Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 2 of chapter 180 of the General Laws, as appearing in the 1988 Official Edition, is hereby amended by adding the following clause:-

(f) "public charity", a corporation holding funds subject to the provisions of section eight of chapter twelve.

SECTION 2. Section 3 of said chapter 180, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

A corporation may have one or more classes of members. If the corporation has one or more classes of members, the designation of such class or classes, the manner of election or appointment, the duration of membership and the qualification and rights, including voting rights, of the members of each class shall be set forth in the articles of organization or the by-laws. If a corporation does not have members, any action or vote required or permitted by this chapter to be taken by members of the corporation shall be taken by action or vote of the same percentage of the directors of the corporation.

SECTION 3. Section 6 of said chapter 180, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

A corporation shall have in furtherance of its corporate purposes the powers specified in paragraphs (a) to (d), inclusive, and clause (k) of section nine of chapter one hundred and fifty-six B and the power to convey land to which it has a legal title. Except as otherwise provided in its articles of organization, a corporation shall have in furtherance of its corporate purposes all of the other powers specified in said section nine except those provided in paragraph (m). To the extent provided in its articles of organization, a corporation shall have the powers specified in sections nine A and nine B of said chapter one hundred and fifty-six B, except that a corporation which constitutes a public charity shall not have the power specified in said section nine B. No power referred to above shall be exercised in a manner inconsistent with this chapter or any other chapter of the General Laws, but this chapter shall not limit or reduce any powers of corporations whether general or special existing on October first, nineteen hundred and seventy-one.

SECTION 4. Section 6A of said chapter 180, as so appearing, is hereby amended by striking out the third paragraph and inserting in place thereof the following two paragraphs:-

Except as otherwise expressly provided, a corporation may by its by-laws determine the manner of calling and conducting its meetings; the number of members which shall constitute a quorum; the mode of voting by proxy; and the tenure of office of the directors and officers and the manner of their selection and removal; and may annex suitable penalties to such by-laws, not exceeding twenty dollars for one offense; but no by-law inconsistent with law shall be made by a corporation. Special meetings of the members may be called by the president or the directors, and shall be called by the clerk, or in the case of the death, absence, incapacity or refusal of the clerk, by any other officer, upon written application of members representing at least ten percent of the smallest quorum of members required for a vote upon any matter at the annual meeting of members. In case none of the officers is able and willing to call a special meeting, the supreme judicial or superior court, upon application of said number of members, shall have jurisdiction in equity to authorize one or more of such members to call a meeting by giving such notice as is required by law.

Unless the corporation's articles of organization or by-laws otherwise provide, a member may vote in person or by proxy. No proxy dated more than six months before the meeting named therein shall be valid and no proxy shall be valid after the final adjournment of such meeting. A proxy purporting to be executed by or on behalf of a member shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger.

SECTION 5. Said chapter 180 is hereby amended by inserting after section 6A, as so appearing, the following two sections:-

Section 6B. If members of a corporation are entitled to vote on any corporate action but are not entitled to vote on action proposed under section seven or eight A, the corporation shall give to such members prior notice of any action proposed under said section seven or eight A. Such notice shall be given in any manner reasonably likely to make such members aware of the proposed action, and a defect in the giving of such notice shall not invalidate or otherwise affect such action.

Section 6C. A director, officer or incorporator of a corporation shall perform his duties as such, including, in the case of a director, his duties as a member of a committee of the board upon which he may serve, in good faith and in a manner he reasonably believes to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position with respect to a similar corporation organized under this chapter would use under similar circumstances. In performing his duties, a director, officer or incorporator shall be entitled to rely on information, opinions, reports or records, including financial statements, books of account and other financial records, in each case presented by or prepared by or under the supervision of (1) one or more officers or employees of the corporation whom the director, officer or incorporator reasonably believes to be reliable and competent in the matters presented, or (2) counsel, public accountants or other persons as to matters which the director, officer or incorporator reasonably believes to be within such person's professional or expert competence, or (3) in the case of a director, a duly constituted committee of the board upon which he does not serve, as to matters within its delegated authority, which committee the director reasonably believes to merit confidence, but he shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A director, officer or incorporator of a corporation shall not be liable for the performance of his duties if he acts in compliance with this section.

