RCW 24.03A.735
Adoption of plan of merger.
In the case of a nonprofit corporation that is a party to a merger:
(1) The plan of merger must be adopted by the board.
(2) Except as provided in subsection (9) of this section, RCW 24.03A.730, or the articles or bylaws, after adopting the plan of merger, the board shall submit the plan to those members entitled to vote on the plan for their approval. The board shall also deliver to the members a recommendation that the members approve the plan, unless the board makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board shall deliver to the members the basis for that determination.
(3) The board may condition its submission of the plan of merger to the members on any basis.
(4) If the plan of merger is required to be approved by the members, and if the approval is to be given at a meeting, then the nonprofit corporation shall give notice to each member, whether or not entitled to vote on the merger, of the meeting of members at which the plan is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. If the corporation is to be merged into an existing corporation or eligible entity, then the notice shall also include a copy or summary of the articles and bylaws or organic records of that corporation or eligible entity. If the corporation is to be merged into a corporation or eligible entity that is to be created pursuant to the merger, then the notice shall include a copy or a summary of the articles and bylaws or organic records of the new corporation or eligible entity. If a summary is provided in lieu of a copy of the plan or of the articles and bylaws, then a copy of the plan and articles and bylaws, as applicable, must be available to members upon request and this fact must be stated in the notice. Such copy of the plan and articles and bylaws, as applicable, may be made available in electronic format.
(5) Unless the articles or bylaws, or the board acting pursuant to subsection (3) of this section, requires a greater vote or a greater number of votes to be present, the approval of the plan of merger by the members entitled to vote thereon requires the approval of a majority of those members at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the plan of merger, the approval of a majority of the members of each voting group entitled to vote at a meeting at which a quorum of the voting group is present.
(6) Separate voting on a plan of merger is required:
(a) By each class of members:
(i) Whose memberships are to be converted into eligible interests, securities, or obligations; rights to acquire eligible interests, securities, or obligations; cash; other property or other consideration; or any combination of the foregoing;
(ii) Which is to experience a change in the rights, powers, preferences, or limitations of the class as a result of the merger; or
(iii) That would be entitled to vote as a separate group on a provision in the plan that, if contained in a proposed amendment to [the] articles of incorporation, would require action by separate voting groups under the articles or bylaws.
(b) By a voting group, if the voting group is entitled under the articles or bylaws to vote as a voting group to approve a plan of merger.
(7) If a plan of merger would affect in the same or a substantially similar way two or more classes of members entitled to vote separately on the plan of merger under subsection (6)(a) of this section, then, instead of voting separately, all similarly affected classes of members shall vote together as a single voting group on the plan of merger, unless otherwise provided in the articles or as a condition imposed by the board under subsection (3) of this section.
(8) If as a result of a merger one or more members of a domestic nonprofit corporation would become subject to owner liability for the debts, obligations[,] or liabilities of any other person or entity, then approval of the plan of merger requires the execution, by each member who would become subject to owner liability, of a separate record consenting to become subject to owner liability.
(9) If a domestic nonprofit corporation that is a party to a merger does not have any members entitled to vote on the merger, then a plan of merger is deemed adopted by the corporation when it has been adopted by the board pursuant to subsection (1) of this section. If a membership corporation has no members entitled to vote on the merger, then the corporation shall deliver notice of the proposed merger to all members of the corporation at least five days before the meeting at which the board is to adopt the plan of merger.
(10) In addition to the adoption and approval of the plan of merger by the board and members as required by this section, the plan of merger must also be approved in the form of a record by any person or group of persons whose approval is required under RCW 24.03A.705
to amend the articles or bylaws.
(11) Adoption and approval of a plan of merger by all required persons under the procedures set forth in this section constitutes adoption and approval of all changes to the approving party's articles, bylaws, or other organic documents contained within the plan of merger.
[
2021 c 176 s 3206
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.740
Articles of merger.
(1) After a plan of merger has been adopted and approved as required by RCW 24.03A.710
through
24.03A.750, articles of merger must be executed on behalf of each party to the merger by an officer or other authorized representative of the party. The articles of merger shall set forth:
(a) The names of the parties to the merger;
(b) If the articles of the surviving domestic nonprofit corporation are being changed, or if a new domestic nonprofit corporation is created as a result of a merger, the changes to the articles of the surviving corporation or the articles of the new corporation;
(c) If the plan of merger required approval by the members of a domestic nonprofit corporation that was a party to the merger, a statement that the plan was approved by the members and, if voting by any separate voting group was required, by each separate voting group entitled to vote, in the manner required by this chapter and the articles or bylaws;
(d) If the plan of merger did not require approval by the members of a domestic nonprofit corporation that was a party to the merger, a statement to that effect;
(e) If a party to the merger is a noncharitable corporation holding property for charitable purposes, and the survivor is not a charitable corporation, a statement that the attorney general has approved, or is deemed to have approved, the merger pursuant to RCW 24.03A.715
; and
(f) As to each foreign nonprofit corporation or eligible entity that was a party to the merger, a statement that the participation of the foreign corporation or eligible entity was authorized as required by the organic law of the corporation or eligible entity.
(2) Terms of articles of merger may be made dependent on facts objectively ascertainable outside the articles in accordance with RCW 24.03A.060
(3).
(3) Articles of merger must be delivered to the secretary of state for filing by the surviving entity of the merger and shall take effect at the effective time provided in RCW 23.95.210
. Articles of merger filed under this section may be combined with any filing required under the organic law of any domestic eligible entity involved in the transaction if the combined filing satisfies the requirements of both this section and the other organic law.
[
2021 c 176 s 3207
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.745
Effect of merger.
(1) Subject to RCW 24.03A.715
and
24.03A.720, if the surviving entity is a domestic nonprofit corporation when a merger becomes effective:
(a) The domestic nonprofit corporation that is designated in the plan of merger as the surviving corporation continues or comes into existence, as the case may be;
(b) The separate existence of every domestic or foreign nonprofit corporation or eligible entity that is merged into the survivor ceases;
(c) All property owned by, and every contract and other right possessed by, each domestic or foreign nonprofit corporation or eligible entity that merges into the surviving corporation is vested in the surviving corporation without reversion or impairment;
(d) All liabilities of each domestic or foreign nonprofit corporation or eligible entity that is merged into the survivor are vested in the surviving corporation;
(e) The name of the surviving corporation may, but need not be, substituted in any pending proceeding for the name of any party to the merger whose separate existence ceased in the merger;
(f) The articles and bylaws or organic records of the surviving corporation are amended to the extent of the changes provided in the plan of merger;
(g) The articles and bylaws of a surviving corporation that is created by the merger become effective; and
(h) The memberships of each corporation that is a party to the merger, and the eligible interests in an eligible entity that is a party to a merger, that are to be converted under the plan of merger into memberships, eligible interests, securities, or obligations; rights to acquire memberships, eligible interests, securities, or obligations; cash; other property or other consideration; or any combination of the foregoing; are converted.
(2) A person who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of any entity as a result of a merger has owner liability only to the extent provided in the organic law of the entity and only for those debts, obligations, and liabilities that arise after the effective time of the articles of merger, except to the extent that the person consented to become subject to liability under RCW 24.03A.735
(8).
(3) The effect of a merger on the owner liability of a person who had owner liability for some or all of the debts, obligations, or liabilities of a party to the merger is as follows:
(a) The merger does not discharge any owner liability under the organic law of the entity in which the person was a member, shareholder, or interest holder to the extent that owner liability arose before the effective time of the articles of merger.
(b) The person does not have owner liability under the organic law of the entity in which the person was a member, shareholder, or interest holder before the merger for any debt, obligation, or liability that arises after the effective time of the articles of merger.
(c) The provisions of the organic law of any entity for which the person had owner liability before the merger continue to apply to the collection or discharge of any owner liability preserved by subsection (1) of this section, as if the merger had not occurred.
(d) The person has whatever rights of contribution from other persons are provided by the organic law of the entity for which the person had owner liability with respect to any owner liability preserved by (a) of this subsection, as if the merger had not occurred.
(4) A devise, bequest, gift, grant, or promise contained in a will or other instrument, in trust or otherwise, made before or after a merger, to or for any of the parties to the merger, inures to the survivor, subject to the express terms of the will or other instrument.
[
2021 c 176 s 3208
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.750
Abandonment of merger.
(1) Unless otherwise provided in a plan of merger or in the organic law of a foreign nonprofit corporation or a domestic or foreign eligible entity that is a party to a merger, after the plan has been adopted and approved as required by RCW 24.03A.710
through
24.03A.750, and at any time before the merger has become effective, it may be abandoned by a domestic nonprofit corporation that is a party thereto without action by its members, in accordance with any procedures set forth in the plan of merger or, if no procedures are set forth in the plan, in the manner determined by the board, subject to any contractual rights of other parties to the merger.
(2) If a merger is abandoned under subsection (1) of this section after articles of merger have been filed by the secretary of state but before the merger has become effective, then a statement that the merger has been abandoned in accordance with this section, executed on behalf of a party to the merger by an officer or other authorized representative, must be delivered to the secretary of state for filing before the effective date of the merger. Upon filing by the secretary of state, the statement takes effect and the merger is deemed abandoned and shall not become effective.
[
2021 c 176 s 3209
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.755
Definitions.
The definitions in this section apply throughout this section and RCW 24.03A.760
through
24.03A.880
unless the context clearly requires otherwise.
(1) "Conversion" means a transaction authorized by RCW 24.03A.810, 24.03A.835, or
24.03A.855
.
(2) "Converting corporation" means the domestic or foreign nonprofit or for-profit corporation that approves a conversion pursuant to RCW 24.03A.755
through
24.03A.880
or its organic law.
(3) "Converting entity" means the domestic or foreign entity that approves a conversion pursuant to RCW 24.03A.855
or its organic law.
(4) "Domesticated corporation" means the domesticating corporation as it continues in existence after a domestication.
(5) "Domesticating corporation" means the domestic nonprofit corporation that adopts a plan of domestication pursuant to RCW 24.03A.790
or the foreign nonprofit corporation that approves a domestication pursuant to its organic law.
(6) "Domestication" means a transaction authorized by RCW 24.03A.785
.
(7) "Surviving corporation" means the corporation as it continues in existence immediately after consummation of a for-profit conversion pursuant to RCW 24.03A.810, a foreign for-profit conversion and domestication pursuant to RCW 24.03A.835, or an entity conversion pursuant to RCW 24.03A.855
.
(8) "Surviving entity" means the unincorporated entity as it continues in existence immediately after consummation of an entity conversion pursuant to RCW 24.03A.855
.
[
2021 c 176 s 3301
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.760
Excluded transactions.
RCW 24.03A.755
through
24.03A.880
may not be used to effect a transaction that:
(1) Converts a nonprofit or mutual insurance company to a for-profit stock corporation; or
(2) Is governed by chapter
70.45
RCW.
[
2021 c 176 s 3302
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.765
Required approvals.
If a domestic or foreign nonprofit corporation or eligible entity may not be a party to a merger or sale of its assets without the approval of a federal or state agency other than the secretary of state, then the corporation or eligible entity shall not be a party to a transaction under RCW 24.03A.755
through
24.03A.880
without the prior approval of that agency.
