HB-6014, As Passed Senate, September 14, 2006

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 6014

     A bill to amend 1931 PA 327, entitled

"An act to provide for the organization, regulation and

classification of corporations; to provide their rights, powers and

immunities; to prescribe the conditions on which corporations may

exercise their powers; to provide for the inclusion of certain

existing corporations within the provisions of this act; to

prescribe the terms and conditions upon which foreign corporations

may be admitted to do business within this state; to require

certain annual reports to be filed by corporations; to prescribe

penalties for the violations of the provisions of this act; and to

repeal certain acts and parts of acts relating to corporations,"

by amending sections 171 and 176 (MCL 450.171 and 450.176) and by

adding section 184a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 171. (1) For the purposes of this act, educational

corporations  shall be  are classified as  follows  1 of the

following:

(a)  (w) Those  Class w: those having a capital of not less

than $500,000.00.  ;

(b)  (x) Those  Class x: those having a capital of not less

than $100,000.00  , and less than $500,000.00.  ;

(c)  (y) Those  Class y: those having a capital of

$1,000,000.00 or more.  ;

(d)  (z) Those  Class z: those instituted and maintained by

any  an ecclesiastical or religious order, society, corporation, or

corporations  , retaining  that retain control of  such  the

institution for denominational purposes.  Every educational

corporation, before being authorized to file its articles, shall be

required to present a statement to the Michigan corporation and

securities commission in writing from the state board of education

that (1) the

     (2) For purposes of this act, educational corporation does not

include a religious college described in section 184a.

     (3) When submitting its articles of incorporation for filing

with the department of labor and economic growth, an educational

corporation conducting an elementary or secondary instructional

program must include a written statement from the state board of

education with the articles of incorporation and an educational

corporation conducting a postsecondary educational program must

include a written statement from the bureau of career education

within the department of labor and economic growth with the

articles of incorporation. A written statement submitted with the

articles of incorporation of an educational institution under this

subsection must confirm all of the following concerning the

educational corporation:

     (a) The housing space and administration facilities  which

that it possesses or proposes to provide for its declared field or

fields of education are adequate.  , (2) its

     (b) Its proposed educational program leading to the diplomas

or degrees  which  that it proposes to offer is adequate.  , (3)

its

     (c) The laboratory, library, and other teaching facilities

which  that it possesses or proposes to provide are adequate.  ,

(4) it

     (d) It has or proposes to employ an adequate staff, fully

trained, for the instruction proposed.  , and (5) at

     (e) At least 50% of its capital, whether consisting of stock

or in gifts, devises, legacies, bequests or other contributions of

money or property, has been paid in or  reduced to  is in its

possession.

(4) In determining whether any educational corporation

satisfies the conditions specified in  classes (w), (x), (y) and

(z) of this section  subsection (1), the  state board of education

department of labor and economic growth may treat as a credit to

the capital of  such  the corporation the guaranteed annual income

of that corporation to the extent that it  deems such  considers

that guaranteed income the equivalent of all or any part of the

required endowment.

(5) The use of the word "college" or "university" in the name

of any group, organization, or association  hereafter formed in

this state after September 18, 1931 is limited to those educational

corporations complying with the requirements for class  (w)  w or

class  (y)  y educational corporations or to  such  any educational

corporations of class  (z) as shall  z that satisfy the

requirements  set up  established for class  (y)  y corporations.

: Provided, however, That the  The word "college" may be used by

ecclesiastical corporations in the name of religious colleges

complying with the requirements of section 184a. The words "junior

college" may be used by educational corporations of class  (x).

Whenever  x. If this provision  subsection is violated, it  shall

be  is the duty of the prosecuting attorney, in the county where

the  organization  educational corporation is located, to bring

proceedings to enjoin the further use of  such  a name in violation

of this  act  subsection.

(6)  No  An educational corporation  shall be  is not

permitted to expand its program beyond that specified in its

articles of incorporation until it  has presented to the Michigan

corporation and securities commission a statement in writing from

the state board of education  obtains a written statement approving

the facilities, equipment, and staff or the proposed facilities,

equipment, and staff as adequate for the offering of the additional

educational program and submits it to the department of labor and

economic growth. The educational corporation must obtain the

written statement described in this subsection from the state board

of education if it is conducting an elementary or secondary

instructional program or from the bureau of career education within

the department of labor and economic growth if it is conducting a

postsecondary educational program.

     Sec. 176.  Same; privileges of holders of diplomas, or

certificates. Every  A diploma, certificate of graduation, or other

evidence of attendance at  such institution, shall entitle  an

educational corporation entitles the lawful recipient  thereof to

all the privileges and immunities  which  that by custom or usage

are allowed to holders of similar diplomas or certificates granted

by similar institutions in this country.  : Provided, That as to

any  However, if an occupation or profession is regulated by

statute as to the requirements and qualifications necessary to the

practice  thereof, no such  of that occupation or profession, the

diploma or certificate of graduation  shall  does not entitle the

recipient to any  such privilege or immunity  where such  if those

statutory requirements or qualifications  have not been  are not

complied with.

     Sec. 184a. (1) An ecclesiastical corporation that meets all of

the following criteria may organize and operate a religious college

under this section:

     (a) The ecclesiastical corporation was incorporated under this

act before January 1, 2007.

     (b) At the time it organizes the religious college, according

to the most recent federal decennial census, the ecclesiastical

corporation is located in a county with a population of more than

17,500 and fewer than 23,500 residents.

     (2) A religious college organized and operated under this

section must meet all of the following criteria:

     (a) The religious college is organized and operated by an

ecclesiastical corporation as a division of the ecclesiastical

corporation and is not separately incorporated.

     (b) The religious college began operating before January 1,

2007.

     (c) The ecclesiastical corporation retains control of the

religious college for denominational purposes.

     (d) The religious college has an academic advisory board to

assist the religious college in the development of its educational

programs. The board shall consist of at least 4 individuals,

appointed by the ecclesiastical corporation, who represent similar

religious colleges located in the United States.

     (e) The religious college offers postsecondary educational

programs that are solely designed for, directed toward, and

attended by students who seek to learn the particular religious

faith or beliefs of the ecclesiastical corporation.

     (f) The sole purposes of the educational programs of the

religious college are to prepare students for ordination or

appointment as a member of the clergy of a church, denomination, or

religious association, order, or sect or to enter into other

vocations directly related to the particular faith of the

ecclesiastical corporation.

     (g) The religious college does not offer general or liberal

arts educational programs or any other postsecondary educational

programs other than those described in this subsection.

     (3) All of the following apply to the name of a religious

college organized and operated by an ecclesiastical corporation

under this section:

     (a) The ecclesiastical corporation may use the word "college"

in the name of the religious college. However, immediately

following the name of the religious college, the ecclesiastical

corporation shall clearly and prominently indicate on any signs,

official school publications, letterhead, business cards, websites,

or other similar written documents that include the name of the

religious college that the religious college is a division of the

ecclesiastical corporation.

     (b) If the ecclesiastical corporation uses the word "college"

in the name of the religious college, it shall provide a copy of

each certificate of assumed name filed by the ecclesiastical

corporation with the department of labor and economic growth for

the name of the religious college to the bureau of career education

within the department of labor and economic growth.

     (4) Subject to subsection (5), a religious college may award 1

of the following degrees to a student of the religious college who

satisfactorily completes a course of study prescribed by the

ecclesiastical corporation for that degree:

     (a) If the course of study requires at least 60 semester hours

or equivalent of study, an associate of biblical studies, an

associate of religious studies, an associate of theology, an

associate of church administration, or another substantially

similar associate degree that does not include the word "arts",

"science", "business", or "applied".

     (b) If the course of study requires at least 120 semester

hours or equivalent of study, a bachelor of biblical studies, a

bachelor of religious studies, a bachelor of theology, or another

substantially similar bachelor's degree that does not include the

word "arts", "science", "business", or "applied".

     (c) If the course of study requires a bachelor's degree and at

least 30 additional semester hours or equivalent of study, a master

of theology, a master of biblical studies, a master of religious

studies, or another substantially similar master's degree that does

not include the word "arts", "science", "business", or "applied".

     (d) If the course of study requires a bachelor's degree and at

least 90 additional semester hours or equivalent of study,

including, but not limited to, dissertation credits or research

study, a doctor of theology, a doctor of biblical studies, a doctor

of religious studies, or another substantially similar doctoral

degree that does not include the word "arts", "science",

"business", or "applied".

