FINAL BILL REPORT

HB 520

                                  C 117 L 87

BYRepresentatives Wang, Armstrong, Schmidt and P. King; by request of  Secretary of State

Revising provisions regulating nonprofit corporations.

House Committe on Judiciary

Senate Committee on Judiciary

SYNOPSIS AS ENACTED

BACKGROUND:

Nonprofit corporations are created by filing articles of incorporation with the secretary of state and complying with other requirements.

The secretary of state will dissolve a domestic corporation or revoke a foreign corporation's authority to conduct business in Washington if the corporation does not comply with law.  Reasons for dissolving or revoking a corporation include failure to file an annual report after notice of a missed filing, as well as failure to appoint a registered agent or to notify the secretary of state of a change in the agent's status.

A foreign corporation's authority will also be revoked if it fails to file amendments to its articles of incorporation, fails to file articles of merger, obtains its authority through fraud or misrepresentation or regularly abuses its authority.  A domestic corporation must be given 45 days notice, while a foreign corporation must be given 60 days notice before revocation.

A foreign corporation may seek reinstatement for up to three years after revocation by paying a $30 filing fee and paying all annual fees as if the corporation's authority had not been revoked.

Present laws allow a corporation to appeal a negative decision by the secretary of state regarding the articles of incorporation or other documents, but are silent regarding an appeal of the secretary's action to dissolve a domestic nonprofit corporation or to revoke the authority of a foreign nonprofit corporation.  There is an appeal process in place to allow a for-profit corporation to appeal dissolutions or revocations due to missed filings.

SUMMARY:

The time during which a foreign nonprofit corporation may apply for reinstatement is increased from three years to five years.  A $25 fee is required, and the corporation must file all annual reports, including the year of reinstatement, as if the corporation's authority had not been revoked.  A domestic nonprofit corporation must also file annual reports for the years that it had been dissolved prior to being reinstated by the secretary of state.

A filing fee of $5 is charged for the annual reports of domestic and foreign nonprofit corporations.

The secretary is authorized to reinstate a nonprofit corporation that was in good standing but is dissolved or revoked because of a missed filing or a lapse in the corporation's period of duration.  The nonprofit corporation must seek relief within 15 days of discovery of the missed filing or lapse, explaining under oath the circumstances behind the corporation's failure to act.  The secretary must be satisfied that "sufficient exigent and mitigating circumstances exist" and that the public interest is not compromised before the corporation can be reinstated.  If the secretary declines the request to reinstate, there is no appeal.

The secretary is instructed to annually inform the legislature of the number of claims for relief sought and how they were handled.

VOTES ON FINAL PASSAGE:

      House 97   0

      Senate    43     0

EFFECTIVE:July 26, 1987