Bill Text: NY A07772 | 2013-2014 | General Assembly | Introduced
Bill Title: Relates to the reform of charitable organizations in the state of New York.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-03-11 - enacting clause stricken [A07772 Detail]
Download: New_York-2013-A07772-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
7772
2013-2014 Regular Sessions
I N A S S E M B L Y
June 4, 2013
___________
Introduced by M. of A. BRENNAN -- read once and referred to the Commit-
tee on Corporations, Authorities and Commissions
AN ACT to amend the not-for-profit corporation law, the estates, powers
and trusts law, the surrogate's court procedure act, the racing, pari-
mutuel wagering and breeding law, the executive law, the education
law, the religious corporations law, the benevolent orders law, the
public authorities law, the insurance law, the private housing finance
law, the banking law, the general business law, the mental hygiene law
and the public lands law, in relation to reform of charitable organ-
izations; and to repeal certain provisions of the not-for-profit
corporation law and the estates, powers and trusts law relating there-
to
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Subparagraph 6 of paragraph (a) of section 102 of the not-
2 for-profit corporation law is amended and ten new subparagraphs 3-a,
3 6-a, 9-a, 19, 20, 21, 22, 23, 24 and 25 are added to read as follows:
4 (3-A) "CHARITABLE CORPORATION" MEANS CORPORATIONS WHOSE PURPOSES AS
5 CONTAINED IN THE CERTIFICATE OF INCORPORATION OR SPECIAL LAW ARE EXCLU-
6 SIVELY CHARITABLE, EDUCATIONAL, RELIGIOUS, SCIENTIFIC, TESTING FOR
7 PUBLIC SAFETY AND TO FOSTER NATIONAL OR INTERNATIONAL AMATEUR SPORTS
8 COMPETITION OR FOR THE PREVENTION OF CRUELTY TO CHILDREN OR ANIMALS,
9 INCLUDING WITHOUT LIMITATION, ARTS, CULTURAL, ENVIRONMENTAL, HEALTH,
10 HUMAN SERVICES, LITERARY, PUBLIC BENEFIT, SOCIETY BENEFIT CORPORATIONS
11 AND OTHER PUBLICLY SUPPORTED OR PRIVATE FOUNDATIONS RECOGNIZED BY THE
12 UNITED STATES INTERNAL REVENUE SERVICE AS EXEMPT FROM FEDERAL INCOME
13 TAXATION UNDER SECTION FIVE HUNDRED ONE (C)(3) OF THE INTERNAL REVENUE
14 CODE OF 1986, AS AMENDED, OR ANY SUCCESSOR LAW.
15 (6) "Director" means any member of the governing board of a corpo-
16 ration, whether designated as director, trustee, manager, governor, or
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08903-04-3
A. 7772 2
1 by any other title. The term "board" means "board of directors" OR ANY
2 OTHER BODY CONSTITUTING A "GOVERNING BOARD" AS DEFINED IN THIS SECTION.
3 (6-A) "ENTIRE BOARD" MEANS THE TOTAL NUMBER OF DIRECTORS ENTITLED TO
4 VOTE WHICH THE CORPORATION WOULD HAVE IF THERE WERE NO VACANCIES. IF THE
5 BY-LAWS OF ANY CORPORATION PROVIDE THAT THE BOARD MAY CONSIST OF A RANGE
6 BETWEEN A MINIMUM AND MAXIMUM NUMBER OF DIRECTORS, THEN THE "ENTIRE
7 BOARD" SHALL CONSIST OF THE NUMBER OF DIRECTORS WITHIN SUCH RANGE THAT
8 WERE ELECTED AT THE MOST RECENTLY HELD ELECTION OF DIRECTORS.
9 (9-A) "BENEFICENT CORPORATION" MEANS LAWFUL NON-BUSINESS CORPORATIONS,
10 INCLUDING CIVIC LEAGUES, SOCIAL WELFARE ORGANIZATIONS, FRATERNAL BENEFIT
11 SOCIETIES, BUSINESS LEAGUES, CHAMBERS OF COMMERCE, LABOR, AGRICULTURAL
12 AND HORTICULTURAL ORGANIZATIONS, SOCIAL AND RECREATIONAL CLUBS, CEMETERY
13 CORPORATIONS, CERTAIN CREDIT UNIONS, WAR VETERANS POSTS AND ORGANIZA-
14 TIONS, PATRIOTIC AND POLITICAL ORGANIZATIONS, CERTAIN INSURANCE ORGAN-
15 IZATIONS, AND CERTAIN EMPLOYEE BENEFIT ORGANIZATIONS, RECOGNIZED BY THE
16 INTERNAL REVENUE SERVICE AS FEDERAL INCOME TAX EXEMPT UNDER OTHER
17 SUBSECTIONS OF SECTION 501 OR UNDER SECTION 527 OF THE INTERNAL REVENUE
18 CODE OF 1986, AS AMENDED, OR ANY SUCCESSOR LAW, OTHER THAN THOSE ORGAN-
19 IZATIONS EXEMPT UNDER SECTION 501(C)(3) THEREOF.
20 (19) "AFFILIATE" OF A CORPORATION MEANS ANY ENTITY CONTROLLED BY, IN
21 CONTROL OF, OR UNDER COMMON CONTROL WITH SUCH CORPORATION.
22 (20) "INDEPENDENT AUDITOR" MEANS ANY CERTIFIED PUBLIC ACCOUNTANT
23 PERFORMING AN AUDIT OF THE FINANCIAL STATEMENTS OF A CORPORATION
24 REQUIRED BY SUBDIVISION ONE OF SECTION ONE HUNDRED SEVENTY-TWO-B OF THE
25 EXECUTIVE LAW OR ENVISIONED BY SECTION FIVE HUNDRED NINE OF THIS CHAP-
26 TER.
27 (21) "INDEPENDENT DIRECTOR" MEANS A DIRECTOR WHO IN THE PAST THREE
28 YEARS: (I) WAS NOT EMPLOYED BY, AND DID NOT HAVE A RELATIVE WHO WAS
29 EMPLOYED BY, THE CORPORATION OR AN AFFILIATE OF THE CORPORATION; (II)
30 WAS NOT EMPLOYED BY, AND DID NOT HAVE A RELATIVE WHO WAS EMPLOYED BY,
31 ANY ENTITY THAT MADE PAYMENTS TO, OR RECEIVED PAYMENTS FROM, THE CORPO-
32 RATION OR ANY AFFILIATE OF THE CORPORATION FOR GOODS, PROPERTY OR
33 SERVICES EXCEEDING TEN THOUSAND DOLLARS; (III) HAS NOT HAD, AND DOES NOT
34 HAVE A RELATIVE WHO HAS HAD, A MATERIAL FINANCIAL INTEREST IN ANY ENTITY
35 THAT MADE PAYMENTS TO, OR HAS RECEIVED PAYMENTS FROM, THE CORPORATION OR
36 ANY AFFILIATE OF THE CORPORATION FOR GOODS, PROPERTY OR SERVICES EQUAL-
37 ING THE LESSER OF TWENTY-FIVE THOUSAND DOLLARS OR TWO PERCENT OF THE
38 CORPORATION'S TOTAL REVENUE FOR THE CORPORATION'S TAX YEAR; AND (IV) HAS
39 NOT RECEIVED, AND DOES NOT HAVE ANY RELATIVE WHO HAS RECEIVED, ANY OTHER
40 COMPENSATION, PAYMENT OF BENEFIT HAVING MONETARY VALUE FROM THE CORPO-
41 RATION OR ANY AFFILIATE OF THE CORPORATION, OTHER THAN REIMBURSEMENT FOR
42 EXPENSES REASONABLY INCURRED AS A DIRECTOR OR REASONABLE COMPENSATION
43 FOR SERVICE AS A DIRECTOR AS PERMITTED BY PARAGRAPH (A) OF SECTION TWO
44 HUNDRED TWO OF THIS CHAPTER. FOR PURPOSES OF THIS CHAPTER, "PAYMENT"
45 DOES NOT INCLUDE CONTRIBUTIONS TO A NOT-FOR-PROFIT CORPORATION.
46 (22) "RELATIVE" OF AN INDIVIDUAL MEANS THE (I) SPOUSE, ANCESTOR, CHIL-
47 DREN, GRANDCHILDREN, GREAT GRANDCHILDREN, BROTHER OR SISTER (WHETHER BY
48 THE WHOLE- OR HALF-BLOOD) OF THE INDIVIDUAL; AND (II) THE SPOUSES OF
49 CHILDREN, GRANDCHILDREN, GREAT GRANDCHILDREN, BROTHER OR SISTER (WHETHER
50 BY THE WHOLE- OR HALF-BLOOD) OF THE INDIVIDUAL.
51 (23) "RELATED PARTY" MEANS (I) ANY DIRECTOR, OFFICER OR KEY EMPLOYEE
52 OF THE CORPORATION OR ANY AFFILIATE OF THE CORPORATION; (II) ANY RELA-
53 TIVE OF ANY DIRECTOR, OFFICER OR KEY EMPLOYEE OF THE CORPORATION OR ANY
54 AFFILIATE OF THE CORPORATION; OR (III) AN ENTITY IN WHICH ANY INDIVIDUAL
55 DESCRIBED IN CLAUSES (I) AND (II) OF THIS SUBPARAGRAPH HAS A THIRTY-FIVE
56 PERCENT OR GREATER OWNERSHIP OR BENEFICIAL INTEREST.
A. 7772 3
1 (24) "RELATED PARTY TRANSACTION" MEANS ANY TRANSACTION, AGREEMENT OR
2 ANY OTHER ARRANGEMENT IN WHICH A RELATED PARTY HAS A FINANCIAL INTEREST
3 AND IN WHICH THE CORPORATION OR ANY AFFILIATE OF THE CORPORATION IS A
4 PARTICIPANT.
5 (25) "KEY EMPLOYEE" MEANS ANY PERSON WHO IS IN A POSITION TO EXERCISE
6 SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE CORPORATION, AS DEFINED IN
7 SECTION 4958(F)(1)(A) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
8 AND THE REGULATIONS THEREUNDER, AND ANY SUCCESSOR LAW OR REGULATION.
9 S 2. Paragraphs (a), (b) and (c) of section 103 of the not-for-profit
10 corporation law, paragraph (a) as amended by chapter 807 of the laws of
11 1973, paragraph (b) as amended by chapter 847 of the laws of 1970, and
12 paragraph (c) as amended by chapter 961 of the laws of 1972, are amended
13 to read as follows:
14 (a) Except as otherwise provided in this section, this chapter
15 applies to every domestic corporation as herein defined, and to every
16 foreign corporation as herein defined which is authorized to conduct or
17 which conducts any activities in this state. This chapter also applies
18 to any other domestic corporation or foreign corporation of any [type
19 or] kind to the extent, if any, provided under this chapter or any law
20 governing such corporation and, if no such provision for application is
21 made, to the extent, if any, that the membership corporations law
22 applied to such corporation as of the effective date of this chapter. A
23 corporation formed by a special act of this state which has as its prin-
24 cipal purpose an education purpose and which is a member of the univer-
25 sity of the state of New York, is an "education corporation" under
26 section two hundred sixteen-a of the education law.
27 To the extent that the membership corporations law or the general
28 corporation law applied to it as of the effective date of this chapter,
29 the corresponding provisions of this chapter apply to a corporation
30 heretofore formed by or pursuant to a special act of this state other
31 than a religious corporation or an "education corporation" under clause
32 (b) of subdivision one of section two hundred sixteen-a of the education
33 law, if (1) its principal purpose is a religious, charitable or educa-
34 tion purpose, and (2) it is operated, supervised or controlled by or in
35 connection with a religious organization. Any such corporation may
36 elect hereunder at any time after the effective date of this chapter AND
37 BEFORE THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND
38 THIRTEEN WHICH AMENDED THIS PARAGRAPH to file a certificate of type
39 under section one hundred thirteen (Certificate of type of not-for-pro-
40 fit corporation). Upon the filing of such certificate [by] TO the
41 department of state, this chapter shall apply in all respects to such
42 corporation.
43 This chapter also applies to any other corporation of any [type or]
44 kind, formed [not for profit] NOT-FOR-PROFIT under any other chapter of
45 the laws of this state except a chapter of the consolidated laws, to the
46 extent that provisions of this chapter do not conflict with the
47 provisions of such unconsolidated law. If an applicable provision of
48 such unconsolidated law relates to a matter embraced in this chapter but
49 is not in conflict therewith, both provisions shall apply. Any corpo-
50 ration to which this chapter is made applicable by this paragraph shall
51 be treated as a "corporation" or "domestic corporation" as such terms
52 are used in this chapter, except that the purposes of any such corpo-
53 ration formed or formable under such unconsolidated law shall not there-
54 by be extended. For the purpose of this paragraph, the effective date
55 of this chapter as to corporations to which this chapter is made appli-
A. 7772 4
1 cable by this paragraph shall be September one, nineteen hundred seven-
2 ty-three.
3 (b) The general corporation law does not apply to a corporation of
4 any [type or] kind to which this chapter applies. A reference in any
5 statute of this state which makes a provision of the general corporation
6 law applicable to a corporation of any [type or] kind to which this
7 chapter is applicable or a reference in any [statute] LAW of this state,
8 other than the membership corporations law, which makes a provision of
9 the membership corporations law applicable to a corporation of any [type
10 or] kind shall be deemed and construed to refer to and make applicable
11 the corresponding provision, if any, of this chapter.
12 (c) If any provision in articles one to thirteen inclusive of this
13 chapter conflicts with a provision of any subsequent articles or of any
14 special act under which a corporation to which this chapter applies is
15 formed, the provision in such subsequent article or special act
16 prevails. A provision of any such subsequent article or special act
17 relating to a matter referred to in articles one to thirteen inclusive
18 and not in conflict therewith is supplemental and both shall apply.
19 Whenever the board of a [Type B] CHARITABLE corporation, formed under a
20 special act, reasonably makes an interpretation as to whether a
21 provision of the special act or this chapter prevails, or both apply,
22 such interpretation shall govern unless and until a court determines
23 otherwise, if such board has acted in good faith for a purpose which it
24 reasonably believes to be in the best interests of the corporation,
25 provided however, that such interpretation shall not bind any govern-
26 mental body or officer.
27 S 3. Paragraph (a) of section 104-a of the not-for-profit corporation
28 law is REPEALED and paragraphs (b) through (s) are relettered paragraphs
29 (a) through (r).
30 S 4. Section 105 of the not-for-profit corporation law, as amended by
31 chapter 172 of the laws of 1999, is amended to read as follows:
32 S 105. Certificates; corrections.
33 (A) ANY CERTIFICATE OR OTHER INSTRUMENT RELATING TO A DOMESTIC OR
34 FOREIGN CORPORATION SUBMITTED TO THE DEPARTMENT OF STATE UNDER THIS
35 CHAPTER MAY BE CORRECTED WITH RESPECT TO ANY TYPOGRAPHICAL, OR SIMILAR
36 NON-MATERIAL ERROR APPARENT ON THE FACE OF THE CERTIFICATE OR INSTRU-
37 MENT, PRIOR TO ACCEPTANCE FOR THE FILING OF SUCH CERTIFICATE OR INSTRU-
38 MENT BY THE DEPARTMENT OF STATE. SUCH CORRECTION SHALL BE EFFECTED BY
39 THE DEPARTMENT OF STATE UPON AUTHORIZATION IN WRITING OR BY ELECTRONIC
40 MAIL BY THE INCORPORATOR, OR FOLLOWING INCORPORATION, BY ANY PERSON
41 AUTHORIZED BY THE CORPORATION.
42 (B) Any certificate or other instrument relating to a domestic or
43 foreign corporation filed by the department of state under this chapter
44 may be corrected with respect to any [informality] TYPOGRAPHICAL OR
45 SIMILAR NON-MATERIAL or error apparent on the face or defect in the
46 execution thereof including the deletion of any matter not permitted to
47 be stated therein. A certificate, entitled "Certificate of correction
48 of.......... (correct title of certificate and name of corporation)"
49 shall be signed and delivered to the department of state. It shall set
50 forth the name of the corporation, the date the certificate to be
51 corrected was filed by the department of state, the provision in the
52 certificate as corrected or eliminated and if the execution was defec-
53 tive, the proper execution. The filing of the certificate by the depart-
54 ment of state shall not alter the effective time of the instrument being
55 corrected, which shall remain as its original effective time, and shall
56 not affect any right or liability accrued or incurred before such
A. 7772 5
1 filing. A corporate name may not be changed or corrected under this
2 section OTHER THAN TO CORRECT ANY TYPOGRAPHICAL OR SIMILAR NON-MATERIAL
3 ERROR.
4 S 5. Subparagraphs 7, 8 and 9 of paragraph (a) of section 112 of the
5 not-for-profit corporation law, subparagraphs 7 and 9 as amended by
6 chapter 1058 of the laws of 1971, are amended and two new subparagraphs
7 10 and 11 are added to read as follows:
8 (7) To enforce any right given under this chapter to members, a
9 director or an officer of a [Type B or Type C] NOT-FOR-PROFIT corpo-
10 ration. The attorney-general shall have the same status as such
11 members, director or officer.
12 (8) To compel the directors and officers, or any of them, of a [Type
13 B or Type C] NOT-FOR-PROFIT corporation which has been dissolved under
14 section 1011 (Dissolution for failure to file certificate of type of
15 Not-for-Profit Corporation Law under section 113) to account for the
16 assets of the dissolved corporation.
17 (9) Upon application, ex parte, for an order to the supreme court at
18 a special term held within the judicial district where the office of the
19 corporation is located, and if the court so orders, to enforce any right
20 given under this chapter to members, a director or an officer of [a Type
21 A corporation] A NOT-FOR-PROFIT CORPORATION. For such purpose, the
22 attorney-general shall have the same status as such members, director or
23 officer.
24 (10) TO ENJOIN, VOID OR RESCIND ANY RELATED PARTY TRANSACTION, OR SEEK
25 ADDITIONAL DAMAGES OR REMEDIES PURSUANT TO SECTION 715 (RELATED PARTY
26 TRANSACTIONS) OF THIS CHAPTER.
27 (11) TO ENFORCE THE PARENS PATRIAE POWER AND ANY OTHER COMMON LAW
28 AUTHORITY OF THE ATTORNEY GENERAL AND ANY COMMON-LAW CAUSES OF ACTION
29 AVAILABLE TO MEMBERS, DIRECTORS, OFFICERS, CREDITORS AND OTHERS AGAINST
30 A DOMESTIC OR FOREIGN CORPORATION AND ITS MEMBERS, DIRECTORS AND OFFI-
31 CERS WHICH ARE NOT PREEMPTED BY THIS CHAPTER.
32 S 6. Subparagraph 1 of paragraph (b) of section 112 of the not-for-
33 profit corporation law is amended to read as follows:
34 (1) If an action, it is triable by jury as a matter of right AS GUAR-
35 ANTEED BY ARTICLE I, SECTION 2 OF THE CONSTITUTION AND PROVIDED BY
36 SECTION FORTY-ONE HUNDRED ONE OF THE CIVIL PRACTICE LAW AND RULES.
37 S 7. Subparagraph 1 of paragraph (c) of section 112 of the not-for-
38 profit corporation law is amended to read as follows:
39 (1) As used in this paragraph the term "resident" shall include indi-
40 viduals, domestic corporations of any [type or] kind and foreign corpo-
41 rations of any [type or] kind authorized to do business or carry on
42 activities in the state.
43 S 8. Section 112 of the not-for-profit corporation law is amended by
44 adding a new paragraph (e) to read as follows:
45 (E) NO PROVISIONS OF THIS CHAPTER SHALL PREEMPT WELL-PLEADED COMMON
46 LAW OR EQUITABLE CAUSES OF ACTION OR PROCEEDINGS BROUGHT BY THE ATTORNEY
47 GENERAL AGAINST CORPORATIONS, DIRECTORS, OFFICERS, KEY EMPLOYEES OR
48 AGENTS, IF SUCH CAUSES OF ACTION ARE INDEPENDENT OF CAUSES OF ACTION, IF
49 ANY, BASED ON VIOLATIONS OF THIS CHAPTER.
50 S 9. Section 113 of the not-for-profit corporation law is REPEALED.
51 S 10. Section 114 of the not-for-profit corporation law, as added by
52 chapter 847 of the laws of 1970, is amended to read as follows:
53 S 114. Visitation of supreme court.
54 [Type B and Type C corporations] CORPORATIONS, whether formed under
55 general or special laws, with their books and vouchers, shall be subject
56 to the visitation and inspection of a justice of the supreme court, or
A. 7772 6
1 of any person appointed by the court for that purpose. If it appears by
2 the verified petition of a member, DIRECTOR, OFFICER, or creditor of any
3 such corporation, that it, or its directors, officers, MEMBERS, KEY
4 EMPLOYEES, or agents, have misappropriated any of the funds or property
5 of the corporation, or diverted them from the purpose of its incorpo-
6 ration, or that the corporation has acquired property in excess of the
7 amount which it is authorized by law to hold, or has engaged in any
8 business other than that stated in its certificate of incorporation, the
9 court may order that notice of at least eight days, with a copy of the
10 petition, be served on the corporation, THE ATTORNEY GENERAL, and the
11 persons charged with misconduct, requiring them to show cause at a time
12 and place specified, why they should not be required to make and file an
13 inventory and account of the property, effects and liabilities of such
14 corporation with a detailed statement of its transactions during the
15 twelve months next preceding the granting of such order. On the hearing
16 of such application, the court may make an order requiring such invento-
17 ry, account and statement to be filed, and proceed to take and state an
18 account of the property and liabilities of the corporation, or may
19 appoint a referee for that purpose. When such account is taken and
20 stated, after hearing all the parties to the application, the court may
21 enter a final order determining the amount of property so held by the
22 corporation, its annual income, whether any of the property or funds of
23 the corporation have been misappropriated or diverted to any other
24 purpose than that for which such corporation was incorporated, and
25 whether such corporation has been engaged in any activity not covered by
26 its certificate of incorporation. An appeal may be taken from the order
27 by any party aggrieved to the appellate division of the supreme court,
28 and to the court of appeals, as in a civil action. No corporation shall
29 be required to make and file more than one inventory and account in any
30 one year, nor to make a second account and inventory, while proceedings
31 are pending for the statement of an account under this section.
32 S 11. Section 115 of the not-for-profit corporation law, as added by
33 chapter 669 of the laws of 1977, is amended to read as follows:
34 S 115. Power to solicit contributions [for charitable purposes].
35 No corporation having the power to solicit contributions [for charita-
36 ble purposes] may solicit contributions for any purpose [for which
37 approval of such solicitation is required under the provisions of
38 section four hundred four of this chapter] unless the certificate
39 specifically makes provision for such solicitation [and the required
40 written approval is endorsed on or annexed to such certificate or]
41 unless the corporation is among those referred to in section one hundred
42 seventy-two-a of the executive law. If [such approval is not obtained
43 and] the corporation continues to solicit or to receive contributions
44 for such purpose [or advertises that it has obtained such approval], the
45 attorney general[, at the request of the officer or body authorized to
46 grant such approval,] shall maintain an action or proceeding pursuant to
47 the provisions of subparagraph one of paragraph (a) of section one
48 hundred twelve of this chapter, OF THE EXECUTIVE LAW AND THE ESTATES,
49 POWERS AND TRUSTS LAW OR ANY OTHER APPLICABLE LAW AGAINST THE CORPO-
50 RATION, ITS DIRECTORS, OFFICERS, KEY EMPLOYEES, OR AGENTS THAT SOLICITS
51 CONTRIBUTIONS IN VIOLATION OF THIS CHAPTER OR THOSE LAWS. Such an
52 action may also be maintained in relation to a corporation hereinafter
53 incorporated if the name, purposes, objects or the activities of such
54 corporation may, in any manner, lead to the belief that the corporation
55 possesses or may exercise any of such purposes. OTHERWISE, NO CORPO-
56 RATION MAY SOLICIT CONTRIBUTIONS FOR ANY PURPOSE UNLESS AND UNTIL SUCH
A. 7772 7
1 CORPORATION IS IN COMPLIANCE WITH THIS SECTION AND THE APPLICABLE REGIS-
2 TRATION AND REPORTING REQUIREMENTS OF ARTICLE SEVEN-A OF THE EXECUTIVE
3 LAW AND SECTION 8-1.4 OF THE ESTATES, POWERS AND TRUSTS LAW.
4 S 12. Section 201 of the not-for-profit corporation law, paragraph (b)
5 as amended by chapter 847 of the laws of 1970 and paragraph (c) as
6 amended by chapter 1058 of the laws of 1971, is amended to read as
7 follows:
8 S 201. Purposes.
9 (a) A corporation, as defined in subparagraph [(5)] (10), paragraph
10 (a) of S 102 (Definitions), may be formed under this chapter [as
11 provided in paragraph (b)] unless it may be formed under any other
12 corporate law of this state in which event it may not be formed under
13 this chapter unless such other corporate law expressly so provides.
