*SB0278.2*
Reprinted
February 28, 2023
SENATE BILL No. 278
_____
DIGEST OF SB 278 (Updated February 27, 2023 3:37 pm - DI 149)
Citations Affected: IC 4-6; IC 23-17.
Synopsis: Nonprofit corporations. Provides that the contents of an
investigative demand issued by the attorney general are to be kept
confidential. Defines charitable organization. Expands the definition of
"public benefit corporation" to include a domestic corporation that
serves a public benefit with an operating budget that is supported by
public funds or authorized to spend public funds in furtherance of its
mission. Provides that a court may dissolve a corporation under certain
circumstances. Specifies procedural requirements that the attorney
general must take before petitioning the court for dissolution of a
corporation for certain reasons. Provides exceptions. Allows the
attorney general to petition a court for additional remedies against a
corporation, in addition to or as an alternative dissolution, for certain
violations. Provides that upon a showing of reasonable cause, a court
may appoint a receiver to manage a corporation under certain
circumstances. Requires a corporation to keep certain records for at
least three years. Allows the attorney general to inspect records of
certain corporations. Prohibits a state agency from imposing a filing or
reporting requirement on a charitable organization that is more
burdensome than Indiana law allows. Provides exceptions. Allows the
attorney general to take certain actions if the attorney general finds that
a corporation has failed to comply with certain record requirements.
Makes conforming changes.
Effective: July 1, 2023.
Freeman, Johnson T,
Randolph Lonnie M
January 11, 2023, read first time and referred to Committee on Judiciary.
February 16, 2023, amended, reported favorably — Do Pass.
February 27, 2023, read second time, amended, ordered engrossed.
SB 278—LS 7086/DI 148 Reprinted
February 28, 2023
First Regular Session of the 123rd General Assembly (2023)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2022 Regular Session of the General Assembly.
SENATE BILL No. 278
A BILL FOR AN ACT to amend the Indiana Code concerning
business and other associations.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 4-6-3-9, AS AMENDED BY P.L.5-2015,
2 SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2023]: Sec. 9. (a) The contents of an investigative demand,
4 all documentary material, answers to written interrogatories, and
5 transcripts of oral testimony that are provided pursuant to an the
6 investigative demand shall be kept confidential by the attorney general
7 until an action is filed against a person for the violation under
8 investigation, unless:
9 (1) confidentiality is waived by the person being investigated and
10 the person who has testified, answered interrogatories, or
11 produced documentary material; or
12 (2) disclosure is made by the attorney general to another state or
13 federal attorney general or law enforcement agency for the
14 purposes of cooperation in law enforcement of state or federal
15 laws.
16 (b) All documentary material, answers to written interrogatories,
17 and transcripts of oral testimony that are provided to the attorney
SB 278—LS 7086/DI 148 2
1 general pursuant to an investigative demand issued by another state or
2 federal attorney general or law enforcement agency under similar
3 authority shall be treated as if obtained pursuant to an investigative
4 demand issued by the attorney general under section 3 of this chapter.
5 SECTION 2. IC 23-17-2-5.7 IS ADDED TO THE INDIANA CODE
6 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
7 1, 2023]: Sec. 5.7. "Charitable organization" means an
8 organization described in Section 501 of the Internal Revenue
9 Code.
10 SECTION 3. IC 23-17-2-23 IS AMENDED TO READ AS
11 FOLLOWS [EFFECTIVE JULY 1, 2023]: Sec. 23. "Public benefit
12 corporation" means a domestic corporation that is the following:
13 (1) Either:
14 (A) formed as a public benefit corporation under this title;
15 (B) designated as a public benefit corporation by another law;
16 (C) recognized as tax exempt under Section 501(c)(3) of the
17 Internal Revenue Code of 1986; or
18 (D) a not-for-profit corporation that serves a public benefit
19 with an operating budget that is supported in whole or in
20 part by public funds, or is otherwise authorized to spend
21 public funds in furtherance of the corporation's mission;
22 or
23 (D) (E) otherwise organized for a public or charitable purpose,
24 including a veterans organization or a post, a unit, or an
25 auxiliary of the veterans organization, that is chartered by a
26 federal statute for patriotic, public, or charitable purposes and
27 recognized as tax exempt under Section 501(c)(4) or Section
28 501(c)(19) of the Internal Revenue Code.
