Effective July 1, 2026, the Florida Legislature enacted revisions to Chapter 617, Florida Statutes, formerly known as the Florida Not-For-Profit Corporation Act. The changes are intended to modernize Florida law and align it with the ABA’s Model Nonprofit Corporation Act. Among other things, the revisions rename the chapter. After July 1, Chapter 617 will be known as the “Florida Nonprofit Corporation Act” (the Act).
The Act applies not only to charitable nonprofit organizations but also to other corporations that do not distribute profits to owners, such as trade associations, homeowners associations, country clubs, and social welfare organizations. Certain provisions of the Act expressly apply to charitable organizations.
This GT Alert highlights some of the changes the Act implements.
Governance
The Act introduces new provisions for filing documents with the Florida Department of State, correcting filed documents, and amending articles of incorporation. It also contains new provisions for changing registered agents.
The Act provides greater flexibility in the composition of a nonprofit’s board of directors. Prior law required all nonprofit corporations to have a minimum of three directors. Under the Act, Section 501(c)(3) organizations will continue to require a minimum of three directors. Other nonprofit corporations, however, will be required to have only one director. This provides flexibility in situations where a larger board is unnecessary, such as with subsidiary corporations that are not Section 501(c)(3) organizations.
The Act establishes new default provisions for the selection and terms of directors. If a term is not specified in the articles of incorporation or bylaws, the default director term is one year. New provisions also address director participation in meetings and waivers of notice of meetings.
The Act introduces new requirements for maintaining records, including articles of incorporation, bylaws, and board meeting records.
Member Provisions
The Act authorizes a nonprofit to levy dues, assessments, and fees. A member of a nonprofit may be personally liable to a creditor of the corporation to the extent the member owes money to the corporation.
Prior law did not permit the transfer of membership interests. Under the Act, a member of a nonprofit corporation may transfer membership interests to the extent permitted by the articles of incorporation or bylaws. In addition, nonprofit corporations, other than Section 501(c)(3) organizations, may purchase membership interests from their members. These provisions may facilitate acquisitions of noncharitable organizations.
The Act establishes a new framework for derivative actions by members, directors, and officers, and introduces new inspection rights for members. These provisions, along with the record retention requirements, may be relevant where there are active memberships.
Conflicts of Interest: Standards of Conduct
The Act substantially changes the conflict-of-interest provisions of prior law and introduces the concept of a “qualified director.” A qualified director is a person who does not have an interest or material relationship that would impair independent judgment with respect to the matter in question. A director is not automatically disqualified from being a qualified director solely because of: (i) nomination or election by a non-qualified director; (ii) service as a director of another corporation where a non-qualified director also serves; or (iii) status as a named defendant in a derivative action.
The Act requires that transactions be fair to the corporation at the time they are approved and implements a burden-shifting framework for challenges to a transaction. If a disinterested majority approves a transaction, the burden to show invalidity shifts to the challenger. The Act defines “fair to the corporation” as a transaction that, overall, is beneficial to the corporation and its members, considering whether it is fair in terms of the directors’ dealings with the corporation and comparable to what might have been obtainable in an arm’s length transaction.
The Act updates director standards of conduct and the application of the business judgment rule, as well as standards of conduct for officers.
Liability Protection for Directors and Officers
The Act extends liability protections previously available only to officers and directors of Section 501(c)(3), (4), (5), and (6) nonprofit corporations to officers and directors of all nonprofits. The Act also revises the liability provisions applicable to directors and officers.
Mergers and Acquisitions
The Act broadens current merger rules to permit mergers into any eligible business entity and provides for short-form mergers of subsidiaries into parent corporations. These expanded rules do not apply to nonprofit corporations that hold property dedicated to charitable purposes.
Takeaways
The Act’s changes generally do not require immediate action by Florida nonprofit corporations. Nonprofits should, however, review their articles of incorporation, bylaws, and other corporate documents, such as conflict of interests policies, to determine whether new provisions should be adopted to reflect actions permitted by the Act or to address the effect of new default provisions contained in the Act.