14 (b) [A corporation, of a type and for a purpose or purposes as
15 follows, may be formed under this chapter, provided consents required
16 under any other statute of this state have been obtained: Type A -] A
17 CORPORATION FORMED ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN
18 SHALL BE EITHER A CHARITABLE CORPORATION OR A BENEFICENT CORPORATION. A
19 not-for-profit corporation [of this type may be formed for any lawful
20 non-business purpose or purposes including, but not limited to, any one
21 or more of the following non-pecuniary purposes: civic, patriotic,
22 political, social, fraternal, athletic, agricultural, horticultural,
23 animal husbandry, and for a professional, commercial, industrial, trade
24 or service association.
25 Type B - A not-for-profit corporation of this type may be formed for
26 any one or more of the following non-business purposes: charitable,
27 educational, religious, scientific, literary, cultural or for the
28 prevention of cruelty to children or animals.
29 Type C - A not-for-profit corporation of this type may be formed for
30 any lawful business purpose to achieve a lawful public or quasi-public
31 objective.
32 Type D - A not-for-profit corporation of this type may be formed under
33 this chapter when such formation is authorized by any other corporate
34 law of this state for any business or non-business, or pecuniary or
35 non-pecuniary, purpose or purposes specified by such other law, whether
36 such purpose or purposes are also within types A, B, C above or other-
37 wise.
38 (c) If a corporation is formed for purposes which are within both type
39 A and type B above, it is a type B corporation. If a corporation has
40 among its purposes any purpose which is within type C, such corporation
41 is a type C corporation. A type D corporation is subject to all
42 provisions of this chapter which are applicable to a type B corporation
43 under this chapter unless provided to the contrary in, and subject to
44 the contrary provisions of, the other corporate law authorizing forma-
45 tion under this chapter of the type D corporation.] FORMED PRIOR TO
46 JANUARY FIRST, TWO THOUSAND FOURTEEN AS A TYPE A CORPORATION UNDER THIS
47 CHAPTER SHALL BE A BENEFICENT CORPORATION UNDER THIS CHAPTER. ANY
48 SUBMISSION OR FILING BY SUCH CORPORATION TO ANY PERSON OR ENTITY SHALL
49 BE DEEMED TO HAVE BEEN SUBMITTED OR FILED BY A BENEFICENT CORPORATION,
50 AND ANY REFERENCE IN ANY SUCH FILING OR SUBMISSION REFERRING TO THE
51 STATUS OF SUCH CORPORATION AS A TYPE A CORPORATION SHALL BE DEEMED TO
52 REFER TO A BENEFICENT CORPORATION.
53 (C) A TYPE B NOT-FOR-PROFIT CORPORATION FORMED PRIOR TO JANUARY FIRST,
54 TWO THOUSAND FOURTEEN SHALL BE DEEMED A CHARITABLE CORPORATION UNDER
55 THIS CHAPTER. ANY SUBMISSION OR FILING BY SUCH CORPORATION TO ANY PERSON
56 OR ENTITY SHALL BE DEEMED TO HAVE BEEN SUBMITTED OR FILED BY A CHARITA-
A. 7772 8
1 BLE CORPORATION, AND ANY REFERENCE IN ANY SUCH FILING OR SUBMISSION
2 REFERRING TO THE STATUS OF SUCH CORPORATION AS A TYPE B CORPORATION
3 SHALL BE DEEMED TO REFER TO A CHARITABLE CORPORATION.
4 (D) A TYPE C OR D NOT-FOR-PROFIT CORPORATION FORMED PRIOR TO JANUARY
5 FIRST, TWO THOUSAND FOURTEEN SHALL BE DEEMED A BENEFICENT CORPORATION.
6 ANY SUBMISSION OR FILING BY SUCH CORPORATION TO ANY PERSON OR ENTITY
7 SHALL BE DEEMED TO HAVE BEEN SUBMITTED OR FILED BY A BENEFICENT CORPO-
8 RATION, AND ANY REFERENCE IN ANY SUCH FILING OR SUBMISSION REFERRING TO
9 THE STATUS OF SUCH CORPORATION AS A TYPE C OR D CORPORATION SHALL BE
10 DEEMED TO REFER TO A BENEFICENT CORPORATION.
11 S 13. Section 204 of the not-for-profit corporation law is amended to
12 read as follows:
13 S 204. Limitation on activities.
14 Notwithstanding any other provision of this chapter or any other
15 general law, a corporation of any [type or] kind to which this chapter
16 applies shall conduct no activities for pecuniary profit or financial
17 gain, whether or not in furtherance of its corporate purposes, except to
18 the extent that such activity supports its other lawful activities then
19 being conducted.
20 S 14. Subparagraphs 1, 2 and 3 of paragraph (a) of section 301 of the
21 not-for-profit corporation law, subparagraph 1 as amended by section 78
22 of part A of chapter 58 of the laws of 2010, subparagraph 2 as amended
23 by chapter 344 of the laws of 2004, are amended to read as follows:
24 (1) Shall[, unless the corporation is formed for charitable or reli-
25 gious purposes, or for purposes for which the approval of the commis-
26 sioner of social services or the public health and health planning coun-
27 cil is required, or is a bar association,] contain the word
28 "corporation", "incorporated" or "limited" or an abbreviation of one of
29 such words; or, in the case of a foreign corporation, it shall, for use
30 in this state, add at the end of its name one of such words or an abbre-
31 viation thereof.
32 (2) (A) Shall be such as to distinguish it from the names of corpo-
33 rations of any [type or] kind, or a fictitious name of an authorized
34 foreign corporation filed pursuant to article thirteen of this chapter,
35 as such names appear on the index of names of existing domestic and
36 authorized foreign corporations of any [type or] kind, including ficti-
37 tious names of authorized foreign corporations filed pursuant to article
38 thirteen of this chapter, in the department of state, division of corpo-
39 rations, or a name the right to which is reserved.
40 (B) Shall be such as to distinguish it from (i) the names of domestic
41 limited liability companies, (ii) the names of authorized foreign limit-
42 ed liability companies, (iii) the fictitious names of authorized foreign
43 limited liability companies, (iv) the names of domestic limited partner-
44 ships, (v) the names of authorized foreign limited partnerships, or (vi)
45 the fictitious names of authorized foreign limited partnerships, in each
46 case, as such names appear on the index of names of existing domestic
47 and authorized foreign limited liability companies, including fictitious
48 names of authorized foreign limited liability companies, in the depart-
49 ment of state, or on the index of names of existing domestic or author-
50 ized foreign limited partnerships, including fictitious names of author-
51 ized foreign limited partnerships, in the department of state, or names
52 the rights to which are reserved; provided, however, that no corporation
53 that was formed prior to the effective date of this clause and no
54 foreign corporation that was qualified to conduct activities in this
55 state prior to such effective date shall be required to change the name
56 or fictitious name it had on such effective date solely by reason of
A. 7772 9
1 such name or fictitious name being indistinguishable from the name or
2 fictitious name of any domestic or authorized foreign limited liability
3 company or limited partnership or from any name the right to which is
4 reserved by or on behalf of any domestic or foreign limited liability
5 company or limited partnership.
6 (3) Shall not contain any word or phrase, or any abbreviation or
7 derivative thereof, the use of which is prohibited or restricted by
8 section 404 [(Approvals] (NOTICES and consents) or any other statute of
9 this state, unless in the latter case the restrictions have been
10 complied with.
11 S 15. Subparagraph 3 of paragraph (b) of section 302 of the not-for
12 profit corporation law, as amended by chapter 847 of the laws of 1970,
13 is amended to read as follows:
14 (3) Shall not prevent a foreign corporation from being authorized
15 under a name which is similar to the name of a corporation of any [type
16 or] kind existing or authorized under any statute, if the department of
17 state finds, upon proof by affidavit or otherwise as it may determine,
18 that a difference between such names exists in the terms or abbrevi-
19 ations indicating corporate character or otherwise, that the applicant
20 has conducted activities as a corporation under its said name for not
21 less than ten consecutive years immediately prior to the date of its
22 application, that the activities to be conducted in this state are not
23 the same or similar to the business or activities conducted by the
24 corporation with whose name it may conflict and that the public is not
25 likely to be confused or deceived, and if the applicant shall agree in
26 its application for authority to use with its corporate name, in this
27 state, to be placed immediately under or following such name, the words
28 "a ..... (name of jurisdiction of incorporation) corporation".
29 S 16. Section 304 of the not-for-profit corporation law, as amended by
30 chapter 168 of the laws of 1982, is amended to read as follows:
31 S 304. Statutory designation of secretary of state as agent of domestic
32 corporations [formed under article four of this chapter] and
33 authorized foreign corporations for service of process.
34 (a) The secretary of state shall be the agent of every domestic corpo-
35 ration [formed under article four of this chapter] and every authorized
36 foreign corporation upon whom process against the corporation may be
37 served.
38 (b) Any designation by a domestic corporation [formed under article
39 four of this chapter] or foreign corporation of the secretary of state
40 as such agent, which designation is in effect on the effective date of
41 this chapter, shall continue. Every domestic corporation [formed under
42 article four of this chapter] or foreign corporation, existing or
43 authorized on the effective date of this chapter, which has not desig-
44 nated the secretary of state as such agent, shall be deemed to have done
45 so.
46 (c) Any designation by a domestic corporation [formed under article
47 four of this chapter] or foreign corporation of an agent other than the
48 secretary of state which is in effect on the effective date of this
49 chapter shall continue in effect until changed or revoked as provided in
50 this chapter.
51 (d) Any designated post-office address to which the secretary of state
52 shall mail a copy of process served upon him OR HER as agent of a domes-
53 tic corporation [formed under article four of this chapter] or foreign
54 corporation, shall continue until the filing of a certificate under this
55 chapter directing the mailing to a different post-office address.
A. 7772 10
1 S 17. Paragraph (a) of section 305 of the not-for-profit corporation
2 law, as amended by chapter 131 of the laws of 1985, is amended to read
3 as follows:
4 (a) Every domestic corporation or authorized foreign corporation may
5 designate a registered agent in this state upon whom process against
6 such corporation may be served. The agent shall be a natural person who
7 is a resident of or has a business address in this state or a domestic
8 corporation or foreign corporation of any [type or] kind formed, or
9 authorized to do business in this state, under this chapter or under any
10 other statute of this state.
11 S 18. Paragraphs (b) and (c) of section 306 of the not-for-profit
12 corporation law, paragraph (b) as amended by chapter 168 of the laws of
13 1982 and paragraph (c) as amended by chapter 93 of the laws of 1984, are
14 amended to read as follows:
15 (b) Service of process on the secretary of state as agent of a domes-
16 tic corporation [formed under article four of this chapter] or an
17 authorized foreign corporation shall be made by personally delivering to
18 and leaving with [him or his] THE deputy OF THE SECRETARY OF STATE, or
19 with any person authorized by the secretary of state to receive such
20 service, at the office of the department of state in the city of Albany,
21 duplicate copies of such process together with the statutory fee, which
22 fee shall be a taxable disbursement. Service of process on such corpo-
23 ration shall be complete when the secretary of state is so served. The
24 secretary of state shall promptly send one of such copies by certified
25 mail, return receipt requested, to such corporation, at the post office
26 address, on file in the department of state, specified for the purpose.
27 If a domestic corporation [formed under article four of this chapter] or
28 an authorized foreign corporation has no such address on file in the
29 department of state, the secretary of state shall so mail such copy to
30 such corporation at the address of its office within this state on file
31 in the department.
32 (c) If an action or special proceeding is instituted in a court of
33 limited jurisdiction, service of process may be made in the manner
34 provided in this section if the office of the domestic corporation
35 [formed under article four of this chapter] or foreign corporation is
36 within the territorial jurisdiction of the court.
37 S 19. The not-for-profit corporation law is amended by adding a new
38 section 309 to read as follows:
39 S 309. PERSONAL JURISDICTION AND SERVICE OF PROCESS ON NON-DOMICILIARY
40 RESIDENT DIRECTOR, OFFICER, KEY EMPLOYEE OR AGENT.
41 A PERSON, BY BECOMING A DIRECTOR, OFFICER, KEY EMPLOYEE OR AGENT OF A
42 CORPORATION IS SUBJECT TO THE PERSONAL JURISDICTION OF THE SUPREME COURT
43 OF THE STATE OF NEW YORK, AND IN AN ACTION OR PROCEEDING BY THE ATTORNEY
44 GENERAL UNDER THIS CHAPTER PROCESS MAY BE SERVED UPON SUCH PERSON AS
45 PROVIDED IN SECTION THREE HUNDRED THIRTEEN OF THE CIVIL PRACTICE LAW AND
46 RULES.
47 S 20. Subparagraphs 2 and 4 of paragraph (a) of section 402 of the
48 not-for-profit corporation law, subparagraph 2 as amended by chapter 847
49 of the laws of 1970 and subparagraph 4 as amended by chapter 679 of the
50 laws of 1985, are amended to read as follows:
51 (2) That the corporation is a corporation as defined in subparagraph
52 (a) (5) of section 102 (Definitions)[;], the purpose or purposes for
53 which it is formed, and [the type of] WHETHER IT IS A CHARITABLE corpo-
54 ration [it shall be] OR A BENEFICENT CORPORATION under section 201
55 (Purposes)[; and in the case of a Type C corporation, the lawful public
56 or quasi-public objective which each business purpose will achieve]. ANY
A. 7772 11
1 CORPORATION MAY ALSO SET FORTH ANY ACTIVITIES THAT IT INTENDS TO CARRY
2 OUT IN FURTHERANCE OF SUCH PURPOSE OR PURPOSES; PROVIDED, HOWEVER, THAT
3 THIS SUBPARAGRAPH SHALL NOT BE INTERPRETED TO REQUIRE THAT SUCH ACTIV-
4 ITIES BE SET FORTH IN THE CERTIFICATE OF INCORPORATION.
5 (4) [In the case of a Type A, Type B, or Type C corporation, the] THE
6 names and addresses of the initial directors. [In the case of a Type D
7 corporation, the names and addresses of the initial directors, if any,
8 may but need not be set forth.]
9 S 21. The section heading and paragraphs (a), (b), (c), (d), (e),
10 (g), (h), (i), (t), (u), (v), and (w) of section 404 of the not-for-pro-
11 fit corporation law, the section heading, paragraphs (c), (d), (e), (h)
12 and (i) as amended and paragraph (a) as added by chapter 139 of the laws
13 of 1993, paragraph (c) as further amended by section 104 of part A of
14 chapter 62 of the laws of 2011 and paragraphs (a), (c), (d), (e), (g),
15 (h) and (i) as relettered by chapter 431 of the laws of 1993, paragraph
16 (b) as amended by section 4 of part D of chapter 58 of the laws of 2006,
17 paragraph (g) as separately amended by chapters 139 and 201 of the laws
18 of 1993, paragraph (t) as amended by section 79 of part A of chapter 58
19 of the laws of 2010, paragraph (u) as amended by chapter 558 of the laws
20 of 1999, paragraph (v) as added by chapter 598 of the laws of 2000 and
21 as further amended by section 104 of part A of chapter 62 of the laws of
22 2011 and paragraph (w) as added by chapter 316 of the laws of 2005, are
23 amended to read as follows:
24 [Approvals] NOTICES and consents.
25 (a) Every [certificate of incorporation] CORPORATION which includes
26 among its purposes the formation of a trade or business association
27 shall [have endorsed thereon or annexed thereto the consent of] SEND BY
28 CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED COPY OF ITS
29 CERTIFICATE OF INCORPORATION TO the attorney-general IMMEDIATELY AFTER
30 THE FILING OF SUCH CERTIFICATE BY THE SECRETARY OF STATE.
31 (b) (1) Every [certificate of incorporation] CORPORATION which
32 includes among its purposes the care of destitute, delinquent, aban-
33 doned, neglected or dependent children; the establishment or operation
34 of any adult care facility, or the establishment or operation of a resi-
35 dential program for victims of domestic violence as defined in subdivi-
36 sion four of section four hundred fifty-nine-a of the social services
37 law, or the placing-out or boarding-out of children or a home or shelter
38 for unmarried mothers, excepting the establishment or maintenance of a
39 hospital or facility providing health-related services as those terms
40 are defined in article twenty-eight of the public health law and a
41 facility for which an operating certificate is required by articles
42 sixteen, nineteen, twenty-two and thirty-one of the mental hygiene law;
43 or the solicitation of contributions for any such purpose or purposes,
44 shall [have endorsed thereon or annexed thereto the approval of] SEND BY
45 CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED COPY OF ITS
46 CERTIFICATE OF INCORPORATION TO the commissioner of the office of chil-
47 dren and family services IMMEDIATELY AFTER THE FILING OF SUCH CERTIF-
48 ICATE BY THE DEPARTMENT OF STATE or with respect to any adult care
49 facility, SEND BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED
50 COPY OF ITS CERTIFICATE OF INCORPORATION TO the commissioner of health
51 IMMEDIATELY AFTER THE FILING OF SUCH CERTIFICATE BY THE DEPARTMENT OF
52 STATE.
53 (2) A corporation whose statement of purposes specifically includes
54 the establishment or operation of a child day care center, as that term
55 is defined in section three hundred ninety of the social services law,
56 shall [provide a certified copy of the certificate of incorporation]
A. 7772 12
1 SEND BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED COPY OF
2 ITS CERTIFICATE OF INCORPORATION, each amendment thereto, and any
3 certificate of merger, consolidation or dissolution involving such
4 corporation to the office of children and family services within thirty
5 days after the filing of such certificate, amendment, merger, consol-
6 idation or dissolution with the department of state. This requirement
7 shall also apply to any foreign corporation filing an application for
8 authority under section thirteen hundred four of this chapter, any
9 amendments thereto, and any surrender of authority or termination of
10 authority in this state of such corporation.
11 (c) Every [certificate of incorporation] CORPORATION which includes
12 among [the] ITS purposes [of the corporation,] the establishment, main-
13 tenance and operation of a hospital service or a health service or a
14 medical expense indemnity plan or a dental expense indemnity plan as
15 permitted in article forty-three of the insurance law, shall [have
16 endorsed thereon or annexed thereto the approval of] SEND BY CERTIFIED
17 MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED COPY OF ITS CERTIFICATE OF
18 INCORPORATION TO the superintendent of financial services and the
19 commissioner of health IMMEDIATELY AFTER THE FILING OF SUCH CERTIFICATE
20 BY THE DEPARTMENT OF STATE.
21 (d) Every [certificate of incorporation] CORPORATION which includes a
22 purpose for which a corporation [might] MUST be chartered by the regents
23 of the university of the State of New York shall [have endorsed thereon
24 or annexed thereto the consent of] APPLY TO THE REGENTS FOR A CHARTER.
25 SUCH CORPORATIONS ARE THOSE WHICH CARRY OUT ANY OF THE ACTIVITIES FOR
26 WHICH THE CONSENT OF THE COMMISSIONER OF EDUCATION IS REQUIRED BY PARA-
27 GRAPH (V) OF THIS SECTION. OTHERWISE A CORPORATION WHICH MAY HAVE
28 EDUCATIONAL PURPOSES MUST SEND BY CERTIFIED MAIL, RETURN RECEIPT
29 REQUESTED, A CERTIFIED COPY OF ITS CERTIFICATE OF INCORPORATION TO the
30 commissioner of education IMMEDIATELY AFTER THE FILING OF SUCH CERTIF-
31 ICATE BY THE DEPARTMENT OF STATE.
32 (e) Every [certificate of incorporation of a] cemetery corporation,
33 except those within the exclusionary provisions of section 1503 (Ceme-
34 tery corporations) shall [have endorsed thereon or annexed thereto the
35 approval of] SEND BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTI-
36 FIED COPY OF ITS CERTIFICATE OF INCORPORATION TO the cemetery board
37 IMMEDIATELY AFTER THE FILING OF SUCH CERTIFICATE BY THE DEPARTMENT OF
38 STATE.
39 (g) Every [certificate of incorporation of a] corporation for
40 prevention of cruelty to animals shall [have endorsed thereon or annexed
41 thereto the approval of] SEND BY CERTIFIED MAIL, RETURN RECEIPT
42 REQUESTED, A CERTIFIED COPY OF ITS CERTIFICATE OF INCORPORATION TO the
43 American Society for the Prevention of Cruelty to Animals[, or, if such
44 approval be withheld thirty days after application therefor, a certified
45 copy of an order of a justice of the supreme court of the judicial
46 district in which the office of the corporation is to be located,
47 dispensing with such approval, granted upon eight days' notice to such
48 society] IMMEDIATELY AFTER THE FILING OF SUCH CERTIFICATE BY THE DEPART-
49 MENT OF STATE.
50 (h) Every [certificate of incorporation of] CORPORATION WHICH HAS AS
51 ITS PURPOSE THE ESTABLISHMENT OF a Young Men's Christian Association
52 shall [have endorsed thereon or annexed thereto the approval of] SEND BY
53 CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED COPY OF ITS
54 CERTIFICATE OF INCORPORATION TO the chairman of the national board of
55 Young Men's Christian Associations IMMEDIATELY AFTER THE FILING OF SUCH
56 CERTIFICATE BY THE DEPARTMENT OF STATE.
A. 7772 13
1 (i) Every [certificate of incorporation] CORPORATION which [indicates
2 that the proposed corporation is] HAS AS ITS PURPOSE to solicit funds
3 for or otherwise benefit the armed forces of the United States or of any
4 foreign country, or their auxiliaries, or of this or any other state or
5 any territory, shall [have endorsed thereon or annexed thereto the
6 approval of] SEND A CERTIFIED COPY, RETURN RECEIPT REQUESTED, OF ITS
7 CERTIFICATE OF INCORPORATION TO the chief of staff IMMEDIATELY AFTER THE
8 FILING OF SUCH CERTIFICATE BY THE DEPARTMENT OF STATE.
9 [(t)] (S) Every certificate of incorporation which includes among its
10 purposes and powers the establishment or maintenance of a hospital or
11 facility providing health related services, as those terms are defined
12 in article twenty-eight of the public health law, or the solicitation of
13 contributions for any such purpose or two or more of such purposes,
14 shall have endorsed thereon the approval of the public health and health
15 planning council.
16 [(u)] (T) Every certificate of incorporation which includes among the
17 purposes of the corporation, the establishment or operation of a
18 substance abuse, substance dependence, alcohol abuse, alcoholism, or
19 chemical abuse or dependence program, or the solicitation of contrib-
20 utions for any such purpose, shall have endorsed thereon or annexed
21 thereto the consent of the commissioner of the office of alcoholism and
22 substance abuse services to its filing by the department of state.
23 [(v)] (U) Every certificate of incorporation which includes among the
24 purposes of the corporation, the establishment, maintenance and opera-
25 tion of a nonprofit property/casualty insurance company, pursuant to
26 article sixty-seven of the insurance law, shall have endorsed thereon or
27 annexed thereto the approval of the superintendent of financial
28 services.
29 [(w)] (V) Every certificate of incorporation in which the name of the
30 proposed corporation includes the terms: "school," "education," "elemen-
31 tary," "secondary," "kindergarten," "prekindergarten," "preschool,"
32 "nursery school," "museum," "history," "historical," "historical socie-
33 ty," "arboretum," "library," "college," "university," "PUBLIC TELE-
34 VISION," "PUBLIC RADIO STATION," or other term restricted by section two
35 hundred twenty-four of the education law; "conservatory," "academy," or
36 "institute," or any abbreviation or derivative of such terms, shall have
37 endorsed thereon or annexed thereto the consent of the commissioner of
38 education.