[
2021 c 176 s 3303
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.770
Property held for charitable purposes.
(1) In any transaction under RCW 24.03A.755
through
24.03A.880, property held for charitable purposes by a nonprofit corporation may not be diverted from charitable purposes.
(2) No transaction under RCW 24.03A.755
through
24.03A.880
shall modify any restriction imposed through any means upon property held for charitable purposes by any entity involved in the transaction, including but not limited to a restriction that affects existing rights of persons other than members, shareholders, or interest holders of the entity, unless the restriction is modified:
(a) In the case of a restriction imposed pursuant to a trust instrument governed by chapter
11.110
RCW in which the nonprofit corporation is a trustee or a beneficiary, through an appropriate order of the court or the agreement of all interested parties, including the attorney general, under chapter
11.96A
RCW; or
(b) In the case of any other restriction, pursuant to RCW 24.03A.190
.
(3) Property held by a nonprofit corporation for charitable purposes upon condition requiring return, transfer[,] or conveyance, which condition occurs by reason of a transaction under RCW 24.03A.755
through
24.03A.880, must be returned, transferred, or conveyed in accordance with that condition.
(4) A corporation holding property for charitable purposes shall deliver to the attorney general notice of its intent to consummate any transaction under RCW 24.03A.755
through
24.03A.880
. The notice must be delivered to the attorney general in the form of a record at least forty-five days before the meeting at which the proposed transaction is to be approved. Such a transaction may not be implemented without the approval of the attorney general, or the approval of the court in a proceeding to which the attorney general is made a party. In the event that the attorney general does not deliver a notice of objection in the form of a record to the corporation within twenty days after the delivery to the attorney general of notice of the transaction, approval of the transaction is deemed to have been given.
(5) The notice described in subsection (4) of this section shall include:
(a) A statement specifying how the transaction will comply with subsections (1) through (3) of this section, as applicable; and
(b) A brief description of:
(i) Real property held for charitable purposes by the corporation, and its nature and location;
(ii) Cash, bank deposits, brokerage accounts, or other financial assets held for charitable purposes by the corporation, and their approximate total fair market value;
(iii) Other personal property held for charitable purposes by the corporation, and its nature and approximate total fair market value; and
(iv) Any gift restrictions applicable to any property described in (b)(i) through (iii) of this subsection, and the nature of those restrictions.
(6) An event of domestication or conversion does not affect the applicability of chapter
11.110, 19.09, or
24.55
RCW to any entity.
[
2021 c 176 s 3304
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.775
Prohibition on financial benefit.
A person who is a member, interest holder, or otherwise affiliated with a charitable corporation or an unincorporated entity with charitable purposes may not receive a direct or indirect financial benefit in connection with a transaction governed by RCW 24.03A.755
through
24.03A.880
to which the charitable corporation or unincorporated entity is a party unless the person is itself a charitable corporation, the federal government, a tribal, state, or local government, a governmental subdivision, or an unincorporated entity that has charitable purposes. This section does not apply to the receipt of reasonable compensation for services rendered.
[
2021 c 176 s 3305
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.780
Voting rights in existing corporations.
For any corporation formed before January 1, 2022, any member or other person who is entitled under the articles or bylaws to vote on or approve a merger transaction involving the corporation is deemed entitled, to the same extent, to vote on or approve any transaction under RCW 24.03A.755
through
24.03A.880
involving the corporation.
[
2021 c 176 s 3306
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.785
Domestication.
(1) A foreign nonprofit corporation may become a domestic nonprofit corporation only if the law of the foreign jurisdiction allows the domestication.
(2) A domestic nonprofit corporation may become a foreign nonprofit corporation if the law of the foreign jurisdiction allows the domestication.
(3) Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of domestication, the domestication must be approved by the corporation's adoption of a plan of domestication in the manner provided in RCW 24.03A.755
through
24.03A.880
.
(4) The plan of domestication shall include:
(a) A statement of the jurisdiction in which the corporation is to be domesticated;
(b) The terms and conditions of the domestication;
(c) The manner and basis of canceling or reclassifying the memberships of the corporation following its domestication into memberships, obligations, rights to acquire memberships, cash, other property, or any combination of the foregoing;
(d) If the corporation is a charitable corporation or is holding assets for charitable purposes, a plan setting forth how the corporation will comply with RCW 24.03A.770
(1) through (3); and
(e) Any desired changes to the articles or bylaws of the corporation in connection with its domestication.
(5) The plan of domestication may also include a provision that the plan may be amended before filing the document required by the laws of this state or the other jurisdiction to consummate the domestication; except that, after approval of the plan by the members, the plan may not be amended without the approval of the members entitled to vote thereon to change:
(a) The amount or kind of memberships, obligations, rights to acquire memberships, cash, or other property to be received by the members under the plan;
(b) The articles as they will be in effect immediately following the domestication, except for changes permitted by RCW 24.03A.655
or by comparable provisions of the laws of the other jurisdiction; or
(c) Any of the other terms or conditions of the plan if the change would adversely affect any of the members in any material respect.
(6) Terms of a plan of domestication may be made dependent upon facts objectively ascertainable outside the plan in accordance with RCW 24.03A.060
(3).
(7) If any debt security, note, or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred[,] or executed by a domestic nonprofit corporation before January 1, 2022, contains a provision applying to a merger of the corporation and the document does not refer to a domestication of the corporation, then the provision is deemed to apply to a domestication of the corporation until the provision is amended after that date.
[
2021 c 176 s 3307
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.790
Action on a plan of domestication.
In the case of a domestication of a domestic nonprofit corporation in a foreign jurisdiction:
(1) The plan of domestication must be adopted by the board.
(2) If there are no members entitled to vote on the plan, then the plan must be adopted by a vote of the majority of directors then in office. If a membership corporation has no members entitled to vote on the plan, then the corporation shall deliver notice of the proposed domestication to all members of the corporation at least ten days before the meeting at which the board is to adopt the plan.
(3) After adopting the plan of domestication, the board shall submit the plan to the members for their approval, if there are members entitled to vote on the plan. The board shall also transmit to the members a recommendation that the members approve the plan, unless the board determines that, because of conflicts of interest or other special circumstances, it should not make such a recommendation, in which case the board shall transmit to the members the basis for that determination.
(4) The board may condition its submission of the plan of domestication to the members on any basis.
(5) If the approval of the members is to be given at a meeting, then the corporation shall notify each member, whether or not entitled to vote, of the meeting of members at which the plan of domestication is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include a copy of the articles and bylaws as they will be in effect immediately after the domestication. If a summary is provided in lieu of a copy of the plan, then a copy of the plan must be available to members upon request and this fact must be stated in the notice.
(6) Unless the articles or bylaws, or the board acting pursuant to subsection (4) of this section, requires a greater vote or a greater number of votes to be present, the approval of the plan of domestication by the members entitled to vote thereon requires the approval of a majority of those members at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the plan, the approval of a majority of the members of each separate voting group entitled to vote at a meeting at which a quorum of the voting group is present.
(7) A separate voting by voting groups is required by each class of members that:
(a) Is to be reclassified under the plan of domestication into a different class of members, or into obligations, rights to acquire memberships, cash, other property, or any combination of the foregoing;
(b) Would be entitled to vote as a separate group on a provision of the plan that, if contained in a proposed amendment to articles of incorporation, would require action by separate voting groups under RCW 24.03A.660
; or
(c) Is entitled under the articles or bylaws to vote as a voting group to approve an amendment of the articles.
(8) If any provision of the articles, bylaws, or an agreement to which any of the directors or members are parties, adopted or entered into before January 1, 2022, applies to a merger of the corporation and that document does not refer to a domestication of the corporation, then the provision is deemed to apply to a domestication of the corporation until the provision is later amended.
[
2021 c 176 s 3308
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.795
Articles of domestication.
(1) Articles of domestication must be executed on behalf of the domesticating corporation by an officer or other authorized representative. The articles shall set forth:
(a) The name and jurisdiction of incorporation of the domesticating corporation;
(b) The name and jurisdiction of incorporation of the domesticated entity; and
(c) If the domesticating corporation is a domestic nonprofit corporation, a statement that the plan of domestication was approved in accordance with RCW 24.03A.755
through
24.03A.880
or, if the domesticating corporation is a foreign nonprofit corporation, a statement that the domestication was approved in accordance with the law of its jurisdiction of incorporation.
(2) The articles of domestication must be delivered to the secretary of state for filing, and take effect at the effective time provided in RCW 23.95.210
.
(3) If the domesticating corporation is a foreign corporation, then the domesticating corporation must, simultaneously with the delivery of the articles of domestication, deliver articles of incorporation that comply with this title to the secretary of state for filing and the secretary of state shall file the articles. Provisions that would not be required to be included in restated articles of incorporation may be omitted, except that the name and address of the initial registered agent of the corporation must be included and the name of the corporation must satisfy the requirements of RCW 24.03A.095
.
(4) If the domesticating corporation is a registered foreign corporation, then its registration is terminated automatically on the effective date of its domestication, and the secretary of state shall record the termination of the registration.
[
2021 c 176 s 3309
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.800
Effect of domestication.
(1) Except as provided in RCW 24.03A.770, when a domestication becomes effective:
(a) The title to all real and personal property, both tangible and intangible, of the domesticating corporation remains in the domesticated corporation without reversion or impairment;
(b) The liabilities of the domesticating corporation remain the liabilities of the domesticated corporation;
(c) An action or proceeding pending against the domesticating corporation continues against the domesticated corporation as if the domestication had not occurred;
(d) The articles of incorporation filed pursuant to RCW 24.03A.795
(3) constitute the articles of a foreign corporation domesticating in Washington state;
(e) The memberships in the domesticating corporation are reclassified into memberships, obligations, rights to acquire memberships, or cash or other property in accordance with the terms of the domestication, and the members are entitled only to the rights provided by those terms;
(f) Gift restrictions binding the domestic corporation remain in place as if the domestication had not occurred, unless modified in accordance with RCW 24.03A.190
;
(g) A devise, bequest, gift, grant, or promise contained in a will or other instrument, in trust or otherwise, made to or for the domesticating corporation before or after the domestication, inures to the domesticated corporation, subject to the express terms of the will or other instrument; and
(h) The domesticating corporation is deemed to be:
(i) Incorporated under and subject to the organic law of the domesticated corporation for all purposes; and
(ii) The same corporation without interruption as the domesticating corporation.
(2) The interest holder liability of a member in a foreign nonprofit corporation that is domesticated in the state of Washington is as follows:
(a) The domestication does not discharge any interest holder liability under the laws of the foreign jurisdiction to the extent the interest holder liability arose before the effective time of the articles of domestication.
(b) The member does not have interest holder liability under the laws of the foreign jurisdiction for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of domestication.
(c) The provisions of the laws of the foreign jurisdiction continue to apply to the collection or discharge of any interest holder liability preserved by (a) of this subsection, as if the domestication had not occurred.
(d) The domestication has no effect on any member's rights of contribution from other members provided by the laws of the foreign jurisdiction with respect to any interest holder liability preserved by (a) of this subsection.
