E52E9013750D058E872587A0007B0E1E Hearing Summary

Herrick Lidstone, chair of the CBA Business Law Section's Business Entities Committee, stated that the section generally supports looking at portions of the act that would be helpful to incorporate into Colorado law, but cautioned that not all provisions in the uniform act fit well with Colorado law. The commission acknowledged that business entities is a complex area and will need to be harmonized with current law. Commissioner Tipper shared feedback from the Colorado Trial Lawyers Association (CTLA) stating that the act is unnecessary and that nonprofits can obtain protections by registering as a nonprofit entity and complying with existing legal requirements. In addition, the act could muddy existing waters and create new liability protections for groups of people who cause injury but claim to have been acting in a not-for-profit capacity. The act leaves ambiguous what exactly qualifies as an unincorporated nonprofit association, leaving an injured plaintiff trying to guess whether the correct defendant would be a collection of individuals or an unincorporated nonprofit not registered anywhere and may not even have a clear name and how judgments would be collected. Mr. Lidstone suggested that the individual liability provisions in Article 30 of Title 7 might address some of these concerns. Commissioner Levy asked if current law allows the incorporation of a nonprofit by oral agreement. Mr. Lidstone answered that §§7-30-101.1 and 7-30-101.2, C.R.S., might apply, but that one would still have to show a course of conduct, but there is no case law. Commissioner Gardner suggested that the act might be useful to inform, probably thousands of groups, currently engaging in common charitable, education, political, and other endeavors, such as book clubs or other study groups, that they may want to take the time to incorporate. The commission discussed if the uniform act was necessary at this time if Colorado already has law in this area. Mr. Lidstone noted that the existing law, adopted in 1997, is sufficient for now, but indicated that he would like to form a committee to take a closer look at the 2011 updates to see what can benefit Colorado. The commission asked Mr. Lidstone and the CBA to put together a committee of interested parties to look at the act.

Commission consensus was to not move forward with the Revised Uniform Unincorporated Nonprofit Association Act as part of the commission's 2022 legislative agenda and to reconsider it for the 20323 legislative agenda.