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Volume XIII, Number 32

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Don't Even Think About Trying to Enforce These Voting Agreements

The California Nonprofit Corporation Law is actually three different laws - the Nonprofit Public Benefit Corporation Law (Part 2), the Nonprofit Mutual Benefit Corporation Law (Part 3), and the Nonprofit Religious Corporation Law (Part 4).  Part 1 of the Nonprofit Corporation Law provides definitions and general provisions that apply to all three types of nonprofit corporations (unless the provisions or context otherwise requires).   The three laws contain many identical and very similar provisions.  Thus, careful attention is required to the specific law applicable to the corporation.

For example, Section 5614 of the Corporations Code provides that a voting agreement or voting trust entered into by a member or members of a nonprofit public benefit corporation "shall not be enforced".   No such provision appears in either the Nonprofit Mutual Benefit Corporation Law or the Nonprofit Religious Corporation Law.  I don't know the reason for the legislature's animus towards voting agreements and voting trust agreements in the case of nonprofit public benefit corporations.  The Assembly Select Committee on the Revision of the Nonprofit Corporation Law  gives the following explanation for the omission of a similar provision in the Nonprofit Mutual Benefit Corporation Law: "Provisions governing such arrangements are not included for Mutual Benefit Corporations because they are not usually used except in more sophisticated economic relationships."  No explanation is given for its absence from the Nonprofit Religious Corporation Law.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 341
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
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