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Michigan Non Profit Corporations: 2018 Annual Statement Filing Deadline is October 1. Stay in Good Standing and Maintain your Corporate Formalities.

Good morning, all. I hope you are enjoying the summer. It is most definitely my favorite time to be in Michigan.

Today I received an e-mail from The Michigan Department of Licensing and Regulatory Affairs(“LARA”) reminding that all annual statements and reports for Non Profit Corporations are due October 1, 2018.

2017-09-01 18.01.03

 

At the end of last year LARA transitioned to an

electronic filing system – and disposed of the fax filing. This caused a significant delay in business filings – many of my clients experienced this headache first hand. See my post on this delay.

 

Per LARA’s announcement:

“There are a total of 62,202 Michigan nonprofit corporations and 1,582 foreign corporations that are receiving 2018 reports.”

 

 

“Annual reports must be filed no later than October 1 of each year and can be filed online at www.michigan.gov/corpfileonline. ”

For more information about LARA, please visit www.michigan.gov/lara

 

Consequences for Failing to File:

LARA also reminds that:

“Section 922 of the NPA provides that if a domestic nonprofit corporation neglects or refuses to file a report or pay a fee required by this act for two years, the nonprofit corporation will be automatically dissolved.

It also provides that if a foreign nonprofit corporation neglects or refuses to file a report or pay a fee required by this act for one year, the nonprofit corporation’s certificate of authority is subject to revocation under section 1042.

“A nonprofit corporation that has been automatically dissolved or certificate of authority revoked is not entitled to a certificate of good standing; its corporate name will be available for use by another entity, and no document will be filed on behalf of the corporation.”

Is your Corporation in Good Standing?

Occasionally I will have a business client come in and I will ask – just to make sure – “is your business still in good standing?”

The common answer is “I think so.”

And of course, after I perform a quick internet check

with the State of Michigan it is all too common that I discover that either the Company is “not in good standing” or worse, the company has been dissolved automatically for failure to file annual statements.

In Conclusion:

Business owners, if you get these annual statements from the State of Michigan, or from your attorney – do not disregard them! Ma

intain your Corporate Formalities.

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

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Michigan Behind the Ball with Benefit Corporation Laws.

Good afternoon, all. It has been a while since my last post – I hope you all have been enjoying the summer.

I usually include in these posts a recent photo of downtown Grand Rapids where my office overlooks Rosa Parks Circle.

7.10 On one of my walks downtown last week I decided to take a different photo – the memorial of Rosa Parks – the courageous woman who  this part of downtown Grand Rapids is named after.

It is wonderful to see Rosa Parks, and all that she stood for, honored – prominently at the intersection of Monroe Center and Monroe Avenue.

People, particularly vulnerable people, who stand up for what is right, even in the face of fierce opposition, should be honored.

 

 

 

West Michigan is truly a unique place where business and philanthropy intersect unlike any other place.  Giving of time, talents and treasure to worthy causes is embedded in the culture of this community.

 

Because business as a force for good is part of the fabric of Grand Rapids, it only makes sense to me that social enterprises such as benefit corporations should be able to thrive in West Michigan.

BCorp Certification is Trending in Michigan…

Over the last several years more and more local businesses have becoming Certified B Corps through BLabs. West Michigan has the most concentration of BCorp businesses in the State.

Check out a March article from Rapid Growth Media on the strong presence of Bcorps in West Michigan.

Headlines in Grand Rapids have brought attention to the need for businesses to ask the question: Am I working to build a better community?

 

B-Corp certification is one way (certainly not the only way) for businesses to hold themselves accountable to being a good community partner.

 

Unfortunately, Michigan has no legal framework for BCorps – yet.

 

BCorps?

A few months back the State House tantalized social entrepreneurs, once again, with the possibility of benefit corporations (“Bcorps”) becoming a viable legal option to do business in the State of Michigan.

House Bills 5867, 5868 & 5869 were introduced on April 24, 2018, that would allow BCorps to be formed under Michigan Law.

 

There has been no movement on this bill.

 

Back almost two years ago the legislature proposed similar legislation which died in committee. For a review of the Former BCorp Bills, the House Fiscal Agency issued a Fiscal Analysis, check it out here. 

 

The Analysis provides good background on what the legislation would do. This is helpful for those who are not overly familiar with BCorps in general.

 

 

The latest proposed Bcorp Legislation

The current Bcorp legislation has some different language than the 2016 proposed language. I am assuming it conforms with the model BCorp Legislation. One difference is the definition of “general public benefit” to “specific public benefit” which would be defined under the new Bcorp law as:

 

“SPECIFIC PUBLIC BENEFIT” INCLUDES, BUT IS NOT LIMITED TO,
ANY OF THE FOLLOWING:
(i) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR
COMMUNITIES WITH BENEFICIAL PRODUCTS OR SERVICES.
(ii) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR
COMMUNITIES BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF
BUSINESS.

(iii) PRESERVING THE ENVIRONMENT.
(iv) IMPROVING HUMAN HEALTH.
(v) PROMOTING THE ARTS, SCIENCES, OR ADVANCEMENT OF KNOWLEDGE.
(vi) INCREASING THE FLOW OF CAPITAL TO ENTITIES THAT HAVE A
PUBLIC BENEFIT PURPOSE

 

Education on the “why” for BCorps.

Interested groups and local politicians have been educating the public on why BCorp laws would be a good thing for our state.

State Rep Hank Vaupe gave a discussion to a local chamber group on B-Corps two Septembers ago:

As Rep. Vaupe indicated “benefit corporations provide an opportunity for businesses to use the markets, rather than traditional charity giving, to advance their philanthropic missions.”

 

 

Michigan is behind the ball.

 

Over the last several years Michigan legislators have repeatedly introduced BCorp legislation – to no avail.

Check out this handout from Rep Barnett almost 8 years ago in support of the BCorp legislation he proposed in September 2010.

I found particularly interesting the very last section – it provides some comment on why some Michigan businesses may have been averse to the introduction of BCorp legislation. Feel free to read it and reach your own conclusions.

 

Michigan now ranks as one of the vast minority of states that has not enacted benefit corporation legislation.

 

Check out the Benefit Corporation website for a state by state legislative analysis.

 

Of particular note, just a few months back in February our neighboring State of Wisconsin has enacted Bcorp legislation.

 

I am hopeful for a more meaningful update on these Bills in the months to come…

 

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

 

 

Detroit Startup Week Kicks Off – Schedule Now Available, Includes Legal Workshops

Today starts art festival in Grand Rapids – I took this photo just minutes ago.

Summer is coming fast and so is Detroit Startup Week. Scheduled from June 18-22.

6.1

According to its website, Startup week is:

“A week long celebration of Detroit’s entrepreneurs. Volunteer-led and completely free for attendees, we are aiming to create a community driven event that builds a stronger startup ecosystem. Startup Week is held in dozens 

of cities around the world.”

Crain’s Detroit reported  that the venue will be moved to outdoors where a crowd of 8,000 – 10,000 is expected, up from last year’s 6,500.

Crain’s reports that Startup week will consist of similar “weeklong collection of panel discussions, speeches, activities, networking and competitions is bringing back its women-tailored entrepreneur events.”

 

The Schedule is Now Available

Check out the great workshops and events for entrepreneurs which will take place in Detroit in the coming weeks.

Last year the week kicked off with Detroit’s Small Business Legal Academy.

 

This year there are several types of legal workshops including:

  • Social Enterprise/non-profit.

Social Enterprise is definitely a trending area in Michigan.

 

I think it is no secret – that startup businesses would do well to get some basic legal  during their business startup

 

I had a client send me this e-mail, below (unprompted) which I was given permission to share – it is extremely on point:

 

“I don’t think you understand how valuable your assistance is. A small guy like me, without you, would sign whatever they put in front of me and get into big trouble because of that someday.  The problem is that most small businesses don’t understand how critical legal review is either.” – client

 

The reality is that there are a host of legal areas that can turn into pitfalls for startup businesses – over the years I have written on quite a few of those areas, including:

Terms and Conditions in Contracts

Non-Competition Agreements

Entity Formation and Personal Liability

Personal Guarantees

 

 

Cash flow is a barrier for startups. This doesn’t mean you should avoid educating yourself on the legal issues affecting your business.

Take advantage of the resources available.

Consult with an attorney – Particularly law firms friendly to startup businesses.

 

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

twitter: @JeshuaTLauka

Staring Into the Eyes of a Fatherless Generation.

There’s nothing like a Michigan summer.

Memorial Day weekend means the beginning of summer – and, consequently, the end of the school year.

 

IMG_2377

 

Today was my last day of mentoring for the school year.  Unless my student moves  (which is always possible) I hope to see him in the Fall.

Most of my interaction with my student is asking questions and just trying to encourage him.

 

One question I asked him today while shooting basketballs during recess:

 

 

 

Do you think you will see your dad this summer?

His answer: I don’t know.

I will state the obvious: The fact that this elementary school aged boy doesn’t know if he will see his father for months is heartbreaking.

This reality is simply not how the world should be.

And, unfortunately, this story is typical.

