Wednesday, July 2, 2008
Crain's Detroit Business reports that the Michigan State Legislature has passed a bill that requires nonprofit corporations formed in that state to follow certain modest new governance requirements. HB 5681 amends Michigan's Nonprofit Corporation Law to (1) require nonprofit corporations to have at least three directors on their governing boards (previous law only required a single director), (2) prohibit such corporations from making loans to or loan guarantees for officers or directors, and (3) require "charitable purpose" nonprofit corporations to notify the Michigan Attorney General and not to dispose of any assets without the AG's written approval if they are dissolved by the state's Corporations Division for failure to file annual information returns. It also makes a number of minor changes, including to the procedures for amending a Michigan nonprofit's articles of incorporation and, in order to implement the third change listed above, creating a definition of "charitable purpose corporation" that includes but is not limited to organizations that are tax-exempt under section 501(c)(3) of the Internal Revenue Code.
The bill is currently awaiting Michigan Governor Jennifer Granholm's signature. The article does not indicate whether there have been any statements from her office regarding her willingness to sign the bill, although given the relatively modest changes it is difficult to see what about the bill would be objectionable to either her or the nonprofit community.