[
2021 c 176 s 3310
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.805
Abandonment of domestication.
(1) Unless otherwise provided in a plan of domestication of a domestic nonprofit corporation, after the plan has been adopted and approved as required by RCW 24.03A.755
through
24.03A.880, and at any time before the domestication has become effective, it may be abandoned by the members if there are members entitled to vote on the plan of domestication, or by the board without action by members.
(2) If a domestication is abandoned under subsection (1) of this section after articles of domestication have been filed by the secretary of state but before the domestication has become effective, then a statement that the domestication has been abandoned in accordance with this section, executed by an officer or other authorized representative, must be delivered to the secretary of state for filing before the effective date of the domestication. The statement takes effect upon filing and the domestication is abandoned and does not become effective.
(3) If the domestication of a foreign nonprofit corporation in Washington state is abandoned in accordance with the laws of the foreign jurisdiction after articles of domestication have been filed by the secretary of state, then a statement that the domestication has been abandoned, executed by an officer or other authorized representative, must be delivered to the secretary of state for filing. The statement takes effect upon filing and the domestication is abandoned and does not become effective.
[
2021 c 176 s 3311
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.810
For-profit conversion of noncharitable corporations.
(1) A domestic nonprofit corporation, other than a charitable corporation, may become a domestic for-profit corporation pursuant to a plan of for-profit conversion if the for-profit conversion is permitted under Title
23B
RCW.
(2) A domestic nonprofit corporation, other than a charitable corporation, may become a foreign for-profit corporation if the for-profit conversion is permitted by the laws of the foreign jurisdiction. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of for-profit conversion, the foreign for-profit conversion must be approved by the adoption by the domestic nonprofit corporation of a plan of for-profit conversion in the manner provided in RCW 24.03A.755
through
24.03A.880
.
(3) The plan of for-profit conversion shall include:
(a) The terms and conditions of the conversion;
(b) The manner and basis of:
(i) Issuing at least one share in the corporation following its conversion; and
(ii) Otherwise reclassifying the memberships in the corporation, if any, following its conversion into shares and other securities, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing;
(c) If the corporation is holding assets for charitable purposes, a plan setting forth how the corporation will comply with RCW 24.03A.770
(1) through (3);
(d) Any desired changes to the articles or bylaws of the corporation following its conversion; and
(e) If the domestic nonprofit corporation is to be converted to a foreign for-profit corporation, a statement of the jurisdiction in which the corporation will be incorporated after the conversion.
(4) The plan of for-profit conversion may also include a provision that the plan may be amended before filing articles of for-profit conversion, except that after approval of the plan by the members the plan may not be amended without the approval of the members to change:
(a) The amount or kind of shares and other securities, obligations, rights to acquire shares or other securities, cash, or other property to be received by the members under the plan;
(b) The articles of incorporation as they will be in effect immediately following the conversion, except for changes permitted by RCW 24.03A.655
; or
(c) Any of the other terms or conditions of the plan if the change would adversely affect any of the members in any material respect.
(5) Terms of a plan of for-profit conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with RCW 24.03A.060
(3).
(6) If any debt security, note, or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or executed by a domestic nonprofit corporation before January 1, 2022, contains a provision applying to a merger of the corporation and the document does not refer to a for-profit conversion of the corporation, then the provision is deemed to apply to a for-profit conversion of the corporation until the provision is later amended.
[
2021 c 176 s 3312
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.815
Action on a plan of for-profit conversion.
In the case of a conversion of a domestic nonprofit corporation to a domestic or foreign for-profit corporation:
(1) The plan of for-profit conversion must be adopted by the board.
(2) If there are no members entitled to vote on the plan, then the plan must be adopted by a vote of the majority of directors then in office. If a membership corporation has no members entitled to vote on the plan, then the corporation shall deliver notice of the proposed for-profit conversion to all members of the corporation at least ten days before the meeting at which the board is to adopt the plan.
(3) After adopting the plan of for-profit conversion, the board shall submit the plan to the members for their approval if there are members entitled to vote on the plan. The board shall also deliver to the members a recommendation that the members approve the plan, unless the board determines that because of conflicts of interest or other special circumstances, it should not make such a recommendation, in which case the board shall deliver to the members the basis for that determination.
(4) The board may condition its submission of the plan of for-profit conversion to the members on any basis.
(5) If the approval of the members is to be given at a meeting, then the corporation shall notify each member of the meeting of members at which the plan of for-profit conversion is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include a copy of the articles as they will be in effect immediately after the for-profit conversion. If a summary is provided in lieu of a copy of the plan, then a copy of the plan must be available to members upon request and this fact must be stated in the notice.
(6) Unless the articles or bylaws, or the board acting pursuant to subsection (4) of this section, require a greater vote or a greater number of votes to be present, the approval of the plan of for-profit conversion by the members entitled to vote thereon requires approval of a majority of those members at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the plan of for-profit conversion, the approval of a majority of the members of each separate voting group entitled to vote at a meeting at which a quorum of the voting group is present.
(7) If any provision of the articles, bylaws, or an agreement to which any of the directors or members are parties, adopted or entered into before January 1, 2022, applies to a merger of the corporation and the document does not refer to a for-profit conversion of the corporation, then the provision is deemed to apply to a for-profit conversion of the corporation until the provision is later amended.
[
2021 c 176 s 3313
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.820
Articles of for-profit conversion.
(1) Articles of for-profit conversion must be executed on behalf of the converting corporation by an officer of the corporation. The articles shall set forth:
(a) If the surviving corporation is a domestic business corporation, the name of the corporation immediately before the filing of the articles of for-profit conversion and if that name does not satisfy the requirements of RCW 23B.04.010, or the corporation desires to change its name in connection with the conversion, a name that satisfies the requirements of RCW 23B.04.010
;
(b) Whether the corporation is holding assets for charitable purposes;
(c) If the corporation is holding assets for charitable purposes, that the attorney general has approved, or is deemed to have approved, the for-profit conversion pursuant to RCW 24.03A.770
(4);
(d) If the surviving corporation is a foreign for-profit corporation, its name after the conversion and its jurisdiction of incorporation;
(e) If the nonprofit corporation has members with voting rights with respect to the for-profit conversion, a statement that the plan of for-profit conversion was approved by the members in the manner required by this chapter and the articles or bylaws; and
(f) Where there are no members or no members having voting rights with respect to the for-profit conversion, a statement to that effect, the date of the meeting of the board at which the amendment was adopted, and a statement that the amendment received the vote of a majority of directors in office.
(2) If the surviving corporation is a domestic for-profit corporation, then the articles of for-profit conversion shall either contain all of the provisions that RCW 23B.02.020
requires to be set forth in articles of incorporation of a domestic for-profit corporation and any other desired provisions permitted under Title
23B
RCW, or have attached articles of incorporation that satisfy the requirements of RCW 23B.02.020
. In either case, provisions that would not be required to be included in restated articles of incorporation of a domestic for-profit corporation may be omitted, except that the name and address of the initial registered agent of the for-profit corporation must be included.
(3) The articles of for-profit conversion and articles of incorporation, if a separate document, must be delivered to the secretary of state for filing, and take effect at the effective time provided in RCW 23.95.210
.
[
2021 c 176 s 3314
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.825
Effect of for-profit conversion.
(1) Except as provided in RCW 24.03A.770, when a conversion of a domestic nonprofit corporation to a domestic or foreign for-profit corporation becomes effective:
(a) The title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;
(b) The liabilities of the corporation remain the liabilities of the corporation;
(c) An action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred;
(d) The articles of the domestic or foreign for-profit corporation become effective;
(e) The memberships of the corporation are reclassified into shares or other securities, obligations, rights to acquire shares or other securities, or into cash or other property in accordance with the plan of conversion, and the members are entitled only to the rights provided in the plan of for-profit conversion;
(f) A devise, bequest, gift, grant, or promise contained in a will or other instrument, in trust or otherwise, made to or for the corporation before or after the for-profit conversion, continues to inure to the corporation, subject to the express terms of the will or other instrument; and
(g) The corporation is deemed to:
(i) Be a domestic or foreign for-profit corporation for all purposes; and
(ii) Be the same corporation without interruption as the nonprofit corporation.
(2) The interest holder liability of a member in a domestic nonprofit corporation that converts to a domestic for-profit corporation is as follows:
(a) The conversion does not discharge any interest holder liability of the member as a member of the nonprofit corporation to the extent the interest holder liability arose before the effective time of the articles of for-profit conversion.
(b) The member does not have interest holder liability for any debt, obligation, or liability of the for-profit corporation that arises after the effective time of the articles of for-profit conversion.
(c) The laws of this state continue to apply to the collection or discharge of any interest holder liability preserved by (a) of this subsection, as if the conversion had not occurred.
(d) The member has whatever rights of contribution from other members are provided by the laws of this state with respect to any interest holder liability preserved by (a) of this subsection, as if the conversion had not occurred.
(3) A member who becomes subject to interest holder liability for some or all of the debts, obligations, or liabilities of the for-profit corporation has interest holder liability only for those debts, obligations, or liabilities of the for-profit corporation that arise after the effective time of the articles of for-profit conversion.
[
2021 c 176 s 3315
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.830
Abandonment of for-profit conversion.
(1) Unless otherwise provided in a plan of for-profit conversion of a domestic nonprofit corporation, after the plan has been adopted and approved as required by RCW 24.03A.755
through
24.03A.880, and at any time before the for-profit conversion has become effective, it may be abandoned by the members if there are members entitled to vote on the for-profit conversion, or by the board without action by members.
(2) If a for-profit conversion is abandoned under subsection (1) of this section after articles of for-profit conversion have been filed by the secretary of state but before the for-profit conversion has become effective, then a statement that the for-profit conversion has been abandoned in accordance with this section, executed by an officer of the corporation, must be delivered to the secretary of state for filing before the effective date of the for-profit conversion. The statement takes effect upon filing and the for-profit conversion is abandoned and does not become effective.
[
2021 c 176 s 3316
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.835
For-profit domestication and conversion.
A foreign for-profit corporation may become a domestic nonprofit corporation if the domestication and conversion is permitted by the law of the foreign jurisdiction.
[
2021 c 176 s 3317
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.840
Articles of domestication and conversion.
(1) Articles of domestication and conversion must be executed on behalf of the domesticating and converting corporation by an officer or other authorized representative. The articles shall set forth:
(a) The name of the corporation immediately before the filing of the articles of domestication and conversion and, if that name is unavailable for use in Washington state or the corporation desires to change its name in connection with the domestication and conversion, a name that satisfies the requirements of RCW 24.03A.095
;
(b) The jurisdiction of incorporation of the corporation immediately before the filing of the articles of domestication and conversion and the date the corporation was incorporated in that jurisdiction; and
(c) A statement that the domestication and conversion of the corporation in this state was authorized as required by the laws of the jurisdiction in which the corporation was incorporated immediately before its domestication and conversion in Washington state.
(2) The articles of domestication and conversion shall either contain all of the provisions that RCW 24.03A.100
(1) requires to be set forth in articles of incorporation and any other desired provisions that RCW 24.03A.100
(2) and (3) permit to be included in articles of incorporation, or have attached articles of incorporation that comply with this chapter. In either case, provisions that would not be required to be included in restated articles of incorporation may be omitted, except that the name and address of the initial registered agent of the domestic nonprofit corporation must be included.
(3) If the domesticating corporation is a foreign corporation, then the domesticating corporation must, simultaneously with the delivery of the articles of domestication and conversion, deliver articles of incorporation that comply with this chapter to the secretary of state for filing and the secretary of state shall file the articles. Provisions that would not be required to be included in restated articles of incorporation may be omitted, except that the name and address of the initial registered agent of the corporation must be included and the name of the corporation must satisfy the requirements of RCW 24.03A.095
.
(4) If the foreign for-profit corporation is authorized to transact business in Washington state under chapter
23B.01
RCW, then its registration shall be terminated automatically on the effective date of its domestication and conversion and the secretary of state shall record the termination of registration.
[
2021 c 176 s 3318
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.845
Effect of for-profit domestication and conversion.
(1) When a domestication and conversion of a foreign for-profit corporation to a domestic nonprofit corporation becomes effective:
(a) The title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;
(b) The liabilities of the corporation remain the liabilities of the corporation;
(c) An action or proceeding pending against the corporation continues against the corporation as if the domestication and conversion had not occurred;
(d) The articles of domestication and conversion, or the articles attached to the articles of domestication and conversion, constitute the articles of incorporation of the corporation;
(e) Memberships, securities, obligations, rights to acquire memberships or securities of the corporation, or cash or other property must be issued or paid as provided pursuant to the laws of the foreign jurisdiction;
(f) A devise, bequest, gift, grant, or promise contained in a will or other instrument, in trust or otherwise, made to or for the foreign for-profit corporation before or after the domestication and conversion, inures to the domestic nonprofit corporation, subject to the express terms of the will or other instrument and to applicable law of the foreign jurisdiction; and
(g) The corporation is deemed to be:
(i) A domestic corporation for all purposes; and
(ii) The same corporation without interruption as the foreign for-profit corporation.
(2) The interest holder liability of a shareholder of the foreign for-profit corporation who becomes a member of the domestic nonprofit corporation in the domestication and conversion is as follows:
(a) The domestication and conversion does not discharge any interest holder liability under the laws of the foreign jurisdiction to the extent the interest holder liability arose before the effective time of the articles of domestication and conversion.
(b) The member does not have interest holder liability under the laws of the foreign jurisdiction for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of domestication and conversion.
(c) The provisions of the laws of the foreign jurisdiction continue to apply to the collection or discharge of any interest holder liability preserved by (a) of this subsection, as if the domestication and conversion had not occurred.
(d) The member has whatever rights of contribution from other members are provided by the laws of the foreign jurisdiction with respect to any interest holder liability preserved by (a) of this subsection, as if the domestication and conversion had not occurred.
(3) A shareholder of a foreign for-profit corporation who becomes subject to interest holder liability for some or all of the debts, obligations, or liabilities of the corporation as a result of its domestication and conversion in this state has interest holder liability only for those debts, obligations, or liabilities of the corporation that arise after the effective time of the articles of domestication and conversion.
[
2021 c 176 s 3319
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.850
Abandonment of for-profit domestication and conversion.
If the domestication and conversion of a foreign for-profit corporation to a domestic nonprofit corporation is abandoned in accordance with the laws of the foreign jurisdiction after articles of domestication and conversion have been filed by the secretary of state, then a statement that the domestication and conversion has been abandoned, executed by an officer or other authorized representative, must be delivered to the secretary of state for filing. The statement takes effect upon filing and the domestication and conversion is abandoned and does not become effective.
[
2021 c 176 s 3320
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.855
Entity conversion for noncharitable corporations.
(1) A domestic nonprofit corporation, other than a charitable corporation, may become a domestic unincorporated entity pursuant to a plan of entity conversion only if the entity conversion is permitted under the organic law governing the entity that would survive the entity conversion.
(2) A domestic nonprofit corporation, other than a charitable corporation, may become a foreign unincorporated entity if the entity conversion is permitted by the laws of the foreign jurisdiction.
(3) A domestic unincorporated entity may be converted into a domestic nonprofit corporation only if applicable Washington state law provides procedures for the approval of an entity conversion into a domestic nonprofit corporation.
(4) A foreign unincorporated entity may become a domestic nonprofit corporation if the law of the foreign jurisdiction authorizes it to become a nonprofit corporation in another jurisdiction.
(5) If any provision of a debt security, note, or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred, or executed by a domestic nonprofit corporation before January 1, 2022, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, then the provision is deemed to apply to an entity conversion of the corporation until the provision is later amended.
[
2021 c 176 s 3321
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.860
Plan of entity conversion.
(1) A plan of entity conversion shall include:
(a) A statement of the type of unincorporated entity the surviving entity will be and, if it will be a foreign unincorporated entity, its jurisdiction of organization;
(b) The terms and conditions of the conversion;
(c) The manner and basis of converting the memberships in the domestic nonprofit corporation following its conversion into interests or other securities, obligations, rights to acquire interests or other securities, cash, other property, or any combination of the foregoing;
(d) If the corporation is holding assets for charitable purposes, a plan setting forth how the corporation will comply with RCW 24.03A.770
(1) through (3); and
(e) The full text, as they will be in effect immediately following the conversion, of the organic documents of the surviving entity.
(2) The plan of entity conversion may also include a provision that the plan may be amended before filing articles of entity conversion, except that after approval of the plan by the members the plan may not be amended to change:
(a) The amount or kind of memberships or other securities, interests, obligations, rights to acquire memberships, securities, or interests, cash, or other property to be received under the plan by the members;
(b) The organic documents that will be in effect immediately following the conversion, except for changes permitted by a provision of the organic law of the surviving entity comparable to RCW 24.03A.655
(2); or
(c) Any of the other terms or conditions of the plan if the change would adversely affect any of the members in any material respect.
(3) Terms of a plan of entity conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with RCW 24.03A.060
(3).
[
2021 c 176 s 3322
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.865
Action on a plan of entity conversion.
In the case of an entity conversion of a domestic nonprofit corporation to a domestic or foreign unincorporated entity:
(1) The plan of entity conversion must be adopted by a vote of the majority of the directors in office.
(2) If there are no members entitled to vote on the plan, then the plan must be adopted by a vote of the majority of directors then in office. If a membership corporation has no members entitled to vote on the plan, then the corporation shall deliver notice of the proposed entity conversion to all members of the corporation at least ten days before the meeting at which the board is to adopt the plan.
(3) After adopting the plan of entity conversion, the board shall submit the plan to the members for their approval if there are members entitled to vote on the plan. The board shall also deliver to the members a recommendation that the members approve the plan, unless the board determines that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board shall deliver to the members the basis for that determination.
(4) The board may condition its submission of the plan of entity conversion to the members on any basis.
(5) If the approval of the members is to be given at a meeting, then the corporation shall notify each member, whether or not entitled to vote, of the meeting of members at which the plan of entity conversion is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include a copy of the organic documents as they will be in effect immediately after the entity conversion. The notice may additionally be accompanied by a summary of the required materials. If a summary is provided in lieu of a copy of the plan, then a copy of the plan must be available to members upon request and this fact must be stated in the notice. Such copy of the plan may be made available to members electronically.
(6) Unless the articles, or the board acting pursuant to subsection (3) of this section, requires a greater vote or a greater number of votes to be present, the approval of the plan of entity conversion by the members entitled to vote thereon requires the approval of a majority of those members at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the plan of entity conversion, the approval of a majority of the members of each separate voting group entitled to vote at a meeting at which a quorum of the voting group is present.
(7) If any provision of the articles, bylaws, or an agreement to which any of the directors or members are parties, adopted or entered into before January 1, 2022, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, then the provision is deemed to apply to an entity conversion of the corporation until the provision is later amended.
(8) If, as a result of the conversion, one or more members of the corporation would become subject to interest holder liability for the debts, obligations, or liabilities of any other person or entity, then approval of the plan of conversion requires the execution, by each affected member, of a separate written consent to become subject to interest holder liability.
[
2021 c 176 s 3323
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.870
Articles of entity conversion.
(1) After the conversion of a domestic nonprofit corporation to a domestic or foreign unincorporated entity has been adopted and approved as required under RCW 24.03A.755
through
24.03A.880, articles of entity conversion must be executed on behalf of the converting corporation by an officer of the corporation. The articles must:
(a) Set forth the name of the corporation immediately before the filing of the articles of entity conversion and the name to which the name of the corporation is to be changed, which must be a name that satisfies the organic law of the surviving entity if the surviving entity is a domestic entity;
(b) State whether the corporation is holding assets for charitable purposes;
(c) If the corporation is holding assets for charitable purposes, state that the attorney general has approved, or is deemed to have approved, the entity conversion pursuant to RCW 24.03A.770
(4);
(d) State the type of unincorporated entity that the surviving entity will be and its jurisdiction of organization;
(e) State that the plan of entity conversion was approved in the manner required by this chapter; and
(f) If the surviving entity is a domestic filing entity, either contain all of the provisions required to be set forth in its public organic record and any other desired provisions that are permitted, or have attached a public organic record.
(2) After the conversion of a domestic unincorporated entity to a domestic nonprofit corporation has been adopted and approved as required by the organic law of the unincorporated entity, articles of entity conversion must be executed on behalf of the unincorporated entity by an officer or other authorized representative. The articles must:
(a) Set forth the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which must be a name that satisfies the requirements of RCW 24.03A.095
;
(b) Set forth a statement that the plan of entity conversion was approved in accordance with the organic law of the unincorporated entity; and
(c) Either contain all of the provisions that RCW 24.03A.100
(1) requires to be set forth in articles of incorporation and any other desired provisions that RCW 24.03A.100
(2) and (3) permit to be included in articles of incorporation, or have attached articles of incorporation that comply with chapter 176, Laws of 2021.
(3) After the conversion of a foreign unincorporated entity to a domestic nonprofit corporation has been authorized as required by the laws of the foreign jurisdiction, articles of entity conversion must be executed on behalf of the foreign unincorporated entity by an officer or other authorized representative. The articles must:
(a) Set forth the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which must be a name that satisfies the requirements of RCW 24.03A.095
;
(b) Set forth the jurisdiction under the laws of which the unincorporated entity was organized immediately before the filing of the articles of entity conversion and the date on which the unincorporated entity was organized in that jurisdiction;
(c) Set forth a statement that the conversion of the unincorporated entity was approved in the manner required by the law of the foreign jurisdiction; and
(d) Either contain all of the provisions that RCW 24.03A.100
(1) requires to be set forth in articles of incorporation and any other desired provisions that RCW 24.03A.100
(2) and (3) permit to be included in articles of incorporation, or have attached articles of incorporation that comply with chapter 176, Laws of 2021; except that, in either case, provisions that would not be required to be included in restated articles of incorporation of a domestic nonprofit corporation may be omitted.
(4) The articles of entity conversion and articles of incorporation must be simultaneously delivered to the secretary of state for filing. The articles of entity conversion and articles of incorporation take effect at the effective time provided in RCW 23.95.210
. Articles of entity conversion filed under subsection (1) or (2) of this section may be combined with any required conversion filing under the organic law of the domestic unincorporated entity if the combined filing satisfies the requirements of both this section and the other organic law.
(5) If the converting entity is a foreign unincorporated entity that is registered to do business in this state under chapter
23.95
RCW, then its registration statement is canceled automatically on the effective date of its conversion.
[
2021 c 176 s 3324
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.875
Effect of entity conversion.
(1) Except as provided in RCW 24.03A.770, when a conversion under RCW 24.03A.755
through
24.03A.880
becomes effective:
(a) The title to all real and personal property, both tangible and intangible, of the converting entity remains in the surviving entity without reversion or impairment;
(b) The liabilities of the converting entity remain the liabilities of the surviving entity;
(c) An action or proceeding pending against the converting entity continues against the surviving entity as if the conversion had not occurred;
(d) In the case of a surviving entity that is a filing entity, its articles or public organic record and its private organic rules become effective;
(e) In the case of a surviving entity that is a nonfiling entity, its private organic rules become effective;
(f) The memberships or interests of the converting entity are reclassified into memberships, interests, other securities, obligations, rights to acquire memberships, interests, or securities, or into cash or other property in accordance with the plan of conversion; and the members or interest holders of the converting entity are entitled only to the rights provided to them under the terms of the conversion and to any appraisal rights they may have under the organic law of the converting entity;
(g) A devise, bequest, gift, grant, or promise contained in a will or other instrument, in trust or otherwise, made to or for the converting entity before or after the conversion, inures to the surviving entity, subject to the express terms of the will or other instrument; and
(h) The surviving entity is deemed to be:
(i) Incorporated or organized under and subject to the organic law of the converting entity for all purposes; and
(ii) The same nonprofit corporation or unincorporated entity without interruption as the converting entity.
(2) A member who becomes subject to interest holder liability for some or all of the debts, obligations, or liabilities of the surviving entity has interest holder liability only for those debts, obligations, or liabilities of the surviving entity that arise after the effective time of the articles of entity conversion.
(3) The interest holder liability of an interest holder in an unincorporated entity that converts to a domestic nonprofit corporation is as follows:
(a) The conversion does not discharge any interest holder liability under the organic law of the unincorporated entity to the extent the interest holder liability arose before the effective time of the articles of entity conversion.
(b) The interest holder does not have interest holder liability under the organic law of the unincorporated entity for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of entity conversion.
(c) The provisions of the organic law of the unincorporated entity continue to apply to the collection or discharge of any interest holder liability preserved by (a) of this subsection, as if the conversion had not occurred.
(d) The interest holder has whatever rights of contribution from other interest holders are provided by the organic law of the unincorporated entity with respect to any interest holder liability preserved by (a) of this subsection, as if the conversion had not occurred.
[
2021 c 176 s 3325
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.880
Abandonment of entity conversion.
(1) Unless otherwise provided in a plan of entity conversion of a domestic nonprofit corporation, after the plan has been adopted and approved as required by RCW 24.03A.755
through
24.03A.880, and at any time before the entity conversion has become effective, it may be abandoned by the members if there are members entitled to vote, or by the board without action by the members.
(2) If an entity conversion is abandoned after articles of entity conversion have been filed by the secretary of state but before the entity conversion has become effective, then a statement that the entity conversion has been abandoned in accordance with this section, executed by an officer of the corporation, must be delivered to the secretary of state for filing before the effective date of the entity conversion. Upon filing, the statement takes effect and the entity conversion is abandoned and does not become effective.
[
2021 c 176 s 3326
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.885
Dispositions not requiring member approval.
Unless the articles or bylaws otherwise provide, approval of the members of a nonprofit corporation is not required:
(1) To sell, lease, exchange, or otherwise dispose of any or all of the corporation's assets:
(a) In the usual and regular course of its activities; or
(b) If the assets disposed of represent less than fifty percent of the total assets of the corporation and its consolidated subsidiaries, determined as of the end of the most recently completed fiscal year;
(2) To mortgage, pledge, dedicate to the repayment of indebtedness whether with or without recourse, or otherwise encumber any or all of the corporation's assets, whether or not in the usual and regular course of business its activities; or
(3) To transfer any or all of the corporation's assets to one or more corporations or other entities all of the memberships or interests of which are owned by the corporation.
[
2021 c 176 s 3401
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.890
Dispositions requiring member approval.
(1) A sale, lease, exchange, or other disposition of assets, other than a disposition described in RCW 24.03A.885, requires approval of the corporation's members that are entitled to vote on the disposition, unless the articles or bylaws otherwise provide.
(2) A disposition that requires approval of the members must be initiated by a resolution by the board authorizing the disposition. After adoption of the resolution, the board shall submit the proposed disposition to the members for their approval. The board shall also deliver to the members a recommendation that the members approve the proposed disposition, unless the board makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, in which case the board shall deliver to the members the basis for that determination.
(3) The board may condition its submission of a disposition to the members under subsection (2) of this section on any basis.
(4) If a disposition is required to be approved by the members, and if the approval is to be given at a meeting, then the nonprofit corporation shall give notice to each member, whether or not entitled to vote, of the meeting of members at which the disposition is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the disposition and must contain a description of the disposition, including the terms and conditions thereof and the consideration to be received by the corporation.
(5) Unless the articles, bylaws, or the board acting pursuant to subsection (3) of this section requires a greater vote, or a greater number of votes to be present, the approval of a disposition by the members entitled to vote thereon requires the approval of a majority of those members at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the disposition, the approval of a majority of the members of each separate voting group entitled to vote at a meeting at which a quorum of the voting group is present.
(6) If a membership corporation has no members entitled to vote on a disposition, then the corporation shall deliver notice of a proposed disposition to all members of the corporation at least ten days before the meeting at which the board is to act upon the disposition.
(7) After a disposition has been approved by the members under subsection (5) of this section, and at any time before the disposition has been consummated, it may be abandoned by the nonprofit corporation without action by the members, subject to any contractual rights of other parties to the disposition.
(8) In addition to the approval of a disposition of assets by the board and members as required by this section, the disposition must also be approved in the form of a record by any person or group of persons whose approval is required under RCW 24.03A.705
to amend the articles or bylaws.
(9) The assets of a direct or indirect consolidated subsidiary are deemed the assets of the parent nonprofit corporation for the purposes of this section.
(10) A disposition of assets in the course of a dissolution governed by RCW 24.03A.904
through
24.03A.926
is not governed by RCW 24.03A.885
through
24.03A.902
.
[
2021 c 176 s 3402
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.895
Effect of dispositions.
Unless a domestic entity that is a party to a disposition of assets obtains an appropriate order of the court or approval from the attorney general under the law of this state, a disposition of assets under RCW 24.03A.885
through
24.03A.902
may not affect:
(1) Any restriction imposed upon the entity by its organic documents or other governing authority that may not be amended by its directors, members, or interest holders; or
(2) The existing rights of persons other than members, shareholders, or interest holders of the entity.
[
2021 c 176 s 3403
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.900
Property held for charitable purposes.
(1) In a disposition of assets under RCW 24.03A.885
through
24.03A.902, property held for charitable purposes by a nonprofit corporation may not be diverted from charitable purposes.
(2) Property held by a nonprofit corporation and restricted to charitable purposes by a gift instrument may not be diverted from the restricted charitable purpose by a disposition of assets under RCW 24.03A.885
through
24.03A.902
unless modified in accordance with RCW 24.03A.190
.
(3) Property held for charitable purposes pursuant to a trust instrument governed by chapter
11.110
RCW in which the nonprofit corporation is a trustee or a beneficiary may not be diverted from the charitable purposes specified in the trust instrument unless those purposes are modified by the court or pursuant to an agreement between all interested parties, including the attorney general, under chapter
11.96A
RCW.
(4) Property held by a nonprofit corporation for charitable purposes upon condition requiring return, transfer, or conveyance, which condition occurs by reason of a disposition of assets under RCW 24.03A.885
through
24.03A.902, must be returned, transferred, or conveyed in accordance with that condition.
(5) A charitable corporation or a corporation holding property for charitable purposes shall deliver to the attorney general of its intent to consummate a disposition, other than a disposition described in RCW 24.03A.885
. The notice must be delivered to the attorney general in the form of a record at least twenty days before the meeting at which the proposed disposition is to be approved. Such a disposition may not be implemented without the approval of the attorney general, or the approval of the court in a proceeding to which the attorney general is made a party. In the event that the attorney general does not deliver a notice of objection in the form of a record to the corporation within twenty days after the delivery to the attorney general of notice of the disposition, approval of the disposition is deemed to have been given.
(6) The notice described in subsection (5) of this section shall include:
(a) A statement specifying how the disposition will comply with subsections (1) through (4) of this section; and
(b) A brief description of:
(i) Real property held for charitable purposes that will be included in the disposition, and its nature and location;
(ii) Cash, bank deposits, brokerage accounts, or other financial assets held for charitable purposes that will be included in the disposition in full or in part, and their approximate total fair market value;
(iii) Other personal property held for charitable purposes that will be included in the disposition, and its nature and approximate total fair market value; and
(iv) Any gift restrictions applicable to any property described in (b)(i) through (iii) of this subsection, and the nature of those restrictions.
[
2021 c 176 s 3404
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.902
Prohibition of financial benefit.
A person who is a member or otherwise affiliated with a charitable corporation may not receive a direct or indirect financial benefit in connection with a disposition of assets governed by RCW 24.03A.885
through
24.03A.902
unless the person is a charitable corporation, the federal government, a tribal government, a state or local government, a governmental subdivision, or an unincorporated entity that has charitable purposes. This section does not apply to the receipt of reasonable compensation for services rendered.
[
2021 c 176 s 3405
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.904
Authorization of voluntary dissolution.
(1) Unless the articles or bylaws require a greater vote, a majority of the directors in office of a nonprofit corporation may authorize the dissolution of any nonprofit corporation that is not a membership corporation or is a membership corporation but has no members entitled to vote on its dissolution.
(2) If a membership corporation has no members entitled to vote on dissolution, then the corporation shall deliver notice of the proposed dissolution to all members of the corporation at least ten days before the meeting at which the board is to authorize the dissolution.
(3) For a membership corporation that has members that are entitled to vote on its dissolution:
(a) The board may propose dissolution for submission to the members entitled to vote, and for such a proposal to dissolve to be authorized:
(i) The board shall recommend dissolution to the members entitled to vote on the dissolution, unless the board determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the members entitled to vote on the dissolution;
(ii) The board may condition its submission of the proposal for dissolution on any basis, including approval of the proposed plan of distribution if required under RCW 24.03A.906
;
(iii) The nonprofit corporation shall give notice to each member, whether or not entitled to vote, of the proposed meeting of members that includes the following statements:
(A) That the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation; and
(B) How the assets of the corporation will be distributed after all creditors have been paid or how the distribution of assets will be determined; and
(iv) The members entitled to vote on the dissolution shall approve the proposal to dissolve as provided in (b) of this subsection.
