SENATE BILL No. 1288

May 7, 2002, Introduced by Senator JOHNSON and referred to the Committee on

Appropriations.

A bill to amend 1931 PA 327, entitled

"An act to provide for the organization, regulation and classifi-

cation of corporations; to provide their rights, powers and immu-

nities; to prescribe the conditions on which corporations may

exercise their powers; to provide for the inclusion of certain

existing corporations within the provisions of this act; to pre-

scribe the terms and conditions upon which foreign corporations

may be admitted to do business within this state; to require cer-

tain annual reports to be filed by corporations; to prescribe

penalties for the violations of the provisions of this act; and

to repeal certain acts and parts of acts relating to

corporations,"

by amending sections 171, 172, 173, and 177 (MCL 450.171,

450.172, 450.173, and 450.177).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 171. For the purposes of this act, educational corpo-

2 rations shall be classified as follows:

3 (w) Those having a capital of not less than $500,000.00;

4 (x) Those having a capital of not less than $100,000.00, and

5 less than $500,000.00;

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1 (y) Those having a capital of $1,000,000.00 or more;

2 (z) Those instituted and maintained by any ecclesiastical or

3 religious order, society, corporation, or corporations, retaining

4 control of such THE institution for denominational purposes.

5 Every educational corporation, before being authorized to

6 file its articles, shall be required to present a statement to

7 the Michigan corporation and securities commission in writing

8 from the state board of education DEPARTMENT OF CAREER

9 DEVELOPMENT that (1) the housing space and administration facili-

10 ties which THAT it possesses or proposes to provide for its

11 declared field or fields of education are adequate, (2) its pro-

12 posed educational program leading to the diplomas or degrees

13 which THAT it proposes to offer is adequate, (3) its laborato-

14 ry, library, and other teaching facilities which THAT it pos-

15 sesses or proposes to provide are adequate, (4) it has or pro-

16 poses to employ an adequate staff, fully trained, for the

17 instruction proposed, and (5) at least 50% of its capital,

18 whether of stock or in gifts, devises, legacies, bequests, or

19 other contributions of money or property, has been paid in or

20 reduced to possession.

21 In determining whether any educational corporation satisfies

22 conditions specified in classes (w), (x), (y) and (z) of this

23 section, the state board of education DEPARTMENT OF CAREER

24 DEVELOPMENT may treat as a credit to the capital of such THAT

25 corporation the guaranteed annual income of that corporation to

26 the extent that it deems such THE guaranteed income the

27 equivalent of all or any part of the required endowment.

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1 The use of the word "college" or "university" in the name of

2 any group, organization, or association hereafter formed in

3 this state is limited to those educational corporations complying

4 with the requirements for class (w) or class (y) educational cor-

5 porations or to such educational corporations of class (z) as

6 shall THAT satisfy the requirements set up for class (y)

7 corporations. : Provided, however, That the THE words "junior

8 college" may be used by educational corporations of class (x).

9 Whenever IF this provision is violated it shall be the duty

10 of the prosecuting attorney , in the county where IN WHICH

11 the organization is located , to SHALL bring proceedings to

12 enjoin the further use of such THAT name in violation of this

13 act.

14 No educational corporation shall be permitted to expand

15 its program beyond that specified in its articles of incorpora-

16 tion until it has presented to the Michigan corporation and

17 securities commission a statement in writing from the state

18 board of education DEPARTMENT OF CAREER DEVELOPMENT approving

19 the facilities, equipment, and staff or the proposed facilities,

20 equipment, and staff as adequate for the offering of the addi-

21 tional educational program.

22 Sec. 172. (a) Educational corporations of class (w), as

23 defined in section 171, of this act shall have authority to

24 establish and conduct general colleges for furnishing higher

25 learning and to confer such THE degrees and honors as shall

26 be approved by the state board of education DEPARTMENT OF

27 CAREER DEVELOPMENT prior to the filing of articles of

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1 incorporation; and the term "college" as herein used shall be

2 construed to include any college, university, or other institu-

3 tion where AT WHICH the arts, sciences, professions, and higher

4 learning are taught and degrees and honors therein conferred.

