AB765: Bill Text

Directors, officers and members

The bill addresses a number of issues relating to directors, officers and members that are either not specifically addressed under current law or are addressed under current law with far less detail. For example, the bill creates specific provisions governing: 1) the admission of members to a nonstock corporation; 2) certificates evidencing membership; 3) the lack of personal liability of members for the acts, debts, liabilities or obligations of the corporation; 4) the purchase of memberships; 5) creditors' actions against members for dues, assessments and fees; 6) record dates of member meetings; 7) voting agreements and voting power; 8) resignation of directors; and 9) removal of directors by judicial proceeding.

Under current law, action may be taken by directors or members of a nonstock corporation without a meeting if the directors or members act by unanimous written consent. Under the bill, if permitted by the articles of incorporation, the board of directors may take action without a meeting by written consent signed by two-thirds of the directors then in office. If action by written consent is permitted to be taken by less than all directors, all directors must be noticed immediately of the text of the written consent and of its effective date and time. The bill also changes provisions relating to action by members without a meeting. Under the bill, unless limited or otherwise provided in the articles of incorporation or the bylaws, members may take action without a meeting if the action is approved by members holding at least 80% of the voting power, or by a different percentage, not less than 50%, specified in the articles of incorporation or bylaws. Separately, the bill creates provisions authorizing action by written ballot. In order for action by written ballot to be effective, the written ballot procedure must be permitted by the articles of incorporation or bylaws. Under the procedure, a ballot must be provided to every member entitled to vote on the matter and the number of votes cast by ballot must equal or exceed the quorum and voting requirements which would apply if the action were taken at a meeting.

The bill authorizes members of nonstock corporations to bring derivative actions in the right of the corporation. Generally, a derivative proceeding may be brought by one or more members of the corporation having 5% or more of the voting power of the corporation or by 50 members, whichever is less. The members bringing the action must have generally been a member of the corporation at the time of the act or omission complained of and must fairly and adequately represent the interests of the corporation in enforcing the right of the corporation. The members wishing to bring a derivative proceeding must have presented a written demand to the corporation to take appropriate action and, unless the demand is rejected by the corporation sooner or unless irreparable injury would result, must wait 90 days before bringing the action. The court is required to dismiss the derivative proceeding if a majority of independent directors or a court-appointed panel determine that the maintenance of the derivative proceeding is not in the best interest of the corporation. The bill contains provisions governing payment of expenses of derivative actions. In the case of a nonmember nonstock corporation, the provisions governing derivative actions apply to directors, rather than to the members, of the corporation. The bill adds a provision, similar to that which applies under current law to stock corporations, relating to indemnification and insurance against securities law claims.

Volunteers

The bill makes certain changes to the provisions which limit the liability of volunteers who provide services to nonstock corporations on behalf of the corporation without compensation. The changes reflect the enactment, at the federal level, of the Volunteer Protection Act of 1997. Under current law, the limited liability protections do not apply to a volunteer who is licensed or certified under state law, if the act or omission is within the scope of practice under the volunteer's license, certificate, permit or registration. Under the bill, the limited liability protections apply to such a person. However, the bill's limited liability provisions do not apply where the volunteer's negligence occurs in the practice of a profession, trade or occupation that requires a license or certificate, if the volunteer does not have the required license or certificate.

Foreign corporations and domestication

Under current law, foreign nonstock corporations are not required to obtain a certificate of authority to transact business in this state. Foreign corporations are, however, subject to the same restrictions, penalties and liabilities imposed upon domestic nonstock corporations. By conducting business in this state or by holding property in this state, current law deems a foreign corporation to have appointed DFI as its agent for service of process. This bill modifies the provisions governing foreign nonstock corporations so that they track the regulation of foreign stock corporations. As a result, a foreign nonstock corporation may not transact business in this state until it obtains a certificate of authority from DFI. A foreign nonstock corporation that does not obtain the required certificate of authority is barred from maintaining a proceeding in state court until it obtains the certificate. The foreign corporation is subject to monetary penalties for failing to obtain a required certificate of authority; however, the validity of its corporate actions in this state are not impaired and the foreign corporation is not barred from defending itself in a proceeding in this state. The foreign corporation is required by the bill to continuously maintain a registered office and a registered agent in this state. The bill subjects a foreign corporation to annual reporting requirements, which, under current law, apply only to domestic nonstock corporations.

Current law does not contain a procedure allowing a foreign nonstock corporation to become a domestic nonstock corporation, although the foreign corporation may merge into or consolidate with a domestic nonstock corporation. This bill creates a procedure under which a foreign nonstock corporation may "domesticate", or become a domestic nonstock corporation. Under the bill, a foreign nonstock corporation may become a domestic corporation by filing articles of domestication that state the name of the corporation and the text of the restated articles of incorporation. The domesticating corporation must also file a certificate of authentication or status from the jurisdiction from which the corporation is domesticating and must file articles of dissolution or a similar document in the jurisdiction from which the corporation is domesticating. The effect of a domestication is as if the domesticating corporation had merged with a newly incorporated domestic corporation, except that the original date of incorporation of the domesticating corporation continues to be the date of incorporation of the domesticated corporation.

Reporting, filing and notice requirements

Under current law, documents required to be filed under the nonstock corporation law are forwarded by DFI to county registers of deeds for recording. This bill eliminates this requirement so that all new filings relating to nonstock corporations are maintained only by DFI. The bill specifies more clearly the filing duties of DFI and modifies the procedures for appealing DFI's refusal to file a document. These provisions parallel those applicable to stock corporations. The bill adds general provisions governing the effective date and time of documents filed with DFI, governing how documents filed with DFI may be corrected, governing the evidentiary effect of a copy of a filed document and governing requests for certificates of status. The bill adds a general provision regarding how notices are to be given under the nonstock corporation law.

Distributions

Under current law, nonstock corporations organized under the state's nonstock corporation law are required to be nonprofit corporations under Wisconsin law, which means that no part of the corporation's income may be distributed to its members, directors or officers. This bill authorizes nonstock corporations to make "for-profit" distributions, if distributions of this type are specifically permitted under the corporation's articles of incorporation, if the distribution is consistent with the corporation's purpose, if permitted by the corporation's articles of incorporation, if the corporation's assets would continue to exceed its liabilities after the distribution and if the corporation would be able to pay its debts as due after the distribution.

Mergers and dissolutions

The bill makes a number of changes regarding mergers and dissolutions of nonstock corporations. Current law provides for both mergers (under which 2 or more nonstock corporations merge into one of the corporations) and consolidations (under which 2 or more nonstock corporations consolidate into a new corporation). This bill eliminates the separate procedures for consolidating nonstock corporations, although the same effect can be achieved under the bill by forming a new corporation and having 2 or more corporations merge into the new corporation. The bill streamlines procedures for the merger of a subsidiary into a parent nonstock corporation and adds a provision stating that bequests made to a corporation that merges inure to the benefit of the surviving corporation, unless otherwise specifically provided in the instrument making the bequest.

The bill changes procedures for judicial dissolution of nonstock corporations. Under current law, a circuit court may dissolve a nonstock corporation in an action by a member or a director, if the director or member can establish that certain of the standards for judicial dissolution applies. The bill removes the ability of a director to apply for judicial dissolution. Under the bill, judicial dissolution may be ordered in an action commenced by members only if the action is brought by at least 50 members or by members representing 5% of the voting power of the corporation. The bill modifies the receivership and custodianship provisions and the dissolution provisions to track more closely the provisions applicable to stock corporations. For example, the bill eliminates provisions regarding the adoption of a plan of distribution and instead simply empowers a dissolved corporation to make provision for discharging its liabilities and obligations and disposing of its property.

Certain religious societies and insurance companies

Certain of the changes made by the bill also impact religious societies, mutual insurance companies, town mutual insurance companies, service insurance corporations and fraternal or mutual benefit societies. Current law provides that religious societies organized under the state's religious societies law have the same powers and privileges as nonstock corporations. This provision remains unchanged by the bill and, as a result, certain of the changes may impact religious societies. Similarly, current law makes certain provisions of the state's nonstock corporation law applicable to mutual insurance companies, town mutual insurance companies, service insurance corporations and fraternal or mutual benefit societies. For the most part, these same provisions, as revised by the bill, remain applicable to mutual insurance companies, town mutual insurance companies, service insurance corporations and fraternal or mutual benefit societies.

