THE ATTORNEY GENERAL HAS RECEIVED YOUR REQUEST FOR AN OPINION ASKING, IN EFFECT:
DOES OKLAHOMA LAW PROHIBIT THE REBATING OF EXCESS REVENUES BY NONPROFIT CORPORATIONS TO THEIR MEMBERS?
SHORTLY AFTER WE RECEIVED YOUR REQUEST, I MET WITH REPRESENTATIVES OF A GROUP OF NON-PROFIT CORPORATIONS WHICH WILL BE EFFECTED BY THE RESOLUTION OF YOUR QUESTION. THESE REPRESENTATIVES EXPLAINED THAT IT WAS YOUR HOPE THAT AN ATTORNEY GENERAL'S OPINION COULD SATISFACTORILY ADDRESS THE QUESTION, BUT THAT, IF NECESSARY, LEGISLATION MIGHT BE POSSIBLE. IT HAS BECOME APPARENT THAT A LEGISLATIVE SOLUTION IS THE BEST ROUTE TO RESOLUTION.
IN THE MONTHS THAT HAVE PASSED SINCE THAT MEETING, THIS OPINION HAS BEEN TO OPINION CONFERENCE THREE TIMES, HAS UNDERGONE AT LEAST FIVE MAJOR REVISIONS, AND STILL THE OPINION CONFEREES REMAIN SHARPLY DIVIDED. IT HAS BECOME APPARENT, AFTER THIS THIRD PRESENTATION AT OPINION CONFERENCE, THAT THERE ARE INHERENT AMBIGUITIES, BOTH LEGAL AND FACTUAL, UNDERLYING THIS QUESTION WHICH MAKE RESOLUTION THROUGH AN OPINION OF THE ATTORNEY GENERAL INAPPROPRIATE.
THE CONCERN REPEATEDLY EXPRESSED BY MEMBERS OF THE OPINION CONFERENCE WAS THAT ANY NONPROFIT CORPORATION IN OKLAHOMA, NOT JUST THOSE TO WHOM WE HAVE SPOKEN AND EXPRESSED OUR UNCERTAINTIES, MIGHT RELY ON AN OPINION FROM OUR OFFICE AS AUTHORIZATION TO BEGIN ISSUING "REBATES" TO THEIR MEMBERS. EVEN IF REBATES ARE SOMETIMES PERMISSIBLE UNDER OKLAHOMA LAW, THERE WILL ALWAYS BE THE QUESTION OF WHETHER OR NOT ANY SPECIFIC PAYMENT IS A REBATE OR IS, INSTEAD "PECUNIARY GAIN" WHICH NONPROFIT CORPORATIONS ARE PROHIBITED UNDER OKLAHOMA LAW FROM DISTRIBUTING TO THEIR MEMBERS. THE SERIOUS TAX CONSEQUENCES WHICH COULD RESULT FROM AN OPINION OF THIS OFFICE BEING OVERTURNED, OR BEING FOUND INAPPLICABLE IN BROADER FACTUAL CIRCUMSTANCES THAN THOSE GIVING RISE TO YOUR REQUEST, ARGUE AGAINST THE ISSUANCE OF AN OPINION TO RESOLVE THIS QUESTION. I AM HOPEFUL THAT THE DISCUSSION I HAVE SET OUT BELOW WILL HELP TO EXPLAIN WHY A LEGISLATIVE RESOLUTION TO YOUR QUESTION WOULD BE MORE APPROPRIATE.
BECAUSE OKLAHOMA LAW DOES NOT EXPLICITLY ADDRESS THE REBATING OF EXCESS REVENUES BY NONPROFIT CORPORATIONS, IT IS NECESSARY TO LOOK TO HOW OKLAHOMA LAW DEFINES NONPROFIT CORPORATIONS. SINCE NOVEMBER 1, 1986, THE CREATION AND OPERATION OF NONPROFIT CORPORATIONS, LIKE MOST CORPORATIONS IN OKLAHOMA, HAS BEEN GOVERNED BY THE OKLAHOMA GENERAL CORPORATION ACT, 18 O.S. 1001 (1990) ET SEQ. THE OKLAHOMA GENERAL CORPORATION ACT DOES NOT CONTAIN A SPECIFIC DEFINITION OF A NONPROFIT CORPORATION. THE OKLAHOMA NONPROFIT CORPORATION ACT, 18 O.S. 851 (1981) ET AL., WHICH GOVERNED OKLAHOMA NONPROFIT CORPORATIONS UNTIL 1986, CONTAINED A SPECIFIC DEFINITION WHICH READ AS FOLLOWS:
"NONPROFIT CORPORATION" MEANS A CORPORATION FORMED FOR A PURPOSE NOT INVOLVING PECUNIARY GAIN TO IT SHAREHOLDERS OR MEMBERS, PAYING NO DIVIDENDS OR OTHER PECUNIARY REMUNERATION DIRECTLY OR INDIRECTLY TO ITS SHAREHOLDERS OR MEMBERS AS SUCH, AND HAVING NO CAPITAL STOCK."
THIS SPECIFIC DEFINITION WAS NOT RETAINED AS PART OF THE GENERAL CORPORATION ACT. INSTEAD, 18 O.S. 1006(7), THE SUCCESSOR TO 18 O.S. 851 OF THE NONPROFIT CORPORATION ACT, SIMPLY REQUIRES THAT THE CERTIFICATE OF INCORPORATION OF A NONPROFIT CORPORATION MUST PROVIDE THAT THE NONPROFIT