State of the Nonprofit Regulatory Environment in MARYLAND

1 Bifurcation of charitable regulatory body

Bifurcated Regulatory Structure

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-101

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Yes - Maryland Ann. Code, Business Regulation Article, §§ 6-101 to 6-205, 6-401 et seq.

2 Notice, Filing or Review of Transactions

Sale of Assets

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 5-209

REGULATORY BODY: Other

STATUTE TEXT: (a) If a charitable or religious corporation is or is about to be dissolved, or for any reason it is impracticable or inexpedient to continue the corporationis activities, a circuit court may order the disposition of corporate property that: (1) Is not needed to pay the corporationis debts; and (2) (i) Is not subject to valid requirements for its return to the donor or the donoris successor in interest by reason of the cessation of corporate activities; or (ii) Is not claimed by the donor or the donoris successor in interest after receiving the notice provided for in subsection (b) of this section. (b) Notice of the substance and purpose of the complaint or petition shall be given to the donor of the property or the donoris successor in interest by personal service or by publication in the manner the court directs. (c) To the extent possible, the court shall direct or provide for the transfer of the corporationis property to another corporation or association having a similar or analogous character or purpose, or associated or connected with the corporation. (d) The intent of this section is that the circuit court may exercise the judicial power of cy-pres to fulfill, despite a change in circumstances, the general intention of the donor of the property for the use of the gift.

NOTES: MD Code, Corporations and Associations, § 5-209 (charitable and religious orgs: circuit court may direct sale)

Certificate of Amendments

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 2-603

REGULATORY BODY: Other

STATUTE TEXT: (a) If there is no stock outstanding or subscribed for entitled to be voted on the charter amendment, it shall be approved as provided in this section. (b) (1) If the amendment is made before the organization meeting of the board of directors, every incorporator shall execute and file amended articles of incorporation in the same form required by Subtitle 1 of this title for original articles of incorporation. (2) When the Department accepts amended articles of incorporation for record, they take the place of the original articles. (c) If the amendment is made at or after the organization meeting of the board of directors, it shall be approved by a majority of the entire board of directors.

NOTES: Dept. of State, MD Code, Corporations and Associations, § 2-603

3 Notice or Action for Dissolutions

Voluntary Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 3-407

REGULATORY BODY: Other

STATUTE TEXT: (a) The corporation shall file articles of dissolution for record with the Department: (1) If there are any known creditors of the corporation, after the 19th day following the mailing of notice to them; or (2) If there are no known creditors, at any time. (b) On written request of the corporation, the Department shall furnish without charge a list of all collectors of taxes of counties and municipalities to which the Department has certified an assessment of personal property taxable to the corporation within the preceding four years. (c) The Department may not accept articles of dissolution of a corporation for record unless the reports required by Title 11 of the Tax n Property Article have been filed.

NOTES: Dept. of State, Corporations and Associations, § 3-407

Judicial Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 3-513

REGULATORY BODY: Attorney General

STATUTE TEXT: (a) At any time, the Department may authorize the Attorney General to institute proceedings against a corporation to determine whether the corporation has abused, misused, or failed to use its powers and franchises in a manner which, in the public interest, would make proper the forfeiture of its charter. (b) If authorized by the Department, the Attorney General may petition a court of equity for forfeiture of the charter and dissolution of the corporation. The petition shall state the facts on which the forfeiture and dissolution of the corporation is sought. (c) In its order, the court shall: (1) Find that no legal cause for forfeiture exists, and dismiss the petition; (2) Direct the corporation to remedy one or more grievances, on penalty of forfeiture of the charter if they are not remedied within the time set by the order; or (3) (i) Find that legal cause for forfeiture has been shown and that the public interest requires a forfeiture; (ii) Declare the charter forfeited and the corporation dissolved; and (iii) Appoint a receiver of the assets of the corporation.

NOTES: Upon referral from Department of State, MD Code, Corporations and Associations, § 3-513

MD Code § 3-417

REGULATORY BODY: Other

STATUTE TEXT: (a) If a court declares a corporation dissolved, the order shall direct the clerk of the court to certify promptly to the Department that the order has been entered. If the order is later annulled, the order of annulment shall contain a similar direction. (b) On notice from the counsel of record of a party seeking dissolution that the entry of an order of dissolution will be requested, the Department shall furnish to the counsel, without charge, a list of all collectors of taxes of counties and municipalities to which the Department has certified an assessment of personal property taxable to the corporation within the preceding four years. (c) (1) The court may not enter an order dissolving a corporation unless the counsel of record certifies that at least 20 days before the order is entered he notified, by certified mail, return receipt requested, the Comptroller, the Department, the Secretary of Labor, and the collector of taxes in each county or municipality on the list supplied by the Department, that entry of the order would be requested. (2) The list shall accompany the certificate of counsel and shall be dated not more than 90 days before entry of the order.

NOTES: Filing with Dept of State, MD Code, Corporations and Associations, § 3-417

Administrative Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 3-503

REGULATORY BODY: Other

STATUTE TEXT: (a) (1) Except with respect to a tax collectable locally, immediately after September 30 of each year, the State Comptroller shall certify to the Department a list of every Maryland corporation which has not paid a tax due before October 1 of the year after the tax became due. (2) When the Comptroller certifies the list to the Department, the Comptroller shall mail to each listed corporation, at its address as it appears on the Comptrolleris records, a notice that its charter will be repealed, annulled, and forfeited unless all taxes, interest, and penalties due by it are paid. (3) The mailing of the notice is sufficient, and the failure of any corporation to receive the notice mailed to it does not affect the repeal, annulment, and forfeiture of its charter. (b) (1) Immediately after September 30 of each year, the Secretary of Labor shall certify to the Department a list of every Maryland corporation that has not paid an unemployment insurance contribution or made a reimbursement payment due before October 1 of the year after the contribution or payment became due. (2) When the Secretary certifies the list to the Department, the Secretary shall mail to each listed corporation, at its address as it appears on the Secretaryis records, a notice that the charter of the corporation will be repealed, annulled, and forfeited unless all contributions, reimbursement payments, interest, and penalties due by the corporation are paid. (3) The mailing of the notice is sufficient, and the failure of any corporation to receive the notice mailed to it does not affect the repeal, annulment, and forfeiture of the charter of the corporation. (c) Immediately after September 30 of each year, the Department shall certify a list of every Maryland corporation which has not filed an annual report with the Department as required by law or has not paid a tax before October 1 of the year after the report was required to be filed or the taxes were due. (d) After the lists are certified, the Department shall issue a proclamation declaring that the charters of the corporations are repealed, annulled, and forfeited, and the powers conferred by law on the corporations are inoperative, null, and void as of the date of the proclamation, without proceedings of any kind either at law or in equity.

NOTES: The State Comptroller, the Secretary of Labor, and the Department of State can certify noncompliant corporations and the Department of State can then revoke their charter, MD Code, Corporations and Associations, § 3-503

4 Notice, Oversight or Filing of Hospital Conversions

Has Statute

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Md. Code Ann., State Gov’t § 6.5

Requires Notice or Oversight

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6.5-102

REGULATORY BODY: Attorney General

STATUTE TEXT:

NOTES: Md. Code Ann., State Gov’t § 6.5-102, Md. Code Ann., State Gov’t § 6.5-101: “‘Regulating entity’ means: (1) for an acquisition of a nonprofit hospital, the Attorney General in consultation with the Department; (2) for an acquisition of a nonprofit health service plan, the Administration; and (3) for an acquisition of a nonprofit health maintenance organization, the Administration.”

MD Code § 6.5-101

REGULATORY BODY: Attorney General

STATUTE TEXT:

MD Code § 6.5-102

REGULATORY BODY: Other

STATUTE TEXT:

MD Code § 6.5-101

REGULATORY BODY: Other

STATUTE TEXT:

Requires Filing

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6.5-102

REGULATORY BODY: Other

STATUTE TEXT:

MD Code § 6.5-101

REGULATORY BODY: Other

STATUTE TEXT:

5 Audits

Requires Audit

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-402(b)(7)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-402(b)(7)

6 Registration Law

Registration Law

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-401

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-401

7 Exemptions from Registering for Specific Organization Types

Religious Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-102(c)(1)(ii)(2)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-102(c)(1)(ii)(2)

Small organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-102(c)(1)(ii)(4)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-102(c)(1)(ii)(4) ($25k)

Governmental Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-101(d)(3)(i)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-101(d)(3)(i)

Non-soliciting

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-101(d)(1)(i)(1)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-101(d)(1)(i)(1)

Fraternal/ Membership

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-102(c)(1)(ii)(3)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-102(c)(1)(ii)(3)

Political Orgs

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-101(d)(3)(ii)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: MD Code, Business Regulation, § 6-101(d)(3)(ii)

Other

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

MD Code § 6-102(c)(1)(ii)(1))

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Specified beneficiary (MD Code, Business Regulation, § 6-102(c)(1)(ii)(1)), org’s that only receive from for-profit co’s (MD Code, Business Regulation, § 6-102(c)(1)(ii)(5))

MD Code § 6-102(c)(1)(ii)(5))

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Specified beneficiary (MD Code, Business Regulation, § 6-102(c)(1)(ii)(1)), org’s that only receive from for-profit co’s (MD Code, Business Regulation, § 6-102(c)(1)(ii)(5))

8 Defined remedies

Dissolution

Regulatory Action: REMEDY

YES: A regulation is defined in the state

MD Code § 3-513

REGULATORY BODY: Not Specific

NOTES: Upon referral from Department of State, MD Code, Corporations and Associations, § 3-513

9 Oversight of professional fundraisers

Does the state require registration by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-301

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Md. Code, Bus. Reg. § 6-301

Does the state require registration by fundraising counsel?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-301

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Md. Code, Bus. Reg. § 6-301

Does the state require the fundraisers to provide notice to the regulator before any solicitation campaign (in addition to annual registration and/or filing the contract)?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-502

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Yes, solicitor must submit fundraising agreement before any solicitation campaign: “Prior to starting a solicitation, a Professional Solicitor is required under Business Regulation Article, §6-502 to submit a fund-raising notice for each fund- raising campaign. The notice requests information concerning the type of fund-raising method to be used and the dates of the solicitation.” http://sos.maryland.gov/Charity/Pages/Register-Professional-Solicitor.aspx Md. Code, Bus. Reg. § 6-502

MD Code § 6-502

REGULATORY BODY: Not Specific

STATUTE TEXT:

Does the state require specified disclosures to donors?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-503

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Md. Code, Bus. Reg. § 6-503; Md. Code, Bus. Reg. § 6-504

MD Code § 6-504

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Md. Code, Bus. Reg. § 6-503; Md. Code, Bus. Reg. § 6-504

Does the state require bonding of professional fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

MD Code § 6-303

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: On applying for registration as a professional solicitor, applicant shall execute and submit to the Secretary of State a bond for $25,000, with surety the Secretary of State approves. An applicant for registration as a professional solicitor that submits a $25,000 irrevocable letter of credit to the Secretary of State is not required to submit a surety bond. Md. Code, Bus. Reg. § 6-303