Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1533 3
4
By: Representative Gramlich 5
6
7
For An Act To Be Entitled 8
AN ACT TO CREATE THE DECENTRALIZED UNINCORPORATED 9
NONPROFIT ASSOCIATION ACT; AND FOR OTHER PURPOSES. 10
11
12
Subtitle 13
TO CREATE THE DECENTRALIZED 14
UNINCORPORATED NONPROFIT ASSOCIATION 15
ACT. 16
17
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 18
19
SECTION 1. Arkansas Code Title 4, Chapter 28, is amended to add an 20
additional subchapter to read as follows: 21
Subchapter 7 — Decentralized Unincorporated Nonprofit Association Act 22
23
4-28-701. Title. 24
This subchapter shall be known and may be cited as the “Decentralized 25
Unincorporated Nonprofit Association Act”. 26
27
4-28-702. Definitions. 28
As used in this subchapter: 29
(1) “Administrator” means a member of a decentralized 30
unincorporated nonprofit association authorized by vote of the membership to 31
fulfill administrative or operational tasks; 32
(2) “Decentralized unincorporated nonprofit association” means 33
an unincorporated nonprofit association: 34
(A) Consisting of at least one hundred (100) members 35
joined by mutual consent under an agreement which may be in writing or 36 HB1533
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implied from conduct, for a common nonprofit purpose; 1
(B) That has elected to be organized under this 2
subchapter; and 3
(C) That is not formed under any other statute that 4
governs its organization and operation; 5
(3)(A) “Digital asset” means a representation of economic, 6
proprietary, or access rights stored in a computer readable format. 7
(B) “Digital asset” does not include any underlying asset 8
unless the asset itself is an electronic record; 9
(4) “Distributed ledger technology” means a software protocol 10
that: 11
(A) Governs the rules, operations, and communications 12
between intersection and connection points in a telecommunications network 13
and its supporting infrastructure; 14
(B) Includes the computer software, hardware, or 15
collection of computer software and hardware, which use or enable distributed 16
ledger technologies, including blockchain; and 17
(C) Uses a distributed, shared, and replicated ledger, 18
which may: 19
(i) Be public or private; 20
(ii) Be permissioned or permissionless; or 21
(iii) Include the use of a digital asset as a medium 22
of electronic exchange; 23
(5) “Distribution” means the payment of a dividend or any part 24
of the income or profit of a decentralized unincorporated nonprofit 25
association to its members or administrators; 26
(6) “Established practices” means the practices used by a 27
decentralized unincorporated nonprofit association without material change 28
during the most recent five (5) years of its existence, or if it has existed 29
for less than five (5) years, during its entire existence; 30
(7)(A) “Governing principles” means all agreements, including 31
without limitation articles of association, consensus formation algorithms, 32
or enacted governance proposals, whether in a record, implied from its 33
established practices, or in any combination thereof, that govern the purpose 34
or operation of a decentralized unincorporated nonprofit association and the 35
rights and obligations of its members and administrators. 36 HB1533
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(B) “Governing principles” includes any amendment or 1
restatement of the agreements constituting the governing principles of a 2
decentralized unincorporated nonprofit association; 3
(8) “Member” means a person that, under the governing principles 4
of a decentralized unincorporated nonprofit association, may participate in 5
the development of the policies and activities of the decentralized 6
unincorporated nonprofit association or the selection of administrators; 7
(9) “Membership interest” means a member’s voting right in a 8
decentralized unincorporated nonprofit association as determined by the 9
decentralized unincorporated nonprofit association’s governing principles; 10
(10) “Person” means a natural person, a partnership, whether 11
general or limited, a limited liability company, a trust, including without 12
limitation a common-law trust, business trust, statutory trust, voting trust, 13
or any other form of trust, an estate, an association, including without 14
limitation any group, organization, cotenancy, plan, board, council or 15
committee, a corporation, a government, including without limitation a 16
country, state, county, or any other governmental subdivision, agency, or 17
instrumentality, a custodian, a nominee, or any other individual or entity, 18
or series thereof, in its own capacity or any representative capacity, in 19
each case, whether domestic or foreign; 20
(11) “Record” means information that is inscribed on a tangible 21
medium or that is stored in an electronic or other medium and is retrievable 22
in a perceivable form; 23
(12) “Smart contract” means a computational process that 24
executes on distributed ledger technology used to automate transactions, 25
including without limitation: 26
(A) Facilitating or instructing transfers of assets; 27
(B) Creating and transmitting digital assets; 28
(C) Synchronizing information; 29
(D) Authenticating user rights and conveying access to 30
software applications; or 31
(E) Effectuating membership votes within an organization; 32
and 33
(13) “State” means a state of the United States, the District of 34
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or 35
insular possession subject to the jurisdiction of the United States. 36 HB1533
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1
4-28-703. Relation to other law. 2
(a) Principles of law and equity supplement this subchapter unless 3