(b) Unless the articles, the bylaws, or the board acting pursuant to (a)(ii) of this subsection requires a greater vote or a greater number of members to be present, the adoption of the proposal to dissolve by the members entitled to vote thereon requires the approval of at least a majority of those members at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the proposal, the approval by a majority of the members in each separate voting group entitled to vote at a meeting at which a quorum of the voting group is present.
[
2021 c 176 s 3501
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.906
Distribution of assets on dissolution.
The assets of a corporation in the process of dissolution shall be applied and distributed in the following order:
(1) All known liabilities and obligations of the corporation must be paid, satisfied, and discharged, or adequate provision must be made to pay, satisfy, and discharge those liabilities.
(2) All property held for charitable purposes by the corporation, including all assets of a charitable corporation remaining after satisfaction of subsection (1) of this section, must be applied and distributed consistently with the corporation's articles, such that property is not diverted from charitable purposes, and as follows:
(a) Property held for charitable purposes pursuant to a trust instrument in which the nonprofit corporation is a trustee or a beneficiary must be governed by and distributed in accordance with the trust instrument and chapter
11.110
RCW, and any modification of restrictions imposed through the trust instrument accomplished through an appropriate order of the court or the agreement of all interested parties, including the attorney general, pursuant to chapter
11.96A
RCW.
(b) Property owned outright and held for charitable purposes, but not held upon a condition requiring return, transfer, or conveyance by reason of the dissolution and not subject to any gift restriction, must be transferred or conveyed:
(i) To one or more entities operated exclusively for one or more charitable purposes;
(ii) To the federal government, a tribal government, or a state or local government for a public purpose; or
(iii) Subject to one or more gift restrictions requiring the property to be used exclusively for the same charitable purposes for which the dissolving corporation holds the property.
(c) Property that is subject to charitable purpose or management or investment restrictions that do not require modification at the time of dissolution and is not held upon a condition requiring return, transfer, or conveyance by reason of the dissolution must be transferred or conveyed subject to all restrictions applicable to the property, except to the extent restrictions are modified pursuant to RCW 24.03A.190
before distribution, pursuant to a plan of distribution adopted by the board and as provided by RCW 24.03A.904
through
24.03A.926
.
(d) Property subject to charitable purpose or management or investment restrictions that require modification at the time of dissolution and are not held upon a condition requiring return, transfer, or conveyance by reason of dissolution, must be modified pursuant to RCW 24.03A.190
before the gifts can be distributed, pursuant to a plan of distribution adopted by the board and as provided by RCW 24.03A.904
through
24.03A.926
.
(e) Property held for charitable purposes by the nonprofit corporation upon condition requiring return, transfer, or conveyance, which condition occurs by reason of the dissolution, must be returned, transferred, or conveyed in accordance with those requirements.
(3) Property held by a corporation upon condition requiring return, transfer, or conveyance, which condition occurs by reason of the dissolution, must be returned, transferred, or conveyed in accordance with the requirements of the condition.
(4) Other assets of a corporation other than a charitable corporation, if any, must be distributed:
(a) To members or other persons in accordance with the articles or bylaws, to the extent that the articles or bylaws determine the rights of members to distributions upon dissolution, or provide for distribution to other persons or classes of persons; and
(b) To the extent that the articles or bylaws do not govern distribution of assets on dissolution, to any persons the board may select.
[
2021 c 176 s 3502
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.908
Corporations holding property for charitable purposes.
(1) A nonprofit corporation holding property for charitable purposes, including any charitable corporation, may not deliver articles of dissolution to the secretary of state for filing pursuant to RCW 24.03A.910
until it has complied with all of the requirements of this section.
(2) A nonprofit corporation described in subsection (1) of this section shall adopt a plan for the distribution of assets for the purpose of authorizing any transfer or conveyance of property held for charitable purposes, which shall:
(a) Be consistent with RCW 24.03A.906
and
24.03A.914
; and
(b) Include a brief description of the following:
(i) Real property held for charitable purposes, and its nature and location;
(ii) Cash, bank deposits, brokerage accounts, or other financial assets held for charitable purposes, and their approximate total fair market value;
(iii) Other personal property held for charitable purposes, and its nature and approximate total fair market value; and
(iv) Any gift restrictions applicable to any property described in (b)(i) through (iii) of this subsection, and the nature of those restrictions.
(3) A plan of distribution shall be adopted in the following manner:
(a) Where there are no members, or no members having voting rights, a plan of distribution is adopted at a meeting of the board upon receiving a vote of a majority of the directors in office.
(b) Where there are members having voting rights, the board shall adopt a resolution recommending a plan of distribution and directing the submission thereof to a vote at a meeting of members having voting rights. Such vote may take place at the same meeting during which members having voting rights vote upon dissolution of the nonprofit corporation. Notice in the form of a record setting forth the proposed plan of distribution or a summary thereof must be given to each member, whether or not entitled to vote at the meeting, within the time and in the manner provided in this chapter for the giving of notice of meetings of members. Such plan of distribution is adopted upon receiving votes from a majority of the members entitled to vote at a meeting at which a quorum is present, and, if any class of members is entitled to vote as a separate group on the plan, the approval by a majority of the members in each separate voting group entitled to vote at a meeting at which a quorum of the voting group is present. If the members entitled to vote on the dissolution approve the proposal to dissolve but do not approve the proposed plan of distribution in all material respects, then the board may either accept the plan of distribution, as approved by the members, or propose a new plan of distribution to the members for approval. This process shall continue until a plan of distribution acceptable to the board has been approved by the members. If successive votes take place at the same meeting of members, then no further notices or meetings are required.
(4) A nonprofit corporation described in subsection (1) of this section shall give the attorney general notice that it intends to dissolve. The notice shall include:
(a) A copy of the plan of distribution proposed to be adopted in accordance with subsection (3) of this section; and
(b) The names and phone numbers of individuals available to answer questions regarding the dissolution and proposed plan of distribution.
(5) Notice required under subsection (4) of this section must be delivered to the attorney general in the form of a record at least twenty days before the meeting at which the proposed plan is to be adopted. No plan of distribution for a corporation described in subsection (1) of this section may be implemented without the approval of the attorney general, or the approval of the court in a proceeding to which the attorney general is made a party. In the event that the attorney general does not deliver a notice of objection in the form of a record to the corporation within twenty days after the delivery to the attorney general of notice of the plan, approval of the plan is deemed to have been given.
[
2021 c 176 s 3503
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.910
Articles of dissolution.
(1) At any time after dissolution is authorized, the nonprofit corporation may dissolve by filing with the secretary of state articles of dissolution, accompanied by a revenue clearance certificate issued pursuant to RCW 82.32.260
. The articles of dissolution shall set forth:
(a) The name of the corporation;
(b) The date of its incorporation;
(c) The effective date of the dissolution, which may be the date on which the articles of dissolution are filed or any date and time up to thirty days thereafter;
(d) Whether it is a membership corporation and, if it is a membership corporation, whether it has members that have a right to vote on its dissolution;
(e) If the corporation is not a membership corporation or has no members that have a right to vote on its dissolution, that the dissolution was authorized by the requisite number of directors;
(f) If the corporation is a membership corporation that has members that have a right to vote on its dissolution, that the requisite number of members has approved the proposal to dissolve;
(g) Whether the corporation is a charitable corporation or is holding property for charitable purposes;
(h) If the corporation is a charitable corporation or is holding property for charitable purposes, that the attorney general has approved, or is deemed to have approved, the corporation's plan of distribution pursuant to RCW 24.03A.908
; and
(i) That the net assets of the corporation remaining after winding up have been, or will be, distributed in accordance with the corporation's articles and bylaws and the corporation's adopted plan of distribution.
(2) A nonprofit corporation is dissolved upon the effective date of its articles of dissolution.
(3) For purposes of RCW 24.03A.904
through
24.03A.926, "dissolved corporation" means a nonprofit corporation whose articles of dissolution have become effective and includes a liquidating trust, if any, or other acquirer entity to which the remaining assets of the corporation are transferred subject to its liabilities for purposes of liquidation.
[
2021 c 176 s 3504
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.912
Revocation of dissolution.
(1) A nonprofit corporation may revoke its dissolution within one hundred twenty days of the effective date of the dissolution.
(2) Revocation of dissolution must be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board alone, in which event the board may revoke the dissolution without action by the members.
(3) Except as provided in subsection (4) of this section, after the revocation of dissolution is authorized, the nonprofit corporation may revoke the dissolution by delivering to the secretary of state for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth:
(a) The name of the corporation;
(b) The effective date of the dissolution that was revoked;
(c) The date that the revocation of dissolution was authorized; and
(d) That the revocation of dissolution was approved in the manner required by this chapter and by the articles and bylaws.
(4) A charitable corporation or a nonprofit corporation holding property restricted to charitable purposes shall not deliver articles of revocation of dissolution to the secretary of state for filing without the approval of the attorney general. Such a corporation shall give the attorney general notice in the form of a record that it intends to revoke its dissolution, to which notice a copy of the articles of revocation of dissolution adopted in accordance with subsection (2) of this section must be attached. In the event that the attorney general does not deliver a notice of objection in the form of a record to the corporation within twenty days after the delivery to the attorney general of notice of the revocation of dissolution, approval of the revocation of dissolution is deemed to have been given.
(5) Revocation of dissolution is effective upon the effective date of the articles of revocation of dissolution.
(6) When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the nonprofit corporation resumes carrying on its activities as if dissolution had never occurred.
[
2021 c 176 s 3505
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.914
Effect of dissolution.
(1) A nonprofit corporation, the dissolution of which has been authorized, continues its corporate existence but may not carry on any activities except those appropriate to wind up and liquidate its affairs, including:
(a) Collecting its assets;
(b) Disposing of its properties that will not be distributed in kind;
(c) Discharging or making provision for discharging its liabilities;
(d) Distributing its remaining property as required by the plan of distribution; and
(e) Doing every other act necessary to wind up and liquidate its activities and affairs.
(2) Dissolution of or authorization to dissolve a nonprofit corporation does not:
(a) Transfer title to the corporation's property;
(b) Subject its directors or officers to standards of conduct different from those prescribed in RCW 24.03A.495
and
24.03A.590
;
(c) Change quorum or voting requirements for its board or members; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
(d) Prevent commencement of a proceeding by or against the corporation in its corporate name;
(e) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution;
(f) Terminate the authority of the registered agent of the corporation; or
(g) Modify any gift restriction, unless the restriction is modified in accordance with RCW 24.03A.190
.
[
2021 c 176 s 3506
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.916
Prohibition of financial benefit.
No person may receive a direct or indirect financial benefit in connection with the dissolution of a charitable corporation unless the person is an entity operated exclusively for one or more charitable purposes, the federal government, a tribal government, a state or local government, or an unincorporated entity that has charitable purposes. This section does not apply to the receipt of reasonable compensation for services rendered.
[
2021 c 176 s 3507
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.918
Known claims against dissolved corporation.
(1) A dissolved nonprofit corporation shall deliver notice of the dissolution in the form of a record to all of the corporation's known claimants within thirty days of the date when the corporation delivered articles of dissolution to the secretary of state for filing.