Conversion tables

Because of the bill's reorganization of the state's nonprofit corporation law (chapter 181), there is often no direct correspondence between a section in the current chapter 181 and the repealed and recreated chapter 181 contained in this bill. However, the following tables may be helpful in locating where the topic treated by a section in the current chapter 181 is treated in the chapter as repealed and recreated by this bill, and vice versa:

Current Citations to New Citations - See PDF for table

New Citations to Current Citations - See PDF for table

Fiscal information

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB765, s. 1 Section 1. 13.482 (2) (a) of the statutes is amended to read:

AB765,18,2 13.482 (2) (a) For the purpose of providing housing for state departments and agencies, including housing for state offices and the completion of the state office building, and to enable the construction, financing and ultimate acquisition thereof by the state, the building commission may acquire any necessary lands, and lease and re-lease any lands owned by the state and available for the purpose to the Wisconsin state public building corporation or other nonstock, nonprofit corporation organized under ch. 181 or any law amendatory thereof or supplemental thereto that is a nonprofit corporation, as defined in s. 181.0103 (17). The lease and re-lease shall be for a term or terms not exceeding 50 years each, and shall be made on the condition that such corporation shall construct and provide on such leased lands such building projects, including buildings, improvements, facilities or equipment or other capital items, as the building commission requires, and shall re-lease the same to the building commission upon satisfactory terms as to the rental, maintenance and ultimate acquisition by the state as is in its best interests in the judgment of the building commission. After such leases and re-leases are executed and until the projects are acquired by the state, they shall be operated by the building commission through the department of administration, which shall have charge of such property as provided in s. 16.85. The building commission shall operate the projects in such manner as to provide revenues therefrom sufficient to pay the costs of operation and maintenance of the project and to provide for the payments due the Wisconsin state public building corporation or other nonstock, nonprofit corporation but if the building commission finds and declares that the housing available in any such project is in excess of the current housing needs or requirements of the state departments and agencies occupying or availing themselves of the space in or capacity of such project, the building commission need not operate such project in a manner to provide revenues therefrom sufficient to pay the costs of operation and maintenance of the project and to provide for the rental payments due the Wisconsin state public building corporation or other nonstock, nonprofit corporation.

AB765, s. 2 Section 2 . 16.30 (1) (a) of the statutes is amended to read:

AB765,18,5 16.30 (1) (a) A nonstock, nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 3 Section 3. 16.334 (2) (d) of the statutes is amended to read:

AB765,18,8 16.334 (2) (d) A nonstock, nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 4 Section 4. 16.352 (1) (b) 4. of the statutes is amended to read:

AB765,18,12 16.352 (1) (b) 4. A private nonprofit organization, as defined under s. 108.02 (19), or a nonstock, nonprofit corporation that is organized under ch. 181 and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 5 Section 5. 19.32 (1) of the statutes is amended to read:

AB765,18,24 19.32 (1) "Authority" means any of the following having custody of a record: a state or local office, elected official, agency, board, commission, committee, council, department or public body corporate and politic created by constitution, law, ordinance, rule or order; a governmental or quasi-governmental corporation except for the Bradley center sports and entertainment corporation; a local exposition district under subch. II of ch. 229; any public purpose corporation, as defined in s. 181.79 (1); any court of law; the assembly or senate; a nonprofit corporation which receives more than 50% of its funds from a county or a municipality, as defined in s. 59.001 (3), and which provides services related to public health or safety to the county or municipality; a nonprofit corporation operating the Olympic ice training center under s. 42.11 (3); or a formally constituted subunit of any of the foregoing.

AB765, s. 6 Section 6. 19.62 (8) of the statutes is amended to read:

AB765,19,6 19.62 (8) "State authority" means an authority that is a state elected official, agency, board, commission, committee, council, department or public body corporate and politic created by constitution, statute, rule or order; a state governmental or quasi-governmental corporation; a public purpose corporation, as defined in s. 181.79 (1); the supreme court or court of appeals; the assembly or senate; or a nonprofit corporation operating the Olympic ice training center under s. 42.11 (3).

AB765, s. 7 Section 7. 19.82 (1) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB765,19,18 19.82 (1) "Governmental body" means a state or local agency, board, commission, committee, council, department or public body corporate and politic created by constitution, statute, ordinance, rule or order; a governmental or quasi-governmental corporation except for the Bradley center sports and entertainment corporation; a local exposition district under subch. II of ch. 229; any public purpose corporation, as defined in s. 181.79 (1); a nonprofit corporation operating the Olympic ice training center under s. 42.11 (3); or a formally constituted subunit of any of the foregoing, but excludes any such body or committee or subunit of such body which is formed for or meeting for the purpose of collective bargaining under subch. I, IV or V of ch. 111.

AB765, s. 8 Section 8. 30.92 (1) (br) 5. of the statutes is amended to read:

AB765,19,22 30.92 (1) (br) 5. Does not have articles of incorporation or bylaws which limit or deny the right of any member or any class of members to vote, as provided permitted under s. 181.16 181.0721 (1).

