Minnesota Church Mergers – Chapter 315

Minnesota Church Mergers - Chapter 315

Minnesota Church Mergers – Chapter 315

Minnesota Governing Statutes

Minnesota church organizations are generally governed by either Chapter 315, or Chapter 317A, of the Minnesota Statutes:

  • Chapter 315, is a collection of quasi-corporate statutes which loosely governs Minnesota religious corporations, societies, and certain churches and related organizations;
  • Chapter 317A is a comprehensive body of corporate statutes which have governed all Minnesota non-profit corporations since 1991 – including, but not limited to – many churches.

Minnesota Church Merger Restrictions

While both Minnesota Chapter 315 and Minnesota Chapter 317A provide statutory procedures for the merger or consolidation of church corporations, a Chapter 315 religious corporation cannot be directly merged or consolidated with a Chapter 317A non-profit corporation – even if it is a church.

Minnesota Chapter 315Religious Societies

Minnesota Chapter 315 frequently uses the term “society” in order to distinguish:

  • the religious body, from
  • the corporate entity owned and operated by the society.

Minnesota Chapter 315 Definition of “Society”

M.S. Section 315.08 defines the term society by providing as follows:

In this chapter “society” means the religious body constituted in accordance with the principles of the ecclesiastical polity which forms the basis of the corporation designated in this chapter as the

  • church,
  • congregation, or
  • society,

as distinguished from the corporation itself.

However, in practice, it is often hard to distinguish between:

  • the religious body or society, and
  • the corporate entity owned and operated by the religious body,

and attempts to do so in the church‘s Certificate of Incorporation, Constitution, or Bylaws often lead to confusion.

Minnesota Church Mergers – Chapter 315 Documents

Minnesota Chapter 315 contains a number of different provisions identifying several procedures for the consolidation or merger of two or more religious corporations.

One set of consolidation procedures is identified in M.S. Section 315.34 through M.S. Section 315.36.

Minnesota Church Mergers – Chapter 315 Religious Corporations

(i)      Incorporated Churches

M.S. Section 315.34 – captioned Consolidation of Religious Corporations – identifies that two or more churches which have been incorporated under the provisions of Minnesota Chapter 315 can consolidate and reorganize into a single entity, by providing in part as follows:

Two or more incorporated

  • churches,
  • congregations, . . . or
  • religious societies, . . .

may consolidate and reorganize as a single

  • church,
  • congregation, . . . or
  • religious society

by complying with the provisions of this chapter for the formation of a

  • church,
  • congregation, . . . or
  • society.

The above provisions identify that in order to accomplish a consolidation of two church corporations formed under Minnesota Chapter 315, essentially a new religious corporation must be formed under that chapter.

(ii)     Unincorporated Churches

M.S. Section 315.34 does not provide a procedure whereby unincorporated church societies can consolidate or merge together.

Minnesota Church Mergers – Chapter 315 Procedure

M.S. Section 315.35 identifies that a two-thirds affirmative vote of the members with voting rights present and voting at a duly called meeting is required in order to consolidate:

  • two or more churches which were incorporated under the provisions of Minnesota Chapter 315,
  • into a single religious corporation,

by providing in part as follows:

(i)     Two Thirds Support of Voting Members

Before action is taken under section 315.34, a resolution authorizing consolidation and reorganization must be adopted by at least two-thirds of the members present and voting at a meeting of each of the

  • churches,
  • congregations, . . . or
  • societies

called for that purpose.

(ii)    Notice of Meeting Given On Four Successive Sabbaths

M.S. Section 315.35 identifies the notice requirements for a meeting of the members at which a vote is taken to consolidate two or more churches which were incorporated under the provisions of Minnesota Chapter 315 into a single religious corporation, by providing in part as follows:

Notice of the time, place, and object of the meeting must be given

  • on four successive Sabbaths on which the society statedly meets for public worship,
  • immediately before the time specified for the meeting.

(iii)    Proof of Notice, Meeting, and Resolution; Affidavit of Officer

M.S. Section 315.35 identifies the evidentiary requirements which must be satisfied in order to consolidate two or more churches which were incorporated under the provisions of Minnesota Chapter 315 into a single religious corporation, by providing in part as follows:

Proof of the notice, meeting and resolution

  • may be made by affidavit of one of the officers or members cognizant of the facts and
  • must be recorded with the certificate of incorporation.

As with all matters relating to Minnesota Chapter 315 churches, proof of any notice, meeting, or resolution must:

  • be filed with the office of the county recorder in the Minnesota county where the church is located, and
  • not with the office of the Minnesota Secretary of State.