39 S 22. Section 404 of the not-for-profit corporation law is amended by
40 adding a new paragraph (w) to read as follows:
41 (W) EACH AGENCY, PUBLIC OFFICER, ORGANIZATION OR PERSON TO WHOM A
42 NOTICE OF INCORPORATION IS TO BE SENT OR FROM WHOM A CONSENT TO INCORPO-
43 RATION MUST BE OBTAINED, AS PROVIDED IN THIS SECTION, SHALL PUBLISH THE
44 NAME AND ADDRESS OF THE REPRESENTATIVE IT HAS DESIGNATED TO RECEIVE SUCH
45 NOTICE OR REQUEST FOR CONSENT. IF ANY AGENCY, PUBLIC OFFICER, ORGANIZA-
46 TION OR PERSON TO WHOM A REQUEST FOR CONSENT HAS BEEN SENT DOES NOT
47 CONSENT OR OBJECT, SETTING FORTH THE REASONS FOR SUCH OBJECTION, WITHIN
48 FORTY-FIVE DAYS AFTER THE RECEIPT OF SUCH REQUEST, THE CONSENT SHALL BE
49 CONCLUSIVELY PRESUMED TO HAVE BEEN GIVEN AND THE SECRETARY OF STATE
50 SHALL FILE THE CERTIFICATE OF INCORPORATION.
51 S 23. Paragraph (b-1) of section 406 of the not-for-profit corporation
52 law is REPEALED.
53 S 24. Subdivision (d) of section 406 of the not-for-profit corporation
54 law, as added by chapter 331 of the laws of 1971, is amended to read as
55 follows:
A. 7772 14
1 (d) Nothing in this section shall impair the rights and powers of the
2 courts or the attorney-general of this state INCLUDING THE ENFORCEMENT
3 OF THE PROVISIONS INCLUDED IN THE CERTIFICATES OF INCORPORATION TO WHICH
4 THIS SECTION APPLIES.
5 S 25. Paragraph (d) of section 502 of the not-for-profit corporation
6 law is amended to read as follows:
7 (d) A member's capital contribution shall be evidenced by a capital
8 certificate which shall be non-transferable, except that the certificate
9 of incorporation of a [Type A] BENEFICENT corporation may provide that
10 its capital certificates, or some of them, may be transferable to other
11 members with the consent of the corporation upon specified terms and
12 conditions.
13 S 26. Paragraph (b) of section 503 of the not-for-profit corporation
14 law, subparagraph 1 as amended by chapter 847 of the laws of 1970, is
15 amended to read as follows:
16 (b) Each capital certificate shall when issued state upon the face
17 thereof:
18 (1) That the corporation is a [Type .....] CHARITABLE OR BENEFICENT
19 corporation under section 113 or section 402 of the New York Not-for-
20 Profit Corporation Law.
21 (2) The name of the member to whom issued.
22 (3) The amount of the member's capital contribution evidenced by such
23 certificate.
24 (4) If appropriate, that the corporation is a [Type A] BENEFICENT
25 corporation, and that its certificate of incorporation provides that the
26 capital certificate is transferable to other members with the consent of
27 the corporation.
28 S 27. Subparagraph 1 of paragraph (b) of section 505 of the not-for-
29 profit corporation law, as amended by chapter 847 of the laws of 1970,
30 is amended to read as follows:
31 (1) That the corporation is a [Type .....] CHARITABLE OR BENEFICENT
32 corporation under section 113 or section 402 of the New York Not-for-
33 Profit Corporation Law.
34 S 28. Section 509 of the not-for-profit corporation law, as amended by
35 chapter 145 of the laws of 1991, is amended to read as follows:
36 S 509. Purchase, sale, mortgage and lease of real property.
37 (A) No CORPORATION SHALL purchase [of] real property [shall be made by
38 a corporation and no corporation shall sell, mortgage or lease real
39 property, unless authorized by the vote of] UNLESS AUTHORIZED BY THE
40 VOTE OF A MAJORITY OF DIRECTORS OF THE BOARD OR A COMMITTEE AUTHORIZED
41 BY THE BOARD; PROVIDED, HOWEVER, THAT IF SUCH PROPERTY WOULD, UPON
42 PURCHASE THEREOF, CONSTITUTE ALL, OR SUBSTANTIALLY ALL, OF THE ASSETS OF
43 THE CORPORATION, THEN THE VOTE OF two-thirds of the entire board[,
44 provided that if] SHALL BE REQUIRED, OR, IF there are twenty-one or more
45 directors, the vote of a majority of the entire board shall be suffi-
46 cient.
47 (B) NO CORPORATION SHALL SELL, MORTGAGE OR LEASE ITS REAL PROPERTY
48 UNLESS AUTHORIZED BY THE VOTE OF A MAJORITY OF DIRECTORS OF THE BOARD OR
49 A COMMITTEE AUTHORIZED BY THE BOARD; PROVIDED, HOWEVER, THAT IF SUCH
50 PROPERTY CONSTITUTES ALL, OR SUBSTANTIALLY ALL, OF THE ASSETS OF THE
51 CORPORATION, THEN THE VOTE OF TWO-THIRDS OF THE ENTIRE BOARD SHALL BE
52 REQUIRED, OR, IF THERE ARE TWENTY-ONE OR MORE DIRECTORS, THE VOTE OF A
53 MAJORITY OF THE ENTIRE BOARD SHALL BE SUFFICIENT.
54 S 29. Paragraph (a) of section 510 of the not-for-profit corporation
55 law, the opening paragraph as amended by chapter 961 of the laws of
A. 7772 15
1 1972, and subparagraph 3 as amended by chapter 847 of the laws of 1970,
2 is amended to read as follows:
3 (a) A sale, lease, exchange or other disposition of all, or substan-
4 tially all, the assets of a corporation may be made upon such terms and
5 conditions and for such consideration, which may consist in whole or in
6 part of cash or other property, real or personal, including shares,
7 bonds or other securities of any other domestic or foreign corporation
8 or corporations of any [type or] kind, as may be authorized in accord-
9 ance with the following procedure:
10 (1) If there are members entitled to vote thereon, the board shall
11 adopt a resolution recommending such sale, lease, exchange or other
12 disposition. The resolution shall specify the terms and conditions of
13 the proposed transaction, including the consideration to be received by
14 the corporation and the eventual disposition to be made of such consid-
15 eration, together with a statement that the dissolution of the corpo-
16 ration is or is not contemplated thereafter. The resolution shall be
17 submitted to a vote at a meeting of members entitled to vote thereon,
18 which may be either an annual or a special meeting. Notice of the meet-
19 ing shall be given to each member and each holder of subvention certif-
20 icates or bonds of the corporation, whether or not entitled to vote. At
21 such meeting by two-thirds vote as provided in paragraph (c) of section
22 613 (Vote of members) the members may approve the proposed transaction
23 according to the terms of the resolution of the board, or may approve
24 such sale, lease, exchange or other disposition and may authorize the
25 board to modify the terms and conditions thereof.
26 (2) If there are no members entitled to vote thereon, such sale,
27 lease, exchange or other disposition shall be authorized by the vote of
28 at least two-thirds of the entire board, provided that if there are
29 twenty-one or more directors, the vote of a majority of the entire board
30 shall be sufficient.
31 (3) If the corporation is, or would be if formed under this chapter,
32 classified as a [Type B or Type C] CHARITABLE corporation under section
33 201, (Purposes) such sale, lease, exchange or other disposition shall in
34 addition require [leave] EITHER (A) APPROVAL of the supreme court in the
35 judicial district or of the county court of the county in which the
36 corporation has its office or principal place of carrying out the
37 purposes for which it was formed IN ACCORDANCE WITH SECTION 511 (PETI-
38 TION FOR COURT APPROVAL) OR (B) APPROVAL OF THE ATTORNEY GENERAL IF
39 AUTHORIZED UNDER SECTION 511-A (PETITION FOR ATTORNEY GENERAL APPROVAL).
40 S 30. The section heading, the opening paragraph and subparagraph 9 of
41 paragraph (a) of section 511 of the not-for-profit corporation law, are
42 amended to read as follows:
43 Petition for [leave of] court APPROVAL.
44 [A corporation required by law to] TO obtain [leave of] court APPROVAL
45 to sell, lease, exchange or otherwise dispose of all or substantially
46 all its assets, A CORPORATION shall present a verified petition to the
47 supreme court of the judicial district, or the county court of the coun-
48 ty, wherein the corporation has its office or principal place of carry-
49 ing out the purposes for which it was formed. The petition shall set
50 forth:
51 9. A [prayer] REQUEST for [leave] COURT APPROVAL to sell, lease,
52 exchange or otherwise dispose of all or substantially all the assets of
53 the corporation as set forth in the petition.
54 S 31. The not-for-profit corporation law is amended by adding a new
55 section 511-a to read a follow:
56 S 511-A. PETITION FOR ATTORNEY GENERAL APPROVAL.
A. 7772 16
1 (A) IN LIEU OF OBTAINING COURT APPROVAL UNDER SECTION 511 (PETITION
2 FOR COURT APPROVAL) TO SELL, LEASE, EXCHANGE OR OTHERWISE DISPOSE OF ALL
3 OR SUBSTANTIALLY ALL OF ITS ASSETS, THE CORPORATION MAY ALTERNATIVELY
4 SEEK APPROVAL OF THE ATTORNEY GENERAL BY VERIFIED PETITION, EXCEPT IN
5 THE FOLLOWING CIRCUMSTANCES:
6 1. THE CORPORATION IS INSOLVENT, OR WOULD BECOME INSOLVENT AS A RESULT
7 OF THE TRANSACTION, AND MUST PROCEED ON NOTICE TO CREDITORS PURSUANT TO
8 PARAGRAPH (C) OF SECTION 511 (PETITION FOR COURT APPROVAL); OR
9 2. THE ATTORNEY GENERAL, IN HIS OR HER DISCRETION, CONCLUDES THAT A
10 COURT SHOULD REVIEW THE PETITION AND MAKE A DETERMINATION THEREON.
11 (B) THE VERIFIED PETITION TO THE ATTORNEY GENERAL SHALL SET FORTH: 1.
12 ALL OF THE INFORMATION REQUIRED TO BE INCLUDED IN A VERIFIED PETITION TO
13 OBTAIN COURT APPROVAL PURSUANT TO SUBPARAGRAPHS ONE THROUGH NINE OF
14 PARAGRAPH (A) OF SECTION 511 (PETITION FOR COURT APPROVAL); 2. A STATE-
15 MENT THAT THE CORPORATION IS NOT INSOLVENT AND WILL NOT BECOME INSOLVENT
16 AS A RESULT OF THE TRANSACTION; AND 3. A STATEMENT AS TO WHETHER ANY
17 PERSONS HAVE RAISED, OR HAVE A REASONABLE BASIS TO RAISE, OBJECTIONS TO
18 THE SALE, LEASE, EXCHANGE OR OTHER DISPOSITION THAT IS THE SUBJECT OF
19 THE PETITION, INCLUDING A STATEMENT SETTING FORTH THE NAMES AND
20 ADDRESSES OF SUCH PERSONS, THE NATURE OF THEIR INTEREST, AND A
21 DESCRIPTION OF THEIR OBJECTIONS. THE ATTORNEY GENERAL, IN HIS OR HER
22 DISCRETION, MAY DIRECT THE CORPORATION TO PROVIDE NOTICE OF SUCH PETI-
23 TION TO ANY INTERESTED PERSON, AND THE CORPORATION SHALL PROVIDE THE
24 ATTORNEY GENERAL WITH A CERTIFICATION THAT SUCH NOTICE HAS BEEN
25 PROVIDED.
26 (C) IF IT SHALL APPEAR, TO THE SATISFACTION OF THE ATTORNEY GENERAL
27 THAT THE CONSIDERATION AND THE TERMS OF THE TRANSACTION ARE FAIR AND
28 REASONABLE TO THE CORPORATION AND THAT THE PURPOSES OF THE CORPORATION
29 OR THE INTERESTS OF THE MEMBERS WILL BE PROMOTED, THE ATTORNEY GENERAL
30 MAY AUTHORIZE THE SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ALL OR
31 SUBSTANTIALLY ALL THE ASSETS OF THE CORPORATION, AS DESCRIBED IN THE
32 PETITION, FOR SUCH CONSIDERATION AND UPON SUCH TERMS AS THE ATTORNEY
33 GENERAL MAY PRESCRIBE. THE AUTHORIZATION OF THE ATTORNEY GENERAL SHALL
34 DIRECT THE DISPOSITION OF THE CONSIDERATION TO BE RECEIVED THEREUNDER BY
35 THE CORPORATION.
36 (D) IF THE ATTORNEY GENERAL DOES NOT APPROVE THE PETITION, OR IF THE
37 ATTORNEY GENERAL CONCLUDES THAT COURT REVIEW IS APPROPRIATE, THE PETI-
38 TIONER MAY SEEK COURT APPROVAL ON TEN DAYS NOTICE TO THE ATTORNEY GENER-
39 AL PURSUANT TO SECTION 511 (PETITION FOR COURT APPROVAL).
40 S 32. Paragraph (a) of section 513 of the not-for-profit corporation
41 law, as amended by chapter 690 of the laws of 1978, is amended to read
42 as follows:
43 (a) A corporation which is, or would be if formed under this chapter,
44 [classified as a Type B corporation] shall hold full ownership rights in
45 any assets consisting of funds or other real or personal property of any
46 kind, that may be given, granted, bequeathed or devised to or otherwise
47 vested in such corporation in trust for, or with a direction to apply
48 the same to, any purpose specified in its certificate of incorporation,
49 and shall not be deemed a trustee of an express trust of such assets.
50 Any other corporation subject to this chapter may similarly hold assets
51 so received, unless otherwise provided by law or in the certificate of
52 incorporation.
53 S 33. Paragraphs (b) and (c) of section 515 of the not-for-profit
54 corporation law, paragraph (c) as amended by chapter 847 of the laws of
55 1970, are amended to read as follows:
A. 7772 17
1 (b) A corporation may pay compensation in a reasonable amount to
2 members, directors, or officers for services rendered AS PERMITTED BY
3 THIS CHAPTER, INCLUDING WITHOUT LIMITATION, IN ACCORDANCE WITH SUBPARA-
4 GRAPH TWELVE OF PARAGRAPH (A) OF SECTION 202 (GENERAL AND SPECIAL
5 POWERS), AND SECTIONS 712-A (AUDIT OVERSIGHT) AND 715 (RELATED PARTY
6 TRANSACTIONS), and may make distributions of cash or property to members
7 upon dissolution or final liquidation as permitted by this chapter.
8 (c) A corporation may confer benefits upon members or nonmembers in
9 conformity with its purposes AS PERMITTED BY THIS CHAPTER, INCLUDING
10 WITHOUT LIMITATION, SECTIONS 712-A (AUDIT OVERSIGHT) AND 715 (RELATED
11 PARTY TRANSACTIONS), may redeem its capital certificates or subvention
12 certificates, and may make other distributions of cash or property to
13 its members or former members, directors, or officers prior to dissol-
14 ution or final liquidation, as authorized by this article, except when
15 the corporation is currently insolvent or would thereby be made insol-
16 vent or rendered unable to carry on its corporate purposes, or when the
17 fair value of the corporation's assets remaining after such conferring
18 of benefits, or redemption, or other distribution would be insufficient
19 to meet its liabilities.
20 S 34. Section 520 of the not-for-profit corporation law, as amended by
21 chapter 58 of the laws of 1981, is amended to read as follows:
22 S 520. Reports of corporation.
23 Each domestic corporation, and each foreign corporation authorized to
24 conduct activities in this state, shall from time to time file such
25 reports on its activities as may be required by the laws of this state.
26 All registration and reporting requirements pursuant to [EPTL 8-1.4]
27 ARTICLE SEVEN-A OF THE EXECUTIVE LAW, AND SECTION 8-1.4 OF THE ESTATES,
28 POWERS AND TRUSTS LAW, or related successor provisions, are, without
29 limitation on the foregoing, expressly included as reports required by
30 the laws of this state to be filed within the meaning of this section.
31 Willful failure of a corporation to file a report as required by law
32 shall constitute a breach of the directors' duty to the corporation and
33 shall subject the corporation, at the suit of the attorney-general, to
34 an action or special proceeding for dissolution under article 11 (Judi-
35 cial dissolution) in the case of a domestic corporation, or under S 1303
36 (Violations) in the case of a foreign corporation.
37 S 35. The not-for-profit corporation law is amended by adding a new
38 section 522 to read as follows:
39 S 522. CY-PRES AND DEVIATION.
40 NOTHING IN THIS CHAPTER SHALL LIMIT THE APPLICATION OF THE
41 DOCTRINES OF CY-PRES AND DEVIATION.
42 S 36. Paragraph (a) of section 601 of the not-for-profit corporation
43 law, as amended by chapter 1058 of the laws of 1971, is amended to read
44 as follows:
45 (a) A corporation shall have one or more classes of members, or, in
46 the case of a [Type B] CHARITABLE corporation, may have no members, in
47 which case any such provision for classes of members or for no members
48 shall be set forth in the certificate of incorporation or the by-laws.
49 Corporations, joint-stock associations, unincorporated associations and
50 partnerships, as well as any other person without limitation, may be
51 members.
52 S 37. Paragraph (a) of section 605 of the not-for-profit corporation
53 law, as amended by chapter 1058 of the laws of 1971, is amended to read
54 as follows:
55 (a) Whenever under the provisions of this chapter members are required
56 or permitted to take any action at a meeting, written notice shall state
A. 7772 18
1 the place, date and hour of the meeting and, unless it is an annual
2 meeting, indicate that it is being issued by or at the direction of the
3 person or persons calling the meeting. Notice of a special meeting shall
4 also state the purpose or purposes for which the meeting is called. A
5 copy of the notice of any meeting shall be given, personally [or], by
6 mail, OR BY FACSIMILE TELECOMMUNICATIONS OR BY ELECTRONIC MAIL, to each
7 member entitled to vote at such meeting. If the notice is given
8 personally [or], by first class mail OR BY FACSIMILE TELECOMMUNICATIONS
9 OR BY ELECTRONIC MAIL, it shall be given not less than ten nor more than
10 fifty days before the date of the meeting; if mailed by any other class
11 of mail, it shall be given not less than thirty nor more than sixty days
12 before such date. If mailed, such notice is given when deposited in the
13 United States mail, with postage thereon prepaid, directed to the member
14 at his address as it appears on the record of members, or, if he shall
15 have filed with the secretary of the corporation a written request that
16 notices to him be mailed to some other address, then directed to him at
17 such other address. IF SENT BY FACSIMILE TELECOMMUNICATIONS OR MAILED
18 ELECTRONICALLY, SUCH NOTICE IS GIVEN WHEN DIRECTED TO THE MEMBER'S FAX
19 NUMBER OR ELECTRONIC MAIL ADDRESS AS IT APPEARS ON THE RECORD OF
20 MEMBERS, OR, TO SUCH FAX NUMBER OR OTHER ELECTRONIC MAIL ADDRESS AS
21 FILED WITH THE SECRETARY OF THE CORPORATION. NOTWITHSTANDING THE FOREGO-
22 ING, SUCH NOTICE SHALL NOT BE GIVEN ELECTRONICALLY: (1) IF THE CORPO-
23 RATION IS UNABLE TO DELIVER TWO CONSECUTIVE NOTICES TO THE MEMBER BY
24 ELECTRONIC MAIL; OR (2) THE CORPORATION OTHERWISE BECOMES AWARE THAT
25 NOTICE CANNOT BE DELIVERED TO THE MEMBER BY ELECTRONIC MAIL. An affida-
26 vit of the secretary or other person giving the notice or of a transfer
27 agent of the corporation that the notice required by this section has
28 been given shall, in the absence of fraud, be prima facie evidence of
29 the facts therein stated. Whenever a corporation has more than five
30 hundred members, the notice may be served by publication[, in lieu of
31 mailing,] in a newspaper published in the county in the state in which
32 the principal office of the corporation is located, once a week for
33 three successive weeks next preceding the date of the meeting, PROVIDED
34 THAT THE CORPORATION SHALL ALSO PROMINENTLY POST NOTICE OF SUCH MEETING
35 ON THE HOMEPAGE OF ANY WEBSITE MAINTAINED BY THE CORPORATION CONTINUOUS-
36 LY FROM THE DATE OF PUBLICATION THROUGH THE DATE OF THE MEETING.
37 S 38. Section 606 of the not-for-profit corporation law is amended to
38 read as follows:
39 S 606. Waivers of notice.
40 Notice of meeting need not be given to any member who submits a
41 [signed] waiver of notice, in person or by proxy, whether before or
42 after the meeting. WAIVER OF NOTICE MAY BE WRITTEN OR ELECTRONIC. IF
43 WRITTEN, THE WAIVER MUST BE EXECUTED BY THE MEMBER OR THE MEMBER'S
44 AUTHORIZED OFFICER, DIRECTOR, EMPLOYEE, OR AGENT BY SIGNING SUCH WAIVER
45 OR CAUSING THE MEMBER'S SIGNATURE TO BE AFFIXED TO SUCH WAIVER BY ANY
46 REASONABLE MEANS, INCLUDING, BUT NOT LIMITED TO FACSIMILE SIGNATURE. IF
47 ELECTRONIC, THE TRANSMISSION OF THE WAIVER MUST BE SENT BY ELECTRONIC
48 MAIL AND SET FORTH, OR BE SUBMITTED WITH, INFORMATION FROM WHICH IT CAN
49 REASONABLY BE DETERMINED THAT THE TRANSMISSION WAS AUTHORIZED BY THE
50 MEMBER. The attendance of any member at a meeting, in person or by
51 proxy, without protesting prior to the conclusion of the meeting the
52 lack of notice of such meeting, shall constitute a waiver of notice by
53 him.
54 S 39. Paragraphs (b) and (c) of section 609 of the not-for-profit
55 corporation law, as added by chapter 186 of the laws of 1999, are
56 amended to read as follows:
A. 7772 19
1 (b) Without limiting the manner in which a member may authorize anoth-
2 er person or persons to act for him as proxy pursuant to paragraph (a)
3 of this section, the following shall constitute a valid means by which a
4 member may grant such authority:
5 (1) A member may execute a writing authorizing another person or
6 persons to act for him as proxy. Execution may be accomplished by the
7 member or the member's authorized officer, director, employee or agent
8 signing such writing or causing his or her signature to be affixed to
9 such writing by any reasonable means including, but not limited to, by
10 facsimile signature.
11 (2) A member may authorize another person or persons to act for the
12 member as proxy by [transmitting or authorizing the transmission of a
13 telegram, cablegram or other means of] PROVIDING SUCH AUTHORIZATION BY
14 electronic [transmission] MAIL to the person who will be the holder of
15 the proxy or to a proxy solicitation firm, proxy support service organ-
16 ization or like agent duly authorized by the person [who will be the
17 holder of the proxy to receive such transmission], provided that any
18 such [telegram, cablegram or other means of electronic transmission]
19 AUTHORIZATION BY ELECTRONIC MAIL shall either set forth [or be submitted
20 with] information from which it can be reasonably determined that the
21 [telegram, cablegram or other] AUTHORIZATION BY electronic [trans-
22 mission] MAIL was authorized by the member. If it is determined that
23 such [telegrams, cablegrams or other] AUTHORIZATION BY electronic [tran-
24 smissions are] MAIL IS valid, the inspectors or, if there are no inspec-
25 tors, such other persons making that determination shall specify the
26 nature of the information upon which they relied.
27 (c) Any copy, facsimile telecommunication or other reliable reprod-
28 uction of the writing or [transmission] ELECTRONIC MAIL created pursuant
29 to paragraph (b) of this section may be substituted or used in lieu of
30 the original writing or transmission for any and all purposes for which
31 the original writing or transmission could be used, provided that such
32 copy, facsimile telecommunication or other reproduction shall be a
33 complete reproduction of the entire original writing or transmission.
