North Carolina 2019-2020 Session Status: Passed House Bipartisan · 10 D · 2 R · 1 I cosponsors

HB 732 — Nonprofit Mergers/Incr.Charit.Solic.Exempts.

Last action — Reptd Fav

  1. ✓
    Introduced
  2. ✓
    In Committee
  3. 3
    Passed House
  4. 4
    Passed Senate
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2019-2020 Session. It reached “Passed House” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there are no live odds of enactment. It would have to be reintroduced in the current session to move again.

Bill Text

What changed in the latest version

74 added · 269 removed

Plain-language change summary

The current version of HB 732 clarifies rules regarding mergers for nonprofit organizations, specifically allowing them to merge with certain limited liability companies under specific tax conditions. It also raises the threshold for when organizations can be exempt from needing a charitable solicitation license, meaning that nonprofits can now have a higher total amount of contributions before needing to register. These changes aim to simplify the merger process for nonprofits and support their fundraising efforts, which could ultimately lead to more efficient operations and greater community support.

→
Previous
Latest
GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2019 H 1 HOUSE BILL 732 Short Title:
GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2019 H 2 HOUSE BILL 732 Committee Substitute Favorable 4/30/19 Short Title:
Representatives Lofton, Howard, McGrady, and Reives (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Finance, if favorable, Rules, Calendar, and Operations of the House April 15, 2019 A BILL TO BE ENTITLED AN ACT (I) TO CLARIFY AND AMEND THE NONPROFIT CORPORATION MERGER STATUTES RELATING TO MERGERS WITH QUALIFYING LIMITED LIABILITY COMPANIES AND WITH UNINCORPORATED NONPROFIT ASSOCIATIONS AND TO PROVIDE THAT THE REQUIREMENT THAT A NONPROFIT CORPORATION NOTIFY THE ATTORNEY GENERAL OF A SALE OR DISPOSITION OF ALL ITS ASSETS DOES NOT APPLY TO THE DISPOSAL OF ITS ASSETS IN ACCORDANCE WITH A PROPERLY ADOPTED PLAN OF DISSOLUTION AND (II) TO RAISE THE MINIMUM TOTAL CONTRIBUTION THRESHOLD FOR A PERSON TO BE EXEMPT FROM CHARITABLE SOLICITATION LICENSING REQUIREMENTS ON THE BASIS OF TOTAL CONTRIBUTIONS RECEIVED AND TO PROVIDE METHODS OF ESTABLISHING THE AMOUNT OF CONTRIBUTIONS RECEIVED.
April 15, 2019 A BILL TO BE ENTITLED AN ACT TO MAKE TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE NORTH CAROLINA NONPROFIT CORPORATION ACT AFFECTING MERGERS AND TO INCREASE THE THRESHOLD TO BE EXEMPT FROM CHARITABLE SOLICITATION LICENSING REQUIREMENTS.
PART I.
SECTION 1.
NONPROFIT CORPORATION AMENDMENTS SECTION 1.1.
(1) A charitable or religious corporation.
… (5) A limited liability company (i) whose sole member is a charitable or religious corporation or a foreign corporation that would qualify under this Chapter as a charitable or religious corporation and (ii) that is disregarded for income tax purposes and satisfies both of the following conditions:
(2) A foreign corporation that would qualify under this Chapter as a charitable or religious corporation.
(3) A wholly owned foreign or domestic corporation (business or nonprofit) which is not a charitable or religious corporation, or an unincorporated entity, provided the charitable or religious corporation is the survivor in the merger and continues to be a charitable or religious corporation after the merger.
(4) A business or nonprofit corporation (foreign or domestic) other than a charitable or religious corporation, or an unincorporated entity, provided that:
(i) on or prior to the effective date of the merger, assets with a value equal to the greater of the fair market value of the net tangible and intangible assets (including goodwill) of the charitable or religious corporation or the fair market value of the charitable or religious corporation if it were to be operated as a business concern are transferred or conveyed to one or more persons who would have received its assets under G.S.
55A-14-03(a)(1) and (2) had it *H732-v-1* General Assembly Of North Carolina Session 2019 dissolved;
(ii) it shall return, transfer or convey any assets held by it upon condition requiring return, transfer or conveyance, which condition occurs by reason of the merger, in accordance with such condition;
and (iii) the merger is approved bya majorityofdirectorsofthecharitableorreligious corporation who are not and will not become members, as "member" is defined in G.S.
55A-1-40(16) or G.S.
57D-1-03, partners, limited partners, or shareholders in or directors, managers, officers, employees, agents, or consultants of the survivor in the merger.