displaced by a particular provision of the subchapter. 4
(b) This subchapter does not repeal or modify a statute or rule for 5
organizations that do not elect to become decentralized unincorporated 6
nonprofit associations. 7
8
4-28-704. Governing law. 9
(a) The law of this state governs any decentralized unincorporated 10
nonprofit association that is formed in this state. 11
(b) A decentralized unincorporated nonprofit association's governing 12
principles shall identify the jurisdiction in which the association is 13
formed. 14
15
4-28-705. Legal entity — Perpetual existence — Powers. 16
A decentralized unincorporated nonprofit association: 17
(1) Is a legal entity distinct from its members and 18
administrators; 19
(2) Has perpetual duration unless its governing principles 20
otherwise specify; and 21
(3)(A) May engage in profit-making activities. 22
(B) Any profits under subdivision (3)(A) of this section 23
shall be used in furtherance of, or set aside for, the decentralized 24
unincorporated nonprofit association’s common nonprofit purpose. 25
26
4-28-706. Distributions prohibited — Compensation and other permitted 27
payments. 28
(a) Except as otherwise provided in subsection ( b) of this section, a 29
decentralized unincorporated nonprofit association shall not pay dividends or 30
distribute any part of its income or profits to its members or 31
administrators. 32
(b) A decentralized unincorporated nonprofit association may: 33
(1) Pay reasonable compensation or reimburse reasonable expenses 34
to its members, administrators, and persons outside the organization for 35
services rendered, including with respect to the administration and operation 36 HB1533
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of the decentralized unincorporated nonprofit association, which may include 1
without limitation the provision of collateral for the self -insurance of the 2
decentralized unincorporated nonprofit association, voting and participation; 3
(2) Confer benefits on its members or administrators in 4
conformity with its common nonprofit purpose or purposes; 5
(3) Repurchase membership interests to the extent authorized by 6
its governing principles; and 7
(4) Make distributions of property to members upon winding up 8
and termination to the extent permitted by § 4 -28-728. 9
10
4-28-707. Ownership and transfer of property. 11
(a) A decentralized unincorporated nonprofit association in its own 12
name may acquire, hold, encumber, or transfer an estate or interest in real 13
or personal property. 14
(b) A decentralized unincorporated nonprofit association may be a 15
beneficiary of a trust or contract, a legatee, or a devisee. 16
17
4-28-708. Statement of authority as to real property — Definition. 18
(a) As used in this section, “statement of authority” means a 19
statement authorizing a person to transfer an interest in real property held 20
in the name of a decentralized unincorporated nonprofit association. 21
(b) An interest in real property held in the name of a decentralized 22
unincorporated nonprofit association may be transferred by a person 23
authorized to do so in a statement of authority recorded by the decentralized 24
unincorporated nonprofit association in the office in the county in which a 25
transfer of the property would be recorded. 26
(c) A statement of authority shall state: 27
(1) The name of the decentralized unincorporated nonprofit 28
association; 29
(2) The address in this state, including the street address, if 30
any, of the decentralized unincorporated nonprofit association or, if the 31
decentralized unincorporated nonprofit association does not have an address 32
in this state, its out -of-state address; 33
(3) That the decentralized unincorporated nonprofit association 34
is a decentralized unincorporated nonprofit association; and 35
(4) The action, procedure or vote of the decentralized 36 HB1533
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unincorporated nonprofit association that authorizes the person to transfer 1
the real property of the decentralized unincorporated nonprofit association 2
and that authorizes the person to execute the statement of authority. 3
(d) A statement of authority shall be executed in the same manner as 4
an affidavit by a person who is not the person authorized to transfer the 5
estate or interest. 6
(e) A filing officer may collect a fee for recording a statement of 7
authority in the amount authorized for recording a transfer of real property. 8
(f) A record amending, revoking, or canceling a statement of authority 9
or stating that the statement is unauthorized for recording an original 10
statement may be filed. 11
(g) Unless canceled earlier, a recorded statement of authority and its 12
most recent amendment shall expire five (5) years after the date of the most 13
recent recording. 14
(h) If the record title to real property is in the name of a 15
decentralized unincorporated nonprofit association and the statement of 16
authority is recorded in the office of the county in which a transfer of real 17
property would be recorded, the authority of the person named in a statement 18
of authority under subdivision (c)(4) of this section is conclusive in favor 19
of a person who gives value without notice that the person lacks authority. 20
21
4-28-709. Liability. 22
(a)(1) A debt, obligation, or other liability of a decentralized 23
unincorporated nonprofit association is solely the debt, obligation, or other 24
liability of the decentralized unincorporated nonprofit association. 25
(2) A member or administrator is not personally liable, directly 26
or indirectly, by way of contribution or otherwise for a debt, obligation, or 27