 

Fatherless Generation

I took these statistics from the Fatherless Generation

  • 63% of youth suicides are from fatherless homes (US Dept. Of Health/Census) – 5 times the average.
  • 90% of all homeless and runaway children are from fatherless homes – 32 times the average.
  • 85% of all children who show behavior disorders come from fatherless homes – 20 times the average.  (Center for Disease Control)
  • 80% of rapists with anger problems come from fatherless homes –14 times the average.  (Justice & Behavior, Vol 14, p. 403-26)
  • 71% of all high school dropouts come from fatherless homes – 9 times the average.  (National Principals Association Report)

 

I look at these statistics, and ask myself:

is it worthwhile spending one hour a week during the school year with a boy who needs a positive male role model?

The answer every time is “Yes.

I am not writing this post to: a) pat myself on the back or b) guilt anyone who is reading this.

I am just trying to illuminate a reality.

I often hear people say they cannot believe the poverty, brokenness, homelessness, addiction, that families are experiencing right in our own City. of Grand Rapids

It is true.

It is also true, that we can’t do everything, but we can do something.

What about you?

Are you working to build a better community?

E-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

Twitter: @JeshuaTLauka

My Thoughts on Social Enterprise: Am I Living Each Day with Conviction and Purpose?

Last week I mowed the lawn for the first time this year.

I didn’t have any gas to fill up the mower, so I just relied on the unknown amount of gas that had been in the mower over the winter.

As I was mowing the back yard, the largest portion of my lawn, I kept wondering – is this gas going to last the entire lawn? I really had no idea.

5.24

I like mowing the lawn because it gets me thinking outside of myself.

My thoughts shifted to a friend who had unexpectedly passed away in February. My friend was the same age as me, 37, he was in excellent health, married with young children. He died suddenly of a heart attack while vacationing with his family.

 

 

 

 

I am sure my friend had no idea that morning he woke up on vacation, that it would be his last on earth.

 

Mowing the lawn without knowing how much gas was in the tank reminded me of how none of us are promised tomorrow.

I had no idea when my mower was out of gas.

None of us knows when we will breathe our last breath.

It gave me pause to ask myself:

am I living each day with conviction and purpose?

am I living each day for what really matters?

 

I think we all could benefit from this “eternal” or “purposeful” mindset.

 

This “purposeful mindset”  is one reason why I love social entrepreneurs:

Those in business who are purposeful in using their business as a force for good.

 

And it is why I am excited about the proposed Benefit Corporation laws that have once again been introduced in the State Legislature.

 

My call to you:
Be purposeful.

Be eternally minded.

 

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

 

Michigan is Back Trending Towards Social Entrepreneurship: April 24, 2018 Benefit Corporation Legislation Proposed.

April 30, 2018 3 comments

Good morning! Downtown Grand Rapids is starting to look and feel like spring. The trees are just starting to get their leaves – I can’t wait for West Michigan to become green once again.

4.30

Speaking of new life – the legislature has breathed new life in the possibility of benefit corporations (“Bcorps”) becoming a viable legal option to do business in the State of Michigan.

House Bills 5867, 5868 & 5869 were introduced last week, on April 24, 2018, that would allow BCorps to be formed under Michigan Law.

 

Back almost two years ago the legislature proposed similar legislation which died in committee. For a review of the Former BCorp Bills, the House Fiscal Agency issued a Fiscal Analysis, check it out here. The Analysis provides good background on what the legislation would do. This is helpful for those who are not overly familiar with BCorps in general.

 

 

The latest proposed Bcorp Legislation

The current Bcorp legislation has some different language than the 2016 proposed language. One difference is the definition of “general public benefit” to “specific public benefit” which would be defined under the new Bcorp law as:

 

“SPECIFIC PUBLIC BENEFIT” INCLUDES, BUT IS NOT LIMITED TO,
ANY OF THE FOLLOWING:
(i) PROVIDING LOW-INCOME OR UNDERSERVED INDIVIDUALS OR
COMMUNITIES WITH BENEFICIAL PRODUCTS OR SERVICES.
(ii) PROMOTING ECONOMIC OPPORTUNITY FOR INDIVIDUALS OR
COMMUNITIES BEYOND THE CREATION OF JOBS IN THE NORMAL COURSE OF
BUSINESS.

(iii) PRESERVING THE ENVIRONMENT.
(iv) IMPROVING HUMAN HEALTH.
(v) PROMOTING THE ARTS, SCIENCES, OR ADVANCEMENT OF KNOWLEDGE.
(vi) INCREASING THE FLOW OF CAPITAL TO ENTITIES THAT HAVE A
PUBLIC BENEFIT PURPOSE

 

I still need to perform a more detailed review of the legislation to see how it differs from the prior iteration; and also how it compares to what other states are doing.

