Why are Non-Profits, like Darrouzett Volunteer Fire Department, records open?
Texas Laws Regarding Non-Profits
Sec. 22.001. DEFINITIONS. In this chapter:
(1) "Board of directors" means the group of persons vested with the management of the affairs of the corporation, regardless of the name used to designate the group.
(5) "Nonprofit corporation" means a corporation no part of the income of which is distributable to a member, director, or officer of the corporation.
(6) "Ordinary care" means the care that an ordinarily prudent person in a similar position would exercise under similar circumstances.
Sec. 22.221. GENERAL STANDARDS FOR DIRECTORS.
(a) A director shall discharge the director's duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation.
(b) A director is not liable to the corporation, a member, or another person for an action taken or not taken as a director if the director acted in compliance with this section. A person seeking to establish liability of a director must prove that the director did not act:
Sec. 22.225. LOAN TO DIRECTOR PROHIBITED.
(a) A corporation may not make a loan to a director.
(b) The directors of a corporation who vote for or assent to the making of a loan to a director, and any officer who participates in making the loan, are jointly and severally liable to the corporation for the amount of the loan until the loan is repaid.
Sec. 22.230. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED DIRECTORS, OFFICERS, AND MEMBERS.
(a) This section applies to a contract or transaction between a corporation and:
(1) one or more directors, officers, or members, or one or more affiliates or associates of one or more directors, officers, or members, of the corporation; or
(2) an entity or other organization in which one or more directors, officers, or members, or one or more affiliates or associates of one or more directors, officers, or members, of the corporation:
(A) is a managerial official or a member; or
(B) has a financial interest.
(b) An otherwise valid and enforceable contract or transaction is valid and enforceable, and is not void or voidable, notwithstanding any relationship or interest described by Subsection (a), if any one of the following conditions is satisfied:
(1) the material facts as to the relationship or interest and as to the contract or transaction are disclosed to or known by:
(A) the corporation's board of directors, a committee of the board of directors, or the members, and the board, the committee, or the members in good faith and with ordinary care authorize the contract or transaction by the affirmative vote of the majority of the disinterested directors, committee members or members, regardless of whether the disinterested directors, committee members or members constitute a quorum; or
(B) the members entitled to vote on the authorization of the contract or transaction, and the contract or transaction is specifically approved in good faith and with ordinary care by a vote of the members; or
(2) the contract or transaction is fair to the corporation when the contract or transaction is authorized, approved, or ratified by the board of directors, a committee of the board of directors, or the members.
(c) Common or interested directors or members of a corporation may be included in determining the presence of a quorum at a meeting of the board, a committee of the board, or members that authorizes the contract or transaction.
(d) A person who has the relationship or interest described by Subsection (a) may:
(1) be present at or participate in and, if the person is a director, member, or committee member, may vote at a meeting of the board of directors, of the members, or of a committee of the board that authorizes the contract or transaction; or
(2) sign, in the person's capacity as a director, member, or committee member, a written consent of the directors, members, or committee members to authorize the contract or transaction.
(e) If at least one of the conditions of Subsection (b) is satisfied, neither the corporation nor any of the corporation's shareholders will have a cause of action against any of the persons described by Subsection (a) for breach of duty with respect to the making, authorization, or performance of the contract or transaction because the person had the relationship or interest described by Subsection (a) or took any of the actions authorized by Subsection (d).
Sec. 22.351. MEMBER'S RIGHT TO INSPECT BOOKS AND RECORDS.
A member of a corporation, on written demand stating the purpose of the demand, is entitled to examine and copy at the member's expense, in person or by agent, accountant, or attorney, at any reasonable time and for a proper purpose, the books and records of the corporation relevant to that purpose.
Sec. 22.352. FINANCIAL RECORDS AND ANNUAL REPORTS.
(a) A corporation shall maintain current and accurate financial records with complete entries as to each financial transaction of the corporation, including income and expenditures, in accordance with generally accepted accounting principles.
