Nonprofit and cooperative corporations: ratification or validation of noncompliant corporate actions.

The General Corporation Law regulates the organization of and operation of specified corporations. The Nonprofit Corporation Law regulates the organization and operation of nonprofit public benefit corporations, nonprofit mutual benefit corporations, and nonprofit religious corporations. The Cooperative Corporation Law governs the organization and operation of cooperative corporations. The General Corporation Law requires the Secretary of State, upon receipt of any instrument for filing, to file and provide the date of endorsed filing, if that instrument conforms to law. The law permits an instrument that does not conform to law to be resubmitted in accordance with specified procedures. The law permits an agreement, certificate, or other instrument relating to a domestic or foreign corporation filed under the General Corporation Law to be corrected with respect to any misstatement of fact contained therein, as provided. The Nonprofit Corporation Law and the Cooperative Corporation Law contain similar provisions. The General Corporation Law, except as provided, authorizes otherwise lawful corporate actions, as defined, not in compliance, or purportedly not in compliance, with the General Corporation Law or the articles, bylaws, or a plan or agreement to which the corporation is a party in effect at the time of a corporate action, to be ratified, or validated by the superior court, in conformity with certain procedures. The law requires, among other things, that the ratification of a corporate action pursuant to these provisions be approved by the board and, as applicable, approved by the shareholders or approved by the outstanding shares in accordance with the General Corporation Law and the articles, bylaws, and any plan or agreement to which the corporation is a party in effect at the time of ratification, except as specified. The law requires a corporation, if a corporate action ratified or validated would have required the filing of an instrument with the Secretary of State or if the ratification or validation would cause an instrument previously filed with the Secretary of State to be inaccurate or incomplete in any material respect, to file a certificate of ratification or certificate of validation to make, amend, or correct those instruments. Neither the Nonprofit Corporation Law nor the Cooperative Corporation Law contains similar provisions. This bill would add similar provisions to the Nonprofit Corporation Law and the Cooperative Corporation Law. The bill would also make conforming changes.