Minnesota Church Mergers – Chapter 317A

Minnesota Church Mergers - Chapter 317A

Minnesota Church Mergers – Chapter 317A

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 Mergers – Chapter 315

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

Minnesota Church Mergers – Chapter 317A

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

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 Church Mergers – Chapter 317A Merger / Consolidation

M.S. Section 317A.601, Subd. 1 identifies the general rules for a merger or consolidation of two Minnesota nonprofit corporations, by providing as follows:

Subdivision 1.    Merger or consolidation

Two or more corporations may merge or consolidate, resulting in a single corporation subject to this chapter.

Per M.S Section 317A.011, Subd. 6, the term “corporation” refers to a corporation governed by Chapter 317A.

A merger or consolidation must be made as provided in sections 317A.611 to 317A.651. 

Minnesota Church Mergers – Chapter 317A Plan of Merger / Consolidation

M.S. Section 317A.611 identifies the requirements for a Plan of Merger or Consolidation of two nonprofit corporations under Minnesota Chapter 317A, by providing in part as follows:

A plan of merger or consolidation must contain: 

(1)     the names of the corporations proposing to merge or consolidate;

(2)     the name of the surviving or new corporation;

(3)     the terms and conditions of the proposed merger or consolidation;

(4)     in the case of a merger, the manner and basis of converting the memberships of the constituent corporations into memberships of the surviving corporation or of any other corporation;

(5)     in the case of a merger, a statement of amendments to the articles of the surviving corporation proposed as part of the merger;

(6)     in the case of a consolidation, the provisions required by section 317A.111 to be set out in the articles of the new corporation; and

(7)     other provisions with respect to the proposed merger or consolidation that are considered necessary or desirable.

Minnesota Church Mergers – Chapter 317A Approval of Plan of Merger

M.S. Section 317A.613 identifies the requirements for approval of a Plan of Merger or Consolidation by each of the two merging corporations, by providing in part as follows:

Subdivision 1.    Approval by each constituent corporation

A plan of merger or consolidation must be approved and adopted by each constituent corporation as provided in this section.

(i)      Approval of Plan of Merger if Members Have Voting Rights

M.S. Section 317A.613, Subd. 2 identifies the requirements for approval of a Plan of Merger or Consolidation when the members have voting rights (on the merger issue), by providing in part as follows:

Subd. 2.    Approval by board and members with voting rights

When a constituent corporation has members with voting rights, the board of directors of the corporation shall adopt a resolution by a majority vote of all directors

  • approving a proposed plan of merger or consolidation and
  • directing that the plan be submitted to a vote at a meeting of the members with voting rights. (on the merger issue)

M.S. Section 317A.613, Subd. 2 identifies the requirements for giving notice of the meeting of the voting members when the members have voting rights on the merger issue, by providing in part as follows:

Notice of the [member’s] meeting must be given to each member with voting rights, accompanied by a copy or summary of the proposed plan

(ii)     Majority of Members With Voting Rights Voting on the Action

M.S. Section 317A.613, Subd. 2 identifies the affirmative voting requirements at a meeting of the voting members when the members have voting rights on the merger issue, by providing in part as follows:

Unless the articles or bylaws require a greater vote, the plan of merger or consolidation is adopted upon receiving the affirmative vote of a majority of the members with voting rights voting on the action.

Minnesota Church Mergers – Chapter 317A Members

M.S. 317A.011, Subd. 12 identifies that the term Member means a person with membership rights in a corporation under its articles or bylaws, regardless of how the person is identified.

Minnesota Church Mergers – Chapter 317A Member Voting Rights

M.S. 317A.011, Subd. 13 identifies that the terms Members with voting rights or voting members mean members that have, or a class of members that has, voting rights with respect to the purpose or matter involved.

M.S. Section 317A.401 subd 4 identifies the general rule for determining the voting rights of members in a Minnesota nonprofit corporation, by providing in part as follows:

Members are entitled to vote and have equal rights and preferences except to the extent that the articles or bylaws

  • have fixed or limited the rights and preferences of members . . . or
  • provide for nonvoting members.

Minnesota Church Mergers – Chapter 317A Limitations on Member Voting

M.S. Section 317A.441(a) confirms that the articles or bylaws can limit the voting rights of members in a Minnesota nonprofit corporation, by providing in part as follows:

317A.441 RIGHT TO VOTE.

(a)     Unless the articles or bylaws provide otherwise, each member with voting rights is entitled to one vote on each matter voted on by the members.

