Out-of-State Nonprofits in North Dakota

The Secretary of State calls a nonprofit formed under another state's, government's or country's law an out-of-state, or foreign, nonprofit. NDCC 10-33-127 stops such a corporation from conducting activities in North Dakota, or getting a state-required license or permit, before it holds a certificate of authority. It also cannot conduct any activity that a North Dakota nonprofit corporation is forbidden to conduct.

Home-state law continues to govern the incorporation and internal affairs of the nonprofit, and North Dakota may not refuse a certificate over differences between the two bodies of law (10-33-125). The certificate gives the same rights and privileges as a domestic nonprofit corporation has, and no more.

The chapter uses the term conducting activity rather than transacting business and does not define it, so an unclear case calls for an attorney's advice.

NDCC 10-33-136 gives six examples, among others, that do not constitute conducting activity:

• Maintaining, defending or settling any proceeding
• Holding meetings of its members or handling other internal affairs
• Maintaining bank accounts
• Taking on debt, or acquiring mortgages and similar liens on property, real or personal
• Securing or collecting debts, or enforcing mortgages and security interests
• Conducting an isolated transaction completed within thirty days and not one of a repeating pattern

Unlike the business corporation list, this one has no item for independent contractors, for securities offices or for orders accepted out of state. Rather than assuming one of those activities is safe for a nonprofit, ask an attorney.

Property again

Subsection 3 says a foreign nonprofit holding land, buildings or other tangible assets in North Dakota that earn income, outside the exempted property, is considered to be conducting activity. A charity that rents out a building it owns here, or leases farmland, should treat that as a trigger. Property that earns nothing is not mentioned. The list is not exhaustive, and it is not the measure of what exposes a nonprofit to lawsuits, taxes or regulation under other statutes.

Foreign nonprofits file the certificate of authority application in FirstStop, and the Secretary of State describes the fee for a nonprofit corporation as $50. The office has published neither a numbered paper form nor a processing time for this filing.

Items on the application

• The corporation's name, and a different name if it will use one in North Dakota
• The jurisdiction and date of incorporation, and its duration
• The address of its principal executive office in the home jurisdiction
• The registered agent, plus a North Dakota street address when the agent is noncommercial
• The purposes it will pursue in North Dakota
• Its directors and officers, each with an address
• Any other information the Secretary of State considers necessary

An authorized person executes the application. If the corporation will operate under a name that is not its true corporate name, the name must be registered as a trade name under chapter 47-25. A nonprofit name does not need a word such as corporation or incorporated, but a name containing words such as bank or trust requires approval in writing from the Department of Financial Institutions.

This filing has two home-state documents. NDCC 10-33-128 asks for a status certificate issued by the home jurisdiction's filing office, and it wants the fees paid together with proof of good standing or existence, authenticated by the incorporating officer.

The Secretary of State's out-of-state nonprofit page adds a rule worth heeding: the name on the application and the name on the certificate must match exactly. No age limit is set in the statute or on the page, but a recent certificate keeps questions away. Order it from the home state and compare the name letter for letter before you file.

Section 10-33-131 obliges a foreign nonprofit to keep a registered agent, and the Secretary of State says that agent needs a physical address in North Dakota. A commercial agent from the state's list needs no address in the filing. Otherwise the choice is an individual living in North Dakota, or a registered corporation or LLC in good standing at a North Dakota address.

The nonprofit cannot be its own agent. An individual from the organization can be a noncommercial agent if they live in North Dakota, and the agent must approve before being named. A change of agent costs $10, and if an agent resigns, the nonprofit has to appoint a new one or risk the loss of its authority.

Each year, on or before February 1, the nonprofit owes an annual report. For a newly authorized nonprofit the first one is due the following calendar year. Filing costs $10, and lateness adds $5. The form identifies the registered agent, shows the registered office and the principal executive office, gives a brief note on North Dakota activities, lists the officers and directors, and names the Internal Revenue Code section behind the nonprofit's tax status.

A nonprofit that is also registered as a charity files a second report, the Charitable Organization Annual Report, separately. The Secretary of State warns about third-party letters that offer to file annual reports for large fees and urge haste. A nonprofit that does not file within a year, with the fees, loses its authority to conduct activities here, and reinstatement within a year after the revocation takes a $40 reinstatement fee plus the past-due report and fees.

An amended certificate, needed when information in the application changes, costs $40. A nonprofit that leaves the state files a certificate of withdrawal application in FirstStop, at $20.

Charitable organization registration is a different Secretary of State registration. A nonprofit that solicits contributions may need it in addition to the certificate of authority, and the office's Charitable Organizations page explains the requirements. Tax-exempt status is also separate, and the certificate of authority does not grant it. The nonprofit's annual report does ask for the Internal Revenue Code section that sets its tax status.

NDCC 10-33-135 lays out the consequences for a foreign nonprofit corporation:

• Its own lawsuits and other proceedings cannot go forward in North Dakota's courts before the certificate is issued
• Fees the state would have collected from a registered, reporting nonprofit are owed, and the attorney general brings proceedings to collect them
• The nonprofit may be fined up to $5,000, and any director, officer or agent who authorizes, directs or participates may be fined up to $1,000
• The Burleigh County district court, on a violation finding, must also enjoin further activity until the money is paid and the chapter is observed

Validity is preserved. The nonprofit's contracts and acts are not impaired, and it may defend a suit. Because of that, the Secretary of State is the contact for its legal notices and process, and members are not answerable for its debts merely on that ground.

A nonprofit corporation has no place in Mainstay Filing's foreign qualification checkout, which is for LLCs and for-profit corporations. The nonprofit or its lawyer submits the FirstStop application. The part Mainstay Filing plays is the registered agent role, at $149 a year, unchanged at renewal.

The Mainstay Filing North Dakota address is what you give as the agent's address, and it appears in the state's records. Court papers handed to the agent are scanned and uploaded on the day they come in, free of charge; the first three official letters of a year are scanned free as well. If another agent is currently on the nonprofit's record, Mainstay Filing prepares the change and bills the state's own $10. See the North Dakota registered agent page. Mainstay Filing is not a law firm.