| 1 | 1 | | 84R7818 CLG-F |
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| 2 | 2 | | By: Oliveira H.B. No. 3479 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to authorizing certain distributions of income from a |
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| 8 | 8 | | nonprofit corporation to members of the corporation who are certain |
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| 9 | 9 | | nonprofit corporations. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Section 22.001(5), Business Organizations Code, |
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| 12 | 12 | | is amended to read as follows: |
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| 13 | 13 | | (5) "Nonprofit corporation" means a corporation no |
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| 14 | 14 | | part of the income of which is distributable to a member, director, |
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| 15 | 15 | | or officer of the corporation, except as provided by Section |
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| 16 | 16 | | 22.054. |
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| 17 | 17 | | SECTION 2. Section 22.053, Business Organizations Code, is |
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| 18 | 18 | | amended to read as follows: |
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| 19 | 19 | | Sec. 22.053. DIVIDENDS PROHIBITED. Except as provided by |
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| 20 | 20 | | Section 22.054, a [A] dividend may not be paid to, and no part of the |
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| 21 | 21 | | income of a corporation may be distributed to, the corporation's |
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| 22 | 22 | | members, directors, or officers. |
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| 23 | 23 | | SECTION 3. Section 22.054, Business Organizations Code, is |
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| 24 | 24 | | amended to read as follows: |
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| 25 | 25 | | Sec. 22.054. AUTHORIZED BENEFITS AND DISTRIBUTIONS. A |
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| 26 | 26 | | corporation may: |
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| 27 | 27 | | (1) pay compensation in a reasonable amount to the |
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| 28 | 28 | | members, directors, or officers of the corporation for services |
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| 29 | 29 | | provided; |
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| 30 | 30 | | (2) confer benefits on the corporation's members in |
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| 31 | 31 | | conformity with the corporation's purposes; [and] |
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| 32 | 32 | | (3) make distributions to the corporation's members on |
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| 33 | 33 | | winding up and termination to the extent authorized by this |
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| 34 | 34 | | chapter; and |
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| 35 | 35 | | (4) make distributions of its income to the |
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| 36 | 36 | | corporation's members who are nonprofit corporations organized |
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| 37 | 37 | | under this code and who are exempt from income taxation under |
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| 38 | 38 | | Section 501(a), Internal Revenue Code of 1986, by being listed |
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| 39 | 39 | | under Section 501(c)(3) of that code, if: |
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| 40 | 40 | | (A) the distributions are made in accordance with |
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| 41 | 41 | | the purpose or purposes of the corporation as stated in the |
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| 42 | 42 | | certificate of formation and with the fiduciary responsibilities of |
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| 43 | 43 | | the board of directors, including the duty to safeguard restricted |
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| 44 | 44 | | funds for their intended purposes; and |
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| 45 | 45 | | (B) after the distributions are complete: |
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| 46 | 46 | | (i) the corporation would be able to pay the |
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| 47 | 47 | | corporation's debts as they become due in the usual course of its |
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| 48 | 48 | | activities; and |
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| 49 | 49 | | (ii) the corporation's total assets would |
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| 50 | 50 | | at least equal the sum of its total liabilities. |
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| 51 | 51 | | SECTION 4. This Act takes effect immediately if it receives |
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| 52 | 52 | | a vote of two-thirds of all the members elected to each house, as |
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| 53 | 53 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 54 | 54 | | Act does not receive the vote necessary for immediate effect, this |
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| 55 | 55 | | Act takes effect September 1, 2015. |
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