29 (2) Restricted so that on dissolution the corporation must
30 distribute the corporation's assets to an organization organized for
31 a public or charitable purpose, a religious corporation, the United
32 States, a state, or a person that is recognized as exempt under
33 Section 501(c)(3) of the Internal Revenue Code of 1986.
34 (3) Not a religious corporation.
35 SECTION 4. IC 23-17-24-1 IS AMENDED TO READ AS
36 FOLLOWS [EFFECTIVE JULY 1, 2023]: Sec. 1. (a) A circuit court or
37 superior court may dissolve a corporation as follows:
38 (1) In a proceeding by the attorney general if one (1) of the
39 following is established:
40 (A) The corporation obtained the corporation's articles of
41 incorporation through fraud.
42 (B) The corporation has continued to exceed or abuse the
SB 278—LS 7086/DI 148 3
1 authority conferred upon the corporation by law.
2 (C) The corporation is a public benefit corporation and the
3 corporate assets are being misapplied or wasted.
4 (D) The corporation is a public benefit corporation and is no
5 longer able to carry out the corporation's purposes or a
6 requirement imposed upon the corporation by law.
7 (E) The corporation is a public benefit corporation and
8 uses solicited property or assets in a way that is
9 substantially inconsistent with the stated purpose for
10 which the funds were solicited.
11 (F) The corporation is a public benefit corporation and has
12 grossly mismanaged property or assets.
13 (G) The corporation has failed to respond in a good faith
14 manner to a reasonable written interrogatory from the
15 attorney general to the corporation, the corporation's
16 officers, or the corporation's directors. This clause does
17 not apply if a circuit court or superior court determines
18 that the written interrogatory was not supported by
19 reasonable cause.
20 Clauses (E) through (G) do not apply to a community mental
21 health center (as defined in IC 12-7-2-38), an ICF/IID (as
22 defined in IC 16-29-4-2), an entity that provides community
23 based services for individuals with a developmental disability
24 (as defined in IC 12-7-2-61), a federally-qualified health
25 center (as defined in 42 U.S.C. 1396d(l)(2)(B)), a hospital
26 licensed under IC 12-25, IC 16-21, IC 16-22, or IC 16-23, a
27 health carrier (as defined in IC 27-2-26-1), or a public utility
28 (as defined in IC 8-1-2-1).
29 (2) Before commencing an action under subdivision (1)(G),
30 the attorney general shall:
31 (A) deliver written notice of the specific violation to the
32 corporation; and
33 (B) give the corporation forty-five (45) days to remedy the
34 relevant violation, whether by:
35 (i) amending the corporation's articles of incorporation
36 or bylaws; or
37 (ii) taking or ceasing to take an action.
38 The attorney general may commence an action against a
39 corporation if the corporation fails to remedy the violation
40 after forty-five (45) days.
41 (2) (3) Except as provided in the articles of incorporation or
42 bylaws of a religious corporation, in a proceeding by fifty (50)
SB 278—LS 7086/DI 148 4
1 members or members holding at least five percent (5%) of the
2 voting power, whichever is less, or by a director or a person
3 specified in articles of corporation, if one (1) of the following is
4 established:
5 (A) The directors are deadlocked in the management of the
6 corporate affairs, and the members, if any, are unable to break
7 the deadlock.
8 (B) The directors or those in control of the corporation have
9 acted, are acting, or will act in a manner that is illegal,
10 oppressive, or fraudulent.
