (2), (9), or (19), designed for or capable of travel over unimproved terrain. This term does not
5844 include golf carts, any vehicle designed to carry a disabled person, any vehicle not specifically
5845 designed for recreational use, or farm tractors as defined under Section 41-1a-102 .
5846 (4) "Board" means the Board of Parks and Recreation.
5847 (5) "Dealer" means a person engaged in the business of selling off-highway vehicles at
5848 wholesale or retail.
5849 (6) "Division" means the Division of Parks and Recreation.
5850 (7) "Low pressure tire" means any pneumatic tire six inches or more in width designed for
5851 use on wheels with rim diameter of 12 inches or less and utilizing an operating pressure of ten
5852 pounds per square inch or less as recommended by the vehicle manufacturer.
5853 (8) "Manufacturer" means a person engaged in the business of manufacturing off-highway
5854 vehicles.
5855 (9) "Motorcycle" means every motor vehicle having a saddle for the use of the operator
5856 and designed to travel on not more than two tires.
5857 (10) "Motor vehicle" means every vehicle which is self-propelled.
5858 (11) "Off-highway vehicle" means any snowmobile, all-terrain type I vehicle, all-terrain
5859 type II vehicle, or motorcycle.
5860 (12) "Off-highway implement of husbandry" means every all-terrain type I vehicle,
5861 motorcycle, or snowmobile which is used by the owner or his agent for agricultural operations.
5862 (13) "Operate" means to control the movement of or otherwise use an off-highway vehicle.
5863 (14) "Operator" means the person who is in actual physical control of an off-highway
5864 vehicle.
5865 (15) "Organized user group" means an off-highway vehicle organization incorporated as
5866 a nonprofit corporation in the state under Title 16, Chapter [
5867 Corporation [
5868 off-highway vehicle recreation.
5869 (16) "Owner" means a person, other than a person with a security interest, having a
5870 property interest or title to an off-highway vehicle and entitled to the use and possession of that
5871 vehicle.
5872 (17) "Public land" means land owned or administered by any federal or state agency or any
5873 political subdivision of the state.
5874 (18) "Register" means the act of assigning a registration number to an off-highway vehicle.
5875 (19) "Roadway" is used as defined in Section 41-6-1 .
5876 (20) "Snowmobile" means any motor vehicle designed for travel on snow or ice and
5877 steered and supported in whole or in part by skis, belts, cleats, runners, or low pressure tires.
5878 (21) "Street or highway" means the entire width between boundary lines of every way or
5879 place of whatever nature, when any part of it is open to the use of the public for vehicular travel.
5880 Section 227. Section 48-2b-106 is amended to read:
5881 48-2b-106. Name -- Exclusive right.
5882 (1) The name of each limited liability company as set forth in the articles of organization:
5883 (a) shall contain the terms:
5884 (i) "limited company";
5885 (ii) "limited liability company";
5886 (iii) "L.C."; or
5887 (iv) "L.L.C.";
5888 (b) may not contain:
5889 (i) the terms:
5890 (A) "association";
5891 (B) "corporation";
5892 (C) "incorporated";
5893 (D) "limited partnership";
5894 (E) "limited";
5895 (F) "L.P."; or
5896 (G) "Ltd."; or
5897 (ii) words or any abbreviation with a similar meaning to those described in Subsection
5898 (1)(b)(i) in any other language;
5899 (c) without the written consent of the United States Olympic Committee, may not contain
5900 the words:
5901 (i) "Olympic";
5902 (ii) "Olympiad"; or
5903 (iii) "Citius Altius Fortius"; and
5904 (d) without the written consent of the State Board of Regents in accordance with Section
5905 53B-5-114 , may not contain the words:
5906 (i) "university";
5907 (ii) "college"; or
5908 (iii) "institute."
5909 (2) (a) A person or entity, other than a limited liability company formed or registered under
5910 this chapter, may not use in its name in this state any of the terms:
5911 (i) "limited liability company";
5912 (ii) "limited company";
5913 (iii) "L.L.C.";
5914 (iv) "L.C.";
5915 (v) "LLC"; or
5916 (vi) "LC".