     (5) A religious college shall clearly and prominently state

all of the following on a student's diploma, certificate of

graduation, transcript, or any other document prepared by or

provided by the religious college to establish or verify that the

student had attended the religious college or completed a course of

study at the religious college:

     (a) For a degree awarded by the religious college, the name of

the degree, including the religious limitation on that degree

required under subsection (4). A religious limitation required for

a degree title under subsection (4) shall immediately precede or be

part of the degree title wherever the degree title appears in the

diploma or other document.

     (b) That the religious college is not licensed, approved, or

otherwise endorsed by the state of Michigan.

     (c) For any document described in this subsection other than a

diploma, that the state of Michigan does not guarantee that any of

the degrees or credits granted by the religious college will be

recognized by any organization for any purpose.

     (6) A diploma, certificate of graduation, or other evidence of

attendance at a religious college entitles the lawful recipient to

all the privileges and immunities that by custom or usage are

allowed to holders of similar diplomas or certificates granted by

similar institutions in this country. However, if an occupation or

profession is regulated by statute as to the requirements and

qualifications necessary to the practice of that occupation or

profession, the diploma or certificate of graduation does not

entitle the recipient to any privilege or immunity if those

statutory requirements or qualifications are not complied with.

     (7) An ecclesiastical corporation is not required to obtain

the approval of or a license from the department of labor and

economic growth to operate a religious college under this section

in this state and the operation of the religious college and its

educational programs are not subject to the supervision of that

department. However, if an ecclesiastical corporation does not

obtain the approval of or a license from the department of labor

and economic growth to operate a religious college, the

ecclesiastical corporation shall clearly and prominently print a

disclaimer on all of its application materials, course catalogs,

brochures, websites, and other similar publications that states all

of the following:

     (a) The religious college is a division of the ecclesiastical

corporation.

     (b) The educational programs offered by the religious college

are solely designed for, directed toward, and attended by students

preparing for ordination or appointment as a member of the clergy

of a church, denomination, or religious association, order, or sect

or preparing to enter into another vocation directly related to the

particular faith of the ecclesiastical corporation.

     (c) The religious college is not licensed, approved, or

otherwise endorsed by the state of Michigan and that the state of

Michigan does not guarantee that any of the degrees or credits

granted by the religious college will be recognized by any

organization for any purpose.

     (8) In any application materials, course catalogs, brochures,

websites, or other publications made available by the religious

college, the religious college shall include the religious

limitation on that degree required under subsection (4), either

immediately preceding or as part of the degree title, wherever the

degree title appears in the document or publication.

     (9) Every 2 years, an ecclesiastical corporation organizing or

operating a religious college shall submit a sworn affidavit to the

department of labor and economic growth that certifies that the

religious college complies with the requirements of this section

and includes all of the following:

     (a) The name of the religious college. The name stated in the

affidavit must comply with subsection (3).

     (b) A statement that the religious college offers only

educational programs designed for, directed toward, and attended by

students preparing for ordination or appointment as a member of the

clergy of a church, denomination, or religious association, order,

sect, or preparing to enter into another vocation directly related

to the particular faith of the ecclesiastical corporation.

     (c) A statement that each diploma, certificate of graduation,

transcript, or other document described in subsection (5) prepared

or provided by the religious college complies with that subsection.

     (d) A statement that each document provided or publication

made available by the religious college under subsection (8)

complies with that subsection.

     (e) A statement that the religious college does not accept

state or federal assistance for its educational programs and does

not accept students who are receiving state or federal financial

aid under any higher education loan, grant, or scholarship program.

     (10) An ecclesiastical corporation organizing or operating a

religious college shall annually provide the department with a

surety bond that meets all of the following:

     (a) It is conditioned to provide indemnification to any

student suffering loss because of inability to complete an

educational program at the religious college due to the closing of

the religious college.

     (b) It expires on June 30 following the date of issuance and

the ecclesiastical corporation shall submit proof of renewal for an

additional 1-year period to the department of labor and economic

growth before the date of expiration.

     (c) The amount of the security bond is 1 of the following,

whichever is higher:

     (i) An amount determined by multiplying the number of students

enrolled in the religious college by $200.00.

     (ii) The amount of $5,000.00.

     (11) An ecclesiastical corporation operating a religious

college that is in compliance with the requirements of this section

is authorized to conduct business as a religious college and offer

postsecondary educational programs in this state.

     Enacting section 1. This amendatory act does not take effect

unless House Bill No. 6016 of the 93rd Legislature is enacted into

law.