Post Merger Meeting of the Resulting New Religious Corporation

M.S. Section 315.36 identifies the procedures which are required in order to complete the organization of the new religious corporation which is to be formed under Minnesota Chapter 315, by providing in part as follows:

(i)     Meeting of the United Congregation of the Societies.

After each society has adopted the resolution, notice must be given stating the time and place of the meeting of the united congregation of the societies.

(ii)    Posting of the Notice

The notice must be posted where each society statedly meets for worship at least 15 days before the meeting.

(iii)   Pulpit Notice of the Meeting at the “Usual Sabbath Service”

The minister or another officer of the organization shall give public notice of the meeting at the usual Sabbath service at least one week before the meeting.

(iv)   Name of the New Corporation Resulting From the Merger

At the meeting of the united congregation, held according to the notice, a name must be adopted for the new corporation.

(v)    Form of Organization of the New Corporation

The meeting shall, by a majority vote,

  • determine the form of organization of the new corporation and
  • fix the qualifications for trustees or vestry members and the number, which must be at least three and not more than 12.

(vi)   Election of Trustees of the New Corporation

A new board of trustees, vestry and wardens or chapter and wardens must be elected by a majority of the members present.

(vii)  New Board of Trustees; Three Classes

The board of trustees, vestry or chapter not including wardens must be divided into three classes.

  • One class must be elected and hold office until the next annual meeting of the congregation,
  • one class until its second annual meeting, and
  • one class until its third annual meeting.

After that, the terms of office of the trustees or vestry members must be

  • three years
  • and until their successors are elected and have qualified.

(viii)  Board of Trustees; Vacancies

If a vacancy occurs in the board of trustees, vestry, or chapter, at the next meeting of the congregation, board of trustees, chapter or vestry a successor must be elected to fill the unexpired term.

(ix)   Certificate of Incorporation

After the meeting the chair and secretary shall make a certificate as prescribed by section 315.01, 315.17, or 315.20, as the case may be.

(x)    Place of Recording

The certificate, proof by affidavit of proper notice of the meeting, and the affidavits provided for in section 315.35 must be recorded with the county recorder of the county where the place of worship of the consolidated society is located.

(xi)   Effect of Recording

When it is filed, the societies become merged into a new corporation under the name specified in the certificate.

Powers of the Newly Formed Religious Corporation

M.S. Section 315.36 identifies the powers, privileges, and liabilities of the newly formed religious corporation, by providing in part as follows:

The new corporation

  • has the rights, powers, and privileges, and
  • is liable for the obligations

of the corporations consolidated.

Property of the New Corporation

M.S. Section 315.36 identifies that the newly formed religious corporation acquires the property rights of the two merging church corporations, by providing in part as follows:

The property of the original corporation vests in the new corporation.

Effect of Testamentary Instruments

M.S. Section 315.36 identifies that any testamentary gifts to the two merging church corporations will accrue to the benefit of the newly formed religious corporation, by providing in part as follows:

If a will or other instrument

  • takes effect after the consolidation and
  • names any of the original corporations as a legatee, devisee, or beneficiary of a trust,

the new corporation

  • shall take under the instrument and
  • is entitled to the money, property, and benefits that the original corporation would have received under the instrument,

unless the instrument expressly provides otherwise.

Minnesota Church Mergers – Chapter 315 Merger of Same Denomination

M.S. Section 315.365 – captioned Merger of Religious Corporations – identifies that two or more churches of the same denomination which were incorporated under the provisions of Minnesota Chapter 315, can merge or consolidate into a single entity, by providing in part as follows:

Subdivision 1.   Merger.

If two or more dioceses, synods, parishes, churches, congregations, or other religious bodies of the same denomination unite, reunite, merge, or consolidate and if, before doing so,

  • each body has created a corporation under Minnesota law to hold and administer its properties or properties in trust for the benefit of the body or its component parts,
  • these property corporations may merge and consolidate one with another or into a new property corporation organized for similar purposes by the new religious body.

Authority for the property corporation merger and consolidation must first be given at an annual meeting of the new body or at a special meeting called for that purpose in accordance with the constitution, canon law, or other lawful provision for its governance.

Minnesota Church Mergers – Chapter 315 Society / Corporation Distinction

The foregoing provisions identify one situation where a distinction must be made between:

  • the religious body or society, and
  • the corporate entity owned and operated by the religious body.

Minnesota Church Mergers – Chapter 315 Procedures

M.S. Section 315.365, Subd. 2 identifies the manner in which the merger must be accomplished, by providing as follows:

Subd. 2.   How merger effected.