other liability of the decentralized unincorporated nonprofit association 28
solely by reason of being or acting as a member or administrator. 29
(3) Subdivisions (a)(1) and (a)(2) of this subsubsection apply 30
regardless of the dissolution of the decentralized unincorporated nonprofit 31
association. 32
(b) A person’s status as a member or administrator does not prevent or 33
restrict law other than this subchapter from imposing liability on the person 34
or the decentralized unincorporated nonprofit association because of the 35
person’s conduct. 36 HB1533
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(c) The failure of a decentralized unincorporated nonprofit 1
association to observe formalities relating to the exercise of its powers or 2
administration of its activities and affairs is not grounds for imposing 3
liability on a member or administrator of the decentralized unincorporated 4
nonprofit association for a debt, obligation, or other liability of the 5
decentralized unincorporated nonprofit association. 6
7
4-28-710. Assertion and defense of claims. 8
(a) A decentralized unincorporated nonprofit association, in its own 9
name, may institute, defend, intervene, or participate in a judicial, 10
administrative, or other governmental proceeding or in an arbitration, 11
mediation, or any other form of alternative dispute resolution. 12
(b)(1) A member or administrator may assert a claim the member or 13
administrator has against the decentralized unincorporated nonprofit 14
association. 15
(2) A decentralized unincorporated nonprofit association may 16
assert a claim it has against a member or administrator. 17
18
4-28-711. Effect of judgment or order. 19
A judgment or order against a decentralized unincorporated nonprofit 20
association is not by itself a judgment or order against a member or 21
administrator. 22
23
4-28-712. Appointment of agent to receive service of process. 24
(a) A decentralized unincorporated nonprofit association may file in 25
the office of the Secretary of State a statement appointing an agent 26
authorized to receive service of process. 27
(b) A statement appointing an agent shall set forth: 28
(1) The name of the decentralized unincorporated nonprofit 29
association; and 30
(2) The name of the person in this state authorized to receive 31
service of process and the person’s address, including the street address, in 32
this state. 33
(c)(1) A statement appointing an agent shall be signed and 34
acknowledged by a person authorized by the decentralized unincorporated 35
nonprofit association. 36 HB1533
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(2) The statement required under subdivision (c)(1) of this 1
section shall be signed and acknowledged by the person appointed agent, who 2
thereby accepts the appointment. 3
(3) The appointed agent may resign by filing a resignation in 4
the office of the Secretary of State and giving notice to the decentralized 5
unincorporated nonprofit association. 6
(d) The Secretary of State may collect a fee for filing a statement 7
appointing an agent to receive service of process, an amendment, or a 8
resignation in the amount charged for filing similar documents. 9
(e) An amendment to or cancellation of a statement appointing an agent 10
to receive service of process shall meet the requirements for execution of an 11
original statement. 12
(f) An amendment shall be filed to update the office of the Secretary 13
of State as to any change regarding an agent authorized to receive service of 14
process within thirty (30) days of a change being made. 15
16
4-28-713. Service of process. 17
In an action or proceeding against a decentralized unincorporated 18
nonprofit association, a summons and complaint or other process shall be 19
served on an agent authorized by appointment to receive service of process, 20
any appointed administrator of the decentralized unincorporated nonprofit 21
association, or in any other manner authorized by the law of this state. 22
23
4-28-714. Claim not abated by change of members or other persons. 24
A claim for relief against a decentralized unincorporated nonprofit 25
association does not abate because of a change in its members or persons 26
authorized to administer the affairs of the decentralized unincorporated 27
nonprofit association. 28
29
4-28-715. Venue. 30
In addition to any other applicable state laws providing venue, venue 31
of an action against a decentralized unincorporated nonprofit association may 32
be brought in this state in the county in which the decentralized 33
unincorporated nonprofit association has appointed an agent for services 34
under § 4-28-712. 35
36 HB1533
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4-28-716. Member has no agency power. 1
A member of a decentralized unincorporated nonprofit association is not 2
an agent of the decentralized unincorporated nonprofit association solely by 3
reason of being a member. 4
5
4-28-717. Member approval. 6
(a) Except as otherwise provided in the governing principles, a 7
decentralized unincorporated nonprofit association shall have the approval of 8
its members according to its governing principles to: 9
(1) Suspend, dismiss, or expel a member; 10
(2) Select or dismiss an administrator; 11
(3) Adopt, amend, or repeal the governing principles; 12
(4) Sell, lease, exchange, or otherwise dispose of all, or 13
substantially all, of the decentralized unincorporated nonprofit 14
association’s property, with or without the decentralized unincorporated 15
nonprofit association’s goodwill, outside the ordinary course of its 16
activities; 17
(5) Dissolve under § 4 -28-727, merge under § 4 -28-729, or 18
convert under § 4-28-730; 19