(i)      Approval of Plan of Merger if Members do not Have Voting Rights

M.S. Section 317A.613, Subd. 3 identifies the requirements for approval of a Plan of Merger or Consolidation when the members do not have voting rights (on the merger issue), by providing in part as follows:

When

  • a constituent corporation does not have members with voting rights, and
  • unless the articles or bylaws require a greater vote,

a plan of merger or consolidation is adopted at a meeting of the board of directors of the corporation upon receiving the affirmative votes of a majority of all directors.

(ii)     Notice Requirements for Meetings of the Members With Voting Rights

M.S. Section 317A.613, Subd. 3 identifies the requirements for giving notice of the meeting of the directors with respect to a proposed Plan of Merger or Consolidation, by providing in part as follows:

Notice of the meeting must be given [to the directors] accompanied by a copy of the proposed plan of merger or consolidation.

Minnesota Church Mergers – Chapter 317A Articles of Merger

M.S. Section 317A.615, Subd. 1 identifies the requirements for producing Articles of Merger or Consolidation, by providing in part as follows:

Upon receiving the approval required [of the directors] by section 317A.613

and

after compliance with section 317A.811, if applicable,

articles of merger or consolidation must be prepared that contain:

(1)     the plan of merger or consolidation;

(2)     a statement that the plan has been approved by each corporation under this chapter; and

(3)      a statement that the notice to the attorney general required by section 317A.811 has been given and the waiting period has expired or has been waived by the attorney general or a statement that section 317A.811 is not applicable.

Notice of the Proposed Merger to the Minnesota Attorney General.

M.S. Section 317A.811 identifies a duty of the merging corporations to give notice of the proposed Merger or Consolidation to the Minnesota Attorney General.

Minnesota Church Mergers – Chapter 317A Filing Articles of Merger / Consolidation

M.S. Section 317A.615, Subd. 2 identifies the requirements for filing the Articles of Merger or Consolidation, by providing in part as follows:

Subd. 2.    Articles signed, filed

The articles of merger or consolidation must be

  • signed on behalf of each constituent corporation and
  • filed with the secretary of state.

Minnesota Church Mergers – Chapter 317A Certificate of Merger

M.S. Section 317A.615, Subd. 3 requires the office of the Minnesota Secretary of State to issue a Certificate of Merger or Consolidation – evidencing completion of the merger approval process – by providing in part as follows:

 Subd. 3.    Certificate

The secretary of state shall issue 

  • a certificate of merger to the surviving corporation or
  • a certificate of consolidation and incorporation to the new corporation.

Minnesota Church Mergers – Chapter 317A Effective Date of Merger

M.S. Section 317A.641, Subd. 1 identifies the effective date of the merger – by providing in part as follows:

Subdivision 1.    Effective date. 

A merger or consolidation is effective when

  • the articles of merger or consolidation are filed with the secretary of state or
  • on a later date named in the articles.

Minnesota Church Mergers – Chapter 317A Effect of Merger

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the two merging corporations – by providing in part as follows:

Subd. 2.    Effect on corporation; general

When a merger or consolidation becomes effective:

(1)     the constituent corporations become a single corporation, which in case of merger is a surviving corporation, or in case of consolidation is a new corporation;

(2)     subject to clause (3) and section 317A.643,

M.S. §317A.643 identifies that the corporate existence of the constituent corporations continues subsequent to the merger for purposes of execution of any required documents.

the separate existence of the constituent corporations except the surviving corporation ends;

(3)  when the agreement of merger or consolidation 

  • expressly provides for the continuance of the corporate existence of a constituent corporation and
  • expressly declares the purpose for the continuance,

the corporate existence of the constituent corporation continues in the single corporation for the purpose declared in the agreement;

(i)      Rights, Powers, Duties, and Liabilities of the Surviving Corporation

M.S. Section 317A.641, Subd. 2 identifies the rights, powers, duties, and liabilities of the surviving corporation after a merger or consolidation – by providing in part as follows:

(4)     the single corporation has the rights, privileges, immunities, and powers, and is subject to the duties and liabilities, of a corporation formed under this chapter;

(5)     the single corporation has the rights, privileges, immunities, powers, and franchises, public and private, of each constituent corporation;

(ii)     Effect of Merger on Property Rights and Liabilities

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the property rights and liabilities of the surviving corporation after a merger or consolidation – by providing in part as follows:

