Download Zipped Introduced WordPerfect SB0084.ZIP
[Status][Bill Documents][Fiscal Note][Bills Directory]
S.B. 84
1
NONPROFIT ENTITY AMENDMENTS
2
2006 GENERAL SESSION
3
STATE OF UTAH
4
Chief Sponsor: Lyle W. Hillyard
5
House Sponsor:
Fred R. Hunsaker
6
7
LONG TITLE
8
General Description:
9
This bill makes changes to Title 16, Chapter 6a, Utah Revised Nonprofit Corporation
10
Act.
11
Highlighted Provisions:
12
This bill:
13
. defines terms;
14
. addresses the prosecution of a derivative suit by a member or director of a nonprofit
15
corporation;
16
. requires an annual meeting be held by a nonprofit corporation unless the bylaws
17
eliminate the requirement;
18
. describes the effect of failure to hold an annual meeting;
19
. prescribes notice requirements for an annual meeting;
20
. provides that a director or officer of a nonprofit corporation is liable for a breach of
21
duty if the director or officer is grossly negligent;
22
. allows a nonprofit corporation to avoid indemnification of a director if the nonprofit
23
corporation's bylaws limit indemnification;
24
. addresses the effect of conversion of a nonprofit corporation to another form;
25
. addresses the amendment of a nonprofit corporation's bylaws;
26
. addresses the requirements for a merger of multiple entities into a domestic
27
nonprofit corporation;
28
. allows distributions of assets upon dissolution to another nonprofit corporation or a
29
mutual benefit corporation;
30
. requires that distribution of a nonprofit corporation's assets comply with the Internal
31
Revenue Code; and
32
. makes technical changes.
33
Monies Appropriated in this Bill:
34
None
35
Other Special Clauses:
36
None
37
Utah Code Sections Affected:
38
AMENDS:
39
16-6a-102, as last amended by Chapter 131, Laws of Utah 2003
40
16-6a-612, as enacted by Chapter 300, Laws of Utah 2000
41
16-6a-812, as enacted by Chapter 300, Laws of Utah 2000
42
16-6a-814, as enacted by Chapter 300, Laws of Utah 2000
43
16-6a-815, as enacted by Chapter 300, Laws of Utah 2000
44
16-6a-822, as enacted by Chapter 300, Laws of Utah 2000
45
16-6a-903, as enacted by Chapter 300, Laws of Utah 2000
46
16-6a-905, as enacted by Chapter 300, Laws of Utah 2000
47
16-6a-1008, as enacted by Chapter 300, Laws of Utah 2000
48
16-6a-1008.7, as enacted by Chapter 193, Laws of Utah 2002
49
16-6a-1010, as enacted by Chapter 300, Laws of Utah 2000
50
16-6a-1101, as enacted by Chapter 300, Laws of Utah 2000
51
16-6a-1102, as enacted by Chapter 300, Laws of Utah 2000
52
16-6a-1103, as enacted by Chapter 300, Laws of Utah 2000
53
16-6a-1104, as enacted by Chapter 300, Laws of Utah 2000
54
16-6a-1302, as enacted by Chapter 300, Laws of Utah 2000
55
16-6a-1405, as last amended by Chapter 127, Laws of Utah 2001
56
42-2-6.6, as last amended by Chapters 197 and 222, Laws of Utah 2002
57
58
Be it enacted by the Legislature of the state of Utah:
59
Section 1.
Section
16-6a-102
is amended to read:
60
16-6a-102. Definitions.
61
As used in this chapter:
62
(1) (a) "Address" means a location where mail can be delivered by the United States
63
Postal Service.
64
(b) "Address" includes:
65
(i) a post office box number;
66
(ii) a rural free delivery route number; and
67
(iii) a street name and number.
68
(2) "Affiliate" means a person that directly or indirectly through one or more
69
intermediaries controls, or is controlled by, or is under common control with, the person
70
specified.
71
(3) "Articles of incorporation" include:
72
(a) amended articles of incorporation;
73
(b) restated articles of incorporation;
74
(c) articles of merger; and
75
(d) a document of a similar import to the documents described in Subsections (3)(a)
76
through (c).
77
(4) "Assumed corporate name" means the name assumed for use in this state:
78
(a) by a:
79
(i) foreign corporation pursuant to Section
16-10a-1506
; or
80
(ii) a foreign nonprofit corporation pursuant to Section
16-6a-1506
; and
81
(b) because the corporate name of the foreign corporation described in Subsection
82
(4)(a) is not available for use in this state.
83
(5) (a) Except as provided in Subsection (5)(b), "board of directors" means the body
84
authorized to manage the affairs of the domestic or foreign nonprofit corporation.
85
(b) Notwithstanding Subsection (5)(a), a person may not be considered a member of
86
the board of directors because of powers delegated to that person pursuant to Subsection
87
16-6a-801
(2).
88
(6) (a) "Bylaws" means the one or more codes of rules, other than the articles of
89
incorporation, adopted pursuant to this chapter for the regulation or management of the affairs
90
of the domestic or foreign nonprofit corporation irrespective of the name or names by which
91
the codes of rules are designated.
92
(b) "Bylaws" includes:
93
(i) amended bylaws; and
94
(ii) restated bylaws.
95
(7) (a) "Cash" or "money" means:
96
(i) legal tender;
97
(ii) a negotiable instrument; or
98
(iii) other cash equivalent readily convertible into legal tender.
99
(b) "Cash" and "money" are used interchangeably in this chapter.
100
(8) (a) "Class" refers to a group of memberships that have the same rights with respect
101
to voting, dissolution, redemption, transfer, or other characteristics.
102
(b) For purposes of Subsection (8)(a), rights are considered the same if they are
103
determined by a formula applied uniformly to a group of memberships.
104
(9) (a) "Conspicuous" means so written that a reasonable person against whom the
105
writing is to operate should have noticed the writing.
106
(b) "Conspicuous" includes printing or typing in:
107
(i) italics;
108
(ii) boldface;
109
(iii) contrasting color;
110
(iv) capitals; or
111
(v) underlining.
112
(10) "Control" or a "controlling interest" means the direct or indirect possession of the
113
power to direct or cause the direction of the management and policies of an entity by:
114
(a) the ownership of voting shares;
115
(b) contract; or
116
(c) means other than those specified in Subsection (10)(a) or (b).
117
(11) Subject to Section
16-6a-207
, "cooperative nonprofit corporation" or "cooperative"
118
means a nonprofit corporation organized or existing under this chapter.
