A variation of this option is for the New York not-for-profit to grant its assets to the new corporation and then dissolve.
#Judicial consent not for profit transfer new york registration#
As a final step, the New York corporation must close out its registration with the Charities Bureau. The members, if any, and the board of each corporation, must approve the transaction. In New York, nonprofit mergers are subject to approval by the Charities Bureau. The two merging corporations must each comply with the legal requirements governing mergers in both New York and the target state.
This translates into significant delays and cost to nonprofits in maintaining their compliance within New York.
Although the recently adopted New York Nonprofit Revitalization Act has eased certain regulatory burdens for New York nonprofits, the remaining governance and regulatory compliance requirements still impose a significant burden, more so than in most states. Administered by the New York Attorney General’s Charities Bureau (“Charities Bureau”), the laws governing nonprofit governance and transactions in New York are complex and onerous in many ways. Now to be frank, the trend for organizations to move out of New York is often partially driven by New York’s nonprofit laws. For example, many nonprofit corporations choose to incorporate in Delaware because of its corporate-friendly laws for both for-profits and nonprofits alike.
While some organizations move when there is no longer an operational nexus within the original home state, many organizations decide from the outset to form in a state other than that in which the organization’s day-to-day activities take place. Organizations may move their headquarters to another state for a variety of reasons, including, for example, the high cost of operating in the home state. Officers and directors may have moved to other states organizations may not maintain any office or employees in the home state or the organization may conduct business from wherever the single paid employee resides. Often, organizations make the move because the organization no longer has a nexus to the home state. The decision to change an organization’s state of incorporation or situs-which I’ll call the “home state” here for convenience-is driven by various factors. While this might or might not include a physical change in the location of the organization’s office, it always entails legal changes to the organization. I call it “Moving Out of New York.” It happens elsewhere too of course, but wherever it occurs, it signals a change to an organization’s state of incorporation or a trust’s situs (the legal term for where it is established). I’ve noticed one such new beginning recurring regularly in the New York nonprofit community.