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Arkansas House Bill HB1533

Arkansas 2025 Regular Session

Arkansas House Bill HB1533 Compare Versions

Only one version of the bill is available at this time.
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11 Stricken language would be deleted from and underlined language would be added to present law.
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33 State of Arkansas 1
44 95th General Assembly A Bill 2
55 Regular Session, 2025 HOUSE BILL 1533 3
66 4
77 By: Representative Gramlich 5
88 6
99 7
1010 For An Act To Be Entitled 8
1111 AN ACT TO CREATE THE DECENTRALIZED UNINCORPORATED 9
1212 NONPROFIT ASSOCIATION ACT; AND FOR OTHER PURPOSES. 10
1313 11
1414 12
1515 Subtitle 13
1616 TO CREATE THE DECENTRALIZED 14
1717 UNINCORPORATED NONPROFIT ASSOCIATION 15
1818 ACT. 16
1919 17
2020 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 18
2121 19
2222 SECTION 1. Arkansas Code Title 4, Chapter 28, is amended to add an 20
2323 additional subchapter to read as follows: 21
2424 Subchapter 7 — Decentralized Unincorporated Nonprofit Association Act 22
2525 23
2626 4-28-701. Title. 24
2727 This subchapter shall be known and may be cited as the “Decentralized 25
2828 Unincorporated Nonprofit Association Act”. 26
2929 27
3030 4-28-702. Definitions. 28
3131 As used in this subchapter: 29
3232 (1) “Administrator” means a member of a decentralized 30
3333 unincorporated nonprofit association authorized by vote of the membership to 31
3434 fulfill administrative or operational tasks; 32
3535 (2) “Decentralized unincorporated nonprofit association” means 33
3636 an unincorporated nonprofit association: 34
3737 (A) Consisting of at least one hundred (100) members 35
3838 joined by mutual consent under an agreement which may be in writing or 36 HB1533
3939
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4141 implied from conduct, for a common nonprofit purpose; 1
4242 (B) That has elected to be organized under this 2
4343 subchapter; and 3
4444 (C) That is not formed under any other statute that 4
4545 governs its organization and operation; 5
4646 (3)(A) “Digital asset” means a representation of economic, 6
4747 proprietary, or access rights stored in a computer readable format. 7
4848 (B) “Digital asset” does not include any underlying asset 8
4949 unless the asset itself is an electronic record; 9
5050 (4) “Distributed ledger technology” means a software protocol 10
5151 that: 11
5252 (A) Governs the rules, operations, and communications 12
5353 between intersection and connection points in a telecommunications network 13
5454 and its supporting infrastructure; 14
5555 (B) Includes the computer software, hardware, or 15
5656 collection of computer software and hardware, which use or enable distributed 16
5757 ledger technologies, including blockchain; and 17
5858 (C) Uses a distributed, shared, and replicated ledger, 18
5959 which may: 19
6060 (i) Be public or private; 20
6161 (ii) Be permissioned or permissionless; or 21
6262 (iii) Include the use of a digital asset as a medium 22
6363 of electronic exchange; 23
6464 (5) “Distribution” means the payment of a dividend or any part 24
6565 of the income or profit of a decentralized unincorporated nonprofit 25
6666 association to its members or administrators; 26
6767 (6) “Established practices” means the practices used by a 27
6868 decentralized unincorporated nonprofit association without material change 28
6969 during the most recent five (5) years of its existence, or if it has existed 29
7070 for less than five (5) years, during its entire existence; 30
7171 (7)(A) “Governing principles” means all agreements, including 31
7272 without limitation articles of association, consensus formation algorithms, 32
7373 or enacted governance proposals, whether in a record, implied from its 33
7474 established practices, or in any combination thereof, that govern the purpose 34
7575 or operation of a decentralized unincorporated nonprofit association and the 35
7676 rights and obligations of its members and administrators. 36 HB1533
7777
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7979 (B) “Governing principles” includes any amendment or 1
8080 restatement of the agreements constituting the governing principles of a 2
8181 decentralized unincorporated nonprofit association; 3
8282 (8) “Member” means a person that, under the governing principles 4
8383 of a decentralized unincorporated nonprofit association, may participate in 5
8484 the development of the policies and activities of the decentralized 6
8585 unincorporated nonprofit association or the selection of administrators; 7
8686 (9) “Membership interest” means a member’s voting right in a 8
8787 decentralized unincorporated nonprofit association as determined by the 9
8888 decentralized unincorporated nonprofit association’s governing principles; 10
8989 (10) “Person” means a natural person, a partnership, whether 11
9090 general or limited, a limited liability company, a trust, including without 12
9191 limitation a common-law trust, business trust, statutory trust, voting trust, 13
9292 or any other form of trust, an estate, an association, including without 14
9393 limitation any group, organization, cotenancy, plan, board, council or 15
9494 committee, a corporation, a government, including without limitation a 16
9595 country, state, county, or any other governmental subdivision, agency, or 17
9696 instrumentality, a custodian, a nominee, or any other individual or entity, 18
9797 or series thereof, in its own capacity or any representative capacity, in 19
9898 each case, whether domestic or foreign; 20
9999 (11) “Record” means information that is inscribed on a tangible 21
100100 medium or that is stored in an electronic or other medium and is retrievable 22
101101 in a perceivable form; 23
102102 (12) “Smart contract” means a computational process that 24
103103 executes on distributed ledger technology used to automate transactions, 25
104104 including without limitation: 26
105105 (A) Facilitating or instructing transfers of assets; 27
106106 (B) Creating and transmitting digital assets; 28
107107 (C) Synchronizing information; 29
108108 (D) Authenticating user rights and conveying access to 30
109109 software applications; or 31
110110 (E) Effectuating membership votes within an organization; 32
111111 and 33
112112 (13) “State” means a state of the United States, the District of 34
