State of the Nonprofit Regulatory Environment in VIRGINIA

1 Bifurcation of charitable regulatory body

Bifurcated Regulatory Structure

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-48

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Yes - VA Code Ann. §§ 57-48 to 57-61.1; VA Code Ann. § 2.2-507.1

VA Code § 2.2-507.1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Yes - VA Code Ann. §§ 57-48 to 57-61.1; VA Code Ann. § 2.2-507.1

Registration Office

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

BIFURCD-REGIOF-NS

REGULATORY BODY: Not Specific

NOTES: Virginia Department of Agriculture and Consumer Services: http://www.vdacs.virginia.gov/consumer/

2 Notice, Filing or Review of Transactions

Sale of Assets

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

REPORTS-ASSETS-AG

REGULATORY BODY: Attorney General

NOTES: No

REPORTS-ASSETS-OT

REGULATORY BODY: Other

NOTES: No

Mergers

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

REPORTS-MERGER-AG

REGULATORY BODY: Attorney General

NOTES: No

VA Code § 13.1-896 ;; 13-1-896

REGULATORY BODY: Other

STATUTE TEXT: A. After a plan of merger has been adopted and approved as required by this Act, articles of merger shall be executed on behalf of each party to the merger. The articles shall set forth:1. The plan of merger, the names of the parties to the merger, and, for each party that is a foreign corporation or eligible entity, the name of the state or country under whose law it is incorporated or formed;2. If the articles of incorporation of a domestic corporation that is the survivor of a merger are amended, or if a new domestic corporation is created as a result of a merger, as an attachment to the articles of merger, the amendments to the survivor’s articles of incorporation or the articles of incorporation of the new corporation;3. The date the plan of merger was adopted by each domestic corporation that was a party to the merger;4. If the plan of merger required approval by the members of a domestic corporation that was a party to the merger, either:a. A statement that the plan was approved by the unanimous consent of the members; orb. A statement that the plan was submitted to the members by the board of directors in accordance with this Act, and a statement of:(1) The designation of and number of votes entitled to be cast by each voting group entitled to vote separately on the plan; and(2) Either the total number of votes cast for and against the plan by each voting group entitled to vote separately on the plan or the total number of undisputed votes cast for the plan separately by each voting group and a statement that the number cast for the plan by each voting group was sufficient for approval by that voting group.5. If the plan of merger was adopted by the directors without approval by the members of a domestic corporation that was a party to the merger, a statement that the plan of merger was duly approved by the vote of a majority of the directors in office, including the reason member approval was not required; and6. As to each foreign corporation or eligible entity that was a party to the merger, a statement that the participation of the foreign corporation or eligible entity was duly authorized as required by the organic law of the corporation or eligible entity.B. Articles of merger shall be filed with the Commission by the survivor of the merger. If the Commission finds that the articles of merger comply with the requirements of law and that all required fees have been paid, it shall issue a certificate of merger. Articles of merger filed under this section may be combined with any filing required under the organic law of any domestic eligible entity involved in the transaction if the combined filing satisfies the requirements of both this section and the other organic law.Code 1950, ssss 13.1-243, 13.1-244; 1956, c. 428; 1975, c. 500; 1985, c. 522; 2000, c. 53; 2003, c. 597; 2007, c. 925; 2009, c. 216.

NOTES: File with State Corp. Comm., VA Code Ann. § 13.1-896

Certificate of Amendments

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

REPORTS-AMMEND-AG

REGULATORY BODY: Attorney General

NOTES: No

VA Code § 13.1-888 ;; 13-1-888

REGULATORY BODY: Other

STATUTE TEXT: A. A corporation amending its articles of incorporation shall file with the Commission articles of amendment setting forth:1. The name of the corporation;2. The text of each amendment adopted or the information required by subdivision L 5 of ss 13.1-804;3. The date of each amendment’s adoption;4. If an amendment was adopted by the incorporators or the board of directors without member approval, a statement that the amendment was duly approved by the vote of at least two-thirds of the directors in office or by a majority of the incorporators, as the case may be, including the reason member and, if applicable, director approval was not required;5. If an amendment was approved by the members, either:a. A statement that the amendment was adopted by unanimous consent of the members; orb. A statement that the amendment was proposed by the board of directors and submitted to the members in accordance with this Act and a statement of:(1) The existence of a quorum of each voting group entitled to vote separately on the amendment; and(2) Either the total number of votes cast for and against the amendment by each voting group entitled to vote separately on the amendment or the total number of undisputed votes cast for the amendment by each voting group and a statement that the number cast for the amendment by each voting group was sufficient for approval by that voting group.B. If the Commission finds that the articles of amendment comply with the requirements of law and that all required fees have been paid, it shall issue a certificate of amendment.Code 1950, ssss 13-226, 13-227, 13.1-237, 13.1-238; 1956, c. 428; 1966, c. 218; 1975, c. 500; 1985, c. 522; 2002, c. 607; 2007, c. 925; 2012, c. 130.

NOTES: File with State Corp. Comm., VA Code Ann. § 13.1-888

Does the state require annual financial reporting by charitable organizations in addition to filing a copy of the 990 with the regulator (if filing 990 is required)?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-49

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Financial statement or 990; Va. Code Ann. § 57-49; BUT “Each charitable organization shall, as a part of its registration statement, compute the percentage that its fund-raising expenses for its preceding fiscal year bore to its support received directly from the public during such year.” Va. Code Ann. § 57-58

VA Code § 57-58

REGULATORY BODY: Not Specific

STATUTE TEXT:

3 Notice or Action for Dissolutions

Voluntary Dissolutions

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

DISSOLV-VOLUNT-AG

REGULATORY BODY: Attorney General

NOTES: No

VA Code § 13.1-904 ;; 13-1-904

REGULATORY BODY: Other

STATUTE TEXT: A. At any time after dissolution is approved, the corporation may dissolve by filing with the Commission articles of dissolution setting forth:1. The name of the corporation.2. The date dissolution was authorized.3. Where there are members having voting rights, either (i) a statement that dissolution was authorized by unanimous consent of the members, or (ii) a statement that the proposed dissolution was submitted to the members by the board of directors in accordance with this article and a statement of (a) the existence of a quorum of each voting group entitled to vote separately on dissolution and (b) either the total number of votes cast for and against dissolution by each voting group entitled to vote separately on dissolution or the total number of undisputed votes cast for dissolution separately by each voting group and a statement that the number cast for dissolution by each voting group was sufficient for approval by that voting group.4. Where there are no members, or no members having voting rights, then a statement of that fact, the date of the meeting of the board of directors at which the dissolution was authorized and a statement of the fact that dissolution was authorized by the vote of a majority of the directors in office.B. If the Commission finds that the articles of dissolution comply with the requirements of law and that the corporation has paid all required fees and taxes imposed by laws administered by the Commission, it shall issue a certificate of dissolution.C. A corporation is dissolved upon the effective date of the certificate of dissolution.D. For purposes of ssss 13.1-902 through 13.1-908.2, “dissolved corporation” means a corporation whose articles of dissolution have become effective; the term includes a successor entity to which the remaining assets of the corporation are transferred subject to its liabilities for purposes of liquidation.Code 1950, ssss 13.1-252, 13.1-253; 1956, c. 428; 1974, c. 452; 1975, c. 500; 1985, c. 522; 2003, c. 596; 2007, c. 925.

NOTES: File with State Corp. Comm., VA Code Ann. § 13.1-904

Judicial Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 13.1-907 ;; 13-1-907

REGULATORY BODY: Attorney General

STATUTE TEXT: A. The assets of a corporation in the process of dissolution shall be applied and distributed as follows:1. All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made therefor;2. Assets held by the corporation upon condition requiring return, transfer or conveyance, which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed in accordance with such requirements;3. Assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to one or more domestic or foreign corporations, societies or organizations engaged in activities substantially similar to those of the dissolving corporation, pursuant to a plan of distribution adopted as provided in this Act or as a court may direct;4. Other assets, if any, shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws to the extent that the articles of incorporation or bylaws determine the distributive rights of members, or any class or classes of members, or provide for distribution to others;5. Any remaining assets may be distributed to such persons, societies, organizations or domestic or foreign corporations, whether issuing shares or not, as may be specified in a plan of distribution adopted as provided in this Act or as a court may direct.B. A plan providing for the distribution of assets, not inconsistent with the provisions of this Act, may be adopted by a corporation in the process of dissolution and shall be adopted by a corporation for the purpose of authorizing any transfer or conveyance of assets for which this Act requires a plan of distribution. A plan shall be adopted in accordance with the procedures established in ss 13.1-902 or 13.1-903, as the case may be.Code 1950, ssss 13-237, 13.1-249, 13.1-250; 1956, c. 428; 1985, c. 522; 2007, c. 925.

NOTES: VA Code Ann. § 13.1-907, 13.1-915; Va. Code Ann. § 2.2-507.1

VA Code § 2.2-507.1

REGULATORY BODY: Attorney General

STATUTE TEXT:

NOTES: VA Code Ann. § 13.1-907, 13.1-915; Va. Code Ann. § 2.2-507.1

VA Code § 13.1-911 ;; 13-1-911

REGULATORY BODY: Other

STATUTE TEXT: A. If after a hearing the court determines that one or more grounds for judicial dissolution described in ss 13.1-909 exist, it may enter a decree directing that the corporation shall be dissolved. The clerk of the court shall deliver a certified copy of the decree to the Commission, which shall enter an order of involuntary dissolution.B. After the order of involuntary dissolution has been entered, the court shall direct the winding up and liquidation of the corporation’s business and affairs in accordance with ssss 13.1-906 and 13.1-907 and the notification of claimants in accordance with ssss 13.1-908, 13.1-908.1, and 13.1-908.2. When all of the assets of the corporation have been distributed, the court shall so advise the Commission, which shall enter an order of termination of corporate existence.Code 1950, ssss 13.1-262, 13.1-263; 1956, c. 428; 1985, c. 522; 2007, c. 925.

NOTES: VA Code Ann. § 13.1-911

Administrative Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 13.1-915 ;; 13-1-915

REGULATORY BODY: Attorney General

STATUTE TEXT: A. The corporate existence of a corporation may be terminated involuntarily by order of the Commission when it finds that the corporation (i) has continued to exceed or abuse the authority conferred upon it by law; (ii) has failed to maintain a registered office or a registered agent in the Commonwealth as required by law; (iii) has failed to file any document required by this Act to be filed with the Commission; or (iv) has been convicted for a violation of 8 U.S.C. ss 1324a(f), as amended, for actions of its officers and directors constituting a pattern or practice of employing unauthorized aliens in the Commonwealth. Upon termination, the properties and affairs of the corporation shall pass automatically to its directors as trustees in liquidation. The trustees then shall proceed to collect the assets of the corporation, and pay, satisfy and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs. After paying or adequately providing for the payment of all its obligations, the trustees shall distribute the remainder of its assets in accordance with ss 13.1-907. A corporation whose existence is terminated pursuant to clause (iv) shall not be eligible for reinstatement for a period of not less than one year.B. Any corporation convicted of the offense listed in clause (iv) of subsection A shall immediately report such conviction to the Commission and file with the Commission an authenticated copy of the judgment or record of conviction.C. Before entering any such order the Commission shall issue a rule against the corporation giving it an opportunity to be heard and show cause why such an order should not be entered. The Commission may issue the rule on its own motion or on motion of the Attorney General.Code 1950, ss 13.1-256; 1956, c. 428; 1958, c. 506; 1968, c. 116; 1976, c. 350; 1985, c. 522; 1991, c. 310; 2007, c. 925; 2008, cc. 588, 770.

NOTES: VA Code Ann. § 13.1-915

VA Code § 13.1-915 ;; 13-1-915

REGULATORY BODY: Other

NOTES: VA Code Ann. § 13.1-915

4 Notice, Oversight or Filing of Hospital Conversions

Has Statute

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 55-531

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. §§ 55-531 - 55-533

Requires Notice or Oversight

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 55-532

REGULATORY BODY: Attorney General

STATUTE TEXT:

NOTES: Va. Code Ann. § 55-532

HOSPCON-OVERSI-OT

REGULATORY BODY: Other

NOTES: No

Requires Filing

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

HOSPCON-FILING-OT

REGULATORY BODY: Other

NOTES: No

5 Audits

Requires Audit

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

VA Code § 58.1-609.11(C)(4)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: No, but orgs with over $1 million in revenue may be asked for an audit to receive exemption from sales and use taxes. Va. Code Ann. § 58.1-609.11(C)(4)

Audit Threshold

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

AUDITFI-THRESH-NS

REGULATORY BODY: Not Specific

NOTES: $ 1 million

6 Registration Law

Registration Law

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-49

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-49

7 Exemptions from Registering for Specific Organization Types

Religious Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-48

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-48

Small organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-60(A)(3)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-60(A)(3) ($5,000)

Educational Institutions

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-60(A)(1)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-60(A)(1)

Governmental Organizations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-GOVMNT-NS

REGULATORY BODY: Not Specific

NOTES: NO

Hospitals

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-60(A)(7)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Charitable hospitals: VA Code Ann. § 57-60(A)(7)

Veterans organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-60(A)(8)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-60(A)(8)

Foundations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-FNDYES-NS

REGULATORY BODY: Not Specific

NOTES: NO

Foundations that don’t solicit contributions

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-FNDNOS-NS

REGULATORY BODY: Not Specific

NOTES: NO

Charitable Trusts

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-CTRUST-NS

REGULATORY BODY: Not Specific

NOTES: NO

Parent-Teacher Organizations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-PTOEDU-NS

REGULATORY BODY: Not Specific

NOTES: NO

Reports to congress

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-CONGRE-NS

REGULATORY BODY: Not Specific

NOTES: NO

Non-soliciting

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-49(A)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-49(A)

Fraternal/ Membership

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-60(A)(4)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-60(A)(4) and (A)(8)

Political Orgs

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

VA Code § 57-48

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 57-48

Other

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

ORGTYPE-OTHTYP-NS

REGULATORY BODY: Not Specific

NOTES: 57-60(A)(2) Fundraising for specific individuals, (A)(6) health area centers, (A)(9) debt management non-profits, (A)(10) agencies on aging, (A)(11) labor organizations, (A)(12) trade associations, (A)(13) EMS councils,

8 Defined remedies

Dissolution

Regulatory Action: REMEDY

YES: A regulation is defined in the state

VA Code § 13.1-907 ;; 13-1-907

REGULATORY BODY: Not Specific

NOTES: VA Code Ann. § 13.1-907, 13.1-915; Va. Code Ann. § 2.2-507.1

VA Code § 2.2-507.1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: VA Code Ann. § 13.1-907, 13.1-915; Va. Code Ann. § 2.2-507.1

Removal of Board Members

Regulatory Action: REMEDY

YES: A regulation is defined in the state

VA Code § 64.2-759

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Attorney General may petition to remove a trustee: Va. Code Ann. § 64.2-759

9 Oversight of professional fundraisers

Does the state require registration by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-61

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. § 57-61

Does the state require registration by fundraising counsel?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-61

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. § 57-61

Does the state oversee commercial-coventuring (e.g. by requiring that the co-venture be registered or by requiring that the charitable organization files the co-venture contract)?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-61.2

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. § 57-61.2

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

A regulation is NOT defined in the state

VA Code § 57-54

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Contracts with professional fundraisers must be filed 10 days before commencement of solicitation. Va. Code Ann. § 57-54

Does the state require specified disclosures to donors?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-55.2

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. § 57-55.2; Va. Code Ann. § 57-55.3

VA Code § 57-55.3

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. § 57-55.2; Va. Code Ann. § 57-55.3

Does the state require a copy of any contract between a charitable organization and a commercial fundraiser or fundraising counsel be filed with the regulator?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-54

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Va. Code Ann. § 57-54

Does the state require annual financial reporting by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-61

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Must submit financial report within 90 days of end of solicitation campaign. Va. Code Ann. § 57-61

Does the state require bonding of professional fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

VA Code § 57-61

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Each professional solicitor shall, at the time of making application, file with and have approved by the Commissioner a bond in the sum of twenty thousand dollars ($20,000.00) with one or more sureties satisfactory to the Commissioner. Va. Code Ann. § 57-61