5917 (b) Notwithstanding Subsection (2)(a):
5918 (i) a foreign corporation whose actual name includes the word "limited" or "Ltd." may use
5919 its actual name in this state if it also uses:
5920 (A) "corporation";
5921 (B) "incorporated"; or
5922 (C) an abbreviation of the words listed in this Subsection (2)(b)(i); or
5923 (ii) a limited liability partnership may use in its name the terms:
5924 (A) "limited liability partnership";
5925 (B) "L.L.P."; or
5926 (C) "LLP".
5927 (3) Except as authorized by Subsection (4), the name of a limited liability company must
5928 be distinguishable as defined in Subsection (5) upon the records of the division from:
5929 (a) the name of any limited partnership formed or authorized to transact business in this
5930 state;
5931 (b) the name of any limited liability company formed or authorized to transact business
5932 in this state;
5933 (c) the corporate name of any corporation incorporated or authorized to transact business
5934 in the state;
5935 (d) any limited partnership name reserved under this chapter;
5936 (e) any limited liability company name reserved under this chapter;
5937 (f) any corporate name reserved under:
5938 [
5939
5940 [
5941 (g) any fictitious name adopted by a foreign corporation, limited partnership, or limited
5942 liability company authorized to transact business in this state because its real name is unavailable;
5943 (h) any corporate name of a not-for-profit corporation incorporated or authorized to
5944 transact business in this state; and
5945 (i) any assumed name, trademark, or service mark registered by the division.
5946 (4) (a) A limited liability company may apply to the division for approval to file its articles
5947 of organization under or to reserve a name that is not distinguishable upon the division's records
5948 from one or more of the names described in Subsection (3).
5949 (b) The division shall approve the name for which the company applies under Subsection
5950 (4)(a) if:
5951 (i) the other person whose name is not distinguishable from the name under which the
5952 applicant desires to file:
5953 (A) consents to the filing in writing; and
5954 (B) submits an undertaking in a form satisfactory to the division to change its name to a
5955 name that is distinguishable from the name of the applicant; or
5956 (ii) the applicant delivers to the division a certified copy of the final judgment of a court
5957 of competent jurisdiction establishing the applicant's right to use the name in this state.
5958 (5) A name is distinguishable from other names, trademarks, and service marks registered
5959 with the division if it contains one or more different letters or numerals from other names upon the
5960 division's records.
5961 (6) The following differences are not distinguishing:
5962 (a) the terms:
5963 (i) "corporation";
5964 (ii) "incorporated";
5965 (iii) "company";
5966 (iv) "limited partnership";
5967 (v) "limited";
5968 (vi) "L.P.";
5969 (vii) "Ltd.";
5970 (viii) "limited liability company";
5971 (ix) "limited company";
5972 (x) "L.C."; or
5973 (xi) "L.L.C.";
5974 (b) an abbreviation of a word listed in Subsection (6)(a);
5975 (c) the presence or absence of the words or symbols of the words "the," "and," "a," or
5976 "plus";
5977 (d) differences in punctuation and special characters;
5978 (e) differences in capitalization;
5979 (f) for a limited liability company that is formed in or registered as a foreign limited
5980 liability company in this state on or after May 4, 1998, differences between singular and plural
5981 forms of words; or
5982 (g) differences in whether the letters or numbers immediately follow each other or are
5983 separated by one or more spaces if:
5984 (i) the sequence of letters or numbers is identical; and
5985 (ii) the limited liability company is formed in or registered as a foreign limited liability
5986 company in this state on or after May 3, 1999.
5987 (7) The director of the division shall have the power and authority reasonably necessary
5988 to interpret and efficiently administer this section and to perform the duties imposed on the
5989 division by this section.
5990 (8) A name that implies that a limited liability company is an agency of this state or any
5991 of its political subdivisions, if it is not actually such a legally established agency or subdivision,
5992 may not be approved for filing by the division.
