Source: https://www.azleg.gov/arsDetail/?title=10 (official Arizona State Legislature site). Retrieved 2026-07-07. Section range: Sec: 10-11201-10-11202. 6 sections.
10-11201. Sale of assets in regular course of activities and mortgage of assets
A. On the terms and conditions and for the consideration determined by the board of directors, a corporation may:
1. Sell, lease, exchange or otherwise dispose of all or substantially all of its property in the usual and regular course of its activities.
2. Mortgage, pledge, dedicate to the repayment of indebtedness, whether with or without recourse, or otherwise encumber any or all of its property whether or not in the usual and regular course of its activities.
3. Transfer any or all of its property to a corporation all the shares of memberships of which are owned by the corporation.
B. Unless the articles of incorporation require it, approval by the members or any other person of a transaction described in subsection A is not required.
10-11202. Sale of assets other than in regular course of activities
A. On the terms and conditions and for the consideration determined by the corporation's board of directors, a corporation may sell, lease, exchange or otherwise dispose of all or substantially all of its property, with or without the goodwill, other than in the usual and regular course of its activities.
B. For a proposed transaction to be approved, all of the following shall have occurred:
1. The board of directors shall approve the transaction. If the members of the corporation are entitled to vote on the proposed transaction, the board of directors shall submit the proposed transaction for approval by its members and shall recommend the proposed transaction to the members, unless the board of directors determines that because of a conflict of interest or other special circumstances it should not make a recommendation and communicates the basis for its determination to the members with the plan.
2. If the members of the corporation are entitled to vote on the proposed transaction, the members entitled to vote on the proposed transaction shall approve the proposed transaction.
3. Each person whose approval is required by the articles of incorporation for the sale, lease, exchange or other disposal shall approve the proposed transaction in writing.
C. The board of directors may condition its submission of the proposed transaction on any basis.
D. If the corporation submits the transaction for member action at a membership meeting, the corporation shall notify each member to which the proposed transaction is to be submitted for approval of the proposed membership meeting in accordance with section 10-3705. The notice shall state that the purpose or one of the purposes of the meeting is to consider the proposed transaction and shall contain or be accompanied by a copy or summary of a description of the transaction.
E. Unless chapters 24 through 40 of this title, the articles of incorporation or the board of directors acting pursuant to subsection C of this section requires a greater vote or voting by class, a majority of the votes cast or a majority of the voting power of the class, whichever is less, shall approve the proposed transaction to be authorized.
F. At any time before consummation of the sale, lease, exchange or other disposition of property, the transaction may be abandoned, subject to any contractual rights, without further action by the members or any other person who approved the transaction, in accordance with the procedure set forth in the resolution proposing the transaction or, if none is set forth, in the manner determined by the board of directors.
G. A transaction that constitutes a distribution is governed by sections 10-11301 and 10-11302 and not by this section.
H. Except as provided in subsection K of this section and chapter 35.1 of this title, any person who intends to purchase, lease or otherwise acquire all or substantially all of the assets of a tax-exempt corporation described in section 501(c)(3) of the internal revenue code of 1986, or all or substantially all of the assets located in this state of a tax-exempt foreign corporation described in section 501(c)(3) of the internal revenue code of 1986 and is conducting affairs in this state, shall comply with subsection B of this section before such a purchase, lease or acquisition if either:
1. The person is a tax-exempt organization described in section 501(c)(3) of the internal revenue code of 1986 but intends to use in an unrelated trade or business, determined by applying section 513(a) of the internal revenue code of 1986 to such organization, any substantial portion of the assets to be acquired which were not being used in an unrelated trade or business of the corporation or foreign corporation conveying the assets immediately before the proposed purchase, lease or acquisition.
2. The person is not a tax-exempt organization described in section 501(c)(3) of the internal revenue code of 1986.
I. A person subject to the requirements of subsection H of this section shall give public notice of the intended transaction in accordance with subsection J of this section and shall hold a public hearing on the intended transaction no less than ten days after the first publication of the notice and no less than ten days before the intended purchase, lease or acquisition occurs. The sole purpose of the public hearing is to receive public comment regarding the proposed transaction. The public hearing shall be held before at least two representatives of the person intending to purchase, lease or otherwise acquire the assets of the corporation or foreign corporation and at least two representatives of the corporation or foreign corporation.