(5) A limited liability company (i) whose sole member is a charitable or religious corporation or a foreign corporation that would qualify under this Chapter as a charitable or religious corporation and (ii) that is disregarded for income tax purposes and satisfies both of the following conditions:
(b) At least 30 days before consummation of any merger of a charitable or religious corporation pursuant to subdivision(a)(4)ofthis section,notice, includinga copyoftheproposed plan of merger, shall be delivered to the Attorney General.
…." SECTION 2.
This notice shall include all the information the Attorney General determines is required for a complete review of the proposed transaction.
The Attorney General may require an additional 30-day period to review the proposed transaction by providing written notice to the charitable or religious corporation prior to the expiration of the initial notice period.
During this 30-day period, the transaction may not be finalized.
(c) Without the prior written consent of the Attorney General, or approval of the superior court in a proceeding in which the Attorney General has been given notice, no member of a charitable or religious corporation mayreceive or retain anypropertyas a result of a merger other than an interest as a member, as "member" is defined in G.S.
55A-1-40(16), in the survivor of the merger.
The Attorney General may consent to the transaction, or the court shall approve the transaction, if it is fair and not contrary to the public interest." SECTION 1.2.
(b) One or more domestic nonprofit corporations may merge with one or more unincorporated entities and, if desired, one or more foreign nonprofit corporations, domestic business corporations, or foreign business corporations if:
… *H732-v-2* General Assembly Of North Carolina Session 2019 (e1) If the surviving business entityis not adomesticlimitedliabilitycompany, adomestic business corporation, a domestic nonprofit corporation, or a domestic limited partnership, when the merger takes effect the surviving business entity is deemed:
(1) The merger is permitted by the laws of the state or country governing the organization andinternal affairsofeachoftheothermergingbusiness entities;
(2) Each merging domestic nonprofit corporation and each other merging business entity comply with the requirements of this section and, to the extent applicable, the laws referred to in subdivision (1) of this subsection;
and Page 2 House Bill 732-First Edition General Assembly Of North Carolina Session 2019 (3) The merger complies with G.S.
55A-11-02, if applicable.
(c) Each merging domestic nonprofit corporation and each other merging business entity shall approve a written plan of merger containing all of the following:
(1) For each merging business entity, its name, type of business entity, and the state or country whose laws govern its organization and internal affairs.
(2) The name of the merging business entity that shall survive the merger.
(3) The terms and conditions of the merger.
(4) The manner and basis of converting the interests in each merging business entity into interests, obligations, or securities of the surviving business entity, or into cash or other propertyin whole or in part, or of cancelling the interests.
(5) If the surviving business entity is a domestic nonprofit corporation, any amendments to its articles of incorporation that are to be made in connection with the merger.
… (c3) In the case of a merging domestic nonprofit corporation, approval of the plan of mergerrequiresthattheplanofmergerbeadopted asprovidedinG.S.
55A-11-03.
Ifanymember of a merging domestic nonprofit corporation has or will have personal liability for any existing or future obligation of the surviving business entity solely as a result of holding an interest in the surviving business entity, then in addition to the requirements of G.S.
55A-11-03, approval of the plan of merger by the domestic nonprofit corporation shall require the affirmative vote or written consent of the member.
In the case of each other merging business entity, the plan of merger must be approved in accordance with the laws of the state or country governing the organization and internal affairs of such merging business entity.
Show all 97 changed rows (57 more)
Previous
Latest
… (d) After a plan of merger has been approved by each merging domestic nonprofit corporation and each other merging business entity as provided in subsection (c) of this section, the surviving business entity shall deliver articles of merger to the Secretary of State for filing.
The articles of merger shall set forth:
… (e) A merger takes effect when the articles of merger become effective.