11 (C) The members have deadlocked in voting power and have
12 failed, for a period that includes at least two (2) consecutive
13 annual meeting dates, to elect successors to directors whose
14 terms have, or would otherwise have, expired.
15 (D) The corporate assets are being misapplied or wasted.
16 (E) The corporation is a public benefit or religious corporation
17 and is no longer able to carry out the corporation's purposes.
18 (3) (4) In a proceeding by a creditor if either of the following is
19 established:
20 (A) The creditor's claim has been reduced to judgment, the
21 execution on the judgment returned unsatisfied, and the
22 corporation is insolvent.
23 (B) The corporation has admitted in writing that the creditor's
24 claim is due and owing and the corporation is insolvent.
25 (4) (5) In a proceeding by the corporation to have the
26 corporation's voluntary dissolution continued under court
27 supervision.
28 (b) Before dissolving a corporation, a court must consider the
29 following:
30 (1) Reasonable alternatives to dissolution.
31 (2) If dissolution is in the public interest if the corporation is a
32 public benefit corporation.
33 (3) If dissolution is the best way of protecting the interests of
34 members if the corporation is a mutual benefit corporation.
35 SECTION 5. IC 23-17-24-1.5, AS AMENDED BY P.L.65-2014,
36 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
37 JULY 1, 2023]: Sec. 1.5. (a) This section applies to the following:
38 (1) Notwithstanding IC 23-17-1-1, all corporations organized
39 under Indiana law for a purpose for which a corporation may be
40 organized under this article, regardless of the date of
41 incorporation.
42 (2) A foreign corporation that desires to transact business in
SB 278—LS 7086/DI 148 5
1 Indiana.
2 (b) In addition or as an alternative to a dissolution under section
3 1 of this chapter, the attorney general may petition a court to issue one
4 (1) or more of the following remedies:
5 (1) Injunctive relief.
6 (2) Appointment of temporary or permanent receivers.
7 (3) Permanent removal of trustees, corporate officers, or directors
8 who have breached the fiduciary duty.
9 (4) Appointment of permanent court approved replacement
10 trustees, corporate officers or directors, and members.
11 (5) Sequestration of assets.
12 (6) Reimbursement of donations to persons from whom
13 contributions have been unlawfully solicited.
14 (7) Reimbursement for relevant costs, to be payable to the
15 attorney general on behalf of the state, including the
16 following:
17 (A) Reasonable attorney's fees for the action.
18 (B) Reasonable costs of an investigation.
19 (C) Reasonable costs for obtaining expert evidence.
20 (D) Audit fees.
21 (8) Assessment of a civil penalty, which does not replace any
22 other relief granted by the court, of not more than ten
23 thousand dollars ($10,000) per violation. Additionally, a
24 penalty of twenty thousand dollars ($20,000) may be added
25 for each repeat violation.
26 (9) Other relief the court deems appropriate.
27 (c) The attorney general may seek a remedy against any or all of the
28 following:
29 (1) If the attorney general establishes a condition enumerated in
30 section 1(a)(1) of this chapter, a corporation.
31 (2) For a violation of the officer's duties under IC 23-17-14-2, a
32 corporate officer.
33 (3) For a violation of IC 23-17-13, a corporate director.
34 (d) In addition to any remedies described in subsection (b), the
35 attorney general may accept a written assurance of voluntary
36 compliance with respect to:
37 (1) a past, an existing, or an imminent condition enumerated in
38 section 1(a)(1) of this chapter; or
39 (2) any past, existing, or imminent violation of a duty under this
40 article by a corporation, director, officer, member, trustee, or
41 other corporate principal.
42 (e) An assurance of voluntary compliance described in subsection
SB 278—LS 7086/DI 148 6
1 (d) may include a stipulation for the voluntary payment by the person
2 of:
3 (1) the costs of an investigation;
4 (2) an amount to be held in escrow pending the outcome of an
5 action;
6 (3) an amount to be held in escrow pending the outcome of an
7 action as restitution to an aggrieved nonprofit corporation or
8 person; or
9 (4) both amounts described in subdivisions (2) and (3).
