By: Taylor of Galveston S.B. No. 1233
(In the Senate - Filed March 11, 2015; March 17, 2015, read
first time and referred to Committee on Business and Commerce;
April 20, 2015, reported favorably by the following vote: Yeas 8,
Nays 0; April 20, 2015, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to authorizing certain distributions of income from a
nonprofit corporation to members of the corporation who are certain
nonprofit corporations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 22.001(5), Business Organizations Code,
is amended to read as follows:
(5) "Nonprofit corporation" means a corporation no
part of the income of which is distributable to a member, director,
or officer of the corporation, except as provided by Section
22.054.
SECTION 2. Section 22.053, Business Organizations Code, is
amended to read as follows:
Sec. 22.053. DIVIDENDS PROHIBITED. Except as provided by
Section 22.054, a [A] dividend may not be paid to, and no part of the
income of a corporation may be distributed to, the corporation's
members, directors, or officers.
SECTION 3. Section 22.054, Business Organizations Code, is
amended to read as follows:
Sec. 22.054. AUTHORIZED BENEFITS AND DISTRIBUTIONS. A
corporation may:
(1) pay compensation in a reasonable amount to the
members, directors, or officers of the corporation for services
provided;
(2) confer benefits on the corporation's members in
conformity with the corporation's purposes; [and]
(3) make distributions to the corporation's members on
winding up and termination to the extent authorized by this
chapter; and
(4) make distributions of its income to the
corporation's members who are nonprofit corporations organized
under this code and who are exempt from income taxation under
Section 501(a), Internal Revenue Code of 1986, by being listed
under Section 501(c)(3) of that code, if:
(A) the distributions are made in accordance with
the purpose or purposes of the corporation as stated in the
certificate of formation and with the fiduciary responsibilities of
the board of directors, including the duty to safeguard restricted
funds for their intended purposes; and
(B) after the distributions are complete:
(i) the corporation would be able to pay the
corporation's debts as they become due in the usual course of its
activities; and
(ii) the corporation's total assets would
at least equal the sum of its total liabilities.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2015.
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