(a) Without the prior approval of a court of record of this state having equity jurisdiction in a proceeding of which the attorney general and reporter has been given written notice of a plan of merger or membership exchange, a plan of entity conversion, or a plan of for-profit conversion in accordance with § 48-61-123; or unless the attorney general and reporter, after receiving written notice to the attorney general in accordance with § 48-61-123, has issued a written statement of no enforcement intent with respect to the plan, a public benefit corporation may be a party to a merger, membership exchange, entity conversion or for-profit conversion transaction described in this chapter only with:

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Terms Used In Tennessee Code 48-61-122

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • board of directors: means the governing board of a corporation, whether denominated the board of directors or otherwise, except that no person or group of persons is the board of directors because of powers delegated to that person or group pursuant to §. See Tennessee Code 48-51-201
  • Business: includes every trade, occupation, profession, investment activity and other lawful purpose for gain or the preservation of assets whether or not carried on for profits. See Tennessee Code 48-202-101
  • Charitable purpose: means a purpose that:
    (A) Would make a corporation operated exclusively for that purpose eligible to be exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. See Tennessee Code 48-51-201
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
  • Directors: means natural persons, designated in the charter or bylaws or elected or appointed by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which such persons are described. See Tennessee Code 48-51-201
  • domestic corporation: means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, as amended. See Tennessee Code 48-202-101
  • Entity: includes the following, whether foreign or domestic: LLCs. See Tennessee Code 48-202-101
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Foreign nonprofit corporation: means a corporation incorporated under a law other than the law of this state, which would be a nonprofit corporation if incorporated under the laws of this state. See Tennessee Code 48-11-201
  • Interest: means either or both of the following rights under the organic law of an unincorporated entity:
    (A) The right to receive distributions from the entity either in the ordinary course or upon liquidation. See Tennessee Code 48-61-101
  • Interest holder: means a person who holds of record an interest. See Tennessee Code 48-61-101
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Membership: means the rights of a member in a domestic or foreign nonprofit corporation and includes the rights and obligations a member has pursuant to a corporation's charter, bylaws and chapters 51-68 of this title. See Tennessee Code 48-61-101
  • Membership interest: means a member's interest in an LLC consisting of a member's financial rights, a member's right to assign financial rights as provided in §. See Tennessee Code 48-202-101
  • Person: includes individual and entity. See Tennessee Code 48-202-101
  • Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Tennessee Code 48-202-101
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Public benefit corporation: means a domestic corporation which becomes by operation of law a public benefit corporation pursuant to §. See Tennessee Code 48-51-201
  • Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in a perceivable form. See Tennessee Code 1-3-105
  • Reporter: Makes a record of court proceedings and prepares a transcript, and also publishes the court's opinions or decisions (in the courts of appeals).
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Unincorporated entity: means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a domestic or foreign business or nonprofit corporation, an estate, a trust, a state, the United States, or a foreign government. See Tennessee Code 48-11-201
  • written: means any information in the form of a document. See Tennessee Code 48-11-201
(1) A domestic nonprofit public benefit corporation;
(2) A foreign nonprofit corporation which would qualify under chapters 51-68 of this title as a public benefit corporation;
(3) A foreign or domestic corporation for profit; provided, that the public benefit corporation is the surviving corporation and continues to be a public benefit corporation after the transaction; or
(4) A foreign or domestic corporation for profit that is the surviving corporation; provided that:

(A) On or prior to the effective date of the transaction, assets with a value equal to the greater of the fair market value of the net tangible and intangible assets (including good will) of the public benefit corporation, or the fair market value of the public benefit corporation if it were to be operated as a business concern, are transferred or conveyed to one (1) or more persons who would have received its assets under § 48-64-106(a)(5) and (a)(6) had it dissolved;
(B) It shall return, transfer or convey any assets held by it upon condition requiring return, transfer or conveyance, which condition occurs by reason of the transaction, in accordance with such condition;
(C) The transaction is approved by a majority of directors of the public benefit corporation who are not and will not become shareholders in or officers, employees, agents or consultants of the for-profit corporation; and
(D) A copy of the plan of transaction is submitted to the attorney general and reporter not less than forty-five (45) days prior to the effective date of the transaction.
(b) A public benefit corporation must give written notice to the attorney general and reporter in accordance with § 48-61-123.
(c) In a transaction to which subdivisions (a)(1), (a)(2) or (a)(3) applies, when a public benefit corporation with members consummates the transaction, each member of the public benefit corporation may only receive or keep a membership or membership interest in the surviving public benefit corporation if the surviving public benefit corporation has memberships or membership interests in accordance with the plan.
(d) Unless a public benefit corporation that is a party to a transaction under this chapter has obtained an order of a court of record in this state having equity jurisdiction to the extent required by the law of this state regarding cy pres or otherwise dealing with the nondiversion of charitable assets, the transaction may not alter, amend, or change the following:

(1) Any restriction or limitation imposed on the public benefit corporation by its documents that may not be altered, amended or changed by its officers, board of directors, members or interest holders;
(2) Any restriction imposed on any assets or property held by the public benefit corporation by virtue of any trust under which it holds the assets or property; or
(3) The existing rights and interests of persons other than members or interest holders in the public benefit corporation.
(e) In any transaction in which a public corporation is a party to a merger, membership exchange, entity conversion or for-profit conversion transaction under this chapter, the public benefit corporation must comply with § 48-62-103(a) with respect to the corporation’s assets and property.
(f) A person who is a member, interest holder or is otherwise affiliated with a public benefit corporation or an unincorporated entity with a charitable purpose may not receive a direct or indirect financial benefit in connection with a transaction under this chapter to which the public benefit corporation is a party unless the party is itself a public benefit corporation or a charitable corporation or unincorporated entity with a charitable purpose. This subsection (f) does not apply to the receipt of reasonable compensation for services rendered.
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