113113 Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 35
114114 insular possession subject to the jurisdiction of the United States. 36 HB1533
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117117 1
118118 4-28-703. Relation to other law. 2
119119 (a) Principles of law and equity supplement this subchapter unless 3
120120 displaced by a particular provision of the subchapter. 4
121121 (b) This subchapter does not repeal or modify a statute or rule for 5
122122 organizations that do not elect to become decentralized unincorporated 6
123123 nonprofit associations. 7
124124 8
125125 4-28-704. Governing law. 9
126126 (a) The law of this state governs any decentralized unincorporated 10
127127 nonprofit association that is formed in this state. 11
128128 (b) A decentralized unincorporated nonprofit association's governing 12
129129 principles shall identify the jurisdiction in which the association is 13
130130 formed. 14
131131 15
132132 4-28-705. Legal entity — Perpetual existence — Powers. 16
133133 A decentralized unincorporated nonprofit association: 17
134134 (1) Is a legal entity distinct from its members and 18
135135 administrators; 19
136136 (2) Has perpetual duration unless its governing principles 20
137137 otherwise specify; and 21
138138 (3)(A) May engage in profit-making activities. 22
139139 (B) Any profits under subdivision (3)(A) of this section 23
140140 shall be used in furtherance of, or set aside for, the decentralized 24
141141 unincorporated nonprofit association’s common nonprofit purpose. 25
142142 26
143143 4-28-706. Distributions prohibited — Compensation and other permitted 27
144144 payments. 28
145145 (a) Except as otherwise provided in subsection ( b) of this section, a 29
146146 decentralized unincorporated nonprofit association shall not pay dividends or 30
147147 distribute any part of its income or profits to its members or 31
148148 administrators. 32
149149 (b) A decentralized unincorporated nonprofit association may: 33
150150 (1) Pay reasonable compensation or reimburse reasonable expenses 34
151151 to its members, administrators, and persons outside the organization for 35
152152 services rendered, including with respect to the administration and operation 36 HB1533
153153
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155155 of the decentralized unincorporated nonprofit association, which may include 1
156156 without limitation the provision of collateral for the self -insurance of the 2
157157 decentralized unincorporated nonprofit association, voting and participation; 3
158158 (2) Confer benefits on its members or administrators in 4
159159 conformity with its common nonprofit purpose or purposes; 5
160160 (3) Repurchase membership interests to the extent authorized by 6
161161 its governing principles; and 7
162162 (4) Make distributions of property to members upon winding up 8
163163 and termination to the extent permitted by § 4 -28-728. 9
164164 10
165165 4-28-707. Ownership and transfer of property. 11
166166 (a) A decentralized unincorporated nonprofit association in its own 12
167167 name may acquire, hold, encumber, or transfer an estate or interest in real 13
168168 or personal property. 14
169169 (b) A decentralized unincorporated nonprofit association may be a 15
170170 beneficiary of a trust or contract, a legatee, or a devisee. 16
171171 17
172172 4-28-708. Statement of authority as to real property — Definition. 18
173173 (a) As used in this section, “statement of authority” means a 19
174174 statement authorizing a person to transfer an interest in real property held 20
175175 in the name of a decentralized unincorporated nonprofit association. 21
176176 (b) An interest in real property held in the name of a decentralized 22
177177 unincorporated nonprofit association may be transferred by a person 23
178178 authorized to do so in a statement of authority recorded by the decentralized 24
179179 unincorporated nonprofit association in the office in the county in which a 25
180180 transfer of the property would be recorded. 26
181181 (c) A statement of authority shall state: 27
182182 (1) The name of the decentralized unincorporated nonprofit 28
183183 association; 29
184184 (2) The address in this state, including the street address, if 30
185185 any, of the decentralized unincorporated nonprofit association or, if the 31
186186 decentralized unincorporated nonprofit association does not have an address 32
187187 in this state, its out -of-state address; 33
188188 (3) That the decentralized unincorporated nonprofit association 34
189189 is a decentralized unincorporated nonprofit association; and 35
190190 (4) The action, procedure or vote of the decentralized 36 HB1533
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193193 unincorporated nonprofit association that authorizes the person to transfer 1
194194 the real property of the decentralized unincorporated nonprofit association 2
195195 and that authorizes the person to execute the statement of authority. 3
196196 (d) A statement of authority shall be executed in the same manner as 4
197197 an affidavit by a person who is not the person authorized to transfer the 5
198198 estate or interest. 6
199199 (e) A filing officer may collect a fee for recording a statement of 7
200200 authority in the amount authorized for recording a transfer of real property. 8
201201 (f) A record amending, revoking, or canceling a statement of authority 9
202202 or stating that the statement is unauthorized for recording an original 10
203203 statement may be filed. 11
204204 (g) Unless canceled earlier, a recorded statement of authority and its 12
205205 most recent amendment shall expire five (5) years after the date of the most 13
206206 recent recording. 14
207207 (h) If the record title to real property is in the name of a 15
208208 decentralized unincorporated nonprofit association and the statement of 16
209209 authority is recorded in the office of the county in which a transfer of real 17
210210 property would be recorded, the authority of the person named in a statement 18
211211 of authority under subdivision (c)(4) of this section is conclusive in favor 19
212212 of a person who gives value without notice that the person lacks authority. 20
213213 21
214214 4-28-709. Liability. 22
215215 (a)(1) A debt, obligation, or other liability of a decentralized 23
216216 unincorporated nonprofit association is solely the debt, obligation, or other 24
