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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 6185 October 3, 1983 EDUCATION, STATE BOARD OF: Authority over transfer of ownership of an educational corporation While the State Board of Education may inspect and publish its findings upon all matters pertaining to the condition, management, instruction and practices of educational corporations whose ownership has been subject to transfer, the Legislature has not empowered it to regulate changes in the ownership of educational corporations. Dr. Phillip E. Runkel Superintendent of Public Instruction Michigan Department of Education Lansing, Michigan On behalf of the State Board of Education, you have asked for my opinion on a question which may be phrased as follows: Does the State Board of Education have the authority to regulate changes in the ownership of educational corporations? In addressing this question, it must be observed that sections 170-177 of 1931 PA 327; MCLA 450.170-MCLA 450.177; MSA 21.171-MSA 21.178, provide for the incorporation of domestic educational corporations. Your question is in connection with an educational corporation which was incorporated under 1931 PA 327, Secs. 170-177, supra, and which has experienced a change in the board of directors and has amended its articles of incorporation so as to change the names of the incorporators and the names of the corporation and the college, as well as to change some of its educational programs. However, no information has been provided to indicate that the new educational program is not within the educational programs specified in the articles of incorporation. In 1931 PA 327, Sec. 171, supra, the Legislature has provided, in pertinent part: 'Every educational corporation, before being authorized to file its articles, shall be required to present a statement to the Michigan corporation and securities commission in writing from the state board of education that (1) the housing space and administration facilities which it possesses or proposes to provide for its declared field or fields of education are adequate, (2) its proposed educational program leading to the diplomas or degrees which it proposes to offer is adequate, (3) its laboratory, library, and other teaching facilities which it possesses or proposes to provide are adequate, (4) it has or proposes to employ an adequate staff, fully trained, for the instruction proposed, and (5) at least 50% of its capital, whether of stock or in gifts, devises, legacies, bequests or other contributions of money or property, has been paid in or reduced to possession. No educational corporation shall be permitted to expand its program beyond that specified in its articles of incorporation until it has presented to the Michigan corporation and securities commission a statement in writing from the state board of education approving the facilities, equipment and staff or the proposed facilities, equipment and staff as adequate for the offering of the additional educational program.' The above quoted language was added to 1931 PA 327, Sec. 171, supra, by 1939 PA 162. This amendatory language is applicable only to educational corporations incorporated after 1939 PA 162 became effective. City of Detroit v Detroit Commercial College, 322 Mich 142, 147-148; 33 NW2d 737 (1948); 2 OAG, 1960, No 3442, p 155 (December 19, 1960); letter opinion of February 1, 1940 to Mr. George Carrothers. The educational corporation here in question was incorporated in 1933. 1931 PA 327, Sec. 177, supra, provides: 'Every such educational corporation shall be visited and inspected by the state board of education, in person or through visitors or inspectors appointed by them, at least once every 3 years. Said state board of education shall at the time of visitation ascertain and publish information upon all matters pertaining to the condition, management, instruction and practices of such corporations, and shall file a copy of their report with the Michigan corporation and securities commission. Upon evidence that the property is at any time less than is required by law, or that any such educational corporation is not otherwise complying with the provisions of this act, they shall serve notice on such corporation to remedy the defects within a reasonable time to be fixed in such notice, and in case the deficiency is not corrected within the time fixed by them, they may institute proceedings at law for the dissolution of such corporation. . . .' In 1931 PA 327, Sec. 177, supra, as originally enacted, the superintendent of public instruction was given discretionary authority to inspect educational corporations and publish his findings. Section 177, as amended by 1939 PA 162, now imposes a duty upon the State Board of Education to inspect educational corporations and publish its findings. Clearly, the educational corporation here in question, which was incorporated in 1933, is subject to the inspection provisions of 1931 PA 327, Sec. 177, supra. Letter opinion of February 1, 1940 to Mr. George Carrothers. A review of 1931 PA 327, Secs. 170-177, supra, reveals that the State Board of Education does not have the authority to regulate changes in the ownership of educational corporations because the Legislature has not conferred such authority upon the Board. However, pursuant to 1931 PA 327, Sec. 177, supra, the State Board of Education may inspect the educational corporation here in question and publish its findings 'upon all matters pertaining to the condition, management, instruction and practices of such corporations. . . .' It is my opinion that, although the State Board of Education does have authority to inspect educational corporations and may publish its findings upon all matters pertaining to the condition, management, instruction and practices of educational corporations whose ownership has been subject to transfer, it does not have the authority to regulate changes in the ownership of educational corporations. Frank J. Kelley Attorney General
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