| 1 | A bill to be entitled |
| 2 | An act relating to corporations not for profit; amending |
| 3 | s. 617.0505, F.S.; providing exceptions to a prohibition |
| 4 | against such corporations paying dividends to members, |
| 5 | officers, or directors; authorizing a corporation to make |
| 6 | distributions to certain nonprofit corporations or |
| 7 | governmental entities; providing an effective date. |
| 8 |
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| 9 | Be It Enacted by the Legislature of the State of Florida: |
| 10 |
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| 11 | Section 1. Section 617.0505, Florida Statutes, is amended |
| 12 | to read: |
| 13 | 617.0505 Payment of dividends and distribution of income |
| 14 | to members prohibited; issuance of certificates of membership; |
| 15 | effect of stock issued under prior law.-- |
| 16 | (1) A dividend may not be paid, and any part of the income |
| 17 | or profit of a corporation may not be distributed, to its |
| 18 | members, directors, or officers. A corporation may pay |
| 19 | compensation in a reasonable amount to its members, directors, |
| 20 | or officers for services rendered, may confer benefits upon its |
| 21 | members in conformity with its purposes, and, upon dissolution |
| 22 | or final liquidation, may make distributions to its members as |
| 23 | permitted by this act. If expressly permitted by its articles of |
| 24 | incorporation, a corporation may make distributions upon partial |
| 25 | liquidation to its members, as permitted by this section. Any |
| 26 | such payment, benefit, or distribution does not constitute a |
| 27 | dividend or a distribution of income or profit for purposes of |
| 28 | this section. Any corporation which is a utility exempt from |
| 29 | regulation under s. 367.022(7), whose articles of incorporation |
| 30 | state that it is exempt from taxation under s. 501(c)(12) of the |
| 31 | Internal Revenue Code, may make such refunds to its members, |
| 32 | prior to a dissolution or liquidation, as its managing board |
| 33 | deems necessary to establish or preserve its tax-exempt status. |
| 34 | Any such refund does not constitute a dividend or a |
| 35 | distribution of income or profit for purposes of this section. |
| 36 | (2) Subject to subsection (1), a corporation may issue |
| 37 | certificates in any form evidencing membership in the |
| 38 | corporation. |
| 39 | (3) Stock certificates issued under former s. 617.011(2), |
| 40 | Florida Statutes(1989), constitute membership certificates for |
| 41 | purposes of this act. |
| 42 | (4) Notwithstanding subsection (1) and s. 617.01401(5), a |
| 43 | corporation may make distributions to one or more of the |
| 44 | following if such distribution does not inure to the benefit of |
| 45 | any individual or for-profit entity: |
| 46 | (a) Corporations not for profit that are organized and |
| 47 | operated for the same or substantially similar purposes as the |
| 48 | distributing corporation; |
| 49 | (b) Entities that are organized and operated exclusively |
| 50 | for charitable, benevolent, educational, or similar purposes, or |
| 51 | are otherwise exempt from federal income taxation under s. |
| 52 | 501(c) of the Internal Revenue Code; or |
| 53 | (c) The United States, a state or possession of the United |
| 54 | States, or any political subdivision thereof. |
| 55 | Section 2. This act shall take effect July 1, 2004. |