5 Such colleges COLLEGES may also include preparatory schools.

6 as commonly understood;

7 (b) Educational corporations of class (x), as defined in

8 section 171, shall have authority to MAY establish and conduct

9 junior colleges, seminaries, academies, or preparatory schools,

10 as determined and approved by the state board of education

11 DEPARTMENT OF CAREER DEVELOPMENT, but not general colleges or

12 universities as defined in subsection (a). hereof;

13 (c) Educational corporations of class (z), as defined in

14 said section 171, shall embrace such INCLUDE schools, acade-

15 mies, or colleges as have been heretofore founded under Act

16 135, Public Acts 1899 FORMER 1899 PA 135, AND known thereunder

17 as "Ursuline academies"; those SCHOOLS, ACADEMIES, OR COLLEGES

18 founded under Act 121, Public Acts 1915 FORMER 1915 PA 121, and

19 known thereunder as "ecclesiastical seminaries"; those

20 SCHOOLS, ACADEMIES, OR COLLEGES founded under Act 28, Public

21 Acts 1901 FORMER 1901 PA 28, and known thereunder as

22 "Evangelical Lutheran deaf mute institutions"; those SCHOOLS,

23 ACADEMIES, OR COLLEGES founded under Act 135, Public Acts 1867

24 FORMER 1867 PA 135, AND known as "industrial and charitable

25 schools"; those SCHOOLS, ACADEMIES, OR COLLEGES organized under

26 paragraph (c), subdivision 1, chapter 2, part 4, of Act 84,

27 Public Acts 1921 FORMER 1921 PA 84, and such ANY other

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1 schools, colleges, and institutions of like character and purpose

2 as may be formed under any law of this state for educational

3 purposes. AN EDUCATIONAL CORPORATION INCLUDED UNDER CLASS (Z)

4 shall have all the rights, powers, privileges, and immunities

5 enjoyed under its act of incorporation and without regard to the

6 classification made in this act, and upon complying with the pro-

7 visions hereof OF THIS ACT shall have such ANY additional

8 rights, powers, privileges, and immunities as are conferred

9 hereunder UNDER THIS ACT according to the classifications pre-

10 scribed in this act. : Provided further, That any ANY corpora-

11 tion heretofore formed under Act 359, Public Acts 1913 1913

12 PA 359, and known thereunder as "kindergarten institutions"

13 shall hereafter be classified under class (x), of sections AS

14 DEFINED IN SECTION 171 and 172 of this act: Provided further,

15 That any THIS SECTION. ANY corporation of class (z) hereafter

16 organized under this act may enjoy HAS the privileges provided

17 under classes (w), (x), and (y), of AS DEFINED IN section 171,

18 on condition that it IF THAT CORPORATION satisfies the require-

19 ments set up for corporations of these THOSE respective

20 classes.

21 (d) Educational corporations of class (y), as defined in

22 section 171, shall have authority to MAY establish and conduct

23 colleges or universities of a graduate rank with programs of

24 studies of 5 years or more.

25 Sec. 173. Same; articles of incorporation. The articles

26 of every educational corporation shall clearly set forth the

27 educational system of the institution to be founded and the

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1 character of the degrees, honors, diplomas, or certificates

2 which THAT it proposes to grant, and same WHICH shall be

3 approved by the state board of education DEPARTMENT OF CAREER

4 DEVELOPMENT prior to the filing of the articles of

5 incorporation. If a college or university, the articles shall

6 state the number and name of the faculties to be established. ;

7 and if IF a denominational religious school or college, the name

8 of such THE denomination and the body supporting or controlling

9 the same SCHOOL OR COLLEGE. Such articles shall be filed as

10 provided in section 5 of this act. Any such corporation may,

11 by increasing its capital to a higher class and amending its

12 articles, assume the powers and privileges of such THAT higher

13 classification. as it may thereby be entitled to as defined in

14 this act.

15 Sec. 177. Same; inspection by state board of education;

16 annual report. Every such educational corporation shall be

17 visited and inspected by the state board of education, in person

18 or through visitors or inspectors appointed by them DEPARTMENT

19 OF CAREER DEVELOPMENT, at least once every 3 years. Said state

20 board of education THE DEPARTMENT OF CAREER DEVELOPMENT shall at

21 the time of visitation ascertain and publish information upon all

22 matters pertaining to the condition, management, instruction, and

23 practices of such corporations THAT CORPORATION, and shall file

24 a copy of their ITS report with the Michigan corporation and

25 securities commission. Upon evidence that the property is at any

26 time less than is required by law, or that any such educational

27 corporation is not otherwise complying with the provisions of

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1 this act, they THE DEPARTMENT OF CAREER DEVELOPMENT shall serve

2 notice on such THAT corporation to remedy the defects within a

3 reasonable time to be fixed in such THE notice, and in case the

4 deficiency is not corrected within the time fixed, by them,

5 they THE DEPARTMENT OF CAREER DEVELOPMENT may institute proceed-

6 ings at law for the dissolution of such THAT corporation.

7 Such THE trustees shall be required ANNUALLY REPORT, on or

8 before the first day of December, annually, to report to the

9 state board of education DEPARTMENT OF CAREER DEVELOPMENT, a

10 statement of the name of each trustee, officer, AND teacher and

11 the number of students of such THE institution, with a state-

12 ment of its property, the amount of stock subscribed, donated,

13 and bequeathed, and the amount actually paid in, and such ANY

14 other information as THAT will tend to exhibit its condition

15 and operations.

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