J. Notice of the intended transaction shall include the time, date and place of the public hearing, the names of the parties to the transaction, a general summary of the intended transaction, a general description of the assets to be purchased, leased or otherwise acquired and a general description of the intended use of the assets after the completion of the transaction. The notice shall be published three consecutive times in a newspaper of general circulation in the county of the known place of business of the corporation or foreign corporation from which the assets are intended to be purchased, leased or otherwise acquired. The first notice shall be published no less than twenty days before the intended purchase, lease or acquisition occurs.
K. The requirements of subsections I and J of this section do not apply to the purchase, lease or other acquisition of assets under this section from a domestic or foreign corporation as provided in this section if any of the following applies:
1. The transaction involves assets having a book value at the time of the transaction, net of accumulated depreciation, of less than two million dollars.
2. The transaction is in the usual course of business of the transferor or in connection with the mortgage or pledge of any or all property and assets of the corporation or foreign corporation whether or not in its usual and regular course of business.
3. The transferor has assets immediately prior to such transaction, with a book value of more than ten million dollars, net of accumulated depreciation.
4. The transaction is to enable the transferor to finance the purchase of assets or to refinance assets already owned by it, or if, after the transaction has been completed, the transferor continues to have possession of the assets purchased, leased or otherwise acquired or used in the usual and regular course of its business.
5. The transferor offers goods or services only to members who are entitled to vote for its board of directors.
6. The transferor is organized for religious purposes and does not have, as a substantial portion of its business, the offering of goods or services on a regular basis to the public for remuneration.
7. The purchase, lease or sale of assets as described in subsection A of this section by the United States, this state, a political subdivision of this state or an agency or instrumentality of such a governmental entity.
8. The purchase, lease or sale of assets as described in subsection A of this section by a hospital, medical, dental or optometric service corporation licensed pursuant to title 20, chapter 4, article 3.
L. For the purposes of subsection K, paragraph 6 of this section:
1. Goods and services shall include, but are not limited to, medical, hospital, dental or counseling or social services offered on a regular basis to the public for remuneration.
2. A transferor organized for religious purposes includes a corporation or foreign corporation that controls or is controlled directly or indirectly by a corporation or foreign corporation organized for religious purposes.
M. The exemption provided by subsection K, paragraph 7 of this section does not apply to a corporation or foreign corporation that provides services to or operates assets of such a governmental entity pursuant to a lease or contract.
10-11251. Definitions
In this chapter, unless the context otherwise requires:
1. "Assets" means all real, personal, tangible and intangible property and rights in property, including cash, buildings, equipment, investments and contracts with other entities.
2. "Community benefit activity" means any activity furthering community benefit purposes including any health care activity that includes education, prevention, promotion of community health, indigent care or any other charitable purpose.
3. "Community benefit assets" means every asset that has been used in connection with community benefit activity during the previous year.
4. "Community benefit organization" means a nonprofit charitable organization that is tax-exempt under section 501(c)(3) of the internal revenue code and whose mission is solely to engage in community benefit activities.
5. "Community benefit purposes" means those purposes for which an entity may qualify for exemption pursuant to section 501(c)(3) of the internal revenue code, or for similar activity engaged in by a for profit organization.
6. "Community health center" means a primary care facility that provides medical care in medically underserved areas as designated in section 36-2352 or in medically underserved areas or medically underserved populations as designated by the United States department of health and human services.
7. "Nonprofit health care entity" means a licensed hospital or community health center that holds tax-exempt status pursuant to section 501(c)(3) of the internal revenue code.
8. "Notice of completion" means the written notice that is sent by the hearing officer to the chairman of the corporation commission after the hearing officer holds a public hearing and files a summary report pursuant to section 10-11253.
10-11252. Scope; included transactions; excluded transactions
A. Except as provided in subsections B and C of this section, this chapter applies to any nonprofit health care entity that intends to sell, transfer, lease, exchange, option, convey, convert, give, merge or otherwise dispose of all or substantially all of its assets to or with another nonprofit health care entity or a for profit entity, including entering into a joint venture involving all or substantially all of its assets. The requirements of section 10-11202 do not apply to a nonprofit health care entity.
