(a) In considering conversions in accordance with this section, the department of attorney general shall adhere to the following process:
(1) Within sixty (60) days after receipt of an initial filing, the department of attorney general shall advise the filer, in writing, whether the filing is complete, and, if not, shall specify all additional information the filer is requested to provide;
(2) The filer shall have thirty (30) working days to submit the requested information. If the additional information is submitted within the thirty (30) day period, the department of attorney general will have thirty (30) working days within which to determine acceptability of the additional information. If the additional information is not submitted by the filer within the thirty (30) day period or if the department of the attorney general determines the additional information submitted by the filer is insufficient, the conversion will be deemed not to provide a community benefit and the department of attorney general shall specify a conversion fee to be paid. If the department of attorney general determines the additional information to be as requested, the filer will be notified, in writing, of the date of acceptance of the filing;
(3) Within sixty (60) working days after acceptance of the initial filing, the department of attorney general shall render its determination on confidentiality pursuant to § 18-4.1-14 and the department of attorney general shall publish notice of the filing in a newspaper of general circulation in the state and shall notify by United States mail any person who has requested notice of the filing. The notice shall:
(i) State that an initial filing has been received and accepted for review;
(ii) State the names of the transacting parties;
(iii) State the date by which a person may submit written comments to the department of attorney general; and
(iv) Provide notice of the date, time and place of informational meeting open to the public which shall be conducted within ninety (90) days of the date of the notice.
(4) The department of attorney general shall determine whether the conversion constitutes a community benefit, and if not, the amount of any applicable payments due, within one hundred and eighty (180) days of the date of acceptance of the filing.
(b) In considering a conversion pursuant to subsection (a) the department of the attorney general shall consider the following criteria:
(1) Whether the proposed conversion will harm the public's interest in property given, devised, or bequeathed to the existing public radio station for charitable, educational or religious purposes located or administered in this state;
(2) Whether a trustee or trustees of the acquiree will be deemed to have exercised reasonable care, diligence, and prudence in performing as a fiduciary in connection with the proposed conversion;
(3) Whether the board established appropriate criteria in deciding to pursue a conversion in relation to carrying out its mission and purposes;
(4) Whether the board formulated and issued appropriate requests for proposals in pursuing a conversion;
(5) Whether the board considered the proposed conversion as the only alternative or as the best alternative in carrying out its mission and purposes;
(6) Whether any conflict of interest exists concerning the proposed conversion relative to members of the board, officers, directors, senior management, experts or consultants engaged in connection with the proposed conversion including, but not limited to, attorneys, accountants, investment bankers, actuaries, broadcasting experts, or industry analysts;
(7) Whether individuals described in subdivision (b)(6) were provided with contracts or consulting agreements or arrangements which included pecuniary rewards based in whole, or in part on the contingency of the completion of the conversion;
(8) Whether the board exercised due care in engaging consultants with the appropriate level of independence, education, and experience in similar conversions;
(9) Whether the board exercised due care in accepting assumptions and conclusions provided by consultants engaged to assist in the proposed conversion;
(10) Whether the board exercised due care in assigning a value to the existing public radio station and its charitable assets in proceeding to negotiate the proposed conversion;
(11) Whether the board exposed an inappropriate amount of assets by accepting in exchange for the proposed conversion future or contingent value based upon success of the new radio station;
(12) Whether officers, directors, board members or senior management will receive future contracts in existing, new, or affiliated public radio stations or organizations;
(13) Whether any members of the board will retain any authority in the new radio station;
(14) Whether the board accepted fair consideration and value for any management contracts made part of the proposed conversion;
(15) Whether individual officers, directors, board members or senior management engaged legal counsel to consider their individual rights or duties in acting in their capacity as a fiduciary in connection with the proposed conversion;
(16) Whether the proposed conversion results in an abandonment of the original purposes of the existing public radio station or whether a resulting entity will depart from the traditional purposes and mission of the existing public radio station such that a cy pres or comparable proceeding would be necessary in the absence of this statute;
(17) Whether the proposed conversion contemplates the appropriate and reasonable fair market value;
(18) Whether the proposed conversion was based upon appropriate valuation methods including, but not limited to, market approach, third-party report or fairness opinion;
(19) Whether the conversion is proper under the Rhode Island nonprofit corporation act chapter 6 of title 7;
(20) Whether the conversion is proper under applicable state tax code provisions;
(21) Whether the proposed conversion jeopardizes the tax status of the existing public radio station;
(22) Whether the individuals who represented the existing public radio station in negotiations avoided conflicts of interest;
(23) Whether officers, board members, directors, or senior management deliberately acted or failed to act in a manner that impacted negatively on the decision to approve the conversion or its terms and conditions;
(24) Whether the formula used in determining the value of the existing public radio station was appropriate and reasonable which may include, but not be limited to, factors such as: the multiplier factor applied to the "EBITDA" — earnings before interest, taxes, depreciation, and amortization; the time period of the evaluation; price/earnings multiplies; the projected efficiency differences between the existing public radio station and the new radio station; and the historic value of any tax exemptions granted to the existing public radio station;
(25) Whether the proposed conversion appropriately provides for the disposition of proceeds of the conversion that may include, but not limited to:
(i) Whether an existing entity or a new entity will receive the proceeds and whether such recipient serves the public interest of Rhode Islanders;
(ii) Whether appropriate tax status implications of the entity receiving the proceeds have been considered;
(iii) Whether the mission statement and program agenda will be or should be closely related with the purposes of the mission of the existing public radio station;
(iv) Whether any conflicts of interest arise in the proposed handling of the conversion's proceeds;
(v) Whether the bylaws and articles of incorporation have been prepared for the new entity;
(vi) Whether the board of any new or continuing entity will be independent from the new radio station;
(vii) Whether the method for selecting board members, staff, and consultants is appropriate;
(viii) Whether the board will be comprised of an appropriate number of individuals with experience in pertinent areas such as foundations, public radio, business, labor, community programs, financial management, legal, accounting, grant making and public members representing diverse ethnic populations of the affected communities;
(ix) Whether the size of the board and proposed length of board terms are sufficient;
(26) Whether the transacting parties are in compliance with the Charitable Trust Act, chapter 9 of title 18;
(27) Whether a right of first refusal to repurchase the assets has been retained;
(28) Whether the character, commitment, competence and standing in the community, or any other communities served by the transacting parties are satisfactory;
(29) Whether a control premium is an appropriate component of the proposed conversion;
(30) Whether the value of assets factored in the conversion is based on past performance or future potential performance; and
(31) Whether based on all the facts and circumstances, the attorney general concludes that the acquiree's charitable and educational missions are no longer viable absent the conversion.
History of Section.
P.L. 2005, ch. 211, § 1; P.L. 2005, ch. 369, § 1.