10 (f) An assurance of voluntary compliance described in subsection
11 (d):
12 (1) must be filed with; and
13 (2) is subject to the approval of;
14 the court having jurisdiction.
15 (g) An assurance of voluntary compliance described in subsection
16 (d) is not considered an admission of a violation of any law.
17 (h) If the attorney general closes a matter by accepting an assurance
18 of voluntary compliance described in subsection (d), the attorney
19 general may reopen the matter for further proceedings within the period
20 of the applicable statute of limitations.
21 SECTION 6. IC 23-17-24-3, AS AMENDED BY P.L.245-2005,
22 SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
23 JULY 1, 2023]: Sec. 3. (a) A court in a judicial proceeding brought by
24 the attorney general or by any other party named under section 1 of this
25 chapter to dissolve a public benefit or mutual benefit corporation may
26 appoint at least one (1):
27 (1) receiver to wind up and liquidate; or
28 (2) custodian to manage;
29 the affairs of the corporation. The court shall hold a hearing, after
30 notifying all parties to the proceeding and any interested persons
31 designated by the court, before appointing a receiver or custodian. The
32 court appointing a receiver or custodian has exclusive jurisdiction over
33 the corporation and all of the corporation's property wherever located.
34 (b) The court may appoint an individual or a domestic or foreign
35 business or nonprofit corporation authorized to transact business in
36 Indiana as a receiver or custodian. The court may require the receiver
37 or custodian to post bond, with or without sureties, in an amount the
38 court directs.
39 (c) The court shall describe the powers and duties of the receiver or
40 custodian in the appointing order, which may be amended from time to
41 time, including the following:
42 (1) The receiver may do the following:
SB 278—LS 7086/DI 148 7
1 (A) Dispose of all or any part of the assets of the corporation
2 wherever located, at a public or private sale, if authorized by
3 the court. However, the corporation is subject to a trust, an
4 endowment, and other restrictions that would be applicable to
5 the corporation.
6 (B) Sue and defend in the receiver's or custodian's name as
7 receiver or custodian of the corporation in all Indiana courts.
8 (2) The custodian may exercise all of the powers of the
9 corporation, through or in place of the corporation's board of
10 directors or officers, to the extent necessary to manage the affairs
11 of the corporation in the best interests of the corporation's
12 members and creditors or to carry out the corporation's lawful
13 purposes.
14 (d) The court during a receivership may redesignate the receiver a
15 custodian, and during a custodianship may redesignate the custodian
16 a receiver if doing so is in the best interests of the corporation and the
17 corporation's members and creditors.
18 (e) The court may, during the receivership or custodianship, order
19 compensation paid and expense disbursements or reimbursements
20 made to the receiver or custodian and the receiver's or custodian's
21 counsel from the assets of the corporation or proceeds from the sale of
22 the assets.
23 (f) Upon a showing of reasonable cause by the attorney general
24 or any other person, a circuit or superior court may appoint a
25 receiver to manage the corporation or property of the corporation
26 even if an action to dissolve the corporation has not been filed.
27 SECTION 7. IC 23-17-27-1, AS AMENDED BY P.L.118-2017,
28 SECTION 94, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
29 JULY 1, 2023]: Sec. 1. (a) A corporation shall keep as permanent
30 records a record of the following:
31 (1) Minutes of meetings of the corporation's members and board
32 of directors.
33 (2) A record of actions taken by the members or directors without
34 a meeting.
35 (3) A record of actions taken by committees of the board of
36 directors as authorized under IC 23-17-15-6(d).
37 (b) A corporation shall maintain appropriate accounting records.
38 (c) A corporation or the corporation's agent shall maintain a record
39 of the corporation's members in a form that permits preparation of a list
40 of the names and addresses of all members, in alphabetical order by
41 class, showing the number of votes each member is entitled to cast.
42 (d) A corporation shall maintain the corporation's records in written
SB 278—LS 7086/DI 148 8
1 form or in another form capable of conversion into written form within
2 a reasonable time.
3 (e) A corporation shall keep a copy of the following records at the
4 corporation's principal office:
5 (1) The corporation's articles of incorporation or restated articles
6 of incorporation and all amendments to the articles of
7 incorporation currently in effect.
8 (2) The corporation's bylaws or restated bylaws and all
9 amendments to the bylaws currently in effect.
10 (3) Resolutions adopted by the corporation's board of directors
11 relating to the characteristics, qualifications, rights, limitations,
12 and obligations of members or a class or category of members.
13 (4) The minutes of all meetings of members and records of all
14 actions approved by the members for the past three (3) years.
15 (5) Written communications to members generally within the past
16 three (3) years, including the financial statements furnished for
17 the past three (3) years under section 6 of this chapter.
18 (6) A list of the names and business or home addresses of the
19 corporation's current directors and officers.
20 (7) The corporation's most recent biennial report delivered to the
21 secretary of state under IC 23-0.5-2-13.
22 (f) Except as otherwise provided in articles of incorporation or
23 bylaws, ballots must be retained by a corporation until the earlier of the
24 following:
25 (1) The date of the next annual meeting.
26 (2) One (1) year after the date the ballot was received.
27 (g) Records required by subsections (a) through (e) must be
28 maintained for at least three (3) years.
29 (h) The attorney general may gain access to the records
30 identified in this chapter using the provisions of IC 4-6-3-3. This
31 subsection does not apply to a community mental health center (as
32 defined in IC 12-7-2-38), an ICF/IID (as defined in IC 16-29-4-2),
33 an entity that provides community based services for individuals
34 with a developmental disability (as defined in IC 12-7-2-61), a
35 federally-qualified health center (as defined in 42 U.S.C.
36 1396d(l)(2)(B)), a hospital licensed under IC 12-25, IC 16-21,
37 IC 16-22, or IC 16-23, a health carrier (as defined in IC 27-2-26-1),
38 or a public utility (as defined in IC 8-1-2-1). A corporation may file
39 a petition in circuit court or superior court for a court order to
40 determine whether:
41 (1) the attorney general's request for access to the
42 corporation's records is supported by reasonable cause; and
SB 278—LS 7086/DI 148 9
1 (2) the records requested are subject to this chapter.
2 (i) Unless specifically required or authorized by federal law, a
3 state agency (as defined in IC 4-6-3-1) may not impose an annual
4 filing or reporting requirement on a charitable organization that
5 is more burdensome than what is required by state law. This
6 subsection does not apply to a state grant or contract, a fraud
7 investigation, or a legal enforcement action.
8 (j) If the attorney general reviews the records of a corporation
9 under subsection (h) and finds that the corporation has failed to
10 comply with this section, the attorney general may:
11 (1) deliver written notice of the specific violation to the
12 corporation; and
13 (2) give the corporation thirty (30) days to remedy the
14 violation; whether by:
15 (A) amending the corporation's articles of incorporation or
16 bylaws; or
17 (B) taking or ceasing to take an action.
18 (k) If, after sixty (60) days, the corporation fails to remedy the
19 violation identified in the notice served under subsection (j), the
20 attorney general may take one (1) or more of the following actions:
21 (1) Petition a court to assess a civil penalty under
22 IC 23-17-24-1.5(b).
23 (2) File a complaint with:
24 (A) the United States Internal Revenue Service; or
25 (B) the department of state revenue;
26 regarding the tax-exempt status of a public benefit
27 corporation.
28 (3) Report a corporation that receives public funds to the state
29 agency that has disbursed state funds to the corporation for
30 an audit or investigation of the corporation's finances.
SB 278—LS 7086/DI 148 10
COMMITTEE REPORT
Madam President: The Senate Committee on Judiciary, to which
was referred Senate Bill No. 278, has had the same under consideration
and begs leave to report the same back to the Senate with the
recommendation that said bill be AMENDED as follows:
Page 1, between the enacting clause and line 1, begin a new
paragraph and insert:
"SECTION 1. IC 4-6-3-9, AS AMENDED BY P.L.5-2015,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2023]: Sec. 9. (a) The contents of an investigative demand,
all documentary material, answers to written interrogatories, and
transcripts of oral testimony that are provided pursuant to an the
investigative demand shall be kept confidential by the attorney general
until an action is filed against a person for the violation under
investigation, unless:
(1) confidentiality is waived by the person being investigated and
the person who has testified, answered interrogatories, or
produced documentary material; or
(2) disclosure is made by the attorney general to another state or
federal attorney general or law enforcement agency for the
purposes of cooperation in law enforcement of state or federal
laws.
(b) All documentary material, answers to written interrogatories,
and transcripts of oral testimony that are provided to the attorney
general pursuant to an investigative demand issued by another state or
federal attorney general or law enforcement agency under similar
authority shall be treated as if obtained pursuant to an investigative
demand issued by the attorney general under section 3 of this chapter.
SECTION 1. IC 23-17-2-5.7 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2023]: Sec. 5.7. "Charitable organization" means an
organization described in Section 501 of the Internal Revenue
Code.".
Page 1, line 9, after "(D)" insert "a not-for-profit corporation that
serves a public benefit with an operating budget that is".
Page 1, line 11, after "mission;" insert "or".
Page 1, delete lines 12 through 13.
Page 1, line 14, delete "(F)" and insert "(E)".
Page 2, line 24, delete "fails to use" and insert "uses".
Page 2, line 24, delete "for the purpose" and insert "in a way that
is substantially inconsistent with the stated purpose for which the
SB 278—LS 7086/DI 148 11
funds were solicited.".
Page 2, delete lines 25 through 33, begin a new line double block
indented and insert:
"(F) The corporation is a public benefit corporation and
has grossly mismanaged property or assets.".
Page 2, line 34, delete "(I)" and insert "(G)".
Page 2, line 34, delete "answered falsely or".
Page 2, line 35, delete "answer" and insert "respond in a good faith
manner to".
Page 2, line 37, after "directors." insert "This clause does not apply
if a circuit court or superior court determines that the written
interrogatory was not reasonable.
Clauses (E) through (G) do not apply to a county hospital
licensed under IC 16-22, a public utility (as defined in
IC 8-1-2-1), or a utility owned, operated, or held in trust by a
consolidated city.".
Page 2, line 38, delete "bringing" and insert "commencing".
Page 2, line 38, delete "(1)(H) or".
Page 2, line 39, delete "(1)(I)," and insert "(1)(G),".
Page 2, line 42, delete "thirty (30)" and insert "forty-five (45)".
Page 3, delete lines 5 through 7, begin a new line block indented
and insert:
"The attorney general may commence an action against a
corporation if the corporation fails to remedy the violation
after forty-five (45) days.".
Page 4, line 11, after "addition" insert "or as an alternative".
Page 4, delete lines 20 through 23.
Page 4, line 24, delete "(6)" and insert "(5)".
Page 4, line 25, delete "(7)" and insert "(6)".
Page 4, line 27, delete "(8)" and insert "(7)".
Page 4, delete line 30, begin a new line double block indented and
insert:
"(A) Reasonable attorney's fees for the action.".
Page 4, line 34, delete "(9)" and insert "(8)".
Page 4, line 39, delete "(10)" and insert "(9)".
Page 5, delete lines 5 through 17.
Page 5, line 18, reset in roman "(d)".
Page 5, line 18, delete "(e)".
Page 5, line 26, reset in roman "(e)".
Page 5, line 26, delete "(f)".
Page 5, line 27, reset in roman "(d)".
Page 5, line 27, delete "(e)".
SB 278—LS 7086/DI 148 12
Page 5, line 36, reset in roman "(f)".
Page 5, line 36, delete "(g)".
Page 5, line 37, reset in roman "(d):".
Page 5, line 37, delete "(e):".
Page 5, line 41, reset in roman "(g)".
Page 5, line 41, delete "(h)".
Page 5, line 42, reset in roman "(d)".
Page 5, line 42, delete "(e)".
Page 6, line 2, reset in roman "(h)".
Page 6, line 2, delete "(i)".
Page 6, line 3, reset in roman "(d),".
Page 6, line 3, delete "(e),".
Page 6, delete lines 6 through 8, begin a new paragraph and insert:
"SECTION 4. IC 23-17-24-3, AS AMENDED BY P.L.245-2005,
SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2023]: Sec. 3. (a) A court in a judicial proceeding brought by
the attorney general or by any other party named under section 1 of this
chapter to dissolve a public benefit or mutual benefit corporation may
appoint at least one (1):
(1) receiver to wind up and liquidate; or
(2) custodian to manage;
the affairs of the corporation. The court shall hold a hearing, after
notifying all parties to the proceeding and any interested persons
designated by the court, before appointing a receiver or custodian. The
court appointing a receiver or custodian has exclusive jurisdiction over
the corporation and all of the corporation's property wherever located.
(b) The court may appoint an individual or a domestic or foreign
business or nonprofit corporation authorized to transact business in
Indiana as a receiver or custodian. The court may require the receiver
or custodian to post bond, with or without sureties, in an amount the
court directs.
(c) The court shall describe the powers and duties of the receiver or
custodian in the appointing order, which may be amended from time to
time, including the following:
(1) The receiver may do the following:
(A) Dispose of all or any part of the assets of the corporation
wherever located, at a public or private sale, if authorized by
the court. However, the corporation is subject to a trust, an
endowment, and other restrictions that would be applicable to
the corporation.
(B) Sue and defend in the receiver's or custodian's name as
receiver or custodian of the corporation in all Indiana courts.
SB 278—LS 7086/DI 148 13
(2) The custodian may exercise all of the powers of the
corporation, through or in place of the corporation's board of
directors or officers, to the extent necessary to manage the affairs
of the corporation in the best interests of the corporation's
members and creditors or to carry out the corporation's lawful
purposes.
(d) The court during a receivership may redesignate the receiver a
custodian, and during a custodianship may redesignate the custodian
a receiver if doing so is in the best interests of the corporation and the
corporation's members and creditors.
(e) The court may, during the receivership or custodianship, order
compensation paid and expense disbursements or reimbursements
made to the receiver or custodian and the receiver's or custodian's
counsel from the assets of the corporation or proceeds from the sale of
the assets.
(f) Upon a showing of reasonable cause by the attorney general
or any other person, a circuit or superior court may appoint a
receiver to manage the corporation or property of the corporation
even if an action to dissolve the corporation has not been filed.".
Page 7, delete lines 9 through 19, begin a new paragraph and insert:
"(g) The attorney general may gain access to the records
identified in this chapter using the provisions of IC 4-6-3-3. This
subsection does not apply to a county hospital licensed under
IC 16-22, a public utility (as defined in IC 8-1-2-1), or a utility
owned, operated, or held in trust by a consolidated city. A
corporation may file a petition in circuit court or superior court
for a court order to determine whether:
(1) the attorney general's request for access to the
corporation's records is reasonable; and
(2) the records requested are subject to this chapter.".
Page 7, line 20, delete "(i) Except where" and insert "(h) Unless".
Page 7, line 21, after "agency" insert "(as defined in IC 4-6-3-1)".
Page 7, line 22, delete "public benefit corporation" and insert
"charitable organization".
Page 7, line 23, delete "the requirements authorized by Indiana law."
and insert "what is required by state law.".
Page 7, line 24, delete "state grants and contracts, or to" and insert
"a state grant or contract, a fraud investigation, or a legal
enforcement action.".
Page 7, delete lines 25 through 26.
Renumber all SECTIONS consecutively.
SB 278—LS 7086/DI 148 14
and when so amended that said bill do pass.
(Reference is to SB 278 as introduced.)
BROWN L, Chairperson
Committee Vote: Yeas 11, Nays 0.
_____
SENATE MOTION
Madam President: I move that Senate Bill 278 be amended to read
as follows:
Page 3, delete lines 18 through 21, and begin a new line block
indented and insert:
"Clauses (E) through (G) do not apply to a community mental
health center (as defined in IC 12-7-2-38), an ICF/IID (as
defined in IC 16-29-4-2), an entity that provides community
based services for individuals with a developmental disability
(as defined in IC 12-7-2-61), a federally-qualified health
center (as defined in 42 U.S.C. 1396d(l)(2)(B)), a hospital
licensed under IC 12-25, IC 16-21, IC 16-22, or IC 16-23, a
health carrier (as defined in IC 27-2-26-1), or a public utility
(as defined in IC 8-1-2-1).".
Page 8, line 21, after "This" insert "subsection does not apply to a
community mental health center (as defined in IC 12-7-2-38), an
ICF/IID (as defined in IC 16-29-4-2), an entity that provides
community based services for individuals with a developmental
disability (as defined in IC 12-7-2-61), a federally-qualified health
center (as defined in 42 U.S.C. 1396d(l)(2)(B)), a hospital licensed
under IC 12-25, IC 16-21, IC 16-22, or IC 16-23, a health carrier
(as defined in IC 27-2-26-1), or a public utility (as defined in
IC 8-1-2-1). A".
Page 8, delete lines 22 through 24.
(Reference is to SB 278 as printed February 17, 2023.)
BROWN L
SB 278—LS 7086/DI 148 15
SENATE MOTION
Madam President: I move that Senate Bill 278 be amended to read
as follows:
Page 2, line 20, after "or" insert "is".
Page 2, line 21, delete "its" and insert "the corporation's".
Page 3, line 17, delete "was not reasonable." and insert "was not
supported by reasonable cause.".
Page 8, between lines 19 and 20, begin a new paragraph and insert:
"(g) Records required by subsections (a) through (e) must be
maintained for at least three (3) years.".
Page 8, line 20, delete "(g)" and insert "(h)".
Page 8, line 28, delete "reasonable;" and insert "supported by
reasonable cause;".
Page 8, line 30, delete "(h)" and insert "(i)".
Page 8, between lines 35 and 36, begin a new paragraph and insert:
"(j) If the attorney general reviews the records of a corporation
under subsection (h) and finds that the corporation has failed to
comply with this section, the attorney general may:
(1) deliver written notice of the specific violation to the
corporation; and
(2) give the corporation thirty (30) days to remedy the
violation; whether by:
(A) amending the corporation's articles of incorporation or
bylaws; or
(B) taking or ceasing to take an action.
(k) If, after sixty (60) days, the corporation fails to remedy the
violation identified in the notice served under subsection (j), the
attorney general may take one (1) or more of the following actions:
(1) Petition a court to assess a civil penalty under
IC 23-17-24-1.5(b).
(2) File a complaint with:
(A) the United States Internal Revenue Service; or
(B) the department of state revenue;
regarding the tax-exempt status of a public benefit
corporation.
(3) Report a corporation that receives public funds to the state
agency that has disbursed state funds to the corporation for
an audit or investigation of the corporation's finances.".
Page 8, delete lines 36 through 39.
(Reference is to SB 278 as printed February 17, 2023.)
FREEMAN
SB 278—LS 7086/DI 148