SENATE BILL No. 412

 

 

March 31, 2009, Introduced by Senator KUIPERS and referred to the Committee on Judiciary.

 

 

 

     A bill to amend 1982 PA 162, entitled

 

"Nonprofit corporation act,"

 

by amending sections 124, 261, 501, and 541 (MCL 450.2124,

 

450.2261, 450.2501, and 450.2541), section 124 as amended by 2002

 

PA 33 and section 541 as amended by 1987 PA 170.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 124. (1) This act does not modify the requirements of the

 

following:

 

     (a) The supervision of trustees for charitable purposes act,

 

1961 PA 101, MCL 14.251 to 14.266.

 

     (b) 1965 PA 169, MCL 450.251 to 450.253.

 

     (c) The charitable organizations and solicitations act, 1975

 

PA 169, MCL 400.271 to 400.294.

 


     (d) The uniform prudent management of institutional funds act.

 

, 1976 PA 157, MCL 450.1201 to 450.1210.

 

     (e) The career development and distance learning act, 2002 PA

 

36, MCL 390.1571 to 390.1579.

 

     (2) A corporation subject to any 1 or more of the acts listed

 

in subsection (1) shall comply with those acts and shall comply

 

with this act. If there is any inconsistency between those acts and

 

this act, those acts shall control.

 

     Sec. 261. (1) A corporation, subject to any limitation

 

provided in this act, in any other statute of this state, in its

 

articles of incorporation, or otherwise by law, shall have power

 

may in furtherance of its corporate purposes to do any of the

 

following:

 

     (a) Have perpetual duration.

 

     (b) Sue and be sued in all courts and participate in actions

 

and proceedings judicial, administrative, arbitrative, or

 

otherwise, in like cases as the same manner as a natural persons

 

person.

 

     (c) Have a corporate seal, and alter the seal, and use it by

 

causing it or a facsimile to be affixed, impressed, or reproduced

 

in any other manner.

 

     (d) Adopt, amend, or repeal bylaws, including emergency

 

bylaws, relating to the purposes of the corporation, the conduct of

 

its affairs, its rights and powers, and the rights and powers of

 

its shareholders, members, directors, or officers.

 

     (e) Elect or appoint officers, employees, and other agents of

 

the corporation, prescribe their duties, fix their compensation and

 


the compensation of directors, and indemnify corporate directors,

 

officers, employees, and agents.

 

     (f) Purchase, receive, take by grant, gift, devise, bequest,

 

or otherwise, lease, or otherwise acquire, own, hold, improve,

 

employ, use, and otherwise deal in and with, real or personal

 

property, or an interest therein in real or personal property,

 

wherever situated, either absolutely or in trust and without

 

limitation as to amount or value.

 

     (g) Sell, convey, lease, exchange, transfer, or otherwise

 

dispose of, or mortgage or pledge, or create a security interest

 

in, any of its property, or an interest therein in the property,

 

wherever situated.

 

     (h) Purchase, take, receive, subscribe for, or otherwise

 

acquire, own, hold, vote, employ, sell, lend, lease, exchange,

 

transfer, or otherwise dispose of, mortgage, pledge, use, and

 

otherwise deal in and with, bonds and other obligations, shares or

 

other securities or interests or memberships issued by others,

 

whether engaged in similar or different business, governmental, or

 

other activities, including banking corporations or trust

 

companies. A corporation organized or conducting affairs in this

 

state under this act may shall not guarantee or become surety upon

 

a bond or other undertaking securing the deposit of public money.

 

     (i) Make contracts, give guarantees, and incur liabilities,

 

borrow money at such rates of interest as the corporation may

 

determine, issue its notes, bonds, and other obligations, and

 

secure any of its obligations by mortgage or pledge of any of its

 

property or an interest therein in the property, wherever situated.

 


     (j) Lend money, invest and reinvest its funds, and take and

 

hold real and personal property as security for the payment of

 

funds loaned or invested.

 

     (k) Make donations for public welfare or for community fund,

 

hospital, charitable, educational, scientific, civic, or similar

 

purposes, and in time of war or other national emergency in aid

 

thereof of war or other national emergency.

 

     (l) Pay pensions, establish and carry out pension, savings,

 

thrift, and other retirement, incentive, and benefit plans, trusts

 

and provisions for any of its directors, officers, and employees.

 

     (m) Purchase, receive, take, otherwise acquire, own, hold,

 

sell, lend, exchange, transfer, otherwise dispose of, pledge, use,

 

and otherwise deal in and with its own shares, bonds, and other

 

securities.

 

     (n) Participate with others in any corporation, business

 

corporation, partnership, limited partnership, joint venture, or

 

other association of any kind, or participate with others in any

 

transaction, undertaking, or agreement which that the participating

 

corporation would have power to conduct by itself, whether or not

 

the participation involves sharing or delegation of control with or

 

to others.

 

     (o) Cease its corporate activities and dissolve.

 

     (p) Conduct its affairs, carry on its operations, and have

 

offices and exercise the powers granted by this act in any

 

jurisdiction within or without the United States, and, in the case

 

of a corporation the purpose or purposes of which require the

 

transaction of business, the receipt and payment of money, the care

 


and custody of property, and other incidental business matters,

 

transact such business, receive, collect, and disburse such money,

 

and engage in such other incidental business matters as are

 

naturally or properly within the scope of its articles.