34 S 40. Paragraphs (a) and (b) of section 614 of the not-for-profit
35 corporation law are amended to read as follows:
36 (a) Whenever, under this chapter, members are required or permitted to
37 take any action by vote, such action may be taken without a meeting [on
38 written] UPON THE consent[, setting forth the action so taken, signed
39 by] OF all of the members entitled to vote thereon, WHICH CONSENT SHALL
40 SET FORTH THE ACTION SO TAKEN. SUCH CONSENT MAY BE WRITTEN OR ELECTRON-
41 IC. IF WRITTEN, THE CONSENT MUST BE EXECUTED BY THE MEMBER OR THE
42 MEMBER'S AUTHORIZED OFFICER, DIRECTOR, EMPLOYEE OR AGENT BY SIGNING SUCH
43 CONSENT OR CAUSING THE MEMBER'S SIGNATURE TO BE AFFIXED TO SUCH WAIVER
44 BY ANY REASONABLE MEANS INCLUDING BUT NOT LIMITED TO FACSIMILE SIGNA-
45 TURE. IF ELECTRONIC, THE TRANSMISSION OF THE CONSENT MUST BE SENT BY
46 ELECTRONIC MAIL AND SET FORTH, OR BE SUBMITTED WITH, INFORMATION FROM
47 WHICH IT CAN REASONABLY BE DETERMINED THAT THE TRANSMISSION WAS AUTHOR-
48 IZED BY THE MEMBER. This paragraph shall not be construed to alter or
49 modify any provision in a certificate of incorporation not inconsistent
50 with this chapter under which the written consent of less than all of
51 the members is sufficient for corporate action.
52 (b) Written OR ELECTRONIC consent thus given by all members entitled
53 to vote shall have the same effect as a unanimous vote of members and
54 any certificate with respect to the authorization or taking of any such
55 action which is delivered to the department of state shall recite that
56 the authorization was by [uanimous] UNANIMOUS written consent.
A. 7772 20
1 S 41. Paragraph (a) of section 702 of the not-for-profit corporation
2 law is amended to read as follows:
3 (a) The number of directors constituting the entire board shall be not
4 less than three. Subject to such limitation, such number may be fixed by
5 the by-laws or, in the case of a corporation having members, by action
6 of the members or of the board under the specific provisions of a by-law
7 adopted by the members. If not otherwise fixed under this paragraph, the
8 number shall be three. [As used in this article, "entire board" means
9 the total number of directors entitled to vote which the corporation
10 would have if there were no vacancies.]
11 S 42. Paragraphs (b) and (c) of section 708 of the not-for-profit
12 corporation law, paragraph (b) as amended by chapter 92 of the laws of
13 1983 and paragraph (c) as amended by chapter 211 of the laws of 2007,
14 are amended to read as follows:
15 (b) Unless otherwise restricted by the certificate of incorporation or
16 the by-laws, any action required or permitted to be taken by the board
17 or any committee thereof may be taken without a meeting if all members
18 of the board or the committee consent [in writing] to the adoption of a
19 resolution authorizing the action. SUCH CONSENT MAY BE WRITTEN OR ELEC-
20 TRONIC. IF WRITTEN, THE CONSENT MUST BE EXECUTED BY THE DIRECTOR BY
21 SIGNING SUCH CONSENT OR CAUSING HIS OR HER SIGNATURE TO BE AFFIXED TO
22 SUCH CONSENT BY ANY REASONABLE MEANS INCLUDING, BUT NOT LIMITED TO,
23 FACSIMILE SIGNATURE. IF ELECTRONIC, THE TRANSMISSION OF THE CONSENT MUST
24 BE SENT BY ELECTRONIC MAIL AND SET FORTH, OR BE SUBMITTED WITH, INFORMA-
25 TION FROM WHICH IT CAN REASONABLY BE DETERMINED THAT THE TRANSMISSION
26 WAS AUTHORIZED BY THE DIRECTOR. The resolution and the written consents
27 thereto by the members of the board or committee shall be filed with the
28 minutes of the proceedings of the board or committee.
29 (c) Unless otherwise restricted by the certificate of incorporation or
30 the by-laws, any one or more members of the board or OF any committee
31 thereof [may participate in] WHO IS NOT PHYSICALLY PRESENT AT a meeting
32 of [such] THE board or A committee MAY PARTICIPATE by means of a confer-
33 ence telephone or similar communications equipment [allowing all persons
34 participating in the meeting to hear each other at the same time] OR BY
35 ELECTRONIC VIDEO SCREEN COMMUNICATION. Participation by such means
36 shall constitute presence in person at a meeting AS LONG AS ALL PERSONS
37 PARTICIPATING IN THE MEETING CAN HEAR EACH OTHER AT THE SAME TIME AND
38 EACH DIRECTOR CAN PARTICIPATE IN ALL MATTERS BEFORE THE BOARD, INCLUD-
39 ING, WITHOUT LIMITATION, THE ABILITY TO PROPOSE, OBJECT TO, AND VOTE
40 UPON A SPECIFIC ACTION TO BE TAKEN BY THE BOARD OR COMMITTEE.
41 S 43. Paragraph (c) of section 711 of the not-for-profit corporation
42 law, as amended by chapter 847 of the laws of 1970, is amended to read
43 as follows:
44 (c) Notice of a meeting need not be given to any alternate director,
45 nor to any director who submits a [signed] waiver of notice whether
46 before or after the meeting, or who attends the meeting without protest-
47 ing, prior thereto or at its commencement, the lack of notice to him OR
48 HER. SUCH WAIVER OF NOTICE MAY BE WRITTEN OR ELECTRONIC. IF WRITTEN, THE
49 WAIVER MUST BE EXECUTED BY THE DIRECTOR SIGNING SUCH WAIVER OR CAUSING
50 HIS OR HER SIGNATURE TO BE AFFIXED TO SUCH WAIVER BY ANY REASONABLE
51 MEANS INCLUDING BUT NOT LIMITED TO FACSIMILE SIGNATURE. IF ELECTRONIC,
52 THE TRANSMISSION OF THE CONSENT MUST BE SENT BY ELECTRONIC MAIL AND SET
53 FORTH, OR BE SUBMITTED WITH, INFORMATION FROM WHICH IT CAN REASONABLY BE
54 DETERMINED THAT THE TRANSMISSION WAS AUTHORIZED BY THE DIRECTOR.
A. 7772 21
1 S 44. Paragraphs (a), (b) and (e) of section 712 of the not-for-profit
2 corporation law, paragraph (e) as amended by chapter 961 of the laws of
3 1972, are amended to read as follows:
4 (a) If the certificate of incorporation or the by-laws so provide, the
5 board, by resolution adopted by a majority of the entire board, may
6 designate from among its members an executive committee and other
7 [standing] committees, each consisting of three or more directors, and
8 each of which, to the extent provided in the resolution or in the
9 certificate of incorporation or by-laws, shall have all the authority of
10 the board, except that no such committee shall have authority as to the
11 following matters:
12 (1) The submission to members of any action requiring members'
13 approval under this chapter.
14 (2) The filling of vacancies in the board of directors or in any
15 committee.
16 (3) The fixing of compensation of the directors for serving on the
17 board or on any committee.
18 (4) The amendment or repeal of the by-laws or the adoption of new
19 by-laws.
20 (5) The amendment or repeal of any resolution of the board which by
21 its terms shall not be so amendable or repealable.
22 (b) The board may designate one or more directors as alternate members
23 of any [standing] committee, who may replace any absent member or
24 members at any meeting of such committee.
25 [(e)] (D) Committees, other than [standing or special] committees of
26 the board, whether created by the board or by the members, shall be
27 committees of the corporation. Such committees OF THE CORPORATION may be
28 elected or appointed in the same manner as officers of the corporation,
29 BUT NO SUCH COMMITTEE SHALL HAVE THE AUTHORITY TO BIND THE BOARD.
30 Provisions of this chapter applicable to officers generally shall apply
31 to members of such committees.
32 S 45. Paragraph (c) of section 712 of the not-for-profit corporation
33 law is REPEALED and paragraphs (d) and (e) are relettered paragraphs (c)
34 and (d).
35 S 46. The not-for-profit corporation law is amended by adding two new
36 sections 712-a and 712-b to read as follows:
37 S 712-A. AUDIT OVERSIGHT.
38 (A) EVERY CORPORATION REQUIRED TO FILE AN INDEPENDENT CERTIFIED PUBLIC
39 ACCOUNTANT'S AUDIT REPORT WITH THE ATTORNEY GENERAL PURSUANT TO SUBDIVI-
40 SION ONE OF SECTION ONE HUNDRED SEVENTY-TWO-B OF THE EXECUTIVE LAW OR
41 WHICH PRESENTS SUCH A REPORT AS PART OF THE ANNUAL REPORT REQUIRED BY
42 SECTION 519 (ANNUAL REPORT OF DIRECTORS) SHALL DESIGNATE AN AUDIT
43 COMMITTEE OF THE BOARD, CONSISTING OF AT LEAST THREE INDEPENDENT DIREC-
44 TORS, FOR THE PURPOSE OF OVERSEEING THE ACCOUNTING AND FINANCIAL REPORT-
45 ING PROCESSES OF THE CORPORATION AND THE INDEPENDENT CERTIFIED PUBLIC
46 ACCOUNTANT'S AUDIT OF THE CORPORATION'S FINANCIAL STATEMENTS. THE CORPO-
47 RATION'S ENTIRE BOARD MAY CONSTITUTE THE AUDIT COMMITTEE, PROVIDED THAT
48 ONLY INDEPENDENT DIRECTORS MAY BE PRESENT AT AND PARTICIPATE IN DELIBER-
49 ATIONS AND VOTING RELATING TO AUDIT COMMITTEE MATTERS. IF A CORPORATION
50 CONTROLS A GROUP OF CORPORATIONS, THE AUDIT COMMITTEE OF THE CONTROLLING
51 CORPORATION MAY BE DEEMED TO BE THE AUDIT COMMITTEE FOR ONE OR MORE OF
52 ITS CONTROLLED CORPORATIONS.
53 (B) THE AUDIT COMMITTEE SHALL, AT A MINIMUM:
54 (1) RETAIN AND EVALUATE THE INDEPENDENT AUDITOR WHO SHALL REPORT
55 DIRECTLY TO THE AUDIT COMMITTEE;
A. 7772 22
1 (2) REVIEW WITH THE INDEPENDENT AUDITOR THE SCOPE AND PLANNING OF THE
2 AUDIT;
3 (3) REVIEW AND DISCUSS WITH THE INDEPENDENT AUDITOR, AT A MINIMUM: (A)
4 THE RESULTS OF ANY AUDIT, INCLUDING BUT NOT LIMITED TO: THE MANAGEMENT
5 LETTER TO THE BOARD AND ANY MATERIAL RISKS AND WEAKNESSES IN INTERNAL
6 CONTROLS IDENTIFIED BY THE AUDITOR; (B) ANY RESTRICTIONS ON THE SCOPE OF
7 THE AUDITOR'S ACTIVITIES OR ACCESS TO REQUESTED INFORMATION; (C) ANY
8 SIGNIFICANT DISAGREEMENTS BETWEEN THE AUDITOR AND MANAGEMENT; AND (D)
9 THE ADEQUACY AND PERFORMANCE OF THE CORPORATION'S ACCOUNTING FUNCTION;
10 (4) CONSIDER AT LEAST ANNUALLY THE PERFORMANCE AND INDEPENDENCE OF THE
11 INDEPENDENT AUDITOR;
12 (5) OVERSEE ADOPTION, IMPLEMENTATION OF, AND COMPLIANCE WITH ANY
13 CONFLICT OF INTEREST POLICY OR WHISTLEBLOWER POLICY ADOPTED BY THE
14 CORPORATION PURSUANT TO SECTIONS 715-A (CONFLICT OF INTEREST POLICY) OR
15 715-B (WHISTLEBLOWER POLICY), IF THIS FUNCTION IS NOT OTHERWISE
16 PERFORMED BY ANOTHER COMMITTEE OF THE BOARD COMPRISED SOLELY OF INDE-
17 PENDENT DIRECTORS; AND
18 (6) REPORT ITS ACTIVITIES TO THE BOARD AT LEAST ANNUALLY.
19 (C) THE AUDIT COMMITTEE SHALL ADOPT A CHARTER THAT SHALL STATE ITS
20 AUTHORITY AND RESPONSIBILITIES, INCLUDING THOSE PRESCRIBED BY THIS
21 SECTION, AND THAT SHALL STATE THE SIZE, COMPOSITION AND RULES OR PROCE-
22 DURES OF THE AUDIT COMMITTEE.
23 S 712-B. EXECUTIVE COMPENSATION OVERSIGHT.
24 (A) FOR PURPOSES OF THIS SECTION, "TOTAL COMPENSATION" MEANS: (1) ANY
25 COMPENSATION, WHETHER PAID OR ACCRUED, BY OR ON BEHALF OF THE CORPO-
26 RATION OR ANY AFFILIATE OF THE CORPORATION, INCLUDING BUT NOT LIMITED TO
27 SALARY, BONUS, AND DEFERRED COMPENSATION; AND (2) ANY BENEFIT HAVING
28 MONETARY VALUE PROVIDED BY THE CORPORATION OR ON BEHALF OF THE CORPO-
29 RATION OR ANY AFFILIATE OF THE CORPORATION, INCLUDING BUT NOT LIMITED TO
30 HOUSING ALLOWANCES, LIVING EXPENSES, PERQUISITES, FRINGE BENEFITS,
31 EMPLOYER CONTRIBUTIONS TO DEFINED CONTRIBUTION RETIREMENT PLANS AND
32 OTHER RETIREMENT BENEFITS.
33 (B) THE TOTAL COMPENSATION PAID BY A CORPORATION TO ANY EMPLOYEE OF
34 THE CORPORATION SHALL BE FAIR, REASONABLE AND COMMENSURATE WITH SERVICES
35 THE EMPLOYEE PROVIDES TO THE CORPORATION.
36 (C) NO EMPLOYEE OR OTHER INDIVIDUAL WHO MAY BENEFIT FROM COMPENSATION
37 OR BENEFITS PROVIDED BY THE CORPORATION MAY BE PRESENT AT OR OTHERWISE
38 PARTICIPATE IN ANY BOARD OR COMMITTEE DELIBERATION OR VOTE CONCERNING
39 SUCH COMPENSATION OR BENEFITS.
40 (D) EVERY CHARITABLE CORPORATION THAT IS REQUIRED TO BE REGISTERED
41 WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF THE EXECUTIVE LAW OR
42 ARTICLE EIGHT OF THE ESTATES, POWERS AND TRUSTS LAW OR BOTH AND THAT IN
43 THE PRIOR FISCAL YEAR HAD ANNUAL REVENUES IN EXCESS OF TWO MILLION
44 DOLLARS SHALL DESIGNATE A COMPENSATION COMMITTEE OF THE BOARD TO OVERSEE
45 EXECUTIVE COMPENSATION PROGRAMS AND RELATED PRACTICES OF THE CORPO-
46 RATION.
47 (1) THE COMPENSATION COMMITTEE SHALL BE COMPRISED OF AT LEAST THREE
48 INDEPENDENT DIRECTORS.
49 (2) THE CORPORATION'S BOARD MAY PERFORM THE FUNCTION OF THE COMPEN-
50 SATION COMMITTEE UNLESS THE BYLAWS PROVIDE OTHERWISE, PROVIDED THAT ONLY
51 INDEPENDENT DIRECTORS MAY BE PRESENT AT AND PARTICIPATE IN ANY DELIBER-
52 ATIONS OR VOTING RELATING TO COMPENSATION COMMITTEE MATTERS.
53 (3) IF A CORPORATION CONTROLS ONE OR MORE CORPORATIONS, THE COMPEN-
54 SATION COMMITTEE OF THE CONTROLLING CORPORATION MAY BE DEEMED TO BE THE
55 COMPENSATION COMMITTEE FOR ITS CONTROLLED CORPORATIONS.
56 (4) THE COMPENSATION COMMITTEE SHALL:
A. 7772 23
1 (A) REVIEW THE TOTAL COMPENSATION PAID TO THE CORPORATION'S OFFICERS
2 AND ITS FIVE HIGHEST-COMPENSATED KEY EMPLOYEES; (B) AFFIRMATIVELY DETER-
3 MINE THAT THE TOTAL COMPENSATION PAID TO ANY SUCH INDIVIDUAL IS FAIR,
4 REASONABLE AND COMMENSURATE WITH SERVICES PROVIDED TO THE CORPORATION.
5 IN MAKING THIS DETERMINATION, THE COMPENSATION COMMITTEE SHALL AT A
6 MINIMUM CONSIDER THE FOLLOWING FACTORS: (I) THE TOTAL COMPENSATION
7 PROVIDED TO THE INDIVIDUAL; (II) RELEVANT BENCHMARK DATA ON THE TOTAL
8 COMPENSATION PAID TO INDIVIDUALS SERVING IN SIMILAR POSITIONS AT CORPO-
9 RATIONS OF SIMILAR SIZE, TYPE, PURPOSE, AND SCOPE; (III) THE INDIVID-
10 UAL'S QUALIFICATIONS AND PERFORMANCE; (IV) COMPENSATION, PAYMENTS OR ANY
11 OTHER BENEFITS PROVIDED TO THE INDIVIDUAL FROM ANY AFFILIATE OF THE
12 CORPORATION; AND (V) THE OVERALL FINANCIAL CONDITION OF THE CORPORATION;
13 (C) MAKE AND KEEP A CONTEMPORANEOUS WRITTEN RECORD DESCRIBING THE BASIS
14 FOR ITS DETERMINATION, INCLUDING ITS ANALYSIS OF THE FACTORS SET FORTH
15 IN THIS PARAGRAPH AND HOW ANY RELEVANT DATA WAS OBTAINED AND USED; (D)
16 APPROVE BY NOT LESS THAN A MAJORITY VOTE THE TOTAL COMPENSATION PAID TO
17 EACH SUCH INDIVIDUAL.
18 (5) IF, PURSUANT TO SUBPARAGRAPH TWO OF THIS PARAGRAPH, THE BOARD DOES
19 NOT PERFORM THE FUNCTION OF THE COMPENSATION COMMITTEE, THEN: (I) THE
20 COMPENSATION COMMITTEE SHALL RECOMMEND TO THE BOARD FOR ITS APPROVAL THE
21 TOTAL COMPENSATION OF EACH INDIVIDUAL THAT THE COMMITTEE HAS AFFIRMA-
22 TIVELY DETERMINED IS FAIR, REASONABLE, AND COMMENSURATE WITH SERVICES
23 PROVIDED TO THE CORPORATION, AND IN CONNECTION THEREWITH, PROVIDE TO THE
24 BOARD THE WRITTEN RECORD OF ITS DETERMINATION CREATED PURSUANT TO CLAUSE
25 (C) OF THIS SUBPARAGRAPH; (II) UPON REVIEW OF THE RECOMMENDATIONS OF THE
26 COMPENSATION COMMITTEE, THE BOARD SHALL APPROVE BY NOT LESS THAN A
27 MAJORITY VOTE OF THE INDEPENDENT DIRECTORS THE TOTAL COMPENSATION OF
28 EACH SUCH INDIVIDUAL, WITH ONLY INDEPENDENT DIRECTORS PARTICIPATING IN
29 ANY SUCH VOTE AND ANY DISCUSSION RELATING THERETO; AND (III) THE BOARD
30 SHALL KEEP A CONTEMPORANEOUS WRITTEN RECORD OF THE BASIS OF ITS DETERMI-
31 NATION, INCLUDING AREAS OF AGREEMENT OR DISAGREEMENT WITH THE RECOMMEN-
32 DATIONS OF THE COMPENSATION COMMITTEE.
33 (6) THE COMPENSATION COMMITTEE MAY RETAIN A COMPENSATION CONSULTANT TO
34 ASSIST IN THE PERFORMANCE OF ITS RESPONSIBILITIES. THE COMPENSATION
35 COMMITTEE SHALL BE DIRECTLY RESPONSIBLE FOR THE APPOINTMENT, COMPEN-
36 SATION AND OVERSIGHT OF THE WORK OF SUCH CONSULTANT, AND ANY SUCH
37 CONSULTANT SHALL REPORT DIRECTLY TO THE COMPENSATION COMMITTEE. THE
38 COMPENSATION COMMITTEE SHALL, AMONG ITS RESPONSIBILITIES, APPROVE THE
39 COMPENSATION PEER GROUP THAT THE COMPENSATION CONSULTANT RECOMMENDS BE
40 USED TO DEVELOP BENCHMARK DATA
41 (A) PRIOR TO RETAINING ANY SUCH CONSULTANT, THE COMPENSATION COMMITTEE
42 SHALL DETERMINE THAT THE CONSULTANT IS INDEPENDENT AND QUALIFIED TO
43 RENDER ADVICE CONCERNING COMPENSATION; PROVIDED THAT NO CONSULTANT MAY
44 BE DETERMINED INDEPENDENT IF SUCH CONSULTANT OR ANY FIRM THAT EMPLOYS
45 SUCH CONSULTANT HAS (I) RECEIVED DIRECTLY OR INDIRECTLY ANY PAYMENT, FEE
46 OR OTHER COMPENSATION FROM THE CORPORATION OR ANY AFFILIATE OF THE
47 CORPORATION WITHIN THE PRECEDING TWO YEARS, OTHER THAN REASONABLE
48 AMOUNTS PAID FOR COMPENSATION CONSULTING SERVICES, OR (II) ANY BUSINESS
49 OR PERSONAL RELATIONSHIP WITH THE CORPORATION OR ANY AFFILIATE, OR ANY
50 OF THEIR OFFICERS, DIRECTORS OR EMPLOYEES, THAT MAY INTERFERE WITH THE
51 ABILITY OF THE CONSULTANT TO PROVIDE OBJECTIVE ADVICE TO THE COMMITTEE.
52 (B) NOTHING IN THIS PARAGRAPH SHALL BE CONSTRUED TO (I) REQUIRE THE
53 COMPENSATION COMMITTEE TO IMPLEMENT OR ACT CONSISTENTLY WITH ANY RECOM-
54 MENDATIONS PROVIDED BY THE COMPENSATION CONSULTANT; OR (II) AFFECT THE
55 ABILITY OR OBLIGATION OF MEMBERS OF THE COMPENSATION COMMITTEE TO EXER-
56 CISE THEIR OWN JUDGMENT IN FULFILLMENT OF THEIR DUTIES TO THE CORPO-
A. 7772 24
1 RATION, INCLUDING THOSE DUTIES PRESCRIBED BY SECTION 717 (DUTIES OF
2 DIRECTORS AND OFFICERS).
3 (7) THE COMPENSATION COMMITTEE SHALL ADOPT A CHARTER SETTING FORTH ITS
4 RESPONSIBILITIES, INCLUDING AS PRESCRIBED BY THIS SECTION, AS WELL AS
5 REQUIREMENTS CONCERNING THE SIZE, COMPOSITION AND FUNCTIONING OF THE
6 COMPENSATION COMMITTEE.
7 S 47. Paragraph (a) of section 713 of the not-for-profit corporation
8 law is amended and a new paragraph (f) is added to read as follows:
9 (a) The board may elect or appoint a CHAIR, WHO MAY BE GIVEN THE TITLE
10 CHAIR OF THE BOARD, CHAIRPERSON OF THE BOARD, CHAIRMAN OF THE BOARD, OR
11 CHAIRWOMAN OF THE BOARD, OR president, OR BOTH, one or more vice-presi-
12 dents, a secretary and a treasurer, and such other officers as it may
13 determine, or as may be provided in the by-laws. These officers may be
14 designated by such alternate titles as may be provided in the certif-
15 icate of incorporation or the by-laws. Any two or more offices may be
16 held by the same person, except the offices of president and secretary,
17 or the offices corresponding thereto.
18 (F) NO EMPLOYEE OF THE CORPORATION SHALL SERVE AS CHAIR OF THE BOARD.
19 S 48. Section 715 of the not-for-profit corporation law, as amended by
20 chapter 847 of the laws of 1970, paragraph (f) as amended by chapter
21 1057 of the laws of 1971, is amended to read as follows:
22 S 715. [Interested directors and officers] RELATED PARTY TRANSACTIONS.
23 (a) [No contract or other transaction between a corporation and one or
24 more of its directors or officers, or between a corporation and any
25 other corporation, firm, association or other entity in which one or
26 more of its directors or officers are directors or officers, or have a
27 substantial financial interest, shall be either void or voidable for
28 this reason alone or by reason alone that such director or directors or
29 officer or officers are present at the meeting of the board, or of a
30 committee thereof, which authorizes such contract or transaction, or
31 that his or their votes are counted for such purpose] NO CORPORATION
32 SHALL ENTER INTO A RELATED PARTY TRANSACTION, UNLESS:
33 (1) [If the] material facts as to [such director's or officer's inter-
34 est in such contract or transaction and as] THE RELATED PARTY'S INTEREST
35 IN, AND RELATIONSHIP to [any such common directorship, officership or
36 financial interest] THE TRANSACTION are disclosed in good faith [or
37 known] to the board [or committee], and [the board or committee author-
38 izes such contract or transaction by a vote sufficient for such purpose
39 without counting the vote or votes of such interested director or offi-
40 cer; or
41 (2) If the material facts as to such director's or officer's interest
42 in such contract or transaction and as to any such common directorship,
43 officership or financial interest are disclosed in good faith or known
44 to the] ANY members OF THE CORPORATION entitled to vote [thereon, if
45 any, and] TO APPROVE such [contract or] transaction [is authorized by
46 vote of such members].
47 [(b) If such good faith disclosure of the material facts as to the
48 director's or officer's interest in the contract or transaction and as
49 to any such common directorship, officership or financial interest, is
50 made to the directors or members, or known to the board or committee or
51 members authorizing such contract or transaction, as provided in para-
52 graph (a), the contract or transaction may not be avoided by the corpo-
53 ration for the reasons set forth in paragraph (a). If there was no such
54 disclosure or knowledge, or if the vote of such interested director or
55 officer was necessary for the authorization of such contract or trans-
56 action at a meeting of the board or committee at which it was author-
A. 7772 25
1 ized, the corporation may avoid the contract or transaction unless the
2 party or parties thereto shall establish affirmatively that the contract
3 or transaction was fair and reasonable as to the corporation at the time
4 it was authorized by the board, a committee or the members.
5 (c) Common or interested directors may be counted in determining the
6 presence of a quorum at a meeting of the board or of a committee which
7 authorizes such contract or transaction.
8 (d)] (2) THE BOARD: (I) HAS CONSIDERED ALTERNATIVE TRANSACTIONS TO THE
9 EXTENT AVAILABLE AND UPON REASONABLE DILIGENCE DETERMINED THAT SUCH
10 ALTERNATIVE TRANSACTIONS WOULD NOT BE MORE ADVANTAGEOUS TO THE CORPO-
11 RATION; (II) DETERMINES BY A TWO-THIRDS VOTE OF THE BOARD THAT THE
12 RELATED PARTY TRANSACTION IS FAIR, REASONABLE AND IN THE BEST INTERESTS
13 OF THE CORPORATION AND APPROVES SUCH TRANSACTION, AND THE RELATED PARTY
14 WITH AN INTEREST IN THE TRANSACTION IS NOT PRESENT AT AND DOES NOT
15 OTHERWISE PARTICIPATE IN ANY DELIBERATION OR VOTING RELATING THERETO;
16 AND (III) CONTEMPORANEOUSLY DOCUMENTS IN WRITING THE BASIS FOR ITS
17 DETERMINATION AND APPROVAL OF THE TRANSACTION. THIS SUBPARAGRAPH SHALL
18 NOT APPLY TO ANY COMPENSATION REVIEWED AND APPROVED IN ACCORDANCE WITH
19 PARAGRAPH (D) OF SECTION 712-A (AUDIT OVERSIGHT). The certificate of
20 incorporation, BYLAWS OR CONFLICT OF INTEREST POLICY OF THE CORPORATION
21 may contain additional restrictions on [contracts or] RELATED PARTY
22 transactions [between a corporation] and [its directors or officers or
23 other persons and may] ADDITIONAL PROCEDURES NECESSARY FOR THE REVIEW OR
24 APPROVAL OF SUCH TRANSACTIONS, OR provide that [contracts or] ANY trans-
25 actions in violation of such restrictions shall be void or voidable.
26 [(e) Unless otherwise provided in the certificate of incorporation or
27 the by-laws, the board shall have authority to fix the compensation of
28 directors for services in any capacity.
29 (f) The fixing of salaries of officers, if not done in or pursuant to
30 the by-laws, shall require the affirmative vote of a majority of the
31 entire board unless a higher proportion is set by the certificate of
32 incorporation or by-laws.]
33 (B) AN OFFICER, DIRECTOR OR KEY EMPLOYEE WHO HAS AN INTEREST IN A
34 RELATED PARTY TRANSACTION SHALL, PRIOR TO THE BOARD'S CONSIDERATION OF
35 THE PROPOSED TRANSACTION, DISCLOSE IN GOOD FAITH TO THE CORPORATION THE
36 MATERIAL FACTS AS TO SUCH PERSON'S INTEREST IN, AND RELATIONSHIP TO, THE
37 TRANSACTION. THE BOARD SHALL ADOPT AND IMPLEMENT PROCEDURES FOR THE
38 TIMELY DISCLOSURE OF SUCH FACTS TO THE BOARD.
39 (C) THE ATTORNEY GENERAL MAY BRING AN ACTION TO ENJOIN, VOID OR
40 RESCIND ANY RELATED PARTY TRANSACTION OR A PROPOSED RELATED PARTY TRANS-
41 ACTION THAT VIOLATES ANY LAW OR IS OTHERWISE NOT FAIR, REASONABLE, OR IN
42 THE BEST INTERESTS OF THE CORPORATION, OR TO SEEK OTHER RELIEF, INCLUD-
43 ING BUT NOT LIMITED TO DAMAGES, RESTITUTION, THE REMOVAL OF DIRECTORS OR
44 OFFICERS, OR SEEK TO REQUIRE ANY PERSON OR ENTITY TO:
45 (1) ACCOUNT FOR ANY PROFITS MADE FROM SUCH TRANSACTION, AND PAY THEM
46 TO THE CORPORATION;
47 (2) PAY THE CORPORATION THE VALUE OF THE USE OF ANY OF ITS PROPERTY OR
48 OTHER ASSETS USED IN SUCH TRANSACTION;
49 (3) RETURN OR REPLACE ANY PROPERTY OR OTHER ASSETS LOST TO THE CORPO-
50 RATION AS A RESULT OF SUCH TRANSACTION, TOGETHER WITH ANY INCOME OR
51 APPRECIATION LOST TO THE CORPORATION BY REASON OF SUCH TRANSACTION, OR
52 ACCOUNT FOR ANY PROCEEDS OF SALE OF SUCH PROPERTY, AND PAY THE PROCEEDS
53 TO THE CORPORATION TOGETHER WITH INTEREST AT THE LEGAL RATE; AND
54 (4) PAY, IN THE CASE OF WILLFUL CONDUCT, AN AMOUNT UP TO DOUBLE THE
55 AMOUNT OF ANY BENEFIT IMPROPERLY OBTAINED.
A. 7772 26
1 (D) THE POWERS OF THE ATTORNEY GENERAL PROVIDED IN THIS SECTION ARE IN
2 ADDITION TO ALL OTHER POWERS THE ATTORNEY GENERAL MAY HAVE UNDER THIS
3 CHAPTER OR ANY OTHER LAW.
4 S 49. The not-for-profit corporation law is amended by adding two new
5 sections 715-a and 715-b to read as follows:
6 S 715-A. CONFLICT OF INTEREST POLICY.
7 (A) EVERY CORPORATION SHALL ADOPT A CONFLICT OF INTEREST POLICY TO
8 ENSURE THAT ITS DIRECTORS, OFFICERS AND KEY EMPLOYEES ACT IN THE CORPO-
9 RATION'S BEST INTEREST AND COMPLY WITH APPLICABLE LEGAL REQUIREMENTS,
10 INCLUDING BUT NOT LIMITED TO THE REQUIREMENTS SET FORTH IN SECTION 715
11 (RELATED PARTY TRANSACTIONS).
12 (B) THE CONFLICT OF INTEREST POLICY SHALL INCLUDE, AT A MINIMUM, THE
13 FOLLOWING PROVISIONS:
14 (1) A DEFINITION OF THE CIRCUMSTANCES THAT CONSTITUTE A CONFLICT OF
15 INTEREST;
16 (2) PROCEDURES FOR DISCLOSING A CONFLICT OF INTEREST TO THE AUDIT
17 COMMITTEE OR, IF THERE IS NO AUDIT COMMITTEE, TO THE BOARD;
18 (3) A REQUIREMENT THAT THE PERSON WITH THE CONFLICT OF INTEREST NOT BE
19 PRESENT AT OR PARTICIPATE IN BOARD OR COMMITTEE DELIBERATION OR VOTE ON
20 THE MATTER GIVING RISE TO SUCH CONFLICT;
21 (4) A PROHIBITION AGAINST ANY ATTEMPT BY THE PERSON WITH THE CONFLICT
22 TO INFLUENCE THE DELIBERATION OR VOTING ON THE MATTER GIVING RISE TO
23 SUCH CONFLICT;
24 (5) A REQUIREMENT THAT THE EXISTENCE AND RESOLUTION OF THE CONFLICT BE
25 DOCUMENTED IN THE CORPORATION'S RECORDS, INCLUDING IN THE MINUTES OF ANY
26 MEETING AT WHICH THE CONFLICT WAS DISCUSSED OR VOTED UPON; AND
27 (6) PROCEDURES FOR DISCLOSING, ADDRESSING, AND DOCUMENTING RELATED
28 PARTY TRANSACTIONS IN ACCORDANCE WITH SECTION 715 (RELATED PARTY TRANS-
29 ACTIONS).
30 (C) THE CONFLICT OF INTEREST POLICY SHALL REQUIRE THAT PRIOR TO THE
31 INITIAL ELECTION OF ANY DIRECTOR, AND ANNUALLY THEREAFTER, THAT SUCH
32 DIRECTOR SHALL COMPLETE, SIGN AND SUBMIT TO THE SECRETARY OF THE CORPO-
33 RATION A WRITTEN STATEMENT IDENTIFYING ANY ENTITY OF WHICH SUCH DIRECTOR
34 IS AN OFFICER, DIRECTOR, TRUSTEE, MEMBER, OWNER (EITHER AS A SOLE
35 PROPRIETOR OR A PARTNER), OR EMPLOYEE WITH WHICH THE CORPORATION HAS, OR
36 MIGHT BE EXPECTED TO HAVE, A RELATIONSHIP OR A TRANSACTION IN WHICH THE
37 DIRECTOR MIGHT HAVE A CONFLICTING INTEREST. THE POLICY SHALL REQUIRE
38 THAT EACH DIRECTOR ANNUALLY RESUBMIT SUCH WRITTEN STATEMENT. THE SECRE-
39 TARY OF THE CORPORATION SHALL PROVIDE A COPY OF ALL COMPLETED STATEMENTS
40 TO THE CHAIR OF THE AUDIT COMMITTEE OR, IF THERE IS NO AUDIT COMMITTEE,
41 TO THE CHAIR OF THE BOARD.
42 (D) EVERY CORPORATION REGISTERED OR REQUIRED TO BE REGISTERED PURSUANT
43 TO SECTION ONE HUNDRED SEVENTY-TWO OF THE EXECUTIVE LAW OR SECTION 8-1.4
44 OF THE ESTATES, POWERS AND TRUSTS LAW SHALL TRANSMIT A COPY OF ITS
45 CONFLICT OF INTEREST POLICY TO THE ATTORNEY GENERAL IN THE FORM AND
46 MANNER SPECIFIED BY THE ATTORNEY GENERAL, AND SHALL WITHIN THIRTY DAYS
47 OF ANY MATERIAL CHANGE OF THESE POLICIES PROVIDE THE ATTORNEY GENERAL
48 WITH THE CHANGED POLICIES.
49 (E) NOTHING IN THIS SECTION SHALL BE INTERPRETED TO REQUIRE A CORPO-
50 RATION TO ADOPT ANY SPECIFIC CONFLICT OF INTEREST POLICY NOT OTHERWISE
51 REQUIRED BY LAW, OR TO SUPERSEDE OR LIMIT ANY REQUIREMENT OR DUTY
52 GOVERNING CONFLICTS OF INTEREST REQUIRED BY ANY OTHER LAW OR RULE.
53 S 715-B. WHISTLEBLOWER POLICY.
54 (A) EVERY CORPORATION THAT HAS TWENTY OR MORE EMPLOYEES AND IN THE
55 PRIOR FISCAL YEAR HAD ANNUAL REVENUE IN EXCESS OF ONE MILLION DOLLARS
56 SHALL ADOPT A WHISTLEBLOWER POLICY TO PROTECT FROM RETALIATION PERSONS
A. 7772 27
1 WHO REPORT SUSPECTED IMPROPER CONDUCT. SUCH POLICY SHALL PROVIDE THAT NO
2 DIRECTOR, OFFICER, EMPLOYEE OR VOLUNTEER OF A CORPORATION WHO IN GOOD
3 FAITH REPORTS ANY ACTION OR SUSPECTED ACTION TAKEN BY OR WITHIN THE
4 CORPORATION THAT IS ILLEGAL, FRAUDULENT OR IN VIOLATION OF ANY ADOPTED
5 POLICY OF THE CORPORATION SHALL SUFFER INTIMIDATION, HARASSMENT,
6 DISCRIMINATION OR OTHER RETALIATION OR, IN THE CASE OF EMPLOYEES,
7 ADVERSE EMPLOYMENT CONSEQUENCE.
8 (B) THE WHISTLEBLOWER POLICY SHALL INCLUDE THE FOLLOWING PROVISIONS:
9 (1) PROCEDURES FOR THE REPORTING OF VIOLATIONS OR SUSPECTED VIOLATIONS
10 OF LAWS OR CORPORATE POLICIES, INCLUDING PROCEDURES FOR PRESERVING THE
11 CONFIDENTIALITY OF REPORTED INFORMATION;
12 (2) PROCEDURES FOR HANDLING AND INVESTIGATING VIOLATIONS OR SUSPECTED
13 VIOLATIONS OF LAWS OR CORPORATE POLICIES;
14 (3) A REQUIREMENT THAT AN EMPLOYEE OF THE CORPORATION BE DESIGNATED TO
15 ADMINISTER, IMPLEMENT AND OVERSEE COMPLIANCE OF THE WHISTLEBLOWER POLI-
16 CY, AND TO REPORT TO THE AUDIT COMMITTEE OR OTHER COMMITTEE OF INDEPEND-
17 ENT DIRECTORS OR, IF THERE ARE NO SUCH COMMITTEES, TO THE BOARD;
18 (4) A REQUIREMENT THAT ALL DOCUMENTS CONCERNING INFORMATION REPORTED
19 UNDER THE WHISTLEBLOWER POLICY AND ANY INVESTIGATION RELATING THERETO BE
20 RETAINED BY THE CORPORATION FOR A MINIMUM PERIOD OF SIX YEARS; AND
21 (5) A REQUIREMENT THAT A COPY OF THE POLICY BE DISTRIBUTED TO ALL
22 DIRECTORS, OFFICERS, EMPLOYEES AND VOLUNTEERS, WITH INSTRUCTIONS ON HOW
23 TO COMPLY WITH THE PROCEDURES SET FORTH IN THE POLICY.
24 (C) NOTHING IN THIS SECTION SHALL BE INTERPRETED TO RELIEVE ANY CORPO-
25 RATION FROM ANY ADDITIONAL REQUIREMENTS IN RELATION TO INTERNAL COMPLI-
26 ANCE, RETALIATION, OR DOCUMENT RETENTION REQUIRED BY ANY OTHER LAW OR
27 RULE.
28 S 50. Section 716 of the not-for-profit corporation law, as amended by
29 chapter 644 of the laws of 1971, is amended to read as follows:
30 S 716. Loans to directors and officers.
31 No loans, other than through the purchase of bonds, debentures, or
32 similar obligations of the type customarily sold in public offerings, or
33 through ordinary deposit of funds in a bank, shall be made by a corpo-
34 ration to its directors or officers, or to any other corporation, firm,
35 association or other entity in which one or more of its directors or
36 officers are directors or officers or hold a substantial financial
37 interest, except a loan by one [type B] CHARITABLE corporation to anoth-
38 er [type B] CHARITABLE corporation. A loan made in violation of this
39 section shall be a violation of the duty to the corporation of the
40 directors or officers authorizing it or participating in it, but the
41 obligation of the borrower with respect to the loan shall not be
42 affected thereby.
43 S 51. Section 717 of the not-for-profit corporation law, paragraph (a)
44 as amended by chapter 490 of the laws of 2010, and paragraph (b) as
45 amended by chapter 734 of the laws of 1988, is amended to read as
46 follows:
47 S 717. Duty of directors and officers.
48 (a) Directors and officers shall discharge the duties of their respec-
49 tive positions in good faith and with the care an ordinarily prudent
50 person in a like position would exercise under similar circumstances IN
51 LIKE POSITIONS. [The factors set forth in subparagraph one of paragraph
52 (e) of section 552 (Standard of conduct in managing and investing an
53 institutional fund), if relevant, must be considered by a governing
54 board delegating] IN THE ADMINISTRATION OF THE POWERS TO MAKE AND RETAIN
55 INVESTMENTS PURSUANT TO SECTION 511-A (PETITION FOR ATTORNEY GENERAL
56 APPROVAL), TO APPROPRIATE APPRECIATION PURSUANT TO SECTION 513 (ADMINIS-
A. 7772 28
1 TRATION OF ASSETS RECEIVED FOR SPECIFIC PURPOSES), AND TO DELEGATE
2 investment management of institutional funds pursuant to section 514
3 (Delegation of investment management) [For purposes of this paragraph,
4 the term institutional fund is defined in section 551 (Definitions).], A
5 GOVERNING BOARD SHALL CONSIDER AMONG OTHER RELEVANT CONSIDERATIONS THE
6 LONG AND SHORT TERM NEEDS OF THE CORPORATION IN CARRYING OUT ITS
7 PURPOSES, ITS PRESENT AND ANTICIPATED FINANCIAL REQUIREMENTS, EXPECTED
8 TOTAL RETURN ON ITS INVESTMENTS, PRICE LEVEL TRENDS, AND GENERAL ECONOM-
9 IC CONDITIONS.
10 (b) In discharging their duties, directors and officers, when acting
11 in good faith, may rely on information, opinions, reports or statements
12 including financial statements and other financial data, in each case
13 prepared or presented by: (1) one or more officers or employees of the
14 corporation, whom the director believes to be reliable and competent in
15 the matters presented, (2) counsel, public accountants or other persons
16 as to matters which the directors or officers believe to be within such
17 person's professional or expert competence or (3) a committee of the
18 board upon which they do not serve, duly designated in accordance with a
19 provision of the certificate of incorporation or the bylaws, as to
20 matters within its designated authority, which committee the directors
21 or officers believe to merit confidence, so long as in so relying they
22 shall be acting in good faith and with that degree of care specified in
23 paragraph (a) of this section, BUT IF THE DIRECTOR OR OFFICER HAS KNOW-
24 LEDGE CONCERNING THE MATTER IN QUESTION REPORTED BY THE COMMITTEE THAT
25 WOULD CAUSE SUCH RELIANCE TO BE UNWARRANTED, THE DIRECTOR OR OFFICER
26 SHALL NOT BE CONSIDERED TO BE ACTING IN GOOD FAITH. Persons shall not
27 be considered to be acting in good faith if they have knowledge concern-
28 ing the matter in question that would cause such reliance to be unwar-
29 ranted. Persons who so perform their duties shall have no liability by
30 reason of being or having been directors or officers of the corporation.
31 (C) IN TAKING ACTION, INCLUDING, WITHOUT LIMITATION, ACTION WHICH MAY
32 INVOLVE OR RELATE TO A CHANGE OR POTENTIAL CHANGE IN THE CONTROL OF
33 CORPORATION, A DIRECTOR SHALL BE ENTITLED TO CONSIDER, WITHOUT LIMITA-
34 TION, (1) BOTH THE LONG-TERM AND THE SHORT-TERM INTERESTS OF THE CORPO-
35 RATION AND ITS MEMBERS AND (2) THE EFFECTS THAT THE CORPORATION'S ACTION
36 MAY HAVE IN THE SHORT-TERM OR IN THE LONG-TERM UPON ANY OF THE FOLLOW-
37 ING: (A) THE PROSPECTS FOR POTENTIAL GROWTH, DEVELOPMENT, PRODUCTIVITY
38 AND FINANCIAL STABILITY OF THE CORPORATION; (B) THE CORPORATION'S
39 CURRENT EMPLOYEES; (C) THE CORPORATION'S RETIRED EMPLOYEES AND OTHER
40 BENEFICIARIES RECEIVING OR ENTITLED TO RECEIVE RETIREMENT, WELFARE OR
41 SIMILAR BENEFITS FROM OR PURSUANT TO ANY PLAN SPONSORED, OR AGREEMENT
42 ENTERED INTO, BY THE CORPORATION; (D) THE BENEFICIARIES OR RECIPIENTS OF
43 THE CORPORATION'S SERVICES; (E) THE CORPORATION'S CREDITORS; (F) THE
44 ABILITY OF THE CORPORATION TO PROVIDE, AS A GOING CONCERN, BENEFITS,
45 GOODS, SERVICES, EMPLOYMENT OPPORTUNITIES AND EMPLOYMENT BENEFITS AND
46 OTHERWISE TO CONTRIBUTE TO THE COMMUNITIES IN WHICH IT CONDUCTS ACTIV-
47 ITIES; AND (G) THE ACCOMPLISHMENT OF THE CORPORATION'S PURPOSES AS STAT-
48 ED IN THE CERTIFICATE OF INCORPORATION. NOTHING IN THIS PARAGRAPH SHALL
49 CREATE ANY DUTIES OWED BY ANY DIRECTOR TO ANY PERSON OR ENTITY TO
50 CONSIDER OR AFFORD ANY PARTICULAR WEIGHT TO ANY OF THE FOREGOING OR
51 ABROGATE ANY DUTY OF THE DIRECTORS, EITHER STATUTORY OR RECOGNIZED BY
52 COMMON LAW OR COURT DECISIONS. FOR PURPOSES OF THIS PARAGRAPH, "CONTROL"
53 SHALL MEAN THE POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO
54 DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND POLICIES OF THE
55 CORPORATION, WHETHER THROUGH MEMBERSHIP OR OTHERWISE.
A. 7772 29
1 S 52. Section 718 of the not-for-profit corporation law, as amended by
2 chapter 992 of the laws of 1970, is amended to read as follows:
3 S 718. List of directors and officers.
4 (a) If a member or creditor of a corporation, in person or by his
5 attorney or agent, or a representative of the district attorney or of
6 the secretary of state, the attorney general, or other state official,
7 makes a written demand on a corporation to inspect a current list of its
8 directors and officers and their [residence] CURRENT addresses, the
9 corporation shall, within two business days after receipt of the demand
10 and for a period of one week thereafter, make the list available for
11 such inspection at its office during usual business hours.
12 (b) Upon refusal by the corporation to make a current list of its
13 directors and officers and their [residence] CURRENT addresses avail-
14 able, as provided in paragraph (a) OF THIS SECTION, the person making a
15 demand for such list may apply, ex parte, to the supreme court at a
16 special term held within the judicial district where the office of the
17 corporation is located for an order directing the corporation to make
18 such list available. The court may grant such order or take such other
19 action as it may deem just and proper.
20 S 53. The section heading and paragraph (a) of section 720 of the
21 not-for-profit corporation law, the section heading as amended by chap-
22 ter 1058 of the laws of 1971, are amended to read as follows:
23 Actions [on behalf of the corporation] AGAINST DIRECTORS, OFFICERS AND
24 KEY EMPLOYEES.
25 (a) An action may be brought against one or more directors [or], offi-
26 cers, OR KEY EMPLOYEES of a corporation to procure a judgment for the
27 following relief:
28 (1) To compel the defendant to account for his official conduct in the
29 following cases:
30 (A) The neglect of, or failure to perform, or other violation of his
31 duties in the management and disposition of corporate assets committed
32 to his charge.
