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SENATE BILL NO. 1086
A bill to amend 1982 PA 162, entitled
"Nonprofit corporation act,"
by amending sections 261, 271, 821, 1012, and 1041 (MCL 450.2261,
450.2271, 450.2821, 450.3012, and 450.3041), sections 261, 821, and
1012 as amended by 2014 PA 557 and section 1041 as amended by 2014
PA 559, and by adding section 261a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 261. (1) A corporation, subject to any limitation 1
provided in this act, including, but not limited to, section 261a, 2
in any other statute of this state, or in its articles of 3
July 02, 2026, Introduced by Senators MCCANN, HERTEL, IRWIN, CHERRY, CHANG,
BAYER, CAVANAGH and SHINK and referred to Committee on Elections and Ethics.
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incorporation, has the power in furtherance of its corporate 1
purposes to do any of the following: 2
(a) Have perpetual duration. 3
(b) Sue and be sued in all courts and participate in actions 4
and proceedings, judicial, administrative, arbitrative, or 5
otherwise, in the same manner as an individual. 6
(c) Have a corporate seal, alter the seal, and use it by 7
causing it or a facsimile to be affixed, impressed, or reproduced 8
in any other manner. 9
(d) Adopt, amend, or repeal bylaws, including emergency 10
bylaws, relating to the purposes of the corporation, the conduct of 11
its affairs, its rights and powers, and the rights and powers of 12
its shareholders, members, directors, or officers. 13
(e) Elect or appoint officers, employees, and other agents of 14
the corporation, prescribe their duties, fix their compensation and 15
the compensation of directors, and indemnify corporate directors, 16
officers, employees, and agents. 17
(f) Purchase, receive, take by grant, gift, devise, bequest, 18
or otherwise, lease, or otherwise acquire, own, hold, improve, 19
administer, employ, use, and otherwise deal in and with, real or 20
personal property, or an interest in real or personal property, 21
wherever situated, either absolutely, in trust, or as an endowment 22
or donor restricted fund, and without limitation as to amount or 23
value. 24
(g) Sell, convey, lease, exchange, transfer, or otherwise 25
dispose of, or mortgage or pledge, or create a security interest 26
in, any of its property , or an interest in the property, wherever 27
situated. 28
(h) Purchase, take, receive, subscribe for, or otherwise 29
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acquire, own, hold, vote, employ, sell, lend, lease, exchange, 1
transfer, or otherwise dispose of, mortgage, pledge, use, and 2
otherwise deal in and with, bonds and other obligations, shares or 3
other securities or interests or memberships issued by others, 4
whether engaged in similar or different business, governmental, or 5
other activities, including banking corporations or trust 6
companies. A corporation organized or conducting affairs in this 7
state under this act shall not guarantee or become surety on a bond 8
or other undertaking securing the deposit of public money. 9
(i) Make contracts, give guarantees, and incur liabilities, 10
borrow money at rates of interest as the corporation may determine, 11
issue its notes, bonds, and other obligations, and secure any of 12
its obligations by mortgage or pledge of any of its property or an 13
interest in the property, wherever situated. Without limiting the 14
preceding, these powers include the powers to give guarantees and 15
to incur joint indebtedness that are necessary or convenient to the 16
conduct, promotion, or attainment of the purposes of any of the 17
following entities, whether or not subject to this act, and those 18
guarantees or joint indebtedness is considered to be in furtherance 19
of the corporate purpose purposes of the contracting corporation: 20
(i) A corporation, foreign corporation, domestic business 21
corporation, or foreign business corporation, if all of its 22
outstanding shares are owned, directly or indirectly, or all of the 23
outstanding memberships are owned or controlled, directly or 24
indirectly, by any of the following: 25
(A) The contracting corporation. 26
(B) A directorship corporation whose directors are all elected 27
or appointed, directly or indirectly, by the contracting 28
corporation. 29
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(C) A domestic or foreign limited liability company, if all of 1
its membership interests are owned or controlled, directly or 2
indirectly, by the contracting corporation. 3
(ii) A corporation or foreign corporation that owns or 4
controls, directly or indirectly, all of the outstanding shares of 5
the contracting corporation; or that owns or controls, directly or 6
indirectly, all of the outstanding membership interests of the 7
contracting corporation; or that elects or appoints, directly or 8
indirectly, all of the directors of the contracting directorship 9
corporation. 10
(iii) A corporation or foreign corporation, if all of its 11
