Allows certain entities to convert their status of filing as a not-for-profit organization to a for-profit entity

1 Co-sponsor

• Martin J. Golden

BILL NUMBER:S5848

Title of bill

An act to amend the not-for-profit corporation law, in relation to allowing certain entities to convert their status of filing as a not-for-profit organization to a for-profit entity

Purpose

To allow certain entities to convert their status as a not-forprofit organization to a for-profit entity

Summary of provisions

Section 1 amends Section 104 of the not-for-profit corporation law by adding a new paragraph (h) to allow certain entities to convert its filing from a not-for-profit corporation to a for-profit corporation if the incorporator submits a sworn statement and outlines the requirements for the sworn statement.

Justification

Enterprising business entrepreneurs are often advised to incorporate a business to protect personal assets from loss suffered by the business in the event of lawsuits. Incorporation of a business however, often carries high costs, including legal fees which can be too costly for someone with only a dollar and a dream. To save money, entrepreneurs sometimes choose "do it yourself routes" and make mistakes that have significant consequences on the outcome of the business venture. When this occurs, our rules and regulations should provide a process for correction of mistakes.

In December 2000, Patricia Smith took the first step to ha l04 dream of owning her own business in the health care industry and filed documents to incorporate Sweet P Home Care. With little money to invest in legal counsel she used standard forms and completed the information by handwriting the necessary information. While intending to run a for-profit business which is in fact how she ran her business after filing the incorporation forms she mistakenly filed as a not-for-profit corporation.

In 2006 Sweet P Homecare commenced operation. Sweet P Home Care provides care to infirmed children who are chronically ill. Currently it employs 10 full time employees and contracts with 300 additional nurse independent contractors to perform services for Sweet P Home Care's clients. Since 2006 Sweet P has conducted it's business as a for-profit paying taxes in every year of operation. Realizing its mistake Sweet Pea has spoken with the Department of State and the Attorney General's office and been informed that the only way for the mistake to be corrected is through a changes in law.

Currently, our incorporation registration laws do not provide a process to correct errors that can be made during the business registration process. For example, when an intended for profit business is inadvertently registered as a not-for-profit.

Enactment of this law will establish a process for businesses who inadvertently register under the wrong classification to convert to

the correct business status and allow for Sweet P Home Care to correct the mistake.

Legislative history

A new bill.

Fiscal implications

None to the state

Local fiscal implications

None.

Effective date

This act shall take effect on the thirtieth day after it is enacted.