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Sen. Serville’s bill to modernize nonstock corporation law advances out of subcommittee 8-0
Summary
The subcommittee unanimously voted 8-0 to report SB 246, a rewrite of Virginia’s nonstock-corporation law (Title 13.1) that updates governance rules and clarifies that community association covenants control in case of conflict; the effective date was moved to Jan. 1, 2027.
Sen. Serville told the subcommittee that SB 246 is "a long overdue update of the nonstock corporation article in Title 13.1," aimed at bringing the code in line with modern practices used by nonprofits and community associations.
The bill would let nonstock corporations place operating rules in bylaws as well as articles of incorporation and clarify governance items such as transfers, suspension or termination of membership, payment of dividends, exclusive-forum provisions, and members' access to financial statements. Serville said the rewrite was modeled on the American Bar Association business-corporation model and was reviewed by the Virginia Bar Association's corporate law section.
Mr. Stevens, the committee staff member, summarized the posted amendments and said they are "a series of technical amendments with one substantive amendment that moves the effective date from July 1, 2027 up 6 months to January 1, 2027." He also described an amendment specifying that, where there is an inconsistency between the nonstock act and a community association's declaration or bylaws, the community association's declaration of covenants controls.
Eric Link, speaking on behalf of the Virginia Bar Association, said the bill is the product of the bar group's business-law work and asked the subcommittee to look favorably upon it. No one spoke in opposition during the session.
The subcommittee moved to report SB 246 as amended; the clerk announced the vote as 8 to 0 in favor. The measure was reported out of the subcommittee with the technical changes and the adjusted effective date.
The subcommittee did not record further conditions or amendments beyond those summarized at the hearing; the bill was reported to the next step in the legislative process by a unanimous vote.
