M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Thursday, December 10, 2009

Non-Profit Mergers

If you've got students in a transactional clinic, most likely they are working with non-profit organizations.  They may sign up for the clinic hoping to work for big corporate clients, but that's just the way it is.  In any event, non-profits do transactions, too.  In particular, they have been known to merge.  When non-profits merge, the process looks familiar, but it's different in a couple of important respects.  First, no pesky shareholder votes.  You might be required to get the pre-approval of the Attorney General of the state in which the non-profit is incorporated, but not always.  For example, here's California's Not For Profit Public Benefit Corporation act's merger provision.  You'll note that basically it just requires the approval of the respective boards of the constituent non-profits.  

Well, I wish it were that easy.  Non-profits, because of their tax exempt status, must make additional filings with the IRS and there are specific accounting issues.  Bryan and Cave has a summary of some recent changes in this area.  

-bjmq

Update:  A little bit of "local" news related to this subject - this morning by a vote of 14-4 the Board of Trustees of UMass just approved its acquisition of the Southern New England School of Law.  Although the transaction documents are not yet available widely, this transaction is being described as a donation of assets from SNESL to UMass.  So, it's not a non-profit merger.  Call it the equivalent of a non-profit dissolution with the proceeds of the dissolution being handed over to UMass instead of the "stockholders."  Presumably, the Attorney General might also have a role in approving this transaction

http://lawprofessors.typepad.com/mergers/2009/12/nonprofit-mergers.html

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Comments

you have been inspiring to me with the post and all!

Posted by: non-profits | Dec 30, 2009 10:56:51 PM

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