217217 liability of the decentralized unincorporated nonprofit association. 25
218218 (2) A member or administrator is not personally liable, directly 26
219219 or indirectly, by way of contribution or otherwise for a debt, obligation, or 27
220220 other liability of the decentralized unincorporated nonprofit association 28
221221 solely by reason of being or acting as a member or administrator. 29
222222 (3) Subdivisions (a)(1) and (a)(2) of this subsubsection apply 30
223223 regardless of the dissolution of the decentralized unincorporated nonprofit 31
224224 association. 32
225225 (b) A person’s status as a member or administrator does not prevent or 33
226226 restrict law other than this subchapter from imposing liability on the person 34
227227 or the decentralized unincorporated nonprofit association because of the 35
228228 person’s conduct. 36 HB1533
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231231 (c) The failure of a decentralized unincorporated nonprofit 1
232232 association to observe formalities relating to the exercise of its powers or 2
233233 administration of its activities and affairs is not grounds for imposing 3
234234 liability on a member or administrator of the decentralized unincorporated 4
235235 nonprofit association for a debt, obligation, or other liability of the 5
236236 decentralized unincorporated nonprofit association. 6
237237 7
238238 4-28-710. Assertion and defense of claims. 8
239239 (a) A decentralized unincorporated nonprofit association, in its own 9
240240 name, may institute, defend, intervene, or participate in a judicial, 10
241241 administrative, or other governmental proceeding or in an arbitration, 11
242242 mediation, or any other form of alternative dispute resolution. 12
243243 (b)(1) A member or administrator may assert a claim the member or 13
244244 administrator has against the decentralized unincorporated nonprofit 14
245245 association. 15
246246 (2) A decentralized unincorporated nonprofit association may 16
247247 assert a claim it has against a member or administrator. 17
248248 18
249249 4-28-711. Effect of judgment or order. 19
250250 A judgment or order against a decentralized unincorporated nonprofit 20
251251 association is not by itself a judgment or order against a member or 21
252252 administrator. 22
253253 23
254254 4-28-712. Appointment of agent to receive service of process. 24
255255 (a) A decentralized unincorporated nonprofit association may file in 25
256256 the office of the Secretary of State a statement appointing an agent 26
257257 authorized to receive service of process. 27
258258 (b) A statement appointing an agent shall set forth: 28
259259 (1) The name of the decentralized unincorporated nonprofit 29
260260 association; and 30
261261 (2) The name of the person in this state authorized to receive 31
262262 service of process and the person’s address, including the street address, in 32
263263 this state. 33
264264 (c)(1) A statement appointing an agent shall be signed and 34
265265 acknowledged by a person authorized by the decentralized unincorporated 35
266266 nonprofit association. 36 HB1533
267267
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269269 (2) The statement required under subdivision (c)(1) of this 1
270270 section shall be signed and acknowledged by the person appointed agent, who 2
271271 thereby accepts the appointment. 3
272272 (3) The appointed agent may resign by filing a resignation in 4
273273 the office of the Secretary of State and giving notice to the decentralized 5
274274 unincorporated nonprofit association. 6
275275 (d) The Secretary of State may collect a fee for filing a statement 7
276276 appointing an agent to receive service of process, an amendment, or a 8
277277 resignation in the amount charged for filing similar documents. 9
278278 (e) An amendment to or cancellation of a statement appointing an agent 10
279279 to receive service of process shall meet the requirements for execution of an 11
280280 original statement. 12
281281 (f) An amendment shall be filed to update the office of the Secretary 13
282282 of State as to any change regarding an agent authorized to receive service of 14
283283 process within thirty (30) days of a change being made. 15
284284 16
285285 4-28-713. Service of process. 17
286286 In an action or proceeding against a decentralized unincorporated 18
287287 nonprofit association, a summons and complaint or other process shall be 19
288288 served on an agent authorized by appointment to receive service of process, 20
289289 any appointed administrator of the decentralized unincorporated nonprofit 21
290290 association, or in any other manner authorized by the law of this state. 22
291291 23
292292 4-28-714. Claim not abated by change of members or other persons. 24
293293 A claim for relief against a decentralized unincorporated nonprofit 25
294294 association does not abate because of a change in its members or persons 26
295295 authorized to administer the affairs of the decentralized unincorporated 27
296296 nonprofit association. 28
297297 29
298298 4-28-715. Venue. 30
299299 In addition to any other applicable state laws providing venue, venue 31
300300 of an action against a decentralized unincorporated nonprofit association may 32
301301 be brought in this state in the county in which the decentralized 33
302302 unincorporated nonprofit association has appointed an agent for services 34
303303 under § 4-28-712. 35
304304 36 HB1533
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307307 4-28-716. Member has no agency power. 1
308308 A member of a decentralized unincorporated nonprofit association is not 2
309309 an agent of the decentralized unincorporated nonprofit association solely by 3
310310 reason of being a member. 4
311311 5
312312 4-28-717. Member approval. 6
313313 (a) Except as otherwise provided in the governing principles, a 7
314314 decentralized unincorporated nonprofit association shall have the approval of 8
315315 its members according to its governing principles to: 9
316316 (1) Suspend, dismiss, or expel a member; 10
317317 (2) Select or dismiss an administrator; 11
318318 (3) Adopt, amend, or repeal the governing principles; 12
319319 (4) Sell, lease, exchange, or otherwise dispose of all, or 13
320320 substantially all, of the decentralized unincorporated nonprofit 14
321321 association’s property, with or without the decentralized unincorporated 15