When a merger takes effect:
(1) Each other merging business entity merges into the surviving business entity and the separate existence of each merging business entity except the surviving business entity ceases;
(2) The title to all real estate and other property owned by each merging business entity is vested in the surviving business entity without reversion or impairment;
(3) The surviving business entity has all liabilities of each merging business entity;
(4) A proceeding pending by or against any merging business entity may be continued as if the merger did not occur, or the surviving business entity may be substituted in the proceeding for a merging business entity whose separate existence ceases in the merger;
(5) If a domestic nonprofit corporation is the surviving business entity, its articles of incorporation shall be amended to the extent provided in the articles of merger;
(6) The interests in each merging business entity that are to be converted into interests, obligations, or securities of the surviving business entity or into the right to receive cash or other property are thereupon so converted, and the former holders of the interests are entitled only to the rights provided to them in the plan of merger or, in the case of former holders of shares in a domestic House Bill 732-First Edition Page 3 General Assembly Of North Carolina Session 2019 business corporation, any rights they may have under Article 13 of Chapter 55 of the General Statutes;
and (7) If the surviving business entity is not a domestic business corporation, the surviving business entity is deemed to agree that it will promptly pay to the shareholders of any merging domestic business corporation exercising appraisal rights the amount, if any, to which they are entitled under Article 13 of Chapter 55 of the General Statutes and otherwise to comply with the requirements of Article 13 as if it were a surviving domestic business corporation in the merger.
The merger shall not affect the liability or absence of liability of any holder of an interest in a merging business entity for any acts, omissions, or obligations of any merging business entity made or incurred prior to the effectiveness of the merger.
The cessation of separate existence of a merging business entity in the merger shall not constitute a dissolution or termination of the merging business entity.
(e1) If the surviving business entityis not adomesticlimitedliabilitycompany, adomestic business corporation, a domestic nonprofit corporation, or a domestic limited partnership, when the merger takes effect the surviving business entity is deemed:
and (2) To have appointed the Secretary of State as its agent for service of process in any such proceeding.
and …." SECTION 3.
Service on the Secretary of State of any such process shall be made by delivering to and leaving with the Secretary of State, or with any clerk authorized by the Secretary of State to accept service of process, duplicate copies of such process and the fee required by G.S.
55A-1-22(b).
Upon receipt of service of process on behalf of a surviving business entity in the manner provided for in this section, the Secretary of State shall immediately mail a copy of the process by registered or certified mail, return receipt requested, to the surviving business entity.
If the surviving business entity is authorized to transact business or conduct affairs in this State, the address for mailing shall be its principal office designated in the latest document filed with the Secretary of State that is authorized by law to designate the principal office or, if there is no principal office on file, its registered office.
If the surviving business entity is not authorized to transact business or conduct affairs in this State, the address for mailing shall be the mailing address designated pursuant to subdivision (3) of subsection (d) of this section.
(f) This section does not apply to a merger that does not include a merging unincorporated entity." SECTION 1.3.
55A-12-02 reads as rewritten:
"§ 55A-12-02.
Sale of assets other than in regular course of activities.
(a) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property other than in the usual and regular course of its activities on the terms and conditions and for the consideration determined by the corporation's board of directors if the proposed transaction is authorized by subsection (b) of this section.
Page 4 House Bill 732-First Edition General Assembly Of North Carolina Session 2019 (b) Unless this Chapter, the articles of incorporation, bylaws, or the board of directors or members (acting pursuant to subsection (d) of this section) require a greater vote or voting by class, the proposed transaction to be authorized shall be approved:
