BILL NUMBER:S5848

TITLE OF BILL:  An act to amend the not-for-profit corporation law, in
relation to allowing certain entities to convert their status of
filing as a not-for-profit organization to a for-profit entity

PURPOSE:

To allow certain entities to convert their status as a not-forprofit
organization to a for-profit entity

SUMMARY OF PROVISIONS:

Section 1 amends Section 104 of the not-for-profit corporation law by
adding a new paragraph (h) to allow certain entities to convert its
filing from a not-for-profit corporation to a for-profit corporation
if the incorporator submits a sworn statement and outlines the
requirements for the sworn statement.

JUSTIFICATION:

Enterprising business entrepreneurs are often advised to incorporate a
business to protect personal assets from loss suffered by the business
in the event of lawsuits. Incorporation of a business however, often
carries high costs, including legal fees which can be too costly for
someone with only a dollar and a dream. To save money, entrepreneurs
              

sometimes choose "do it yourself routes" and make mistakes that have
significant consequences on the outcome of the business venture. When
this occurs, our rules and regulations should provide a process for
correction of mistakes.

In December 2000, Patricia Smith took the first step to ha l04 dream
of owning her own business in the health care industry and filed
documents to incorporate Sweet P Home Care. With little money to
invest in legal counsel she used standard forms and completed the
information by handwriting the necessary information. While intending
to run a for-profit business which is in fact how she ran her business
after filing the incorporation forms she mistakenly filed as a
not-for-profit corporation.

In 2006 Sweet P Homecare commenced operation. Sweet P Home Care
provides care to infirmed children who are chronically ill. Currently
it employs 10 full time employees and contracts with 300 additional
nurse independent contractors to perform services for Sweet P Home
Care's clients. Since 2006 Sweet P has conducted it's business as a
for-profit paying taxes in every year of operation. Realizing its
mistake Sweet Pea has spoken with the Department of State and the
Attorney General's office and been informed that the only way for the
mistake to be corrected is through a changes in law.

Currently, our incorporation registration laws do not provide a
process to correct errors that can be made during the business
registration process. For example, when an intended for profit
business is inadvertently registered as a not-for-profit.

Enactment of this law will establish a process for businesses who
inadvertently register under the wrong classification to convert to


the correct business status and allow for Sweet P Home Care to correct
the mistake.

LEGISLATIVE HISTORY:

A new bill.

FISCAL IMPLICATIONS:

None to the state

LOCAL FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect on the thirtieth day after it is enacted.