(6) Undertake any other act outside the ordinary course of the 20
decentralized unincorporated nonprofit association’s activities; or 21
(7) Determine the policy and purposes of the decentralized 22
unincorporated nonprofit association. 23
(b) A decentralized unincorporated nonprofit association shall have 24
the approval of the members according to its governing principles to do any 25
other acts or exercise a right that the governing principles require to be 26
approved by members. 27
(c) Unless otherwise provided for in the governing principles, 28
membership interest in a decentralized unincorporated nonprofit association 29
shall be calculated in proportion to members' voting rights within the 30
decentralized unincorporated nonprofit association. 31
32
4-28-718. Utilization of distributed ledger technology. 33
(a) A decentralized unincorporated nonprofit association may provide 34
for its governance, in whole or in part, through distributed ledger 35
technology, including smart contracts. 36 HB1533
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(b) The governing principles for a decentralized unincorporated 1
nonprofit association may: 2
(1) Specify whether any distributed ledger technology utilized 3
or enabled by the decentralized unincorporated nonprofit association shall be 4
fully immutable or subject to change and whether any such ledger shall be 5
fully or partially public or private, including the extent of members’ access 6
to information; and 7
(2) Adopt voting procedures, which may include smart contracts 8
deployed to distributed ledger technology that provide for the following: 9
(A) Proposals from administrators or members in the 10
decentralized unincorporated nonprofit association for upgrades, 11
modifications or additions to software systems or protocols; 12
(B) Other proposed changes to the decentralized 13
unincorporated nonprofit association’s governing principles; and 14
(C) Any other matters of governance or activities within 15
the purpose of the decentralized unincorporated nonprofit association. 16
17
4-28-719. Consensus formation algorithms and governance process. 18
According to its governing principles, a decentralized unincorporated 19
nonprofit association may: 20
(1) Adopt any reasonable algorithm for establishing consensus 21
for the validation of records, as well as for establishing requirements, 22
processes, and procedures for conducting operations, or making organizational 23
decisions with respect to the distributed ledger technology used by the 24
decentralized unincorporated nonprofit association; and 25
(2) According to any procedure specified under § 4 -28-718, 26
modify the consensus mechanism as well as the requirements, processes, and 27
procedures, or substitute a new consensus mechanism, requirement, processes, 28
or procedures that comply with the requirements of law and the govern ing 29
principles of the decentralized unincorporated nonprofit association. 30
31
4-28-720. Duties to members. 32
(a) A member does not have any fiduciary duty to a decentralized 33
unincorporated nonprofit association or to any other member of the 34
decentralized unincorporated nonprofit association solely by being a member. 35
(b) A member shall discharge the duties and obligations under this 36 HB1533
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subchapter or under the governing principles and exercise any rights 1
consistent with the contractual obligation of good faith and fair dealing. 2
3
4-28-721. Admission, suspension, dismissal, or expulsion of members. 4
(a)(1) A person becomes a member according to the governing principles 5
of the decentralized unincorporated nonprofit association. 6
(2) If there are no applicable governing principles, a person 7
shall: 8
(A) Be considered a member upon such person’s purchase or 9
assumption of a right of ownership of a membership interest or other property 10
or instruments that confers upon a person a voting right within the 11
decentralized unincorporated nonprofit association; and 12
(B) Continue as a member until the earlier of the person’s 13
resignation under § 4 -28-722 or expulsion under subsection (b) of this 14
section. 15
(b)(1) A member may be suspended or expelled according to the 16
governing principles of the decentralized unincorporated nonprofit 17
association. 18
(2) If there are no applicable governing principles, a person 19
may be suspended or expelled from a decentralized unincorporated nonprofit 20
association only by a vote of its members. 21
(c) Unless the governing principles provide otherwise, the suspension 22
or expulsion of a member does not relieve the member from any obligation 23
incurred or commitment made by the member before suspension or expulsion. 24
25
4-28-722. Member’s resignation. 26
(a)(1) A member may resign as a member of a decentralized 27
unincorporated nonprofit association according to the governing principles. 28
(2) In the absence of applicable governing principles, a member 29
shall be deemed to have resigned as a member upon the disposal, voluntary or 30
involuntary, of all membership interest or other property or inst ruments that 31
confers upon the person a voting right within the decentralized 32
unincorporated nonprofit association. 33
(b) Unless a decentralized unincorporated nonprofit association’s 34
governing principles provide otherwise, resignation of a member does not 35
relieve the member from any unpaid capital contribution, dues, assessments, 36 HB1533
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fees, or other obligation incurred or commitment made by the member before 1
resignation. 2
3
4-28-723. Membership interest transferable. 4