119
(12) "Corporate name" means:
120
(a) the name of a domestic corporation as stated in the domestic corporation's articles
121
of incorporation;
122
(b) the name of a domestic nonprofit corporation as stated in the domestic nonprofit
123
corporation's articles of incorporation;
124
(c) the name of a foreign corporation as stated in the foreign corporation's:
125
(i) articles of incorporation; or
126
(ii) document of similar import to articles of incorporation; or
127
(d) the name of a foreign nonprofit corporation as stated in the foreign nonprofit
128
corporation's:
129
(i) articles of incorporation; or
130
(ii) document of similar import to articles of incorporation.
131
(13) "Corporation" or "domestic corporation" means a corporation for profit, which is
132
not a foreign corporation, incorporated under or subject to Chapter 10a, Utah Revised Business
133
Corporation Act.
134
(14) "Delegate" means any person elected or appointed to vote in a representative
135
assembly:
136
(a) for the election of a director; or
137
(b) on matters other than the election of a director.
138
(15) "Deliver" includes delivery by mail and any other means of transmission
139
authorized by Section
16-6a-103
, except that delivery to the division means actual receipt by
140
the division.
141
(16) "Director" means a member of the board of directors.
142
(17) (a) "Distribution" means the payment of a dividend or any part of the income or
143
profit of a nonprofit corporation to the nonprofit corporation's:
144
(i) members;
145
(ii) directors; or
146
(iii) officers.
147
(b) "Distribution" does not include fair-value payments for:
148
(i) goods sold; or
149
(ii) services received.
150
(18) "Division" means the Division of Corporations and Commercial Code.
151
(19) "Effective date," when referring to a document filed by the division, means the
152
time and date determined in accordance with Section
16-6a-108
.
153
(20) "Effective date of notice" means the date notice is effective as provided in Section
154
16-6a-103
.
155
(21) (a) "Employee" includes an officer of a nonprofit corporation.
156
(b) (i) Except as provided in Subsection (21)(b)(ii), "employee" does not include a
157
director of a nonprofit corporation.
158
(ii) Notwithstanding Subsection (21)(b)(i), a director may accept duties that make that
159
director an employee of a nonprofit corporation.
160
(22) "Executive director" means the executive director of the Department of
161
Commerce.
162
(23) "Entity" includes:
163
(a) a domestic or foreign corporation;
164
(b) a domestic or foreign nonprofit corporation;
165
(c) a limited liability company;
166
(d) a profit or nonprofit unincorporated association;
167
(e) a business trust;
168
(f) an estate;
169
(g) a partnership;
170
(h) a trust;
171
(i) two or more persons having a joint or common economic interest;
172
(j) a state;
173
(k) the United States; or
174
(l) a foreign government.
175
(24) "Foreign corporation" means a corporation for profit incorporated under a law
176
other than the laws of this state.
177
(25) "Foreign nonprofit corporation" means an entity:
178
(a) incorporated under a law other than the laws of this state; and
179
(b) that would be a nonprofit corporation if formed under the laws of this state.
180
(26) "Governmental subdivision" means:
181
(a) a county;
182
(b) a city;
183
(c) a town; or
184
(d) any other type of governmental subdivision authorized by the laws of this state.
185
(27) "Individual" means:
186
(a) a natural person;
187
(b) the estate of an incompetent individual; or
188
(c) the estate of a deceased individual.
189
(28) "Internal Revenue Code" means the federal "Internal Revenue Code of 1986," as
190
amended from time to time, or to corresponding provisions of subsequent internal revenue laws
191
of the United States of America.
192
(29) (a) "Mail," "mailed," or "mailing" means deposit, deposited, or depositing in the
193
United States mail, properly addressed, first-class postage prepaid.
194
(b) "Mail," "mailed," or "mailing" includes registered or certified mail for which the
195
proper fee has been paid.
196
(30) (a) "Member" means one or more persons identified or otherwise appointed as a
197
member of a domestic or foreign nonprofit corporation as provided:
198
(i) in the articles of incorporation;
199
(ii) in the bylaws;
200
(iii) by a resolution of the board of directors; or
201
(iv) by a resolution of the members of the nonprofit corporation.
202
(b) "Member" includes "voting member."
203
(31) "Membership" refers to the rights and obligations of a member or members.
204
(32) "Mutual benefit corporation" means a nonprofit corporation all of whose assets are
205
contributed or earned by or for the members of the nonprofit corporation to serve the collective
206
purposes of the members.
207
[(32)] (33) "Nonprofit corporation" or "domestic nonprofit corporation" means an
208
entity, which is not a foreign nonprofit corporation, incorporated under or subject to the
209
provisions of this chapter.
210
[(33)] (34) "Notice" is as provided in Section
16-6a-103
.
211
[(34)] (35) "Party related to a director" means:
212
(a) the spouse of the director;
213
(b) a child of the director;
214
(c) a grandchild of the director;
215
(d) a sibling of the director;
216
(e) a parent of the director;
217
(f) the spouse of an individual described in Subsections [(34)] (35)(b) through (e);
218
(g) an individual having the same home as the director;
219
(h) a trust or estate of which the director or any other individual specified in this
220
Subsection [(34)] (35) is a substantial beneficiary; or
221
(i) any of the following of which the director is a fiduciary:
222
(i) a trust;
223
(ii) an estate;
224
(iii) an incompetent;
225
(iv) a conservatee; or
226
(v) a minor.
227
[(35)] (36) "Person" means an:
228
(a) individual; or
229
(b) entity.
230
[(36)] (37) "Principal office" means:
231
(a) the office, in or out of this state, designated by a domestic or foreign nonprofit
232
corporation as its principal office in the most recent document on file with the division
233
providing that information, including:
234
(i) an annual report;
235
(ii) an application for a certificate of authority; or
236
(iii) a notice of change of principal office; or
237
(b) if no principal office can be determined, a domestic or foreign nonprofit
238
corporation's registered office.
239
[(37)] (38) "Proceeding" includes:
240
(a) a civil suit;
241
(b) arbitration;
242
(c) mediation;
243
(d) a criminal action;
244
(e) an administrative action; or
245
(f) an investigatory action.
246
[(38)] (39) "Receive," when used in reference to receipt of a writing or other document
247
by a domestic or foreign nonprofit corporation, means the writing or other document is actually
248
received:
249
(a) by the domestic or foreign nonprofit corporation at:
250
(i) its registered office in this state; or
251
(ii) its principal office;
252
(b) by the secretary of the domestic or foreign nonprofit corporation, wherever the
253
secretary is found; or
254
(c) by any other person authorized by the bylaws or the board of directors to receive the
255
writing or other document, wherever that person is found.
256
[(39)] (40) (a) "Record date" means the date established under Part 6, Members or 7,
257
Member Meetings and Voting on which a nonprofit corporation determines the identity of the
258
nonprofit corporation's members.