(b) Based on the records maintained under Subsection (a), the board of directors of the corporation shall annually prepare or approve a financial report for the corporation for the preceding year. The report must conform to accounting standards as adopted by the American Institute of Certified Public Accountants and must include:
Sec. 22.353. AVAILABILITY OF FINANCIAL INFORMATION FOR PUBLIC INSPECTION.
(a) A corporation shall keep records, books, and annual reports of the corporation's financial activity at the corporation's registered or principal office in this state for at least three years after the close of the fiscal year.
(b) The corporation shall make the records, books, and reports available to the public for inspection and copying at the corporation's registered or principal office during regular business hours. The corporation may charge a reasonable fee for preparing a copy of a record or report.
Sec. 22.354. FAILURE TO MAINTAIN FINANCIAL RECORD OR PREPARE ANNUAL REPORT; OFFENSE.
(a) A corporation commits an offense if the corporation fails to maintain a financial record, prepare an annual report, or make the record or report available to the public in the manner required by Section 22.353.
(b) An offense under this section is a Class B misdemeanor.
Sec. 22.355. EXEMPTIONS FROM CERTAIN REQUIREMENTS RELATING TO FINANCIAL RECORDS AND ANNUAL REPORTS.
Sections 22.352, 22.353, and 22.354 do not apply to:
(1) a corporation that solicits funds only from members of the corporation;
(2) a corporation that does not intend to solicit and receive and does not actually raise or receive during a fiscal year contributions in an amount exceeding $10,000 from a source other than its own membership;
(3) a private or independent institution of higher education described by Section 61.003, Education Code, accredited by a recognized accrediting agency as defined by Section 61.003, Education Code, a postsecondary educational institution authorized to grant degrees under a certificate of authority issued by the Texas Higher Education Coordinating Board or a foundation chartered for the benefit of the institution or any component part of the institution, a career school or college that has received a certificate of approval from the Texas Workforce Commission, a public institution of higher education or a foundation chartered for the benefit of the institution or any component part of the institution, or an elementary or secondary school;
(4) a religious institution that is a church, an ecclesiastical or denominational organization, or another established physical place for worship at which religious services are the primary activity and are regularly conducted;
(5) a trade association or professional society the income of which is principally derived from membership dues and assessments, sales, or services;
(6) an insurer licensed and regulated by the Texas Department of Insurance; or
(7) an alumni association of a public or private institution of higher education in this state that is recognized and acknowledged as the official alumni association by the institution.
Sec. 22.356. CORPORATIONS ASSISTING STATE AGENCIES.
(a) In this section, "state agency" means:
(1) a board, commission, department, office, or other entity that is in the executive branch of state government and that was created by the constitution or a statute of this state, including an institution of higher education as defined by Section 61.003, Education Code;
(2) the legislature or a legislative agency; or
(3) the supreme court, the court of criminal appeals, a court of appeals, the state bar, or another state judicial agency.
(b) The books and records of a corporation other than a bona fide alumni association are subject to audit at the discretion of the state auditor if:
(1) the corporation's charter specifically dedicates the corporation's activities to the benefit of a particular state agency; and
(2) a board member, officer, or employee of that state agency sits on the board of directors of the corporation in other than an ex officio capacity.
(c) If the corporation's charter specifically dedicates the corporation's activities to the benefit of a particular state agency but the conditions described by Subsection (b)(2) do not exist, a corporation shall file with the secretary of state a copy of the report required by Section 22.352(b) for the preceding fiscal year not later than the 89th day after the last day of the corporation's fiscal year.
Sec. 22.358. NOTICE REGARDING REPORT.
(a) The secretary of state shall send written notice that the report required by Section 22.357 is due. The notice must be:
(1) addressed to the corporation; and
(2) mailed to the corporation's registered agent or to the corporation at:
(A) the last known address of the corporation as it appears on record in the office of the secretary of state; or
(B) any other known place of business of the corporation.
(b) The secretary of state shall include with the notice a report form to be prepared and filed as provided by this subchapter.