Except as otherwise provided in the decentralized unincorporated 5
nonprofit association’s governing principles, a member’s interest or any 6
right thereunder is freely transferable to another person through conveyance 7
of membership interest. 8
9
4-28-724. Selection of administrators — Rights and duties of 10
administrators. 11
(a) Except as otherwise provided in this subchapter or a decentralized 12
unincorporated nonprofit association’s governing principles, the members may 13
select the decentralized unincorporated nonprofit association’s 14
administrators according to § 4 -28-717. 15
(b) If an administrator is not selected, then no member of the 16
association is an administrator. 17
(c) As there is no requirement that a decentralized unincorporated 18
nonprofit association should have administrators, there are no default 19
obligations, and the rights and duties of an administrator or administrators 20
are a result of the specific authority authorized by the decentralized 21
unincorporated nonprofit association through approval of its members 22
according to § 4-28-717 and contractual agreement with its administrator or 23
administrators. 24
(d) An administrator has no authority to act on behalf of the 25
decentralized unincorporated nonprofit association beyond the specific 26
authorization granted in the selection process. 27
(e) If in a record, the governing principles of a decentralized 28
unincorporated nonprofit association may limit or eliminate the liability of 29
an administrator to the decentralized unincorporated nonprofit association or 30
its members for money damages for any action taken, or for failure to take 31
any action, as an administrator except liability for: 32
(1) The amount of financial benefit improperly received by an 33
administrator; 34
(2) An intentional infliction of harm on the decentralized 35
unincorporated nonprofit association or its members; 36 HB1533
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(3) An intentional violation of criminal law; 1
(4) A breach of the duty of loyalty should one exist, unless a 2
full disclosure of all material facts, a specific act or transaction that 3
would otherwise violate the duty of loyalty by an agent be authorized by 4
approval of the disinterested members under § 4 -28-717; or 5
(5) Improper distributions. 6
7
4-28-725. Rights of members and administrators to information. 8
(a) On reasonable notice, a member or administrator of a decentralized 9
unincorporated nonprofit association is entitled to an electronic record of 10
any record maintained by the decentralized unincorporated nonprofit 11
association regarding its activities, financial condition, and other 12
circumstances, to the extent the information exists and is material to the 13
member’s or administrator’s rights and duties under the decentralized 14
unincorporated nonprofit association’s governing principles of this 15
subchapter, subject to subsection (b) of this section. 16
(b) A decentralized unincorporated nonprofit association has no 17
obligation to furnish any record maintained by the decentralized 18
unincorporated nonprofit association for record requests which the member or 19
administrator has access, including through records made available on 20
distributed ledger technology . 21
(c) A decentralized unincorporated nonprofit association may impose 22
reasonable restrictions on access to and use of information to be furnished 23
under this section, including designating the information confidential and 24
imposing nondisclosure and safeguarding obligations on the recipient. 25
(d) A former member or administrator may have access to information to 26
which the member or administrator was entitled while a member or 27
administrator if the information pertains to the period during which the 28
person was a member or administrator, the former member or administrator 29
seeks the information in good faith, and the former member or administrator 30
satisfies the requirements of subsections (a) —(c) of this section. 31
(e) A decentralized unincorporated nonprofit association has no 32
obligation to collect and maintain member listings. 33
34
4-28-726. Reimbursement — Indemnification — Advancement of expenses — 35
Insurance. 36 HB1533
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(a) Except as otherwise provided in a decentralized unincorporated 1
nonprofit association’s governing principles, members or administrators may 2
be reimbursed for authorized expenses reasonably incurred on behalf of the 3
decentralized unincorporated nonprofit association. 4
(b)(1) A decentralized unincorporated nonprofit association may 5
indemnify a member or manager for any debt, obligation, or other liability 6
incurred during the member or administrator’s activities on behalf of the 7
decentralized unincorporated nonprofit association. 8
(2) To be eligible for indemnification, an administrator shall 9
have complied with the duties stated in § 4 -28-724. 10
(3) If in a record, a decentralized unincorporated nonprofit 11
association’s governing principles may broaden or limit this right of 12
indemnification. 13
(c)(1) If a person is made or threatened to be made a party in a 14
proceeding based on that person’s conduct of the affairs of a decentralized 15
unincorporated nonprofit association, that person is entitled, upon written 16
request to the decentralized unincorporated nonprofit association, and 17
approval, in a record, of the disinterested members under § 4 -28-717 of this 18
subchapter, to receive payment of or reimbursement by the decentralized 19
unincorporated nonprofit association of reasonable expenses, including 20
attorney’s fees and disbursements, incurred by that person in advance of the 21