33 (B) The acquisition by himself, transfer to others, loss or waste of
34 corporate assets due to any neglect of, or failure to perform, or other
35 violation of his duties.
36 (2) To set aside an unlawful conveyance, assignment or transfer of
37 corporate assets, where the transferee knew of its unlawfulness.
38 (3) To enjoin a proposed unlawful conveyance, assignment or transfer
39 of corporate assets, where there are reasonable grounds for belief that
40 it will be made.
41 S 54. Paragraphs (a) and (c) of section 722 of the not-for-profit
42 corporation law, as amended by chapter 368 of the laws of 1987, are
43 amended to read as follows:
44 (a) A corporation may indemnify any person, made, or threatened to be
45 made, a party to an action or proceeding other than one by or in the
46 right of the corporation to procure a judgment in its favor, whether
47 civil or criminal, including an action by or in the right of any other
48 corporation of any [type or] kind, domestic or foreign, or any partner-
49 ship, joint venture, trust, employee benefit plan or other enterprise,
50 which any director or officer of the corporation served in any capacity
51 at the request of the corporation, by reason of the fact that he, his
52 testator or intestate, was a director or officer of the corporation, or
53 served such other corporation, partnership, joint venture, trust,
54 employee benefit plan or other enterprise in any capacity, against judg-
55 ments, fines, amounts paid in settlement and reasonable expenses,
56 including attorneys' fees actually and necessarily incurred as a result
A. 7772 30
1 of such action or proceeding, or any appeal therein, if such director or
2 officer acted, in good faith, for a purpose which he reasonably believed
3 to be in, or, in the case of service for any other corporation or any
4 partnership, joint venture, trust, employee benefit plan or other enter-
5 prise, not opposed to, the best interests of the corporation and, in
6 criminal actions or proceedings, in addition, had no reasonable cause to
7 believe that his conduct was unlawful.
8 (c) A corporation may indemnify any person made, or threatened to be
9 made, a party to an action by or in the right of the corporation to
10 procure a judgment in its favor by reason of the fact that he, his
11 testator or intestate, is or was a director or officer of the corpo-
12 ration, or is or was serving at the request of the corporation as a
13 director or officer of any other corporation of any [type or] kind,
14 domestic or foreign, of any partnership, joint venture, trust, employee
15 benefit plan or other enterprise, against amounts paid in settlement and
16 reasonable expenses, including attorneys' fees, actually and necessarily
17 incurred by him in connection with the defense or settlement of such
18 action, or in connection with an appeal therein, if such director or
19 officer acted, in good faith, for a purpose which he reasonably believed
20 to be in, or, in the case of service for any other corporation or any
21 partnership, joint venture, trust, employee benefit plan or other enter-
22 prise, not opposed to, the best interests of the corporation, except
23 that no indemnification under this paragraph shall be made in respect of
24 (1) a threatened action, or a pending action which is settled or other-
25 wise disposed of, or (2) any claim, issue or matter as to which such
26 person shall have been adjudged to be liable to the corporation, unless
27 and only to the extent that the court in which the action was brought,
28 or, if no action was brought, any court of competent jurisdiction,
29 determines upon application that, in view of all the circumstances of
30 the case, the person is fairly and reasonably entitled to indemnity for
31 such portion of the settlement amount and expenses as the court deems
32 proper.
33 S 55. Paragraph (c) of section 723 of the not-for-profit corporation
34 law, as amended by chapter 368 of the laws of 1987, is amended to read
35 as follows:
36 (c) Expenses incurred in defending a civil or criminal action or
37 proceeding may be paid by the corporation in advance of the final dispo-
38 sition of such action or proceeding upon receipt of an undertaking by or
39 on behalf of such director or officer [to repay] SUFFICIENT TO ENSURE
40 THE REPAYMENT OF such amount as, and to the extent, required by para-
41 graph (a) of section 725.
42 S 56. Paragraph (b) of section 724 of the not-for-profit corporation
43 law, as amended by chapter 368 of the laws of 1987, is amended to read
44 as follows:
45 (b) The application shall be made in such manner and form as may be
46 required by the applicable rules of court or, in the absence thereof, by
47 direction of a court to which it is made. Such application shall be upon
48 notice to the corporation AND THE ATTORNEY GENERAL. The court may also
49 direct that notice be given at the expense of the corporation to the
50 members and such other persons as it may designate in such manner as it
51 may require.
52 S 57. Subparagraph 3 of paragraph (a) of section 803 of the not-for-
53 profit corporation law, as amended by chapter 168 of the laws of 1982,
54 is amended to read as follows:
55 (3) That the corporation is a corporation as defined in subparagraph
56 (a) (5) of section 102 (Definitions)[; the type of corporation it is
A. 7772 31
1 under section 201 (Purposes); and if the corporate purposes are
2 enlarged, limited or otherwise changed, the type of corporation it shall
3 thereafter be under section 201].
4 S 58. The section heading and paragraph (a) of section 804 of the
5 not-for-profit corporation law, as amended by chapter 139 of the laws of
6 1993, and subparagraph (i) of paragraph (a) as amended by chapter 198 of
7 the laws of 2010, are amended to read as follows:
8 [Approvals] NOTICES, CONSENTS, and effect.
9 (a) (i) A certificate of amendment shall not be filed if the amendment
10 adds, changes or eliminates a purpose, power or provision the inclusion
11 of which in a certificate of incorporation requires consent or approval
12 of a governmental body or officer or any other person or body, or if the
13 amendment changes the name of a corporation whose certificate of incor-
14 poration had such consent or approval endorsed thereon or annexed there-
15 to, unless such consent or approval is no longer required or is endorsed
16 on or annexed to the certificate of amendment. IF A CERTIFICATE OF
17 AMENDMENT ADDING, CHANGING OR ELIMINATING A PURPOSE, POWER OR PROVISION
18 THE INCLUSION OF WHICH IN A CERTIFICATE OF INCORPORATION REQUIRES THE
19 INCORPORATOR TO SEND A CERTIFIED COPY OF ITS CERTIFICATE OF INCORPO-
20 RATION TO A GOVERNMENTAL BODY OR OFFICER OR ANY OTHER PERSON OR ENTITY
21 UNDER SECTION 404 (NOTICES AND CONSENTS), OR IF THE AMENDMENT CHANGES
22 THE NAME OF A CORPORATION WHOSE INCORPORATOR WAS REQUIRED TO DELIVER A
23 CERTIFIED COPY OF ITS CERTIFICATE OF INCORPORATION TO A GOVERNMENTAL
24 BODY OR OFFICER OR ANY OTHER PERSON OR ENTITY UNDER SECTION 404 (NOTICES
25 AND CONSENTS), A CERTIFIED COPY OF THE CERTIFICATE OF AMENDMENT SHALL BE
26 SENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE GOVERNMENT BODY
27 OR OFFICER OR OTHER PERSON OR ENTITY IMMEDIATELY AFTER THE FILING OF
28 SUCH CERTIFICATE WITH THE DEPARTMENT OF STATE.
29 (ii) Every certificate of amendment of a CHARITABLE corporation [clas-
30 sified as type B or type C under section 201 (Purposes)] which seeks to
31 change or eliminate a purpose or power enumerated in the corporation's
32 certificate of incorporation, or to add a power or purpose not enumer-
33 ated therein, shall have endorsed thereon or annexed thereto the
34 approval of a justice of the supreme court of the judicial district in
35 which the office of the corporation is located. Ten days' written notice
36 of the application for such approval shall be given to the attorney-gen-
37 eral.
38 S 59. Section 907 of the not-for-profit corporation law is amended to
39 read as follows:
40 S 907. Approval by the supreme court OR THE ATTORNEY GENERAL.
41 [(a)] Where any constituent corporation or the consolidated corpo-
42 ration is, or would be if formed under this chapter, a [Type B or a Type
43 C] CHARITABLE corporation under section 201 (Purposes) [of this chap-
44 ter], no certificate shall be filed pursuant to section 904 (Certificate
45 of merger or consolidation; contents) or section 906 (Merger or consol-
46 idation of domestic and foreign corporations) until (A) THE SUPREME
47 COURT HAS GRANTED an order approving the plan of merger or consolidation
48 and authorizing the filing of the certificate [has been made by the
49 supreme court,] as provided in [this] section[. A certified copy of such
50 order shall be annexed to the certificate of merger or consolidation.
51 Application for the order may be made in the judicial district in which
52 the principal office of the surviving or consolidated corporation is to
53 be located, or in which the office of one of the domestic constituent
54 corporations is located. The application shall be made by all the
55 constituent corporations jointly and shall set forth by affidavit (1)
56 the plan of merger or consolidation, (2) the approval required by
A. 7772 32
1 section 903 (Approval of plan) or paragraph (b) of section 906 (Merger
2 or consolidation of domestic and foreign corporations) for each constit-
3 uent corporation, (3) the objects and purposes of each such corporation
4 to be promoted by the consolidation, (4) a statement of all property,
5 and the manner in which it is held, and of all liabilities and of the
6 amount and sources of the annual income of each such corporation, (5)
7 whether any votes against adoption of the resolution approving the plan
8 of merger or consolidation were cast at the meeting at which the resol-
9 ution as adopted by each constituent corporation, and (6) facts showing
10 that the consolidation is authorized by the laws of the jurisdictions
11 under which each of the constituent corporations is incorporated] 907-A
12 (APPLICATION FOR APPROVAL OF THE SUPREME COURT) OR (B) THE ATTORNEY
13 GENERAL HAS APPROVED THE PLAN OF MERGER OR CONSOLIDATION AND AUTHORIZED
14 THE FILING OF THE CERTIFICATE, AS PROVIDED IN SECTION 907-B (APPLICATION
15 FOR APPROVAL OF THE ATTORNEY GENERAL).
16 [(b) Upon the filing of the application the court shall fix a time for
17 hearing thereof and shall direct that notice thereof be given to such
18 persons as may be interested, including the attorney general, any
19 governmental body or officer and any other person or body whose consent
20 or approval is required by section 909 (Consent to filing), in such form
21 and manner as the court may prescribe. If no votes against adoption of
22 the resolution approving the plan of merger or consolidation were cast
23 at the meeting at which the resolution was adopted by any constituent
24 corporation the court may dispense with notice to anyone except the
25 attorney-general, any governmental body or officer and any other person
26 or body whose consent or approval is required by section 909 (Consent to
27 filing). Any person interested may appear and show cause why the appli-
28 cation should not be granted.
29 (c) If the court shall find that any of the assets of any of the
30 constituent corporations are held for a purpose specified as Type B in
31 paragraph (b) of section 201 or are legally required to be used for a
32 particular purpose, but not upon a condition requiring return, transfer
33 or conveyance by reason of the merger or consolidation, the court may,
34 in its discretion, direct that such assets be transferred or conveyed to
35 the surviving or consolidated corporation subject to such purpose or
36 use, or that such assets be transferred or conveyed to the surviving or
37 consolidated corporation or to one or more other domestic or foreign
38 corporations or organizations engaged in substantially similar activ-
39 ities, upon an express trust the terms of which shall be approved by the
40 court.
41 (d) If the court shall find that the interests of non-consenting
42 members are or may be substantially prejudiced by the proposed merger or
43 consolidation, the court may disapprove the plan or may direct a modifi-
44 cation thereof. In the event of a modification, if the court shall find
45 that the interests of any members may be substantially prejudiced by the
46 proposed merger or consolidation as modified, the court shall direct
47 that the modified plan be submitted to vote of the members of the
48 constituent corporations, or if the court shall find that there is not
49 such substantial prejudice, it shall approve the agreement as so modi-
50 fied without further approval by the members. If the court, upon direct-
51 ing a modification of the plan of merger or consolidation, shall direct
52 that a further approval be obtained from members of the constituent
53 corporations or any of them, such further approval shall be obtained in
54 the manner specified in section 903 (Approval of plan) or section 906(b)
55 (Merger or consolidation of domestic and foreign corporations) of this
56 chapter.
A. 7772 33
1 (e) If it shall appear, to the satisfaction of the court, that the
2 provisions of this section have been complied with, and that the inter-
3 ests of the constituent corporations and the public interest will not be
4 adversely affected by the merger or consolidation, it shall approve the
5 merger or consolidation upon such terms and conditions as it may
6 prescribe.]
7 S 60. The not-for-profit corporation law is amended by adding a new
8 section 907-a to read as follows:
9 S 907-A. APPLICATION FOR APPROVAL OF THE SUPREME COURT.
10 (A) APPLICATION FOR AN ORDER APPROVING THE PLAN OF MERGER AND AUTHOR-
11 IZING THE FILING OF THE CERTIFICATE MAY BE MADE IN THE JUDICIAL DISTRICT
12 IN WHICH THE PRINCIPAL OFFICE OF THE SURVIVING OR CONSOLIDATED CORPO-
13 RATION IS TO BE LOCATED, OR IN WHICH THE OFFICE OF ONE OF THE DOMESTIC
14 CONSTITUENT CORPORATIONS IS LOCATED. THE APPLICATION SHALL BE MADE BY
15 ALL THE CONSTITUENT CORPORATIONS JOINTLY AND SHALL SET FORTH BY AFFIDA-
16 VIT: (1) THE PLAN OF MERGER OR CONSOLIDATION, (2) THE APPROVAL REQUIRED
17 BY SECTION 903 (APPROVAL OF PLAN) OR PARAGRAPH (B) OF SECTION 906 (MERG-
18 ER OR CONSOLIDATION OF DOMESTIC AND FOREIGN CORPORATIONS) FOR EACH
19 CONSTITUENT CORPORATION, (3) THE OBJECTS AND PURPOSES OF EACH SUCH
20 CORPORATION TO BE PROMOTED BY THE MERGER OR CONSOLIDATION, (4) A STATE-
21 MENT OF ALL PROPERTY, AND THE MANNER IN WHICH IT IS HELD, AND OF ALL
22 LIABILITIES AND OF THE AMOUNT AND SOURCES OF THE ANNUAL INCOME OF EACH
23 SUCH CORPORATION, (5) WHETHER ANY VOTES AGAINST ADOPTION OF THE RESOL-
24 UTION APPROVING THE PLAN OF MERGER OR CONSOLIDATION WERE CAST AT THE
25 MEETING AT WHICH THE RESOLUTION WAS ADOPTED BY EACH CONSTITUENT CORPO-
26 RATION, AND (6) FACTS SHOWING THAT THE CONSOLIDATION IS AUTHORIZED BY
27 THE LAWS OF THE JURISDICTIONS UNDER WHICH EACH OF THE CONSTITUENT CORPO-
28 RATIONS IS INCORPORATED.
29 (B) UPON THE FILING OF THE APPLICATION THE COURT SHALL FIX A TIME FOR
30 A HEARING THEREOF AND SHALL DIRECT THAT NOTICE THEREOF BE GIVEN TO SUCH
31 PERSONS AS MAY BE INTERESTED, INCLUDING THE ATTORNEY GENERAL, ANY
32 GOVERNMENTAL BODY OR OFFICER AND ANY OTHER PERSON OR BODY WHOSE CONSENT
33 OR APPROVAL IS REQUIRED BY SECTION 909 (CONSENT TO FILING), IN SUCH FORM
34 AND MANNER AS THE COURT MAY PRESCRIBE. IF NO VOTES AGAINST ADOPTION OF
35 THE RESOLUTION APPROVING THE PLAN OF MERGER OR CONSOLIDATION WERE CAST
36 AT THE MEETING AT WHICH THE RESOLUTION WAS ADOPTED BY ANY CONSTITUENT
37 CORPORATION THE COURT MAY DISPENSE WITH NOTICE TO ANYONE EXCEPT THE
38 ATTORNEY GENERAL, ANY GOVERNMENTAL BODY OR OFFICER AND ANY OTHER PERSON
39 OR BODY WHOSE CONSENT OR APPROVAL IS REQUIRED BY SECTION 909 (CONSENT TO
40 FILING). ANY PERSON INTERESTED MAY APPEAR AND SHOW CAUSE WHY THE APPLI-
41 CATION SHOULD NOT BE GRANTED.
42 (C) IF THE COURT SHALL FIND THAT ANY OF THE ASSETS OF ANY OF THE
43 CONSTITUENT CORPORATIONS ARE HELD FOR A CHARITABLE PURPOSE OR ARE LEGAL-
44 LY REQUIRED TO BE USED FOR A PARTICULAR PURPOSE, BUT NOT UPON A CONDI-
45 TION REQUIRING RETURN, TRANSFER OR CONVEYANCE BY REASON OF THE MERGER OR
46 CONSOLIDATION, THE COURT MAY, IN ITS DISCRETION, DIRECT THAT SUCH ASSETS
47 BE TRANSFERRED OR CONVEYED TO THE SURVIVING OR CONSOLIDATED CORPORATION
48 SUBJECT TO SUCH PURPOSE OR USE, OR THAT SUCH ASSETS BE TRANSFERRED OR
49 CONVEYED TO THE SURVIVING OR CONSOLIDATED CORPORATION OR TO ONE OR MORE
50 OTHER DOMESTIC OR FOREIGN CORPORATIONS OR ORGANIZATIONS ENGAGED IN
51 SUBSTANTIALLY SIMILAR ACTIVITIES, UPON AN EXPRESS TRUST THE TERMS OF
52 WHICH SHALL BE APPROVED BY THE COURT.
53 (D) IF THE COURT SHALL FIND THAT THE INTERESTS OF NON-CONSENTING
54 MEMBERS ARE OR MAY BE SUBSTANTIALLY PREJUDICED BY THE PROPOSED MERGER OR
55 CONSOLIDATION, THE COURT MAY DISAPPROVE THE PLAN OR MAY DIRECT A MODIFI-
56 CATION THEREOF. IN THE EVENT OF A MODIFICATION, IF THE COURT SHALL FIND
A. 7772 34
1 THAT THE INTERESTS OF ANY MEMBERS MAY BE SUBSTANTIALLY PREJUDICED BY THE
2 PROPOSED MERGER OR CONSOLIDATION AS MODIFIED, THE COURT SHALL DIRECT
3 THAT THE MODIFIED PLAN BE SUBMITTED TO VOTE OF THE MEMBERS OF THE
4 CONSTITUENT CORPORATIONS, OR IF THE COURT SHALL FIND THAT THERE IS NOT
5 SUCH SUBSTANTIAL PREJUDICE, IT SHALL APPROVE THE AGREEMENT AS SO MODI-
6 FIED WITHOUT FURTHER APPROVAL BY THE MEMBERS. IF THE COURT, UPON DIRECT-
7 ING A MODIFICATION OF THE PLAN OF MERGER OR CONSOLIDATION, SHALL DIRECT
8 THAT A FURTHER APPROVAL BE OBTAINED FROM MEMBERS OF THE CONSTITUENT
9 CORPORATIONS OR ANY OF THEM, SUCH FURTHER APPROVAL SHALL BE OBTAINED IN
10 THE MANNER SPECIFIED IN SECTION 903 (APPROVAL OF PLAN) OR PARAGRAPH (B)
11 OF SECTION 906 (MERGER OR CONSOLIDATION OF DOMESTIC AND FOREIGN CORPO-
12 RATIONS).
13 (E) IF IT SHALL APPEAR, TO THE SATISFACTION OF THE COURT, THAT THE
14 PROVISIONS OF THIS SECTION HAVE BEEN COMPLIED WITH, AND THAT THE INTER-
15 ESTS OF THE CONSTITUENT CORPORATIONS AND THE PUBLIC INTEREST WILL NOT BE
16 ADVERSELY AFFECTED BY THE MERGER OR CONSOLIDATION, IT SHALL APPROVE THE
17 MERGER OR CONSOLIDATION UPON SUCH TERMS AND CONDITIONS AS IT MAY
18 PRESCRIBE.
19 (F) A CERTIFIED COPY OF SUCH ORDER SHALL BE ANNEXED TO THE CERTIFICATE
20 OF MERGER OR CONSOLIDATION.
21 S 61. The not-for-profit corporation law is amended by adding a new
22 section 907-b to read as follows:
23 S 907-B. APPLICATION FOR APPROVAL OF THE ATTORNEY GENERAL.
24 (A) IN LIEU OF OBTAINING AN ORDER APPROVING THE PLAN OF MERGER OR
25 CONSOLIDATION AND AUTHORIZING THE FILING OF THE CERTIFICATE, THE CORPO-
26 RATION MAY ALTERNATIVELY MAKE AN APPLICATION TO THE ATTORNEY GENERAL FOR
27 APPROVAL, EXCEPT WHERE THE ATTORNEY GENERAL, IN HIS OR HER DISCRETION,
28 CONCLUDES THAT A COURT SHOULD REVIEW THE APPLICATION AND MAKE A DETERMI-
29 NATION THEREON.
30 (B) THE APPLICATION TO THE ATTORNEY GENERAL SHALL BE MADE BY ALL THE
31 CONSTITUENT CORPORATIONS JOINTLY AND SHALL SET FORTH BY AFFIDAVIT: (I)
32 ALL OF THE INFORMATION REQUIRED TO BE INCLUDED IN AN APPLICATION TO
33 OBTAIN COURT APPROVAL PURSUANT TO SECTION 907-A (APPLICATION FOR
34 APPROVAL OF THE SUPREME COURT), (II) ALL CONSENTS AND APPROVALS REQUIRED
35 BY SECTION 909 (CONSENT TO FILING), AND (III) A STATEMENT AS TO WHETHER
36 ANY PERSONS HAVE RAISED, OR HAVE A REASONABLE BASIS TO RAISE, OBJECTIONS
37 TO THE MERGER OR CONSOLIDATION THAT IS THE SUBJECT OF THE APPLICATION,
38 INCLUDING A STATEMENT SETTING FORTH THE NAMES AND ADDRESSES OF SUCH
39 PERSONS, THE NATURE OF THEIR INTEREST, AND A DESCRIPTION OF THEIR
40 OBJECTIONS.
41 (C) UPON THE FILING OF THE APPLICATION, THE ATTORNEY GENERAL, IN HIS
42 OR HER DISCRETION, MAY DIRECT THAT THE CONSTITUENT CORPORATIONS PROVIDE
43 NOTICE TO SUCH PERSONS AS MAY BE INTERESTED, INCLUDING ANY GOVERNMENTAL
44 BODY OR OFFICER AND ANY OTHER PERSON OR BODY THAT IS REQUIRED EITHER TO
45 GIVE CONSENT OR BE NOTIFIED UNDER SECTION 404 (NOTICES AND CONSENTS) OR
46 SECTION 909 (CONSENT TO FILING). THE CONSTITUENT CORPORATIONS SHALL
47 PROVIDE THE ATTORNEY GENERAL WITH A CERTIFICATION THAT SUCH NOTICE HAS
48 BEEN PROVIDED.
49 (D) IF ANY ASSETS OF ANY OF THE CONSTITUENT CORPORATIONS ARE HELD FOR
50 A CHARITABLE PURPOSE OR ARE ASSETS RECEIVED FOR A SPECIFIC PURPOSE AND
51 LEGALLY REQUIRED TO BE USED FOR A PARTICULAR PURPOSE, BUT NOT UPON A
52 CONDITION REQUIRING RETURN, TRANSFER OR CONVEYANCE BY REASON OF THE
53 MERGER OR CONSOLIDATION, THE ATTORNEY GENERAL MAY, IN HIS OR HER
54 DISCRETION, DIRECT THAT SUCH ASSETS BE TRANSFERRED OR CONVEYED TO THE
55 SURVIVING OR CONSOLIDATED CORPORATION SUBJECT TO SUCH PURPOSE OR USE.
A. 7772 35
1 (E) IF THE ATTORNEY GENERAL SHALL FIND THAT THE INTERESTS OF NON-CON-
2 SENTING MEMBERS ARE OR MAY BE SUBSTANTIALLY PREJUDICED BY THE PROPOSED
3 MERGER OR CONSOLIDATION, THE ATTORNEY GENERAL MAY DISAPPROVE OF THE
4 APPLICATION OR MAY CONDITION APPROVAL OF THE APPLICATION UPON MODIFICA-
5 TION OF THE PLAN OF MERGER OR CONSOLIDATION IN ACCORDANCE WITH THIS
6 CHAPTER AND ANY OTHER LAW OR RULE.
7 (F) IF IT SHALL APPEAR, TO THE SATISFACTION OF THE ATTORNEY GENERAL,
8 THAT THE PROVISIONS OF THIS SECTION HAVE BEEN COMPLIED WITH, AND THAT
9 THE INTERESTS OF THE CONSTITUENT CORPORATIONS AND THE PUBLIC INTEREST
10 WILL NOT BE ADVERSELY AFFECTED BY THE MERGER OR CONSOLIDATION, THE
11 ATTORNEY GENERAL SHALL APPROVE THE MERGER OR CONSOLIDATION UPON SUCH
12 TERMS AND CONDITIONS AS IT MAY PRESCRIBE.
13 (G) THE APPROVAL OF THE ATTORNEY GENERAL SHALL BE ANNEXED TO THE
14 CERTIFICATE OF MERGER OR CONSOLIDATION.
15 (H) IF THE ATTORNEY GENERAL DOES NOT APPROVE THE APPLICATION, OR IF
16 THE ATTORNEY GENERAL CONCLUDES THAT COURT REVIEW IS APPROPRIATE, THE
17 CONSTITUENT CORPORATIONS MAY SEEK COURT APPROVAL ON NOTICE TO THE ATTOR-
18 NEY GENERAL PURSUANT TO SECTION 907-A (APPLICATION FOR APPROVAL OF THE
19 SUPREME COURT).
20 S 62. Paragraphs (a) and (f) of section 908 of the not-for-profit
21 corporation law are amended to read as follows:
22 (a) One or more domestic or foreign corporations which is, or would be
23 if formed under this chapter, BENEFICENT CORPORATION, OR ANY CORPORATION
24 FORMED AS a type A or type C corporation [under section 201 (Purposes)]
25 PRIOR TO JANUARY FIRST, TWO THOUSAND FOURTEEN, may be merged or consol-
26 idated into a domestic or foreign corporation which is, or would be if
27 formed under the laws of this state, a corporation formed under the
28 business corporation law of this state if such merger or consolidation
29 is not contrary to the law of the state of incorporation of any constit-
30 uent corporation. With respect to such merger or consolidation, any
31 reference in paragraph (b) of section 901 (POWER OF MERGER OR CONSOL-
32 IDATION) of this article or paragraph (b) of section 901 (POWER OF MERG-
33 ER OR CONSOLIDATION) of the business corporation law to a corporation
34 shall, unless the context otherwise requires, include both domestic and
35 foreign corporations.