To accomplish the merger and consolidation, the property corporations must execute an agreement containing:

(1)     the names of the property corporations who are parties to it;

(2)     the name and location of the principal office of the surviving corporation with which the property corporations are to be merged and consolidated;

(3)     the persons who constitute the governing board of the surviving corporation until their successors are elected and qualified;

(4)     the general purposes of the surviving corporation and the general description of the area to be served by it;

(5)     the date of adoption of the authorization for the merger and consolidation by the meeting of the united, reunited, merged, or consolidated religious body to which the merging or consolidating property corporations pertain; and

(6)     other provisions appropriate for the certificate of incorporation of property corporations of this character formed under Minnesota law.

The agreement

  • must be executed by the corporate officers of each property corporation that is party to it and
  • must be accompanied by the certificate of the secretary or other recording officer of the new religious body.

The certificate must certify

  • that the body has adopted in accordance with its constitution, canon law, or other general provisions for the governance of its affairs,
  • a resolution authorizing the merger and consolidation.

The agreement must also be accompanied by a certificate of the secretary or other recording officer of each of the property corporations, certifying that the members and governing body of each property corporation have adopted resolutions directing the execution of the agreement.

The agreement, when executed and certified, must be filed for record with the county recorder of the county where the surviving corporation’s principal place of business is to locate.

It must also be recorded with the county recorder of each other county of this state where the principal place of business of any of the property corporations was located according to the property corporation’s certificate of incorporation.

The merger and consolidation takes effect when the agreement and certificates are filed for record with the county recorder.

Minnesota Church Mergers – Chapter 315 Continued Corporate Identity

M.S. Section 315.365, Subd. 3 identifies the legal continuation of the two merging corporations, by providing as follows:

Subd. 3.   Continuation of corporate identities.

When a merger and consolidation takes effect, the corporate identity of each party to it continues in the surviving corporation.

The legal title to assets held or owned by any property corporation that is a party to the merger and consolidation vests in the surviving corporation.

The surviving corporation is entitled to receive gifts, devises, bequests, legacies, or other transfers or assignments of money or property, real, personal, or mixed, made after the merger directly or in trust to or intended for any of the constituent property corporations.

Except as provided in section 501B.31, 

  • no properties or assets and no income of properties or assets held or received by a party to the merger and consolidation or by the surviving corporation
  • shall be diverted from the uses and purposes for which they were received and held by the property corporations or from the uses and purposes for which they were expressed and intended.

Minnesota Church Mergers – Chapter 315 Continued Certificate of Incorporation

M.S. Section 315.365, Subd. 4 identifies the continued effectiveness of the certificate of incorporation of the surviving corporation, by providing as follows:

Subd. 4.   Effectiveness of original certificates of incorporation.

Except as otherwise provided in the agreement, the provisions of the certificate of incorporation of the surviving corporation continue in force as to the surviving corporation and corporations merged and consolidated with it.

Conclusion – Minnesota Church Mergers – Chapter 315

Minnesota Religious Corporations

Consolidations or Mergers of Minnesota religious corporation churches may be accomplished pursuant to Minnesota Statutes Chapter 315.

Minnesota Non-profit Corporations

Consolidations or Mergers of Minnesota non-profit corporation churches may be accomplished pursuant to Minnesota Statutes Chapter 317A.

Minnesota Church Attorney – Legal Representation of Minnesota Churches

Since 1992, Attorney Gary C. Dahle has represented a variety of Minnesota churches with respect to:

  • church mergers,
  • application for IRC Section 501(c)(3) tax exempt status,
  • bond financing for construction purposes,
  • bond “refinancing” in order to obtain a lower interest rate on church debt,
  • clergy issues,
  • employment issues,
  • insurance issues,
  • on-site day care issues,
  • probate matters,
  • property tax exemption issues,
  • real property easements,
  • real property title issues,
  • real property leasing issues,
  • school issues,
  • the sale of church real property – including property acquired by gift,
  • Minnesota Secretary of State filings, and
  • the drafting and revising of Articles of Incorporation, Constitutions and Bylaws.

Attorney Gary C. Dahle has represented churches located in the Minnesota cities of Arden Hills, Blaine, Bloomington, Brooklyn Park, Chaska, Corcoran, Coon Rapids, Glencoe, Mounds View, Roseville, St. Louis Park, and Wyoming.

Copyright 2017 – All Rights Reserved

Gary C. Dahle – Attorney at Law

2704 County Road 10, Mounds View, MN 55112

Phone:  763-780-8390  Fax: 763-780-1735

gary@dahlelaw.com

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