Minnesota Session Laws - 1992, Regular Session

  

                         Laws of Minnesota 1992 

                        CHAPTER 503-S.F.No. 2088 
           An act relating to corporations; making miscellaneous 
          changes in provisions dealing with the organization 
          and operation of nonprofit corporations; amending 
          Minnesota Statutes 1990, sections 309.52, subdivision 
          1; 317A.011, subdivision 14; 317A.111, subdivision 3; 
          317A.227; 317A.251, subdivision 3; 317A.255, 
          subdivisions 1, 2, and by adding a subdivision; 
          317A.341, subdivision 2; 317A.431, subdivision 2; 
          317A.447; 317A.461; 317A.751, subdivision 3; 317A.821, 
          subdivision 3; and 317A.827, by adding a subdivision; 
          Minnesota Statutes 1991 Supplement, sections 317A.821, 
          subdivision 2; 317A.823; and 317A.827, subdivision 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 309.52, 
subdivision 1, is amended to read: 
    Subdivision 1.  No charitable organization, except as 
otherwise provided in section 309.515, shall solicit 
contributions from persons in this state by any means whatsoever 
unless, prior to any solicitation, there shall be on file with 
the attorney general upon forms provided by the attorney 
general, a registration statement containing, without 
limitation, the following information: 
    (a) Legally established name. 
    (b) Name or names under which it solicits contributions. 
    (c) Form of organization. 
    (d) Date and place of organization. 
    (e) Address of principal office in this state, or, if none, 
the name and address of the person having custody of books and 
records within this state. 
    (f) Names and addresses of, and total annual compensation 
paid to, officers, directors, trustees, and chief executive 
officer. 
    (g) Federal and state tax exempt status. 
    (h) Denial at any time by any governmental agency or court 
of the right to solicit contributions. 
    (i) Date on which accounting year of the charitable 
organization ends. 
    (j) General purposes for which organized. 
    (k) General purposes for which contributions to be 
solicited will be used. 
    (l) Methods by which solicitation will be made. 
    (m) Copies of contracts between charitable organization and 
professional fund raisers relating to financial compensation or 
profit to be derived by the professional fund raisers.  Where 
any such contract is executed after filing of the registration 
statement, a copy thereof shall be filed within seven days of 
the date of execution. 
    (n) Board, group or individual having final discretion as 
to the distribution and use of contributions received. 
    (o) The amount of total contributions received during the 
accounting year last ended. 
    (p) Such other information as the attorney general may by 
rule or order require to promote fairness of the solicitation 
and to assure full and fair disclosure of all material 
information to the attorney general. 
    Sec. 2.  Minnesota Statutes 1990, section 317A.011, 
subdivision 14, is amended to read: 
    Subd. 14.  [NOTICE.] (a) "Notice" is given by a member of a 
corporation to the corporation or an officer of the corporation 
when in writing and mailed or delivered to the corporation or 
the officer at the registered office of the corporation. 
    (b) Notice is given by the corporation to an a director, 
officer, member, or other person: 
    (1) when mailed to the person at an address designated by 
the person, at the last known address of the person or, in the 
case of an a director, officer, or member, at the address of the 
person in the corporate records; 
    (2) when communicated to the person orally; 
    (3) when handed to the person; 
    (4) when left at the office of the person with a clerk or 
other person in charge of the office, or if there is no one in 
charge, when left in a conspicuous place in the office; 
    (5) if the person's office is closed or the person to be 
notified has no office, when left at the dwelling or usual place 
of abode of the person with a person of suitable age and 
discretion residing in the house; or 
    (6) when the method is fair and reasonable when all the 
circumstances are considered.  
    (c) Notice by mail is given when deposited in the United 
States mail with sufficient postage.  Notice is considered 
received when it is given. 