5993 (9) The exclusive right to a name may be reserved by:
5994 (a) any person intending to:
5995 (i) organize a limited liability company under this chapter; and
5996 (ii) adopt that name;
5997 (b) any limited liability company or any foreign limited liability company registered in this
5998 state intending to adopt that name;
5999 (c) any foreign limited liability company intending to:
6000 (i) register in this state; and
6001 (ii) adopt that name; and
6002 (d) any person intending to:
6003 (i) organize a foreign limited liability company;
6004 (ii) have the company register in this state; and
6005 (iii) adopt that name.
6006 (10) (a) The reservation described in Subsection (9)(a) shall be made by filing with the
6007 division an application executed under penalty of perjury by the applicant to reserve a specified
6008 name.
6009 (b) If the division finds that the name is available for use by a limited liability company
6010 or a foreign limited liability company, it shall reserve the name exclusively for the applicant for
6011 a period of 120 days. The name reservation may be renewed for any number of subsequent periods
6012 of 120 days.
6013 (c) The exclusive right to a reserved name may be transferred to any other person by filing
6014 with the division a notice of the transfer executed under penalty of perjury by the applicant for
6015 whom the name was reserved and specifying the name and address of the transferee.
6016 (11) (a) The requirements of Subsection (1)(d) do not apply to a limited liability company
6017 that is formed in or registered as a foreign limited liability company in this state on or before May
6018 4, 1998, until December 31, 1998.
6019 (b) On or after January 1, 1999, any limited liability company formed in or registered as
6020 a foreign limited liability company in this state shall comply with the requirements of Subsection
6021 (1)(d).
6022 Section 228. Section 53B-5-114 is amended to read:
6023 53B-5-114. Consent to use of educational terms in business names.
6024 (1) For purposes of this section:
6025 (a) "Business name" means a name filed with the Division of Corporations and
6026 Commercial Code under:
6027 (i) Section [
6028 (ii) Section 16-10a-401 ;
6029 (iii) Section 42-2-6.6 ;
6030 (iv) Section 48-2a-102 ; or
6031 (v) Section 48-2b-106 .
6032 (b) "Educational term" means the term:
6033 (i) "university";
6034 (ii) "college"; or
6035 (iii) "institution."
6036 (2) If a statute listed in Subsection (1)(a) requires the written consent of the board to file
6037 a business name with the Division of Corporations and Commercial Code that includes an
6038 educational term, the board may consent to the use of an educational term in accordance with this
6039 statute.
6040 (3) The board shall consent to the use of an educational term in a business name if the
6041 person seeking to file the name:
6042 (a) is registered under this chapter;
6043 (b) is exempt from the chapter under Section 53B-5-105 ; or
6044 (c) (i) is not engaged in educational activities; and
6045 (ii) does not represent that it is engaged in educational activities.
6046 (4) The board may withhold consent to use of an educational term in a business name if
6047 the person seeking to file the name:
6048 (a) offers, sells, or awards a degree or any other type of educational credential; and
6049 (b) fails to provide bona fide instruction through student-faculty interaction according to
6050 the standards and criteria established by the board under Subsection 53B-5-104 (5).
6051 Section 229. Section 59-8-103 is amended to read:
6052 59-8-103. Definitions.
6053 As used in this chapter:
6054 (1) "Corporation" means:
6055 (a) any domestic corporation organized under Title 16, Chapter [
6056 Nonprofit Corporation Act;
6057 (b) any foreign corporation engaged in business in this state under Sections [
6058 16-6a-1501 through [
6059 (c) any legal or administrative entity created under Section 11-13-5.5 .
6060 (2) "Engaging in business" means carrying on or causing to be carried on any activity
6061 through which goods or services are made or rendered by the taxpayer, except as provided in
6062 Section 59-7-102 .
6063 (3) "Gross receipts" means the totality of the consideration that the taxpayer receives for
6064 any good or service produced or rendered in the state without any deduction or expense paid or
6065 accrued in respect to it.
6066 (4) "Taxpayer" means any corporation, other than an eleemosynary, religious, or charitable
6067 institution, any insurance company, credit union, or Subchapter S organization, any nonprofit
6068 hospital, educational, welfare, or employee representation organization, or any mutual benefit
6069 association engaged in business in the state that is not otherwise required to pay income or
6070 franchise tax to the state under Title 59, Chapter 7.