AB765, s. 9 Section 9. 32.19 (4) (a) (intro.) of the statutes is amended to read:

AB765,20,8 32.19 (4) (a) Owner-occupants. (intro.) In addition to amounts otherwise authorized by this subchapter, the condemnor shall make a payment, not to exceed $25,000, to any displaced person who is displaced from a dwelling actually owned and occupied, or from a mobile home site actually owned or occupied, by the displaced person for not less than 180 days prior to the initiation of negotiations for the acquisition of the property. For the purposes of this paragraph, a nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), may, if otherwise eligible, be considered a displaced owner. A displaced owner may elect to receive the payment under par. (b) 1. in lieu of the payment under this paragraph. Such payment includes only the following:

AB765, s. 10 Section 10. 32.19 (4) (b) (intro.) of the statutes is amended to read:

AB765,20,19 32.19 (4) (b) Tenants and certain others. (intro.) In addition to amounts otherwise authorized by this subchapter, the condemnor shall make a payment to any individual or family displaced from any dwelling which was actually and lawfully occupied by such individual or family for not less than 90 days prior to the initiation of negotiations for the acquisition of such property or, if displacement is not a direct result of acquisition, such other event as determined by the department of commerce by rule. For purposes of this paragraph, a nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), may, if otherwise eligible, be considered a displaced tenant. Subject to the limitations under par. (bm), such payment shall be either:

AB765, s. 11 Section 11. 32.22 (12) (a) (intro.) of the statutes is amended to read:

AB765,21,3 32.22 (12) (a) (intro.) Nothing in this section requires the municipality to rehabilitate a residential building, if it appears at any time that total cost of rehabilitation, including structural repairs and alterations, exceeds 80% of the estimated fair market value of the building when rehabilitation is complete. If the municipality determines under this paragraph not to rehabilitate a residential building condemned under this section, the municipality shall sell the building to any nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), or any cooperative organized under ch. 185 which:

AB765, s. 12 Section 12. 36.54 (2) (a) 1. of the statutes, as affected by 1997 Wisconsin Act 27, is amended to read:

AB765,21,7 36.54 (2) (a) 1. "Corporation" means a nonstock , nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 13 Section 13. 44.03 (3) of the statutes is amended to read:

AB765,21,22 44.03 (3) Every affiliated society shall make a report of its work annually to the historical society that contains the information specified in s. 181.651 181.1622 (1) (a) to (c) (e), which, in its entirety or in part, may be included in the publications of the historical society, and upon application of any affiliated society the historical society may accept, in behalf of the state, custody of or title to the property, records and collections of the affiliated society or may assist in the disposal thereof. If any affiliated society becomes, in the opinion of the board of curators of the historical society, inactive or defunct, title to such property, records and collections not otherwise provided for in the grants of donors or in the articles of incorporation of the inactive and defunct society, shall vest in the historical society which shall take appropriate action in the public interest for the protection or disposal of such property, records and collections. Preference in disposition shall be given to historical or related organizations in the area or to whatever county or local governmental unit that has aided such affiliate financially.

AB765, s. 14 Section 14. 44.60 (1) (b) of the statutes is amended to read:

AB765,22,3 44.60 (1) (b) "Nonprofit arts organization" means a nonprofit corporation organized under ch. 181, that is a nonprofit corporation as defined in s. 181.0103 (17), for the purpose of furthering the arts.

AB765, s. 15 Section 15. 45.052 (1) (b) of the statutes is amended to read:

AB765,22,6 45.052 (1) (b) The powers set forth in s. 181.04 181.0302 and all other applicable provisions of ch. 181.

AB765, s. 16 Section 16. 45.38 (1) (c) of the statutes is amended to read:

AB765,22,10 45.38 (1) (c) "Nonprofit corporation" means a nonstock, nonprofit corporation that is organized under ch. 181 or any law amendatory thereof or supplemental thereto and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 17 Section 17. 46.035 (1) (c) of the statutes is amended to read:

AB765,22,15 46.035 (1) (c) The term "nonprofit corporation" means a nonstock, nonprofit corporation that is organized under ch. 181 or any law amendatory thereof or supplemental thereto and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 18 Section 18. 46.036 (5m) (a) 1. of the statutes is amended to read:

AB765,22,20 46.036 (5m) (a) 1. "Provider" means a nonprofit, nonstock corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), and that contracts under this section to provide client services on the basis of a unit rate per client service.