    Sec. 3.  Minnesota Statutes 1990, section 317A.111, 
subdivision 3, is amended to read: 
    Subd. 3.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED IN 
ARTICLES OR BYLAWS.] The following provisions govern a 
corporation unless modified in the articles or bylaws:  
     (1) a certain method must be used for amending the articles 
(section 317A.133); 
     (2) a corporation has perpetual duration and certain powers 
(section 317A.161); 
     (3) certain procedures apply to the adoption, amendment, or 
repeal of bylaws by the members (section 317A.181); 
     (4) a director holds office until expiration of the 
director's term and election of a successor (section 317A.207); 
     (5) the term of a director filling a vacancy expires at the 
end of the term the director is filling (section 317A.207); 
     (6) the compensation of directors is fixed by the board 
(section 317A.211); 
     (7) a certain method must be used for removal of directors 
(section 317A.223); 
     (8) a certain method must be used for filling board 
vacancies (section 317A.227); 
     (9) board meetings must be held at least once per year and 
if the board fails to select a place for a board meeting, it 
must be held at the registered office (section 317A.231); 
     (10) a director may call a board meeting, and the notice of 
the meeting need not state the purpose of the meeting (section 
317A.231); 
    (11) a majority of the board is a quorum (section 
317A.235); 
    (12) the affirmative vote of the majority of directors 
present is required for board action (section 317A.237); 
    (13) a committee consists of one or more persons, who need 
not be directors, appointed by the board (section 317A.241); 
    (14) the president and treasurer have certain duties, until 
the board determines otherwise (section 317A.305); 
    (15) a certain method must be used for removal of officers 
(section 317A.341); 
     (16) officers may delegate some or all of their duties and 
powers, if not prohibited by the board from doing so (section 
317A.351); 
    (16) (17) a corporation does not have members (section 
317A.401); 
    (17) (18) the board may determine the consideration 
required to admit members (section 317A.401); 
    (18) (19) all members are entitled to vote and have equal 
rights and preferences in matters not otherwise provided for by 
the board or members (section 317A.401); 
    (19) (20) memberships may not be transferred (section 
317A.405); 
    (20) (21) a corporation with voting members must hold a 
regular meeting of voting members annually (section 317A.431); 
    (21) (22) if a specific minimum notice period has not been 
fixed by law, at least five days' notice is required for a 
meeting of members (section 317A.435); 
    (22) (23) the board may fix a date up to 60 days before the 
date of a members meeting as the date for determination of the 
members entitled to notice of and entitled to vote at the 
meeting (section 317A.437); 
    (23) (24) each member has one vote (section 317A.441); 
    (24) (25) the affirmative vote of the majority of members 
with voting rights present and entitled to vote is required for 
action of the members, unless this chapter or the articles or 
bylaws require a greater vote or voting by class (section 
317A.443); 
    (25) (26) members may take action at a meeting by voice or 
ballot, by unanimous action without a meeting, by mailed ballot, 
or by electronic communication (section 317A.443); 
    (26) (27) the number of members required for a quorum is 
ten percent of the members entitled to vote (section 317A.451); 
    (27) (28) certain procedures govern acceptance of member 
acts (section 317A.455); and 
    (28) (29) indemnification of certain persons is required 
(section 317A.521).  
    Sec. 4.  Minnesota Statutes 1990, section 317A.227, is 
amended to read: 
    317A.227 [VACANCIES.] 
    (a) Unless the articles or bylaws provide otherwise, and 
except as provided in paragraphs (b), (c), and (d), if a vacancy 
occurs on the board of directors, including a vacancy resulting 
from an increase in the number of directors: 
    (1) the members with voting rights, if any, may fill the 
vacancy; or 
    (2) the remaining members of the board, though less than a 
quorum, may fill the vacancy.  
    (b) If a vacant office was held by a director elected by a 
class, chapter, or other organizational unit or by region or 
other geographic grouping, only members of the class, chapter, 
unit, or grouping are entitled to vote to fill the vacancy.  
    (c) If a vacant office was held by an appointed director, 
only the person who appointed the director may fill the vacancy. 
    (d) If a vacant office was held by a designated director, 
the vacancy must be filled as provided in the articles or 
bylaws.  The vacancy may not be filled by the board unless 
authorized by the articles or bylaws.  
    (e) A vacancy that will occur at a specific later date may 
be filled before the vacancy occurs but the new director may not 
take office until the vacancy occurs. 
    Sec. 5.  Minnesota Statutes 1990, section 317A.251, 
subdivision 3, is amended to read: 
    Subd. 3.  [PRESUMPTION OF ASSENT; DISSENT.] A director who 
is present at a meeting of the board when an action is approved 
by the board is presumed to have assented to the action 
approved, unless the director:  
    (1) objects at the beginning of the meeting to the 
transaction of business because the meeting is not lawfully 
called or convened and does not participate in the meeting, in 
which case the director is not considered to be present at the 
meeting for purposes of this chapter; 
    (2) votes against the action at the meeting; or 
    (3) is prohibited from voting on the action by the articles 
or bylaws or by section 317A.255 from voting on the action as a 
result of a decision to approve, ratify, or authorize a 
transaction pursuant to section 317A.255 or a conflict of 
interest policy adopted by the board.  
    Sec. 6.  Minnesota Statutes 1990, section 317A.255, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CONFLICT; PROCEDURE WHEN CONFLICT 
ARISES.] (a) A contract or other transaction between a 
corporation and:  (1) its director, or between or a member of 
the family of its director and; (2) a director of a related 
organization, or between a corporation and a member of the 
family of a director of a related organization; or (3) an 
organization in or of which its director the corporation's 
director, or a member of the family of its director, is a 
director, officer, or legal representative or has a material 
financial interest,; is not void or voidable because the 
director or or the other individual or organization are parties 
or because the director is present at the meeting of the members 
or the board or a committee at which the contract or transaction 
is authorized, approved, or ratified, if: a requirement of 
paragraph (b) is satisfied. 
    (b) A contract or transaction described in paragraph (a) is 
not void or voidable if:  
    (1) the contract or transaction was, and the person 
asserting the validity of the contract or transaction has the 
burden of establishing that the contract or transaction was, 
fair and reasonable as to the corporation when it was 
authorized, approved, or ratified; 
    (2) the material facts as to the contract or transaction 
and as to the director's interest are fully disclosed or known 
to the members and the contract or transaction is approved in 
good faith by two-thirds of the members entitled to vote, other 
than not counting any vote that the interested director or 
directors might otherwise have, or the unanimous affirmative 
vote of all members, whether or not entitled to vote; 
    (3) the material facts as to the contract or transaction 
and as to the director's interest are fully disclosed or known 
to the board or a committee, and the board or committee 
authorizes, approves, or ratifies the contract or transaction in 
good faith by a majority of the board or committee, but not 
counting any vote that the interested director may not be 
counted might otherwise have, and not counting the director in 
determining the presence of a quorum and may not vote; or 
    (4) the contract or transaction is a merger or 
consolidation described in section 317A.601.  
    Sec. 7.  Minnesota Statutes 1990, section 317A.255, 
subdivision 2, is amended to read: 
    Subd. 2.  [MATERIAL FINANCIAL INTEREST.] For purposes of 
this section:  
    (1) a director does not have a material financial interest 
in a resolution fixing the compensation of the director or 
fixing the compensation of another director as a director, 
officer, employee, or agent of the corporation, even though the 
first director is also receiving compensation from the 
corporation; and 
    (2) a director has a material financial interest in an 
organization in which the director, or the spouse, parents, 
children and spouses of children, brothers and sisters or 
spouses of brothers and sisters of the director, have, or a 
member of the family of the director, has a material financial 
interest. 
    Sec. 8.  Minnesota Statutes 1990, section 317A.255, is 
amended by adding a subdivision to read: 
    Subd. 4.  [MEMBER OF THE FAMILY.] For purposes of this 
section, a member of the family of a director is a spouse, 
parent, child, spouse of a child, brother, sister, or spouse of 
a brother or sister. 
    Sec. 9.  Minnesota Statutes 1990, section 317A.341, 
subdivision 2, is amended to read: 
    Subd. 2.  [REMOVAL.] Except as otherwise provided in the 
articles or bylaws, an officer may be removed, with or without 
cause, by a resolution adopted by the board or by the members, 
whichever elected or appointed the officer.  The removal is 
without prejudice to contractual rights of the officer.  
    Sec. 10.  Minnesota Statutes 1990, section 317A.431, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEMAND BY MEMBERS.] If an annual meeting of 
voting members has not been held during the preceding 15 months, 
at least 50 members with voting rights or ten percent of the 
members with voting rights, whichever is less, may demand an 
annual meeting of members by written notice of demand given to 
the president or the treasurer of the corporation.  Within 30 
days after receipt of the demand, the board shall cause a 
meeting of members to be called and held at the expense of the 
corporation on notice no later than 90 days after receipt of the 
demand.  If the board fails to cause a meeting to be called and 
held as required by this subdivision, the members with voting 
rights making the demand may call the meeting at the expense of 
the corporation by giving notice as required by section 317A.435.
    Sec. 11.  Minnesota Statutes 1990, section 317A.447, is 
amended to read: 
    317A.447 [ACTION BY WRITTEN BALLOT.] 
    (a) Except as provided in paragraph (e) and unless 
prohibited or limited by the articles or bylaws, an action that 
may be taken at a regular or special meeting of members may be 
taken without a meeting if the corporation mails or delivers a 
written ballot to every member entitled to vote on the matter.  
    (b) A written ballot must: 
    (1) set forth each proposed action; and 
    (2) provide an opportunity to vote for or against each 
proposed action. 
    (c) Approval by written ballot under this section is valid 
only when if the number of votes cast by ballot equals or 
exceeds the quorum required to be present at a meeting 
authorizing the action, and the number of approvals equals or 
exceeds the number of votes that would be required to approve 
the matter at a meeting at which the total number of votes cast 
was the same as the number of votes cast by ballot.  
    (d) Solicitations for votes by written ballot must: 
    (1) indicate the number of responses needed to meet the 
quorum requirements; 
    (2) state the percentage of approvals necessary to approve 
each matter other than election of directors; and 
    (3) specify the time by which a ballot must be received by 
the corporation in order to be counted.  
    (e) Except as otherwise provided in the articles or bylaws, 
a written ballot may not be revoked.  
    Sec. 12.  Minnesota Statutes 1990, section 317A.461, is 
amended to read: 
    317A.461 [BOOKS AND RECORDS; FINANCIAL STATEMENT.] 
    Subdivision 1.  [ARTICLES AND BYLAWS; MINUTES.] A 
corporation shall keep at its registered office correct and 
complete copies of its articles and bylaws, accounting records, 
voting agreements, and minutes of meetings of members, board of 
directors, and committees having any of the authority of the 
board of directors for the last six years. 
    Subd. 2.  [INSPECTION.] A member or a director, or the 
agent or attorney of a member or a director, may inspect 
all books and records and voting agreements documents referred 
to in subdivision 1 or 3 for any proper purpose at any 
reasonable time.  A proper purpose is one reasonably related to 
the person's interest as a member or director of the corporation.
    Subd. 3.  [FINANCIAL STATEMENT.] Upon request, a 
corporation shall give the member or the director a statement 
showing the financial result of all operations and transactions 
affecting income and surplus during its last annual accounting 
period and a balance sheet containing a summary of its assets 
and liabilities as of the closing date of the accounting period. 
    Subd. 4.  [OTHER USE PROHIBITED.] A member or director who 
has gained access under this section to any corporate record may 
not use or furnish to another for use the corporate record or a 
portion of the contents for any purpose other than a proper 
purpose.  Upon application of the corporation, a court may issue 
a protective order or order other relief as may be necessary to 
enforce the provisions of this subdivision. 
    Subd. 5.  [COST OF COPIES.] The corporation may charge the 
requesting party a reasonable fee to cover the expenses of 
providing copies of documents under this section.  