(1) By the board;
(2) By the members entitled to vote thereon by two-thirds of the votes cast or a majorityofthevotesentitledto becast ontheproposed transaction,whichever is less;
and (3) In writing by anyperson or persons whose approval is required by a provision of the articles of incorporation authorized by G.S.
55A-10-30 for an amendment to the articles of incorporation or bylaws.
(c) If the corporation does not have members entitled to vote thereon, the transaction shall be approved by a vote of a majority of the directors then in office.
The corporation shall provide at least five days' written notice of any directors' meeting at which such approval will be considered.
The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a description of the transaction.
(d) The board may condition its approval of the proposed transaction, and the members entitled to vote thereon may condition their approval of the transaction, on receipt of a higher percentage of affirmative votes or on any other basis.
(e) If the corporation seeks to have the transaction approved by the members entitled to vote thereon at a membership meeting, the corporation shall give notice of the membership meeting to those members in accordance with G.S.
55A-7-05.
The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a description of the transaction.
(f) If the board seeks to have the transaction approved by the members entitled to vote thereon by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a description of the transaction.
(g) A Other than dispositions to a charitable or religious corporation authorized under a plan of dissolution adopted pursuant to Article 14 of Chapter 55A of the General Statutes, a charitable or religious corporation shall give written notice to the Attorney General 30 days before it sells, leases, exchanges, or otherwise disposes of all, or a majority of, its property if the transaction is not in the usual and regular course of its activities unless the Attorney General has given the corporation a written waiver of this subsection.
This notice shall include all the information the Attorney General determines is required for a complete review of the proposed transaction.
The Attorney General may require an additional 30-day period to review the proposed transaction by providing written notice to the charitable or religious corporation prior to the expiration of the initial notice period.
During this 30-day period, the transaction may not be finalized.
(h) After a sale, lease, exchange, or other disposition of property is authorized, the transaction may be abandoned (subject to any contractual rights), without further action by the members or anyother person who approved the transaction, in accordance with the procedure set forth in the resolution proposing the transaction or, if none is set forth, in the manner determined by the board of directors." PART II.
INCREASE EXEMPTION THRESHOLD – CHARITABLE SOLICITATION LICENSES SECTION 2.1.
G.S.
… House Bill 732-First Edition Page 5 General Assembly Of North Carolina Session 2019 (3) Any person who receives less than twenty-five thousand dollars ($25,000) fiftythousand dollars ($50,000) in contributions in anycalendar year and does not provide compensation to any officer, trustee, organizer, incorporator, fund-raiser, or solicitor.
… (3) Any person who receives less than twenty-five thousand dollars ($25,000) fiftythousand dollars ($50,000) in contributions in anycalendar year and does not provide compensation to any officer, trustee, organizer, incorporator, fund-raiser, or solicitor.
Compensation to any organizer or incorporator does not include professional fees paid to licensed attorneys or licensed accountants.
A copy of the message confirming its submission of Internal Revenue Service Form 990-N or an applicable successor form.
A copy of its budget for the current year that was approved by its governing board and that includes projected revenue and projected expenses.
A copy of its budget for the current year that includes projected revenue and projected expenses.
d.
e.
d.
…." PART III.
…." SECTION 4.
EFFECTIVE DATE AND APPLICABILITY SECTION 3.1.
This act is effective when it becomes law.
Part I of this act becomes effective October 1, 2019, and applies to plans of mergers adopted on or after that date.
Page 2 House Bill 732-Second Edition
Part II of this act is effective when it becomes law and applies to requests for exemptions filed on or after that date.
The remainder of this act is effective when it becomes law.
Page 6 House Bill 732-First Edition
⬇ Download PDF
View plain text versions (3)

