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SPONSOR: |
Gonzales |
DATE TYPED: |
|
HB |
940 |
||
|
SHORT TITLE: |
Nonprofit Corporation Officer Civil Liability |
SB |
|
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|
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ANALYST: |
Fox-Young |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
|
$0.1 Minimal (See Narrative) |
Recurring |
|
|
|
|
|
|
|
|
(Parenthesis
( ) Indicate Expenditure Decreases)
Responses
Received From
Administrative
Office of the Courts (AOC)
Attorney
General (AG)
Public
Regulation Commission (PRC)
SUMMARY
Synopsis
of Bill
House Bill 940 amends Section 44-3-4 NMSA 1978, providing that the attorney general or district attorney may initiate a civil action against a director of a nonprofit corporation.
This section gives the attorney general or the
district attorney the authority to bring an action in the name of the state
·
When a person usurps, intrudes into or unlawfully holds or exercises
any public office, civil or military, any franchise within this state or any
office in a corporation or nonprofit corporation created by authority of the
state;
·
When any public officer, civil or military, has done or suffered an act
which, by the provisions of law, works a forfeiture of his office; or
·
When any association or number of persons acts within this state as a
corporation without being duly incorporated or, in case of a foreign
corporation, without being duly authorized to do business within this state.
Significant
Issues
The Attorney General (AG) notes that the provisions
of the bill will allow individuals to bring a civil cause of action against a
nonprofit corporation for its misconduct or violation of its charitable trust.
The Administrative Office of the Courts (AOC) notes
that the bill increases potential liability for directors of nonprofit
corporations.
An increase in liability may act as a negative
incentive to individuals seeking directors’ positions in nonprofit corporations.
It appears that directors of nonprofit corporations
whose charters have been revoked will be subject to civil action. Charters may be revoked as a result of
missed filings and other administrative oversights.
The Public Regulation Commission (PRC) notes
that the provisions of the bill may diminish the number of filings from those
officers or directors who do not lawfully hold an office in a nonprofit
corporation.
FISCAL IMPLICATIONS
JCF/prr