New Compliance Laws for D.C. Nonprofits Effective January 1, 2012

All domestic and foreign nonprofit corporations authorized to do business in the District of Columbia must comply with new laws pursuant to The DC Nonprofit Corporation Act of 2010 (“The Act”). This is the first substantial change to the D.C. Official Code since 1962. The new laws replace old laws formed under DC law in 1962 and later. Additionally, the new laws apply to nonprofits formed before 1962, which are still covered under the pre-1962 law (“Old Act Companies”). Old Act Companies have a transition period of two years before they are required to comply with the new laws, which are effective January 1, 2014.

The Act contains several provisions that address matters such as the new filing deadline for the biennial report, record-keeping requirements, standards of conduct for officers, directors, and committees, the structure of the board and committees, voting rights, maintaining Articles and Bylaws, the inspection of membership lists, maintaining corporate records and financial statements, domestication, and notice of charitable dissolution. 

We have outlined the most important revisions below:

• The DC biennial report is now due every two years by April 1. Previously, the due date was January 15.
• Corporate records can now be kept in digital form.
• Records of board minutes must be kept permanently.
• Records such as articles, bylaws, and all communication to members must be kept at the corporation’s principal office for the most recent three years.
• Minimum board quorum is now the greater of 1/3 of the directors in office or two directors. 
• New guidelines for establishing committees and a designated body.
• There must be at least two separate officers. One officer must be responsible for management, such as a president, and one must be responsible for finances, such as a treasurer. The president and treasurer cannot be the same individual.
• New definitions of fiduciary duty, director liability, indemnification, and “Member”.
• New guidelines for determining a conflict of interest, holding membership meetings, providing notice for membership meetings held, electing directors, ballot voting, amending articles and bylaws, providing membership lists to all members before a membership meeting, providing corporate records to members upon request, domesticating a foreign corporation (domestication), and providing notice of charitable dissolution.

D.C. nonprofit corporations should develop a strategic approach in determining if their corporate records and policies should be re-structured to be in compliance with the new laws.