California's Nonprofit Corporation Law consists of three separate laws - the Nonprofit Public Benefit Corporation Law, the Mutual Benefit Corporation Law, and the Religious Corporation Law. Each of these laws authorizes a corporation to admit persons to membership as provided in the articles or bylaws or provide in the articles or bylaws that the corporation will have no members. Cal. Corp. Code §§ 5310, 7310 & 9310. However, not all members of nonprofit corporations are "members", as defined in Section 5056. The reason is that Sections 5332, 7333, and 9332 each permits a corporation to "refer to persons associated with it as 'members' even though such persons are not members". It should also be noted that other entities, such as corporations organized under the General Corporation Law, may refer to their clients as "members".
If a nonprofit corporation in fact has members, can those memberships be transferred? The answer depends upon the type of nonprofit corporation in which the membership is held. The default rule for both public benefit and mutual benefit corporations is that a member may not transfer a membership or any rights arising therefrom unless the articles or bylaws provide otherwise. Cal. Corp. Code §§ 5320 & 7320. Even if the articles or bylaws permit membership transfer, a member in a public benefit corporation may not transfer the membership for value. Cal. Corp. Code § 5320(b). Both laws make an exception for proxies.
Matters are different under the Religious Corporation Law, which does not prohibit membership transfers unless otherwise provided in the articles or bylaws. It only prohibits transfers for value. Cal. Corp. Code § 9320(a).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
