This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Picture a Florida trade association that has quietly built something valuable. It started as a membership group, added a certification program, then a software platform its members use for scheduling and compliance, and now the software throws off real revenue. A strategic buyer wants the platform. The board wants to know whether it can merge the whole thing into a Delaware LLC and take cash. For decades in Florida the answer was a flat no. As of July 1, 2026, the answer is a qualified yes — and the qualification is doing enormous work.
Chapter 2026-168, Laws of Florida — the enacted version of CS/CS/HB 797, approved by the Governor on June 25, 2026 — comprehensively rewrites chapter 617, the Florida Not For Profit Corporation Act, harmonizing it with the Florida Business Corporation Act and the Model Nonprofit Corporation Act. Most of the attention has gone to governance housekeeping: remote meetings, proxy voting, derivative actions, records access. The transactional provisions got less attention and matter more.
Florida nonprofits can now merge into for-profit entities — unless they hold charitable assets
The old rule was categorical. Prior § 617.1102 permitted a Florida nonprofit to merge with other eligible entities only if the surviving entity was itself a not-for-profit organized under a governing statute that allowed the merger. A nonprofit could not merge into an LLC, a limited partnership, or a for-profit corporation. Full stop.
The rewrite replaces the categorical bar with a status test. The limitation on merger now attaches to a domestic corporation that holds property for a charitable purpose. Such a corporation may still merge only into a nonprofit survivor. A nonprofit that holds no charitable assets faces no such restriction — it may merge into an LLC, an LP, or a for-profit corporation like any other entity.
That single change reorganizes the Florida nonprofit exit landscape. The 501(c)(6) trade association, the 501(c)(4) social welfare organization, the social club, the mutual benefit corporation — these entities now have a statutory path into a taxable structure that did not previously exist under Florida law. The 501(c)(3) charity does not.
Which makes the definitions the most consequential paragraphs in the act. New § 617.01401 defines a “charitable asset” as property given, received, or held for a charitable purpose, and defines “charitable purpose” as a purpose that either would make a corporation organized and operated exclusively for that purpose eligible for exemption under § 501(c)(3) of the Internal Revenue Code, or is considered charitable under Florida law apart from the Code. Note the disjunctive. An organization that never sought or obtained a federal exemption determination can still hold charitable assets under the second branch. Note also that the test reaches property, not the entity. A predominantly non-charitable nonprofit that accepted one restricted gift, one grant with a charitable-purpose condition, or one devise years ago may be holding a charitable asset it has forgotten about, and that asset controls the available structure for the entire organization.
Nobody has to tell the Attorney General
This is the part that should get more attention than it will. Revised chapter 617 requires no notice to, and no approval from, the Florida Attorney General or the Department of Legal Affairs for a nonprofit merger, conversion, sale of substantially all assets, or voluntary dissolution — including for an organization holding charitable assets. Several states condition nonprofit conversions and charitable asset sales on advance notice to, or consent from, the state charity regulator. Florida does not, and the 2026 rewrite did not add such a requirement.
What the act does instead is embed substantive locks and route enforcement elsewhere. New § 617.1106(3) provides that property held in trust or otherwise dedicated to a charitable purpose immediately before a merger becomes effective may not, as a result of the merger, be diverted from the purposes for which it was donated, granted, devised, or otherwise transferred, except pursuant to Florida law addressing cy pres or the nondiversion of charitable assets. Section 617.1405(6) applies a parallel lock to dissolution. And § 617.1406(3)(c) requires that assets received subject to limitations permitting use only for charitable, religious, eleemosynary, benevolent, educational, or similar purposes be transferred on dissolution to organizations engaged in activities substantially similar to those of the dissolving corporation.
So the guardrail is real, but self-executing rather than supervised. No filing triggers regulator review, and there is no waiting period or pre-closing sign-off. The Attorney General’s parens patriae authority over charitable assets sits outside chapter 617 and arrives, if at all, after the fact. For a buyer, the absence of a required consent is not the absence of risk — it means the risk is unliquidated and back-loaded. The practical answer is usually a well-documented board record on the charitable-asset question, a representation and covenant addressing it, and a considered decision about whether to seek judicial guidance where the classification is close.
Conversion into a for-profit is now administrative, and still closed to charities
The prior conversion regime was judicial and ran one direction only. Repealed §§ 617.1805 through 617.1807 required a petition to a circuit judge, with unanimous shareholder consent and proposed articles, and converted a for-profit into a nonprofit. There was no statutory mechanism at all for a Florida nonprofit to convert into another entity type. The act replaces that with a modern, filing-based regime at §§ 617.1804 and 617.18042 through 617.18046 — plan of conversion, board adoption plus member vote, articles of conversion filed with the Department of State, amendment and abandonment mechanics, and statutory effects — and adds inbound and outbound domestication at §§ 617.180301 and 617.18031 through 617.18034.
New § 617.18041 supplies the limit. A domestic corporation that holds property for a charitable purpose is prohibited from becoming a domestic or foreign eligible entity, with an exception permitting domestication to become a foreign nonprofit corporation. A Florida charity can therefore redomesticate to Delaware or another state as a nonprofit. It cannot convert itself into a taxable entity. And § 617.18046 carries the nondiversion lock through conversion.
