HB 5060 — Relating to Decentralized Unincorporated Nonprofit Associations

CS for HB 5060 WEST VIRGINIA LEGISLATURE REGULAR SESSION ENGROSSED Committee Substitute for House Bill 5060 By Delegates Leavitt, J.

Reportedreported on February 26, 2026] Eng CS for HB 5060 A BILL to amend the Code of West Virginia, 1931, as amended, by adding a new article, designated §36-13-1, §36-13-2, §36-13-3, §36-13-4, §36-13-5, §36-13-6, §36-13-7, §36- 13-8, §36-13-9, §36-13-10, §36-13-11, §36-13-12, §36-13-13, §36-13-14, §36-13-15, §36- 13-16, §36-13-17, §36-13-18, §36-13-19, §36-13-20, §36-13-21, §36-13-22, §36-13-23, §36-13-24, §36-13-25, §36-13-26, §36-13-27, §36-13-28, §36-13-29, §36-13-30, and §36- 13-31, relating generally to making unincorporated nonprofit associations a recognized legal entity in the state;

1 Eng CS for HB 5060 "Decentralized unincorporated nonprofit association" means an unincorporated nonprofit 1 CS for HB 5060 association that meets the following requirements:

2 Eng CS for HB 5060 "Member" means a person who, under the governing principles of a decentralized unincorporated nonprofit association, may participate in the selection of the nonprofit association's administrators or the development of the policies and activities of the nonprofit association.

2 CS for HB 5060 "Membership interest" means a member's voting right in a decentralized unincorporated nonprofit association determined by the nonprofit association's governing principles, including as ascertained from decentralized ledger technology on which the nonprofit association relies to determine a member's voting right.

3 Eng CS for HB 5060 §36-13-4.

(a) A decentralized unincorporated nonprofit association may engage in profit‑making activities, but profits from any activities shall be used in furtherance of, or set aside for, the 3 CS for HB 5060 nonprofit association's common nonprofit purpose.

4 Eng CS for HB 5060 §36-13-6.

4 CS for HB 5060 (b) An estate or interest in real property in the name of a decentralized unincorporated nonprofit association may be transferred by a person so authorized in a statement of authority recorded in the office of the county clerk in which a transfer of the property will be recorded.

5 Eng CS for HB 5060 (g) If the record title to the real property is in the name of a decentralized unincorporated nonprofit association and the statement of authority is recorded in the office of the county in which a transfer of real property would be recorded, the authority of the person named in a statement of authority is conclusive in favor of a person who gives value without notice that the person lacks authority.

5 CS for HB 5060 §36-13-7.

A 6 Eng CS for HB 5060 decentralized unincorporated nonprofit association may assert a claim against a member, administrator, person authorized to participate in the management of the affairs of the nonprofit association or person considered as a member by the nonprofit association.

(a) A decentralized unincorporated nonprofit association, in its name, may institute, 6 CS for HB 5060 defend, intervene or participate in a judicial, administrative or other governmental proceeding or in an arbitration, mediation or any other form of alternative dispute resolution.

and 7 Eng CS for HB 5060 (3) The name of the person in this state authorized to receive service of process and the person's address, including the state address in this state.

The statement shall also be signed and acknowledged by the person appointed agent, who thereby 7 CS for HB 5060 accepts the appointment.

8 Eng CS for HB 5060 A claim for relief against a decentralized unincorporated nonprofit association shall not abate merely because of a change in its members or persons authorized to administer the affairs of the nonprofit association.

8 CS for HB 5060 (1) The decentralized unincorporated nonprofit association has an office;

9 Eng CS for HB 5060 (c) After dissolution, a decentralized unincorporated nonprofit association continues in existence until its activities have been wound up and terminated pursuant to §36-13-26 of this code.

If there are no applicable governing principles, a person shall be considered a member upon purchase or assumption of ownership of a membership interest and the person shall continue as a member absent the person's 9 CS for HB 5060 suspension, dismissal or expulsion pursuant to subsection (b) of this section, resignation pursuant to §36-13-26 of this code or the nonprofit association's dissolution and wind‑up pursuant to §36- 13-14 to §36-13-26 of this code.

10 Eng CS for HB 5060 (b) Unless otherwise provided for in the governing principles, resignation of a member does not relieve the member of any obligation incurred, or commitment made by the member, before the resignation.

10 CS for HB 5060 (a) A member is not an agent of a decentralized unincorporated nonprofit association merely by reason of being a member.

11 Eng CS for HB 5060 (4) Sell, lease, exchange or otherwise dispose of the decentralized unincorporated nonprofit association's property;

(b) A decentralized unincorporated nonprofit association shall have the approval of its members in accordance with its governing principles to perform any acts or exercise a right that CS for HB 5060 the governing principles require to be approved by members.

12 Eng CS for HB 5060 (B) Other proposed changes to the decentralized unincorporated nonprofit association's governing principles;

(1) Adopt any reasonable algorithmic means for establishing consensus for the validation of records, as well as for establishing requirements, processes and procedures for conducting operations or making organizational decisions with respect to the distributed ledger technology 12 CS for HB 5060 used by the decentralized unincorporated nonprofit association;

(d) If in a record, the governing principles of a decentralized unincorporated nonprofit association may limit or eliminate the liability of an administrator to the nonprofit association or its 13 Eng CS for HB 5060 members for money damages for any action taken, or failure to take any action, as an administrator except liability for:

13 CS for HB 5060 §36-13-24.

In a dispute concerning the reasonableness of a 14 Eng CS for HB 5060 restriction under this subsection, the nonprofit association shall have the burden of proving reasonableness.

(e) A decentralized unincorporated nonprofit association shall not be obligated to collect and maintain a list of members or individual member information, including the names or 14 CS for HB 5060 addresses of its members.

(c) If a person is made, or threatened to be made, a party in a proceeding based on that person's conduct in the affairs of a decentralized unincorporated nonprofit association, that person is entitled, upon written request to the nonprofit association, including through decentralized ledger technology, to receive payment of or reimbursement by the nonprofit association, of reasonable expenses, including attorney's fees and disbursements, incurred by that person in 15 Eng CS for HB 5060 advance of the final disposition of the proceeding.

(d) A decentralized unincorporated nonprofit association may purchase and maintain insurance on behalf of a member or administrator for liability asserted against or incurred by the member or administrator in that capacity, whether or not the nonprofit association would have the power to indemnify or advance expenses to the member or administrator against the same liability 15 CS for HB 5060 under this section.

16 Eng CS for HB 5060 (B) In accordance with the nonprofit association's governing principles.

(C) Prosecute and defend actions and proceedings, whether civil, criminal or 16 CS for HB 5060 administrative;

17 Eng CS for HB 5060 (2) "Charitable purpose" means any purpose of an organization that has attained exemption under section 501(c)(3) of the Internal Revenue Code or any successor section, or that upon dissolution shall distribute its assets to a public benefit corporation, the United States, a state or a person that is recognized as exempt under section 501(c)(3) of the Internal Revenue Code or any successor section;

The term includes a domestic or foreign organization regardless of 17 CS for HB 5060 whether the organization is organized for profit;

18 Eng CS for HB 5060 (A) The name and form of each organization that is party to the merger;

(3) The plan of merger shall be approved by the members of each decentralized unincorporated nonprofit association that is a constituent organization in the merger, subject to 18 CS for HB 5060 §36-13-20 of this code.

and (B) The surviving organization is a decentralized unincorporated nonprofit association, as specified in the plan of merger and upon compliance by any constituent organization that is not a 19 Eng CS for HB 5060 nonprofit association with any requirements, including any required filings in the office of the Secretary of State, of the organization's governing statute;

(5) An action or proceeding pending by or against any constituent organization that ceases 19 CS for HB 5060 to exist may be continued as if the merger had not occurred;

A surviving organization that is a foreign organization and not 20 Eng CS for HB 5060 authorized to transact business in this state appoints the Secretary of State as agent for service of process for the purpose of enforcing a debt, obligation or other liability under this subsection.