36 (f) Where any constituent corporation is, or would be if formed under
37 this chapter, a [Type C] CHARITABLE corporation [under section 201
38 (Purposes)], no certificate shall be filed pursuant to this section
39 until an order approving the plan of merger or consolidation and author-
40 izing the filing of the certificate has been made by the supreme court,
41 as provided in section 907 (Approval by the supreme court).
42 S 63. Section 909 of the not-for-profit corporation law, as amended by
43 section 6 of part D of chapter 58 of the laws of 2006, is amended to
44 read as follows:
45 S 909. Consent to filing AND NOTICES.
46 If the purposes of any constituent or consolidated corporation would
47 require the approval or consent of any governmental body or officer or
48 any other person or body under section 404 ([Approvals] NOTICES and
49 consents) no certificate of merger or consolidation shall be filed
50 pursuant to this article unless such approval or consent is endorsed
51 thereon or annexed thereto. A corporation whose statement of purposes
52 specifically includes the establishment or operation of a child day care
53 center, as that term is defined in section three hundred ninety of the
54 social services law, shall [provide] SEND BY CERTIFIED MAIL, RETURN
55 RECEIPT REQUESTED, a certified copy of any certificate of merger or
56 consolidation involving such corporation to the office of children and
A. 7772 36
1 family services within thirty days after the filing of such merger or
2 consolidation with the department of state. IF THE PURPOSES OF ANY
3 CONSTITUENT OR CONSOLIDATED CORPORATION WOULD REQUIRE NOTICE TO ANY
4 GOVERNMENTAL BODY OR OFFICER OR ANY OTHER PERSON OR ENTITY UNDER SECTION
5 404 (NOTICES AND CONSENTS), A CERTIFIED COPY OF THE CERTIFICATE OF MERG-
6 ER OR CONSOLIDATION SHALL BE SENT, CERTIFIED MAIL, RETURN RECEIPT
7 REQUESTED, TO THE GOVERNMENTAL BODY OR OFFICER OR ANY OTHER PERSON OR
8 ENTITY IMMEDIATELY AFTER THE FILING OF SUCH MERGER OR CONSOLIDATION BY
9 THE DEPARTMENT OF STATE.
10 S 64. Paragraphs (b), (c) and (d) of section 1001 of the not-for-pro-
11 fit corporation law, as amended by chapter 434 of the laws of 2006, are
12 amended to read as follows:
13 (b) If the corporation is a [Type B, C or D corporation and] has no
14 assets to distribute and no liabilities at the time of dissolution, the
15 plan of dissolution shall include a statement to that effect.
16 (c) If the corporation [is a Type B, C or D corporation and] has no
17 assets to distribute, other than a reserve not to exceed twenty-five
18 thousand dollars for the purpose of paying ordinary and necessary
19 expenses of winding up its affairs including attorney and accountant
20 fees, and liabilities not in excess of ten thousand dollars at the time
21 of adoption of the plan of dissolution, the plan of dissolution shall
22 include a statement to that effect.
23 (d) If the corporation has assets to distribute or liabilities, the
24 plan of dissolution shall contain:
25 (1) a description with reasonable certainty of the assets of the
26 corporation and their fair value, and the total amount of debts and
27 other liabilities incurred or estimated by the corporation, including
28 the total amount of any accounting and legal fees incurred or estimated,
29 in connection with the dissolution procedure.
30 (2) a statement as to whether any gifts or other assets are legally
31 required to be used for a particular purpose.
32 (3) if there are assets received and held by the corporation either
33 for a CHARITABLE CORPORATION OR BENEFICENT CORPORATION purpose [speci-
34 fied as Type B in paragraph (b) of section 201 (Purposes)] or which are
35 legally required to be used for a particular purpose, a statement that
36 the assets owned by the corporation, subject to any unpaid liabilities
37 of the corporation, shall be distributed as required by any gift instru-
38 ment or to a charitable CORPORATION OR organization or organizations OR
39 A BENEFICENT CORPORATION exempt from taxation pursuant to federal and
40 state laws and engaged in activities substantially similar to those of
41 the dissolved corporation. Each such recipient organization shall be
42 identified and the governing instrument and amendments thereto of each
43 of the proposed recipient organizations shall be annexed to such state-
44 ment, along with the financial reports of each recipient organization
45 for the last three years and a sworn affidavit from a director and offi-
46 cer of each recipient organization stating the purposes of the organiza-
47 tion, and that it is currently exempt from federal income taxation.
48 (4) if any of the assets of the corporation are to be distributed to a
49 recipient for a particular legally required purpose, an agreement by the
50 recipient to apply the assets received only for such purpose shall be
51 included.
52 S 65. Paragraphs (a), (c) and (d) of section 1002 of the not-for-pro-
53 fit corporation law, as amended by chapter 434 of the laws of 2006, are
54 amended to read as follows:
55 (a) Upon adopting a plan of dissolution and distribution of assets,
56 the board shall submit it to a vote of the members, if any, and such
A. 7772 37
1 plan shall be approved at a meeting of members by two-thirds vote as
2 provided in paragraph (c) of section 613 (Vote of members) OF THIS CHAP-
3 TER; provided, however, that if the corporation is a [Type B, C or D]
4 corporation, other than a corporation incorporated pursuant to article
5 15 (Public cemetery corporations), and has no assets to distribute, OR
6 NO ASSETS TO DISTRIBUTE other than a reserve not to exceed twenty-five
7 thousand dollars for the purpose of paying ordinary and necessary
8 expenses of winding up its affairs including attorney and accountant
9 fees, and liabilities not in excess of ten thousand dollars at the time
10 of adoption of the plan of dissolution, the vote required by the corpo-
11 ration's board of directors for adoption of the plan of dissolution of
12 such a corporation or by the corporation's members for the authorization
13 thereof shall be:
14 (1) In the case of a vote by the board of directors: (i) the number of
15 directors required under the certificate of incorporation, by-laws, this
16 chapter and any other applicable law; or
17 (ii) if the number of directors actually holding office as such at the
18 time of the vote to adopt the plan is less than the number required to
19 constitute a quorum of directors under the certificate of incorporation,
20 the by-laws, this chapter or any other applicable law, the remaining
21 directors unanimously;
22 (2) In the case of a vote by the members, (i) the number of members
23 required under the certificate of incorporation, by-laws, this chapter
24 and any other applicable law; or (ii) by the vote of members authorized
25 by an order of the supreme court pursuant to section 608 (QUORUM AT
26 MEETING OF MEMBERS) of this chapter permitting the corporation to
27 dispense with the applicable quorum requirement.
28 Notice of a special or regular meeting of the board of directors or of
29 the members entitled to vote on adoption and authorization or approval
30 of the plan of dissolution shall be sent to all the directors and
31 members of record entitled to vote. Unless otherwise directed by order
32 of the supreme court pursuant to section 608 (QUORUM AT MEETING OF
33 MEMBERS) of this chapter, the notice shall be sent by certified mail,
34 return receipt requested, to the last known address of record of each
35 director and member not fewer than thirty, and not more than sixty days
36 before the date of each meeting provided, however, that if the last
37 known address of record of any director or member is not within the
38 United States, the notice to such director shall be sent by any other
39 reasonable means.
40 (c) [Whenever] EXCEPT IN THE CASE OF A CORPORATION WITH NO ASSETS TO
41 DISTRIBUTE OR WITH NO ASSETS NOT TO EXCEED TWENTY-FIVE THOUSAND DOLLARS
42 AND LIABILITIES NOT IN EXCESS OF TEN THOUSAND DOLLARS, WHENEVER a stat-
43 ute creating, or authorizing the formation of, a corporation requires
44 approval by a governmental body or officer for the formation of such
45 corporation, dissolution shall not be authorized without the approval of
46 such body or officer.
47 (d) (1) The plan of dissolution and distribution of assets shall have
48 annexed thereto the approval of THE ATTORNEY GENERAL OR a justice of the
49 supreme court in the judicial district in which the office of the corpo-
50 ration is located in the case of a Type B, C or D corporation, and in
51 the case of any other corporation which holds assets at the time of
52 dissolution legally required to be used for a particular purpose, except
53 that no such approval shall be required with respect to the plan of
54 dissolution of a corporation, other than a corporation incorporated
55 pursuant to article 15 (Public cemetery corporations), which has no
56 assets to distribute at the time of dissolution, OR NO ASSETS TO
A. 7772 38
1 DISTRIBUTE other than a reserve not to exceed twenty-five thousand
2 dollars for the purpose of paying ordinary and necessary expenses of
3 winding up its affairs including attorney and accountant fees, and
4 liabilities not in excess of ten thousand dollars, and which has
5 complied with the requirements of section 1001 (Plan of dissolution and
6 distribution of assets) and this section applicable to such a corpo-
7 ration.
8 (2) APPLICATION TO THE ATTORNEY GENERAL FOR SUCH APPROVAL SHALL BE BY
9 VERIFIED PETITION, WITH THE PLAN OF DISSOLUTION AND DISTRIBUTION OF
10 ASSETS AND CERTIFIED COPIES OF THE CONSENTS PRESCRIBED BY THIS SECTION
11 ANNEXED THERETO. THE ATTORNEY GENERAL MAY APPROVE THE PETITION IF THE
12 CORPORATION HAS ADOPTED A PLAN IN ACCORDANCE WITH THE REQUIREMENTS OF
13 SECTION 1001 (PLAN OF DISSOLUTION AND DISTRIBUTION OF ASSETS) OF THIS
14 ARTICLE, AND ANY OTHER REQUIREMENTS IMPOSED BY LAW OR RULE. IF THE
15 ATTORNEY GENERAL DOES NOT APPROVE THE PETITION, OR IF THE ATTORNEY
16 GENERAL CONCLUDES THAT COURT REVIEW IS APPROPRIATE, THE PETITIONER MAY
17 SEEK COURT APPROVAL UPON TEN DAYS WRITTEN NOTICE TO THE ATTORNEY GENER-
18 AL.
19 (3) Application to the supreme court for an order for such approval
20 shall be by verified petition, with the plan of dissolution and distrib-
21 ution of assets and certified copies of the consents prescribed by this
22 section annexed thereto, and upon ten days written notice to the attor-
23 ney general accompanied by copies of such petition, plan and consents.
24 (4) In such case where approval of a justice of the supreme court OR
25 THE ATTORNEY GENERAL is not required [for a Type B, C or D corporation],
26 a copy of such plan certified under penalties of perjury shall be filed
27 with the attorney general within ten days after its authorization.
28 S 66. Paragraphs (a) and (c) of section 1002-a of the not-for-profit
29 corporation law as amended by chapter 434 of the laws of 2006, is
30 amended to read as follows:
31 (a) Carry out the plan of dissolution and distribution of assets, pay
32 its liabilities and distribute its assets in accordance therewith within
33 two hundred seventy days from the date the plan of dissolution and
34 distribution of assets shall have been (1) authorized as provided in
35 section 1002 of this article (Authorization of plan), (2) approved by
36 any governmental body or officer whose approval is required pursuant to
37 paragraph (c) of section 1002 of this article, and (3) approved by
38 EITHER THE ATTORNEY GENERAL OR a justice of the supreme court, if such
39 approval is required pursuant to paragraph (d) of section 1002 of this
40 article, or filed with the attorney general, if such filing is required
41 pursuant to paragraph (d) of section 1002 of this article. Evidence of
42 the disposition of its assets and payment of its liabilities pursuant to
43 the plan of dissolution and distribution of assets shall be submitted by
44 the corporation to the attorney general and any other governmental body
45 or officer, as required under applicable laws. If the plan of dissol-
46 ution and distribution of assets cannot be carried out within the
47 prescribed time, the attorney general may upon good cause shown extend
48 such time, or any extended period of time, by not fewer than thirty days
49 nor more than one year;
50 (c) Distribute the assets of the corporation that remain after paying
51 or adequately providing for the payment of its liabilities, in the
52 following manner:
53 (1) assets received and held by the corporation [either for a purpose
54 specified as Type B in paragraph (b) of section 201 (Purposes)] or which
55 are legally required to be used for a particular purpose, shall be
56 distributed to one or more [domestic or foreign] CHARITABLE
A. 7772 39
1 corporations, BENEFICENT CORPORATIONS or other organizations engaged in
2 activities substantially similar to those of the dissolved corporation
3 pursuant to the plan of dissolution and distribution or, if applicable,
4 as ordered by the court to which such plan is submitted for approval
5 under section 1002 (Authorization of plan). Any disposition of assets
6 contained in a will or other instrument, in trust or otherwise, made
7 before or after the dissolution, to or for the benefit of any corpo-
8 ration so dissolved shall inure to or for the benefit of the corporation
9 or organization acquiring such assets of the dissolved corporation as
10 provided in this section, and so far as is necessary for that purpose
11 the corporation or organization acquiring such disposition shall be
12 deemed a successor to the dissolved corporation with respect to such
13 assets; provided, however, that such disposition shall be devoted by the
14 acquiring corporation or organization to the purposes intended by the
15 testator, donor or grantor.
16 (2) assets other than those described by subparagraph one of this
17 paragraph, if any, shall be distributed in accordance with the specifi-
18 cations of the plan of dissolution and distribution of assets or, to the
19 extent that the certificate of incorporation prescribes the distributive
20 rights of members, or of any class or classes of members, as provided in
21 such certificate;
22 S 67. Paragraphs (a) and (b) of section 1003 of the not-for-profit
23 corporation law, as amended by chapter 434 of the laws of 2006, are
24 amended to read as follows:
25 (a) After the plan of dissolution and distribution of assets has been
26 adopted, authorized, approved and carried out pursuant to the terms of
27 the plan within the time period set forth pursuant to section 1002-a
28 (Carrying out the plan of dissolution and distribution of assets), a
29 certificate of dissolution, entitled "Certificate of dissolution
30 of ........ (name of corporation) under section 1003 of the Not-for-Pro-
31 fit Corporation Law" shall be signed and, if required pursuant to
32 subparagraph two of paragraph (b) of this section, after the attorney
33 general has affixed thereon his or her consent to the dissolution, such
34 certificate of dissolution shall be delivered to the department of
35 state. It shall set forth:
36 (1) The name of the corporation and, if its name has been changed, the
37 name under which it was formed.
38 (2) The date its certificate of incorporation was filed by the depart-
39 ment of state.
40 (3) The name and address of each of its officers and directors.
41 (4) The type of corporation it is at the time of dissolution.
42 (5) A statement as to whether or not the corporation holds assets at
43 the time of authorization of its plan of dissolution and distribution of
44 assets as provided in section 1002 of this article (Authorization of
45 plan) which are legally required to be used for a particular purpose.
46 (6) That the corporation elects to dissolve.
47 (7) The manner in which the dissolution was authorized. If the dissol-
48 ution of the corporation is authorized by a vote of the directors and/or
49 members of the corporation that is less than that ordinarily required by
50 the certificate of incorporation, the by-laws, this chapter or any other
51 applicable law, as permitted by paragraph (a) of section 1002 (Authori-
52 zation of plan), then the certificate of dissolution shall so state.
53 (8) A statement that prior to delivery of such certificate of dissol-
54 ution to the department of state for filing, the plan of dissolution and
55 distribution of assets has been approved by EITHER THE ATTORNEY GENERAL
56 OR a justice of the supreme court, if such approval is required. A copy
A. 7772 40
1 of the order shall be attached to the certificate of dissolution. In the
2 case of a corporation, other than a corporation incorporated pursuant to
3 article 15 (Public cemetery corporations), having no assets to distrib-
4 ute, OR HAVING NO ASSETS TO DISTRIBUTE other than a reserve not to
5 exceed twenty-five thousand dollars for the purpose of paying ordinary
6 and necessary expenses of winding up its affairs including attorney and
7 accountant fees, and liabilities not in excess of ten thousand dollars
8 at the time of dissolution, a statement that a copy of the plan of
9 dissolution which contains the statement prescribed by paragraph (b) of
10 section 1001 (Plan of dissolution and distribution of assets) has been
11 duly filed with the attorney general, if required.
12 (b) Such certificate of dissolution shall have indorsed thereon or
13 annexed thereto the approval of the dissolution:
14 (1) By a governmental body or officer, if such approval is required. A
15 corporation whose statement of purposes specifically includes the estab-
16 lishment or operation of a child day care center, as that term is
17 defined in section three hundred ninety of the social services law,
18 shall provide a certified copy of any certificate of dissolution involv-
19 ing such corporation to the office of children and family services with-
20 in thirty days after the filing of such dissolution with the department
21 of state.
22 (2) By the attorney general in the case of a [Type B, C or D] CHARITA-
23 BLE corporation, or any other corporation that holds assets at the time
24 of dissolution legally required to be used for a particular purpose.
25 S 68. Paragraph (a) of section 1007 of the not-for-profit corporation
26 law, as amended by chapter 434 of the laws of 2006, is amended to read
27 as follows:
28 (a) At any time after the plan of dissolution and distribution of
29 assets shall have been (1) authorized as provided in section 1002 of
30 this article (Authorization of plan), (2) approved by any governmental
31 body or officer whose approval is required pursuant to paragraph (c) of
32 section 1002 of this article, and (3) approved by EITHER BY THE ATTORNEY
33 GENERAL OR a justice of the supreme court, if such approval is required
34 pursuant to paragraph (d) of section 1002 of this article, or filed with
35 the attorney general, if such filing is required pursuant to paragraph
36 (d) of section 1002 of this article, and prior to filing the certificate
37 of dissolution, the corporation may give a notice requiring all credi-
38 tors and claimants, including any with unliquidated or contingent claims
39 and any with whom the corporation has unfulfilled contracts, to present
40 their claims in writing and in detail at a specified place and by a
41 specified day, which shall not be less than six months after the first
42 publication of such notice. Such notice shall be published at least once
43 a week for two successive weeks in a newspaper of general circulation in
44 the county in which the office of the corporation was located at the
45 date of authorization of its plan of dissolution and distribution of
46 assets as provided in section 1002 of this article (Authorization of
47 plan). On or before the date of the first publication OR POSTING ON A
48 WEBSITE of such notice, the corporation shall mail a copy thereof, post-
49 age prepaid, to each person believed to be a creditor of or claimant
50 against the corporation whose current name and address are known to or
51 can with due diligence be ascertained by the corporation. The giving of
52 such notice shall not constitute a recognition that any person is a
53 proper creditor or claimant, and shall not revive or make valid, or
54 operate as a recognition of the validity of, or a waiver of any defense
55 or counterclaim in respect of any claim against the corporation, its
56 assets, directors, officers or members, which has been barred by any
A. 7772 41
1 statute of limitations or become invalid by any cause, or in respect of
2 which the corporation, its directors, officers or members, has any
3 defense or counterclaim.
4 S 69. Subparagraph 15 of paragraph (a) of section 1008 of the not-for-
5 profit corporation law, as amended by chapter 434 of the laws of 2006,
6 is amended to read as follows:
7 (15) Where assets were received and held by the corporation either for
8 a CHARITABLE CORPORATION OR A BENEFICENT CORPORATION purpose [specified
9 as Type B in paragraph (b) of section 201 (Purposes),] or were legally
10 required to be used for a particular purpose, the distribution of such
11 assets to one or more [domestic or foreign] CHARITABLE corporations,
12 BENEFICENT CORPORATIONS or other organizations engaged in activities
13 substantially similar to those of the dissolved corporation, on notice
14 to the attorney general and to such other persons, and in such manner,
15 as the court may deem proper.
16 S 70. Paragraph (a) of section 1010 of the not-for-profit corporation
17 law is amended to read as follows:
18 [(a)] At any time prior to the filing of a certificate of dissolution
19 by the department of state, a corporation may revoke the action taken to
20 dissolve the corporation in the following manner:
21 (1) If there are members entitled to vote thereon:
22 (A) Unless the certificate of incorporation dispenses with dissol-
23 ution action by the board, the board shall adopt a resolution recommend-
24 ing that the voluntary dissolution proceedings be revoked and directing
25 submission of the proposed revocation to a vote of the members entitled
26 to vote thereon.
27 (B) Revocation of the voluntary dissolution proceedings shall be
28 authorized by two-thirds vote as provided in paragraph (c) of section
29 613 (Vote of members).
30 (2) If there are no members entitled to vote thereon, revocation of
31 the voluntary dissolution proceedings shall be authorized by the vote of
32 a majority of the directors then in office.
33 (3) If approval of the dissolution of a corporation by a governmental
34 body or officer is required, as provided in paragraph (c) of section
35 1002 (Authorization of plan), and such approval has been given, revoca-
36 tion of the voluntary dissolution proceedings shall not be authorized
37 without approval thereof by such body or officer.
38 S 71. Subparagraph 6 of paragraph (a) of section 1012 of the not-for
39 profit corporation law, as amended by chapter 726 of the laws of 2005,
40 is amended to read as follows:
41 (6) That[, under section 201 (Purposes),] it is a [Type .............
42 (Insert A, B, C or D)] CHARITABLE OR BENEFICENT not-for-profit corpo-
43 ration.
44 S 72. Subparagraph 1 of paragraph (a) of section 1207 of the not-for-
45 profit corporation law, clause (C) as amended by chapter 847 of the laws
46 of 1970, is amended to read as follows:
47 (1) To give immediate notice of his appointment by publication once a
48 week for two successive weeks in two newspapers of general circulation
49 in the county where the office of the corporation is located or, in the
50 case of a foreign corporation against which an action has been brought
51 under subparagraph [(a)] (4) OF PARAGRAPH (A) of section 1202 (Appoint-
52 ment of receiver of property of a domestic or foreign corporation) OF
53 THIS ARTICLE EITHER, AS DIRECTED BY THE COURT, in a newspaper of general
54 circulation [as directed by the court,] OR POSTED PROMINENTLY AND
55 CONTINUOUSLY FOR TWO SUCCESSIVE WEEKS ON THE HOMEPAGE OF ANY WEBSITE
56 MAINTAINED BY THE CORPORATION OR requiring:
A. 7772 42
1 (A) All persons indebted to the corporation to render an account of
2 all debts owing by them to the corporation and to pay the same to the
3 receiver at a specified place and by a specified day.
