Page 46 - Akerman | 2016 Guide to Doing Business in Florida

A nonprofit corporation has an existence of its own independent of the terms of office or
employment of members, directors or officers. It can sue or be sued in its own name and can
own real estate or other assets in its own name.

3.6.2 Advantages and Disadvantages
Where profit is not a goal and the enterprise can be funded without the need for access to
capital, the nonprofit corporation is the preferred vehicle for pursuing social objectives. Although
nonprofit corporations are not prohibited from engaging in commercial activities, the directors of
a nonprofit are duty-bound to devote primary attention to the promotion of the social mission of
the nonprofit corporation rather than the production of net income.

On the other hand, if outside capital is needed, a for-profit corporation (or limited liability
company) is likely to be the preferred option because nonprofit corporations cannot issue
capital stock. The directors of a for-profit corporation owe strict duties to the shareholders to
maximize profits and value. Therefore, unless the directors and managers can tie the social
mission of their for-profit corporation directly to its business purpose, they can be sued for
breach of their duties to shareholders and for misuse of corporate assets if they focus too
much on the social mission and forego profits. To address this concern, Florida authorizes the
business corporations to become social purpose corporations (Sections 607.501 et seq. of
the Florida Business Corporation Act) or benefit corporations (Sections 607.601 et seq. of the
Florida Business Corporation Act), each of which is further discussed in Section 3.7 of this
Guide.

3.6.3 Formation

A nonprofit corporation attains its separate legal status through the filing and approval by the
Department of State of the State of Florida of its Articles of Incorporation. This document is in
essence a contract between the state and the nonprofit corporation in which the State of
Florida grants individual legal status to the nonprofit corporation in exchange for the nonprofit
corporation’s commitment to follow its rules.

The Florida Not For Profit Corporation Act requires that the Articles of Incorporation of a
nonprofit corporation include (a) the name and street address of the initial principal office and, if
different, the mailing address, of the nonprofit corporation; (b) the purpose(s) for which the
nonprofit corporation is being organized; (c) a statement of the manner in which the directors
are to be elected or appointed (or the Articles may specify that the method of election is
contained in the nonprofit corporation’s Bylaws); (d) any provisions, not inconsistent with the
Florida Not For Profit Corporation Act, which limit in any manner the corporate powers or the
nonprofit corporation authorized under the Act; (e) the street address of the nonprofit
corporation’s initial registered office and the name of its initial registered agent at that address,
together with a written acceptance of appointment as a registered agent; and (f) the name and
address of each incorporator.

In addition, the Articles may set forth (1) the names and addresses of the initial directors; (2) any
provision, not inconsistent with law, regarding the regulation of the nonprofit corporation’s
internal affairs; (3) the manner of termination of membership in the nonprofit corporation; (4) the
rights upon termination of membership; (5) the transferability of membership; (6) the distribution
of assets upon dissolution or final liquidation; (7) any designation of one or more classes of
members; (8) the names of any persons or the designation of any groups of persons who are
to be the initial members; (9) a provision to the effect that the nonprofit corporation will be

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