1     
UTAH REVISED NONPROFIT CORPORATION ACT

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Kay L. McIff

5     
Senate Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Utah Revised Nonprofit Corporation Act to allow for the transfer
10     of water shares in a mutual benefit corporation and clarifies the property rights of a
11     member of a nonprofit corporation.
12     Highlighted Provisions:
13          This bill:
14          ▸     authorizes a member of a mutual benefit corporation to transfer membership or the
15     rights of membership under certain circumstances;
16          ▸     states that a member of, or shareholder in, a mutual benefit corporation:
17               •     has an undivided interest in real property, proportional to the member or
18     shareholder's shares, in the water and facilities of the mutual benefit
19     corporation; and
20               •     is a person entitled to the use of water under Title 73, Water and Irrigation,
21     including the right to change the use of water; and
22          ▸     makes technical changes.
23     Money Appropriated in this Bill:
24          None
25     Other Special Clauses:
26          None
27     Utah Code Sections Affected:
28     AMENDS:
29          16-6a-606, as enacted by Laws of Utah 2000, Chapter 300
30          16-6a-611, as last amended by Laws of Utah 2015, Chapter 240
31     

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




Legislative Review Note
Office of Legislative Research and General Counsel