outstanding shares are owned or controlled, directly or indirectly, 12
or all of its outstanding memberships are owned or controlled, 13
directly or indirectly, by an affiliate; or a directorship 14
corporation, if all of its directors are elected or appointed, 15
directly or indirectly, by an affiliate. As used in this 16
subparagraph, "affiliate" means a nonprofit corporation, whether or 17
not subject to this act, or a foreign corporation, that owns or 18
controls, directly or indirectly, all of the outstanding shares of 19
the contracting corporation; or that owns or controls, directly or 20
indirectly, all of the outstanding memberships of the contracting 21
corporation; or that elects or appoints, directly or indirectly, 22
all of the directors of the contracting corporation if it is a 23
directorship corporation. 24
(j) Lend money, invest and reinvest its funds, and take and 25
hold real and personal property as security for the payment of 26
funds loaned, invested, or reinvested. 27
(k) Make donations for any of the following: the public 28
welfare; a community fund; or a hospital; or a charitable, 29
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educational, scientific, civic, or similar purpose. A corporation 1
also has the power to provide aid in time of war or other national 2
emergency. 3
(l) Pay pensions, establish and carry out pension, federally 4
qualified profit sharing, savings, thrift, and other retirement, 5
incentive, and benefit plans, trusts, and provisions for any of its 6
directors, officers, and employees. 7
(m) Purchase, receive, take, otherwise acquire, own, hold, 8
sell, lend, exchange, transfer, otherwise dispose of, pledge, use, 9
and otherwise deal in and with its own shares, bonds, and other 10
securities. 11
(n) Participate with others in any domestic corporation, 12
foreign corporation, domestic business corporation, foreign 13
business corporation, partnership, limited partnership, limited 14
liability company, limited liability partnership, joint venture, or 15
other association of any kind, or in any transaction, undertaking, 16
or agreement that the participating corporation would have power to 17
conduct by itself, whether or not the participation involves 18
sharing or delegation of control with or to others. 19
(o) Cease its corporate activities and dissolve. 20
(p) Conduct its affairs, carry on its operations, and have 21
offices and exercise the powers granted under this act in any 22
jurisdiction in or outside the United States, and, in the case of a 23
corporation the purpose or purposes of which require the 24
transaction of business, the receipt and payment of money, the care 25
and custody of property, and other incidental business matters, 26
transact that business, receive, collect, and disburse that money, 27
and engage in those other incidental business matters as are 28
naturally or properly within the scope of its articles. 29
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(q) Have and exercise all powers necessary or convenient to 1
effect any purpose for which the corporation is formed. 2
(2) A corporation that is subject to the uniform prudent 3
management of institutional funds act, 2009 PA 87, MCL 451.921 to 4
451.931, has all powers granted under both this act and that act. 5
However, in the event of an inconsistency between the 2 acts, the 6
uniform prudent management of institutional funds act, 2009 PA 87, 7
MCL 451.921 to 451.931, controls. 8
(3) The corporate existence of all corporations incorporated 9
before January 1, 1983, without capital stock, for religious, 10
benevolent, social, or fraternal purposes, shall be is considered 11
to be in perpetuity. A limitation or term fixed in the articles or 12
in the law under which the corporation originally incorporated is 13
not effective unless the corporation affirmatively waived its right 14
to perpetual existence after September 18, 1931, by fixing a 15
definite term of existence by amendment to its articles. 16
(4) Any nonprofit power corporation that is authorized to 17
furnish electric service may construct, maintain, and operate its 18
lines along, over, across, or under any public places, streets, and 19
highways, and across or under the waters in this state, with all 20
necessary erections and fixtures. A nonprofit power corporation may 21
exercise the power of eminent domain, in the manner provided by the 22
uniform condemnation procedures act, 1980 PA 87, MCL 213.51 to 23
213.75. As a condition to the exercise of any of these powers, 24
nonprofit power corporations are subject to the jurisdiction of the 25
Michigan public service commission under 1909 PA 106, MCL 460.551 26
to 460.559, 1919 PA 419, MCL 460.54 to 460.62, and 1939 PA 3, MCL 27
460.1 to 460.11. 28
(5) A corporation formed under this act that is operating a 29
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public school academy as that term is defined in section 5 of the 1
revised school code, 1976 PA 451, MCL 380.5, is a public body 2
corporate and a governmental agency and shall have has all powers 3
granted under this act and under the revised school code, 1976 PA 4
451, MCL 380.1 to 380.1853. 380.1852. However, in the event of if 5
there is an inconsistency between this act and the revised school 6
code, the revised school code shall control.controls. 7
(6) Subject to the limitations on the practice of law by 8
corporations contained in 1917 PA 354, MCL 450.681, a domestic 9
corporation may be formed and a foreign corporation may be 10
authorized to conduct affairs in this state for the purpose of 11
providing services in a learned profession and may employ and enter 12
into other arrangements with duly licensed or authorized 13
individuals who shall furnish those services on behalf of the 14
corporation. 15
(7) Except as otherwise provided in section 209(1)(d) or 16
section 209(1)(e), (e), any duly licensed or authorized individual 17
who is employed by a corporation described in subsection (6) is 18
personally and fully liable and accountable for any negligent or 19
wrongful acts or misconduct committed by him or her, the 20
individual, or by any individual under his or her the individual's 21
direct supervision and control, while rendering professional 22
services on behalf of the corporation to the person for whom those 23
professional services were being rendered. However, the corporation 24
that employs that duly licensed or authorized individual may 25
indemnify him or her the individual for any resulting liabilities 26
and expenses as provided in this act and under other applicable 27
law. 28
Sec. 261a. (1) Except as otherwise provided in subsection (3), 29
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a domestic corporation does not have any power to pay, contribute, 1
or expend money or anything of value in support of, or in 2
opposition to, a candidate, political party, political committee, 3
or ballot question. The performance of an act described in this 4
subsection by a domestic corporation is invalid and subject to 5
disgorgement. 6
(2) Except as otherwise provided in subsection (3), a foreign 7
corporation does not have any power, privilege, or right to pay, 8
contribute, or expend money or anything of value in support of, or 9
in opposition to, a candidate, political party, political 10
committee, or ballot question in this state. The performance of an 11
act described in this subsection by a foreign corporation is 12
invalid and subject to disgorgement. 13
(3) Subsections (1) and (2) do not apply to either of the 14
following: 15
(a) An existing contract, debt instrument, security, or other 16
legal obligation validly entered into before the effective date of 17
the amendatory act that added this section. 18
(b) A bona fide news story, commentary, or editorial 19
distributed through the facilities of a broadcasting station or of 20
any print, online, or digital newspaper, magazine, blog, or other 21
periodical publication, unless the broadcasting, print, online, or 22
digital facility is owned or controlled by a candidate, political 23
party, or political committee. 24
(4) A domestic corporation that performs an act described in 25
subsection (1) is subject to dissolution as provided in section 26
821. A foreign corporation that performs an act described in 27
subsection (2) is subject to revocation of the foreign 28
corporation's authority to transact business in this state as 29
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provided in section 1041. 1
(5) The attorney general or the administrator may bring an 2
action for any of the following: 3
(a) A declaration that the performance of an act is invalid 4
under subsection (1) or (2). 5
(b) An order of disgorgement under subsection (1) or (2). 6
(c) An injunction against the performance of an act under 7
subsection (1) or (2). 8
(6) As used in this section: 9
(a) "Ballot question" means that term as defined in section 2 10
of the Michigan campaign finance act, 1976 PA 388, MCL 169.202. 11
(b) "Candidate" means that term as defined in section 3 of the 12
Michigan campaign finance act, 1976 PA 388, MCL 169.203. 13
(c) "Domestic corporation" and "foreign corporation" do not 14
include a political committee. 15
(d) "Political committee" means a committee as that term is 16
defined in section 3 of the Michigan campaign finance act, 1976 PA 17
388, MCL 169.203. 18
Sec. 271. An Except as otherwise provided in section 261a, an 19
act of a corporation and a transfer of real or personal property to 20
or by a corporation, otherwise lawful, is not invalid because the 21
corporation was without capacity or power to do the act or make or 22
receive the transfer of property. However, the lack of capacity or 23
power may be asserted in any of the following: 24
(a) By a shareholder or member, or by a director who has not 25
authorized or consented to the act or transfer, in an action 26
against the corporation to enjoin the doing of an act or the 27
transfer of real or personal property by or to the corporation. 28
(b) In an action by or in the right of the corporation to 29
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procure a judgment in its favor against an incumbent or former 1
officer or director of the corporation for loss or damage due to an 2
unauthorized act by that person. 3
(c) In an action or special proceeding by the attorney general 4
to dissolve the corporation or to enjoin it from the conducting of 5
unauthorized affairs. 6
Sec. 821. (1) The attorney general may bring an action in the 7
circuit court for the county in which the principal place of 8
business or registered office of a corporation is located or for 9
Ingham county County for dissolution of a corporation on the ground 10
that the corporation has committed any of the following acts: 11
(a) Procured its organization through fraud. 12
(b) Repeatedly, willfully, and materially exceeded the 13
authority conferred on it by law. 14
(c) Repeatedly, willfully, and materially conducted its 15
affairs in an unlawful manner. 16
(d) Performed an act described in section 261a(1). 17
(2) The enumeration in this section of grounds for dissolution 18
does not exclude any other statutory or common law action by the 19
attorney general for dissolution of a corporation or revocation or 20
forfeiture of its corporate franchises. 21
Sec. 1012. (1) Without excluding other activities that may not 22
constitute conducting affairs in this state, a foreign corporation 23
is not considered to be conducting affairs in this state for the 24
purposes of this act solely because it is carrying on in this state 25
any 1 or more of the following activities: 26
(a) Maintaining, defending, or settling any proceeding. 27
(b) Holding meetings of the board of directors, shareholders, 28
or members or carrying on other activities concerning internal 29
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corporate affairs. 1
(c) Maintaining bank accounts. 2
(d) Maintaining offices or agencies for the transfer, 3
exchange, or registration of the corporation's own securities or 4
maintaining trustees or depositories with respect to those 5
securities. 6
(e) Selling through independent contractors. 7
(f) Soliciting or obtaining orders, whether by mail or through 8
employees or agents or otherwise, if the orders require acceptance 9
outside this state before they become contracts. 10
(g) Soliciting or obtaining donations, whether by mail, by 11
telephone or other form of remote communications, by electronic 12
transmission, or through employees, agents, volunteers or 13
otherwise, if the donations are made to a foreign corporation that 14
has its principal place of business outside the state. 15
(h) Creating or acquiring indebtedness, mortgages, or security 16
interests in real or personal property. 17
(i) Securing or collecting debts or enforcing mortgages and 18
security interests in property that secures those debts. 19
(j) Owning, without more, real or personal property. 20
(k) Conducting an isolated transaction that is completed 21
within 30 days and that is not 1 transaction in the course of 22
repeated transactions of a similar nature. 23
(l) Transacting business in interstate commerce. 24
(2) This section does not apply in determining the contracts 25
or activities that may subject a foreign corporation to service of 26
process or taxation in this state or to regulation under any other 27
statute of this state. 28
(3) This section does not authorize a foreign corporation to 29
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perform an act described in section 261a(2). 1
Sec. 1041. In addition to any other ground for revocation 2
provided by law, the administrator may revoke the certificate of 3
authority of a foreign corporation to conduct affairs in this 4
state, in the manner described in section 1042, on any of the 5
following grounds: 6
(a) The corporation fails to maintain a resident agent in this 7
state as required under this act. 8
(b) The corporation, after changing its registered office or 9
resident agent, fails to file a statement of the change as required 10
under this act. 11
(c) The corporation fails to file an amended application if 12
required under this act. 13
(d) The corporation, after becoming the survivor in a merger, 14
consolidation, or conversion, fails to file a certificate that 15
attests to the occurrence of the merger, consolidation, or 16
conversion as required under this act. 17
(e) The corporation fails to file its annual report within the 18
time required under this act, or fails to pay an annual fee 19
required under this act. 20
(f) The corporation performs an act described in section 21
261a(2). 22
Enacting section 1. This amendatory act does not take effect 23
unless all of the following bills of the 103rd Legislature are 24
enacted into law: 25
(a) Senate Bill No. 1085. 26
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(b) Senate Bill No. 1087. 28