By Hartnett H.B. No. 3001
76R9255 T
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to community trusts converting to non-profit corporations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. PREAMBLE. The Citizens of the Great State of
1-5 Texas demand that the monies collected from them be spent
1-6 responsibly and with great frugality. At the same time, the
1-7 Citizens of this Great State are compassionate and demand that
1-8 their Government help provide for those who need a helping hand to
1-9 fully enjoy the benefits of this Great State. By its very nature,
1-10 Government as an institution has a limited ability to help
1-11 individuals in need. Therefore, the Citizens of this State must,
1-12 and do, rely on their charitable institutions to provide a helping
1-13 hand to this State's Citizens. Day in and day out, the charitable
1-14 institutions of this State manage to succeed in helping our
1-15 Citizens where Government cannot. It is, therefore, imperative
1-16 that Government take all reasonable steps necessary to permit the
1-17 charitable institutions of this State to conserve their scarce
1-18 resources so that they may, to the fullest extent, apply those
1-19 resources to achieving their goals on behalf of this State's
1-20 Citizens. This legislation is another step in the continuing
1-21 effort to help all of the Citizens of this Great State achieve for
1-22 themselves and their families the benefits of living in this Great
1-23 State and Nation.
1-24 It is the express intent of the Legislature that, by
2-1 permitting community trusts to reorganize as non-profit
2-2 [organizations] corporations, they do so for the sole purpose of
2-3 achieving savings so that the money saved may be used for the
2-4 benefit of the Citizens of this State and Nation. It is the
2-5 express intent of the Legislature that the non-profit corporation
2-6 receiving the assets of the community trust use those assets for
2-7 the same purposes as the community trust used the assets, such that
2-8 any person who contributed to the community trust is assured that
2-9 the community trust, by reorganizing, is not breaching the trust
2-10 the contributor placed in the community trust by making his or her
2-11 contribution.
2-12 SECTION 2. Subchapter C, Chapter 112, Subtitle B, Title 9,
2-13 Property Code, is amended by adding Section 112.058 to read as
2-14 follows:
2-15 Sec. 112.058. [CONVERTING COMMUNITY TRUST TO NON-PROFIT
2-16 CORPORATION] CONVERTING COMMUNITY TRUST TO NON-PROFIT CORPORATION
2-17 (a) A community trust, as described in Section 1.170A of the
2-18 [income tax regulations] Income Tax Regulations promulgated under
2-19 Section 170 of the Internal Revenue Code of 1986 (26 U.S.C.
2-20 [Section] Sec. 170), may request that a court of appropriate
2-21 jurisdiction permit it to transfer [all] the assets of its [assets]
2-22 component trust funds to a nonprofit corporation. The community
2-23 trust must proceed in accordance with this section.
2-24 (b) The court in which the community trust files this
2-25 proceeding must order that the assets of the community trust's
2-26 component trust funds be transferred to a non-profit corporation
2-27 organized under the Texas Non-Profit Corporation Act and that the
3-1 community trust and its component funds be terminated, if all of
3-2 the following requirements are met:
3-3 (1) The governing board of the community trust files a
3-4 petition in the probate court, county court, or district court with
3-5 jurisdiction of the community trust requesting that the board be
3-6 permitted to: (a) transfer the assets of the trust's component
3-7 trust funds to a non-profit corporation set up for the purpose of
3-8 receiving and administering those assets; and (b) terminate the
3-9 community trust and its component trusts.
3-10 (2) The governing board publishes once in a newspaper
3-11 of general circulation in the county in which the proceeding is
3-12 pending, a notice stating as follows:
3-13 TO ALL INTERESTED PERSONS:
3-14 (NAME OF COMMUNITY TRUST), PURSUANT
3-15 TO TEXAS PROPERTY CODE [SECTION 112.058]
3-16 Sec. 112.058, HAS FILED A PROCEEDING IN
3-17 (NAME OF COURT) OF (NAME OF COUNTY), TEXAS,
3-18 REQUESTING THAT (NAME OF COMMUNITY TRUST)
3-19 BE PERMITTED TO CONVERT FROM [A TRUST] ITS
3-20 PRESENT FORM TO A NON-PROFIT CORPORATION.
3-21 IF PERMITTED TO CONVERT TO A NON-PROFIT
3-22 CORPORATION BY THE COURT, THE ASSETS OF
3-23 (NAME OF COMMUNITY TRUST)'S COMPONENT TRUST
3-24 FUNDS WILL BE TRANSFERRED TO A NON-PROFIT
3-25 CORPORATION AND WILL BE HELD BY THAT
3-26 CORPORATION AND ADMINISTERED AS PROVIDED IN
3-27 THE TEXAS NON-PROFIT CORPORATION ACT, TEX.
4-1 REV. CIV. STAT. ART. 1396-1.01, ET SEQ.,
4-2 AND THE COMMUNITY TRUST AND ITS COMPONENT
4-3 FUNDS WILL BE TERMINATED.
4-4 THE PURPOSE OF THE CONVERSION [FROM A TRUST] TO A
4-5 NON-PROFIT CORPORATION IS TO ACHIEVE SAVINGS FOR (NAME
4-6 OF COMMUNITY TRUST) SO THAT IT MAY USE THE MONEY SAVED
4-7 TO FURTHER THE PURPOSES FOR WHICH IT WAS CREATED.
4-8 A HEARING ON (NAME OF COMMUNITY TRUST)'S REQUEST
4-9 TO CONVERT TO A NON-PROFIT CORPORATION WILL BE HELD ON:
4-10 (DATE AND TIME) AT (LOCATION OF COURT).
4-11 FOR ADDITIONAL INFORMATION, YOU MAY
4-12 CONTACT THE COURT OR THE GOVERNING BOARD OF
4-13 (NAME OF COMMUNITY TRUST) AT (ADDRESS AND
4-14 TELEPHONE NUMBER FOR COMMUNITY TRUST).
4-15 (3) The governing board of the community trust sends
4-16 to all living settlors of the trust funds comprising the community
4-17 trust who can be located with the exercise of reasonable diligence,
4-18 by First Class United States Mail, a copy of the board's petition
4-19 and a notice of the time and place of the hearing on the petition.
4-20 (4) A hearing is held by the court stated in the
4-21 notices required by paragraphs (2) and (3). The hearing may be
4-22 held no sooner than 10 days after the later of: (a) the date the
4-23 notice required by paragraph (2) is published; and (b) the date
4-24 the notices required by paragraph (3) were deposited in the United
4-25 States Mail. The hearing must be held at the time and place stated
4-26 in the notices required by paragraphs (2) and (3) unless the court
4-27 orders, for good cause shown, that the hearing be postponed. If
5-1 the hearing is postponed, a notice of a new hearing date and time
5-2 must be posted at the courthouse door of the county in which the
5-3 proceeding is pending or at the place in or near the courthouse
5-4 where public notices are customarily posted.
5-5 (5) The non-profit corporation to which the [trust
5-6 assets] assets of the funds comprising the community trust are
5-7 transferred must: (i) be properly organized under the Texas
5-8 Non-Profit Corporation Act; and (ii) be organized for the same
5-9 purposes as [the trust from which the assets are transferred] such
5-10 community trust. The charter of the corporation must, to the
5-11 fullest extent possible, contain language describing the purpose or
5-12 goals of the corporation, and the use or uses to be made of the
5-13 assets of the corporation, [that is] which language must be
5-14 identical to the language contained in the initial instrument used
5-15 to form the community trust.
5-16 (c) The governing board may, in its petition, request that
5-17 the court's order be subject to Internal Revenue Service approval
5-18 of the asset transfer. If the governing board requests that the
5-19 order be contingent on Internal Revenue Service approval, the
5-20 court's order shall be final and effective on the filing by the
5-21 governing board of a notice that Internal Revenue Service approval
5-22 has been obtained. That notice must be filed within 360 days of
5-23 the date the court's order is signed and if not filed within that
5-24 time, the court's order is, as a matter of law, dissolved ab initio
5-25 and of no force and effect.
5-26 (d) If the court orders that the assets of the trust funds
5-27 comprising the community trust be transferred to a non-profit
6-1 corporation and the community trust and its component funds are
6-2 terminated under this section, the [trustees duties are] duties of
6-3 the trustee of each component trust fund shall likewise be
6-4 terminated on the date on which the assets are so transferred and
6-5 [the] such order must provide that as of such date, the trustee is
6-6 discharged. The liability of the trustee, if any, for acts or
6-7 omissions occurring before the trustee is discharged are not
6-8 affected by this subdivision.
6-9 SECTION 3. This Act takes effect September 1, 1999.
6-10 SECTION 4. The importance of this legislation and the
6-11 crowded condition of the calendars in both houses create an
6-12 emergency and an imperative public necessity that the
6-13 constitutional rule requiring bills to be read on three several
6-14 days in each house be suspended, and this rule is hereby suspended.