(2) A dissolved nonprofit corporation may dispose of the known claims against it by delivering a notice in the form of a record that meets the requirements listed in subsection (3) of this section to its known claimants at any time after the date when the corporation delivered articles of dissolution to the secretary of state for filing. Delivery of a notice under this subsection shall satisfy the requirement of subsection (1) of this section if the notice is delivered to all known claimants within thirty days of the date when the corporation delivered articles of dissolution to the secretary of state for filing.
(3) A notice to claimants under subsection (2) of this section must:
(a) Describe information that must be included in a claim;
(b) Provide a mailing address where a claim may be sent;
(c) State the deadline, which may not be fewer than one hundred twenty days from the effective date of the notice, by which the dissolved nonprofit corporation must receive the claim; and
(d) State that the claim will be barred if not received by the deadline.
(4) A claim against the dissolved nonprofit corporation is barred:
(a) If a claimant who was given notice under subsection (2) of this section does not deliver the claim to the dissolved corporation by the deadline; or
(b) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice.
(5) For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
[
2021 c 176 s 3508
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.920
Other claims against dissolved corporation.
(1) A dissolved nonprofit corporation may publish notice of its dissolution and request that persons with claims against the dissolved corporation present them in accordance with the notice.
(2) The notice must:
(a) Be published three times during three successive weeks in a newspaper of general circulation in the county where the principal office of the dissolved nonprofit corporation or, if none in this state, its registered office is or was last located;
(b) Describe the information that must be included in a claim and provide a mailing address where the claim shall be sent; and
(c) State that a claim against the dissolved corporation will be barred unless a proceeding to enforce the claim is commenced within three years after the last publication of the notice.
(3) If the dissolved nonprofit corporation publishes a newspaper notice in accordance with subsection (2) of this section, then the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within three years after the last publication date of the newspaper notice:
(a) A claimant who was not given notice under RCW 24.03A.918
;
(b) A claimant whose claim was timely sent to the dissolved corporation but not acted on; or
(c) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
[
2021 c 176 s 3509
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.922
Enforcement of claims.
A claim that is not barred by RCW 24.03A.918
(4) or
24.03A.920
(3) may be enforced:
(1) Against the dissolved nonprofit corporation, to the extent of its undistributed assets; or
(2) Except as provided in RCW 24.03A.924
(4), if the assets have been distributed in liquidation, against any person, other than a creditor of the dissolved corporation, to whom the corporation distributed its property, subject to the following restrictions:
(a) Recovery is limited to the amount of the distributee's pro rata share of the claim or the corporate assets distributed to the distributee in liquidation, whichever is less;
(b) A distributee's total liability for all claims under this section may not exceed the total amount of assets distributed to the distributee; and
(c) A distributee is only liable to the extent permitted by existing common law or statutory remedies, and nothing in this section creates a separate cause of action against a distributee.
[
2021 c 176 s 3510
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.924
Court proceedings.
(1) A dissolved nonprofit corporation that has published a notice under RCW 24.03A.918
may file an application with the court for a determination of the amount and form of security to be provided for payment of claims that are contingent or have not been made known to the dissolved corporation or that are based on an event occurring after the effective date of dissolution but that, based on the facts known to the dissolved corporation, are reasonably estimated to be presented after the effective date of dissolution. Provision need not be made for any claim that is or is reasonably anticipated to be barred under RCW 24.03A.918
(3).
(2) Within ten days after the filing of the application, the dissolved corporation shall give notice of the proceeding to each claimant holding a contingent claim whose contingent claim is shown on the records of the dissolved corporation.
(3) The court may appoint a special representative to represent the interests of all claimants whose identities are unknown in any proceeding brought under this section. The dissolved corporation shall pay reasonable fees and expenses of the special representative, including all reasonable expert witness fees.
(4) Provision by the dissolved nonprofit corporation for security in the amount and the form ordered by the court under this section satisfies the dissolved corporation's obligations with respect to claims that are contingent, have not been made known to the dissolved corporation, or are based on an event occurring after the effective date of dissolution. Such claims may not be enforced against a person who received assets in liquidation.
[
2021 c 176 s 3511
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.926
Directors' duties.
(1) Directors shall cause the dissolved corporation to discharge or make reasonable provision for the payment of claims and make distributions of assets in accordance with the plan of distribution after payment or provision for claims.
(2) Directors of a dissolved corporation that has disposed of claims under RCW 24.03A.918, 24.03A.920, or
24.03A.924
are not liable for breach of subsection (1) of this section with respect to claims against the dissolved corporation that are barred or satisfied under RCW 24.03A.918, 24.03A.920, or
24.03A.924
.
(3) Failure to dispose of claims under RCW 24.03A.918, 24.03A.920, or
24.03A.924
is not, in and of itself, a violation of this section.
[
2021 c 176 s 3512
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.928
Administrative dissolution.
The secretary of state may commence a proceeding under RCW 23.95.610
to administratively dissolve a nonprofit corporation for any reason set forth in RCW 23.95.605
.
[
2021 c 176 s 3601
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.930
Procedure and effect of administrative dissolution.
(1) Administrative dissolution does not terminate, bar, or otherwise modify any claim against the administratively dissolved corporation.
(2) A person is not liable in contract, tort, or otherwise solely by reason of being a director, officer, or member of a nonprofit corporation that was dissolved under RCW 24.03A.928
through
24.03A.942, with respect to the activities or affairs of the corporation that have been continued, without knowledge of the dissolution.
[
2021 c 176 s 3602
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.932
Property held for charitable purposes.
(1) If a charitable corporation, or a corporation holding property for charitable purposes, has been administratively dissolved and has not been reinstated, then neither the corporation nor any other person may transfer or distribute to any other person any property held for charitable purposes by the corporation unless the corporation has:
(a) Adopted a plan of distribution satisfying the requirements of RCW 24.03A.908
(2) and following the procedure set out in RCW 24.03A.908
(3); and
(b) Obtained the approval or deemed approval of the attorney general of the plan of distribution, following the procedure set out in RCW 24.03A.908
(4) and (5).
(2) A corporation that has been administratively dissolved is not required to apply for reinstatement if its only activities will consist of adopting a plan of distribution, obtaining the approval or deemed approval of the attorney general of the plan of distribution, and distributing assets in accordance with the plan of distribution.
[
2021 c 176 s 3603
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.934
Reinstatement of administratively dissolved corporation.
A nonprofit corporation administratively dissolved under RCW 23.95.610
may apply to the secretary of state for reinstatement by following the procedure and meeting the requirements set forth in RCW 23.95.615
. A nonprofit corporation denied reinstatement may obtain judicial review of the denial within the time specified in RCW 23.95.620
.
[
2021 c 176 s 3604
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.936
Judicial dissolution.
The court may dissolve a nonprofit corporation:
(1) In a proceeding by the attorney general, if it is established that:
(a) The corporation obtained its articles through fraud; or
(b) The corporation has exceeded or abused, and is continuing to exceed or abuse, the authority conferred upon it by law; or
(c) The directors are deadlocked in the management of the corporate affairs; the members, if any, are unable to break the deadlock; and irreparable injury to the corporation or its purposes is threatened or being suffered because of the deadlock; or
(d) The corporation is misapplying or wasting property held for charitable purposes;
(2) Except as provided in the articles or bylaws, in a proceeding by fifty members or members holding at least five percent of the voting power, whichever is less, or by a director, if it is established that:
(a) The directors are deadlocked in the management of the corporate affairs; the members, if any, are unable to break the deadlock; and irreparable injury to the corporation or its mission is threatened or being suffered because of the deadlock;
(b) The directors or those in control of the corporation have acted, are acting, or have expressed intent to act in a manner that is illegal, oppressive, or fraudulent;
(c) The members are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have, or otherwise would have, expired;
(d) The corporate assets are being misapplied or wasted; or
(e) The corporation has insufficient assets to continue its activities and it is no longer able to assemble a quorum of directors or members;
(3) In a proceeding by a creditor, if it is established that:
(a) The creditor's claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or
(b) The corporation has admitted in a record that the creditor's claim is due and owing and the corporation is insolvent; or
(4) In a proceeding by the corporation to have its voluntary dissolution continued under court supervision.
[
2021 c 176 s 3605
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.938
Procedure for judicial dissolution.
(1) It is not necessary to make directors or members parties to a proceeding to dissolve a nonprofit corporation unless relief is sought against them individually.
(2) A person commencing a proceeding to dissolve a nonprofit corporation shall notify the attorney general of the proceeding in the form of a record if:
(a) The corporation is recognized by the internal revenue service as an organization described in section 501(c)(3) of the internal revenue code; or
(b) The person bringing the proceeding knows that the nonprofit corporation is a charitable corporation or has property held for charitable purposes.
(3) The court in a proceeding brought to dissolve a nonprofit corporation may issue injunctions, take other action required to preserve the corporate assets wherever located, and carry on the activities of the corporation until a full hearing can be held.
[
2021 c 176 s 3606
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.940
Receivership.
The court in a judicial proceeding brought to dissolve a nonprofit corporation may appoint one or more receivers to wind up and liquidate, or to manage, the affairs of the corporation, pursuant to chapter
7.60
RCW.
[
2021 c 176 s 3607
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.942
Decree of dissolution.
(1) If, after a hearing, the court determines that one or more grounds for judicial dissolution described in RCW 24.03A.936
exist, then it may enter a decree dissolving the nonprofit corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the secretary of state, who shall file it.
(2) After entering a decree of dissolution, the court shall direct the winding up and liquidation of the nonprofit corporation's affairs in accordance with RCW 24.03A.914
and the notification of claimants in accordance with RCW 24.03A.918
and
24.03A.920
.
[
2021 c 176 s 3608
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.944
Notice to attorney general.
(1) Every notice to the attorney general required under this chapter must be served upon the attorney general. Service upon the attorney general must be via United States mail, postage prepaid, or by other means as authorized by the attorney general.
(2) Every notice to the attorney general under this chapter shall identify the provisions of this chapter relevant to the subject matter of the notice.
(3) Any person that has commenced any proceeding which this chapter authorizes the attorney general to bring, including but not limited to any proceeding involving a charitable corporation or property held for charitable purposes brought under RCW 24.03A.185, 24.03A.200, 24.03A.610, 24.03A.922, 24.03A.936, or
24.03A.966, shall serve notice of the commencement of the proceeding upon the attorney general. Any other party to such a proceeding may serve notice of the commencement of the proceeding upon the attorney general. To be valid, the notice must identify that it is being given pursuant to this subsection. The attorney general may waive this notice at any time.
(4) Notice to the attorney general is effective:
(a) Five days after its deposit in the United States mail, only if the postage is paid and the notice is correctly addressed; or
(b) When given, if the notice is delivered in any other manner that the attorney general has authorized.
[
2021 c 176 s 4101
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.946
Actions to secure property held for charitable purposes.
