San Clemente, CA asked in Public Benefits and Business Law for California

Q: Need advice on requirements on unifying an unincorporated association with a public benefit corporation.

We are an unincorporated association with members that do philanthropic work in the community. We want to unify with our sister entity, a public benefit corporation which manages the property we and other community groups use for meetings. The members of the public benefit corporation are the identical members of our unincorporated association. We want to unify in order to benefit from the corporate shield , save administrative costs and streamline operations ( one board instead of two etc). There are rules for asking permission from the Secretary of State when two corporations merge but nothing about an unincorporated association moving its assets (cash and minor equipment) to a corporation and then dissolving. Do we need permission to do this?

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1 Lawyer Answer
Matthew Morris
Matthew Morris

A: An unincorporated association does not need permission from the Secretary of State to give away its property and dissolve, but an unincorporated association that exists for charitable purposes almost certainly needs to get permission from the Attorney General's office. Groups that have assets that are used for philanthropic purposes are usually considered to be holding those assets in trust, and in California (as in many other states) the office responsible for oversight of charitable trusts is the Attorney General's office (see To be in perfect compliance with the law, an unincorporated association files an initial registration with the AG's office (form CT-1), and annual reports thereafter (form RRF-1 and CT-TR-1) and is then listed in the AG's "Registry of Charitable Trusts."

When an unincorporated association holding assets in charitable trust wants to dissolve, the Attorney General's office requests that they mail a letter to the Registry of Charitable Trusts, signed by a director or attorney, requesting to withdraw with an explanation for the reason for the withdrawal. "The letter should include a balance sheet for the last three years of activity and include the disposition of charitable assets and/or asset recipient information and any existing court paperwork."

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