TO CREATE THE DECENTRALIZED UNINCORPORATED NONPROFIT ASSOCIATION ACT.

2025 Regular Session Introduced by Justin Boyd and 1 co-sponsor

House Bill 1533 establishes a legal framework for decentralized nonprofit associations in Arkansas, allowing flexible operations and member governance without formal incorporation.

Recommended for study in the Interim by the Committee on INSURANCE & COMMERCE- HOUSE

Purpose and Intent

House Bill 1533 aims to establish a legal framework for decentralized unincorporated nonprofit associations in the state of Arkansas. This legislation seeks to provide clarity and structure for organizations that operate without formal incorporation while utilizing modern technologies, such as distributed ledger technology (e.g., blockchain), to facilitate their operations.

Key Provisions

The bill introduces a new subchapter to the Arkansas Code, specifically Title 4, Chapter 28, which includes the following significant provisions:

Definitions

Decentralized Unincorporated Nonprofit Association: Defined as an organization with at least 100 members, formed for a common nonprofit purpose, and not governed by any other statute.

Digital Asset: Refers to economic representations stored in a computer-readable format, excluding underlying assets unless they are electronic records.

Distributed Ledger Technology: Encompasses the software and protocols that enable decentralized operations, including blockchain technology.

Organizational Structure

Legal Entity: The decentralized unincorporated nonprofit association is recognized as a distinct legal entity with perpetual existence, unless specified otherwise in its governing principles.

Membership and Governance: Members have voting rights and can participate in decision-making processes as outlined in the association's governing principles.

Financial Provisions

Profit Activities: The association may engage in profit-making activities, but profits must be used to further its nonprofit purposes.

Distributions: Generally prohibits the distribution of profits to members, but allows for reasonable compensation for services rendered and reimbursement of expenses.

Relation to Other Laws

The bill clarifies that it does not repeal or modify existing statutes for organizations that do not choose to become decentralized unincorporated nonprofit associations.

Impact

This legislation would primarily affect:
- Nonprofit Organizations: Groups seeking a flexible, decentralized structure without the need for formal incorporation.
- Members and Administrators: Individuals involved in these associations will have defined roles and responsibilities, as well as protections under the law.
- Legal and Financial Advisors: Professionals assisting nonprofits will need to understand the new framework to guide their clients effectively.

Procedural Aspects

Introduced: February 19, 2025

Current Status: Recommended for study in the Interim by the Committee on Insurance & Commerce as of April 16, 2025.

Amendments: The bill has undergone amendments, including the addition of a co-sponsor, Senator J. Boyd.

This summary provides an overview of House Bill 1533, highlighting its purpose, key provisions, and potential impacts on nonprofit organizations in Arkansas.

Bill