The attorney general may commence in the court described in RCW 24.03A.025
any action or proceeding to:
(1) Ensure compliance by a nonprofit corporation, or its members, directors, officers, employees, or agents, with any provision of this chapter that governs the distribution, disposition, management, or expenditure of, or reporting obligations relating to, any property held for charitable purposes;
(2) Secure the proper administration of a charitable corporation, or of property held for charitable purposes by a nonprofit corporation, when reasonably necessary to protect property held for charitable purposes; and
(3) Restrain and prevent any act that violates any provision of this chapter that governs the distribution, disposition, management, or expenditure of, or reporting obligations relating to, any property held for charitable purposes.
[
2021 c 176 s 4102
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.948
Attorney general's right to intervene.
The attorney general, as of right, may intervene in any proceeding that has been commenced by a person other than the attorney general if the attorney general is otherwise authorized to bring such a proceeding under this chapter.
[
2021 c 176 s 4103
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.950
Attorney general's investigative power.
Upon reasonable suspicion that there has been a violation of any provision of this chapter that governs the distribution, disposition, management, or expenditure of, or reporting obligations relating to, any property held for charitable purposes, or that a charitable corporation or property held for charitable purposes by a nonprofit corporation has been improperly administered, the attorney general may institute an investigation for the purpose of determining whether there has been such a violation or improper administration.
[
2021 c 176 s 4104
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.952
Civil investigative demands.
(1) The attorney general may, before the institution of a civil proceeding arising from an investigation instituted under RCW 24.03A.950, execute in writing and cause to be served upon a person a civil investigative demand requiring the person to produce documentary material and permit inspection and copying, to answer in writing written interrogatories, to give oral testimony, or any combination of those demands, whenever the attorney general believes that the person:
(a) May be in possession, custody, or control of any original or copy of any record, report, memorandum, paper, communication, tabulation, map, chart, photograph, mechanical transcription, or other document or recording, wherever situated, which the attorney general reasonably believes to be relevant to the subject matter of any investigation instituted under RCW 24.03A.950
; or
(b) May have knowledge of any information which the attorney general reasonably believes to be relevant to the subject matter of any such investigation.
(2) The provisions of RCW 19.86.110
(2) through (9)[,] except for RCW 19.86.110
(7) (b) and (c), shall apply to every civil investigative demand issued under this section.
(3) With respect to a civil investigative demand issued under this section, the venue for filing a petition to extend a return date under RCW 19.86.110
(8) or a petition for an order of enforcement under RCW 19.86.110
(9) shall include any court described in RCW 24.03A.025
.
(4) The attorney general may provide copies of documentary material, answers to written interrogatories, or transcripts of oral testimony provided under this section to an official of this state, another state, or the federal government who is charged with the enforcement of state or federal laws related to the protection or regulation of property held for charitable purposes, provided that before the disclosure the receiving official agrees in the form of a record that the information may not be disclosed to anyone other than that official or the official's authorized employees or agents. Material provided under this subsection is subject to the limitations on disclosure contained in RCW 19.86.110
(7)(a), and, where applicable, Title 5 U.S.C. Sec. 552, and may not be introduced as evidence in a criminal prosecution.
(5) The attorney general may use such copies of documentary material, answers to written interrogatories, or transcripts of oral testimony as the attorney general determines necessary in the enforcement of any provision of this chapter that governs the distribution, disposition, management, or expenditure of, or reporting obligations relating to, any property held for charitable purposes, including presentation before any court, provided, however, that any such material, answers to written interrogatories, or transcripts of oral testimony which contain trade secrets shall not be presented except with the approval of the court in which the action is pending after adequate notice to the person furnishing such material, answers to written interrogatories, or oral testimony.
[
2021 c 176 s 4105
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.954
Religious corporations.
The attorney general shall not commence any action under RCW 24.03A.946
against a religious corporation; intervene in any action under RCW 24.03A.948
involving a religious corporation; institute any investigation under RCW 24.03A.950, the subject of which is a religious corporation; or serve any civil investigative demand under RCW 24.03A.952
on a religious corporation, unless for the purposes of this section only:
(1) The basis for the action, investigation, or civil investigative demand is the attorney general's knowledge of facts, circumstances, or results that property held by the religious corporation for charitable purposes has been, is threatened to be, or is about to be distributed in violation of RCW 24.03A.155
;
(2) The board of directors of the religious corporation has adopted a resolution in the form of a record requesting the attorney general's involvement in the action or investigation; or
(3) The attorney general has knowledge of facts, circumstances, or results indicating that the religious corporation has no directors in office, in which case the attorney general may investigate the issue of whether the religious corporation has directors in office, and, if necessary, appoint one or more directors of the religious corporation following the procedure set out in RCW 24.03A.535
(4).
[
2021 c 176 s 4106
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.956
Assurances of discontinuance.
In the enforcement of the provisions of this chapter that govern the distribution, disposition, or expenditure of, or reporting obligations relating to, property held for charitable purposes, the attorney general may accept an assurance of discontinuance of any act or practice deemed in violation of such provision, from any person engaging in, or who has engaged in, such act or practice. Any such assurance must be in writing and be filed with and subject to the approval of the court. Such assurance of discontinuance is not an admission of a violation for any purpose, but proof of failure to comply with the assurance of discontinuance is prima facie evidence of a violation of this chapter.
[
2021 c 176 s 4107
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.958
Civil penalties, costs, and fees.
(1) Pursuant to an action by the attorney general, a person shall forfeit and pay a civil penalty of not more than five thousand dollars for each violation if such person:
(a) Engages in conduct that violates any provision of this chapter governing the distribution, disposition, management, or expenditure of, or reporting obligations relating to, property held for charitable purposes, intending or knowing that such conduct was in violation of this chapter;
(b) As a director or officer of a corporation, votes for or assents to a distribution of property held for charitable purposes that would give rise to liability under RCW 24.03A.610
; or
(c) Receives any portion of a distribution described in (b) of this subsection knowing that the distribution was made in violation of this chapter.
(2) Any person who shall violate the terms of any injunction issued pursuant to an action by the attorney general under RCW 24.03A.946
shall forfeit and pay a civil penalty of not more than twenty-five thousand dollars for each violation.
(3) At the discretion of the court, the attorney general is entitled to recovery of its costs and fees incurred in securing compliance with the provisions of this chapter governing the distribution, disposition, management, or expenditure of, or reporting obligations relating to, property held for charitable purposes.
[
2021 c 176 s 4108
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.960
Charitable asset protection account.
(1) The Washington state attorney general charitable asset protection account is created in the custody of the state treasurer. Only the attorney general or the attorney general's designee may authorize expenditures from the account. Moneys in the account shall be used exclusively for:
(a) The costs associated with the attorney general's enforcement of the provisions of this chapter governing the distribution, disposition, management, or expenditure of, or reporting obligations relating to, property held for charitable purposes, or the proper administration of a charitable corporation or property held for charitable purposes;
(b) The costs associated with the attorney general's review and handling of notices and requests submitted to the attorney general under the provisions of this chapter including, but not limited to, binding agreements described in RCW 24.03A.195, major changes in purposes or programs reported under RCW 24.03A.075, and notices of proposed transactions under RCW 24.03A.640
through
24.03A.942
;
(c) The costs associated with the attorney general's review and handling of notices and requests submitted to the attorney general in connection with the release or modification under RCW 24.55.045
of restrictions applicable to institutional funds;
(d) The costs associated with the attorney general's supervision of charitable trusts under the authority granted in chapter
11.110
RCW, including review and handling of binding agreements under chapter
11.96A
RCW, involving assets held in charitable trust; and
(e) The charitable solicitation education program.
An appropriation is not required for expenditures, but the account is subject to allotment procedures under chapter
43.88
RCW.
(2)(a) The secretary of state shall collect a charitable asset protection fee, in addition to fees that the secretary of state may set under RCW 24.03A.085, for filing:
(i) Annual reports under RCW 24.03A.070
;
(ii) Articles of incorporation of newly formed corporations under RCW 24.03A.100
;
(iii) Articles of domestication under RCW 24.03A.795
; and
(iv) Articles of domestication and conversion under RCW 24.03A.840
.
(b) The charitable asset protection fee is fifty dollars per year, reduced to ten dollars if the corporation certifies that its total gross revenue in the most recent fiscal year was less than five hundred thousand dollars.
(c) Revenue generated from the charitable asset protection fee must be distributed as follows:
(i) Ninety-five percent of the revenue must be deposited into the Washington state attorney general charitable asset protection account created in subsection (1) of this section; and
(ii) Five percent of the revenue must be deposited into the secretary of state's revolving fund to cover the administrative costs of assessing the fee.
[
2021 c 176 s 4109
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.962
Definitions.
This section and RCW 24.03A.964
and
24.03A.966
apply to, and the term "corporate action" in this section and RCW 24.03A.964
and
24.03A.966
means, any of the following actions:
(1) The election, appointment, designation, or other selection and the suspension, removal, or expulsion of members, delegates, directors, or officers of a nonprofit corporation;
(2) The taking of any action on any matter that:
(a) Is required under this chapter or any other provision of law to be submitted for approval of or adoption by the members, delegates, directors, or officers of a nonprofit corporation;
(b) Under the articles or bylaws may be submitted for approval of or adoption by the members, delegates, directors, or officers of a nonprofit corporation; or
(c) Is in fact approved or adopted by the members, delegates, directors, or officers of a nonprofit corporation.
[
2021 c 176 s 4201
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.964
Proceedings prior to corporate action.
(1) Where under applicable law or the articles or bylaws of a nonprofit corporation there has been a failure to hold a meeting to take corporate action and the failure has continued for thirty days after the date designated or appropriate therefor, the court may summarily order a meeting to be held upon the application of any person entitled, either alone or in conjunction with other persons similarly seeking relief under this section, to call a meeting to consider the corporate action in issue, and, in the case of a charitable corporation, upon the application of the attorney general.
(2) The court may determine the right to vote at the meeting of persons claiming that right, may appoint an individual to hold the meeting under such orders and powers as the court may deem proper, and may take such action as may be required to give due notice of the meeting and convene and conduct the meeting in the interests of justice.
[
2021 c 176 s 4202
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.
RCW 24.03A.966
Review of contested corporate action.
(1) Except as provided in subsection (3) of this section, upon petition of a person whose status as, or whose rights or duties as, a member, delegate, director, or officer of a corporation are or may be affected by any corporate action, or, in the case of a charitable corporation, the attorney general, the court may hear and determine the validity of the corporate action. The petitioner shall provide notice of the proceeding to every other person the petitioner knows, or should reasonably know, to be affected by the proceeding.
(2) The court may make such orders in any such case as may be just and proper, with power to enforce the production of any books, papers, and records of the corporation and other evidence that may relate to the issue, and may provide for notice of the proceeding to other parties if necessary. If it is determined that no valid corporate action has been taken, the court may order a meeting to be held in accordance with RCW 24.03A.964
.
(3) If a nonprofit corporation has provided in its articles or bylaws for a means of resolving a challenge to a corporate action, then subsection (1) of this section shall not apply, except in the case of actions brought by the attorney general with respect to corporate actions of charitable corporations. The court may enforce provisions of the articles or bylaws if appropriate.
[
2021 c 176 s 4203
.]
NOTES:
Effective date
—
2021 c 176:
See note following RCW 24.03A.005
.