New York: Conversion of Not-For-Profit to For-Profit Entity

New York Assembly Bill 8116C enables certain not-for-profit corporations to convert to for-profit corporations during a limited window of time. Intended to establish a “process for businesses who are inadvertently registered under the wrong classification to convert to the correct business status,” the law became effective November 28, 2016, and will expire 180 days after its enactment, May 28, 2017.

In order to convert, the incorporator or incorporators must submit to the New York State Attorney General sworn statements under the penalties of perjury certifying the following:

  • that legal advice had not been sought or received as to the appropriate course of action that would have resulted in correct registration allowing for the intended for-profit operation of the entity.
  • the entity at no time received the benefits and/or privileges of being recognized as a not-for-profit corporation, such as being exempt from incurring any local, state, or federal taxes.
  • the entity throughout its operation as a not-for-profit corporation did not at any time solicit and/or receive any private and/or public grants or charitable donations.
  • the office of the attorney general has provided written indication that either it does not object to, or it approves of, the proposed conversion.

To read the bill in its entirety, visit: http://tinyurl.com/AB-8116C.

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