North Carolina 2025-2026 Regular Session

North Carolina Senate Bill S489 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		GENERAL ASSEMBLY OF NORTH CAROLINA
2	2		SESSION 2025
3		-	S 1
4		-	SENATE BILL 489
	3	+	S D
	4	+	SENATE BILL DRS15220-MVf-22
	5	+
5	6
6	7
7	8		Short Title: Modify Nonprofit Corp. Act/Charitable Org. (Public)
8	9		Sponsors: Senator Sawrey (Primary Sponsor).
9		-	Referred to: ~~Rules and Operations of the Senate~~
10		-	~~March 26, 2025~~
11		-	~~S489 -v-1~~
	10	+	Referred to:
	11	+
	12	+	DRS15220 -MVf-22
12	13		A BILL TO BE ENTITLED 1
13	14		AN ACT TO MAKE VARIOUS CHANGES TO THE NORTH CAROLINA NONPROFIT 2
14	15		CORPORATIONS ACT AND TO ALLOW A CHARITABLE ORGANIZATION 'S 3
15	16		DISCLOSURE UNDER STATE LAW TO BE SATISFIED BY THE 4
16	17		ACKNOWLEDGEMENT REQUIRED FOR A TAX DEDUCTION UNDER FEDERAL 5
17	18		LAW. 6
18	19		The General Assembly of North Carolina enacts: 7
19	20		8
20	21		PART I. MODIFY LIMITATIONS ON MERGERS AND SALES OF ASSETS 9
21	22		SECTION 1.(a) G.S. 55A-11-02 reads as rewritten: 10
22	23		"§ 55A-11-02. Limitations on mergers by charitable or religious corporations. 11
23	24		(a) Without the prior approval of the superior court in a proceeding in which the Attorney 12
24	25		General has been given written notice, a charitable or religious corporation may merge only with 13
25	26		any of the following: 14
26	27		… 15
27	28		(5) A limited liability company that satisfies both of the following conditions: 16
28	29		a. Its sole member is a domestic or foreign corporation that is exempt 17
29	30		from income tax under section 501(c)(3) of the Internal Revenue Code 18
30	31		of 1986 or any successor section. 19
31	32		b. It is disregarded for income tax purposes but would be eligible for an 20
32	33		exemption under section 501(c)(3) of the Internal Revenue Code of 21
33	34		1986 or any successor section if it were not disregarded for income tax 22
34	35		purposes. 23
35	36		…." 24
36	37		SECTION 1.(b) G.S. 55A-11-09 reads as rewritten: 25
37	38		"§ 55A-11-09. Merger with unincorporated entity. 26
38	39		(a) As used in this section, "business entity" means a (i) domestic business corporation 27
39	40		(including corporation, including a professional corporation as defined in G.S. 55B-2), a 28
40	41		G.S. 55B-2, (ii) foreign business corporation (including corporation, including a foreign 29
41	42		professional corporation as defined in G.S. 55B-16), a G.S. 55B-16, (iii) domestic or foreign 30
42	43		nonprofit corporation, a (iv) domestic or foreign limited liability company, a (v) domestic or 31
43	44		foreign limited partnership, a (vi) registered limited liability partnership or foreign limited 32
44	45		liability partnership as defined in G.S. 59-32, or any other partnership as defined in G.S. 59-36 33
45	46		whether or not formed under the laws of this State.State, or (vii) nonprofit association as defined 34
46		-	in G.S. 59B-2 whether or not formed under the laws of this State. 35 General Assembly Of North Carolina Session 2025
47		-	Page 2 Senate Bill 489-First Edition
	47	+	in G.S. 59B-2 whether or not formed under the laws of this State. 35
	48	+	FILED SENATE
	49	+	Mar 25, 2025
	50	+	S.B. 489
	51	+	PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
	52	+	Page 2 DRS15220-MVf-22
48	53		(b) One or more domestic nonprofit corporations may merge with one or more 1
49	54		unincorporated entities and, if desired, one or more foreign nonprofit corporations, domestic 2
50	55		business corporations, or foreign business corporations if:if all of the following apply: 3
51	56		(1) The merger is permitted by the laws of the state or country governing the 4
52	57		organization and internal affairs of each of the other merging business 5
53	58		entities;entities. 6
54	59		(2) Each merging domestic nonprofit corporation and each other merging 7
55	60		business entity comply with the requirements of this section and, to the extent 8
56	61		applicable, the laws referred to in subdivision (1) of this subsection; 9
57	62		andsubsection. 10
58	63		(3) The merger complies with G.S. 55A-11-02, if applicable. 11
59	64		… 12
60	65		(c3) In the case of a merging domestic nonprofit corporation, approval of the plan of 13
61	66		merger requires that the plan of merger be adopted as provided in G.S. 55A-11-03. If any member 14
62	67		of a merging domestic nonprofit corporation has or will have personal liability for any existing 15
63	68		or future obligation of the surviving business entity solely as a result of holding an interest in the 16
64	69		surviving business entity, then in addition to the requirements of G.S. 55A-11-03, approval of 17
65	70		the plan of merger by the domestic nonprofit corporation shall require the affirmative vote or 18
66	71		written consent of the member. In the case of each other merging business entity, the plan of 19
67	72		merger must shall be approved in accordance with the laws of the state or country governing the 20
68	73		organization and internal affairs of such merging business entity. 21
69	74		… 22
70	75		(d) After a plan of merger has been approved by each merging domestic nonprofit 23
71	76		corporation and each other merging business entity as provided in subsection (c) of this section, 24
72	77		the surviving business entity shall deliver articles of merger to the Secretary of State for filing. 25
73	78		The articles of merger shall set forth:forth all of the following: 26
74	79		… 27
75	80		(e) A merger takes effect when the articles of merger become effective. When a merger 28
76	81		takes effect:effect, all of the following apply: 29
77	82		(1) Each other merging business entity merges into the surviving business entity 30
78	83		and the separate existence of each merging business entity except the 31
79	84		surviving business entity ceases;ceases. 32
80	85		(2) The title to all real estate and other property owned by each merging business 33
81	86		entity is vested in the surviving business entity without reversion or 34
82	87		impairment;impairment. 35
83	88		(3) The surviving business entity has all liabilities of each merging business 36
84	89		entity;entity. 37
85	90		(4) A proceeding pending by or against any merging business entity may be 38
86	91		continued as if the merger did not occur, or the surviving business entity may 39
87	92		be substituted in the proceeding for a merging business entity whose separate 40
88	93		existence ceases in the merger;merger. 41
89	94		(5) If a domestic nonprofit corporation is the surviving business entity, its articles 42
90	95		of incorporation shall be amended to the extent provided in the articles of 43
91	96		merger;merger. 44
92	97		(6) The interests in each merging business entity that are to be converted into 45
93	98		interests, obligations, or securities of the surviving business entity or into the 46
94	99		right to receive cash or other property are thereupon so converted, and the 47
95	100		former holders of the interests are entitled only to the rights provided to them 48
96	101		in the plan of merger or, in the case of former holders of shares in a domestic 49
97	102		business corporation, any rights they may have under Article 13 of Chapter 50
98	103		55 of the General Statutes; andStatutes. 51 General Assembly Of North Carolina Session 2025
99		-	~~Senate Bill 489-First Edition~~ Page 3
	104	+	DRS15220-MVf-22 Page 3
100	105		… 1
101	106		(e1) If the surviving business entity is not a domestic limited liability company, a domestic 2
102	107		business corporation, a domestic nonprofit corporation, or a domestic limited partnership, when 3
103	108		the merger takes effect the surviving business entity is deemed:deemed to have done all of the 4
104	109		following: 5
105	110		(1) To agree Agreed that it may be served with process in this State in any 6
106	111		proceeding for enforcement of (i) any obligation of any merging domestic 7
107	112		limited liability company, domestic business corporation, domestic nonprofit 8
108	113		corporation, domestic limited partnership, or other partnership as defined in 9
109	114		G.S. 59-36 that is formed under the laws of this State, or nonprofit association 10
110	115		as defined in G.S. 59B-2 that is formed under the laws of this State, (ii) the 11
111	116		appraisal rights of shareholders of any merging domestic business corporation 12
112	117		under Article 13 of Chapter 55 of the General Statutes, and (iii) any obligation 13
113	118		of the surviving business entity arising from the merger; andmerger. 14
