(a) For proceeds or reserves of not-for-profit healthcare conversion transactions that constitute public benefit assets, there shall be created a new tax-exempt public benefit or charitable organization or foundation pursuant to 26 U.S.C. § 501(c)(3) or (c)(4) of the Federal Internal Revenue Code [26 U.S.C. § 501(c)(3) or (c)(4)] into which the proceeds or reserves shall be ultimately deposited. Whether or not the public benefit or charitable organization is classified as a private foundation under § 509 of the Internal Revenue Code [26 U.S.C. § 509], it shall be subject to the restrictions and limitations that apply to private foundations found in § 4941 through 4945 of the Internal Revenue Code [26 U.S.C. §§ 4941 through 4945].

(b) The mission of the public benefit or charitable organization or foundation receiving the public benefit assets shall be serving the State’s unmet health needs, particularly with regard to medically uninsured and underserved populations.

(c) The board of directors of the foundation shall consist of 9 to 15 members who shall be broadly representative of the community’s diversity and shall include persons with knowledge, expertise and skills in investment and asset management, healthcare finance, not-for-profit administration, delivery of healthcare services, and of health care consumer issues. Each member of the board of directors shall be appointed by the Governor, by and with the consent of the Senate, from a list of qualified persons who have been nominated by the Community Advisory Committee established in subsection (d) of this section, below. The directors shall elect a chairperson. The directors shall have the authority to adopt bylaws for the foundation in consultation with the Community Advisory Committee. After the directors have finalized the formation of the foundation and the adoption of bylaws, the State shall transfer the public benefit assets to the foundation.

(d) A Community Advisory Committee shall be formed to nominate candidates for the foundation’s board of directors. The initial Community Advisory Committee shall be comprised of 9 members, 1 selected by each of the following organizations:

(e) The State Treasurer shall open and maintain an escrow account for the benefit of the foundation for the receipt of any public benefit assets. During the interim time period from when the State receives public benefit assets until they are transferred to the foundation, the State Treasurer shall invest any funds that are part of the public benefit amount in a manner that will protect the principal balance of the public benefit assets.

(f) The certificate of incorporation of the foundation shall provide that the directors shall be appointed to the board for a term of 3 years except as provided herein. The term for each board position shall be staggered by thirds so that the first term for a board position may be 1, 2 or 3 years and shall be determined by lot. No individual may serve more than 2 terms consecutively, except for the initial members whose terms are 1 or 2 years who may serve 3 consecutive terms. Notwithstanding any other law to the contrary, directors of the foundation shall be prohibited from holding over their term once expired even if their successors have not been duly elected and qualified. The directors shall receive no compensation for their service on the board of the foundation other than reimbursement for reasonable expenses related to their service. No elected official may serve as a director of the foundation.

(g) The not-for-profit public benefit or charitable organization or foundation receiving the public benefit assets, its directors, officers, and management shall be and remain independent of the for-profit company or mutual corporation and its affiliates. No person who is an officer, director, or member of management of the not-for-profit corporation submitting the plan for the proposed healthcare conversion transaction, at the time the plan is submitted, or at the time of the agreement or transaction, or thereafter, shall be qualified to be an officer, director or member of management of the not-for-profit public benefit or charitable organization or foundation receiving the charitable assets.

(h) The not-for-profit public benefit or charitable organization or foundation receiving the public benefit assets shall establish formal mechanisms to avoid conflicts of interest and to prohibit grants benefiting the for-profit corporation, the board of directors and management of the for-profit corporation.

(i) The foundation shall have the power to enter into any contract, acquire, lease, sell, hold or dispose of any assets in accordance with the purposes of this subchapter; to employ, retain or enter into contracts with persons in connection with the management and operation of the foundation; to bring or defend, pay, collect, compromise or arbitrate any legal action by or against the foundation; to deposit withdraw, invest, pay, retain and distribute the foundation’s funds in accordance with this subchapter; to purchase, hold, sell, lease, exchange, receive or otherwise acquire or dispose of securities in the name of the foundation; to open, maintain and close bank accounts, and draw checks or other orders for the payment of moneys; and to authorize any officer, director employee or other agent of the foundation to act for and on behalf of the foundation in all matters incidental to the forgoing.

(j) The charitable organization or foundation receiving the public benefit assets shall provide the Attorney General, the Governor, and the General Assembly with an annual report of its charitable activities related to its use of the public benefit assets received. The annual report shall be a public document.

(k) Nothing in this subchapter shall be construed to limit the common law authority of the Attorney General to protect the charitable trusts and assets held for the public benefit in this State. Nothing in this subchapter shall be construed as a replacement for any other civil or criminal actions, which the Attorney General may take either under the common law or statutory law, seeking injunctive relief, or other available remedies.

(l) Nothing in this subchapter shall be construed to supersede, restrict or otherwise limit the powers, duties, and authority of the Insurance Commissioner pursuant to Title 18, or any other provisions relating to the regulation of insurers, hospitals, or other health care corporations.

74 Del. Laws, c. 298, § 2; 77 Del. Laws, c. 282, § 2.