No. CS/CS/HB 797
Filed under Housing.
Nonprofit Corporations; Conforms terminology for consistency with Model Nonprofit Corporation Act adopted by American Bar Association; aligns provisions with Florida Business Corporation Act; revises corporate powers; updates provisions on distributions, dividends, & board vacancies; revises who may answer DOS interrogatories; specifies acceptable methods of written notice; requires officers to act in good faith, with reasonable care, & in corporation’s best interests; establishes requirements for judicial removal of directors; provides construction; allows board actions to satisfy meeting & voting requirements if no members exist; removes affiliate chapter registration requirement; ensures equal member rights & obligations; authorizes board to admit members for consideration & set payment terms; permits membership termination per terms; prohibits corporation from being its own member; allows fines or penalties if authorized; permits certain nonprofits to purchase membership interests; sets rules for buying interests of resigned or terminated members; revises meeting procedures & special meeting requirements; provides proxy voting rules & effects of incapacity; revises remote participation provisions; updates board composition, election, & term rules; grants liability immunity to all officers & directors; authorizes eligible mergers; requires statements for property held for charitable purposes.
Plain English Summary
AI-GENERATEDImmunity from personal liability for money damages used to reach only directors and officers of certain tax-exempt organisations. That qualifier is struck, so it now covers every corporation under Florida's nonprofit act.
It also now runs expressly against the corporation and its own members, not just outsiders. For a claim by the corporation or a member, recklessness alone no longer defeats it -- only conscious disregard or wilful misconduct will.
The rest is a rewrite of the chapter along the Model Nonprofit Corporation Act. Standards of conduct are written for officers for the first time, and the minimum board size falls from three directors to one outside 501(c)(3).
Nonprofits outside 501(c)(3) may now buy back a member's interest, if the corporation can still pay its debts and its assets still cover its liabilities. Dividends and distributions stay barred, with narrow exceptions.
AIThe old section protected directors and officers only where the organisation was recognised under s. 501(c)(3), (c)(4) or (c)(6), or was an agricultural or horticultural body under s. 501(c)(5). That whole qualifier is deleted, so the protection reaches every corporation the chapter governs.
AIA board of directors had to consist of three or more individuals. It now needs one, unless the corporation is exempt under s. 501(c)(3), which must still have three. The old corporate power to change the number 'so that the number shall not be less than three' is struck to match.
AIWhere the old text said a director or officer is not liable in damages to any person, the new text says to the corporation or any person. The limit confining it to acts regarding organisational management or policy is struck at the same time.
AIThe exceptions split by who is suing. For a proceeding by or in the right of the corporation or a member, the breach must amount to conscious disregard for the corporation's best interest, or wilful or intentional misconduct. Recklessness remains an exception only for outsiders.
AIA new subsection deems a director or officer not to have derived an improper personal benefit where neither the transaction nor the benefit is prohibited by state or federal law and the transaction was fair to the corporation. The listed circumstances are stated not to be exclusive.
AIFor the first time the chapter states what an officer owes: good faith, a reasonable belief in the corporation's best interests, and the care an ordinarily prudent person would think appropriate. Officers may rely on staff, counsel, accountants, board committees and, in a religious corporation, religious authorities.
AIThe rewritten standards for directors end by stating that a director is not a trustee of the corporation or of property it holds in trust, including property carrying restrictions imposed by the donor.
AIA director's conflict of interest transaction that was fair to the corporation is neither void nor voidable, and the conflict is no ground for damages or equitable relief. If the conflict was disclosed and disinterested directors or members approved it, the burden of proving unfairness falls on the challenger.