114	119		(2) To have appointed Appointed the Secretary of State as its agent for service of 15
115	120		process in any such the proceeding. Service on the Secretary of State of any 16
116	121		such process shall be made by delivering to and leaving with the Secretary of 17
117	122		State, or with any clerk authorized by the Secretary of State to accept service 18
118	123		of process, duplicate copies of such the process and the fee required by 19
119	124		G.S. 55A-1-22(b). Upon receipt of service of process on behalf of a surviving 20
120	125		business entity in the manner provided for in this section, the Secretary of 21
121	126		State shall immediately mail a copy of the process by registered or certified 22
122	127		mail, return receipt requested, to the surviving business entity. If the surviving 23
123	128		business entity is authorized to transact business or conduct affairs in this 24
124	129		State, the address for mailing shall be its principal office designated in the 25
125	130		latest document filed with the Secretary of State that is authorized by law to 26
126	131		designate the principal office or, if there is no principal office on file, its 27
127	132		registered office. If the surviving business entity is not authorized to transact 28
128	133		business or conduct affairs in this State, the address for mailing shall be the 29
129	134		mailing address designated pursuant to subdivision (3) of subsection (d) of 30
130	135		this section. 31
131	136		(f) This section does not apply to a merger that does not include a merging 32
132	137		unincorporated entity." 33
133	138		SECTION 1.(c) G.S. 55A-12-02 reads as rewritten: 34
134	139		"§ 55A-12-02. Sale of assets other than in regular course of activities. 35
135	140		… 36
136	141		(b) Unless this Chapter, the articles of incorporation, bylaws, or the board of directors or 37
137	142		members (acting pursuant to subsection (d) of this section) require a greater vote or voting by 38
138	143		class, the proposed transaction to be authorized shall be approved:approved by all of the 39
139	144		following: 40
140	145		(1) By the board;The board. 41
141	146		(2) By the The members entitled to vote thereon by two-thirds of the votes cast or 42
142	147		a majority of the votes entitled to be cast on the proposed transaction, 43
143	148		whichever is less; andless. 44
144	149		(3) In writing by any person or persons whose approval is required by a provision 45
145	150		of the articles of incorporation authorized by G.S. 55A-10-30 for an 46
146	151		amendment to the articles of incorporation or bylaws. 47
147	152		(c) If the corporation does not have members entitled to vote thereon, the transaction 48
148	153		shall be approved by a vote of a majority of the directors then in office. The corporation shall 49
149	154		provide at least five days' written notice of any directors' meeting at which such the approval will 50
150	155		be considered. The notice shall state that the purpose, or one of the purposes, of the meeting is to 51 General Assembly Of North Carolina Session 2025
151		-	Page 4 ~~Senate Bill 489-First Edition~~
	156	+	Page 4 DRS15220-MVf-22
152	157		consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property 1
153	158		or assets of the corporation and contain or be accompanied by a description of the transaction. 2
154	159		… 3
155	160		(h) After a sale, lease, exchange, or other disposition of property is authorized, the 4
156	161		transaction may be abandoned (subject abandoned, subject to any contractual rights), rights, 5
157	162		without further action by the members or any other person who approved the transaction, in 6
158	163		accordance with the procedure set forth in the resolution proposing the transaction or, if none is 7
159	164		set forth, in the manner determined by the board of directors." 8
160	165		SECTION 1.(d) This section becomes effective October 1, 2025, and applies to 9
161	166		plans of mergers adopted on or after that date. 10
162	167		11
163	168		PART II. REQUIRE ANNUAL REPORTS TO THE SECRETARY OF STATE 12
164	169		SECTION 2.(a) Article 16 of Chapter 55A of the General Statutes is amended by 13
165	170		adding a new section to read: 14
166	171		"§ 55A-16-22.1. Annual report to the Secretary of State. 15
167	172		(a) Each domestic corporation and each foreign corporation authorized to conduct affairs 16
168	173		in this State shall submit an annual report to the Secretary of State, in electronic form as 17
169	174		prescribed by the Secretary of State, that sets forth all of the following: 18
170	175		(1) The name of the corporation and the state or country under whose law it is 19
171	176		incorporated. 20
172	177		(2) The street address, and the mailing address if different from the street address, 21
173	178		of the registered office in this State, the county in which the registered office 22
174	179		is located, the name and email address of its registered agent at that office, and 23
175	180		a statement of any change of the registered office or registered agent. 24
176	181		(3) The address and telephone number of its principal office. 25
177	182		(4) The names, titles, and business street addresses of its principal officers and 26
178	183		the name, mailing address, email address, and telephone number of an 27
179	184		individual who is authorized to provide information regarding persons with 28
180	185		the authority to bind the corporation. 29
181	186		(5) A brief description of the nature of its activities. 30
182	187		(6) An email address for the corporation, if different from the email address 31
183	188		provided under subdivision (2) of this subsection. 32
184	189		(b) The information in the annual report shall be current as of the date the annual report 33
185	190		is submitted on behalf of the corporation. 34
186	191		(c) The corporation shall submit an annual report to the Secretary of State by November 35
187	192		15 of each year following (i), in the case of a domestic corporation, the calendar year in which 36
188	193		the corporation was formed or (ii), in the case a foreign corporation, the calendar year in which 37
189	194		the Secretary of State issued to the foreign corporation a certificate of authority to conduct affairs 38
190	195		in this State. An annual report is due each year until (i), in the case of a domestic corporation, the 39
191	196		effective date of a voluntary or judicial dissolution or (ii), in the case of a foreign corporation, 40
192	197		the effective date of a certificate of withdrawal or revocation of a certificate of authority. 41
193	198		(d) If an annual report does not contain the information required by this section, the 42
194	199		Secretary of State shall promptly notify the reporting corporation in writing and return the report 43
195	200		to it for correction. If the report is corrected to contain the information required by this section 44
196	201		and submitted to the Secretary of State within 30 days after the notice, the report shall be deemed 45
197	202		to be timely submitted. 46
198	203		(e) Amendments to any previously filed annual report may be submitted for filing to the 47
199	204		Secretary of State at any time for the purpose of correcting, updating, or augmenting the 48
200	205		information contained in the annual report. 49 General Assembly Of North Carolina Session 2025
201		-	~~Senate Bill 489-First Edition~~ Page 5
	206	+	DRS15220-MVf-22 Page 5
202	207		(f) If the Secretary of State does not receive an annual report within 60 days after the 1
203	208		date the report is due, the Secretary of State may presume that the annual report is delinquent. 2
204	209		This presumption may be rebutted by evidence of submission presented by the filing corporation. 3
205	210		(g) The Secretary of State may provide by email any notice or form required under this 4
206	211		section if the submitting domestic or foreign corporation to be notified has consented to receiving 5
207	212		notices and forms via email and has provided the Secretary of State an email address for receiving 6
208	213		the notices or forms. Any email address provided by a submitting corporation in accordance with 7
209	214		this section is confidential information and is not a public record under Chapter 132 of the 8
210	215		General Statutes. 9
211	216		(h) A domestic or foreign corporation shall be deemed to have filed the annual report 10
212	217		required by this section if all of the following have occurred: 11
213	218		(1) The corporation is a charitable organization or sponsor that is licensed under 12
214	219		Article 2 of Chapter 131F of the General Statutes. 13
215	220		(2) The corporation applies for the license electronically in a form prescribed by 14
216	221		the Secretary and provides additional information in that application that is 15
217	222		required for the annual report in this section. 16
218	223		(3) The corporation is licensed on the annual report due date." 17
219	224		SECTION 2.(b) G.S. 55A-1-22, as amended by Section 3.2(a) of this act, reads as 18
220	225		rewritten: 19
221	226		"§ 55A-1-22. Filing, service, and copying fees. 20
222	227		(a) The Secretary of State shall collect the following fees when the documents described 21
223	228		in this subsection are submitted to the Secretary for filing: 22
224	229		Document Fee 23
225	230		… 24
226	231		(29) Annual report No fee 25
227	232		…." 26
228	233		SECTION 2.(c) G.S. 55A-14-20 reads as rewritten: 27
229	234		"§ 55A-14-20. Grounds for administrative dissolution. 28
230	235		The Secretary of State may commence a proceeding under G.S. 55A-14-21 to dissolve 29
231	236		administratively a corporation if:if any of the following occurs: 30
232	237		(1) The corporation does not pay within 60 days after they are due any penalties, 31
233	238		fees, or other payments due under this Chapter;Chapter. 32
234	239		(2) Repealed by Session Laws 1995, c. 539, s. 24. 33
235	240		(2a) The corporation is delinquent in submitting its annual report. 34
236	241		(3) The corporation is without a registered agent or registered office in this State 35
237	242		for 60 days or more;more. 36
238	243		(4) The corporation does not notify the Secretary of State within 60 days that its 37
239	244		registered agent or registered office has been changed, that its registered agent 38
240	245		has resigned, or that its registered office has been discontinued;discontinued. 39
241	246		(5) The corporation's period of duration stated in its articles of incorporation 40
242	247		expires;expires. 41
243	248		(6) The corporation knowingly fails or refuses to answer truthfully and fully 42
244	249		within the time prescribed in this Chapter interrogatories propounded by the 43
245	250		Secretary of State in accordance with the provisions of this Chapter; 44
246	251		orChapter. 45
247	252		(7) The corporation does not designate the address of its principal office with the 46
248	253		Secretary of State or does not notify the Secretary of State within 60 days that 47
249	254		the principal office has changed." 48
250	255		SECTION 2.(d) G.S. 55A-14-22 reads as rewritten: 49
251	256		"§ 55A-14-22. Reinstatement following administrative dissolution. 50 General Assembly Of North Carolina Session 2025
252		-	Page 6 ~~Senate Bill 489-First Edition~~
	257	+	Page 6 DRS15220-MVf-22
253	258		(a) A corporation administratively dissolved under G.S. 55A-14-21 may apply to the 1
254	259		Secretary of State for reinstatement. The application shall:shall do all of the following: 2
255	260		(1) Recite the name of the corporation and the effective date of its administrative 3
256	261		dissolution; anddissolution. 4
257	262		(2) State that the ground or grounds for dissolution either did not exist or have 5
258	263		been eliminated. 6
259	264		(a1) If, at the time the corporation applies for reinstatement, the name of the corporation 7
260	265		is not distinguishable from the name of another entity authorized to be used under G.S. 55D-21, 8
261	266		then the corporation must shall change its name to a name that is distinguishable upon the records 9
262	267		of the Secretary of State from the name of the other entity before the Secretary of State may 10
263	268		prepare a certificate of reinstatement. 11
264	269		(b) If the Secretary of State determines that the application contains the information 12
265	270		required by subsection (a) of this section, that the information is correct, and that the name of the 13
266	271		corporation complies with G.S. 55D-21 and any other applicable section, and that any penalties, 14
267	272		fees, or other payments due under this Chapter have been paid, the Secretary of State shall cancel 15
268	273		the certificate of dissolution and dissolution, prepare a certificate of reinstatement that recites the 16
269	274		Secretary of State's determination and the effective date of reinstatement, file the original of the 17
270	275		certificate, certificate of reinstatement, and mail a copy of it to the corporation. 18
271	276		(c) When the reinstatement is effective, it relates back to and takes effect as of the 19
272	277		effective date of the administrative dissolution and the corporation resumes carrying on its 20
273	278		activities as if the administrative dissolution had never occurred, subject to the rights of any 21
274	279		person who reasonably relied to his the person's prejudice upon the certificate of dissolution." 22
275	280		SECTION 2.(e) Until January 1, 2029, the Secretary of State may waive the fee 23
276	281		payable under G.S. 55A-1-22(a)(17) by a corporation seeking reinstatement following 24
277	282		administrative dissolution for delinquent filing pursuant to G.S. 55A-14-20(2a). 25
278	283		SECTION 2.(f) This section becomes effective January 1, 2027, and applies to 26
279	284		annual reports due on or after that date. 27
280	285		28
281	286		PART III. AUTHORIZE DOMESTICATION 29
282	287		SECTION 3.1. Chapter 55A of the General Statutes is amended by adding a new 30
283	288		Article to read: 31
284	289		"Article 11B. 32
285	290		"Domestication. 33
286	291		"§ 55A-11B-01. Definitions. 34
287	292		In this Article, the following definitions apply: 35
288	293		(1) Domesticated corporation. – The domesticating nonprofit corporation as it 36
289	294		continues in existence after a domestication. 37
290	295		(2) Domesticating corporation. – The domestic nonprofit corporation that 38
291	296		approves a plan of domestication pursuant to G.S. 55A-11B-04 or the foreign 39
292	297		corporation that approves a domestication pursuant to the law of the 40
293	298		jurisdiction of the foreign corporation. 41
294	299		(3) Domestication. – A transaction pursuant to this Article. 42
295	300		(4) Interest holder liability. – Any of the following: 43
296	301		a. Personal liability for a liability of a domestic or foreign nonprofit 44
297	302		corporation that is imposed on a person by either of the following: 45
298	303		1. Solely by reason of the status of the person as an interest 46
299	304		holder. 47
300	305		2. By a provision of the articles of incorporation or bylaws that 48
301	306		make one or more specified interest holders or categories of 49
302	307		interest holders liable in their capacity as interest holders for 50
303	308		all or specified liabilities of the entity. 51 General Assembly Of North Carolina Session 2025
304		-	~~Senate Bill 489-First Edition~~ Page 7
	309	+	DRS15220-MVf-22 Page 7
305	310		b. An obligation of an interest holder under the bylaws to contribute to 1
306	311		the domestic or foreign nonprofit corporation. 2
307	312		(5) Law of the jurisdiction. – The law of the jurisdiction governing the 3
308	313		organization and internal affairs of the corporation. 4
309	314		"§ 55A-11B-02. Domestication; preliminary provisions. 5
310	315		(a) By complying with the provisions of this Article applicable to foreign nonprofit 6
311	316		corporations, a foreign nonprofit corporation may become a domestic nonprofit corporation, if 7
312	317		the domestication is permitted by the law of the jurisdiction of the foreign corporation. 8
313	318		(b) By complying with the provisions of this Article, a domestic nonprofit corporation 9
314	319		may become a foreign nonprofit corporation pursuant to a plan of domestication, if the 10
315	320		domestication is permitted by the law of the jurisdiction of the foreign corporation. 11
316	321		(c) A charitable or religious corporation may only become a foreign nonprofit 12
317	322		corporation in accordance with the requirements of G.S. 55A-11-02 for mergers involving 13
318	323		charitable or religious corporations, and the domesticated corporation shall meet the same 14
319	324		requirements as the survivor in a merger. 15
320	325		(d) Any devise, gift, grant, or promise contained in a will or other instrument of donation, 16
321	326		subscription, or conveyance that is made to a domesticating corporation and that takes effect or 17
322	327		remains payable after the domestication becomes effective inures to the domesticated corporation 18
323	328		unless the will or other instrument otherwise specifically provides. 19
324	329		"§ 55A-11B-03. Plan of domestication. 20
325	330		(a) A domestic nonprofit corporation may become a foreign nonprofit corporation by 21
326	331		approving a plan of domestication. The plan of domestication shall include all of the following: 22
327	332		(1) The name of the domesticating corporation. 23
328	333		(2) The name and governing jurisdiction of the domesticated corporation. 24
329	334		(3) The manner and basis of converting the memberships, if any, of the 25
330	335		domesticating corporation into memberships, obligations, rights to acquire 26
331	336		memberships, cash, other property, or any combination thereof. 27
332	337		(4) The proposed articles of incorporation and bylaws of the domesticated 28
333	338		corporation. 29
334	339		(5) The other terms and conditions of the domestication. 30
335	340		(b) In addition to the requirements of subsection (a) of this section, a plan of 31
336	341		domestication may contain any other provision not prohibited by law. 32
337	342		(c) The terms of a plan of domestication, other than the terms described in subdivisions 33
338	343		(1), (2), and (4) of subsection (a) of this section, may be made dependent upon facts objectively 34
339	344		ascertainable outside the plan if the plan sets forth the manner in which the facts will operate 35
340	345		upon the terms of the plan. The facts may include any of the following: 36
341	346		(1) Statistical or market indices, market prices of any security or group of 37
342	347		securities, interest rates, currency exchange rates, or similar economic or 38
343	348		financial data. 39
344	349		(2) A determination or action by any person or body, including the nonprofit 40
345	350		corporation or any other party to the plan. 41
346	351		(3) The terms of, or actions taken under, an agreement to which the corporation 42
347	352		is a party, or any other agreement or record. 43
348	353		"§ 55A-11B-04. Approval of domestication. 44
349	354		(a) If a domestic nonprofit corporation is to be the domesticating corporation, the plan of 45
350	355		domestication shall be adopted in the following manner: 46
351	356		(1) The plan of domestication shall first be adopted by the board of directors. The 47
352	357		board may set conditions for (i) approval of the plan of domestication by the 48
353	358		members or (ii) the effectiveness of the plan of domestication. If the 49
354	359		domesticating corporation does not have any members entitled to vote on the 50 General Assembly Of North Carolina Session 2025
355		-	Page 8 ~~Senate Bill 489-First Edition~~
	360	+	Page 8 DRS15220-MVf-22
356	361		domestication, a plan of domestication is adopted by the corporation when it 1
357	362		has been adopted by the board of directors pursuant to this subdivision. 2
358	363		(2) Except as provided in subdivision (1) of this subsection, the plan of 3
359	364		domestication shall then be approved by the members. In submitting the plan 4
360	365		of domestication to the members for approval, the board of directors shall 5
361	366		recommend that the members approve the plan, unless the board of directors 6
362	367		makes a determination that because of conflicts of interest or other special 7
363	368		circumstances it should not make the recommendation, in which case the 8
364	369		board shall inform the members of the basis for not making the 9
365	370		recommendation. 10
366	371		(3) If the plan of domestication is required to be approved by the members, and if 11
367	372		the approval is to be given at a meeting, the corporation shall notify each 12
368	373		member entitled to vote of the meeting of the members at which the plan of 13
369	374		domestication is to be submitted for approval. The notice shall (i) state that 14
370	375		the purpose, or one of the purposes, of the meeting is to consider the plan of 15
371	376		domestication and (ii) contain or be accompanied by a copy or summary of 16
372	377		the plan. The notice shall include or be accompanied by a copy of the articles 17
373	378		of incorporation and the bylaws as they will be in effect immediately after the 18
374	379		domestication. 19
375	380		(4) Unless the articles of incorporation or bylaws, or the board of directors acting 20
376	381		pursuant to subdivision (1) of this subsection, require a greater vote or a 21
377	382		greater quorum, approval of the plan of domestication requires (i) the approval 22
378	383		of the members at a meeting at which a quorum exists consisting of a majority 23
379	384		of the votes entitled to be cast on the plan and (ii), if any class of membership 24
380	385		is entitled to vote as a separate group on the plan of merger, the approval of 25
381	386		each class of members voting as a separate voting group at a meeting at which 26
382	387		a quorum of the voting group exists consisting of a majority of the votes 27
383	388		entitled to be cast on the plan by that voting group. 28
384	389		(5) Subject to subdivision (6) of this subsection, separate voting by voting groups 29
385	390		on a plan of domestication is required in the following circumstances: 30
386	391		a. By each class of memberships that is either of the following: 31
387	392		1. To be converted under the plan of domestication into security 32
388	393		interests, obligations, rights to acquire securities or interests, 33
389	394		cash, other property, or any combination thereof. 34
390	395		2. Entitled to vote as a separate group on a provision in the plan 35
391	396		that constitutes a proposed amendment to the articles or bylaws 36
392	397		of the domesticated corporation that requires action by separate 37
393	398		voting groups under the provisions of this Chapter. 38
394	399		b. If the voting group is entitled under the articles of incorporation or 39
395	400		bylaws to vote as a group to approve a plan of domestication. 40
396	401		(6) The articles of incorporation or bylaws may expressly limit or eliminate the 41
397	402		separate voting rights provided in sub-sub-subdivision (5)a.1. of this 42
398	403		subsection as to any class of members, except when the plan includes what 43
399	404		would be in effect an amendment subject to sub-sub-subdivision (5)a.2. of this 44
400	405		subsection. 45
401	406		(7) If, as a result of a domestication, one or more members of the domesticating 46
402	407		corporation would become subject to new interest holder liability, approval of 47
403	408		the plan of domestication requires the signing in connection with the 48
404	409		domestication, by each affected member, of a separate consent in a record to 49
405	410		become subject to the new interest holder liability. This subdivision does not 50
406	411		apply in the case of a member that already has interest holder liability with 51 General Assembly Of North Carolina Session 2025
407		-	~~Senate Bill 489-First Edition~~ Page 9
	412	+	DRS15220-MVf-22 Page 9
408	413		respect to the domesticating corporation, if the terms and conditions of the 1
409	414		new interest holder liability with respect to the domesticated corporation are 2
410	415		substantially identical to those of the existing interest holder liability, other 3
411	416		than for changes that eliminate or reduce the interest holder liability. 4
412	417		(8) In addition to the adoption and approval of the plan of domestication by the 5
413	418		board of directors and members as required by this section, the plan of 6
414	419		domestication shall also be approved in a record by any person or group of 7
415	420		persons whose approval is required under G.S. 55A-10-30 to amend the 8
416	421		articles or bylaws. 9
417	422		(b) The plan of domestication of a charitable or religious corporation is subject to the 10
418	423		approval requirements described in G.S. 55A-11B-02(c). 11
419	424		"§ 55A-11B-05. Amendment or abandonment of plan of domestication; abandonment. 12
420	425		(a) Before articles of domestication have taken effect, a plan of domestication of a 13
421	426		domestic nonprofit corporation may be amended, except as otherwise provided in the plan. 14
422	427		(b) A domestic nonprofit corporation may approve an amendment of a plan of 15
423	428		domestication in any of the following ways: 16
424	429		(1) In the same manner as the plan was approved, if the plan does not provide for 17
425	430		the manner in which it may be amended. 18
426	431		(2) In the manner provided in the plan, except that a member that was entitled to 19
427	432		vote on or consent to approval of the plan is entitled to vote on or consent to 20
428	433		any amendment of the plan that will change any of the following: 21
429	434		a. The amount or kind of memberships, securities, obligations, money 22
430	435		rights to acquire memberships, securities, money, other property, or 23
431	436		any combination thereof to be received by any of the members of the 24
432	437		domesticating corporation under the plan. 25
433	438		b. The articles of incorporation or bylaws of the domesticated 26
434	439		corporation that will be in effect immediately after the domestication 27
435	440		becomes effective, except for changes that do not require approval of 28
436	441		the members of the domesticated corporation under the law of the 29
437	442		jurisdiction of the domesticated corporation or its proposed articles of 30
438	443		or bylaws as set forth in the plan. 31
439	444		c. Any of the other terms or conditions of the plan, if the change would 32
440	445		adversely affect the member in any material respect. 33
441	446		(c) After a plan of domestication has been approved and before the articles of 34
442	447		domestication have become effective, the plan may be abandoned as provided in the plan. Unless 35
443	448		prohibited by the plan, a domestic nonprofit corporation may abandon the plan in the same 36
444	449		manner as the plan was approved by the corporation without action by its members in accordance 37
445	450		with any procedures set forth in the plan or, if no such procedures are set forth in the plan, in the 38
446	451		manner determined by the board of directors. 39
447	452		(d) If a domestication is abandoned after articles of domestication have been delivered to 40
448	453		the Secretary of State for filing but before the articles are effective, articles of abandonment, 41
449	454		signed by the domesticating nonprofit corporation, shall be delivered to the Secretary of State for 42
450	455		filing before the articles of domestication are effective. The articles of abandonment take effect 43
451	456		upon filing, and the domestication is abandoned and does not become effective. The articles of 44
452	457		abandonment shall contain all of the following: 45
453	458		(1) The name of the domesticating corporation. 46
454	459		(2) The date on which the articles of domestication were filed by the Secretary of 47
455	460		State. 48
456	461		(3) A statement that the domestication has been abandoned in accordance with 49
457	462		this section. 50
458	463		"§ 55A-11B-06. Articles of domestication; effective date. 51 General Assembly Of North Carolina Session 2025
459		-	Page 10 ~~Senate Bill 489-First Edition~~
	464	+	Page 10 DRS15220-MVf-22
460	465		(a) Articles of domestication shall be signed by the domesticating corporation and 1
461	466		delivered to the Secretary of State for filing. 2
462	467		(b) The articles of domestication shall contain all of the following: 3
463	468		(1) The name and governing jurisdiction of the domesticating corporation. 4
464	469		(2) The name and governing jurisdiction of the domesticated corporation. 5
465	470		(3) If the domesticating corporation is a domestic nonprofit corporation, a 6
466	471		statement that the plan of domestication was approved in accordance with this 7
467	472		Article or, if the domesticating corporation is a foreign nonprofit corporation, 8
468	473		a statement that the domestication was approved in accordance with its law of 9
469	474		jurisdiction. 10
470	475		(4) If the domesticated corporation is a domestic nonprofit corporation, its articles 11
471	476		of incorporation, as an attachment, except that provisions that would not be 12
472	477		required to be included in restated articles of incorporation may be omitted 13
473	478		from the articles of the domesticated corporation and the articles do not need 14
474	479		to be signed. 15
475	480		(c) In addition to the requirements of subsection (b) of this section, articles of 16
476	481		domestication may contain any other provision not prohibited by law. 17
477	482		(d) If the domesticated corporation is a domestic nonprofit corporation, the domestication 18
478	483		becomes effective when the articles of domestication are effective. If the domesticated 19
479	484		corporation is a foreign nonprofit corporation, the domestication becomes effective on the later 20
480	485		of the following: 21
481	486		(1) The date and time provided by the law of the jurisdiction of the domesticated 22
482	487		corporation. 23
483	488		(2) When the articles of domestication are effective. 24
484	489		"§ 55A-11B-07. Effect of domestication. 25
485	490		(a) When a domestication becomes effective, all of the following apply: 26
486	491		(1) All property owned by, and every contract right possessed by, the 27
487	492		domesticating corporation becomes the property and contract rights of the 28
488	493		domesticated corporation without transfer, reversion, or impairment. 29
489	494		(2) All debts, obligations, and other liabilities of the domesticating corporation 30
490	495		remain the debts, obligations, and other liabilities of the domesticated 31
491	496		corporation. 32
492	497		(3) The name of the domesticated corporation may be, but is not required to be, 33
493	498		substituted for the name of the domesticating corporation in any pending 34
494	499		proceeding. 35
495	500		(4) The articles of incorporation and bylaws of the domesticated corporation 36
496	501		become effective. 37
497	502		(5) The memberships of the domesticating corporation are reclassified into 38
498	503		memberships, obligations, rights to acquire memberships, cash, or other 39
499	504		property in accordance with the terms of the domestication, and the members 40
500	505		of the domesticating corporation are entitled only to the rights provided to 41
501	506		them by those terms. 42
502	507		(6) The domesticated corporation is all of the following: 43
503	508		a. Incorporated under and subject to the current law of the jurisdiction of 44
504	509		the domesticated corporation. 45
505	510		b. The same corporation without interruption as the domesticating 46
506	511		corporation. 47
507	512		c. Deemed to have been incorporated on the date the domesticating 48
508	513		corporation was originally incorporated. 49
509	514		(b) Except as otherwise provided under the law of the jurisdiction or the articles of 50
510	515		incorporation or bylaws of a foreign nonprofit corporation that is the domesticating corporation, 51 General Assembly Of North Carolina Session 2025
511		-	~~Senate Bill 489-First Edition~~ Page 11
	516	+	DRS15220-MVf-22 Page 11
512	517		the interest holder liability of a member in a foreign corporation that is domesticated into this 1
513	518		State who had interest holder liability in respect of the domesticating corporation before the 2
514	519		domestication becomes effective shall be as follows: 3
515	520		(1) The domestication does not discharge that prior interest holder liability with 4
516	521		respect to any interest holder liabilities that arose before the domestication 5
517	522		becomes effective. 6
518	523		(2) The provisions of the law of the jurisdiction of the domesticating corporation 7
519	524		shall continue to apply to the collection or discharge of any interest holder 8
520	525		liabilities preserved by subdivision (1) of this subsection, as if the 9
521	526		domestication had not occurred. 10
522	527		(3) The member shall have such rights of contribution from other persons as are 11
523	528		provided by the law of the jurisdiction of the domesticating corporation with 12
524	529		respect to any interest holder liabilities preserved by subdivision (1) of this 13
525	530		subsection, as if the domestication had not occurred. 14
526	531		(4) The member shall not, by reason of the prior interest holder liability, have 15
527	532		interest holder liability with respect to any interest holder liabilities that are 16
528	533		incurred after the domestication becomes effective. 17
529	534		(c) A member who becomes subject to interest holder liability in respect of the 18
530	535		domesticated corporation as a result of the domestication shall have such interest holder liability 19
531	536		only in respect of interest holder liabilities that arise after the domestication becomes effective. 20
532	537		(d) A domestication does not constitute or cause the dissolution of the domesticating 21
533	538		corporation." 22
534	539		SECTION 3.2.(a) G.S. 55A-1-22 reads as rewritten: 23
535	540		"§ 55A-1-22. Filing, service, and copying fees. 24
536	541		(a) The Secretary of State shall collect the following fees when the documents described 25
537	542		in this subsection are delivered submitted to the Secretary for filing: 26
538	543		Document Fee 27
539	544		… 28
540	545		(13a) Reserved for future codification purposes. 29
541	546		(13b) Reserved for future codification purposes. 30
542	547		(13c) Articles of domestication $25.00 31
543	548		(13d) Articles of abandonment of domestication $10.00 32
544	549		…." 33
545	550		SECTION 3.2.(b) G.S. 55A-1-60 reads as rewritten: 34
546	551		"§ 55A-1-60. Judicial relief. 35
547	552		(a) If for any reason it is impracticable for any corporation to call or conduct a meeting 36
548	553		of its members, delegates, or directors, or otherwise obtain their consent, in the manner prescribed 37
549	554		by its articles of incorporation, bylaws, or this Chapter, then upon petition of a director, officer, 38
550	555		delegate, member, or the Attorney General, the superior court may order that such a meeting be 39
551	556		held or that a written ballot or other method be used for obtaining the vote of members, delegates, 40
552	557		or directors, in such a manner as the court finds fair and equitable under the circumstances. 41
553	558		… 42
554	559		(d) Whenever practical any order issued pursuant to this section shall limit the subject 43
555	560		matter of meetings or other forms of consent authorized to items, including amendments to the 44
556	561		articles of incorporation or bylaws, the resolution of which will or may enable the corporation to 45
557	562		continue managing its affairs without further resort to this section; provided, however, that 46
558	563		section. However, an order under this section may also authorize the obtaining of whatever votes 47
559	564		and approvals are necessary for the dissolution, domestication, merger, or sale of assets. 48
560	565		…." 49
561	566		SECTION 3.2.(c) G.S. 55A-8-25 reads as rewritten: 50
562	567		"§ 55A-8-25. Committees of the board. 51 General Assembly Of North Carolina Session 2025
563		-	Page 12 ~~Senate Bill 489-First Edition~~
	568	+	Page 12 DRS15220-MVf-22
564	569		… 1
565	570		(d) To the extent specified by the board of directors or in the articles of incorporation or 2
566	571		bylaws, each committee of the board may exercise the board's authority under 3
567	572		G.S. 55A-8-01.G.S. 55A-8-01, except that a 4
568	573		(e) A committee of the board shall not, however:not exercise authority to do any of the 5
569	574		following: 6
570	575		(1) Authorize distributions;distributions. 7
571	576		(2) Recommend to members or approve dissolution, merger domestication, 8
572	577		merger, or the sale, pledge, or transfer of all or substantially all of the 9
573	578		corporation's assets;assets. 10
574	579		(3) Elect, appoint or remove directors, or fill vacancies on the board of directors 11
575	580		or on any of its committees; orcommittees. 12
576	581		(4) Adopt, amend, or repeal the articles of incorporation or bylaws. 13
577	582		…." 14
578	583		SECTION 3.3.(a) Sections 3.1 and 3.2 of this Part become effective October 1, 2025. 15
579	584		Except as otherwise provided, this Part is effective when it becomes law. 16
580	585		SECTION 3.3.(b) If a protected agreement of a domestic domesticating nonprofit 17
581	586		corporation in effect immediately before the domestication becomes effective contains a 18
582	587		provision applying to a merger of the corporation and the agreement does not refer to a 19
583	588		domestication of the corporation, the provision applies to a domestication of the corporation as 20
584	589		if the domestication were a merger until the provision is first amended after October 1, 2025. 21
585	590		SECTION 3.3.(c) For the purposes of this section, a protected agreement is any of 22
586	591		the following in effect immediately before October 1, 2025: 23
587	592		(1) A document evidencing indebtedness of a domestic nonprofit corporation and 24
588	593		any related agreement. 25
589	594		(2) An agreement that is binding on a domestic nonprofit corporation. 26
590	595		(3) The articles of incorporation or bylaws of a domestic nonprofit corporation. 27
591	596		(4) An agreement that is binding on any of the interest holders or directors of a 28
592	597		domestic nonprofit corporation in their capacities as interest holders or 29
593	598		directors. 30
594	599		31
595	600		PART IV. MODIFY REQUIRED NUMBER OF DIRECTORS 32
596	601		SECTION 4.(a) G.S. 55A-1-50 reads as rewritten: 33
597	602		"§ 55A-1-50. Private Foundations. 34
598	603		(a) Except where otherwise determined by a court of competent jurisdiction, a 35
599	604		corporation that is a private foundation as defined in section 509(a) of the Internal Revenue Code 36
600	605		of 1986:1986 shall comply with all of the following: 37
601	606		(1) Shall distribute such amounts for each taxable year at such the time and in 38
602	607		such the manner required so as not to subject the corporation to tax under 39
603	608		section 4942 of the Code. 40
604	609		(2) Shall not engage in any act of self-dealing as defined in section 4941(d) of the 41
605	610		Code. 42
606	611		(3) Shall not retain any excess business holdings as defined in section 4943(c) of 43
607	612		the Code. 44
608	613		(4) Shall not make any investments in such a manner as to that would subject the 45
609	614		corporation to tax under section 4944 of the Code. 46
610	615		(5) Shall not make any taxable expenditures as defined in section 4945(d) of the 47
611	616		Code. 48
612	617		All references in this section to sections of the Code shall be to sections of the Internal 49
613	618		Revenue Code of 1986 as amended from time to time, or to corresponding provisions of 50
614	619		subsequent internal revenue laws of the United States. 51 General Assembly Of North Carolina Session 2025
615		-	~~Senate Bill 489-First Edition~~ Page 13
	620	+	DRS15220-MVf-22 Page 13
616	621		(b) A board of directors of a private foundation shall consist of one or more natural 1
617	622		persons, with the number specified in or fixed in accordance with the articles of incorporation or 2
618	623		bylaws." 3
619	624		SECTION 4.(b) G.S. 55A-8-03 reads as rewritten: 4
620	625		"§ 55A-8-03. Number of directors. 5
621	626		(a) A Except as provided in G.S. 55A-1-50(b), a board of directors shall consist of one 6
622	627		three or more natural persons, with the number specified in or fixed in accordance with the 7
623	628		articles of incorporation or bylaws. 8
624	629		(b) The number of directors may be increased or decreased from time to time by 9
625	630		amendment to or in the manner prescribed in the articles of incorporation or bylaws. 10
626	631		(c) The articles of incorporation or bylaws may establish a variable range for the size of 11
627	632		the board of directors by fixing a minimum number not inconsistent with this Chapter and 12
628	633		maximum number of directors. If a variable range is established, the number of directors may be 13
629	634		fixed or changed from time to time, within the minimum and maximum, by the members entitled 14
630	635		to vote for directors or (unless or, unless the articles of incorporation or an agreement valid under 15
631	636		G.S. 55A-7-30 shall otherwise provide) provide, the board of directors. If the corporation has 16
632	637		members entitled to vote for directors, only such those members may change the range for the 17
633	638		size of the board or change from a fixed to a variable-range size board or vice versa." 18
634	639		SECTION 4.(c) G.S. 55A-8-11 reads as rewritten: 19
635	640		"§ 55A-8-11. Vacancy on board. 20
636	641		(a) Unless the articles of incorporation or bylaws provide otherwise, and except as 21
637	642		provided in subsections (b) and (c) of this section, if a vacancy occurs on a board of directors, 22
638	643		including, without limitation, a vacancy resulting from an increase in the number of directors or 23
639	644		from the failure by the members to elect the full authorized number of directors, the vacancy may 24
640	645		be filled:filled by any of the following means: 25
641	646		(1) By the members entitled to vote for directors, if any, or if the vacant office 26
642	647		was held by a director elected by a class, chapter or other organizational unit, 27
643	648		or by region or other geographic grouping, by the members of that class, 28
644	649		chapter, unit, or grouping;grouping. 29
645	650		(2) By the board of directors; ordirectors. 30
646	651		(3) If the directors remaining in the office constitute fewer than a quorum of the 31
647	652		board, by the affirmative vote of a majority of all the directors, or by the sole 32
648	653		director, remaining in office. 33
649	654		(b) Unless the articles of incorporation or bylaws provide otherwise, if a vacant office 34
650	655		was held by an appointed director, only the person who appointed the director may fill the 35
651	656		vacancy. 36
652	657		(c) If a vacant office was held by a designated director, the vacancy shall be filled only 37
653	658		as provided in the articles of incorporation or bylaws. 38
654	659		(d) A vacancy that will occur at a specific later date (by date, by reason of a resignation 39
655	660		effective at a later date under G.S. 55A-8-07(b) or otherwise) otherwise, may be filled before the 40
656	661		vacancy occurs but the new director shall not take office until the vacancy occurs. 41
657	662		(e) Notwithstanding G.S. 55A-8-03(a), a board of directors may have fewer than three 42
658	663		members due to vacancies until the vacancies are filled." 43
659	664		SECTION 4.(d) This section becomes effective October 1, 2025, and applies to 44
660	665		corporations organized on or after that date. 45
661	666		46
662	667		PART V. MODIFY THE REQUIREMENT FOR ESTABLISHING COMMITTEES OF 47
663	668		THE BOARD OF DIRECTORS 48
664	669		SECTION 5.(a) G.S. 55A-8-25 reads as rewritten: 49
665	670		"§ 55A-8-25. Committees of the board. 50 General Assembly Of North Carolina Session 2025
666		-	Page 14 ~~Senate Bill 489-First Edition~~
	671	+	Page 14 DRS15220-MVf-22
667	672		(a) Unless the articles of incorporation or bylaws provide otherwise, a board of directors 1
668	673		may create one or more committees of the board and appoint members of the board to serve on 2
669	674		them. Each committee shall have two or more members, who serve at the pleasure of the board. 3
670	675		(b) The Unless the articles of incorporation or bylaws provide otherwise, the creation of 4
671	676		a committee and appointment of members to it shall be approved by the greater of:of the 5
672	677		following: 6
673	678		(1) A majority of all the directors in office when the action is taken; ortaken. 7
674	679		(2) The number of directors required by the articles of incorporation or bylaws to 8
675	680		take action under G.S. 55A-8-24. 9
676	681		(c) G.S. 55A-8-20 through G.S. 55A-8-24, which govern meetings, action without 10
677	682		meetings, notice and waiver of notice, and quorum and voting requirements of the board, apply 11
678	683		to committees of the board and their members as well. 12
679	684		(d) To the extent specified by the board of directors or in the articles of incorporation or 13
680	685		bylaws, each committee of the board may exercise the board's authority under G.S. 55A-8-01. 14
681	686		(e) A committee of the board shall not, however:however, take the following actions: 15
682	687		(1) Authorize distributions;distributions. 16
683	688		(2) Recommend to members or approve dissolution, merger or the sale, pledge, 17
684	689		or transfer of all or substantially all of the corporation's assets;assets. 18
685	690		(3) Elect, appoint or remove directors, or fill vacancies on the board of directors 19
686	691		or on any of its committees; orcommittees. 20
687	692		(4) Adopt, amend, or repeal the articles of incorporation or bylaws. 21
688	693		(f) The creation of, delegation of authority to, or action by a committee does not alone 22
689	694		constitute compliance by a director with the standards of conduct described in G.S. 55A-8-30." 23
690	695		SECTION 5.(b) This section becomes effective October 1, 2025, and applies to 24
691	696		committees created on or after that date. 25
692	697		26
693	698		PART VI. FURTHER AUTHORIZE AND CLARIFY CONVERSION 27
694	699		SECTION 6.(a) Article 11A of Chapter 55A of the General Statutes is amended by 28
695	700		adding a new Part to read: 29
696	701		"Part 1. Conversion To Nonprofit Corporation. 30
697	702		"§ 55A-11A-01. Conversion. 31
698	703		(a) As used in this section, "business entity" means a domestic business corporation, 32
699	704		including a professional corporation as defined in G.S. 55B-2, a foreign business corporation, 33
700	705		including a foreign professional corporation as defined in G.S. 55B-16, a domestic or foreign 34
701	706		nonprofit corporation, a domestic or foreign limited liability company, a domestic or foreign 35
702	707		limited partnership, a registered limited liability partnership or foreign limited liability 36
703	708		partnership as defined in G.S. 59-32, or any other partnership as defined in G.S. 59-36 whether 37
704	709		or not formed under the laws of this State. 38
705	710		(b) A business entity, other than a domestic nonprofit corporation, may convert to a 39
706	711		domestic nonprofit corporation if both of the following apply: 40
707	712		(1) The conversion is permitted by the laws of the state or country governing the 41
708	713		organization and internal affairs of the converting business entity. 42
709	714		(2) The converting business entity complies with the requirements of this Part 43
710	715		and, to the extent applicable, the laws referred to in subdivision (1) of this 44
711	716		subsection. 45
712	717		"§ 55A-11A-02. Plan of conversion. 46
713	718		(a) The converting business entity shall approve a written plan of conversion containing 47
714	719		all of the following: 48
715	720		(1) The name of the converting business entity, its type of business entity, and the 49
716	721		state or country whose laws govern its organization and internal affairs. 50 General Assembly Of North Carolina Session 2025
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718	723		(2) The name of the resulting domestic nonprofit corporation into which the 1
719	724		converting business entity will convert. 2
720	725		(3) The terms and conditions of the conversion. 3
721	726		(4) The manner and basis for converting the interests in the converting business 4
722	727		entity, if any, into any combination of eligible interests or other securities, 5
723	728		rights to acquire interests or other securities, obligations, cash, or other 6
724	729		property of the resulting domestic nonprofit corporation. 7
725	730		(b) The plan of conversion may contain any other provisions not prohibited by law. 8
726	731		(c) The provisions of the plan of conversion, other than the provisions required by 9
727	732		subdivisions (1) and (2) of subsection (a) of this section, may be made dependent on facts 10
728	733		objectively ascertainable outside the plan of conversion if the plan of conversion sets forth the 11
729	734		manner in which the facts will operate upon the affected provisions. 12
730	735		(d) The plan of conversion shall be approved in accordance with the laws of the state or 13
731	736		country governing the organization and internal affairs of the converting business entity. 14
732	737		(e) After a plan of conversion has been approved as provided in subsection (d) of this 15
733	738		section, but before articles of incorporation for the resulting domestic nonprofit corporation 16
734	739		become effective, the plan of conversion may be amended or abandoned to the extent permitted 17
735	740		by the laws that govern the organization and internal affairs of the converting business entity. 18
736	741		"§ 55A-11A-03. Filing of articles of incorporation by converting business entity. 19
737	742		(a) After a plan of conversion has been approved by the converting business entity as 20
738	743		provided in G.S. 55A-11A-02, the converting business entity shall deliver articles of conversion 21
739	744		to the Secretary of State for filing. In addition to the matters required or permitted by 22
740	745		G.S. 55A-2-02, the articles of incorporation shall contain articles of conversion stating all of the 23
741	746		following: 24
742	747		(1) That the corporation is being formed pursuant to a conversion of a business 25
743	748		entity. 26
744	749		(2) The name of the converting business entity, its type of business entity, and the 27
745	750		state or country whose laws govern its organization and internal affairs. 28
746	751		(3) That a plan of conversion has been approved by the converting business entity 29
747	752		as required by law. 30
748	753		(b) If the plan of conversion is abandoned after the articles of incorporation have been 31
749	754		filed with the Secretary of State but before the articles of incorporation become effective, the 32
750	755		converting business entity shall deliver to the Secretary of State for filing prior to the time the 33
751	756		articles of incorporation become effective an amendment to the articles of incorporation 34
752	757		withdrawing the articles of incorporation. 35
753	758		(c) The conversion takes effect when the articles of incorporation become effective. 36
754	759		(d) Certificates of conversion shall also be registered as provided in G.S. 47-18.1. 37
755	760		"§ 55A-11A-04. Effects of conversion. 38
756	761		When the conversion takes effect, all of the following apply: 39
757	762		(1) The converting business entity ceases its prior form of organization and 40
758	763		continues in existence as the resulting domestic nonprofit corporation. 41
759	764		(2) The title to all real estate and other property owned by the converting business 42
760	765		entity continues vested in the resulting domestic nonprofit corporation without 43
761	766		transfer, reversion, or impairment. 44
762	767		(3) Except as otherwise provided by law or by the plan of conversion, all rights, 45
763	768		privileges, immunities, powers, and purposes of the converting business entity 46
764	769		remain vested in the resulting domestic nonprofit corporation. 47
765	770		(4) All debts, obligations, and other liabilities of the converting business entity 48
766	771		continue as debts, obligations, and other liabilities of the resulting domestic 49
767	772		nonprofit corporation. 50 General Assembly Of North Carolina Session 2025
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769	774		(5) A proceeding pending by or against the converting business entity may be 1
770	775		continued as if the conversion did not occur. The name of the resulting 2
771	776		domestic nonprofit corporation may be substituted for the name of the 3
772	777		converting business entity in any pending action or proceeding. 4
773	778		(6) The interests and obligations in the converting business entity are converted 5
774	779		to eligible interests or other securities, rights to acquire interests or other 6
775	780		securities, obligations, cash, or other property of the resulting domestic 7
776	781		corporation in accordance with the plan of conversion. 8
777	782		(7) All of the following apply to the resulting domestic nonprofit corporation: 9
778	783		a. It is incorporated under and subject to this Chapter. 10
779	784		b. It converts from the converting business entity into its new form of 11
780	785		organization interruption. 12
781	786		c. It is deemed to have been incorporated on the date that the converting 13
782	787		entity was originally incorporated or organized. 14
783	788		The conversion does not affect the liability or absence of liability of any holder of an interest 15
784	789		in the converting business entity for any acts, omissions, or obligations of the converting business 16
785	790		entity made or incurred prior to the effectiveness of the conversion. The cessation of the existence 17
786	791		of the converting business entity in its prior form of organization in the conversion does not 18
787	792		constitute a dissolution or termination of the converting business entity." 19
788	793		SECTION 6.(b) Part 2 of Article 11A of Chapter 55A of the General Statutes reads 20
789	794		as rewritten: 21
790	795		"Part 2. Conversion of Nonprofit Corporation. 22
791	796		"§ 55A-11A-10. Conversion. 23
792	797		(a) A charitable or religious corporation may convert to a domestic limited liability 24
793	798		company if the converting charitable or religious corporation complies with the requirements of 25
794	799		this part Part and the requirements of G.S. 57D-9-20, 57D-9-21, and 57D-9-22. 26
795	800		(b) The plan of conversion of a charitable or religious corporation to a domestic limited 27
796	801		liability company under G.S. 57D-9-21 shall comply with all of the following: 28
797	802		(1) If the converting charitable or religious corporation does not have any 29
798	803		members entitled to vote on the conversion, the plan shall be approved by the 30
799	804		board of directors of the converting charitable or religious corporation. 31
800	805		(2) If the charitable or religious corporation has members entitled to vote on the 32
801	806		conversion, the plan shall first be approved by the board of directors and then 33
802	807		by the members entitled to vote on the conversion in accordance with the 34
803	808		following: 35
804	809		a. In submitting the plan of conversion to the members for approval, the 36
805	810		board of directors shall recommend that the members approve the plan 37
806	811		unless the directors make a determination that because of conflicts of 38
807	812		interest or other special circumstances they should not make this 39
808	813		recommendation, in which case the directors shall inform the members 40
809	814		of the basis for so proceeding. 41
810	815		b. If the approval is to be given at a meeting, the charitable or religious 42
811	816		corporation shall notify each member entitled to vote of the meeting 43
812	817		of members at which the plan of conversion will be submitted for 44
813	818		approval. The notice shall state that the purpose, or one of the 45
814	819		purposes, of the meeting is to consider the plan of conversion and shall 46
815	820		contain or be accompanied by a copy or summary of the plan. 47
816	821		c. Unless the articles of incorporation, the bylaws, or the board of 48
817	822		directors of the charitable or religious corporation require a different 49
818	823		vote or quorum, approval of the plan of conversion requires (i) the 50
819	824		approval of the members, consisting of the majority of the votes 51 General Assembly Of North Carolina Session 2025
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821	826		entitled to be cast on the plan, at a meeting at which a quorum exists 1
822	827		and (ii) the approval of each separate voting group, consisting of a 2
823	828		majority of the votes entitled to be cast on the plan by that voting 3
824	829		group, at a meeting at which a quorum of the voting group is present. 4
825	830		(3) If, as a result of the conversion, one or more members of the converting entity 5
826	831		would become subject to new member liability, approval of the plan of 6
827	832		conversion requires that each of those members sign a separate record 7
828	833		consenting to become subject to the new member liability. 8
829	834		(4) In addition to the adoption and approval of the plan of conversion by the board 9
830	835		of directors and members as required by this section, the plan of conversion 10
831	836		shall also be approved by any person or group of persons whose approval is 11
832	837		required under G.S. 55A-10-30 to amend the articles of incorporation or 12
833	838		bylaws of the charitable or religious corporation." 13
834	839		SECTION 6.(c) This section becomes effective October 1, 2025, and applies to plans 14
835	840		of conversion approved on or after that date. 15
836	841		16
837	842		PART VII. ALIGN STATE AND FEDERAL DISCLOSURE REQUIREMENTS FOR 17
838	843		CHARITABLE ORGANIZATIONS 18
839	844		SECTION 7. G.S. 131F-9 reads as rewritten: 19
840	845		"§ 131F-9. Disclosure requirements of charitable organizations and sponsors. 20
841	846		… 21
842	847		(b) Disclosures. – A charitable organization or sponsor soliciting in this State shall 22
843	848		include all of the following disclosures at the point of solicitation: 23
844	849		… 24
845	850		(4) Upon request, the amount of the contribution which that may be deducted as 25
846	851		a charitable contribution under federal income tax laws. A written 26
847	852		acknowledgement that provides the information set forth in section 170(f)(8) 27
848	853		of the Internal Revenue Code satisfies this disclosure requirement. 28
849	854		…." 29
850	855		30
851	856		PART VIII. EFFECTIVE DATE AND APPLICABILITY 31
852	857		SECTION 8. Except as otherwise provided, this act is effective when it becomes 32
853	858		law. 33