45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO NONPROFIT CORPORATIONS; PROVIDING THAT, UPON THE DISSOLUTION OF CERTAIN DOMESTIC NONPROFIT CORPORATIONS OR UPON THE WITHDRAWAL OF CERTAIN FOREIGN DOMESTIC CORPORATIONS, CERTAIN ASSETS ARE REQUIRED TO REMAIN IN NEW MEXICO FOR FUTURE NONPROFIT ACTIVITIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 53-8-48 NMSA 1978 (being Laws 1975, Chapter 217, Section 48, as amended) is amended to read:

"53-8-48. DISTRIBUTION OF ASSETS.--The assets of a corporation in the process of dissolution shall be applied and distributed as follows:

A. all liabilities and obligations of the corporation shall be paid and discharged, or adequate provision shall be made therefor;

B. assets held by the corporation upon condition requiring return, transfer or conveyance, which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed in accordance with such requirements;

C. assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to the New Mexico health trust fund or to one or more nonprofit domestic [or foreign] corporations, nonprofit societies or nonprofit organizations engaged in activities in New Mexico substantially similar to those of the dissolving corporation, pursuant to a plan of distribution adopted as provided in the Nonprofit Corporation Act;

D. other assets, if any, shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws, but in no event may any member, former member, director, former director, officer or former officer receive directly or indirectly any distribution or portion of a distribution of any assets; and

E. any remaining assets may be distributed to such persons, nonprofit societies, nonprofit organizations or nonprofit domestic or foreign corporations whether for profit or nonprofit as may be specified in a plan of distribution adopted as provided in the Nonprofit Corporation Act."

Section 2. Section 53-8-56 NMSA 1978 (being Laws 1975, Chapter 217, Section 56) is amended to read:

"53-8-56. PROCEDURE IN LIQUIDATION OF CORPORATION BY COURT.--

A. In proceedings to liquidate the assets and affairs of a corporation, the district court shall have the power to issue injunctions; to appoint a receiver or receivers pendente lite, with such powers and duties as the court, from time to time, may direct; and to take such other proceedings as may be requisite to preserve the corporate assets wherever situated and carry on the affairs of the corporation until a full hearing can be had.

B. After a hearing had upon such notice as the district court may direct to be given to all parties to the proceedings and to any other parties in interest designated by the court, the court may appoint a liquidating receiver or receivers with authority to collect the assets of the corporation. The liquidating receiver or receivers shall have authority, subject to the order of the court, to sell, convey and dispose of all or any part of the assets of the corporation wherever situated, either at public or private sale. The order appointing the liquidating receiver or receivers shall state their powers and duties. The powers and duties may be increased or diminished at any time during the proceedings.

C. The assets of the corporation or the proceeds resulting from a sale, conveyance or other disposition thereof shall be applied and distributed as follows:

(1) all costs and expenses of the court proceedings and all liabilities and obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made therefor;

(2) assets held by the corporation upon condition requiring return, transfer or conveyance, which condition occurs by reason of the dissolution or liquidation, shall be returned, transferred or conveyed in accordance with the requirements;

(3) assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution or liquidation, shall be transferred or conveyed to the New Mexico health trust fund or to one or more domestic [or foreign] corporations, societies or organizations engaged in activities in New Mexico substantially similar to those of the dissolving or liquidating corporation as the court may direct;

(4) other assets, if any, shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws to the extent that the articles of incorporation or bylaws determine the distributive right of members, or any class or classes of members, or provide for distribution to others; and

(5) any remaining assets may be distributed to such persons, societies, organizations or domestic or foreign corporations, whether for profit or not for profit, specified in the plan of distribution adopted as provided in the Nonprofit Corporation Act, or where no plan of distribution has been adopted, as the court may direct.

D. The district court shall have power to allow, from time to time, as expenses of the liquidation, compensation to the receiver or receivers and to attorneys in the proceeding and to direct the payment thereof out of the assets of the corporation or the proceeds of any sale or disposition of the assets.

E. A receiver of a corporation appointed under the provisions of this section shall have authority to sue and defend in all courts in his own name as receiver of the corporation. The district court appointing the receiver shall have exclusive jurisdiction of the corporation and its property, wherever situated."

Section 3. Section 53-8-77 NMSA 1978 (being Laws 1975, Chapter 217, Section 77) is amended to read:

"53-8-77. WITHDRAWAL OF FOREIGN CORPORATION.--

A. A foreign corporation authorized to conduct affairs in New Mexico may withdraw from this state upon procuring from the [corporation] public regulation commission a certificate of withdrawal. In order to procure the certificate of withdrawal, the foreign corporation shall deliver to the commission an application for withdrawal, which shall set forth:

(1) the name of the corporation and the state or country under the laws of which it is incorporated;

(2) that the corporation is not conducting affairs in New Mexico;

(3) that the corporation surrenders its authority to conduct affairs in New Mexico;

(4) that the corporation revokes the authority of its registered agent in New Mexico to accept service of process and consents that service of process in any action, suit or proceeding based upon any cause of action arising in this state during the time the corporation was authorized to conduct affairs in this state may thereafter be made on the corporation by service thereof on the secretary of state; [and]

(5) a post office address to which the [corporation] public regulation commission may mail a copy of any process against the corporation that may be served on him; and

(6) that the corporation has disposed of its New Mexico assets pursuant to Subsection C of this section.

B. The application for withdrawal shall be made on forms prescribed and furnished by the [corporation] public regulation commission and shall be executed by the corporation by its president or a vice president and by its secretary or an assistant secretary or, if the corporation is in the hands of a receiver or trustee, shall be executed on behalf of the corporation by the receiver or trustee.

C. Upon the withdrawal of a foreign corporation, the New Mexico assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to the New Mexico health trust fund or to one or more nonprofit domestic corporations, nonprofit societies or nonprofit organizations engaged in activities in New Mexico substantially similar to those of the withdrawing corporation. As used in this subsection, "New Mexico assets" means real property and equipment used by the corporation for its activities in New Mexico and acquired, for the most part, with proceeds generated from its activities in New Mexico."

Section 4. A new section of the Nonprofit Corporation Act is enacted to read:

"[NEW MATERIAL] NEW MEXICO HEALTH TRUST FUND--CREATED--PURPOSE.--The "New Mexico health trust fund" is created in the state treasury. The fund shall consist of money transferred or conveyed to the fund and gifts, bequests and grants made to the fund. Earnings of the fund shall be credited to the fund and balances in the fund shall not revert or be transferred to any other fund. Money in the fund shall be subject to appropriation by the legislature to benefit the health care of New Mexico residents."