Bill Text: IA HF2320 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to certain corporations doing business in this state, including restrictions and requirements imposed on nonprofit corporations acquiring agricultural land used in farming, and the duties and liabilities of directors of for-profit and nonprofit corporations. (Formerly HSB 609.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2018-04-17 - Withdrawn. H.J. 799. [HF2320 Detail]

Download: Iowa-2017-HF2320-Introduced.html

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House File 2320 - Introduced




                                 HOUSE FILE       
                                 BY  COMMITTEE ON JUDICIARY

                                 (SUCCESSOR TO HSB 609)

                                      A BILL FOR

  1 An Act relating to certain corporations doing business in this
  2    state, including restrictions and requirements imposed on
  3    nonprofit corporations acquiring agricultural land used in
  4    farming, and the duties and liabilities of directors of
  5    for=profit and nonprofit corporations.
  6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1                           DIVISION I
  1  2       NONPROFIT CORPORATIONS ACQUIRING AGRICULTURAL LAND
  1  3    Section 1.  Section 9H.1, subsection 20, Code 2018, is
  1  4 amended to read as follows:
  1  5    20.  "Nonprofit corporation" means any of the following:
  1  6    a.  Corporations organized under the provisions of chapter
  1  7 504, Code 1989, or current chapter 504; or A corporation as
  1  8 defined in section 504.141 that is not a foreign corporation
  1  9 as described in paragraph "b".
  1 10    b.  Corporations which qualify under 26 U.S.C. {501(c)(3) A
  1 11 foreign corporation as defined in section 504.141.
  1 12    Sec. 2.  Section 9H.4, subsection 1, paragraph b,
  1 13 subparagraph (3), subparagraph division (a), subparagraph
  1 14 subdivisions (i) and (iv), Code 2018, are amended to read as
  1 15 follows:
  1 16    (i)  The corporation or limited liability company must not
  1 17 hold the agricultural land other than as a lessee. The term
  1 18 of the lease must be for not more than twelve years. The
  1 19 corporation or limited liability company shall not renew a
  1 20 lease. The corporation or limited liability company shall not
  1 21 enter into a lease under this subparagraph subdivision, if the
  1 22 corporation or limited liability company has ever entered into
  1 23 another lease under this subparagraph (3), whether or not the
  1 24 lease is in effect. However, this subparagraph subdivision
  1 25 does not apply to a domestic nonprofit corporation organized
  1 26 under chapter 504, Code 1989, or current chapter 504 as defined
  1 27 in section 9H.1, subsection 20, paragraph "a".
  1 28    (iv)  The corporation or limited liability company must
  1 29 deliver a copy of the lease to the secretary of state. The
  1 30 secretary of state shall notify the lessee of receipt of the
  1 31 copy of the lease. However, this subparagraph division does
  1 32 not apply to a domestic nonprofit corporation organized under
  1 33 chapter 504, Code 1989, or current chapter 504 as defined in
  1 34 section 9H.1, subsection 20, paragraph "a".
  1 35    Sec. 3.  Section 9H.4, subsection 1, paragraph c, Code 2018,
  2  1 is amended to read as follows:
  2  2    c.  Agricultural land, including a leasehold interests
  2  3  interest, acquired by a nonprofit corporation organized
  2  4 under the provisions of chapter 504, Code 1989, and current
  2  5 chapter 504 as defined in section 9H.1, subsection 20,
  2  6 paragraph "a", including land acquired and operated by or for
  2  7 a state university for research, experimental, demonstration,
  2  8 foundation seed increase or test purposes and land acquired
  2  9 and operated by or for nonprofit corporations organized
  2 10 specifically for research, experimental, demonstration,
  2 11 foundation seed increase or test purposes in support of or in
  2 12 conjunction with a state university.
  2 13    Sec. 4.  Section 10B.1, subsection 9, Code 2018, is amended
  2 14 by striking the subsection and inserting in lieu thereof the
  2 15 following:
  2 16    9.  "Nonprofit corporation" means the same as defined in
  2 17 section 9H.1.
  2 18                           DIVISION II
  2 19                CORPORATIONS FOR PECUNIARY PROFIT
  2 20    Sec. 5.  Section 491.16A, Code 2018, is amended to read as
  2 21 follows:
  2 22    491.16A  Directors and officers ==== duties and liabilities.