6071 Section 230. Section 63-11-3.1 is amended to read:
6072 63-11-3.1. Definitions.
6073 As used in Sections 63-11-3.1 through 63-11-3.3 :
6074 (1) "Board" means the board of trustees of This is the Place Foundation.
6075 (2) "Division" means the Division of Parks and Recreation.
6076 (3) "Foundation" means This is the Place Foundation, a private nonprofit corporation
6077 formed pursuant to Title 16, Chapter [
6078
6079 (4) "Monument" means This is the Place Monument at This is the Place State Park.
6080 (5) "Park" means This is the Place State Park, property owned by the state of Utah located
6081 at 2601 East Sunnyside Avenue, Salt Lake City.
6082 Section 231. Repealer.
6083 This act repeals:
6084 Section 16-6-18, Short title.
6085 Section 16-6-19, Definitions.
6086 Section 16-6-20, Applicability.
6087 Section 16-6-21, Purposes.
6088 Section 16-6-22, General powers.
6089 Section 16-6-23, Defense of ultra vires.
6090 Section 16-6-24, Corporate name -- Contents.
6091 Section 16-6-25, Corporate name -- Reservation.
6092 Section 16-6-25.1, Registered office -- Appointment of registered agent Disclosure.
6093 Section 16-6-25.2, Change of registered office or registered agent -- Resignation of
6094 registered agent.
6095 Section 16-6-25.3, Service of process on registered agent or director of division.
6096 Section 16-6-26, Members -- Classes -- Provisions of articles of incorporation or
6097 bylaws -- Liability.
6098 Section 16-6-27, Meetings of members -- Annual and special meetings.
6099 Section 16-6-28, Meetings of members -- Notice.
6100 Section 16-6-29, Voting -- Quorum.
6101 Section 16-6-30, Voting -- Rights of members.
6102 Section 16-6-31, Voting -- Provisions of articles control.
6103 Section 16-6-32, Waiver of notice.
6104 Section 16-6-33, Consent to action without meeting.
6105 Section 16-6-34, Governing board -- Qualifications for trustees.
6106 Section 16-6-35, Trustees -- Number -- Election or appointment -- Terms.
6107 Section 16-6-36, Vacancies in governing board.
6108 Section 16-6-37, Voting rights -- Proxy -- Quorum of trustees.
6109 Section 16-6-38, Committees.
6110 Section 16-6-39, Meetings of governing board -- Notice and waiver of notice.
6111 Section 16-6-40, Officers.
6112 Section 16-6-41, Inspection of books and records -- Report to members.
6113 Section 16-6-42, Issuance of certificates or stock -- Compensation to members,
6114 trustees, or officers -- Effect of distributions on dissolution or liquidation.
6115 Section 16-6-43, Loans to trustees or officers prohibited.
6116 Section 16-6-44, Bylaws -- Resolutions.
6117 Section 16-6-45, Incorporators.
6118 Section 16-6-46, Articles of incorporation.
6119 Section 16-6-47, Filing articles of incorporation.
6120 Section 16-6-48, Effect of issuance of certificate of incorporation.
6121 Section 16-6-49, Right to amend articles of incorporation -- Conversion to business
6122 corporation.
6123 Section 16-6-50, Procedure to amend articles of incorporation.
6124 Section 16-6-51, Articles of amendment.
6125 Section 16-6-52, Filing articles of amendment.
6126 Section 16-6-53, Effect of certificate of amendment.
6127 Section 16-6-53.5, Restated articles of incorporation -- Filing -- Issuance and effect of
6128 issuance of certificate of restatement.
