Articles of Incorporation Changes

by Seven 26 Replies latest jw friends

• 

  Seven

  I received this via email and I'm posting it here for someone who wishes to remain anonymous .

  I'm not up on legal stuff, but it sure seems to me that this further shows how the WTS is positioning KH properties to be exempt from financial impact due to adverse judicial decisions (eccleciastical privilege, and all that stuff).

  From Septmeber:

  Articles of Incorporation Changes

  Please note that the following two paragraphs are to be included in your charter or articles of incorporation (this may require an amendment to your existing charter or articles of incorporation):

  The property of this Corporation is irrevocably dedicated to religious purposes, and no part of the net earnings or assets of this Corporation shall inure to the benefit of a director, officer, or member of the Corporation or any private individual. No substantial part of the activities of this Corporation shall consist of the carrying out of propaganda or otherwise attempting to influence legislation, nor shall this Corporation participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. This Corporation is organized exclusively for religious purposes within the meaning of Internal Revenue Code Section 501(c)(3). Notwithstanding any other provisions of these Articles, the Corporation shall not carry on any other activities not permitted to be carried on (1) by a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States tax code) or (2) by a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States tax code).

  Upon the winding up and dissolution of this Corporation, after paying or adequately providing for debts and obligations of the Corporation, the remaining assets shall be distributed to Watchtower Bible and Tract Society of New York, Inc. No assets will be deemed to be received by Watchtower Bible and Tract Society of New York, Inc., until such acceptance is evidenced in writing. If Watchtower Bible and Tract Society of New York, Inc., is not then in existence and exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States tax code), then said assets shall be distributed to any organization designated by the ecclesiastical Governing Body of Jehovah?s Witnesses that is organized and operated for religious purposes and is a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding section of any future United States tax code).
• 

  Phantom Stranger

  So there are not specific sections to be replaced.

  Your explanation sounds plausible...but that fact that such a paragraph was not already mandatory, when it should have been in place even without any impending legal exposure, sounds more like poor management than cunning defense. I'm sure that's part of the motivation for detecting the need, though...
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  Euphemism

  Yeah, this is just standard legal boilerplate for qualifying for federal non-profit status. Until recently, the WTS has said that it's not important for the local congregations to worry about federal tax-exemption; it seems that they're changing their tune on that.
• 

  Seven

  bttt
• 

  Gadget

  No substantial part of the activities of this Corporation shall consist of the carrying out of propaganda

  I wonder if the preaching work would be classed as propaganda.....
• 

  Elsewhere

  This is very common in the articles of incorporation for kingdom halls and other WTS related properties. Basically it says that it is to be used for religious purposes and not political purposes (this is to maintain the tax exempt status). The second paragraph basically says that the property, even thought it is paid for by the local people, belongs to the WTS.
  

  What is interesting about the second paragraph is that the locals are responsible for anything that happens with the property (legal liability, financial liability, etc? they are liable for EVERYTHING), but if the property ownership should change, it automatically falls into the hands of the WTS. The WTS get have their cake and eat it too.

  It's a pretty slick scam... the WTS loans money to the locals, with interest. Once it is paid for, the locals basically sign over ownership to the WTS, while still remaining liable for any problems. I'm amazed anyone would agree to this... shows you how people will act when they are "loyal" to a book publishing corporation with questionable moral and business practices.
• 

  onacruse

  I'm wondering about this clause:

  no part of the net earnings or assets of this Corporation shall inure to the benefit of a director, officer, or member of the Corporation or any private individual.

  I have no idea if this provision might have long been part of the standard Articles of Incorporation. But I get the idea that it wasn't, and that this 'new' stipulation is designed to legally insulate KH property and congregation assets from attachment in a lawsuit against an elder who messes up and finds himself in Civil Court...in other words, "you're on your own, dude."

  Am I reading too much into this?

  Craig
• 

  Euphemism

  Elsewhere... I think that you're reading too much into that. (And yeah, you too, Craig. )

  Here's the first part of the Articles of Incorporation:

  The property of this Corporation is irrevocably dedicated to religious purposes, and no part of the net earnings or assets of this Corporation shall inure to the benefit of a director, officer, or member of the Corporation or any private individual.

  Now comare that with this statement in the IRS Requirements for tax-exemption for a charity or religion:

  The organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests.

  Back to the articles:

  No substantial part of the activities of this Corporation shall consist of the carrying out of propaganda or otherwise attempting to influence legislation, nor shall this Corporation participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

  Back to the IRS:

  An IRC Section 501(c)(3) organization may not engage in carrying on propaganda, or otherwise attempting, to influence legislation as a substantial part of its activities.

  Articles:

  This Corporation is organized exclusively for religious purposes within the meaning of Internal Revenue Code Section 501(c)(3). Notwithstanding any other provisions of these Articles, the Corporation shall not carry on any other activities not permitted to be carried on (1) by a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States tax code) or (2) by a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States tax code).

  IRS:

  The articles of organization must limit the organization's purposes to one or more of the exempt purposes set forth in IRC Section 501(c)(3) and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that are not in furtherance of one or more of those purposes. This requirement may be met if the purposes stated in the articles of organization are limited in some way by reference to IRC Section 501(c)(3).

  Articles:

  Upon the winding up and dissolution of this Corporation, after paying or adequately providing for debts and obligations of the Corporation, the remaining assets shall be distributed to Watchtower Bible and Tract Society of New York, Inc. No assets will be deemed to be received by Watchtower Bible and Tract Society of New York, Inc., until such acceptance is evidenced in writing. If Watchtower Bible and Tract Society of New York, Inc., is not then in existence and exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States tax code), then said assets shall be distributed to any organization designated by the ecclesiastical Governing Body of Jehovah?s Witnesses that is organized and operated for religious purposes and is a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding section of any future United States tax code).

  IRS:

  To establish that an organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision insuring their distribution for an exempt purpose in the event of dissolution.

  In other words, these articles are a simple, plain-vanilla implementation (in some places, almost a word-for-word copy) of the IRS requirements for tax-exemption. Nothing remarkable or underhanded here.
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  waiting

  Upon the winding up and dissolution of this Corporation, after paying or adequately providing for debts and obligations of the Corporation,

  So, the KH's belong to the locals as long as they use them as KH's and the locals pay all debts & obligations. The locals bought & paid for the KH & property themselves, while the WT made money from loaning them money.

  the remaining assets shall be distributed to Watchtower Bible and Tract Society of New York, Inc.

  After all debts are paid - THEN the WT owns the KH property or profits therefrom.

  No assets will be deemed to be received by Watchtower Bible and Tract Society of New York, Inc., until such acceptance is evidenced in writing.

  The WT will not accept the dissolution of any KH until the locals pay all the debts - and then the KH will belong only to the WT - and the WT wants that in writing.

  Interesting - and very profitable for the WTBTS. It also distances the WT from being like the Catholic Church who owns their churches (last I heard.) That way, the WTBTS can say to the government....."We don't rule our followers. They own their own buildings & land - maintaining them."

  If I understand this correctly.

  waiting
• 

  Euphemism

  I'm sorry, waiting, but I believe you've misunderstood this. This is a standard corporate dissolution clause. Here's an example from the Sample Articles of Incorporation by the Management Assistance Program for Non-Profits:

  Upon the time of dissolution of the corporation, assets shall be distributed by the Board of Directors, after paying or making provisions for the payment of all debts, obligations, liabilities, costs and expenses of the corporation, for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code. (italics added)

  A corporation must pay all its debts before handing over its assets. Otherwise, it would be cheating its creditors.