(6)     all real or personal property, debts, including debts arising from a subscription for membership, and interests belonging to each constituent corporation are transferred to the single corporation without further act or deed;    

(7)     interest (sic) in real estate possessed by a constituent corporation does not revert to the grantor, or otherwise, nor is it in any way impaired by reason of the merger or consolidation; and the personal property of a constituent corporation does not revert by reason of the merger or consolidation;

(iii)    No Failure of Testamentary Property Rights By Reason of the Merger

M.S. Section 317A.641, Subd. 2 identifies that no testamentary gift to either the surviving corporation or the terminating corporation will fail after a merger or consolidation – by providing in part as follows:

(8)     except

  • where the will or other instrument provides otherwise, and
  • subject to section 317A.671,

a devise, bequest, gift, or grant contained in a will or other instrument, in trust or otherwise, made before or after the merger or consolidation has become effective,

  • to or for any of the constituent corporations,
  • inures to the single corporation;

(iv)    Effect of Merger on Corporate Liabilities

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the corporate liabilities of the surviving corporation and the terminating corporation after a merger or consolidation – by providing in part as follows:

(9)     debts, liabilities, and obligations of each constituent corporation become the debts, liabilities, and obligations of the single corporation, just as if the debts, liabilities, and obligations had been incurred or contracted by the single corporation;

(v)     Effect of Merger on Legal Actions

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the existing legal actions of the surviving corporation and the terminating corporation after a merger or consolidation – by providing in part as follows:

(10)    existing claims or a pending action or proceeding by or against a constituent corporation may be prosecuted to judgment as though the merger or consolidation had not been effected, or the single corporation may be substituted for the constituent corporation;

(vi)    Effect of Merger on Member, Officer, and Director Liabilities

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the existing member, officer, and director liabilities of the surviving corporation and the terminating corporation after a merger or consolidation – by providing in part as follows:

(11)    the liabilities of the members, officers, directors, or similar groups or persons, however denominated, of a constituent corporation are not affected by the merger or consolidation of a constituent corporation;

(vii)   Effect of Merger on Rights of Creditors

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the existing rights of creditors of the surviving corporation and the terminating corporation after a merger or consolidation – by providing in part as follows:

(12)    the rights of creditors or liens upon the property of a constituent corporation 

  • are not impaired by the merger or consolidation,
  • but the liens are limited to the property upon which they were liens immediately before the merger or consolidation;

(viii)  Effect of Merger on Articles of Incorporation of Surviving Corporation

M.S. Section 317A.641, Subd. 2 identifies the effect of the merger or consolidation on the Articles of Incorporation of the surviving corporation after a merger or consolidation – by providing in part as follows:

(13)    the articles of the surviving corporation are considered to be amended to the extent that changes in its articles are contained in a plan of merger;

(ix)    Effect of Merger on the Fiduciary Capacity of the Surviving Corporation

M.S. Section 317A.641, Subd. 3 identifies the effect of the merger on the fiduciary capacity – as defined in the statute – of the surviving corporation – by providing in part as follows:

Subd. 3.    Effect on fiduciary capacity. 

(a)     For purposes of this subdivision, “fiduciary capacity” means the capacities of trustee, executor, administrator, personal representative, guardian, conservator, receiver, escrow agent, agent for the investment of money, attorney-in-fact, or a similar capacity.

(b)     Except where the will, declaration of trust, or other instrument provides otherwise, the single corporation

  • is, without further act or deed, the successor of the constituent corporations in fiduciary capacities in which a constituent corporation was acting at the time of the merger or consolidation, and
  • is liable to the beneficiaries as fully as if the constituent corporation had continued its separate corporate existence.

(c)      If a constituent corporation is nominated and appointed, or has been nominated and appointed, in a fiduciary capacity in a will, declaration of trust, or other instrument, order, or judgment before or after the merger or consolidation, then

  • even if the will or other instrument, order, or judgment does not become operative or effective until after the merger or consolidation becomes effective,
  • every fiduciary capacity and the rights, powers, privileges, duties, discretions, and responsibilities provided for in the nomination or appointment
  • fully vest in and are to be exercised by
  • the single corporation, whether there are one or more successive mergers or consolidation.

(x)     Effect of Church Merger on Real Property Tax Exemption

Depending on the County, the completion of Minnesota Church Mergers – Chapter 317A may require the church to reapply for any real property tax exemption.

For more information, see Minnesota Real Property Tax Exemption for Churches.

Conclusion – Minnesota Church Mergers – Chapter 317A

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.

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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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