 

     (q) Have and exercise all powers necessary or convenient to

 

effect any purpose for which the corporation is formed.

 

     (2) A corporation subject to Act No. 157 of the Public Acts of

 

1976, being sections 451.1201 to 451.1210 of the Michigan Compiled

 

Laws, shall have the uniform prudent management of institutional

 

funds act has all powers granted under both this act and Act No.

 

157 of the Public Acts of 1976 that act. However, in the event of

 

an inconsistency between this act and Act No. 157 of the Public

 

Acts of 1976, Act No. 157 shall control the 2 acts, the uniform

 

prudent management of institutional funds act controls.

 

     (3) The corporate existence of all corporations incorporated

 

before the effective date of this act January 1, 1983, without

 

capital stock, for religious, benevolent, social, or fraternal

 

purposes, shall be deemed considered to be in perpetuity. A

 

limitation or term fixed in the articles or in the law under which

 

the corporation originally incorporated shall not be is not

 

effective unless the corporation has affirmatively waived its right

 

to perpetual existence subsequent to after September 18, 1931, by

 

fixing a definite term of existence by amendment to its articles.

 

     (4) Any nonprofit power corporation which that is authorized

 

to furnish electric service may construct, maintain, and operate

 

its lines along, over, across, or under any public places, streets,

 

and highways, and across or under the waters in this state, with

 


all necessary erections and fixtures. A nonprofit power corporation

 

may exercise the power of eminent domain, in the manner provided by

 

Act No. 87 of the Public Acts of 1980, as amended, being sections

 

213.51 to 213.77 of the Michigan Compiled Laws the uniform

 

condemnation procedures act, 1980 PA 87, MCL 213.51 to 213.75. As a

 

condition to the exercise of any of these powers, nonprofit

 

corporations shall be are subject to the jurisdiction of the

 

Michigan public service commission pursuant to Act No. 106 of the

 

Public Acts of 1909, as amended, being sections 460.551 to 460.559

 

of the Michigan Compiled Laws 1909 PA 106, MCL 460.551 to 460.559,

 

Act No. 419 of the Public Acts of 1919, as amended, being sections

 

460.51 to 460.62 of the Michigan Compiled Laws 1919 PA 419, MCL

 

460.54 to 460.62, and Act No. 3 of the Public Acts of 1939, as

 

amended, being sections 460.1 to 460.8 of the Michigan Compiled

 

Laws 1939 PA 3, MCL 460.1 to 460.11.

 

     Sec. 501. (1) The business and affairs of a corporation shall

 

be managed by its board, except as otherwise provided in this act.

 

A director need not be a shareholder or member of the corporation

 

unless the articles or bylaws so require. The articles or bylaws

 

may prescribe qualifications for directors.

 

     (2) The board of a corporation which that is subject to Act

 

No. 157 of the Public Acts of 1976, being sections 451.1201 to

 

451.1210 of the Michigan Compiled Laws, shall have the uniform

 

prudent management of institutional funds act has the powers

 

granted under Act No. 157 of the Public Acts of 1976 both that act

 

and this act. However, in the event of an inconsistency between

 

this act and Act No. 157 of the Public Acts of 1976, Act No. 157

 


shall control the 2 acts, the uniform prudent management of

 

institutional funds act controls.

 

     Sec. 541. (1) A director or an officer shall discharge the

 

duties of that position in good faith and with that the degree of

 

diligence, care, and skill which that an ordinarily prudent person

 

would exercise under similar circumstances in a like position. In

 

discharging the duties, a director or an officer, when acting in

 

good faith, may rely upon the opinion of counsel for the

 

corporation, upon the report of an independent appraiser selected

 

with reasonable care by the board, or upon financial statements of

 

the corporation represented to the director or officer as correct

 

by the president or the officer of the corporation having who has

 

charge of its books or account, or as stated in a written report by

 

an independent public or certified public accountant or firm of

 

accountants fairly to reflect the financial condition of the

 

corporation.

 

     (2) A director or officer of a corporation subject to the

 

uniform prudent management of institutional funds act, Act No. 157

 

of the Public Acts of 1976, being sections 451.1201 to 451.1210 of

 

the Michigan Compiled Laws, shall be considered to be in compliance

 

with this section when if the director or officer complies with

 

section 7 of Act No. 157 of the Public Acts of 1976 the uniform

 

prudent management of institutional funds act in the administration

 

of the powers specified in that section act.

 

     (3) If the corporation's articles of incorporation contain a

 

provision authorized under section 209(c), then a volunteer

 

director of the corporation shall is only be personally liable for

 


monetary damages for a breach of fiduciary duty as a director to

 

the corporation, its shareholders, or its members to the extent set

 

forth in the provision.

 

     (4) If the corporation's articles of incorporation contain a

 

provision authorized under section 209(d), then a claim for

 

monetary damages for a breach of a volunteer director's duty to any

 

person other than the corporation, its shareholders, or its members

 

shall not be brought or maintained against a the volunteer

 

director. Such a The claim shall be brought or maintained instead

 

against the corporation, which corporation shall be liable for the

 

any breach of the volunteer director's duty.

 

     (5) An action against a director or officer for failure to

 

perform the duties imposed by this section shall be commenced

 

within 3 years after the cause of action has accrued, or within 2

 

years after the time when the cause of action is discovered, or

 

should reasonably have been discovered, by the complainant,

 

whichever occurs first.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No. 411                                         

 

            of the 95th Legislature is enacted into law.