322322 nonprofit association’s goodwill, outside the ordinary course of its 16
323323 activities; 17
324324 (5) Dissolve under § 4 -28-727, merge under § 4 -28-729, or 18
325325 convert under § 4-28-730; 19
326326 (6) Undertake any other act outside the ordinary course of the 20
327327 decentralized unincorporated nonprofit association’s activities; or 21
328328 (7) Determine the policy and purposes of the decentralized 22
329329 unincorporated nonprofit association. 23
330330 (b) A decentralized unincorporated nonprofit association shall have 24
331331 the approval of the members according to its governing principles to do any 25
332332 other acts or exercise a right that the governing principles require to be 26
333333 approved by members. 27
334334 (c) Unless otherwise provided for in the governing principles, 28
335335 membership interest in a decentralized unincorporated nonprofit association 29
336336 shall be calculated in proportion to members' voting rights within the 30
337337 decentralized unincorporated nonprofit association. 31
338338 32
339339 4-28-718. Utilization of distributed ledger technology. 33
340340 (a) A decentralized unincorporated nonprofit association may provide 34
341341 for its governance, in whole or in part, through distributed ledger 35
342342 technology, including smart contracts. 36 HB1533
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345345 (b) The governing principles for a decentralized unincorporated 1
346346 nonprofit association may: 2
347347 (1) Specify whether any distributed ledger technology utilized 3
348348 or enabled by the decentralized unincorporated nonprofit association shall be 4
349349 fully immutable or subject to change and whether any such ledger shall be 5
350350 fully or partially public or private, including the extent of members’ access 6
351351 to information; and 7
352352 (2) Adopt voting procedures, which may include smart contracts 8
353353 deployed to distributed ledger technology that provide for the following: 9
354354 (A) Proposals from administrators or members in the 10
355355 decentralized unincorporated nonprofit association for upgrades, 11
356356 modifications or additions to software systems or protocols; 12
357357 (B) Other proposed changes to the decentralized 13
358358 unincorporated nonprofit association’s governing principles; and 14
359359 (C) Any other matters of governance or activities within 15
360360 the purpose of the decentralized unincorporated nonprofit association. 16
361361 17
362362 4-28-719. Consensus formation algorithms and governance process. 18
363363 According to its governing principles, a decentralized unincorporated 19
364364 nonprofit association may: 20
365365 (1) Adopt any reasonable algorithm for establishing consensus 21
366366 for the validation of records, as well as for establishing requirements, 22
367367 processes, and procedures for conducting operations, or making organizational 23
368368 decisions with respect to the distributed ledger technology used by the 24
369369 decentralized unincorporated nonprofit association; and 25
370370 (2) According to any procedure specified under § 4 -28-718, 26
371371 modify the consensus mechanism as well as the requirements, processes, and 27
372372 procedures, or substitute a new consensus mechanism, requirement, processes, 28
373373 or procedures that comply with the requirements of law and the govern ing 29
374374 principles of the decentralized unincorporated nonprofit association. 30
375375 31
376376 4-28-720. Duties to members. 32
377377 (a) A member does not have any fiduciary duty to a decentralized 33
378378 unincorporated nonprofit association or to any other member of the 34
379379 decentralized unincorporated nonprofit association solely by being a member. 35
380380 (b) A member shall discharge the duties and obligations under this 36 HB1533
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383383 subchapter or under the governing principles and exercise any rights 1
384384 consistent with the contractual obligation of good faith and fair dealing. 2
385385 3
386386 4-28-721. Admission, suspension, dismissal, or expulsion of members. 4
387387 (a)(1) A person becomes a member according to the governing principles 5
388388 of the decentralized unincorporated nonprofit association. 6
389389 (2) If there are no applicable governing principles, a person 7
390390 shall: 8
391391 (A) Be considered a member upon such person’s purchase or 9
392392 assumption of a right of ownership of a membership interest or other property 10
393393 or instruments that confers upon a person a voting right within the 11
394394 decentralized unincorporated nonprofit association; and 12
395395 (B) Continue as a member until the earlier of the person’s 13
396396 resignation under § 4 -28-722 or expulsion under subsection (b) of this 14
397397 section. 15
398398 (b)(1) A member may be suspended or expelled according to the 16
399399 governing principles of the decentralized unincorporated nonprofit 17
400400 association. 18
401401 (2) If there are no applicable governing principles, a person 19
402402 may be suspended or expelled from a decentralized unincorporated nonprofit 20
403403 association only by a vote of its members. 21
404404 (c) Unless the governing principles provide otherwise, the suspension 22
405405 or expulsion of a member does not relieve the member from any obligation 23
406406 incurred or commitment made by the member before suspension or expulsion. 24
407407 25
408408 4-28-722. Member’s resignation. 26
409409 (a)(1) A member may resign as a member of a decentralized 27
410410 unincorporated nonprofit association according to the governing principles. 28
411411 (2) In the absence of applicable governing principles, a member 29
412412 shall be deemed to have resigned as a member upon the disposal, voluntary or 30
413413 involuntary, of all membership interest or other property or inst ruments that 31
414414 confers upon the person a voting right within the decentralized 32
415415 unincorporated nonprofit association. 33
416416 (b) Unless a decentralized unincorporated nonprofit association’s 34
417417 governing principles provide otherwise, resignation of a member does not 35
418418 relieve the member from any unpaid capital contribution, dues, assessments, 36 HB1533
419419
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421421 fees, or other obligation incurred or commitment made by the member before 1