SECTION 6. Said chapter 180 is hereby further amended by striking out section 7, as so appearing, and inserting in place thereof the following section:-

Section 7. A corporation may authorize, by vote of two-thirds of its members entitled to vote thereon or, in the case of a corporation having capital stock, the holders of two-thirds of its capital stock entitled to vote thereon at a meeting duly called for the purpose, with notice given as provided in section six B, any amendment of its articles of organization, including a change of its purposes or name, or a restatement of its articles of organization which restatement may affect any permitted amendment; provided, however, that any provision added to or change made in its articles of organization by such amendment could have been included in, and any provision deleted thereby could have been omitted from, original articles of organization filed at the time of such meeting; and provided also, that no articles of amendment or restated articles of organization shall be approved and filed by the state secretary (i) if as a result thereof the name of a corporation subject to section twenty-six would be changed, until after approval of such change by the state secretary, or (ii) if the purposes of any corporation are to be amended to include purposes which are such that the articles of organization of a corporation newly organized under this chapter for such purposes must be approved by any department or officer of this commonwealth as a condition of organization under this chapter, until after approval of the articles of amendment or the restated articles of organization by such department or officer. Articles of amendment shall be signed and submitted to the state secretary in the manner prescribed in and subject to section seventy-two of chapter one hundred and fifty-six B, and restated articles of organization shall be signed and submitted to the state secretary in the manner prescribed in and subject to section seventy-four of said chapter one hundred and fifty-six B.

SECTION 7. Said chapter 180 is hereby further amended by inserting after section 8, as so appearing, the following section:-

Section 8A. (a) A corporation may authorize, by vote of two-thirds of its members entitled to vote thereon or, in the case of a corporation having capital stock, by the holders of two-thirds of its capital stock entitled to vote thereon, at a meeting duly called for the purpose, with notice given as provided in section six B, the sale, lease, exchange or other disposition of all or substantially all of its property and assets upon such terms and conditions as it deems expedient, except that no such vote shall be required if such transaction does not involve or will not result in a material change in the nature of the activities conducted by the corporation.

(b) The authorization by members of the mortgage or pledge of, or granting of a security interest in, property or assets of a corporation shall not be necessary except to the extent that the corporation's articles of organization or by-laws provide otherwise.

(c) A corporation constituting a public charity shall give written notice to the attorney general not less than thirty days before making any sale, lease, exchange, or other disposition not referred to in subsection (b) of all or substantially all of its property and assets if that sale, lease, exchange or other disposition involves or will result in a material change in the nature of the activities conducted by the corporation, except that no such notice shall be required if a written waiver of such notice is executed by the attorney general before or after such sale, lease, exchange or other disposition. A certificate signed by an officer of the corporation which states that notice was not required, that notice was given, or that notice was waived by the attorney general, with respect to any sale, lease, exchange or other disposition of property by the corporation shall be conclusive in favor of any purchaser, lessee, transferee or other person relying thereon for purposes of determining compliance with the provisions of this subsection.

SECTION 8. Said chapter 180 is hereby further amended by striking out section 10, as so appearing, and inserting in place thereof the following section:-

Section 10. (a) Any two or more corporations as defined in section two and any such corporation and any other corporations organized under other laws of the commonwealth, if such other laws permit, may consolidate to form a new corporation, or may merge into a single corporation which may be any one of the constituent corporations, in the manner specified in this section. If one or more of such corporations constitutes a public charity, then the consolidated or surviving corporation shall be a public charity.

(b) Such corporations as desire to consolidate or merge shall enter into an agreement of consolidation or merger signed by an authorized officer of each corporation which shall set forth:

(i) the names of the corporations proposing to consolidate or merge and the name of the resulting or surviving corporation;

(ii) the purposes of the resulting or surviving corporation;

(iii) the terms and conditions of the consolidation or merger, including, in the case of any constituent corporation having capital stock, the method of retiring and cancelling such stock; and

(iv) the manner of fixing the effective date of the consolidation or merger, which shall be fixed as provided in section seventy-eight of chapter one hundred and fifty-six B.

The agreement of consolidation or merger may contain such other provisions as are permitted by section three to be included in the articles of organization of a corporation organized under this chapter, together with any provisions deemed necessary or desirable in connection with the consolidation or merger, including without limitation, a provision permitting the abandonment thereof, which are not inconsistent with the provisions of this chapter.

(c) The agreement of consolidation or merger shall be adopted by each of the constituent corporations by vote of two-thirds of its members entitled to vote thereon or, in the case of a constituent corporation having capital stock, by the holders of two-thirds of its capital stock entitled to vote thereon at a meeting duly called for the purpose in the manner prescribed in section seventy-eight of chapter one hundred and fifty-six B.

(d) (1) Unless such agreement to consolidate or merge is abandoned pursuant to its provisions, articles of consolidation or merger shall be submitted to the state secretary in the manner prescribed in and subject to section seventy-eight of chapter one hundred and fifty-six B and shall become effective as provided in said section seventy-eight of said chapter one hundred and fifty-six B; provided, however, that no articles of consolidation or merger shall be approved and filed by the state secretary (i) if as a result thereof the location of a constituent corporation subject to section twenty-six would be changed, until after approval of such change by the state secretary, or (ii) if the purposes of the resulting or surviving corporation are such that the articles of organization of a corporation newly organized under this chapter for such purposes must be approved by any department or officer of this commonwealth as a condition of organization under this chapter, until after approval of the articles of consolidation or merger by such department or officer.

(2) The resulting or surviving corporation shall file a copy of the articles of consolidation or merger certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of any constituent corporation is situated or in lieu of such certified copy, a certificate issued by the state secretary in such form as he shall prescribe evidencing the filing and approval of articles of consolidation or merger hereunder, except that no filing need be made with respect to real property of a constituent corporation which is the surviving corporation of a merger.

SECTION 9. Said chapter 180 is hereby amended by striking out section 10A, as most recently amended by section 2 of chapter 509 of the acts of 1987, and inserting in place thereof the following three sections:-

Section 10A. (a) Any one or more corporations as defined in section two may consolidate or merge with one or more other corporations organized under the laws of any other state or states of the United States, if the laws of such other state or states permit. The constituent corporations may consolidate to form a new corporation, which may be a corporation of the state under the laws of which any one of the constituent corporations is organized, or they may merge into a single corporation which may be any one of the constituent corporations; provided, however, that if one or more of the constituent corporations constitutes a public charity governed by this chapter, the resulting or surviving corporation shall constitute a public charity governed by this chapter.

(b) (1) Such corporations as desire to consolidate or merge shall enter into an agreement of consolidation or merger which shall specify the state under the laws of which the resulting or surviving corporation is organized. If the resulting or surviving corporation is to be a corporation governed by this chapter, such agreement of consolidation or merger shall comply with the provisions of section ten.

(2) If the resulting or surviving corporation is to be governed by the laws of a state other than this commonwealth, the agreement of consolidation or merger shall comply with the applicable provisions of the laws of such state, and the resulting or surviving corporation shall agree in the articles of consolidation or merger that it may be sued in this commonwealth for any prior obligation of any constituent domestic corporation, any prior obligation of any constituent foreign corporation qualified under chapter one hundred and eighty-one, and any other obligation thereafter incurred by the resulting or surviving corporation, so long as any liability remains outstanding against the corporation in this commonwealth, and it shall irrevocably appoint the state secretary as its agent to accept service of process in any action for the enforcement of any such obligation, including taxes, in the same manner as provided in chapter one hundred and eighty-one.

(c) (1) The agreement of consolidation or merger shall be adopted by each of the constituent corporations in accordance with the laws of the state under which it is organized, and, in the case of a corporation governed by this chapter, in the manner provided in section ten.

(2) Unless such agreement is abandoned pursuant to its provisions, articles of consolidation or merger shall be signed and submitted to the state secretary in the manner prescribed in and subject to section seventy-eight of chapter one hundred and fifty-six B, and in the case of one or more constituent corporations organized under the laws of any other state, section seventy-nine of said chapter one hundred and fifty-six B, and shall become effective as provided in said section seventy-nine of said chapter one hundred and fifty-six B; provided, however, that if the resulting or surviving corporation is to be a corporation governed by this chapter, no articles of consolidation or merger shall be approved and filed by the state secretary (i) if as a result thereof, the location of a constituent corporation subject to section twenty-six would be changed, until after approval of such change by the state secretary, or (ii) if the purposes of the resulting or surviving corporation are such that the articles of organization of a corporation newly organized under this chapter for such purposes must be approved by any department or officer of this commonwealth as a condition of organization under this chapter, until after approval of the articles of consolidation or merger by such department or officer.

(d) The resulting or surviving corporation shall file a copy of the articles of consolidation or merger certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of any constituent corporation is situated, or in lieu of such certified copy, a certificate issued by the state secretary evidencing the filing and approval of articles of consolidation or merger, except that no filing need be made with respect to real property of a constituent corporation which is the surviving corporation of a merger.

Section 10B. Any consolidation or merger carried out in the manner specified in section ten or ten A shall have the effect set forth in section eighty of chapter one hundred and fifty-six B and the articles of merger or articles of consolidation, as the case may be, may thereafter be amended in the manner provided in this chapter.

Section 10C. Every corporation shall, except as otherwise provided in this chapter, be subject to sections six, eight, ten, eleven, fourteen, thirty-two, thirty-five, thirty-seven, thirty-eight A, forty-three, forty-nine, fifty-five, fifty-six, fifty-seven, fifty-eight, fifty-nine, sixty-eight, sixty-nine, one hundred and two, one hundred and four, one hundred and five, one hundred and six, one hundred and eight, and one hundred and fifteen of chapter one hundred and fifty-six B, except that the provisions of section fifty-five of said chapter one hundred and fifty-six B shall not affect the requirement under section eleven A of this chapter concerning the authorization of a petition for the dissolution of a charitable corporation constituting a public charity.

The foregoing provisions and the other provisions of said chapter one hundred and fifty-six B that are made applicable to corporations governed by this chapter shall be subject to the following: (a) those provisions of said chapter one hundred and fifty-six B that pertain to stock and stockholders, shares and classes or series of shares and stock and transfer records shall, except in the case of a corporation having capital stock outstanding, be applicable as nearly as may be to members, classes of members and records of membership; (b) the definitions of terms provided in this chapter shall be applicable; and (c) the filing fees provided in section eleven C of this chapter shall be applicable.

SECTION 10. Said chapter 180 is hereby further amended by inserting after section 26A, as so appearing, the following section:-

Section 26B. A corporation which is required to file annual reports with the state secretary shall be deemed to be in good standing with the state secretary if such corporation has filed all annual reports required to be filed by it with the state secretary, has paid all fees due with respect to such reports, the charter of the corporation has not been revoked pursuant to section twenty-six A, and the secretary has not received notice of its dissolution pursuant to section eleven, eleven A or eleven B. Upon the request of any person and payment of such fee as may be prescribed by law, the state secretary shall issue a certificate stating, in substance, as to any corporation meeting the requirements of this section, that such corporation appears from the records in his office to be in good standing.

SECTION 11. The fourth paragraph of section six A of chapter one hundred and eighty of the General Laws, inserted by section four of this act, shall take effect on January first, nineteen hundred and ninety-one.