California Proposes Rules Relating to Disposal of Charitable Assets (Comments Due 12/6)

The California Department of Justice is proposing new rules relating to transactions involving all or substantially all of the assets of a charitable corporation or trust, or assets in charitable trust held by a mutual benefit corporation. Comments are due by 5:00 p.m. December 6, 2022.

Here is a summary of the effect of the proposed rulemaking:

For purposes of giving notice to the Attorney General of certain transactions involving all or substantially all of the assets of a charitable corporation or trust, the proposed rulemaking defines “substantially all” assets to mean an asset or assets equal to or exceeding 75 percent of the value of all assets held at the time of the notice or at any time during the six-month period before submitting the notice.

The proposed rulemaking also sets a standard for the Attorney General’s review of requests for waiver of the notice requirements. The Attorney General may waive notice for a particular transaction if the Attorney General determines that the transaction poses no risk to the public interest and the financial cost to the charitable corporation, trust, or mutual benefit corporation of providing notice to the Attorney General outweighs the potential benefit to the public interest.

Lloyd Mayer