B. This chapter does not apply to any physician or licensed health care provider contract with a hospital or community health center. This chapter shall not affect any contract entered into between a physician or licensed health care provider or group of physicians or licensed health care providers and a licensed hospital.
C. This chapter does not apply to transactions:
1. Involving a transfer of community benefit assets of a licensed hospital or community health center with a book value of less than one million dollars, net of accumulated depreciation as of the date of the closing date of the intended transaction.
2. Enabling a party to finance the purchase of assets, refinance assets or mortgage or pledge assets already owned by the party, whether or not in its usual course of business.
3. Between or among a nonprofit health care entity and affiliated nonprofit entities that are part of a common line of ownership or control.
10-11253. Public hearing; notice; requirements; summary report
A. No later than ninety days before the anticipated closing of the intended transaction, any nonprofit health care entity that intends to engage in any of the transactions described in section 10-11252, subsection A shall give written notice to the director of the department of health services and the attorney general. The written notice shall include all of the following information:
1. The names, addresses and telephone numbers of the parties to the intended transaction.
2. The names, addresses and telephone numbers of the attorneys or other persons who represent the parties in connection with the intended transaction.
3. A general summary of the intended transaction.
4. A general description of the assets involved in the intended transaction and the intended use of the assets after the closing of the intended transaction.
5. A general summary of all collateral transactions that relate to the intended transaction, including the names, addresses and telephone numbers of the parties involved in the collateral transactions.
6. The anticipated date of completion of the intended transaction.
B. The notice and information required pursuant to subsection A of this section and information submitted pursuant to subsection H of this section are public records.
C. Within thirty days after the nonprofit health care entity sends the written notice prescribed in subsection A of this section, the parties to the intended transaction shall:
1. Select a hearing officer to conduct the public hearing required by this section and determine a time and place within this state for the public hearing with the agreement of the director of the department of health services.
2. Publish a notice of the time and place for the public hearing at least three consecutive times in at least one newspaper of general circulation in the county in which the nonprofit health care entity has its principal place of business.
D. The hearing officer shall hold the public hearing within ten days after the last publication of the public notice.
E. The purpose of the public hearing is to provide the information described in subsection F of this section and to receive comments from the public and other interested parties.
F. The parties shall present written summary information at the public hearing that sets forth all of the following:
1. The extent to which the intended transaction impacts community benefit activities and is consistent with community benefit purposes, including a description of the resources that will be committed to community benefit purposes following the intended transaction.
2. Whether the intended transaction creates or has the likelihood of creating an adverse effect on the access to or availability or cost of health care services.
3. Whether any director, officer, agent or employee of the entity will receive any community benefit asset or will benefit directly or indirectly from the intended transaction, except for the receipt of compensation for professional services relating to the intended transaction for normal compensation for services rendered.
4. The extent to which the nonprofit health care entity used due diligence in the selection of the entity that will receive any community benefit asset and in the negotiation of the price and other terms and conditions of the transaction.
5. The extent to which the parties will continue to use the nonprofit health care entity's community benefit assets for community benefit purposes following the intended transaction, or, if applicable, the proceeds of the disposition of the assets will be deposited in a community benefit organization for community benefit purposes.
6. Whether any initial board of directors members of any entity changed or created by the intended transaction will reside in or near the communities affected by the intended transaction.
7. That any community benefit organization established to hold the proceeds of the disposition of assets is organized for community benefit purposes as required under federal and state law.
G. The attorney general may present information at the public hearing.
H. The hearing officer conducting the public hearing shall compile a summary report of the public hearing proceedings and shall transmit the summary report, a notice of completion and copies of all written information presented at the hearing to the director of the department of health services and the attorney general.
I. The parties to the intended transaction shall pay for all costs associated with the hearing officer, notice, publication of notice, public hearing and summary report.
10-11254. Applicability
A. Nothing in this chapter:
1. Affects the provisions of chapters 24 through 35 and chapters 36 through 40 of this title regarding the corporation commission's acceptance or denial of new, restated or amended articles of incorporation.
2. Affects the operation of state or federal antitrust laws or the attorney general's enforcement of those laws.
3. Is intended to create any private or governmental right or cause of action relating to the transaction or related parties.
B. This chapter does not apply to any transactions for which a letter of intent or memorandum of understanding or similar documentation was executed on or before December 31, 1996.