Legal Question in Business Law in California

Re: Denial of Membership or Right of First Refusal

Mutual benefit corporations don't have to repurchase shares or memberships to the extent their articles of incorporation, bylaws or agreements among members so restrict such repurchases. In other words, repurchase is pretty much voluntary. In some cases, repurchase is prohibited by law. See Corporations Code sections 7413 and 7414.

Unless the articles or bylaws provide otherwise, no member may transfer a membership or any membership right. When the member dies, all the member's rights cease (a membership cannot be inherited). The articles or bylaws may, however, provide for transferability of memberships, or may authorize the board to approve transfers. Corporations Code 7320.

So, it's all pretty much up to the people who organized the mutual benefit corporation in the first place; they can set all the rules at the time the articles of incorporation are filed or the initial bylaws adopted. I would expect different mutual benefit corporations to have widely differing rules depending upon their size and purpose.