Print Friendly HOUSE BILL NO. 588 – Nonprofit corp/conversion transactn
HOUSE BILL NO. 588
View Daily Data Tracking History
View Bill Text
View Statement of Purpose / Fiscal Impact
Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.
This sentence is marked with bold and underline to show added text.
This sentence is marked with strikethrough and italic, indicating
text to be removed.
NONPROFIT CORPORATIONS - Adds to existing law to provide notice to the
attorney general by a community benefit organization that it intends to
enter into a conversion transaction (the lease or acquisition of all, or
substantially all, of the assets of a community benefit organization by a
for profit entity); to provide for public hearings; to provide that private
benefit is prohibited; to provide excluded transactions; and to provide
02/16 House intro - 1st rdg - to printing
02/17 Rpt prt - to Bus
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 588
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO CONVERSION TRANSACTIONS OF CERTAIN NONPROFIT CORPORATIONS; AMEND-
3 ING TITLE 30, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 4, TITLE 30,
4 IDAHO CODE, TO DEFINE TERMS, TO PROVIDE NOTICE TO THE ATTORNEY GENERAL BY
5 A COMMUNITY BENEFIT ORGANIZATION THAT IT INTENDS TO ENTER INTO A CONVER-
6 SION TRANSACTION, TO PROVIDE FOR PUBLIC HEARINGS, TO PROVIDE THAT PRIVATE
7 BENEFIT IS PROHIBITED, TO PROVIDE EXCLUDED TRANSACTIONS AND TO PROVIDE
9 Be It Enacted by the Legislature of the State of Idaho:
10 SECTION 1. That Title 30, Idaho Code, be, and the same is hereby amended
11 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
12 ter 4, Title 30, Idaho Code, and to read as follows:
13 CHAPTER 4
14 CONVERSION OF CERTAIN NONPROFIT CORPORATIONS
15 30-401. DEFINITIONS. As used in this act:
16 (1) "Assets" means all real and personal property and rights in property,
17 including cash, buildings, equipment, investments and contracts with other
19 (2) "Community benefit organization" means a nonprofit corporation that
20 is tax exempt under section 501(c)(3) of the Internal Revenue Code.
21 (3) "Community benefit purposes" means those purposes for which an entity
22 may qualify for exemption pursuant to section 501(c)(3) of the Internal Reve-
23 nue Code.
24 (4) "Conversion transaction" means the lease or acquisition of all or
25 substantially all of the assets of a community benefit organization by a for
26 profit entity.
27 30-402. NOTICE TO ATTORNEY GENERAL. (1) In recognition of the statutory
28 duty of the attorney general to supervise nonprofit corporations pursuant to
29 section 67-1401 5., Idaho Code, any community benefit organization that
30 intends to enter into a conversion transaction shall provide written notice to
31 the attorney general of the intended conversion transaction no later than
32 ninety (90) days before the anticipated closing of the intended conversion
34 (2) The written notice shall include all of the following information:
35 (a) The names, addresses and telephone numbers of the parties to the
36 intended conversion transaction;
37 (b) The names, addresses and telephone numbers of the attorneys or other
38 persons who represent the parties in connection with the intended conver-
39 sion transaction;
40 (c) A general summary of the terms of the intended conversion transac-
1 (d) A general description of the assets involved in the intended conver-
2 sion transaction and the intended use of the assets after the closing of
3 the intended conversion transaction; and
4 (e) The anticipated date of completion of the intended conversion trans-
6 30-403. PUBLIC HEARINGS. (1) The attorney general may, at his discretion,
7 hold a public hearing on the intended conversion transaction in the county
8 where the community benefit organization's assets to be converted are primar-
9 ily located.
10 (2) If a party to the intended conversion transaction requests the hear-
11 ing be conducted by a hearing officer outside the attorney general's office, a
12 hearing officer, mutually agreed upon by the parties to the conversion trans-
13 action and the attorney general, shall be selected.
14 (3) In the event the attorney general elects to hold a hearing, he or the
15 independent hearing officer shall set the time and place for the public hear-
16 ing with agreement of the parties to the intended conversion transaction and
17 conduct the hearing within thirty (30) days after notice of the intended con-
18 version transaction is received by the attorney general.
19 (4) The attorney general shall cause notice of the time and place for the
20 public hearing to be published in at least one (1) newspaper of general circu-
21 lation in the county in which the community benefit organization's assets to
22 be converted are primarily located.
23 (5) The sole purpose of the public hearing is to receive public comment
24 regarding the proposed conversion transaction.
25 (6) The parties to the conversion transaction and the attorney general
26 may present information at the public hearing.
27 (7) If an independent hearing officer is used, the community benefit
28 organization and the attorney general shall share equally in the costs of the
29 hearing officer, publication of official notice and the site for the hearing.
30 Each party and the attorney general shall bear its own costs including, but
31 not limited to, attorney's fees.
32 30-404. PRIVATE BENEFIT PROHIBITED. No director, officer, agent or
33 employee of the community benefit organization shall receive any community
34 benefit organization assets or benefit directly or indirectly from the
35 intended conversion transaction, except for the receipt of ordinary compensa-
36 tion for services relating to the intended conversion transaction or the oper-
37 ation of the entities.
38 30-405. EXCLUDED TRANSACTIONS. This act does not apply to transactions:
39 (1) Involving a conversion of assets of a community benefit organization
40 with a book value of less than one million dollars ($1,000,000), net of accu-
41 mulated depreciation as of the date of the closing of the intended conversion
43 (2) Enabling a community benefit organization to finance the lease or
44 purchase of assets, refinance assets or mortgage or pledge assets already
45 owned by the community benefit organization, whether or not in its usual
46 course of business.
47 30-406. APPLICATION. This act applies to all conversion transactions, the
48 consummation of which occur after July 1, 2000.
STATEMENT OF PURPOSE
This proposed legislation is the alternative to the attorney general's bill regarding
the conversion of nonprofit hospitals to for profit entities. The purpose of the
legislation is to provide for notification to the attorney general in the event a
nonprofit corporation conversion transaction is going to occur to allow the
attorney general to invoke his statutory duty to supervise nonprofit corporations
pursuant to section 67-1401(5), Idaho Code. Further, the legislation allows the
attorney general to conduct a public hearing on the intended conversion
transaction and prohibits private benefit to any director, officer, agent or
employee of the nonprofit corporation. The proposal also excludes transactions of
smaller nonprofit corporations with a book value of less than one million dollars
net of accumulated depreciation.
There is no fiscal impact to the general fund with the possible exception of
negligible costs associated with the attorney general holding a hearing on a
Name: Steven A. Millard
Idaho Hospital Association
Phone: 338-5100, extension 203
STATEMENT OF PURPOSE/FISCAL NOTE H58