SENATE BILL REPORT

EHB 520

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

Senate Hearing Date(s):March 26, 1987

Majority Report:  Do pass.

      Signed by Senators Talmadge, Chairman; Halsan, Vice Chairman; Bottiger, McCaslin, Moore, Nelson, Newhouse.

Senate Staff:Dick Armstrong (786-7460)

                  March 26, 1987

AS REPORTED BY COMMITTEE ON JUDICIARY, MARCH 26, 1987

BACKGROUND:

Nonprofit corporations are created by filing articles of incorporation with the Secretary of State and complying with other requirements as stated in RCW chapter 24.

The Secretary of State will dissolve a domestic corporation or revoke a foreign corporation's authority to conduct business in Washington if it does not comply with the statutes.  Reasons for dissolving or revoking a corporation include failure to file annual reports after notice of the missed filing and failure to appoint a registered agent or notify of a change in the agent.

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, obtained 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reinstatement after three years by paying a $30 filing fee and paying all annual fees as if the corporation had not been revoked.

Present statutes allow a corporation to appeal a negative decision by the Secretary of State regarding the articles of incorporation and other documents, but is silent regarding the Secretary taking 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 that a foreign nonprofit corporation has to request 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and the corporation must file all annual reports, including the year of reinstatement, as if the corporation had not been revoked.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 under this chapter because of a missed filing or a lapse in the corporations 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 corporations 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 inform the legislature annually of the number of claims for relief sought and how they were handled.

Fiscal Note:      none requested

Senate Committee - Testified: Laura Eckert, Secretary of State's Office