259
(b) The determination described in Subsection [(39)] (40)(a) shall be made as of the
260
close of business on the record date unless another time for doing so is specified when the
261
record date is fixed.
262
[(40)] (41) "Registered agent" means the registered agent of:
263
(a) a domestic nonprofit corporation required to be maintained pursuant to Subsection
264
16-6a-501
(1)(b); or
265
(b) a foreign nonprofit corporation required to be maintained pursuant to Subsection
266
16-6a-1508
(1)(b).
267
[(41)] (42) "Registered office" means the office within this state designated by a
268
domestic or foreign nonprofit corporation as its registered office in the most recent document
269
on file with the division providing that information, including:
270
(a) articles of incorporation;
271
(b) an application for a certificate of authority; or
272
(c) a notice of change of registered office.
273
[(42)] (43) "Secretary" means the corporate officer to whom the bylaws or the board of
274
directors has delegated responsibility under Subsection
16-6a-818
(3) for:
275
(a) the preparation and maintenance of:
276
(i) minutes of the meetings of:
277
(A) the board of directors; or
278
(B) the members; and
279
(ii) the other records and information required to be kept by the nonprofit corporation
280
pursuant to Section
16-6a-1601
; and
281
(b) authenticating records of the nonprofit corporation.
282
[(43)] (44) "State," when referring to a part of the United States, includes:
283
(a) a state;
284
(b) a commonwealth;
285
(c) the District of Columbia;
286
(d) an agency or governmental and political subdivision of a state, commonwealth, or
287
District of Columbia;
288
(e) territory or insular possession of the United States; or
289
(f) an agency or governmental and political subdivision of a territory or insular
290
possession of the United States.
291
[(44)] (45) "Street address" means:
292
(a) (i) street name and number;
293
(ii) city or town; and
294
(iii) United States post office zip code designation; or
295
(b) if, by reason of rural location or otherwise, a street name, number, city, or town
296
does not exist, an appropriate description other than that described in Subsection [(44)] (45)(a)
297
fixing as nearly as possible the actual physical location but only if the information includes:
298
(i) the rural free delivery route;
299
(ii) the county; and
300
(iii) the United States post office zip code designation.
301
[(45)] (46) "United States" includes any district, authority, office, bureau, commission,
302
department, and any other agency of the United States of America.
303
[(46)] (47) "Vote" includes authorization by:
304
(a) written ballot; and
305
(b) written consent.
306
[(47)] (48) (a) "Voting group" means all the members of one or more classes of
307
members or directors that, under this chapter, the articles of incorporation, or the bylaws, are
308
entitled to vote and be counted together collectively on a matter.
309
(b) All members or directors entitled by this chapter, the articles of incorporation, or
310
the bylaws to vote generally on a matter are for that purpose a single voting group.
311
[(48)] (49) (a) "Voting member" means a person entitled to vote for all matters
312
required or permitted under this chapter to be submitted to a vote of the members, except as
313
otherwise provided in the articles of incorporation or bylaws.
314
(b) A person is not a voting member solely because of:
315
(i) a right the person has as a delegate;
316
(ii) a right the person has to designate a director; or
317
(iii) a right the person has as a director.
318
(c) Except as the bylaws may otherwise provide, "voting member" includes a
319
"shareholder" if the nonprofit corporation has shareholders.
320
Section 2.
Section
16-6a-612
is amended to read:
321
16-6a-612. Derivative suits.
322
(1) Without affecting the right of a member or director to bring a proceeding against a
323
nonprofit corporation or its directors or officers, a proceeding may be brought in the right of a
324
nonprofit corporation to procure a judgment in its favor by a complainant who is:
325
(a) a voting member; or
326
(b) a director in a nonprofit corporation that does not have voting members.
327
[(2) In a proceeding described in Subsection (1), each complainant shall be a voting
328
member or director at the time of bringing the proceeding.]
329
[(3) (a) A complaint in a proceeding brought in the right of a nonprofit corporation
330
shall be verified and allege with particularity:]
331
[(i) the demand made, if any, to obtain action by the directors; and]
332
[(ii) (A) why the complainant could not obtain the action; or]
333
[(B) why the complainant did not make the demand.]
334
[(b) If a demand for action was made and the nonprofit corporation's investigation of
335
the demand is in progress when the proceeding is filed, the court may stay the suit until the
336
investigation is completed.]
337
[(4) (a) (i) In any action instituted in the right of a nonprofit corporation by one or more
338
voting members, the court having jurisdiction over the matter may, at any time before final
339
judgment, require the plaintiff to give security for the costs and reasonable expenses that may
340
be:]
341
[(A) directly attributable to and incurred by the nonprofit corporation in the defense of
342
the action; or]
343
[(B) incurred by other parties named as defendant for which the nonprofit corporation
344
may become legally liable.]
345
[(ii) Notwithstanding Subsection (4)(a)(i), the security for the costs and reasonable
346
expenses may not include fees of attorneys.]
347
[(b) The amount of the security permitted under this Subsection (4) may from time to
348
time be increased or decreased, in the discretion of the court, upon showing that the security
349
provided has or may become inadequate or excessive.]
350
[(c) If the court finds that the action was commenced without reasonable cause, the
351
nonprofit corporation shall have recourse to the security permitted under this Subsection (4) in
352
the amount the court shall determine upon the termination of the action.]
353
[(5) A procedure pursuant to this section shall comply with the applicable rules set
354
forth in the Utah Rules of Civil Procedure, as amended from time to time.]
355
[(6) An action may not be commenced in this state by a member of a foreign nonprofit
356
corporation in the right of a foreign nonprofit corporation unless the action is permitted by the
357
laws of the state under which the foreign nonprofit corporation is incorporated.]
358
(2) A complainant may not commence or maintain a derivative proceeding unless the
359
complainant:
360
(a) was once a voting member or a director in a nonprofit corporation that no longer
361
has voting members at the time the proceeding is brought; and
362
(b) fairly and adequately represents the nonprofit corporation's interests in enforcing
363
the nonprofit corporation's right.
364
(3) (a) A complainant may not commence a derivative proceeding until:
365
(i) a written demand is made upon the nonprofit corporation to take suitable action; and
366
(ii) 90 days have expired from the date the demand described in Subsection (3)(a)(i) is
367
made, unless:
368
(A) the complainant is notified before the 90-day period expires that the demand is
369
rejected by the nonprofit corporation; or
370
(B) irreparable injury to the nonprofit corporation would result by waiting for the
371
90-day period's expiration.
372
(b) A complaint in a derivative proceeding shall be:
373
(i) verified; and
374
(ii) allege with particularity the demand made to obtain action by the board of
375
directors.
376
(c) A derivative proceeding shall comply with the procedures of Utah Rules of Civil
377
Procedure, Rule 23.1.
378
(d) The court shall stay any derivative proceeding until the inquiry is completed and for
379
an additional period as the court considers appropriate if:
380
(i) the nonprofit corporation commences an inquiry into the allegations made in the
381
demand or complaint; and
382
(ii) a person or group described in Subsection (4) is conducting an active review of the
383
allegations in good faith.
384
(e) If a nonprofit corporation proposes to dismiss a derivative proceeding pursuant to
385
Subsection (4)(a), discovery by a complainant in the derivative proceeding:
386
(i) is limited to facts relating to:
387
(A) whether the person or group conducting the inquiry is independent and
388
disinterested;
389
(B) the good faith of the inquiry; and
390
(C) the reasonableness of the procedures followed by the person or group conducting
391
the inquiry; and
392
(ii) may not extend to any facts or substantive issues with respect to the act, omission,
393
or other matter that is the subject matter of the derivative proceeding.
394
(4) (a) A derivative proceeding shall be dismissed by the court on motion by the
395
corporation if a person or group specified in Subsection (4)(b) or (4)(f) determines in good
396
faith, after conducting a reasonable inquiry upon which the person's or group's conclusions are
397
based, that the maintenance of the derivative proceeding is not in the best interest of the
398
nonprofit corporation.
399
(b) Unless a panel is appointed pursuant to Subsection (4)(f), the determination in
400
Subsection (4)(a) shall be made by:
401
(i) a majority vote of independent directors present at a meeting of the board of
402
directors, if the independent directors constitute a quorum; or
403
(ii) a majority vote of a committee consisting of two or more independent directors
404
appointed by a majority vote of independent directors present at a meeting of the board of
405
directors, whether or not the independent directors appointing the committee constituted a
406
quorum.
407
(c) None of the following by itself causes a director to be considered not independent
408
for purposes of this section:
409
(i) the nomination or election of the director by persons:
410
(A) who are defendants in the derivative proceeding; or
411
(B) against whom action is demanded;
412
(ii) the naming of the director as:
413
(A) a defendant in the derivative proceeding; or
414
(B) a person against whom action is demanded; or
415
(iii) the approval by the director of the act being challenged in the derivative
416
proceeding or demand if the act resulted in no personal benefit to the director.
417
(d) If a derivative proceeding is commenced after a determination is made rejecting a
418
demand by a complainant, the complaint shall allege with particularity facts establishing either:
419
(i) that a majority of the board of directors did not consist of independent directors at
420
the time the determination was made; or
421
(ii) that the requirements of Subsection (4)(a) are not met.
422
(e) (i) If a majority of the board of directors does not consist of independent directors at
423
the time the determination is made to reject a demand by a shareholder, the corporation has the
424
burden of proving that the requirements of Subsection (4)(a) are met.
425
(ii) If a majority of the board of directors consists of independent directors at the time
426
the determination is made to reject a demand by a complainant, the plaintiff has the burden of
427
proving that the requirements of Subsection (4)(a) are not met.
428
(f) (i) The court may appoint a panel of one or more independent persons upon motion
429
by the corporation to make a determination whether the maintenance of the derivative
430
proceeding is in the best interest of the corporation.
431
(ii) If the court appoints a panel under Subsection (4)(f)(i), the plaintiff has the burden
432
of proving that the requirements of Subsection (4)(a) are not met.
433
(g) A person may appeal an interlocutory order of a court that grants or denies a motion
434
to dismiss brought pursuant to Subsection (4)(a).
435
(5) On termination of a derivative proceeding the court may order:
436
(a) the nonprofit corporation to pay the plaintiff's reasonable expenses, including
437
attorney fees, incurred in the proceeding, if it finds that the proceeding results in a substantial
438
benefit to the nonprofit corporation;
439
(b) the plaintiff to pay a defendant's reasonable expenses, including attorney fees,
440
incurred in defending the proceeding, if it finds that the proceeding was commenced or
441
maintained:
442
(i) without reasonable cause; or
443
(ii) for an improper purpose; or
444
(c) a party to pay an opposing party's reasonable expenses, including attorney fees,
445
incurred because of the filing of a pleading, motion, or other paper, if the court finds that the
446
pleading, motion, or other paper was:
447
(i) (A) not well grounded in fact, after reasonable inquiry; or
448
(B) not warranted by existing law or a good faith argument for the extension,
449
modification, or reversal of existing law; and
450
(ii) interposed for an improper purpose, such as to:
451
(A) harass;
452
(B) cause unnecessary delay; or
453
(C) cause needless increase in the cost of litigation.
454
Section 3.
Section
16-6a-812
is amended to read:
455
16-6a-812. Meetings.
456
(1) Unless the bylaws eliminate the requirement for holding an annual meeting, a
457
nonprofit corporation that does not have voting members shall hold a meeting of the directors
458
annually:
459
(a) at a time and date stated in or fixed in accordance with the bylaws; or
460
(b) if a time and date is not stated in or fixed in accordance with the bylaws, at a time
461
and date stated in or fixed in accordance with a resolution of the board of directors.
462
[(1)] (2) The board of directors may hold regular or special meetings in or out of this
463
state.
464
[(2)] (3) (a) Unless otherwise provided in the bylaws, the board of directors may permit
465
any director to participate in a [regular or special] meeting by, or conduct the meeting through
466
the use of, any means of communication by which all directors participating may hear each
467
other during the meeting.
468
(b) A director participating in a meeting by a means permitted under Subsection [(1)]
469
(2) is considered to be present in person at the meeting.
470
(4) The failure to hold an annual or regular meeting at the time and date determined
471
pursuant to Subsection (1) or (2) does not:
472
(a) affect the validity of any corporate action; or
473
(b) result in forfeiture or dissolution of the nonprofit corporation.
474
Section 4.
Section
16-6a-814
is amended to read:
475
16-6a-814. Notice of meeting.
476
(1) (a) A nonprofit corporation shall give to each director entitled to vote at an annual
477
meeting notice in a fair and reasonable manner.
478
(b) Except as otherwise provided in the bylaws, "fair and reasonable," as used in
479
Subsection (1)(a), has the same meaning as set forth in Subsection
16-6a-704
(3)(a), as the
480
context permits.
481
[(1)] (2) Unless otherwise provided in this chapter or in the bylaws, regular meetings of
482
the board of directors may be held without notice of the date, time, place, or purpose of the
483
meeting.
484
[(2)] (3) (a) Unless the bylaws provide for a longer or shorter period, special meetings
485
of the board of directors shall be preceded by at least two days notice of the date, time, and
486
place of the meeting.
487
(b) The notice required by Subsection [(2)] (3)(a) need not describe the purpose of the
488
special meeting unless otherwise required by this chapter or the bylaws.
489
Section 5.
Section
16-6a-815
is amended to read:
490
16-6a-815. Waiver of notice.
491
(1) (a) A director may waive any notice of a meeting before or after the time and date
492
of the meeting stated in the notice.
493
(b) Except as provided by Subsection (2), the waiver shall:
494
(i) be in writing;
495
(ii) signed by the director entitled to the notice; and
496
(iii) be delivered to the nonprofit corporation for filing with the corporate records.
497
(c) The delivery and filing required by Subsection (1)(b) may not be conditions of the
498
effectiveness of the waiver.
499
(2) A director's attendance at or participation in a meeting waives any required notice
500
to that director of the meeting unless:
501
(a) (i) at the beginning of the meeting or promptly upon the director's later arrival, the
502
director objects to holding the meeting or transacting business at the meeting because of lack of
503
notice or defective notice; and
504
(ii) after objecting, the director does not vote for or assent to action taken at the
505
meeting; or
506
(b) if special notice was required of a particular purpose pursuant to Subsection
507
[
16-6a-814
(2)]
16-6a-814
(3):
508
(i) the director objects to transacting business with respect to the purpose for which the
509
special notice was required; and
510
(ii) after objecting, the director does not vote for or assent to action taken at the
511
meeting with respect to the purpose.
512
Section 6.
Section
16-6a-822
is amended to read:
513
16-6a-822. General standards of conduct for directors and officers.
514
(1) (a) A director shall discharge the director's duties as a director, including the
515
director's duties as a member of a committee of the board, in accordance with Subsection (2).
516
(b) An officer with discretionary authority shall discharge the officer's duties under that
517
authority in accordance with Subsection (2).
518
(2) A director or an officer described in Subsection (1) shall discharge the director or
519
officer's duties:
520
(a) in good faith;
521
(b) with the care an ordinarily prudent person in a like position would exercise under
522
similar circumstances; and
523
(c) in a manner the director or officer reasonably believes to be in the best interests of
524
the nonprofit corporation.
525
(3) In discharging duties, a director or officer is entitled to rely on information,
526
opinions, reports, or statements, including financial statements and other financial data, if
527
prepared or presented by:
528
(a) one or more officers or employees of the nonprofit corporation whom the director
529
or officer reasonably believes to be reliable and competent in the matters presented;
530
(b) legal counsel, a public accountant, or another person as to matters the director or
531
officer reasonably believes are within the person's professional or expert competence;
532
(c) religious authorities or ministers, priests, rabbis, or other persons:
533
(i) whose position or duties in the nonprofit corporation, or in a religious organization
534
with which the nonprofit corporation is affiliated, the director or officer believes justify
535
reliance and confidence; and
536
(ii) who the director or officer believes to be reliable and competent in the matters
537
presented; or
538
(d) in the case of a director, a committee of the board of directors of which the director
539
is not a member if the director reasonably believes the committee merits confidence.
540
(4) A director or officer is not acting in good faith if the director or officer has
541
knowledge concerning the matter in question that makes reliance otherwise permitted by
542
Subsection (3) unwarranted.
543
(5) A director, regardless of title, may not be considered to be a trustee with respect to
544
any property held or administered by the nonprofit corporation including property that may be
545
subject to restrictions imposed by the donor or transferor of the property.
546
(6) A director or officer is not liable to the nonprofit corporation, its members, or any
547
conservator or receiver, or any assignee or successor-in-interest of the nonprofit corporation or
548
member, for any action taken, or any failure to take any action, as an officer or director, as the
549
case may be, unless:
550
(a) the director or officer has breached or failed to perform the duties of the office as
551
set forth in this section; and
552
[(b) the breach or failure to perform constitutes:]
553
[(i) willful misconduct; or]
554
[(ii) intentional infliction of harm on:]
555
[(A) the nonprofit corporation; or]
556
[(B) the members of the nonprofit corporation.]
557
(b) the breach or failure to perform constitutes gross negligence.
558
Section 7.
Section
16-6a-903
is amended to read:
559
16-6a-903. Mandatory indemnification of directors.
560
(1) Unless limited by its [articles of incorporation] bylaws, a nonprofit corporation
561
shall indemnify a director described in Subsection (2) against reasonable expenses incurred by
562
the director in connection with the proceeding or claim with respect to which the director has
563
been successful.
564
(2) Subsection (1) applies to a director who was successful, on the merits or otherwise,
565
in the defense of:
566
(a) any proceeding to which the director was a party because the director is or was a
567
director of the nonprofit corporation; or
568
(b) any claim, issue, or matter in the proceeding, to which the director was a party
569
because the director is or was a director of the nonprofit corporation.
570
Section 8.
Section
16-6a-905
is amended to read:
571
16-6a-905. Court-ordered indemnification of directors.
572
(1) Unless a nonprofit corporation's [articles of incorporation] bylaws provide
573
otherwise, a director of the nonprofit corporation who is or was a party to a proceeding may
574
apply for indemnification to:
575
(a) the court conducting the proceeding; or
576
(b) another court of competent jurisdiction.
577
(2) On receipt of an application described in Subsection (1), the court, after giving any
578
notice the court considers necessary, may order indemnification in the following manner:
579
(a) if the court determines that the director is entitled to mandatory indemnification
580
under Section
16-6a-903
, the court shall:
581
(i) order indemnification; and
582
(ii) order the nonprofit corporation to pay the director's reasonable expenses incurred to
583
obtain court-ordered indemnification; and
584
(b) if the court determines that the director is fairly and reasonably entitled to
585
indemnification in view of all the relevant circumstances, whether or not the director met the
586
applicable standard of conduct set forth in Section
16-6a-902
or was adjudged liable as
587
described in Subsection
16-6a-902
(4), the court may order indemnification as the court
588
determines to be proper, except that the indemnification with respect to any proceeding in
589
which liability has been adjudged in the circumstances described in Subsection
16-6a-902
(4) is
590
limited to reasonable expenses incurred.
591
Section 9.
Section
16-6a-1008
is amended to read:
592
16-6a-1008. Conversion to a corporation.
593
(1) (a) A domestic nonprofit corporation may convert to a corporation subject to Title
594
16, Chapter 10a, Utah Revised Business Corporation Act, by filing an amendment of its articles
595
of incorporation with the division pursuant to this section.
596
(b) The day on which a nonprofit domestic corporation files an amendment under this
597
section, the domestic nonprofit corporation becomes a corporation subject to Title 16, Chapter
598
10a, Utah Revised Business Corporation Act.
