January 25, 2022

New Washington Nonprofit Corporation Act Took Effect on January 1

A new comprehensive law governing Washington nonprofit corporations took effect on January 1. Condominium and homeowners associations located in Washington state that are organized as nonprofit corporations are required to comply with that new law except to the extent that the other statutes applicable to them take precedence over it. The most important portion of that new law from their perspective pertains to records retention and production.   

The new law contains an extensive list of records that must be kept, including governing documents (articles of incorporation, covenants, bylaws, and rules), minutes of all meetings of the members and of the board, all records produced by committees, records of all actions taken by unanimous consent, all communications with members that are in the form of a record for the past six years, a list of the names and addresses of the directors and officers, the most recent annual report, appropriate accounting records, and a record of all members that contains their names and addresses and the number of votes that each of them possesses.

The new law establishes that all members of a nonprofit corporation have the right to review its records. A member who wishes to do so must deliver an executed notice describing in detail the records that they want to review to the corporation at least five days before the date on which the member or their agent seeks to review the records. The member must be acting in good faith and for a proper purpose, and the requested records must relate directly to that purpose. Certain records may be withheld by the corporation, including attorney-client or work product records, confidential addresses, records that would cause harm to the corporation if they were disclosed (such as disciplinary proceedings) and records required to be kept confidential by law or an agreement with a third party. 

The new law permits nonprofit corporations to provide records to members in either a tangible form or an electronic form. If records are provided in a tangible form, then corporations are permitted to charge reasonable fees that do not exceed the cost of reproduction.    

The entire new law can be reviewed here.