6129 Section 16-6-54, Procedure for merger.
6130 Section 16-6-55, Procedure for consolidation.
6131 Section 16-6-56, Approval of merger or consolidation.
6132 Section 16-6-57, Articles of merger or consolidation.
6133 Section 16-6-58, Effective date of merger or consolidation.
6134 Section 16-6-59, Effect of merger or consolidation.
6135 Section 16-6-60, Merger or consolidation of foreign or domestic corporations.
6136 Section 16-6-61, Sale, lease, exchange or mortgage of assets.
6137 Section 16-6-62, Voluntary dissolution.
6138 Section 16-6-63, Distribution of assets.
6139 Section 16-6-64, Plan of distribution.
6140 Section 16-6-65, Revocation of voluntary dissolution proceedings.
6141 Section 16-6-66, Articles of dissolution.
6142 Section 16-6-67, Filing articles of dissolution.
6143 Section 16-6-68, Involuntary dissolution.
6144 Section 16-6-69, Jurisdiction of court to liquidate assets and affairs of nonprofit
6145 corporation.
6146 Section 16-6-70, Procedure in liquidation of nonprofit corporation.
6147 Section 16-6-71, Qualification of receivers.
6148 Section 16-6-72, Filing of claims in liquidation proceedings.
6149 Section 16-6-73, Discontinuance of liquidation proceedings.
6150 Section 16-6-74, Decree dissolving corporation.
6151 Section 16-6-75, Filing decree dissolving corporation.
6152 Section 16-6-76, Deposits with state treasurer.
6153 Section 16-6-77, Survival of remedy after dissolution.
6154 Section 16-6-78, Continuance of corporate existence after dissolution.
6155 Section 16-6-79, Admission of foreign corporation.
6156 Section 16-6-80, Powers of foreign corporation.
6157 Section 16-6-82, Change of name by foreign corporation.
6158 Section 16-6-83, Application for certificate of authority by foreign corporation.
6159 Section 16-6-84, Filing application for certificate of authority by foreign corporation.
6160 Section 16-6-85, Effect of certificate of authority of foreign corporation.
6161 Section 16-6-86, Registered office and registered agent of foreign corporation -
6162 Appointment of registered agent.
6163 Section 16-6-87, Change of registered office or registered agent of foreign corporation.
6164 Section 16-6-88, Service of process on foreign corporation.
6165 Section 16-6-89, Amendment of articles of incorporation of foreign corporation.
6166 Section 16-6-90, Merger of foreign corporation authorized to conduct affairs in this
6167 state.
6168 Section 16-6-91, Amended certificate of authority of foreign corporation.
6169 Section 16-6-92, Withdrawal of foreign corporation.
6170 Section 16-6-93, Filing application for withdrawal by foreign corporation.
6171 Section 16-6-94, Revocation of certificate of authority of foreign corporation.
6172 Section 16-6-95, Issuance of certificate of revocation of foreign corporation.
6173 Section 16-6-96, Conducting affairs without certificate of authority by foreign
6174 corporation.
6175 Section 16-6-97, Annual report of domestic and foreign nonprofit corporations --
6176 Contents.
6177 Section 16-6-98, Annual report of domestic and foreign nonprofit corporations --
6178 Filing -- Certification.
6179 Section 16-6-99, Delinquency -- Notice.
6180 Section 16-6-99.1, Suspension -- Notice -- Failure to remove suspension.
6181 Section 16-6-100, Fees.
6182 Section 16-6-100.5, Expedited document processing for items under Section 16-6-100.
6183 Section 16-6-101, Fees for certified copies and for accepting service of process as
6184 resident agent.
6185 Section 16-6-102, Powers of division.
6186 Section 16-6-103, Procedure upon disapproval of document or revocation of certificate
6187 of authority -- Venue for judicial review.
6188 Section 16-6-104, Certificates and certified copies to be received in evidence.
6189 Section 16-6-105, Use of particular forms not mandatory.
6190 Section 16-6-106, Liability for unauthorized assumption of corporate powers.
6191 Section 16-6-107, Personal liability of a trustee or officer limited -- Trustee or officer
6192 signing false document as misdemeanor.
6193 Section 16-6-108, Incorporation of co-operative association.
6194 Section 16-6-109, Continuation of existing domestic and foreign nonprofit
6195 corporations.
6196 Section 16-6-110, Effect of repeal of prior law.
6197 Section 16-6-112, Correction of technical errors in instruments.
6198 Section 232. Effective date.
6199 This act takes effect on July 1, 2000.
Legislative Review Note
as of 2-7-00 8:04 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.