599
(2) The amendment of the articles of incorporation to convert to a corporation shall:
600
(a) revise the statement of purpose;
601
(b) delete:
602
(i) the authorization for members; and
603
(ii) any other provisions relating to memberships;
604
(c) authorize shares:
605
(i) stating the number of shares; and
606
(ii) including the information required by Section
16-10a-601
with respect to each class
607
of shares the corporation is to be authorized to issue;
608
(d) make such other changes as may be necessary or desired; and
609
(e) if the corporation has any members, provide for:
610
(i) the cancellation of the memberships; or
611
(ii) the conversion of the memberships to shares of the corporation.
612
(3) If the nonprofit corporation has any voting members, an amendment to convert to a
613
corporation shall be approved by all of the members regardless of limitations or restrictions on
614
the voting rights of the members.
615
(4) If an amendment to the articles of incorporation filed pursuant to this section is
616
included in a merger agreement, this section applies, except that any provisions for cancellation
617
or conversion of memberships:
618
(a) shall be in the merger agreement; and
619
(b) may not be in the amendment of the articles of incorporation.
620
(5) A conversion under this section may not result in a violation, directly or indirectly,
621
of:
622
(a) Section
16-6a-1301
; or
623
(b) any other provision of this chapter.
624
Section 10.
Section
16-6a-1008.7
is amended to read:
625
16-6a-1008.7. Conversion to or from a domestic limited liability company.
626
(1) (a) A domestic nonprofit corporation may convert to a domestic limited liability
627
company subject to Title 48, Chapter 2c, Utah Revised Limited Liability Company Act, by
628
complying with:
629
(i) this Subsection (1); and
630
(ii) Section
48-2c-1401
.
631
(b) If a domestic nonprofit corporation converts to a domestic limited liability company
632
in accordance with this Subsection (1), the articles of conversion shall:
633
(i) comply with Section
48-2c-1402
; and
634
(ii) if the corporation has any members, provide for:
635
(A) the cancellation of any membership; or
636
(B) the conversion of any membership in the domestic nonprofit corporation to a
637
membership interest in the domestic limited liability company.
638
(c) In accordance with Section
48-2c-1404
, before articles of conversion may be filed
639
with the division, the conversion shall be approved:
640
(i) in the manner provided for the articles of incorporation or bylaws of the domestic
641
nonprofit corporation; or
642
(ii) if the articles of incorporation or bylaws of the domestic nonprofit corporation do
643
not provide the method for approval:
644
(A) if the domestic nonprofit corporation has voting members, by all of the members of
645
the domestic nonprofit corporation regardless of limitations or restrictions on the voting rights
646
of the members; or
647
(B) if the nonprofit domestic corporation does not have voting members, by a majority
648
of:
649
(I) the directors in office at the time the conversion is approved by the board of
650
directors; or
651
(II) if directors have not been appointed or elected, the incorporators.
652
(2) A domestic limited liability company may convert to a domestic nonprofit
653
corporation subject to this chapter by:
654
(a) filing articles of incorporation in accordance with this chapter; and
655
(b) complying with Section
48-2c-1406
.
656
(3) Any conversion under this section may not result in a violation, directly or
657
indirectly, of:
658
(a) Section
16-6a-1301
; or
659
(b) any other provision of this chapter.
660
Section 11.
Section
16-6a-1010
is amended to read:
661
16-6a-1010. Amendment of bylaws by board of directors or members.
662
(1) The board of directors may amend the bylaws at any time to add, change, or delete
663
a provision, unless:
664
(a) this chapter or the articles of incorporation or bylaws:
665
(i) reserve the power exclusively to the members in whole or part; or
666
(ii) otherwise prohibit the board of directors from amending the bylaws to add, change,
667
or delete a provision; or
668
(b) it would result in a change of the rights, privileges, preferences, restrictions, or
669
conditions of a membership class as to voting, dissolution, redemption, or transfer by changing
670
the rights, privileges, preferences, restrictions, or conditions of another class.
671
(2) (a) [The] Unless otherwise provided by the bylaws, the members may amend the
672
bylaws even though the bylaws may also be amended by the board of directors.
673
(b) Amendments to the bylaws by members shall be made in accordance with Sections
674
16-6a-1003
and
16-6a-1004
as if each reference in Sections
16-6a-1003
and
16-6a-1004
to the
675
article of incorporation was a reference to the bylaws.
676
Section 12.
Section
16-6a-1101
is amended to read:
677
16-6a-1101. Merger.
678
(1) One or more [nonprofit corporations] domestic corporations, foreign corporations,
679
domestic nonprofit corporations, or foreign nonprofit corporations may merge into another
680
nonprofit corporation:
681
(a) if the board of directors of each [nonprofit corporation] domestic corporation,
682
foreign corporation, domestic nonprofit corporation, or foreign nonprofit corporation party to
683
the merger adopts a plan of merger; [and]
684
(b) if [required by Section
16-6a-1102
,] the members of [the] each domestic nonprofit
685
corporation entitled to vote on the plan of merger, approve the plan of merger[.] if required by
686
Section
16-6a-1102
;
687
(c) if the shareholders of each domestic corporation entitled to vote on the plan of
688
merger, approve the plan of merger, if required by Section
16-10a-1103
;
689
(d) if the merger is permitted by and consistent with the laws of the state or country
690
under whose law each foreign corporation or foreign nonprofit corporation party to the merger
691
is incorporated;
692
(e) if the shareholders of each such foreign corporation approve the plan of merger and
693
as required by applicable law of the states or countries under whose law each foreign
694
corporation party to the merger is incorporated; and
695
(f) if the members of each such foreign nonprofit corporation approve the plan of
696
merger and as required by applicable law of the states or countries under whose law each
697
foreign nonprofit corporation party to the merger is incorporated.
698
(2) The plan of merger required by Subsection (1) shall set forth:
699
(a) the name of each [nonprofit corporation] party to the merger planning to merge;
700
(b) the name of the surviving domestic nonprofit corporation into which each
701
[nonprofit corporation] party to the merger plans to merge;
702
(c) the terms and conditions of the merger;
703
(d) the manner and basis of converting in whole or part the shares or memberships [of
704
each nonprofit corporation, if any,] if any, of each party to the merger into memberships,
705
obligations, or other interests of:
706
(i) the surviving domestic nonprofit corporation;
707
(ii) any other entity; or
708
(iii) into money or other property; and
709
(e) any amendments to the articles of incorporation of the surviving domestic nonprofit
710
corporation to be effected by the merger.
711
(3) In addition to the provisions required by Subsection (2), the plan of merger may set
712
forth other provisions relating to the merger.
713
Section 13.
Section
16-6a-1102
is amended to read:
714
16-6a-1102. Action on plan of merger.
715
(1) After adopting the plan of merger, the board of directors of each domestic nonprofit
716
corporation that is a party to the merger shall submit the plan of merger to its members, if any
717
are entitled to vote on the plan of merger, for approval.
718
(2) If the domestic nonprofit corporation has members entitled to vote with respect to
719
the approval of a plan of merger, a plan of merger is approved by the members if:
720
(a) (i) the board of directors recommends the plan of merger to the members entitled to
721
vote on the plan of merger; or
722
(ii) (A) the board of directors determines that, because of conflict of interest or other
723
special circumstances, it should make no recommendation; and
724
(B) communicates the basis for its determination to the members with the plan; and
725
(b) the members entitled to vote on the plan of merger approve the plan as provided in
726
Subsection (7).
727
(3) After adopting the plan of merger, the board of directors of each domestic nonprofit
728
corporation party to the merger shall submit the plan of merger for written approval by any
729
person or persons:
730
(a) whose approval is required by the articles of incorporation of the domestic
731
nonprofit corporation; and
732
(b) as required by Section
16-6a-1013
for an amendment to the articles of
733
incorporation or bylaws.
734
(4) (a) If the domestic nonprofit corporation does not have members entitled to vote on
735
a merger, the merger shall be approved and adopted by a majority of the directors elected and
736
in office at the time the plan of merger is considered by the board of directors.
737
(b) The domestic nonprofit corporation shall provide notice of any meeting of the
738
board of directors at which the approval described in Subsection (4)(a) is to be obtained in
739
accordance with Section
16-6a-814
.
740
(c) The notice required by Subsection (4)(b) shall state that the purpose, or one of the
741
purposes, of the meeting is to consider the proposed merger.
742
(5) The board of directors may condition the effectiveness of the plan of merger on any
743
basis.
744
(6) (a) The domestic nonprofit corporation shall give notice, in accordance with
745
Section
16-6a-704
, to each member entitled to vote on the plan of merger of the members'
746
meeting at which the plan will be voted on.
747
(b) The notice required by Subsection (6)(a) shall:
748
(i) state that the purpose, or one of the purposes, of the meeting is to consider the plan
749
of merger; and
750
(ii) contain or be accompanied by a copy of the plan of merger or a summary of the
751
plan of merger.
752
(7) The plan of merger shall be approved by the votes required by Sections
16-6a-714
753
and
16-6a-715
by every voting group entitled to vote on the plan of merger unless a greater
754
vote is required by:
755
(a) this chapter;
756
(b) the articles of incorporation;
757
(c) bylaws adopted by the members; or
758
(d) the board of directors acting pursuant to Subsection (5).
759
(8) Separate voting by voting groups is required on a plan of merger if the plan
760
contains a provision that, if contained in an amendment to the articles of incorporation, would
761
require action by one or more separate voting groups on the amendment.
762
Section 14.
Section
16-6a-1103
is amended to read:
763
16-6a-1103. Articles of merger.
764
(1) After a plan of merger is approved, pursuant to Section
16-6a-1102
, the surviving
765
domestic nonprofit corporation shall deliver to the division for filing articles of merger setting
766
forth:
767
(a) the plan of merger;
768
(b) if shareholder or member approval was not required of any party to the merger:
769
(i) a statement to the effect that [member] approval was not required; and
770
(ii) a statement that the plan of merger was approved by a sufficient vote of the board
771
of directors of [the nonprofit corporation] each party to the merger;
772
(c) if approval of the shareholders or members of one or more [nonprofit corporations]
773
domestic corporation, foreign corporation, domestic nonprofit corporation, or foreign nonprofit
774
corporation party to the merger was required, a statement that the number of votes cast for the
775
plan by each voting group entitled to vote separately on the merger was sufficient for approval
776
by that voting group; and
777
(d) if approval of the plan by some person or persons other than the shareholders,
778
members, or the board of directors is required pursuant to Subsection
16-6a-1102
(3), or other
779
applicable law, a statement that the approval was obtained.
780
(2) A merger takes effect upon the effective date stated in the articles of merger, which
781
may not be prior to the date the articles of merger are filed.
782
(3) Articles of merger shall be executed by each party to the merger.
783
Section 15.
Section
16-6a-1104
is amended to read:
784
16-6a-1104. Effect of merger.
785
(1) When a merger takes effect:
786
(a) every [other nonprofit corporation] domestic corporation, foreign corporation,
787
domestic nonprofit corporation, or foreign nonprofit corporation party to the merger merges
788
into the surviving domestic nonprofit corporation;
789
(b) the separate existence of every [nonprofit corporation] domestic corporation,
790
foreign corporation, domestic nonprofit corporation, or foreign nonprofit corporation party to
791
the merger except the surviving domestic nonprofit corporation ceases;
792
(c) the title to all real estate and other property owned by every [other nonprofit
793
corporation] domestic corporation, foreign corporation, domestic nonprofit corporation, or
794
foreign nonprofit corporation party to the merger is transferred to and vested in the surviving
795
domestic nonprofit corporation without reversion or impairment;
796
(d) the surviving domestic nonprofit corporation has all liabilities of each [nonprofit
797
corporation] domestic corporation, foreign corporation, domestic nonprofit corporation, or
798
foreign nonprofit corporation party to the merger;
799
(e) (i) a proceeding pending by or against any [nonprofit corporation] party to the
800
merger may be continued as if the merger did not occur; or
801
(ii) the surviving domestic nonprofit corporation may be substituted in the proceeding
802
for the [nonprofit corporation] party to the merger whose existence ceased;
803
(f) the articles of incorporation of the surviving domestic nonprofit corporation are
804
amended to the extent provided in the plan of merger; and
805
(g) the share or memberships of each [nonprofit corporation] domestic corporation,
806
foreign corporation, domestic nonprofit corporation, or foreign nonprofit corporation party to
807
the merger that are to be converted into memberships, obligations, or other interests of the
808
surviving domestic nonprofit corporation or into money or other property are converted, and
809
the former holders of the shares and memberships are entitled only to the rights provided in the
810
articles of merger.
811
(2) (a) A transfer to and vesting in the surviving domestic nonprofit corporation
812
described in Subsection (1)(c) occurs by operation of law.
813
(b) Consent or approval of any other person may not be required in connection with
814
any transfer or vesting unless the consent or approval is specifically required in the event of
815
merger by:
816
(i) law; or
817
(ii) express provision in any contract, agreement, decree, order, or other instrument to
818
which any of the [nonprofit corporations] domestic corporations, foreign corporations,
819
domestic nonprofit corporations, or foreign nonprofit corporations so merged is a party or by
820
which it is bound.
821
Section 16.
Section
16-6a-1302
is amended to read:
822
16-6a-1302. Authorized distributions.
823
(1) A nonprofit corporation may:
824
(a) make distributions [of its income] or distribute the nonprofit corporation's assets to
825
a member that is a domestic or foreign nonprofit corporation;
826
(b) pay compensation in a reasonable amount to its members, directors, or officers for
827
services rendered;
828
(c) if a cooperative nonprofit corporation, make distributions consistent with its
829
purposes; and
830
(d) confer benefits upon its members in conformity with its purposes.
831
[(2) A nonprofit corporation may make distributions upon dissolution in conformity
832
with this chapter.]
833
(2) A nonprofit corporation may make distributions upon dissolution:
834
(a) in conformity with this chapter;
835
(b) to a member that is a domestic or foreign nonprofit corporation; and
836
(c) to its members if it is a mutual benefit corporation.
837
Section 17.
Section
16-6a-1405
is amended to read:
838
16-6a-1405. Effect of dissolution.
839
(1) A dissolved nonprofit corporation continues its corporate existence but may not
840
carry on any activities except as is appropriate to wind up and liquidate its affairs, including:
841
(a) collecting its assets;
842
(b) returning, transferring, or conveying assets held by the nonprofit corporation upon a
843
condition requiring return, transfer, or conveyance, which condition occurs by reason of the
844
dissolution, in accordance with the condition;
845
(c) transferring, subject to any contractual or legal requirements, its assets as provided
846
in or authorized by its articles of incorporation or bylaws;
847
(d) discharging or making provision for discharging its liabilities; and
848
(e) doing every other act necessary to wind up and liquidate its assets and affairs.
849
[(2) (a) Upon dissolution of a nonprofit corporation described under Section 501(c)(3),
850
Internal Revenue Code, and exempt from tax under Section 501(a), Internal Revenue Code, or
851
the corresponding section of any future federal tax code, the assets of the nonprofit corporation
852
shall be distributed:]
853
[(i) for one or more exempt purposes under Section 501(c)(3), Internal Revenue Code;]
854
[(ii) to the federal government for a public purpose; or]
855
[(iii) to a state or local government, for a public purpose.]
856
[(b) Any assets not disposed of under Subsection (2)(a) shall be disposed of by the
857
district court for the county in which the principal office of the nonprofit corporation is then
858
located, exclusively as determined by the court:]
859
[(i) for one or more exempt purposes under Section 501(c)(3), Internal Revenue Code;
860
or]
861
[(ii) to organizations that are organized and operated exclusively for exempt or public
862
purposes.]
863
[(c) The conversion to a corporation under Section
16-6a-1008
of a nonprofit
864
corporation described under Section 501(c)(3), Internal Revenue Code, and exempt from tax
865
Section 501(a), Internal Revenue Code, or the corresponding section of any future federal tax
866
code, shall be considered to be a dissolution of that nonprofit corporation for purposes of this
867
Subsection (2).]
868
(2) Notwithstanding any other provision of this chapter, the distribution of assets of a
869
nonprofit corporation upon its dissolution shall be consistent with all applicable requirements
870
and limitations set forth in the Internal Revenue Code.
871
(3) Dissolution of a nonprofit corporation does not:
872
(a) transfer title to the nonprofit corporation's property;
873
(b) subject its directors or officers to standards of conduct different from those
874
prescribed in this chapter;
875
(c) change quorum or voting requirements for its board of directors or members;
876
(d) change provisions for selection, resignation, or removal of its directors or officers,
877
or both;
878
(e) change provisions for amending its bylaws or its articles of incorporation;
879
(f) prevent commencement of a proceeding by or against the nonprofit corporation in
880
its corporate name; or
881
(g) abate or suspend a proceeding pending by or against the nonprofit corporation on
882
the effective date of dissolution.
883
Section 18.
Section
42-2-6.6
is amended to read:
884
42-2-6.6. Assumed name.
885
(1) The assumed name:
886
(a) may not contain any word or phrase that indicates or implies that the business is
887
organized for any purpose other than one or more of the purposes contained in its application;
888
(b) shall be distinguishable from any registered name or trademark of record in the
889
offices of the Division of Corporations and Commercial Code, as defined in Subsection
890
16-10a-401
(5), except as authorized by the Division of Corporations and Commercial Code
891
pursuant to Subsection (2);
892
(c) without the written consent of the United States Olympic Committee, may not
893
contain the words:
894
(i) "Olympic";
895
(ii) "Olympiad"; or
896
(iii) "Citius Altius Fortius";
897
(d) without the written consent of the Division of Consumer Protection issued in
898
accordance with Section
13-34-114
, may not contain the words:
899
(i) "university";
900
(ii) "college"; or
901
(iii) "institute"; and
902
(e) an assumed name authorized for use in this state on or after May 1, 2000, may not
903
contain the words:
904
(i) "incorporated";
905
(ii) "inc."; or
906
(iii) a variation of "incorporated" or "inc."
907
(2) Notwithstanding Subsection (1)(e), an assumed name may contain a word listed in
908
Subsection (1)(e) if the Division of Corporations and Commercial Code authorizes the use of
909
the name by a corporation as defined in:
910
(a) Subsection
16-6a-102
(25);
911
(b) Subsection
16-6a-102
[(32)](33);
912
(c) Subsection
16-10a-102
(11); or
913
(d) Subsection
16-10a-102
(20).
914
(3) The Division of Corporations and Commercial Code shall authorize the use of the
915
name applied for if:
916
(a) the name is distinguishable from one or more of the names and trademarks that are
917
on the division's records; or
918
(b) the applicant delivers to the division a certified copy of the final judgment of a
919
court of competent jurisdiction establishing the applicant's right to use the name applied for in
920
this state.
921
(4) The assumed name, for purposes of recordation, shall be either translated into
922
English or transliterated into letters of the English alphabet if it is not in English.
923
(5) The Division of Corporations and Commercial Code may not approve an
924
application for an assumed name to any person violating this section.
925
(6) The director of the Division of Corporations and Commercial Code shall have the
926
power and authority reasonably necessary to interpret and efficiently administer this section
927
and to perform the duties imposed on the division by this section.
928
(7) A name that implies by any word in the name that it is an agency of the state or of
929
any of its political subdivisions, if it is not actually such a legally established agency, may not
930
be approved for filing by the Division of Corporations and Commercial Code.
931
(8) Section
16-10a-403
applies to this chapter.
932
(9) (a) The requirements of Subsection (1)(d) do not apply to a person who filed a
933
certificate of assumed and of true name with the Division of Corporations and Commercial
934
Code on or before May 4, 1998, until December 31, 1998.
935
(b) On or after January 1, 1999, any person who carries on, conducts, or transacts
936
business in this state under an assumed name shall comply with the requirements of Subsection
937
(1)(d).
Legislative Review Note
as of 2-1-06 10:26 AM
Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.