Nonprofit Corporation Membership Exit and Termination in Indiana

At a glance

Requirements one by one

Membership and transfer

§ 23-17-7-3 allows a corporation with no members. Under § 23-17-7-1, the articles or bylaws may set admission criteria, but admission requires the person's consent. § 23-17-7-4 gives members equal rights and obligations by default, with document-based class differences. § 23-17-7-5 bars transfer of a membership or any right arising from it unless the articles or bylaws provide or authorize it. A later restriction on an already issued transferable membership needs approval by both the members and affected holder.

Voluntary and involuntary exit

§ 23-17-8-1 permits resignation “at any time” and preserves obligations incurred or commitments made before it. Under § 23-17-8-2(a), expulsion, suspension, or termination of public and mutual benefit corporation membership must use a procedure “fair and reasonable” and “carried out in good faith.” Subsection (b) supplies a document-based notice and response route or a procedure fair and reasonable under all relevant circumstances. The named decision maker on the notice route must have authority to stop the proposed action. The cited fair-procedure provision is expressly framed for public and mutual benefit corporations; it does not automatically govern a religious corporation.

Records, dues, and purchases

§ 23-17-27-1(c) requires a record that can generate an alphabetical member list by class, showing each member's name, address, and votes. § 23-17-7-7(a) says an articles, bylaws, or board dues provision alone does not create payment liability, yet nonpayment can be grounds to expel or suspend a member or suspend or terminate membership. Under § 23-17-8-2(e), a member exiting involuntarily may still owe dues, assessments, or fees from earlier commitments. § 23-17-8-3 distinguishes a mutual benefit corporation's document-authorized purchase of a resigned or terminated membership from public benefit or religious corporations, which may not purchase memberships or related rights.

What trips people up

The document procedure in § 23-17-8-2(b)(1) calls for written notice with reasons at least 15 days before the proposed exit and a chance to be heard orally or in writing at least five days before its effective date. Subsection (b)(2) separately permits a fair and reasonable procedure in light of the facts. Under subsection (c), a mailed notice must use first-class or certified mail to the member's last address in the corporate records.

Under § 23-17-8-2(d), a challenge, including a defective-notice claim, must begin within one year after the effective date of expulsion, suspension, or termination. The trigger is the effective date, not the day a member reads the notice.

Common questions

Does quitting erase promised dues or work? No. § 23-17-8-1(b) preserves obligations and commitments from before resignation.

Can a transferee inherit unpaid dues? § 23-17-7-7(b) makes a permitted transferee with notice of unpaid transferor dues, assessments, or fees liable, subject to its stated fiduciary and heir exceptions.

Is a hearing always in person? The document route in § 23-17-8-2(b)(1) allows the member to be heard orally or in writing; subsection (b)(2) provides the separate contextual fairness route.

Statutes and sources

• Ind. Code §§ 23-17-7-1, -3–5, -7, official 2026 membership chapter, accessed October 3, 2026.
• Ind. Code §§ 23-17-8-1–3, official 2026 exit chapter, accessed October 3, 2026.
• Ind. Code § 23-17-27-1(c), official 2026 records chapter, accessed October 3, 2026.