422422 resignation. 2
423423 3
424424 4-28-723. Membership interest transferable. 4
425425 Except as otherwise provided in the decentralized unincorporated 5
426426 nonprofit association’s governing principles, a member’s interest or any 6
427427 right thereunder is freely transferable to another person through conveyance 7
428428 of membership interest. 8
429429 9
430430 4-28-724. Selection of administrators — Rights and duties of 10
431431 administrators. 11
432432 (a) Except as otherwise provided in this subchapter or a decentralized 12
433433 unincorporated nonprofit association’s governing principles, the members may 13
434434 select the decentralized unincorporated nonprofit association’s 14
435435 administrators according to § 4 -28-717. 15
436436 (b) If an administrator is not selected, then no member of the 16
437437 association is an administrator. 17
438438 (c) As there is no requirement that a decentralized unincorporated 18
439439 nonprofit association should have administrators, there are no default 19
440440 obligations, and the rights and duties of an administrator or administrators 20
441441 are a result of the specific authority authorized by the decentralized 21
442442 unincorporated nonprofit association through approval of its members 22
443443 according to § 4-28-717 and contractual agreement with its administrator or 23
444444 administrators. 24
445445 (d) An administrator has no authority to act on behalf of the 25
446446 decentralized unincorporated nonprofit association beyond the specific 26
447447 authorization granted in the selection process. 27
448448 (e) If in a record, the governing principles of a decentralized 28
449449 unincorporated nonprofit association may limit or eliminate the liability of 29
450450 an administrator to the decentralized unincorporated nonprofit association or 30
451451 its members for money damages for any action taken, or for failure to take 31
452452 any action, as an administrator except liability for: 32
453453 (1) The amount of financial benefit improperly received by an 33
454454 administrator; 34
455455 (2) An intentional infliction of harm on the decentralized 35
456456 unincorporated nonprofit association or its members; 36 HB1533
457457
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459459 (3) An intentional violation of criminal law; 1
460460 (4) A breach of the duty of loyalty should one exist, unless a 2
461461 full disclosure of all material facts, a specific act or transaction that 3
462462 would otherwise violate the duty of loyalty by an agent be authorized by 4
463463 approval of the disinterested members under § 4 -28-717; or 5
464464 (5) Improper distributions. 6
465465 7
466466 4-28-725. Rights of members and administrators to information. 8
467467 (a) On reasonable notice, a member or administrator of a decentralized 9
468468 unincorporated nonprofit association is entitled to an electronic record of 10
469469 any record maintained by the decentralized unincorporated nonprofit 11
470470 association regarding its activities, financial condition, and other 12
471471 circumstances, to the extent the information exists and is material to the 13
472472 member’s or administrator’s rights and duties under the decentralized 14
473473 unincorporated nonprofit association’s governing principles of this 15
474474 subchapter, subject to subsection (b) of this section. 16
475475 (b) A decentralized unincorporated nonprofit association has no 17
476476 obligation to furnish any record maintained by the decentralized 18
477477 unincorporated nonprofit association for record requests which the member or 19
478478 administrator has access, including through records made available on 20
479479 distributed ledger technology . 21
480480 (c) A decentralized unincorporated nonprofit association may impose 22
481481 reasonable restrictions on access to and use of information to be furnished 23
482482 under this section, including designating the information confidential and 24
483483 imposing nondisclosure and safeguarding obligations on the recipient. 25
484484 (d) A former member or administrator may have access to information to 26
485485 which the member or administrator was entitled while a member or 27
486486 administrator if the information pertains to the period during which the 28
487487 person was a member or administrator, the former member or administrator 29
488488 seeks the information in good faith, and the former member or administrator 30
489489 satisfies the requirements of subsections (a) —(c) of this section. 31
490490 (e) A decentralized unincorporated nonprofit association has no 32
491491 obligation to collect and maintain member listings. 33
492492 34
493493 4-28-726. Reimbursement — Indemnification — Advancement of expenses — 35
494494 Insurance. 36 HB1533
495495
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497497 (a) Except as otherwise provided in a decentralized unincorporated 1
498498 nonprofit association’s governing principles, members or administrators may 2
499499 be reimbursed for authorized expenses reasonably incurred on behalf of the 3
500500 decentralized unincorporated nonprofit association. 4
501501 (b)(1) A decentralized unincorporated nonprofit association may 5
502502 indemnify a member or manager for any debt, obligation, or other liability 6
503503 incurred during the member or administrator’s activities on behalf of the 7
504504 decentralized unincorporated nonprofit association. 8
505505 (2) To be eligible for indemnification, an administrator shall 9
506506 have complied with the duties stated in § 4 -28-724. 10
507507 (3) If in a record, a decentralized unincorporated nonprofit 11
508508 association’s governing principles may broaden or limit this right of 12
509509 indemnification. 13
510510 (c)(1) If a person is made or threatened to be made a party in a 14
511511 proceeding based on that person’s conduct of the affairs of a decentralized 15
512512 unincorporated nonprofit association, that person is entitled, upon written 16
513513 request to the decentralized unincorporated nonprofit association, and 17
514514 approval, in a record, of the disinterested members under § 4 -28-717 of this 18
515515 subchapter, to receive payment of or reimbursement by the decentralized 19
516516 unincorporated nonprofit association of reasonable expenses, including 20