The practical consequence for deal structuring is that where a charitable nonprofit is involved, the transaction is almost always an asset sale for fair value with the proceeds staying inside the charitable entity, not a merger or conversion that moves the enterprise into a for-profit wrapper. That was effectively true before; it remains true now, notwithstanding the general liberalization.
The new short-form merger is the most useful provision in the act
Chapter 617 previously had no short-form merger at all. New § 617.1104 creates one, and it will matter to every nonprofit that sits atop a group of affiliated entities — health systems, university-affiliated foundations, associations with captive subsidiaries.
A domestic or foreign parent eligible entity holding a membership in a domestic corporation that carries at least 80 percent of the voting power of each class of membership having voting power may merge the subsidiary into itself, merge the subsidiary into another entity in which the parent holds at least 80 percent of the voting power, or merge itself into the subsidiary. Those mergers do not require the approval of the board of directors or members of the subsidiary unless the parent’s or subsidiary’s governing documents provide otherwise, and the articles of merger need not be signed by the subsidiary. The parent must notify the subsidiary’s members within 10 days after the effective date.
Anyone who has worked with Florida for-profit structures will recognize the architecture immediately — it parallels the short-form merger provision in the Business Corporation Act, down to the section number. Corporate simplification projects that previously required assembling subsidiary boards and member votes can now be executed at the parent level. The drafting caveat is the one built into the statute: the subsidiary’s articles or the parent’s organic rules can switch the shortcut off. Anyone planning to rely on § 617.1104 should read the governing documents before assuming it is available.
Member approval thresholds moved, and the change is easy to miss
Under the rewritten architecture, the board adopts the plan of merger first, then submits it to the voting members. The board must recommend approval unless conflicts of interest or other special circumstances counsel otherwise, in which case it must inform the members of the basis for proceeding without a recommendation. The board may set conditions on approval or effectiveness. Notice must state that a purpose of the meeting is to consider the plan and must include a copy of it — and if the corporation is not the survivor, a copy of the survivor’s governing documents. The vote itself requires approval by a majority of the votes entitled to be cast at a meeting at which the required quorum exists, with separate class voting for each class whose memberships convert into securities, interests, cash, or other property, unless the articles expressly limit or eliminate those rights.
The same shift shows up on the asset side. Section 617.1201 was not amended and continues to allow the board to authorize, without member vote, secured transactions, dispositions of less than substantially all assets, and sales of all or substantially all assets where the corporation is insolvent and a cash sale is advisable to meet liabilities, or where the corporation was formed to liquidate. Everything else runs through § 617.1202, which now imports the Business Corporation Act structure — board recommendation duty with a conflict carve-out, board authority to set conditions, notice describing the disposition and the consideration to be received, and approval by a majority of all votes entitled to be cast on the disposition.
That last phrase is the trap. The prior standard turned on votes present or represented by proxy. The new standard measures against all votes entitled to be cast. For a membership organization with thin turnout — which describes a great many of them — a transaction that would have cleared comfortably under a majority-of-those-present standard can fail under the new one. The mechanics resemble the analysis under § 607.1202 for for-profit asset sales, and the planning response is the same: model the vote before signing, and consider whether the articles should set a different quorum or threshold. Section 617.1202(2) does add a useful seller-side tool — after member approval and before consummation, the corporation may abandon the disposition without further member action, subject to other parties’ contractual rights.
Two timing points worth calendaring
Abandonment of a merger now runs to effectiveness rather than to filing. Under § 617.1103(3), a plan may be abandoned as provided in the plan, or by the board in the same manner the plan was approved, at any time before the articles of merger become effective. If articles have already been delivered to the Department of State but have not yet taken effect, a statement of abandonment signed by all parties that signed the articles must be filed before effectiveness. That closes a real gap for delayed-effective-date filings.
And the act reaches organizations formed long before it. There is no grandfather clause and no opt-in. The one meaningful transition device is the defined term “protected agreement,” which preserves the effect of documents evidencing indebtedness, binding agreements, articles and bylaws or organic rules, and agreements binding on interest holders or directors in their capacities as such, in each case in effect immediately before July 1, 2026. Practically: pre-July 2026 loan documents, member agreements, and governing documents that restrict or condition mergers and conversions keep their bite. Diligence on a Florida nonprofit transaction should surface those instruments early, because they can override the flexibility the new statute appears to offer.
One more note on what the act did not do. It created no appraisal or dissenters’ rights for nonprofit members. Section 617.1106(1)(i) provides only that interest holders are entitled to the rights given them under the plan of merger and to any appraisal rights they have under the merging entity’s organic law — meaning a member gets appraisal rights only where some other entity’s statute, such as chapter 605 for an LLC, supplies them. A dissenting member of a Florida nonprofit has no statutory cash-out remedy. Whatever protection exists has to be built into the articles.
The full bill history, enrolled text, and staff analyses are available from the Florida Senate. Because the 2026 Florida Statutes are not yet published, the enrolled bill and chapter law remain the operative sources for section-level text, and anyone quoting a specific subsection should work from those rather than the 2025 edition.
If you are evaluating a merger, conversion, or asset sale involving a Florida nonprofit corporation, feel free to reach out to our firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
