On July 7, 2026, North Carolina Governor Josh Stein signed House Bill 517 into law. This bill makes significant changes to the North Carolina Nonprofit Corporation Act, including adding an annual report requirement, a domestication process, and expanding the entity conversion process.
Annual Report Requirement
Beginning on January 1, 2027, all North Carolina nonprofit corporations (both domestic and foreign) will be required to file an annual report with the North Carolina Secretary of State by November 15th each year, unless they meet an exception. If it is a North Carolina nonprofit corporation, it must begin filing annual reports in the year following the year the nonprofit corporation was formed in or if it is a foreign nonprofit corporation, the year its certificate of authority was issued. The filing fee is $25 for a paper filing or $18 for an electronic filing. Annual reports may be amended at any time to update or correct the information contained in the report.
Annual reports must include:
- The nonprofit corporation’s name and place of incorporation
- The registered office street address and mailing address (if different) in North Carolina
- The Registered Agent’s name and email address
- The principal office address and phone number
- The names, titles, addresses of the nonprofit corporation’s principal officers
- The name, title, address, and email address of the person authorized to provide information regarding the persons who have the authority to bind the nonprofit corporation
- A description of the nature of the nonprofit corporation’s activities
- A contact email address for the nonprofit corporation, if different from the Registered Agent’s email address
Nonprofit corporations that file annual reports with missing information will receive a notice from the North Carolina Secretary of State and will have 30 days from the date of the notice to correct it. If an annual report is not submitted within 60 days after it is due, it will be presumed delinquent, and the nonprofit corporation may be administratively dissolved. Nonprofit corporations that are administratively dissolved may apply for reinstatement.
There is an exception to the requirement to file an annual report. A nonprofit corporation will be deemed to have filed its annual report if it has a valid North Carolina solicitation license on the annual report due date and has provided additional information in the solicitation license application required for the annual report. With this exception it is important that nonprofit corporations with solicitation licenses stay on top of their renewal requirements or they may find themselves delinquent on both their annual report requirement (which can administratively dissolve the nonprofit corporation) and its license renewal requirement (which can result in monetary penalties).
Domestication Process
North Carolina now permits nonprofit domestication. This means a North Carolina nonprofit corporation is permitted to change its domicile to a foreign jurisdiction and a foreign nonprofit corporation is allowed to change its domicile to North Carolina, so long as the laws of that foreign jurisdiction also permit domestication.
Once a nonprofit corporation completes the domestication process it is deemed to be incorporated under the laws of its new jurisdiction on the date of its original incorporation and is the same nonprofit corporation without interruption. The nonprofit corporation’s assets, properties, contract rights, liabilities, and debts become and remain the property of the domesticated nonprofit corporation without the need to transfer. And the memberships of the domesticating nonprofit corporation are reclassified into memberships, obligations, rights to acquire memberships, cash, or other property in accordance with the terms of the domestication. Again, this is contingent on the laws of the foreign jurisdiction. If the new domestication process is not allowed under the laws of the state your nonprofit is moving to or from, our firm’s Non-Profit entities and Tax-Exempt Organizations Practice Group can assist you with other options for making the transition.
Requirements for domestication:
- The nonprofit corporation must properly approve of a Plan of Domestication
- File Articles of Domestication
Domestication is effective when the Articles of Domestication are effective. If the nonprofit corporation is moving to a foreign domicile then they are effective on the later of the date provided in the foreign jurisdiction or when the Articles of Domestication are effective.
Updates to the Nonprofit Conversion Process
Prior to House Bill 517 a charitable or religious corporation could convert into a North Carolina LLC if it complied with N.C.G.S. 57D-9-20, 57D-9-21, and 57D-9-22. As of October 1, 2026, this process has been expanded. It now allows business entities, which include foreign and domestic business corporations, LLC’s, LP’s, LLP’s, PC’s, and foreign nonprofits to convert to a North Carolina nonprofit corporation and provides some more details on a process for charitable and religious corporations to convert into North Carolina LLC’s under Article 11A of Chapter 55A.
In order to convert to a North Carolina nonprofit corporation, the business entity must be permitted to convert by the laws of its jurisdiction and:
- Approve of a Plan of Conversion
- File Articles of Incorporation that contain Articles of Conversion with the North Carolina Secretary of State
- Register Certificate of Conversion as provided in N.C.G.S. 47-18.1
The conversion is effective when the Articles of Incorporation become effective. Once effective, the business entity ceases its prior organizational form and continues in existence as a North Carolina nonprofit corporation without interruption and will be deemed to have been incorporated on the date the converted entity was originally incorporated or organized. As a result, title to its real estate, debts, liabilities, and property continue to be vested in the resulting nonprofit corporation without a requirement to transfer. Additionally, the interests and obligations in the business entity are converted to eligible interests or other securities, rights to acquire interests or other securities, obligations, cash, or other property of the resulting domestic corporation in accordance with the plan of conversion.
A charitable or religious corporation can convert into a North Carolina LLC if it complies with the requirements of N.C.G.S. 57D-9-20, 57D-9-21, and 57D-9-22 and approves of a Plan of Conversion.
Other Important Updates
For any North Carolina non-profit corporations, except for Private Foundations, formed on or after October 1, 2026, their Board of Directors must now have a minimum of three directors instead of one. However, if any Board vacancies result in a number below three, that is acceptable while the vacancies are being filled. Most non-profit corporations already should have at least three directors since IRS rulings indicate a preference for three or more directors on non-profit boards. So, this just results in North Carolina state law becoming consistent with IRS preferences.
If requested, a charity soliciting in North Carolina must include at the point of solicitation an acknowledgment that states the amount of the contribution to be deducted as a charitable contribution for federal income tax. House Bill 517 clarifies that this disclosure requirement is met if a charity provides information set forth in Section 170(f)(8) of the Internal Revenue Code in its disclosure.
Sunsetting of Emergency Video Notarization is extended until July 1, 2027. This was previously set to expire on July 1, 2026.
JAH Can Help
The experienced corporate attorneys at Johnston Allison Hord are tracking legal and regulatory updates that may affect your businesses and nonprofit organizations and can assist your organization with any questions you may have. Contact a member of our Non-Profit Entities and Tax-Exempt Organizations Practice Group or complete our General Contact Form if you are in need of assistance.
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