Nonprofit Corporations - Chapter 7 - Advising Minnesota Corporations and Other Business Organizations - 2nd Edition

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Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover

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CHAPTER 7
NONPROFIT CORPORATIONS

Section
§ 7.01 Introduction
§ 7.02 Profit and Nonprofit Corporations Distinguished
§ 7.03 Trade Associations, Religious Organizations, and Political
Organizations Distinguished
§ 7.04 The Organization of Nonprofit Corporation: Organizational Meeting
§ 7.05 Articles of Incorporation
§ 7.06 Name, Trademarks, and Service Marks
§ 7.07 Amendment of Articles of Incorporation
§ 7.08 Purpose
§ 7.09 Powers
§ 7.10 Bylaws of Nonprofit Corporations
§ 7.11 Directors
§ 7.12 Officers
§ 7.13 Members
§ 7.14 Liability of Nonprofit Officers, Directors, Members, and Agents
§ 7.15 Indemnification
§ 7.16 Dissolution of Nonprofit Corporations
§ 7.17 --Voluntary Dissolution by Incorporators
§ 7.18 --By Board and Voting Members
§ 7.19 Distribution of Assets in Dissolution
§ 7.20 Involuntary Dissolution--Judicial Intervention
§ 7.21 Tax Considerations--Introduction
§ 7.22 --I.R.C. § 501(c)
§ 7.23 Organized and Operated
§ 7.24 Purposes--Religious
§ 7.25 --Charitable
§ 7.26 --Scientific
§ 7.27 --Educational Purposes
§ 7.28 --Social Welfare Organizations
§ 7.29 Procedure
§ 7.30 Nonprofit Corporations in Countries Other Than the United States

§ 7.01 Introduction
The term nonprofit as applied to corporations is somewhat
misleading. A nonprofit corporation does not necessarily mean the
corporation cannot make a profit. The focus is on what the organization
does with the profits. Whereas the business corporation gives the profits
to the shareholders, the nonprofit status requires that no income or profit
is distributed to its members. Instead, the nonprofit uses the “profit” to
further its tax-exempt purpose.

Minnesota statutes define a nonprofit corporation as a corporation
formed for a purpose not involving pecuniary gain to shareholders or
members.1 It cannot pay dividends either directly or indirectly to its
members.2 Generally, a nonprofit corporation has members rather than
shareholders and does not issue stock.3 Thus a nonprofit can be broadly
characterized as having the following three characteristics: (1) the
enterprise is designed as such at its inception; (2) no pecuniary gain
inures to shareholders or members either directly or indirectly; and (3) it
may pursue any lawful activity unless otherwise limited by its articles.4

Despite these distinguishing features, as a general proposition, these
entities are corporations and are governed by the general body of the
corporate laws that govern “for-profit” or business corporations. The
language set forth in Minn. Stat. § 317A, the Minnesota Nonprofit
Corporation Act, for the most part tracks the Minnesota Business
Corporation Act, Minn. Stat. § 302A.5 As a result, much of the case law
and regulatory law attributable to business corporations is likely to be
applied equally to nonprofit corporations. The full extent of overlap has
yet to be configured by statute and by Supreme Court rulings.

Chapter 7 Nonprofit Corporations

§ 7.01 Introduction

§ 7.02 Profit and Nonprofit Corporations Distinguished

§ 7.03 Trade Associations, Religious Organizations, and Political Organizations Distinguished

§ 7.04 The Organization of Nonprofit Corporation: Organizational Meeting

§ 7.05 Articles of Incorporation

§ 7.06 Name, Trademarks, and Service Marks

§ 7.07 Amendment of Articles of Incorporation

§ 7.08 Purpose

§ 7.09 Powers

§ 7.10 Bylaws of Nonprofit Corporations

§ 7.11 Directors

§ 7.12 Officers

§ 7.13 Members

§ 7.14 Liability of Nonprofit Officers, Directors, Members, and Agents

§ 7.15 Indemnification

§ 7.16 Dissolution of Nonprofit Corporations

§ 7.17 --Voluntary Dissolution by Incorporators

§ 7.18 --By Board and Voting Members

§ 7.19 Distribution of Assets in Dissolution

§ 7.20 Involuntary Dissolution--Judicial Intervention

§ 7.21 Tax Considerations--Introduction

§ 7.22 --I.R.C. § 501(c)

§ 7.23 Organized and Operated

§ 7.24 Purposes--Religious

§ 7.25 --Charitable

§ 7.26 --Scientific

§ 7.27 --Educational Purposes

§ 7.28 --Social Welfare Organizations

§ 7.29 Procedure

§ 7.30 Nonprofit Corporations in Countries Other Than the United States

Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."

Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.

Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.

Contributing Editor:
Amanda Chang

Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis