In March 2015, the Michigan Legislature enacted several laws, namely Public Acts 557, 558, and 559 of 2014, which amended the Michigan Nonprofit Corporation Act. The amendments found in these Acts have the potential to impact the corporate governance of all kinds of nonprofit organizations, from charitable organizations to public school academies. To help assist you in determining how the amended Nonprofit Corporation Act impacts your organization's corporate governance, we will be publishing a series of articles over the next few months outlining the various amendments to the Nonprofit Corporation Act and how these changes can impact the operation of your nonprofit organization.
Some of the more significant changes to the Nonprofit Corporation Act include (1) allowing corporations to limit or remove director or volunteer liability in extended circumstances; (2) permitting a nonprofit to reserve corporate power for any one or more of its members, shareholders, or other persons; (3) allowing the board of directors to create nonexecutive committees and allowing traditional, executive committees to have the authority to appoint or delegate power to a subcommittee, by default; (4) allowing "foundation" to be used in the name of a corporation with a charitable purpose; (5) allowing LARA to send notices to the nonprofit's resident agent through electronic communication; (6) allowing for the removal of nonprofit directors by court order; (7) expanding the ability of a director to rely upon the advice of others outside the corporation; (8) allowing the Attorney General to oversee the dissolution, merger, or conversion of a nonprofit corporation; (9) allowing the merger of a domestic limited liability company with a nonprofit corporation; and (10) allowing ten percent of shareholders or members to initiate an action in Court to remove a director in various circumstances.
This list, however, is not exhaustive, and due to the sheer number of legislative changes to the Act, some of the more nuanced amendments have been overlooked by many nonprofit organizations operating in this state. This is problematic because it is critical for a nonprofit entity to appreciate each and every change made to the Nonprofit Corporation Act so it can properly amend its corporate governance documents. Please stay tuned to our blog for the latest analysis of the various amendments to the Act, and if you would like to have one of our experienced attorneys review your corporate governance documents to ensure the amended Nonprofit Act does not affect the corporate governance of your organization, please do not hesitate to contact us at (248) 406-0620 or at www.shifmancarlsonlaw.com.