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This is a non-Model Act provision. It is essentially the same as Section 33-4-104 of the South Carolina Business Corporation Act. The South Carolina Reporters' Comments to that section may be helpful in interpreting this section. This provision also had a counterpart in the earlier nonprofit statutes. Former Section 33-31-170 required that all nonprofit charters and any amendments thereto (regardless if the corporation owned any real property) were to be recorded within thirty days after the charter was issued in the office of the clerk of court or register of mesne conveyances in the county in which the corporation is organized.

Section 33-31-501. Registered office and registered agent.

Each corporation must continuously maintain in this State:

(1) a registered office with the same address as that of the registered agent; and

(2) a registered agent, who may be:

(i) an individual who resides in this State and whose office is identical with the registered office;

(ii) a domestic business or nonprofit corporation whose office is identical with the registered office; or

(iii) a foreign business or nonprofit corporation authorized to transact business in this State whose office is identical with the registered office.
OFFICIAL COMMENT

Section 5.01 is particularly important for nonprofit corporations, many of which are small, have no permanent office, and are difficult to locate. Section 5.01, by mandating a registered agent and registered office, provides a place where service of process can be made and notices from governmental entities directed.

Section 5.01 requires all nonprofit corporations to maintain a registered office and a registered agent at the same address. The office may be anywhere in the state. It is a "legal" office and in many cases will not be the same as the real office, if any, of the corporation. Any person who resides in the state, any domestic nonprofit or business corporation or any

Under the prior nonprofit statutes contained in former Chapter 31, Title 33, it was unclear whether nonprofit corporations were required to have statutory agents. The nonprofit statutes themselves were silent on the matter. However, a provision in the South Carolina Business Corporation Act, Section 33-20-103, stated:
Chapters 1 through 20 of this Title apply to every domestic nonprofit corporation and to every foreign nonprofit corporation which is authorized or transacts business in this State except as otherwise provided in Chapter 1 through 20 of this Title or by the law regulating the organization, qualifi- cation, or governance of the nonprofit corporation.
Did this language require nonprofit corporations to have statutory agents? The Secretary of State did not interpret the section as requiring such. This policy of not requiring statutory agents for nonprofit corporations created problems in the context of litigation respecting homeowner associations and incorporated condominium regimes. Whether or not formerly required, it was obvious and logical that nonprofit corporations should also have agents.
2. Operation of new section

This new section is identical to Section 33-5-101 of the South Carolina Business Corporation Act. Although not mentioned in this Section 33-31-501, but mentioned in Sections 33-31-202(a)(3) and 33-31-502, the actual street address (not post office box) must be listed for the office and agent. There is now a separate section, with identical language, which specifies the requirements for a registered office and agent for foreign nonprofit corporations. See Section 33-31-1507.

Section 33-31-502. Change of registered office or registered agent.

(a) A corporation may change its registered office or registered agent by delivering to the Secretary of State for filing a statement of change that sets forth:

(1) the name of the corporation;

(2) the street address, with zip code, of its current registered office;

(4) the name of its current registered agent;

(5) if the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent, either on the statement or attached to it, to the appointment; and

(6) that after the change or changes are made, the street addresses of its registered office and the office of its registered agent which will be identical.

(b) If the street address of a registered agent's office is changed, the registered agent may change the street address of the registered office of any corporation for which the registered agent is the registered agent by notifying the corporation in writing of the change and by signing, either manually or in facsimile, and delivering to the Secretary of State for filing a statement that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.
OFFICIAL COMMENT

Section 5.02 provides an easy method for changing a registered agent or registered office without the need to obtain board or member approval. The section requires a newly designated registered agent to sign a written consent to the appointment. This is to ensure that a nonprofit corporation does not appoint someone to serve as registered agent without informing that person of the appointment and obtaining that person's consent.

Section 5.02(c) allows a registered agent to change the address of the registered office simply by notifying he corporation and signing and delivering a statement of change to the secretary of state.
SOUTH CAROLINA REPORTERS' COMMENTS

This is identical to the previously applicable section, Section 33-5-102 of the South Carolina Business Corporation Act. If a new agent is being appointed he must consent to the appointment. Any authorized officer can appoint a new agent without formal board of directors' approval. If the agent dies or becomes incapacitated, Section 33-31-501 imposes a duty on the nonprofit corporation to appoint a successor. The registered agent, as any other agent, serves at the pleasure of the corporation and the corporation has the right to terminate the agent. If the agent merely moves its office, the agent itself may notify both the corporation and Secretary of State of the move. The notification to the Secretary of State shall contain all the same information as if the corporation were directing the change.

Section 33-31-503. Resignation of registered agent.

(b) After filing the statement the Secretary of State shall mail one copy to the registered office, if not discontinued, and the other copy to the corporation at its principal office as shown in its articles or most recently filed notice of change of principal office.

(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.
OFFICIAL COMMENT

Under section 5.03 a registered agent may resign by delivering to the secretary of state a signed original and two copies of a statement of resignation. The secretary of state will then inform the corporation of the resignation by mailing one copy to the registered office and another copy to the corporation "at its principal office shown on its most recent annual report filed under section 16.22." [In South Carolina, the principal office shown on the most recent Notice of Change of Principal Office.]
SOUTH CAROLINA REPORTERS' COMMENTS

This section is similar to the formerly applicable provision of the South Carolina Business Corporation Act, Section 33-5-103. The agency does not end for thirty-one days after the agent gives notice. Therefore, resigning agents have a continuing duty during this thirty-one day period. Although there may be overlap if one agent quits and another one is appointed within the thirty-one day grace period, service on either agent would be proper. (Section 33-31-501 mandates the nonprofit corporation to appoint a successor agent.) This is a beneficial option. For example, during ongoing litigation a party will be able to serve the "old" agent for the thirty-day window period. The party will not have to continuously check the Secretary of State's office to determine if a new agent might have been appointed since the last service was made. Some states have a provision that the agency ends as soon as a new agent is appointed. This prevents an overlap which is possible under the South Carolina Statute. For example, in South Carolina if agent #1 quits, his resignation is not effective for thirty-one days. If Agent #2 is appointed one day after agent #1 quits both will be serving for the thirty-day window period. There is a an identical, separate section, Section 33-31-1509 dealing with the resignation of agents for foreign nonprofit corporations.

Section 33-31-504. Service on corporation.

[Portions of Model Act section 5.04 are incorporated into Section 15-9-210 of the Code of Laws of South Carolina, 1976.] Section 5.04 sets forth two nonexclusive ways of serving a corporation with process. A nonprofit corporation can be served by serving its registered agent if it has one. If it has no registered agent, or the registered agent cannot with reasonable diligence be served, the corporation may be served at its principal office as shown on the most recent annual report filed under section 16.22. [In South Carolina the principal office is designated on the most recently filed Notice of Change of Principal Office.]

Section 5.04 does not prescribe the only means or necessarily the required means of serving the corporation. A state may have a code of civil procedure or other law providing alternative ways of serving nonprofit corporations.
SOUTH CAROLINA REPORTERS' COMMENTS

Portions of Model Act section 5.04 are incorporated into Section 15-9-210. Extensive comments explaining Section 15-9-210 are contained in the Reporters' Comments to Section 33-5-104 of the South Carolina Business Corporation Act. In adopting the South Carolina Business Corporation Act, it was determined that the service provisions should be retained in Title 15. Since the proposed nonprofit service provisions are similar to the existing provisions in Section 15-9-210, it was reasonable to amend Section 15-9-210. If service is made directly on the corporate secretary as provided in Section 15-9-210(b), the address would be the last filed Notice of Change of Principal Office, or if none has ever been filed, the principal office specified in the articles of incorporation.

In some instances, if the corporation fails to maintain a statutory agent to receive service of process, the Secretary of State becomes the corporation's statutory agent. See, for example, section 33-31-1707(b).

Section 33-31-505. Notice of Change of Principal Office.

If a corporation changes the location of its principal office, the corporation within thirty days shall file a Notice of Change of Principal Office with the Secretary of State. The Notice of Change of Principal Office shall set forth:
a. The name of the corporation; and

b. The current street address with zip code of the corporation's principal office and the former principal office address.

Historically, not all nonprofit corporations have been required to file an annual report with the Tax Commission. Churches have been exempt. With the adoption of this South Carolina Nonprofit Corporation Act, the Department of Revenue and Taxation desired to exempt all nonprofit corporations from filing an annual report since it was costing more to process the paper than it was worth.

The annual report as to for-profit corporations functions to advise the public of changes in the entity's principal office. The current directors (with addresses) are listed in the annual report. Therefore, by eliminating the requirement that nonprofit corporations file an annual report an alternative public notice was required.

Therefore, each nonprofit corporation must file a short form with the Secretary of State, much in the nature of a notice of change of statutory agent. This filing is required to be made within thirty days of any change in the corporation's principal office.

Some nonprofit corporations such as Rotary clubs, the Kiwanis, and others, will not have an actual permanent location. They will have a usual place of meeting and may maintain a mailbox or a member's address as their mailing address. It is anticipated that the Secretary of State will liberally construe the requirement in this section that the organization list its "street address." In situations where the organization does not actually own or lease property, it is assumed that the filing will be acceptable if it specifies the usual mailing address which the organization uses. The organization, if it desires, could also specify its usual date, time, and place of meeting - or merely its usual place of meeting.

Different from the requirements applicable to business corporations, nonprofit corporations are not required to report changes in their officers and directors. Different from business corporations, most nonprofit corporations, such as churches, clubs, and homeowner corporations, change their directors and officers at least once a year. It was determined that a filling requirement for director changes would be burdensome, would not be complied with, and would not provide significant information.

This is a non-Model Act provision. The Model Act requires all nonprofit corporations to file an annual report.

It should be noted that other provisions of the South Carolina Revised Code impose other filing requirements. For example, many nonprofit corporations will be required to register with the Secretary of State pursuant to the Charitable Solicitations Act, Sections 33-55-40, 33-55-70,

Certain nonprofit corporations are also required, pursuant to Section 33-31-1620 to make reports to their members which reports may also be open to inspection by the Attorney General or Secretary of State.

Section 33-31-601. Admission.

(a) The articles or bylaws may establish criteria or procedures for the admission of members.

(b) No person may be admitted as a member without his consent.
OFFICIAL COMMENT

Section 3.02 allows, but does not require, a nonprofit corporation to admit members. Any person may be admitted as a member. See section 1.40(21). As the definition of person contained in section 1.40(25) is all encompassing, minors, corporations, partnerships, governmental subdivisions and any other person without limitation may be admitted to membership. See New York Not-for-Profit Corporation Law Section 601.

Section 3.02(15) allows corporations to "establish conditions for admission of members" and "admit members." The requirements for admission are normally set forth in the article, bylaws or a resolution adopted by the board. These requirements will be upheld unless they conflict with some federal or state law.

Subdivision (b) prevents corporations from admitting people as members unless they consent to becoming members. Consent may be express or implied. For example, consent may be implied by acceptance of membership benefits knowing that the benefits are only offered to members.

Corporations sometimes name people as members without knowing or having the ability to identify individual members. For example, a corporation's bylaws may provide that "all poor people within one mile of city hall are members entitled to vote for directors." In many instances there is not way to prepare a list of these "members" or meet the notice or other requirements of the Model Act as to them, unless they identify themselves to the corporation. As a result of section 6.01, the above bylaw provision simply authorizes poor people in the area to become members. Before they became members they would have to apply for or consent to joining by attending a meeting, voting or otherwise evidencing

The former act did not address membership directly, but, by analogy to the Business Corporation Act, arguably assumed that nonprofit corporations would have members just as business corporations have shareholders. This argument is strengthened by the former act's reservation to members of significant powers, e.g., the power to amend the corporate charter, Section 33-31-130, and the power to dissolve the corporation, Section 33-31-150. The present act, at Sections 33-31-302 and 33-31-603, permits but does not require nonprofit corporations to have members. This clarity and Section 33-31-601's provision of membership procedures are changes from prior statutory law.

Consent to membership can be implied from circumstances. For example, one who purchases a real estate interest which is subject to covenants of record making the purchaser a member of a nonprofit corporation would have "consented" to membership.

"Member" is defined at Section 33-31-140(21) as "any person". "Person" is defined very broadly to include "any entity".

Section 33-31-602. Consideration.

Except as provided in its articles or bylaws, a corporation may admit members for no consideration or for such consideration as is determined by the board.
OFFICIAL COMMENT

Issuance of a membership, unlike the sale of stock, does not necessarily involve the sale of something of value. Memberships in public benefit and religious corporations have no economic value, but reflect a contribution or a commitment to participate in or support the organization and its objectives. Memberships in mutual benefit corporations may or may not have a n economic value depending on the nature of the organization. Nonprofit corporations need the ability to issue memberships for no consideration or such consideration as is set forth in or determined by their articles, bylaws, or board. Section 6.02 provides this flexibility.

Consideration may take any form including but not limited to promissory notes, intangible property, or past or future services. Payment may be made at such times and upon such terms as are set forth in or authorized by the articles, bylaws or a resolution of the board. It may be a fixed amount or based on a formula. For example, in some trade associations the scot of joining is based on the sales, net worth, or other characteristics of the applicant.

This provision had no direct counterpart in the former act but, by analogy to the Business Corporation Act, membership could be issued only upon adequate consideration determined in the discretion of the board of directors, subject to the directors' standard of care and loyalty. See Section 33-6-210. Section 33-31-602 includes no concept of adequacy, but attention is drawn to the Official Comment's observation that the board's duties of loyalty and care are implicated in the determination of consideration for membership.

Section 33-31-603. No requirement of members.

A corporation is not required to have members.
OFFICIAL COMMENT

Nonprofit corporations are not required to have members. They may operate with designated or appointed directors, self-perpetuating boards or delegates. See sections 6.40 and 8.04(b).

Most mutual benefit corporations have members. The members are those persons for whose benefit the corporation operates. There was some sentiment on the Committee to require all mutual benefit corporations to have members. However, numerous mutual benefit corporations serve or represent individuals or entities who pay for the services or representation but have no right to vote for directors. As they have no right to vote for directors, they are not "members" as that term is used in section 1.40(21) of the Model Act. (The corporation may, however, refer to them as "members.") A majority of the Committee felt that the Model Act should not prevent mutual benefit corporations from operating with self-perpetuating boards. However, by allowing this flexibility, the Model Act does not affect the duties, if any, the board may have toward those for whose benefit the corporation operates and who pay to support its activities. The nature and the extent of these duties, if any, is left to a case-by-case determination.
SOUTH CAROLINA REPORTERS' COMMENTS

See the South Carolina Reporters' Comments to Section 33-31-601.

All members have the same rights and obligations with respect to voting, dissolution, redemption, and transfer, unless the articles or bylaws establish classes of membership with different rights or obligations. All members have the same rights and obligations with respect to any other matters, except as set forth in or authorized by the articles or bylaws.
OFFICIAL COMMENT

Section 6.10 allows great flexibility and diversity in membership rights. In the absence of an applicable article or bylaw provision, all members have the same rights and obligations with respect to voting, dissolution, redemption and transfer. If some members have different rights or obligations in regard to any of these matters, these rights must be set forth in the articles or bylaws and those members comprise a class of members. See section 1.40(5) which defines class as "a group of memberships that have the same rights with respect to voting, dissolution, redemption and transfer." A class vote may be required to amend voting, dissolution, redemption or transfer rights. See sections 10.04 and 10.22. Unless the differences as to voting, dissolution, redemption or transfer are set forth in the articles, or bylaws, each member has the same rights and obligations in regard to these matters as every other member.

The articles or bylaws may authorize any person, group or committee to establish different rights and obligations for different members unless different rights and obligations would create a separate class of members.

The differences may relate to dues, assessments, transfers of memberships in mutual benefit corporations, use of facilities, termination or suspension of members, voting, distributions on dissolution of mutual benefit corporations and other factors. Distinctions can be made between individual, corporate and other entities that are members of the corporation. These distinctions between members can be based on size, net worth, number of employees, activity and other factors. These distinctions do not necessarily result in classes having the right to vote separately on matters requiring a member vote. See sections 10.04 and 10.22.

Federal or state law may prohibit some differences or distinctions. Absent such a law, the underlying philosophy of the Model Act as embodied in section 6.10 is to authorize great diversity in memberships.

Once members have been admitted, a vote of the members may be required to change membership rights and obligations. See sections 10.03, 10.04, 10.21 and 10.22. Members' obligations to the corporation are dealt with in section 6.14.

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