AB765, s. 19 Section 19. 46.21 (2) (nm) of the statutes is amended to read:

AB765,23,2 46.21 (2) (nm) May, together with a nonstock, nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), and that is organized solely for the purpose of operating duly accredited educational programs offering baccalaureate and associate degrees in nursing and allied health fields, maintain and fund the programs.

AB765, s. 20 Section 20. 46.27 (1) (a) 3. of the statutes is amended to read:

AB765,23,5 46.27 (1) (a) 3. A private, nonprofit corporation that is organized under ch. 181 and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 21 Section 21. 46.27 (1) (bm) of the statutes is amended to read:

AB765,23,10 46.27 (1) (bm) "Private nonprofit agency" means a nonprofit corporation, as defined in s. 181.02 (8) 181.0103 (17), which provides comprehensive health care services to elderly persons and which participates in the On Lok replication initiative.

AB765, s. 22 Section 22. 46.81 (1) (a) 3. of the statutes is amended to read:

AB765,23,13 46.81 (1) (a) 3. A private, nonprofit corporation that is organized under ch. 181 and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 23 Section 23. 46.82 (1) (a) 3. of the statutes is amended to read:

AB765,23,16 46.82 (1) (a) 3. A private, nonprofit corporation that is organized under ch. 181 and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 24 Section 24. 46.93 (1m) (c) of the statutes is amended to read:

AB765,23,20 46.93 (1m) (c) "Nonprofit corporation" means a nonstock, nonprofit corporation that is organized under ch. 181 and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 25 Section 25. 46.997 (1) (d) of the statutes is amended to read:

AB765,23,24 46.997 (1) (d) "Nonprofit corporation" means a nonstock, nonprofit corporation that is organized under ch. 181 and that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 26 Section 26. 49.134 (1) (c) of the statutes is amended to read:

AB765,24,4 49.134 (1) (c) "Nonprofit, tax-exempt corporation" means a nonstock, nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), and that is exempt from taxation under section 501 (c) of the internal revenue code.

AB765, s. 27 Section 27. 49.34 (5m) (a) 1. of the statutes is amended to read:

AB765,24,9 49.34 (5m) (a) 1. "Provider" means a nonprofit, nonstock corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17), and that contracts under this section to provide client services on the basis of a unit rate per client service.

AB765, s. 28 Section 28. 59.43 (2) (ag) 1. of the statutes is amended to read:

AB765,24,15 59.43 (2) (ag) 1. After June 30, 1991, and subject to s. 59.72 (5), for recording any instrument entitled to be recorded in the office of the register of deeds, $10 for the first page and $2 for each additional page, except that no fee may be collected for recording a change of address that is exempt from a filing fee under s. 181.68 (1) (b) or (e) or 185.83 (1) (b).

AB765, s. 29 Section 29. 59.57 (2) (e) 2. of the statutes is amended to read:

AB765,25,2 59.57 (2) (e) 2. The articles of incorporation shall be signed and acknowledged by persons designated by the board or where counties join in the formation of the agency by the boards of those counties and shall include at least 3 of the following from each county: the county executive, if there is one; the chairperson of the board; the chairperson of the board finance committee, if there is one; the county corporation counsel and the county auditor or treasurer in counties having no county auditor, and only those persons so signing and acknowledging the articles of incorporation shall for the purposes of ch. 181 be the incorporators of the agency. When counties join in the formation of the agency, the articles of incorporation shall be recorded in the office of the register of deeds of each county.

AB765, s. 30 Section 30. 59.82 (1) (a) of the statutes is amended to read:

AB765,25,6 59.82 (1) (a) A nonstock, nonprofit corporation is organized under ch. 181, and that corporation is a nonprofit corporation as defined in s. 181.0103 (17), organized for the sole purpose of developing a research and technology park under sub. (2).

AB765, s. 31 Section 31. 66.501 (6) of the statutes is amended to read:

AB765,25,14 66.501 (6) Definitions. Unless context otherwise requires, the terms "buildings", "new buildings" and "existing buildings" as used in this section include all buildings, structures, improvements, facilities, equipment or other capital items which the governing body of the city, village or town determines to be necessary or desirable for the purpose of providing hospital facilities. The term "nonprofit corporation" means a nonstock, nonprofit corporation organized under ch. 181 that is a nonprofit corporation, as defined in s. 181.0103 (17).

AB765, s. 32 Section 32. 66.504 (1) (b) of the statutes is amended to read: