As earlier reported, a new version of the Internal Revenue Service Form 990 information return for nonprofit organizations will be in effect for the upcoming annual 990 filing cycle.  The new 990 continues the IRS push to require extensive information reporting on various aspects of a nonprofit’s internal corporate governance, combining a “raised eyebrow” and a “big stick” to push for corporate compliance in areas where the IRS has no direct authority of its own.  Meanwhile, for California nonprofit corporations, a series of Corporations Code amendments took effect last year which add generally welcome clarification and simplification to the California nonprofit corporations law.  The new California laws, adopted in the legislative bill known as AB 1233, include the following:
            ●         Officer Titles:  Clarifies that each corporation must have a president (or CEO or chairman of the board), chief financial officer (or the equivalent term “treasurer”), and corporate secretary.  Clarifies that Chairman of the Board may also sign documents as “Chairperson of the Board”, “Chairwoman of the Board” or “Chair of the Board”.
            ●         Director Voting:  Clarifies that board structure must provide an equal vote per director (one director, one vote); proxy voting by directors is not valid (a director’s duties and voting are personal and non-delegable); “ex officio” directors, whose board position is tied to another position such as officer status, are directors for all purposes including voting; and “honorary”, “emeritus” and “advisory” directors are not legal directors and do not have voting rights.
            ●         Board Reduction:  Clarifies that if a nonprofit board takes formal action to reduce the authorized size or number of seats on the board, such action does not automatically remove any existing directors from office until the expiration of the term for which they were most recently elected.
            ●         Personal Liability Protection:  Clarifies that certain statutory protections against personal liability of directors, which depend on the corporation maintaining specified directors and officers (D&O) or other insurance coverage against claims, will apply to the extent of any insurance which actually covers a claim, regardless of what the specific insurance policy is called.  Reinforces the advisability of the corporation maintaining D&O type coverage, preferably coupled with employment practices liability insurance (EPLI).

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