  2 23    Sections 490.830, 490.831, and 490.833, sections 490.840
  2 24  through 490.842, sections 490.860 through 490.863, and section
  2 25 490.870 apply to corporations organized under or subject to
  2 26 this chapter.
  2 27                          DIVISION III
  2 28             REVISED IOWA NONPROFIT CORPORATION ACT
  2 29    Sec. 6.  Section 504.832, subsection 1, paragraph a, Code
  2 30 2018, is amended to read as follows:
  2 31    a.  That section 504.202, subsection 2, paragraph "d", or
  2 32 section 504.901 or the protection afforded by section 504.833
  2 33 or 504.836, if interposed as a bar to the proceeding by the
  2 34 director, does not preclude liability.
  2 35                           EXPLANATION
  3  1 The inclusion of this explanation does not constitute agreement with
  3  2 the explanation's substance by the members of the general assembly.
  3  3    GENERAL.  This bill makes changes to statutes involving
  3  4 corporations operating on a for=profit basis under Code chapter
  3  5 490 (the "Iowa Business Corporation Act") or Code chapter 491,
  3  6 or on a nonprofit basis under Code chapter 504, the "Revised
  3  7 Iowa Nonprofit Corporation Act".
  3  8    NONPROFIT CORPORATIONS ==== RESTRICTIONS AND REQUIREMENTS
  3  9 CONCERNING AGRICULTURAL LAND HOLDINGS.  The bill amends Code
  3 10 chapter 9H which restricts certain business entities, including
  3 11 corporations, from acquiring agricultural land suitable for
  3 12 use in farming (Code section 9H.1(2)(14)).  The bill also
  3 13 amends related provisions in Code chapter 10B that require such
  3 14 entities to file landholding reports with the secretary of
  3 15 state (Code section 10B.1).  Specifically, the bill replaces
  3 16 language defining a nonprofit corporation as a business entity
  3 17 "organized under" former Code chapter 504 as published in the
  3 18 1989 edition of the Code (prior to its repeal) or current
  3 19 Code chapter 504 with language that adopt by reference the
  3 20 definition of a corporation as set forth in current Code
  3 21 chapter 504, including a domestic nonprofit corporation
  3 22 incorporated under its provisions and a foreign corporation
  3 23 authorized to transact business in this state (Code sections
  3 24 504.141 and 504.119). A domestic corporation incorporated
  3 25 under Code chapter 501A is subject to current Code chapter
  3 26 504 (Code section 504.1701). The bill also makes the same
  3 27 change to another statute that allows a nonprofit corporation
  3 28 to acquire agricultural land for research or experimental
  3 29 purposes under two exceptions:  first, by a domestic nonprofit
  3 30 corporation for research or experimental purposes (Code section
  3 31 9H.4(1)(b)), and second, by a domestic or foreign nonprofit
  3 32 corporation when acting in association with a state university
  3 33 (Code section 9H.4(1)(c)).
  3 34    CORPORATIONS FOR PECUNIARY PROFIT ==== DIRECTOR'S CONFLICT
  3 35 OF INTEREST TRANSACTIONS AND BUSINESS OPPORTUNITY EXCEPTION
  4  1 ==== IOWA BUSINESS CORPORATION ACT.  The bill provides that in
  4  2 the case of a corporation organized under Code chapter 491, a
  4  3 director's "conflict of interest transaction" is subject to
  4  4 the same requirements as provided for a corporation organized
  4  5 under and therefor subject to Code chapter 490 (Code sections
  4  6 490.860 through 490.863), including a so=called "safe harbor"
  4  7 exception. The bill also allows a director of a corporation
  4  8 organized under and subject to Code chapter 491 to take
  4  9 advantage of another safe harbor known as the "business
  4 10 opportunity" exception according to the same requirements that
  4 11 apply to a director of a corporation organized and subject to
  4 12 Code chapter 490 (Code section 490.870).
  4 13    NONPROFIT CORPORATIONS SUBJECT TO REVISED IOWA NONPROFIT
  4 14 CORPORATION ACT ==== STANDARD OF LIABILITY FOR DIRECTORS ====
  4 15 BUSINESS OPPORTUNITY EXCEPTION.  The bill provides that for
  4 16 a plaintiff to move forward in a legal or equitable action
  4 17 alleging a director is liable for violating the duty of care
  4 18 owed to the nonprofit corporation, the plaintiff must establish
  4 19 that the director's liability is not precluded by the director
  4 20 having acted under the business opportunity exception if such
  4 21 a defense is raised ("interposed as a bar to the proceeding")
  4 22 (Code sections  504.832 and 504.836).
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