CODING: Words stricken are deletions; words underlined are additions.
SENATE AMENDMENT
Bill No. SB 1048
Amendment No.
CHAMBER ACTION
Senate House
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11 Senator .................... moved the following amendment:
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13 Senate Amendment
14 Delete everything after the enacting clause
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16 and insert:
17 Section 1. Sale, lease, exchange, conveyance, merger,
18 or other transfer of the assets or management authority of a
19 community organization to outside interests.--
20 (1) This section may be cited as "The Community Asset
21 Protection Act."
22 (2) It is the intent of the Legislature that all
23 proposed transfers involving a controlling interest or
24 transfer of controlling interest or 50 percent or more of the
25 assets or management authority described in this section of a
26 community organization to outside interests be made public so
27 that an affected community may reasonably evaluate the
28 fairness and effects of such transfers before they are
29 consummated. It is the further intent of the Legislature to
30 make such proposed transfers public by requiring community
31 organizations to give public notice at least 60 days before
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1 the transfers are consummated and to make all records relating
2 to such transfers available for public inspection and copying.
3 (3) As used in this section, the term:
4 (a) "Affected community" means the geographical area
5 comprised of a county or counties that is served by, or
6 receives the benefit of the services provided by, a community
7 organization.
8 (b) "Community organization" means a nonprofit
9 corporation, trust, foundation, society, league, order,
10 association, organization, or other entity that is tax exempt
11 under 26 U.S.C. s. 501(c) and that has current gross assets
12 with a fair market value of $3 million or more and is
13 organized under the laws of this state, or authorized to
14 transact business in this state, for the purpose of providing
15 health, medical, or hospital care, or charitable, social
16 welfare, educational, scientific, literary, fraternal,
17 financial, insurance, or similar services that benefit the
18 community. A member-owned organization that makes available
19 to its members all records relating to a proposed transaction
20 for the purpose of inspecting, copying, and evaluating such
21 records reasonably in advance of consummation of the
22 transaction is not a community organization subject to the
23 provisions of this section.
24 (c) "Consummated" means when a transaction creates a
25 legally enforceable right to a specific performance of the
26 transaction.
27 (d) "Outside interests" means an individual,
28 partnership, corporation, trust, foundation, joint business
29 venture, or other entity, whether for-profit or
30 not-for-profit, which conducts business or provides services.
31 (e) "Public inspection period" means the 60 days
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1 immediately following the date of publication by a community
2 organization of the first advertisement that conforms to the
3 provisions of this section notifying the public of a proposed
4 transaction.
5 (f) "Transaction" means an action by a community
6 organization to:
7 1. Sell, lease, exchange, convey, merge, or otherwise
8 transfer control of a controlling interest or transfer of
9 controlling interest or 50 percent or more of its current
10 gross assets in a single transaction or a series of related
11 transactions to outside interests;
12 2. Grant a controlling interest or transfer of
13 controlling interest or 50 percent or more of the vote on its
14 board of directors or board of trustees in a single
15 transaction or a series of related transactions to outside
16 interests; or
17 3. Enter into a joint venture, joint operating
18 agreement, management agreement, partnership or other business
19 agreement that transfers a controlling interest or 50 percent
20 or more of the community organization's management authority
21 in a single transaction or a series of related transactions to
22 outside interests.
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24 The term "transaction" does not include the sale, lease,
25 exchange, conveyance, merger, or other transfer of assets or
26 management authority between wholly owned subsidiaries of the
27 community organization or between a wholly owned subsidiary of
28 the community organization and the community organization.
29 (4)(a) When a community organization proposes to
30 consummate a transaction, before providing notice under
31 paragraph (b), the community organization shall:
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1 1. Obtain one or more written reports by an
2 independent expert or experts assessing the following aspects
3 of the proposed transaction:
4 a. Whether the community organization is receiving
5 fair market value for any assets or management authority,
6 which shall include a detailed valuation of such assets or
7 management authority and a detailed analysis of all competing
8 offers, if any, made to the community organization;
9 b. Whether the proposed transaction was negotiated at
10 arms' length and is fair to the affected community from both a
11 financial and community service standpoint;
12 2. Obtain a written report by an expert assessing
13 whether the proposed use of the proceeds of the proposed
14 transaction is consistent with the general donative intent of
15 the benefactors and the charitable mission of the community
16 organization and whether there are sufficient safeguards to
17 ensure that the restricted use funds are segregated and used
18 for their intended purpose; and
19 3. Obtain signed affidavits regarding conflicts of
20 interest from each member of its board of directors or board
21 of trustees and each executive director, chief operating
22 officer, chief executive officer, and chief financial officer
23 of the community organization. These affidavits must disclose
24 whether the affiant has been offered or has accepted, orally
25 or in writing, any personal or familial benefit, including
26 future employment or stock options, from any outside interests
27 or any affiliated entities. In addition, the affiants must
28 disclose whether they have been offered or have accepted,
29 orally or in writing, any position with a foundation, trust,
30 corporation, or other entity that will direct the use of any
31 part of the proceeds of the proposed transaction or otherwise
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1 function as a successor to the community organization.
2 4. State in writing whether there are any contractual
3 or other agreements with outside interests regarding future
4 use of the assets or future exercise of the management
5 authority involved in the proposed transaction and, if so,
6 what remedies are available if the outside interests do not
7 comply with those agreements.
8 (b) After complying with the provisions of paragraph
9 (a), a community organization must provide notice describing
10 clearly and concisely the nature of the proposed transaction;
11 the parties to the transaction; the date, time, and location
12 of the public hearings required by this section; and, for
13 purposes of public examination and copying, the location of
14 all records related to the proposed transaction which are
15 required to be made available pursuant to this section.
16 1. Such notice must be provided, before the public
17 inspection period commences, to the state attorney where the
18 community organization maintains its principal place of
19 business and to the Attorney General.
20 2. Such notice must be provided to the affected
21 community by placing two advertisements in a newspaper of
22 general paid circulation in the affected community and of
23 general interest and readership in the affected community, and
24 not one of limited subject matter, under chapter 50, no less
25 than 3 weeks apart, the first before the public inspection
26 period commences and the other at least 30 days before the end
27 of the public inspection period. The required advertisements
28 must be no less than 2 columns wide by 10 inches long in a
29 standard size or a tabloid size newspaper, and the headline in
30 the advertisement must be in type no smaller than 18 point.
31 The advertisements must not be placed in that portion of the
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1 newspaper where legal notices and classified advertisements
2 appear. When possible, the advertisements must appear in a
3 newspaper that is published at least 5 days a week unless the
4 only newspaper in the affected community is published less
5 frequently than 5 days a week. The advertisements must be in
6 substantially the following form:
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8 NOTICE OF ... (TYPE OF TRANSACTION) ... INVOLVING SUBSTANTIAL
9 ... (ASSETS OR MANAGEMENT AUTHORITY) ... OF ... (NAME OF
10 COMMUNITY ORGANIZATION) ...
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12 The ... (name of community organization) ... proposes to
13 (clear, concise description of proposed transaction, including
14 the name of the outside interests) ... in no fewer than (60 or
15 30 days, as appropriate) from the date of this Notice.
16 Records relating to this proposed transaction are available
17 for public inspection and copying during regular business
18 hours at ... (location where records will be made available)
19 .... Public hearings regarding this proposed transaction will
20 be held ... (date, time, and location of public hearings) ...,
21 at which knowledgeable representatives of ... (name of
22 community organization) ... will be available to explain the
23 proposed transaction and respond to questions or comments
24 regarding the nature, purpose, and effects of the proposed
25 transaction.
26 (c) A community organization shall permit public
27 inspection at no cost, and copying at the rate set forth in
28 section 119.07(1), Florida Statutes, during the public
29 inspection period, of all relevant records relating to the
30 transaction, including, but not limited to, records setting
31 forth the terms, conditions, and structure of the transaction;
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1 written reports of experts; relevant financial records;
2 affidavits required by this section; records relating to
3 agreements disclosed in any affidavit required by this
4 section, portions of the minutes or any reports or other
5 materials presented at meetings of the board of directors or
6 trustees of all meetings where the proposed transaction was
7 considered; and offers by other outside interests that are
8 reasonably related to the proposed transaction. These records
9 must be made available to the public in a single location
10 during regular business hours in the locale where the
11 community organization maintains its principal place of
12 business.
13 (d) A community organization must hold no fewer than
14 two public hearings in the affected community during the
15 public inspection period at times and locations that are
16 reasonably convenient for members of the affected community to
17 attend and be heard. At such meetings, knowledgeable
18 representatives of the community organization must be
19 available to explain the proposed transaction and respond to
20 questions or comments regarding the nature, purpose, and
21 effects of the proposed transaction.
22 (5) Only the Attorney General or state attorney, on
23 behalf of the affected community, may challenge a proposed
24 transaction under this section by bringing an action for
25 declaratory judgment under chapter 86, Florida Statutes, in
26 the circuit court. In such action, the court may address
27 issues that might be brought before it in a common law cy-pres
28 action. The court may declare that the proposed transaction
29 or any part of it is invalid and may not be consummated, may
30 establish a mechanism to monitor future compliance by the
31 outside interests with the terms of the transaction, or may
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1 order any other equitable or legal relief necessary to ensure
2 that the proposed transaction is fair to the affected
3 community, upon a finding that:
4 (a) The community organization failed to substantially
5 comply with the provisions of this section;
6 (b) The community organization will not receive fair
7 market value for the assets or management authority involved
8 in the proposed transaction;
9 (c) The proposed transaction is not the product of an
10 arms-length negotiation; there exists a material conflict of
11 interest relating to the proposed transaction; or there has
12 been a material breach of fiduciary duty;
13 (d) The proceeds from the proposed transaction will
14 not be applied in a manner consistent with the general
15 donative intent of the benefactors and the charitable mission
16 of the community organization, or there are insufficient
17 safeguards to ensure that any restricted use funds are
18 segregated and used for their intended purpose; or
19 (e) The proposed transaction is fundamentally unfair
20 and not in the best interests of the affected community.
21 (6) Nothing in this section contravenes or limits
22 state or federal antitrust laws or the existing authority of
23 the Attorney General or a state attorney to protect the public
24 interest in matters relating to charitable trusts.
25 Section 2. This act shall take effect October 1, 1997.
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