    Subd. 6.  [COMPUTERIZED RECORDS.] The records maintained by 
a corporation may use any information storage technique, even 
though the technique makes them illegible visually, if the 
records can be converted accurately and within a reasonable time 
into a form that is legible visually and whose contents are 
assembled by related subject matter to permit convenient use by 
people in the normal course of business.  A corporation shall 
convert any of the records referred to in subdivision 1 or 3 
upon the request of a person entitled to inspect them, and the 
expense of the conversion must be borne by the person who bears 
the expense of copying under subdivision 5.  A copy of the 
conversion is admissible in evidence, and must be accepted for 
all other purposes, to the same extent as the existing or 
original records would be if they were legible visually.  
    Subd. 7.  [REMEDIES.] A member or a director who is 
wrongfully denied access to or copies of documents under this 
section may bring an action for injunctive relief, damages, and 
costs and reasonable attorney fees. 
    Sec. 13.  Minnesota Statutes 1990, section 317A.751, 
subdivision 3, is amended to read: 
    Subd. 3.  [ACTION BY DIRECTOR OR MEMBERS WITH VOTING 
RIGHTS.] A court may grant equitable relief in an action by a 
director or at least 50 members with voting rights or ten 
percent of the members with voting rights, whichever is less, 
when it is established that:  
    (1) the directors or the persons having the authority 
otherwise vested in the board are deadlocked in the management 
of the corporate affairs, the members cannot break the deadlock, 
and the corporation or the parties have not provided for a 
procedure to resolve the dispute; 
    (2) the directors or those in control of the corporation 
have acted fraudulently, illegally, or in a manner unfairly 
prejudicial toward one or more members in their capacities as 
members, directors, or officers; 
    (3) the members of the corporation are so divided in voting 
power that, for a period that includes the time when two 
consecutive regular meetings were held, they have failed to 
elect successors to directors whose terms have expired or would 
have expired upon the election and qualification of their 
successors; 
    (4) the corporate assets are being misapplied or wasted; or 
    (5) the period of duration as provided in the articles has 
expired and has not been extended as provided in section 
317A.801.  
    Sec. 14.  Minnesota Statutes 1991 Supplement, section 
317A.821, subdivision 2, is amended to read: 
    Subd. 2.  [LOSS OF GOOD STANDING; CORPORATE NAME.] A 
corporation that does not file the initial corporate 
registration required under subdivision 1 with the secretary of 
state on or before December 31, 1990, loses its good standing.  
To regain its good standing, the corporation must file the 
initial corporate registration.  If, as a part of the initial 
corporate registration process the corporation needs to bring 
its registered office address into compliance with section 
317A.011, subdivision 2, the fees stated in subdivision 1, 
paragraph (b), apply.  If a corporation loses its good standing 
under this subdivision, its corporate name or a name that is not 
distinguishable may be registered after January 1, 1992, by 
another person before the corporation regains its good 
standing.  If the name or a name that is not distinguishable has 
been registered by another person, the corporation may not file 
its initial corporate registration and regain its good standing 
unless it obtains the consent of the other person as provided in 
section 317A.115, subdivision 2, or adopts a new corporate name 
that complies with section 317A.115.  
     Sec. 15.  Minnesota Statutes 1990, section 317A.821, 
subdivision 3, is amended to read: 
    Subd. 3.  [DISSOLUTION; EXTENSION.] If a corporation fails 
to regain its good standing under subdivision 2 on or before 
December 31, 2000 1997, the corporation is dissolved under 
section 317A.827.  After December 31, 2000 1997, the corporate 
existence of a corporation dissolved under this subdivision may 
be extended by filing the initial corporate registration with 
the secretary of state and payment of a $1,000 fee.  The 
extension relates back to December 31, 2000 1997. 
    Sec. 16.  Minnesota Statutes 1991 Supplement, section 
317A.823, is amended to read: 
    317A.823 [ANNUAL CORPORATE REGISTRATION.] 