 

 

Education on the “why” for BCorps.

Interested groups and local politicians have been educating the public on why BCorp laws would be a good thing for our state.

State Rep Hank Vaupe gave a discussion to a local chamber group on B-Corps two Septembers ago:

As Rep. Vaupe indicated “benefit corporations provide an opportunity for businesses to use the markets, rather than traditional charity giving, to advance their philanthropic missions.”

 

BCorp Certification is Trending in Michigan…

Over the last several years more and more local businesses have becoming Certified B Corps through BLabs. West Michigan has the most concentration of BCorp businesses in the State.

Check out a March article from Rapid Growth Media on the strong presence of Bcorps in West Michigan.

Headlines in Grand Rapids have brought attention to the need for businesses to ask the question: Am I working to build a better community?

 

B-Corp certification is one way (certainly not the only way) for businesses to hold themselves accountable to being a good community partner.

 

Why has it taken so long to get here?

 

Over the last several years Michigan legislators have introduced BCorp legislation – to no avail.

Check out this handout from Rep Barnett several years ago in support of the BCorp legislation he proposed in September 2010.

I found particularly interesting the very last section – it provides some comment on why some Michigan businesses may have been averse to the introduction of BCorp legislation. Feel free to read it and reach your own conclusions.

Trending Towards Social Entrepreneurship.

The trends all show that millennials and our up and coming workforce want to to be part of business as a force for good in our local community.

Questions? Comments?

Jeshua@dwlawpc.com

http://www.dwlawpc.com

Connect with me on Twitter: @JeshuaTLauka

Business Law Update: When Can a Business Sue Another Business over its Corporate Status?

March 29, 2018 Leave a comment

I (like much of West Michigan) am headed out the office and on vacation for my kids’ Spring Break. But before I go I wanted to share an interesting business law case that came out a few days ago.

2016-01-09 12.56.14

Check out the March 27, 2018  case:

Michigan Radiology Society v OMIC, LLC et al

The first sentence of the opinion sums up the dispute:

This case arises from plaintiff’s effort to prevent defendants from continuing the
operation of their business.

 

 

 

 

Facts:

 

  • Plaintiff is a non-profit corp. Its owners are radiologists licensed to practice medicine in Michigan.
  • Defendant OMIC, LLC,  is a for-profit LLC.
  • OMIC  provides diagnostic imaging to the public and is solely owned and managed by defendant SusanSwider.
  • Defendant Susan Swider is not a licensed physician.
  • Plaintiff sued, claiming that defendants were in violation of:
    • the Michigan Limited Liability Company Act (LLCA)
    • the Business Corporation Act (BCA),  and
    • the Public Health Code (PHC)

 

Plaintiff sued asking for declaratory and injunctive relief.

Basically, Plaintiff claimed “You can’t do that! You need to be properly licensed!”

The case was dismissed by the Trial Court.

A reasonable question to ask is: Why?  

 

Why was the case dismissed by the Trial Court?

Answer: Plaintiff was not a proper party to enforce a claimed violation under the statutes.

Plaintiff did not have “standing”.

 

Who has Standing to Bring a Claim?

The Court of Appeals cited the long standing law of our constitution:

Our constitution requires that a plaintiff possess standing before a court
can exercise jurisdiction over that plaintiff’s claim. This constitutional standing
doctrine is longstanding and stems from the separation of powers in our
constitution. Because the constitution limits the judiciary to the exercise of
“judicial power,” Const 1963, art 6, § 1, the Legislature encroaches on the
separation of powers when it attempts to grant standing to litigants who do not
meet constitutional standing requirements.” Id page 3.

 

So in this case, Plaintiff sued Defendants saying they violated 3 statutes. The question presented was, did the Plaintiff have standing to sue Defendants under those statutes?

“Statutory standing…necessitates an inquiry into whether a statute
authorizes a plaintiff to sue at all.” Id. Page 3.

Basically, the Court held that the statutes above that the Plaintiff sued under (LLCA, BCA PHC), only allowed the Attorney General to sue to enforce a violation.

“[T]he Attorney General alone has the authority to challenge corporate status.” Id. Page 3,  citing  Miller v Allstate Ins Co, 481 Mich 601, 606-608; 751 NW2d 463 (2008)

 

Lesson:

If you are a business and believe another business is operating “illegally” it doesn’t mean you are the proper party to sue them.

Think about this another way: You are business and know of a business that is gouging a client of yours – does that give you the right to sue that business? Do you have standing to sue that business.

Something you should talk with your lawyer about…

For all of those traveling on Spring Break – safe travels!

 

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka