Michigan recently amended the Nonprofit Corporation Act to include several new requirements for nonprofit corporations. Nonprofit corporations in existence on July 16, 2008, must have and maintain a board including 3 or more directors, by January 16, 2009. For nonprofit corporations formed after July 16, 2008, the initial board of directors, and subsequent boards, must consist of and maintain 3 or more directors over the life of the organization.

Do you need to amend your non-profit organization bylaws to add directors?
An existing nonprofit corporation with only 1 or 2 directors will need to increase the size of the board to at least 3 directors. If you have a nonprofit corporation formed in Michigan which provides for a board with less than 3 directors, the organization’s bylaws will need to be amended. To comply with the new law, a nonprofit may elect additional directors at its annual meeting or a special meeting called by the board.

Non-profits may be automatically dissolved for failure to file annual reports
Smaller non-profits corporations are typically stretched thin, with several individuals serving multiple roles and functions, in their spare time. Sometimes forms don’t get filed on time. With the new law, failure to file regular reports within 2 years of the due date could cause the non-profit to be dissolved. This is, by far, the most dangerous part of the new law.

Dissolving non-profits must receive state permission before disposing of assets
Nonprofits dissolving after the new law’s effective date of July 16, 2008 must provide notice of the impending dissolution to the Attorney General to obtain approval of the dissolution, before disposing of any of the non-profit’s assets.

Legislative history and bill analysis of the new amendments to the Michigan non-profit law are available on the Michigan Legislature’s website.