No conflict-of-interest transaction occurred between a church and district council when church members voted to close the church and its property reverted to the district council pursuant to the church’s bylaws. Glad Tidings church was a Nebraska non-profit corporation that owned certain property, including real estate. Its constitution and bylaws provided that all of its property reverted to the district council if Glad Tidings ever ceased to function as a church. At a meeting to address long-standing difficulties the church was having, the congregation voted, by all standing, to close the church. Two of Glad Tidings’ board members also held positions with the district council. Glad Tidings subsequently alleged that, because the district council received Glad Tidings’ property when it closed, it was “a transaction with the corporation in which a director of the corporation has a direct or indirect interest,” proscribed by Nebraska statute. The court concluded, however, that church policy mandated that the property revert, and that there was no “transaction” under Nebraska statute because there were “no negotiations, no bilateral agreement, and no ‘deal’” between Glad Tidings and another party. Accordingly, the unilateral action by the “corporation” did not expose the directors to liability for a conflict of interest. See Glad Tidings Assembly of God v. Nebraska Dist. Council of the Assemblies of God, Inc., 734 N.W.2d 731 (Neb. 2007).

Pennsylvania’s Nonprofit Corporation Law grants anyone with rights or duties similar to those of a corporation’s members standing to challenge corporate actions that may affect their rights. The law provides that “[u]pon petition of any person whose status as, or whose rights or duties as, a member, director, member of an other body, officer or otherwise of a nonprofit corporation are or may be affected by any corporate action, the court may hear and determine the validity of such corporate action” (emphasis added). When evaluating the standing of a non-profit health plan’s subscribers, the court concluded the word “otherwise” in the statute expanded the class of persons covered beyond those expressly listed. The court then looked at the articles of incorporation of Independence Blue Cross (“IBC”), which gave its subscribers (those insured under the plan) rights to elect board members, remove board members, amend the articles of incorporation and bylaws, and to dissolve the corporation, among other things. The rights IBC granted subscribers were similar to those typically given to a corporation’s members. Accordingly, the court concluded that the subscribers had standing under the statute to challenge IBC’s corporate action of failing to apply its profits to the corporation’s lawful activities and its accumulation of a surplus of reserves for conversion to a for-profit corporation or merger, an action which could affect the subscribers’ rights in IBC. See Ciamaichelo v. Independence Blue Cross, 928 A.2d 407 (Pa. Commw. Ct. 2007).

Members of a Missouri “public benefit corporation” cannot transfer their membership, or any rights arising from it, to anyone else. Accordingly, when Freeman and Tri-State, two member hospitals of a three-member emergency medical services non-profit corporation consolidated, Tri-State’s corporate existence ceased and its membership in the emergency medical services corporation was extinguished, rather than transferring to Freeman or its successor, the consolidated hospital FHS. FHS was therefore not entitled to two-thirds of the board seats. Rather, consistent with the provision in the by-laws that equal representation be maintained, the newly consolidated hospital and St. John’s, the other original member hospital, were each entitled to appoint three seats on the six-member board. See St. John’s Regional Medical Center v. Freeman Health System, 235 S.W.3d 46 (Mo. Ct. App. 2007).

Amendments to non-profit corporation’s bylaws, granting members (the four families occupying the residential building owned by the non-profit) more than one vote were invalid under New York statute that provides at all meetings of members, “each member ‘shall have no more than, nor less than, one vote.’” The non-profit’s bylaws were amended to give each of the four families a membership certificate that would entitle them to three votes with respect to any issue to be voted upon by the members. The bylaws further gave one of the four families, which occupied an additional 300 square feet of the building, an additional vote. After two families challenged election of the board in court, the court invalidated the new bylaw as violating the New York Non-Profit Corporations statute’s one-person one-vote rule. It reinstated the former bylaws which had granted one vote to each member-resident and which deemed all members of the corporation to be members of the board when there are fewer than ten members. Thakur v. 210 Forsyth Street Housing Development Fund Corp., 844 N.Y.S.2d 686 (N.Y. Sup. Ct. 2007).

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