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Nonprofit Acquisition Agreement

First, read these three best practices for successful merger or acquisition of non-profit organizations. The agreement, sometimes referred to as “membership” of non-profit organizations, can be obtained through changes to the statutes and statutes of “subsidiary” non-profit. These documents would be amended to reflect the fact that the “mother organization” is entitled either as a single member (with the exclusive right to vote) of the “subsidiary” or as a single member of the “subsidiary” or as a single member of the “subsidiary” or with the right to appoint the subsidiary`s board of directors. Although beyond the scope of this article, it is emphasized that not-for-profit organizations can participate in other types of agreements that reduce the mix of their resources. For example, two not-for-profit organizations may enter into joint funding, joint programming, combined services or other types of joint ventures. These types of agreements allow the not-for-profit organizations concerned to maintain their autonomy while achieving certain efficiencies. It is also possible that non-profit organizations may enter into joint venture agreements with for-profit companies. These rules raise tax issues that may affect the structure of each joint venture. Where the merged company owns real estate, the surviving company should consider issues such as the costs and requirements of the transfer of ownership, whether the credit conditions require the bank`s agreement, whether there are a wagering tax on the property, whether the merger will result in a transfer tax and whether an environmental assessment should be carried out.

The surviving company will also want to verify whether the merged company is a subgroup, pending litigation or threat of recourse, transaction agreements or court decisions, and whether the merged company has non-transferable authorizations or licenses. In addition, the surviving company should take into account the potentially complex employment problems that may result, particularly if not all employees of the merging company are employed by the surviving company, if there are no union or organizational activities, if the compensation and performance structures are very different and cannot be easily harmonized, if there are poorly classified independent contractors who should have been treated as employees, or if there are workers who are are strongly opposed to the merger. As stated in the terms of use, we do not provide legal or tax advice, do not offer mutual aid advice or substantial legal information on this site. Users of the site should also understand that we practice in California and that we have created the use documents by California non-profit organizations that are our clients. We do not guarantee that they reflect existing legislation or that they are otherwise comprehensive, let alone that they are fit to be used in a given situation. Because this type of combination or membership is similar to a merger or asset acquisition, the parties often enter into a type of partnership agreement covering similar issues addressed in other business combination agreements. An affiliation agreement could, for example. B, cover any changes to the activities of the non-profit subsidiary as well as the composition of the parent company`s board of directors, as well as certain insurance and guarantees for the parties and their activities.

Some public not-for-profit organizations also allow the consolidation of non-profit organizations, which is very similar to a merger of a non-profit organization with another non-profit organization.