final disposition of the proceeding. 22
(2) To be entitled to the advance payments or reimbursements 23
under subdivision (c)(1) of this section, the person making the request shall 24
make a written affirmation that the person has a good faith belief that the 25
criteria for indemnification in subsection (a) of this section have been 26
satisfied and that the person will repay the amounts paid or reimbursed if it 27
is determined that the criteria for reimbursement have not been satisfied. 28
(d) A decentralized unincorporated nonprofit association may purchase 29
and maintain insurance on behalf of a member or administrator for liability 30
asserted against or incurred by the member or administrator in that capacity, 31
whether or not the decentralized unincorporated nonprofit association would 32
have the power to indemnify or advance expenses to the member or 33
administrator against the same liability under this subchapter. 34
(e) These rights of reimbursement, indemnification, and advancement of 35
expense apply to former members or administrators for activities undertaken 36 HB1533
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on behalf of the decentralized unincorporated nonprofit association while 1
they were members or administrators. 2
3
4-28-727. Dissolution — Continuation of existence. 4
(a) A decentralized unincorporated nonprofit association may be 5
dissolved by any of the following methods: 6
(1) If the governing principles of the association provide a 7
time or method for dissolution by that method; 8
(2) If the governing principles of the association do not 9
provide a method for dissolution, upon approval of the members according to § 10
4-28-717; 11
(3) If membership in the organization falls below one hundred 12
(100) members; or 13
(4) By court order. 14
(b) After dissolution, a decentralized unincorporated nonprofit 15
association shall continue in existence until its activities have been wound 16
up and it is terminated under § 4 -28-728. 17
18
4-28-728. Winding up and termination. 19
(a) A dissolved decentralized unincorporated nonprofit association 20
shall wind up its business and the decentralized unincorporated nonprofit 21
association continues after dissolution only for the purpose of winding up. 22
(b) In winding up a decentralized unincorporated nonprofit 23
association, the members shall: 24
(1) Discharge the decentralized unincorporated nonprofit 25
association’s debts, obligations, and other liabilities; 26
(2) Settle and close the decentralized unincorporated nonprofit 27
association’s business; and 28
(3) Marshal and distribute any remaining property: 29
(i) As required by law other than this subchapter that 30
requires assets of a decentralized unincorporated nonprofit association to be 31
distributed to another entity or person with similar nonprofit purposes; 32
(ii) According to the decentralized unincorporated 33
nonprofit association’s governing principles and in the absence of applicable 34
governing principles, to the current members of the association in proportion 35
to their membership interests; or 36 HB1533
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(iii) If neither subdivisions (b)(3)(i) or (b)(3)(ii) of 1
this section applies, then under the Unclaimed Property Act, § 18 -28-201 et 2
seq. 3
(c) In winding up a decentralized unincorporated nonprofit 4
association, the members may: 5
(1) Appoint an administrator or administrators authorized to 6
wind up the decentralized unincorporated nonprofit association according to § 7
4-28-717; 8
(2) Preserve the decentralized unincorporated nonprofit 9
association operations and property as a going concern for a reasonable time; 10
(3) Prosecute and defend actions and proceedings, whether civil, 11
criminal, or administrative; 12
(4) Transfer the decentralized unincorporated nonprofit 13
association’s property; 14
(5) Settle disputes by mediation or arbitration; 15
(6) Receive reasonable compensation for services rendered in 16
winding up the decentralized unincorporated nonprofit association; and 17
(7) Perform other acts necessary or appropriate to the winding 18
up. 19
(d) If the members of decentralized unincorporated nonprofit 20
association do not appoint an administrator or administrators to wind up the 21
decentralized unincorporated nonprofit association, the members themselves 22
shall each owe the decentralized unincorporated nonprofit association a duty 23
of care in the conduct or winding up of the decentralized unincorporated 24
nonprofit association operations to refrain from engaging in grossly 25
negligent or reckless conduct, willful or intentional misconduct, or a 26
knowing violation of the law. 27
28
4-28-729. Mergers — Definitions. 29
(a) As used in this section: 30
(1) "Constituent organization" means an organization that is 31
merged with one or more other organizations and includes the surviving 32
organization; 33
(2) "Disappearing organization" means a constituent organization 34
that is not the surviving organization; 35
(3)(A) "Organization" means a decentralized unincorporated 36 HB1533
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nonprofit association, an unincorporated nonprofit association, a general 1
partnership, including a limited liability partnership, a limited 2
partnership, including a limited liability limited partnership, limited 3
liability company, business, or statutory trust, a corporation, or any other 4
legal or commercial entity having a statute governing its formation and 5
operation. 6
(B) "Organization" includes a domestic or foreign 7
organization regardless of whether the organization is a for profit 8
organization; and 9
(4) "Surviving organization" means an organization into which 10
one (1) or more other organizations are merged. 11
(b) A decentralized unincorporated nonprofit association may merge 12
with any organization that is authorized by law to effect a merger with a 13
decentralized unincorporated nonprofit association. 14
(c) A merger involving a decentralized unincorporated nonprofit 15
association is subject to the following requirements: 16
(1) Each of the constituent organizations complies with its 17
governing law; 18
(2)(A) Each party to the merger shall approve a plan of merger 19
according to its governing principles. 20
(B) The plan shall be in a record. 21
(C) The plan shall include the following provisions: 22
(i) The name and form of each organization that is a 23
party to the merger; 24
(ii) The name and form of the surviving organization 25
and, if the surviving organization is to be created by the merger, a 26
statement to that effect; 27
(iii) The terms and conditions of the merger, 28
including the manner and basis for converting the interests in each 29
constituent organization into any combination of money, interests in the 30
surviving organization, and other consideration; 31
(iv) If the surviving organization is to be created 32
by the merger, the surviving organization’s organizational documents that are 33
proposed to be in a record; and 34
(v) If the surviving organization is not to be 35
created by the merger, any amendments to be made by the merger to the 36 HB1533
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surviving organization’s organizational documents that are, or are proposed 1
to be, in a record; 2
(3)(A) The plan of merger shall be approved by the members of 3
each decentralized unincorporated nonprofit association that is a constituent 4
organization in the merger. 5
(B) If a member of a decentralized unincorporated 6
nonprofit association that is a party to a merger has personal liability with 7
respect to an obligation of a constituent or a surviving organization, the 8
consent in a record of that member to the plan of merger shall also be 9
obtained; 10
(4) Subject to the contractual rights of third parties, after a 11
plan of merger is approved and at any time before the merger is effective, a 12
constituent organization may amend the plan or abandon the merger as provided 13
in the plan, or except as otherwise prohibited in the plan, with the same 14
consent as was required to approve the plan; and 15
(5) Following approval of the plan, a merger under this section 16
is effective: 17
(A) If a constituent organization is required to give 18
notice to or obtain the approval of a governmental agency or officer in order 19
to be a party to a merger, the notice has been given and the approval has 20
been obtained; and 21
(B) If the surviving organization is a decentralized 22
unincorporated nonprofit association, as specified in the plan of merger and 23
upon compliance by any constituent organization that is not a decentralized 24
unincorporated nonprofit association with any requirements of the 25
organization's governing statute, including any required filings in the 26
office of the Secretary of State; or 27
(C) If the surviving organization is not a decentralized 28
unincorporated nonprofit association, as provided by the statute governing 29
the surviving organization. 30
(d) When a merger becomes effective: 31
(1) The surviving organization continues or comes into 32
existence; 33
(2) Each constituent organization that merges into the surviving 34
organization ceases to exist as a separate entity; 35
(3) All property owned by each constituent organization that 36 HB1533
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ceases to exist vests in the surviving organization; 1
(4) All debts, obligations, or other liabilities of each 2
constituent organization that ceases to exist continue as debts, obligations, 3
or other liabilities of the surviving organization; 4
(5) An action or proceeding pending by or against any 5
constituent organization that ceases to exist may be continued as if the 6
merger had not occurred; 7
(6) Except as prohibited by other law, all of the rights, 8
privileges, immunities, powers, and purposes of each constituent organization 9
that ceases to exist vest in the surviving organization; 10
(7) Except as otherwise provided in the plan of merger, the 11
terms and conditions of the plan of merger take effect; 12
(8) The merger does not affect the personal liability, if any, 13
of a member, administrator, or manager of a constituent association for a 14
debt, liability, or obligation of the association incurred before the merger 15
is effective; and 16
(9)(A) A surviving organization that is a foreign organization 17
consents to the jurisdiction of the courts of this state to enforce any debt, 18
obligation, or other liability owed by a constituent organization, if before 19
the merger the constituent organization was subject to suit in this state on 20
the debt, obligation, or other liability. 21
(B) A surviving organization that is a foreign 22
organization and not authorized to transact business in this state shall 23
appoint the Secretary of State as its agent for service of process for the 24
purposes of enforcing a debt, obligation, or other liability under 25
subdivision (d)(9)(A) of this section. 26
(e) Property held for a charitable purpose under the law of this state 27
by a domestic or foreign organization immediately before a merger under this 28
section becomes effective may not, as a result of the merger, be diverted 29
from the objects for which it was donated, granted, or devised, unless, to 30
the extent required under the law of this state concerning cy pres or other 31
law dealing with nondiversion of charitable assets, the organization shall 32
obtain an appropriate order of the Pulaski County Circuit Court specifying 33
the disposition of the property. 34
(f)(1) A bequest, devise, gift, grant, or promise contained in a will 35
or other instrument of donation, subscription, or conveyance that is made to 36 HB1533
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a disappearing organization and that takes effect or remains payable after 1
the merger inures to the benefit of the surviving organization. 2
(2) A trust obligation that would govern property if transferred 3
to the disappearing entity applies to property that is instead transferred to 4
the surviving organization under this section. 5
6
4-28-730. Conversions — Definitions. 7
(a) As used in this section: 8
(1) "Conversion" means a transaction authorized by this section 9
under which an entity of one (1) type is converted into an entity of another 10
type; 11
(2) "Converted entity" means the entity that results from a 12
conversion; and 13
(3) "Converting entity" means the entity that becomes the 14
converted entity through a conversion. 15
(b) A decentralized unincorporated nonprofit association may convert 16
to any form of entity that is authorized by law to affect a conversion from a 17
decentralized unincorporated nonprofit association. 18
(c) A conversion involving a decentralized unincorporated nonprofit 19
association is subject to the following requirements: 20
(1) Each of the constituent converting organizations complies 21
with its governing principles; 22
(2)(A) The decentralized unincorporated organization, as a 23
converting entity, shall approve a plan of conversion according to its 24
governing principles. 25
(B) The plan shall be in a record and include the 26
following provisions: 27
(i) The name of the converting decentralized 28
unincorporated nonprofit association; 29
(ii) The name, jurisdiction of formation, and type 30
of entity of the converted entity; 31
(iii) The manner of converting the interest in the 32
converting decentralized unincorporated nonprofit association into interests, 33
securities, obligations, money, other property, rights to acquire interests 34
or securities, or any combination of the requirements under this section; 35
(iv) If the converted entity requires a record that 36 HB1533
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is filed publicly to form, organize, incorporate, or otherwise create a 1
converted entity, the converted entity’s organizational documents that are 2
proposed to be in a record; 3
(v) If the converted entity does not require a 4
record that is filed publicly to form, organize, incorporate, or otherwise 5
create a converted entity, a record of the converted entities' governing 6
principles to the extent they exist; 7
(vi) The other terms and conditions of the 8
conversion; and 9
(vii) Any other provision required by the law of 10
this state or the governing principles of the converting decentralized 11
unincorporated nonprofit association; 12
(3)(A) The plan of conversion shall be approved by the members 13
of the converting decentralized unincorporated according to its governing 14
principles. 15
(B) If a member of decentralized unincorporated nonprofit 16
association that is a party to a conversion shall have personal liability 17
with respect to an obligation of a converted entity or converting entity, the 18
consent in a record of that member to the plan of conversion shall also be 19
obtained; 20
(4) Subject to the contractual rights of third parties, after a 21
plan of conversion is approved and at any time before the conversion is 22
effective, a converting entity may amend the plan or abandon the conversion 23
as provided in the plan, or except as otherwise prohibited in the plan, with 24
the same consent as was required to approve the plan; and 25
(5) Following approval of the plan, a conversion under this 26
section is effective: 27
(A) If a converted entity is required to give notice to or 28
obtain the approval of a governmental agency or officer in order to form an 29
entity, the notice has been given and the approval has been obtained; and 30
(B) If a converted entity is not required to give notice 31
or obtain the approval of a governmental agency or officer in order to form 32
an entity, as provided by the statute governing the converted entity. 33
(d) A conversion becomes effective when the converted entity comes 34
into existence. 35
(e) When a conversion becomes effective: 36 HB1533
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(1) The converted entity is: 1
(A) Organized under and subject to the laws of the 2
converted entity; and 3
(B) The same entity without interruption as the converting 4
entity; 5
(2) All property of the converting entity continues to be vested 6
in the converted entity without transfer, reversion, or impairment; 7
(3) All debts, obligations, and other liabilities of the 8
converting entity continue as debts, obligations, and other liabilities of 9
the converted entity; and 10
(4) The name of the converted entity may be substituted for the 11
name of the converting entity in any pending action or proceeding. 12
(f) A conversion does not require the entity to wind up its affairs 13
and does not constitute or cause the dissolution of the entity. 14
15
4-28-731. Uniformity of application and construction. 16
In applying and construing this subchapter, consideration shall be 17
given to the need to promote uniformity of the law with respect to its 18
subject matter among states that enact it. 19
20
4-28-732. Effective date. 21
This subchapter takes effect on January 1, 2026. 22
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