    Subdivision 1.  [NOTICE FROM SECRETARY OF STATE; 
REGISTRATION REQUIRED.] (a) Before February 1 of each year, the 
secretary of state shall mail a corporate registration form by 
first-class mail to each corporation that incorporated or filed 
a corporate registration during either of the previous two 
calendar years at its last registered office address listed on 
the records of the secretary of state.  The form must include 
the exact legal corporate name and registered office address 
currently on file with the secretary of state along with the 
name of the person who performs the functions of the president.  
The secretary of state may also give notice of the requirement 
to file the annual registration by any other means the secretary 
of state considers appropriate.  
    (b) A corporation shall file a corporate registration with 
the secretary of state once each calendar year.  The 
registration must include the exact legal corporate name and 
registered office address of the corporation and must be signed 
by an authorized person.  If the corporation has changed its 
registered office address to an address other than that listed 
on the records of the secretary of state, the corporation shall 
file the new registered office address on the registration 
form.  A fee of $35 must be paid for filing the registered 
office address change.  The new address must comply with section 
317A.011, subdivision 2, and must have been approved by the 
board.  
    Subd. 2.  [LOSS OF GOOD STANDING; CORPORATE NAME.] A 
corporation that files an initial corporate registration under 
section 317A.821 or that is incorporated on or after January 1, 
1990, and that does not file a corporate registration during a 
calendar year loses its good standing after December 31 of that 
year.  To regain its good standing, the corporation must file a 
single annual corporate registration and pay a $25 fee.  If a 
corporation loses its good standing under this subdivision, its 
corporate name or a name that is not distinguishable may be 
registered by another person before the corporation regains its 
good standing.  If the name or a name that is not 
distinguishable has been registered by another person, the 
corporation may not file its corporate registration and regain 
its good standing unless it obtains the consent of the other 
person as provided in section 317A.115, subdivision 2, or adopts 
a new corporate name that complies with section 317A.115.  
    Subd. 3.  [NOTICE; DISSOLUTION.] If a corporation fails to 
file a report required under this section for three consecutive 
calendar years, the secretary of state shall give notice to the 
corporation by first-class mail at its registered office and by 
any other means of notice that the secretary of state considers 
appropriate, that it has violated this section and is subject to 
dissolution under section 317A.827 if the delinquent 
registration is not filed with a $25 fee within 60 days after 
the mailing of the notice or the date of the alternative 
notice.  For purposes of this subdivision, "delinquent 
registration" means a single registration.  A corporation that 
fails to file the delinquent annual registration within the 60 
days is dissolved under section 317A.827.  
    Sec. 17.  Minnesota Statutes 1991 Supplement, section 
317A.827, subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURE.] If a corporation requests 
dissolution as part of the initial registration under section 
317A.821, if it fails to file the initial registration by 
December 31, 2000 1997, or if it fails to file the delinquent 
registration before expiration of the 60-day period in section 
317A.823, subdivision 3, the secretary of state shall 
immediately issue a certificate of dissolution and file a copy 
in the office of the secretary of state.  If the corporation is 
dissolved for failure to file a registration, the secretary of 
state shall issue a certificate of involuntary dissolution.  The 
secretary of state shall send the original certificate to the 
registered office of the corporation and file a copy in the 
office of the secretary of state.  The secretary of state shall 
annually inform the attorney general of the names of 
corporations dissolved under this section during the previous 
year and indicate whether the dissolution was voluntary or 
involuntary.  A corporation dissolved under this section is not 
entitled to the benefits of section 317A.781, subdivision 1. 
    Sec. 18.  Minnesota Statutes 1990, section 317A.827, is 
amended by adding a subdivision to read: 
    Subd. 3.  [REACTIVATION.] If a corporation is dissolved for 
failure to file the annual registration for three consecutive 
years, it may reactivate by paying a $25 fee, filing the annual 
registration, and filing any necessary amendment, including the 
filing fees for the amendment. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 23, 1992, 11:48 a.m.