517517 attorney’s fees and disbursements, incurred by that person in advance of the 21
518518 final disposition of the proceeding. 22
519519 (2) To be entitled to the advance payments or reimbursements 23
520520 under subdivision (c)(1) of this section, the person making the request shall 24
521521 make a written affirmation that the person has a good faith belief that the 25
522522 criteria for indemnification in subsection (a) of this section have been 26
523523 satisfied and that the person will repay the amounts paid or reimbursed if it 27
524524 is determined that the criteria for reimbursement have not been satisfied. 28
525525 (d) A decentralized unincorporated nonprofit association may purchase 29
526526 and maintain insurance on behalf of a member or administrator for liability 30
527527 asserted against or incurred by the member or administrator in that capacity, 31
528528 whether or not the decentralized unincorporated nonprofit association would 32
529529 have the power to indemnify or advance expenses to the member or 33
530530 administrator against the same liability under this subchapter. 34
531531 (e) These rights of reimbursement, indemnification, and advancement of 35
532532 expense apply to former members or administrators for activities undertaken 36 HB1533
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535535 on behalf of the decentralized unincorporated nonprofit association while 1
536536 they were members or administrators. 2
537537 3
538538 4-28-727. Dissolution — Continuation of existence. 4
539539 (a) A decentralized unincorporated nonprofit association may be 5
540540 dissolved by any of the following methods: 6
541541 (1) If the governing principles of the association provide a 7
542542 time or method for dissolution by that method; 8
543543 (2) If the governing principles of the association do not 9
544544 provide a method for dissolution, upon approval of the members according to § 10
545545 4-28-717; 11
546546 (3) If membership in the organization falls below one hundred 12
547547 (100) members; or 13
548548 (4) By court order. 14
549549 (b) After dissolution, a decentralized unincorporated nonprofit 15
550550 association shall continue in existence until its activities have been wound 16
551551 up and it is terminated under § 4 -28-728. 17
552552 18
553553 4-28-728. Winding up and termination. 19
554554 (a) A dissolved decentralized unincorporated nonprofit association 20
555555 shall wind up its business and the decentralized unincorporated nonprofit 21
556556 association continues after dissolution only for the purpose of winding up. 22
557557 (b) In winding up a decentralized unincorporated nonprofit 23
558558 association, the members shall: 24
559559 (1) Discharge the decentralized unincorporated nonprofit 25
560560 association’s debts, obligations, and other liabilities; 26
561561 (2) Settle and close the decentralized unincorporated nonprofit 27
562562 association’s business; and 28
563563 (3) Marshal and distribute any remaining property: 29
564564 (i) As required by law other than this subchapter that 30
565565 requires assets of a decentralized unincorporated nonprofit association to be 31
566566 distributed to another entity or person with similar nonprofit purposes; 32
567567 (ii) According to the decentralized unincorporated 33
568568 nonprofit association’s governing principles and in the absence of applicable 34
569569 governing principles, to the current members of the association in proportion 35
570570 to their membership interests; or 36 HB1533
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573573 (iii) If neither subdivisions (b)(3)(i) or (b)(3)(ii) of 1
574574 this section applies, then under the Unclaimed Property Act, § 18 -28-201 et 2
575575 seq. 3
576576 (c) In winding up a decentralized unincorporated nonprofit 4
577577 association, the members may: 5
578578 (1) Appoint an administrator or administrators authorized to 6
579579 wind up the decentralized unincorporated nonprofit association according to § 7
580580 4-28-717; 8
581581 (2) Preserve the decentralized unincorporated nonprofit 9
582582 association operations and property as a going concern for a reasonable time; 10
583583 (3) Prosecute and defend actions and proceedings, whether civil, 11
584584 criminal, or administrative; 12
585585 (4) Transfer the decentralized unincorporated nonprofit 13
586586 association’s property; 14
587587 (5) Settle disputes by mediation or arbitration; 15
588588 (6) Receive reasonable compensation for services rendered in 16
589589 winding up the decentralized unincorporated nonprofit association; and 17
590590 (7) Perform other acts necessary or appropriate to the winding 18
591591 up. 19
592592 (d) If the members of decentralized unincorporated nonprofit 20
593593 association do not appoint an administrator or administrators to wind up the 21
594594 decentralized unincorporated nonprofit association, the members themselves 22
595595 shall each owe the decentralized unincorporated nonprofit association a duty 23
596596 of care in the conduct or winding up of the decentralized unincorporated 24
597597 nonprofit association operations to refrain from engaging in grossly 25
598598 negligent or reckless conduct, willful or intentional misconduct, or a 26
599599 knowing violation of the law. 27
600600 28
601601 4-28-729. Mergers — Definitions. 29
602602 (a) As used in this section: 30
603603 (1) "Constituent organization" means an organization that is 31
604604 merged with one or more other organizations and includes the surviving 32
605605 organization; 33
606606 (2) "Disappearing organization" means a constituent organization 34
607607 that is not the surviving organization; 35
608608 (3)(A) "Organization" means a decentralized unincorporated 36 HB1533
609609
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611611 nonprofit association, an unincorporated nonprofit association, a general 1
612612 partnership, including a limited liability partnership, a limited 2
613613 partnership, including a limited liability limited partnership, limited 3
614614 liability company, business, or statutory trust, a corporation, or any other 4
615615 legal or commercial entity having a statute governing its formation and 5
616616 operation. 6
617617 (B) "Organization" includes a domestic or foreign 7
618618 organization regardless of whether the organization is a for profit 8
619619 organization; and 9
620620 (4) "Surviving organization" means an organization into which 10
621621 one (1) or more other organizations are merged. 11
622622 (b) A decentralized unincorporated nonprofit association may merge 12
623623 with any organization that is authorized by law to effect a merger with a 13
624624 decentralized unincorporated nonprofit association. 14
625625 (c) A merger involving a decentralized unincorporated nonprofit 15
626626 association is subject to the following requirements: 16
627627 (1) Each of the constituent organizations complies with its 17
628628 governing law; 18
629629 (2)(A) Each party to the merger shall approve a plan of merger 19
630630 according to its governing principles. 20
631631 (B) The plan shall be in a record. 21
632632 (C) The plan shall include the following provisions: 22
633633 (i) The name and form of each organization that is a 23
634634 party to the merger; 24
635635 (ii) The name and form of the surviving organization 25
636636 and, if the surviving organization is to be created by the merger, a 26
637637 statement to that effect; 27
638638 (iii) The terms and conditions of the merger, 28
639639 including the manner and basis for converting the interests in each 29
640640 constituent organization into any combination of money, interests in the 30
641641 surviving organization, and other consideration; 31
642642 (iv) If the surviving organization is to be created 32
643643 by the merger, the surviving organization’s organizational documents that are 33
644644 proposed to be in a record; and 34
645645 (v) If the surviving organization is not to be 35
646646 created by the merger, any amendments to be made by the merger to the 36 HB1533
647647
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649649 surviving organization’s organizational documents that are, or are proposed 1
650650 to be, in a record; 2
651651 (3)(A) The plan of merger shall be approved by the members of 3
652652 each decentralized unincorporated nonprofit association that is a constituent 4
653653 organization in the merger. 5
654654 (B) If a member of a decentralized unincorporated 6
655655 nonprofit association that is a party to a merger has personal liability with 7
656656 respect to an obligation of a constituent or a surviving organization, the 8
657657 consent in a record of that member to the plan of merger shall also be 9
658658 obtained; 10
659659 (4) Subject to the contractual rights of third parties, after a 11
660660 plan of merger is approved and at any time before the merger is effective, a 12
661661 constituent organization may amend the plan or abandon the merger as provided 13
662662 in the plan, or except as otherwise prohibited in the plan, with the same 14
663663 consent as was required to approve the plan; and 15
664664 (5) Following approval of the plan, a merger under this section 16
665665 is effective: 17
666666 (A) If a constituent organization is required to give 18
667667 notice to or obtain the approval of a governmental agency or officer in order 19
668668 to be a party to a merger, the notice has been given and the approval has 20
669669 been obtained; and 21
670670 (B) If the surviving organization is a decentralized 22
671671 unincorporated nonprofit association, as specified in the plan of merger and 23
672672 upon compliance by any constituent organization that is not a decentralized 24
673673 unincorporated nonprofit association with any requirements of the 25
674674 organization's governing statute, including any required filings in the 26
675675 office of the Secretary of State; or 27
676676 (C) If the surviving organization is not a decentralized 28
677677 unincorporated nonprofit association, as provided by the statute governing 29
678678 the surviving organization. 30
679679 (d) When a merger becomes effective: 31
680680 (1) The surviving organization continues or comes into 32
681681 existence; 33
682682 (2) Each constituent organization that merges into the surviving 34
683683 organization ceases to exist as a separate entity; 35
684684 (3) All property owned by each constituent organization that 36 HB1533
685685
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687687 ceases to exist vests in the surviving organization; 1
688688 (4) All debts, obligations, or other liabilities of each 2
689689 constituent organization that ceases to exist continue as debts, obligations, 3
690690 or other liabilities of the surviving organization; 4
691691 (5) An action or proceeding pending by or against any 5
692692 constituent organization that ceases to exist may be continued as if the 6
693693 merger had not occurred; 7
694694 (6) Except as prohibited by other law, all of the rights, 8
695695 privileges, immunities, powers, and purposes of each constituent organization 9
696696 that ceases to exist vest in the surviving organization; 10
697697 (7) Except as otherwise provided in the plan of merger, the 11
698698 terms and conditions of the plan of merger take effect; 12
699699 (8) The merger does not affect the personal liability, if any, 13
700700 of a member, administrator, or manager of a constituent association for a 14
701701 debt, liability, or obligation of the association incurred before the merger 15
702702 is effective; and 16
703703 (9)(A) A surviving organization that is a foreign organization 17
704704 consents to the jurisdiction of the courts of this state to enforce any debt, 18
705705 obligation, or other liability owed by a constituent organization, if before 19
706706 the merger the constituent organization was subject to suit in this state on 20
707707 the debt, obligation, or other liability. 21
708708 (B) A surviving organization that is a foreign 22
709709 organization and not authorized to transact business in this state shall 23
710710 appoint the Secretary of State as its agent for service of process for the 24
711711 purposes of enforcing a debt, obligation, or other liability under 25
712712 subdivision (d)(9)(A) of this section. 26
713713 (e) Property held for a charitable purpose under the law of this state 27
714714 by a domestic or foreign organization immediately before a merger under this 28
715715 section becomes effective may not, as a result of the merger, be diverted 29
716716 from the objects for which it was donated, granted, or devised, unless, to 30
717717 the extent required under the law of this state concerning cy pres or other 31
718718 law dealing with nondiversion of charitable assets, the organization shall 32
719719 obtain an appropriate order of the Pulaski County Circuit Court specifying 33
720720 the disposition of the property. 34
721721 (f)(1) A bequest, devise, gift, grant, or promise contained in a will 35
722722 or other instrument of donation, subscription, or conveyance that is made to 36 HB1533
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725725 a disappearing organization and that takes effect or remains payable after 1
726726 the merger inures to the benefit of the surviving organization. 2
727727 (2) A trust obligation that would govern property if transferred 3
728728 to the disappearing entity applies to property that is instead transferred to 4
729729 the surviving organization under this section. 5
730730 6
731731 4-28-730. Conversions — Definitions. 7
732732 (a) As used in this section: 8
733733 (1) "Conversion" means a transaction authorized by this section 9
734734 under which an entity of one (1) type is converted into an entity of another 10
735735 type; 11
736736 (2) "Converted entity" means the entity that results from a 12
737737 conversion; and 13
738738 (3) "Converting entity" means the entity that becomes the 14
739739 converted entity through a conversion. 15
740740 (b) A decentralized unincorporated nonprofit association may convert 16
741741 to any form of entity that is authorized by law to affect a conversion from a 17
742742 decentralized unincorporated nonprofit association. 18
743743 (c) A conversion involving a decentralized unincorporated nonprofit 19
744744 association is subject to the following requirements: 20
745745 (1) Each of the constituent converting organizations complies 21
746746 with its governing principles; 22
747747 (2)(A) The decentralized unincorporated organization, as a 23
748748 converting entity, shall approve a plan of conversion according to its 24
749749 governing principles. 25
750750 (B) The plan shall be in a record and include the 26
751751 following provisions: 27
752752 (i) The name of the converting decentralized 28
753753 unincorporated nonprofit association; 29
754754 (ii) The name, jurisdiction of formation, and type 30
755755 of entity of the converted entity; 31
756756 (iii) The manner of converting the interest in the 32
757757 converting decentralized unincorporated nonprofit association into interests, 33
758758 securities, obligations, money, other property, rights to acquire interests 34
759759 or securities, or any combination of the requirements under this section; 35
760760 (iv) If the converted entity requires a record that 36 HB1533
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763763 is filed publicly to form, organize, incorporate, or otherwise create a 1
764764 converted entity, the converted entity’s organizational documents that are 2
765765 proposed to be in a record; 3
766766 (v) If the converted entity does not require a 4
767767 record that is filed publicly to form, organize, incorporate, or otherwise 5
768768 create a converted entity, a record of the converted entities' governing 6
769769 principles to the extent they exist; 7
770770 (vi) The other terms and conditions of the 8
771771 conversion; and 9
772772 (vii) Any other provision required by the law of 10
773773 this state or the governing principles of the converting decentralized 11
774774 unincorporated nonprofit association; 12
775775 (3)(A) The plan of conversion shall be approved by the members 13
776776 of the converting decentralized unincorporated according to its governing 14
777777 principles. 15
778778 (B) If a member of decentralized unincorporated nonprofit 16
779779 association that is a party to a conversion shall have personal liability 17
780780 with respect to an obligation of a converted entity or converting entity, the 18
781781 consent in a record of that member to the plan of conversion shall also be 19
782782 obtained; 20
783783 (4) Subject to the contractual rights of third parties, after a 21
784784 plan of conversion is approved and at any time before the conversion is 22
785785 effective, a converting entity may amend the plan or abandon the conversion 23
786786 as provided in the plan, or except as otherwise prohibited in the plan, with 24
787787 the same consent as was required to approve the plan; and 25
788788 (5) Following approval of the plan, a conversion under this 26
789789 section is effective: 27
790790 (A) If a converted entity is required to give notice to or 28
791791 obtain the approval of a governmental agency or officer in order to form an 29
792792 entity, the notice has been given and the approval has been obtained; and 30
793793 (B) If a converted entity is not required to give notice 31
794794 or obtain the approval of a governmental agency or officer in order to form 32
795795 an entity, as provided by the statute governing the converted entity. 33
796796 (d) A conversion becomes effective when the converted entity comes 34
797797 into existence. 35
798798 (e) When a conversion becomes effective: 36 HB1533
799799
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801801 (1) The converted entity is: 1
802802 (A) Organized under and subject to the laws of the 2
803803 converted entity; and 3
804804 (B) The same entity without interruption as the converting 4
805805 entity; 5
806806 (2) All property of the converting entity continues to be vested 6
807807 in the converted entity without transfer, reversion, or impairment; 7
808808 (3) All debts, obligations, and other liabilities of the 8
809809 converting entity continue as debts, obligations, and other liabilities of 9
810810 the converted entity; and 10
811811 (4) The name of the converted entity may be substituted for the 11
812812 name of the converting entity in any pending action or proceeding. 12
813813 (f) A conversion does not require the entity to wind up its affairs 13
814814 and does not constitute or cause the dissolution of the entity. 14
815815 15
816816 4-28-731. Uniformity of application and construction. 16
817817 In applying and construing this subchapter, consideration shall be 17
818818 given to the need to promote uniformity of the law with respect to its 18
819819 subject matter among states that enact it. 19
820820 20
821821 4-28-732. Effective date. 21
822822 This subchapter takes effect on January 1, 2026. 22
823823 23
824824 24
825825 25
826826 26
827827 27
828828 28
829829 29
830830 30
831831 31
832832 32
833833 33
834834 34
835835 35
836836 36