Action History

  1. Reptd Fav

  2. Cal Pursuant Rule 36(b)

  3. Added to Calendar

  4. Passed 2nd Reading

  5. Passed 3rd Reading

  6. Special Message Sent To Senate

  7. Special Message Received From House

  8. Passed 1st Reading

  9. Ref To Com On Rules and Operations of the Senate

  10. Reptd Fav Com Substitute

  11. Re-ref Com On Rules, Calendar, and Operations of the House

  12. Passed 1st Reading

  13. Ref to the Com on Finance, if favorable, Rules, Calendar, and Operations of the House

  14. Filed

Sponsors

Sponsorship breakdown

Export CSV (upgrade) →

3 sponsors · 22 co-sponsors · 154 not signed on

Sponsors (3)

Co-sponsors (22)

Not signed on (154)

154 members have not signed on to this bill.

Show all 154 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Votes

Second Reading

Passed 117 Yea · 0 Nay · 3 Other
Party YeaNayPresentNot Voting
Democratic 25000
Republican 32001
Unaffiliated 58002
U 2000
Total 117003
% of votes cast 98%0%0%3%
How each member voted (120)
Member Party Vote
Autry — Yea
Beasley — Yea
Black — Yea
Brewer — Yea
Clemmons — Yea
Farmer-Butterfield — Yea
Fisher — Yea
Floyd — Yea
Gailliard — Yea
Garrison — Yea
Gill — Yea
Graham — Yea
Harris — Yea
Holley — Yea
Hunt — Yea
Hunter — Yea
Insko — Yea
Jackson — Yea
Lucas — Yea
Martin — Yea
Montgomery — Yea
Queen — Yea
Richardson — Yea
Russell — Yea
Terry — Yea
vonHaefen — Yea
Wray — Yea
Bumgardner — Yea
Carter — Yea
Cleveland — Yea
Conrad — Yea
Davis — Yea
Dobson — Yea
Elmore — Yea
Faircloth — Yea
Fraley — Yea
Grange — Yea
Hardister — Yea
Henson — Yea
Horn — Yea
Hurley — Yea
Lewis — Yea
McElraft — Yea
McGrady — Yea
McNeill — Yea
Moore — Yea
Murphy — Yea
Presnell — Yea
Rogers — Yea
Saine — Yea
Sasser — Yea
Speciale — Yea
Szoka — Yea
Yarborough — Yea
Zachary — Yea
Boles — Not Voting
L. Johnson — Not Voting
C. Smith — Yea
K. Smith — Yea
R. Smith — Yea
Allison A. Dahle Democratic Yea
Amos L. Quick, III Democratic Yea
Becky Carney Democratic Yea
Brandon Lofton Democratic Yea
Brian Turner Democratic Yea
Brian Turner Democratic Yea
Carolyn G. Logan Democratic Yea
Cecil Brockman Democratic Yea
Cynthia Ball Democratic Yea
Dante Pittman Democratic Yea
Deb Butler Democratic Yea
Eric Ager Democratic Yea
Gale Adcock Democratic Yea
Garland E. Pierce Democratic Yea
Graig Meyer Democratic Yea
Joe John Democratic Yea
Marcia Morey Democratic Yea
Mary Belk Democratic Yea
Pricey Harrison Democratic Yea
Robert T. Reives, II Democratic Yea
Shelly Willingham Democratic Yea
Sydney Batch Democratic Yea
Terence Everitt Democratic Yea
Tracy Clark Democratic Yea
Zack Hawkins Democratic Yea
Bobby Hanig Republican Yea
Brenden H. Jones Republican Yea
Chris Humphrey Republican Yea
Dean Arp Republican Yea
Dennis Riddell Republican Yea
Destin Hall Republican Yea
Donna McDowell White Republican Yea
Donny Lambeth Republican Yea
Edward C. Goodwin Republican Yea
Frank Iler Republican Yea
Harry Warren Republican Yea
Hugh Blackwell Republican Not Voting
Jay Adams Republican Yea
Jimmy Dixon Republican Yea
John A. Torbett Republican Yea
John R. Bell, IV Republican Yea
John Sauls Republican Yea
Julia C. Howard Republican Yea
Keith Kidwell Republican Yea
Kelly E. Hastings Republican Yea
Kevin Corbin Republican Yea
Kyle Hall Republican Yea
Larry C. Strickland Republican Yea
Larry W. Potts Republican Yea
Lisa S. Barnes Republican Yea
Mark Brody Republican Yea
Mitchell S. Setzer Republican Yea
Phil Shepard Republican Yea
Sarah Stevens Republican Yea
Stephen M. Ross Republican Yea
Steve Jarvis Republican Yea
W. Ted Alexander Republican Yea
William D. Brisson Republican Yea
Carla D. Cunningham U Yea
Nasif Majeed U Yea

Official roll call →

Subjects

public-safety taxation
Cross-referencing the record. Reading this bill against every other bill in the corpus by meaning, not keywords. Only the first open is slow. It’s instant for you after this. Matching · Ranking · Engrossing

Frequently asked questions

Who sponsors HB 732?
HB 732 is sponsored by Julia C. Howard (Republican), McGrady, Robert T. Reives, II (Democratic), Autry, Batch, Fisher, Floyd, Gill, Harris, Pricey Harrison (Democratic), Becky Carney (Democratic), Cecil Brockman (Democratic), Insko, Lucas, Martin, Meyer, Mitchell S. Setzer (Republican), Terry, Julie von Haefen (Democratic), Nasif Majeed (U), Carolyn G. Logan (Democratic), Joe John (Democratic), Zack Hawkins (Democratic), Allison A. Dahle (Democratic), and Brandon Lofton (Democratic).
What is the current status of HB 732?
This bill died with 2019-2020 Session. It reached “Passed House” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
Where can I track HB 732?
Track HB 732 free on One Click Politics — get push/email alerts when it moves.

Make your voice heard on HB 732

Find the representatives who decide this bill and tell them where you stand — for yourself, or mobilize your whole list in one click with One Click Politics advocacy software.

Find my representatives → Run a campaign

Stay ahead of HB 732

Last checked for changes 3 months ago · updated continuously

One Click Politics tracks every bill in Congress and all 50 states.

Track this bill →