4 (B) All persons having in their possession any property of the corpo-
5 ration to deliver the same to the receiver at the specified place and by
6 the specified day.
7 (C) All creditors and claimants, including any with unliquidated or
8 contingent claims and any with whom the corporation has unfulfilled
9 contracts, to present their claims to the receiver in writing and in
10 detail at a specified place and by a specified day, which shall not be
11 less than six months after the first publication of such notice. When-
12 ever a receiver is appointed in dissolution proceedings under article 10
13 (Non-judicial dissolution) or article 11 (Judicial dissolution), section
14 1007 (Notice to creditors BY CORPORATIONS INTENDING TO DISSOLVE; filing
15 or barring claims) shall apply and shall control the giving of notice to
16 creditors and claimants and the filing and barring of claims.
17 S 73. Paragraph (a) of section 1211 of the not-for-profit corporation
18 law is amended to read as follows:
19 (a) If there remains property of the corporation after the first
20 distribution, the receiver shall, within one year thereafter, make a
21 final distribution among the creditors entitled thereto. Notice that
22 such distribution will be the final distribution to creditors shall be
23 published once a week for two consecutive weeks in a newspaper of gener-
24 al circulation in the county where the office of the corporation is
25 located OR POSTED PROMINENTLY AND CONTINUOUSLY FOR TWO CONSECUTIVE WEEKS
26 ON THE HOMEPAGE OF ANY WEBSITE MAINTAINED BY THE CORPORATION.
27 S 74. Paragraph (b) of section 1215 of the not-for-profit corporation
28 law is amended to read as follows:
29 (b) The petition shall be accompanied by a verified account of all
30 the assets of the corporation received by him, of all payments or other
31 disposition thereof made by him, of the remaining assets of the corpo-
32 ration in respect to which he was appointed receiver and the situation
33 of the same, and of all his transactions as receiver. Thereupon, the
34 court shall grant an order directing notice to be given to the sureties
35 on his official bond and to all persons interested in the property of
36 the corporation to show cause, at a time and place specified, why the
37 receiver should not be permitted to resign. Such notice shall EITHER,
38 AS DIRECTED BY THE COURT, be published once in each week for six succes-
39 sive weeks in one or more newspapers [as the court shall direct] OR
40 POSTED PROMINENTLY AND CONTINUOUSLY FOR SIX SUCCESSIVE WEEKS ON THE
41 HOMEPAGE OF ANY WEBSITE MAINTAINED BY THE CORPORATION. If it shall
42 appear that the proceedings of the receiver in the discharge of his
43 trust have been fair and honest and that there is no good cause to the
44 contrary, the court shall make an order permitting such receiver to
45 resign. Thereupon he shall be discharged and his powers as receiver
46 shall cease, but he shall remain subject to any liability incurred prior
47 to the making of such order. The court, in its discretion, may require
48 the expense of such proceeding to be paid by the receiver presenting the
49 petition.
50 S 75. Subparagraph 3 of paragraph (a) of section 1218 of the not-for-
51 profit corporation law is amended to read as follows:
52 (3) The order directing service of the summons shall require the
53 publication thereof EITHER in a newspaper published in the state of New
54 York in the English language at least once a week for four successive
55 weeks, OR POSTED PROMINENTLY AND CONTINUOUSLY FOR FOUR SUCCESSIVE WEEKS
56 ON ANY APPROPRIATE WEBSITE, and shall also require the mailing on or
A. 7772 43
1 before the date of the first publication of a copy of the summons,
2 complaint and order to the corporation at its last known principal or
3 head office in the state or country of its incorporation.
4 S 76. Section 1302 of the not-for-profit corporation law, as amended
5 by chapter 847 of the laws of 1970, is amended to read as follows:
6 S 1302. Application to existing authorized foreign corporations.
7 Every foreign corporation which on the effective date of this chapter
8 is authorized to conduct activities in this state under a certificate of
9 authority heretofore issued to it by the secretary of state shall
10 continue to have such authority. Such foreign corporation, its members,
11 directors, and officers shall have the same rights, franchises, and
12 privileges and shall be subject to the same limitations, restrictions,
13 liabilities, and penalties as a foreign corporation authorized under
14 this chapter, its members, directors, and officers respectively. A
15 foreign corporation may by amendment to its certificate of authority set
16 forth [the type of] WHETHER IT IS A CHARITABLE corporation [it is under
17 section 201 (Purposes);] OR A BENEFICENT CORPORATION and in the absence
18 of such amendment an authorized foreign corporation shall be a [Type B]
19 CHARITABLE corporation. Reference in this chapter to an application for
20 authority shall, unless the context otherwise requires, include the
21 statement and designation and any amendment thereof required to be filed
22 by the secretary of state under prior statutes to obtain a certificate
23 of authority.
24 S 77. Subparagraph 4 of paragraph (a) of section 1304 of the not-for-
25 profit corporation law, as amended by chapter 847 of the laws of 1970
26 and as renumbered by chapter 590 of the laws of 1982, is amended to read
27 as follows:
28 (4) That the corporation is a foreign corporation as defined in
29 subparagraph [(a)] (7) OF PARAGRAPH (A) of section 102 (Definitions)[;
30 the type of] OF THIS CHAPTER, WHETHER IT WOULD BE A CHARITABLE corpo-
31 ration [it shall be under section 201 (Purposes); a statement] OR A
32 BENEFICENT CORPORATION IF FORMED IN THIS STATE; A STATEMENT of its
33 purposes to be pursued in this state and of the activities which it
34 proposes to conduct in this state; AND a statement that it is authorized
35 to conduct those activities in the jurisdiction of its incorporation[;
36 and in the case of a Type C corporation, the lawful public or quasi-
37 public objective which each business purpose will achieve].
38 S 78. Paragraph (c) of section 1304 of the not-for-profit corporation
39 law is amended to read as follows:
40 (c) If the application for authority sets forth any purpose or activ-
41 ity for which a domestic corporation could be formed only with the
42 consent or approval of any governmental body or officer, or other person
43 or body under section 404 ([Approvals] NOTICES and consents), such
44 consent or approval shall be endorsed thereon or annexed thereto. IF THE
45 APPLICATION FOR AUTHORITY SETS FORTH ANY PURPOSE OR ACTIVITY REQUIRING A
46 DOMESTIC CORPORATION TO PROVIDE NOTICE OF THE FILING OF A CERTIFICATE OF
47 INCORPORATION TO ANY GOVERNMENT BODY OR OFFICER OR OTHER ENTITY UNDER
48 SECTION 404 (NOTICES AND CONSENTS) OF THIS CHAPTER, THEN THE CORPORATION
49 SHALL SEND BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, A CERTIFIED COPY
50 OF THE CERTIFICATE OF AUTHORITY TO SUCH PERSON OR ENTITY IMMEDIATELY
51 AFTER FILING THE CERTIFICATE OF AUTHORITY BY THE DEPARTMENT OF STATE.
52 S 79. Subparagraph 1 of paragraph (a) of section 1309 of the not-for-
53 profit corporation law, as amended by chapter 186 of the laws of 1983,
54 is amended to read as follows:
55 (1) The name of the foreign corporation as it appears on the index of
56 names of existing domestic and authorized foreign corporations of any
A. 7772 44
1 [type or] kind in the department of state and the fictitious name the
2 corporation has agreed to use in this state pursuant to paragraph (d) of
3 section 1301 of this chapter.
4 S 80. Subparagraph 1 of paragraph (b) of section 1310 of the not-for-
5 profit corporation law, as amended by chapter 186 of the laws of 1983,
6 is amended to read as follows:
7 (1) The name of the foreign corporation as it appears on the index of
8 names of existing domestic and authorized foreign corporations of any
9 [type or] kind in the department of state and the fictitious name the
10 corporation has agreed to use in this state pursuant to paragraph (d) of
11 section 1301 of this chapter.
12 S 81. Subparagraph 1 of paragraph (a) of section 1311 of the not-for-
13 profit corporation law, as amended by chapter 186 of the laws of 1983,
14 is amended to read as follows:
15 (1) The name of the foreign corporation as it appears on the index of
16 names of existing domestic and authorized foreign corporations of any
17 [type or] kind in the department of state and the fictitious name the
18 corporation has agreed to use in this state pursuant to paragraph (d) of
19 section 1301 of this chapter.
20 S 82. Paragraphs (a) and (b) of section 1315 of the not-for-profit
21 corporation law, subparagraph 5 of paragraph (b) as amended by chapter
22 847 of the laws of 1970, are amended to read as follows:
23 (a) An action or special proceeding against a foreign corporation may
24 be maintained by a resident of this state or by a domestic corporation
25 of any [type or] kind for any cause of action.
26 (b) Except as otherwise provided in this article, an action or special
27 proceeding against a foreign corporation may be maintained by another
28 foreign corporation of any [type or] kind or by a nonresident in the
29 following cases only:
30 (1) Where the action is brought to recover damages for the breach of a
31 contract made or to be performed within this state, or relating to prop-
32 erty situated within this state at the time of the making of the
33 contract.
34 (2) Where the subject matter of the litigation is situated within this
35 state.
36 (3) Where the cause of action arose within this state, except where
37 the object of the action or special proceeding is to affect the title of
38 real property situated outside this state.
39 (4) Where, in any case not included in the preceding subparagraphs, a
40 non-domiciliary would be subject to the personal jurisdiction of the
41 courts of this state under section [302] THREE HUNDRED TWO of the civil
42 practice law and rules.
43 (5) Where the defendant is a foreign corporation conducting activities
44 or authorized to conduct activities in this state.
45 S 83. Paragraph (b) of section 1316 of the not-for-profit corporation
46 law is amended to read as follows:
47 (b) An examination authorized by paragraph (a) may be denied to such
48 member or other person upon his refusal to furnish to the foreign corpo-
49 ration or its transfer agent or registrar an affidavit that such
50 inspection is not desired for a purpose which is in the interests of a
51 business or object other than the activities of the foreign corporation
52 and that such member or other person has not within five years sold or
53 offered for sale any list or record of members of any corporation of any
54 [type or] kind, whether or not formed under the laws of this state, or
55 aided or abetted any person in procuring any such list or record of
56 members for any such purpose.
A. 7772 45
1 S 84. Paragraph (a) of section 1321 of the not-for-profit corporation
2 law, subparagraphs 1, 2 and 3 as amended by chapter 847 of the laws of
3 1970, is amended to read as follows:
4 (a) Notwithstanding any other provision of this chapter, a foreign
5 corporation conducting activities in this state which is authorized
6 under this article, its directors, officers and members, shall be exempt
7 from the provisions of paragraph (e) of section 1317 (Voting trust
8 records), subparagraph [(a)] (1) OF PARAGRAPH (A) of section 1318
9 (Liabilities of directors and officers of foreign corporations), and
10 subparagraph [(a)] (2) OF PARAGRAPH (A) of section 1320 (Applicability
11 of other provisions) if when such provision would otherwise apply:
12 (1) The corporation is a [Type A] BENEFICENT corporation under this
13 chapter; its principal activities are conducted outside this state; the
14 greater part of its property is located outside this state; and less
15 than one third of its members are residents of this state; or
16 (2) The corporation is a [Type B] CHARITABLE corporation under this
17 chapter; its principal activities are conducted outside this state; the
18 greater part of its property is located outside this state; and less
19 than ten per cent of its annual revenues is derived from solicitation of
20 funds within this state[; or
21 (3) The corporation is a Type C corporation under this chapter; its
22 principal activities are conducted outside this state; the greater part
23 of its property is located outside this state; and less than one half of
24 its revenues for the preceding three fiscal years, or such portion ther-
25 eof as the foreign corporation was in existence, was derived from sourc-
26 es within this state].
27 S 85. Paragraph (d) of section 1401 of the not-for-profit corporation
28 law, as added by chapter 871 of the laws of 1977, is amended to read as
29 follows:
30 (d) Type of corporation. A family or private cemetery corporation is a
31 [type B] CHARITABLE corporation under this chapter.
32 S 86. Paragraph (b) of section 1402 of the not-for-profit corporation
33 law is amended to read as follows:
34 (b) Type of corporation.
35 A fire corporation is a [Type B] CHARITABLE corporation under this
36 chapter.
37 S 87. Paragraph (c) of section 1403 of the not-for-profit corporation
38 law is amended to read as follows:
39 (c) Type of corporation. A corporation for the prevention of cruelty
40 is a [Type B] CHARITABLE corporation under this chapter.
41 S 88. Paragraph (b) of section 1404 of the not-for-profit corporation
42 law, as amended by chapter 1058 of the laws of 1971, is amended to read
43 as follows:
44 (b) Type of corporation.
45 A christian association is a [Type B] CHARITABLE corporation under
46 this chapter.
47 S 89. Paragraph (b) of section 1405 of the not-for-profit corporation
48 law is amended to read as follows:
49 (b) Type of corporation.
50 A soldiers' monument corporation is a [Type B] CHARITABLE corporation.
51 S 90. Paragraph (b) of section 1406 of the not-for-profit corporation
52 law is amended to read as follows:
53 (b) Type of corporation.
54 A medical society is a [Type A] BENEFICENT corporation under this
55 chapter.
A. 7772 46
1 S 91. Paragraph (b) of section 1407 of the not-for-profit corporation
2 law is amended to read as follows:
3 (b) Type of corporation.
4 An alumni corporation is a [Type A] BENEFICENT corporation.
5 S 92. Paragraph (b) of section 1408 of the not-for-profit corporation
6 law is amended to read as follows:
7 (b) Type of corporation.
8 An historical society is a [Type B] CHARITABLE corporation under this
9 chapter.
10 S 93. Paragraph (b) of section 1409 of the not-for-profit corporation
11 law, as amended by chapter 1058 of the laws of 1971, is amended to read
12 as follows:
13 (b) Type of corporation.
14 An agricultural or horticultural corporation is a [Type A] BENEFICENT
15 corporation under this chapter, except that any such corporation which
16 has received moneys from the state or has acted as agent for the state
17 under paragraph (c) OF THIS SECTION, or has acquired or does acquire
18 real property by condemnation is or becomes a [Type B] CHARITABLE corpo-
19 ration under this chapter. [If such corporation has not already filed as
20 a Type B corporation it shall, upon such receipt of moneys or acting as
21 such agent or such acquisition of real property by condemnation, amend
22 its certificate to that effect.]
23 S 94. Paragraph (b) of section 1410 of the not-for-profit corporation
24 law is amended to read as follows:
25 (b) Type of corporation.
26 A board of trade or a chamber of commerce is a [Type A] BENEFICENT
27 corporation under this chapter.
28 S 95. Paragraph (b) of section 1411 of the not-for-profit corporation
29 law is amended to read as follows:
30 (b) Type of corporation. A local development corporation is a [Type
31 C] CHARITABLE corporation under this chapter.
32 S 96. Paragraph (d) of section 1412 of the not-for-profit corporation
33 law, as added by chapter 555 of the laws of 1993, is amended to read as
34 follows:
35 (d) Type. A university faculty practice corporation is a [Type B]
36 CHARITABLE corporation under this chapter.
37 S 97. Paragraph (c) of section 1505 of the not-for-profit corporation
38 law, as added by chapter 871 of the laws of 1977, is amended to read as
39 follows:
40 (c) Type of corporation. A cemetery corporation is a [Type B] CHARI-
41 TABLE corporation under this chapter.
42 S 98. Paragraph (b) of section 1602 of the not-for-profit corporation
43 law, as added by chapter 257 of the laws of 2011, is amended to read as
44 follows:
45 (b) "land bank" shall mean a land bank established as a [type C not-
46 for-profit] CHARITABLE corporation under this chapter and in accordance
47 with the provisions of this article and pursuant to this article;
48 S 99. Paragraph (f) of section 1603 of the not-for-profit corporation
49 law, as added by chapter 257 of the laws of 2011, is amended to read as
50 follows:
51 (f) Each land bank created pursuant to this act shall be a [type C
52 not-for-profit] CHARITABLE corporation, and shall have permanent and
53 perpetual duration until terminated and dissolved in accordance with the
54 provisions of section sixteen hundred thirteen of this article.
A. 7772 47
1 S 100. The opening paragraph of paragraph (a) of section 1607 of the
2 not-for-profit corporation law, as added by chapter 257 of the laws of
3 2011, is amended to read as follows:
4 A land bank shall constitute a [type C not-for-profit] CHARITABLE
5 corporation under New York law, which powers shall include all powers
6 necessary to carry out and effectuate the purposes and provisions of
7 this article, including the following powers in addition to those herein
8 otherwise granted:
9 S 101. Paragraph (e) of section 1611 of the not-for-profit corporation
10 law, as added by chapter 257 of the laws of 2011, is amended to read as
11 follows:
12 (e) Bonds issued by the land bank shall be issued, sold, and delivered
13 in accordance with the terms and provisions of a resolution adopted by
14 the board. The board may sell such bonds in such manner, either at
15 public or at private sale, and for such price as it may determine to be
16 in the best interests of the land bank. The resolution issuing bonds
17 shall be published in a newspaper of general circulation within the
18 jurisdiction of the land bank AND POSTED PROMINENTLY AND CONTINUOUSLY ON
19 THE HOMEPAGE OF ANY WEBSITE MAINTAINED BY THE LAND BANK.
20 S 102. Section 1613 of the not-for-profit corporation law, as added by
21 chapter 257 of the laws of 2011, is amended to read as follows:
22 S 1613. Dissolution of land bank.
23 A land bank may be dissolved as a [type C not-for-profit] CHARITABLE
24 corporation sixty calendar days after an affirmative resolution approved
25 by two-thirds of the membership of the board of directors. Sixty calen-
26 dar days advance written notice of consideration of a resolution of
27 dissolution shall be given to the foreclosing governmental unit or units
28 that created the land bank, shall be published in a local newspaper of
29 general circulation, and POSTED PROMINENTLY AND CONTINUOUSLY ON THE
30 HOMEPAGE OF ANY WEBSITE MAINTAINED BY THE LAND BANK, AND shall be sent
31 certified mail to the trustee of any outstanding bonds of the land bank.
32 Upon dissolution of the land bank all real property, personal property
33 and other assets of the land bank shall become the assets of the fore-
34 closing governmental unit or units that created the land bank. In the
35 event that two or more foreclosing governmental units create a land bank
36 in accordance with section [sixteen hundred three] 1603 of this article,
37 the withdrawal of one or more foreclosing governmental units shall not
38 result in the dissolution of the land bank unless the intergovernmental
39 agreement so provides, and there is no foreclosing governmental unit
40 that desires to continue the existence of the land bank.
41 S 103. Paragraph (h) of section 8-1.4 of the estates, powers and
42 trusts law, as amended by chapter 43 of the laws of 2002, is amended to
43 read as follows:
44 (h) The attorney general shall make rules and regulations necessary
45 for the administration of this section, including rules and regulations
46 as to the time for filing reports, the contents thereof, and [the] ANY
47 manner of executing and filing them, INCLUDING BUT NOT LIMITED TO ALLOW-
48 ING OR REQUIRING ANY SUBMISSION TO THE ATTORNEY GENERAL TO BE EFFECTED
49 BY ELECTRONIC MEANS AND ELECTRONIC SIGNATURES. He or she may classify
50 trusts, estates, corporations and other trustees as to purpose, nature
51 of assets, duration, amount of assets, amounts to be devoted to charita-
52 ble purposes, or otherwise, and may establish different rules for
53 different classes as to time and nature of the reports required, to the
54 ends that he or she shall receive current financial reports as to all
55 such trusts, estates, corporations or other trustees which will enable
56 him or her to ascertain whether they are being properly administered.
A. 7772 48
1 The attorney general may suspend the filing of financial reports as to a
2 particular trustee for a reasonable, specifically designated time upon
3 written application of the trustee, signed under penalties for perjury,
4 and filed with the attorney general and after the attorney general has
5 filed in the register of trustees a written statement that the interests
6 of the beneficiaries will not be prejudiced thereby and that periodic
7 reports during the term of such suspension are not required for proper
8 supervision by his or her office. The filing of the financial reports
9 required by this section, or the exemption from such filing or the
10 suspension therefrom, shall not have the effect of absolving trustees
11 from any responsibility for accounting for property or income held by
12 them for charitable purposes. A copy of an account or other financial
13 report filed by a trustee in any court in this state, if the account or
14 other financial report substantially complies with the rules and regu-
15 lations of the attorney general, may be filed as a financial report
16 under this section.
17 S 104. Paragraph (b-1) of section 8-1.8 of the estates, powers and
18 trusts law is REPEALED.
19 S 105. The estates, powers and trusts law is amended by adding a new
20 section 8-1.9 to read as follows:
21 S 8-1.9 TRUST GOVERNANCE
22 (A) FOR PURPOSES OF THIS SECTION:
23 (1) A "TRUST" MEANS A TRUST CREATED SOLELY FOR CHARITABLE PURPOSES, OR
24 A TRUST THAT CONTINUES SOLELY FOR SUCH PURPOSES AFTER ALL NON-CHARITABLE
25 INTERESTS HAVE TERMINATED.
26 (2) "CHARITABLE PURPOSE" MEANS ANY RELIGIOUS, CHARITABLE EDUCATIONAL
27 OR BENEVOLENT PURPOSE.
28 (3) "KEY EMPLOYEE" MEANS ANY PERSON WHO HAS RESPONSIBILITIES, POWERS
29 OR INFLUENCE OVER THE TRUST SIMILAR TO THOSE OF AN OFFICER OF A
30 NOT-FOR-PROFIT CORPORATION, OR IS OTHERWISE IN A POSITION TO EXERCISE
31 SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE TRUST, AS DEFINED IN
32 SECTION 4958(F)(1)(A) OF THE INTERNAL REVENUE CODE OF 1986 AS AMENDED,
33 AND THE REGULATIONS THEREUNDER, AND ANY SUCCESSOR LAW OR REGULATION.
34 (4) AN "AFFILIATE" OF A TRUST MEANS ANY ENTITY CONTROLLED BY, IN
35 CONTROL OF, OR UNDER COMMON CONTROL WITH SUCH TRUST.
36 (5) "RELATIVE" OF AN INDIVIDUAL MEANS THE (I) SPOUSE, ANCESTOR, CHIL-
37 DREN, GRANDCHILDREN, GREAT GRANDCHILDREN, BROTHER OR SISTER (WHETHER BY
38 THE WHOLE- OR HALF-BLOOD) OF THE INDIVIDUAL; AND (II) THE SPOUSES OF
39 CHILDREN, GRANDCHILDREN, GREAT GRANDCHILDREN, BROTHER, OR SISTER (WHETH-
40 ER BY THE WHOLE- OR HALF-BLOOD) OF THE INDIVIDUAL.
41 (6) "RELATED PARTY" MEANS (I) ANY TRUSTEE OR KEY EMPLOYEE OF THE TRUST
42 OR ANY AFFILIATE OF THE TRUST;
43 (II) ANY RELATIVE OF ANY TRUSTEE OR KEY EMPLOYEE OF THE TRUST OR ANY
44 AFFILIATE OF THE TRUST; OR (III) AN ENTITY IN WHICH ANY INDIVIDUAL
45 DESCRIBED IN CLAUSES (I) AND (II) OF THIS SUBPARAGRAPH HAS A THIRTY-
46 FIVE PERCENT OR GREATER OWNERSHIP OR BENEFICIAL INTEREST.
47 (7) "INDEPENDENT TRUSTEE" MEANS A TRUSTEE WHO IN THE PAST THREE YEARS:
48 (I) WAS NOT EMPLOYED BY, AND DID NOT HAVE A RELATIVE WHO WAS EMPLOYED
49 BY, THE TRUST OR AN AFFILIATE OF THE TRUST; (II) WAS NOT EMPLOYED BY,
50 AND DOES NOT HAVE A RELATIVE WHO WAS EMPLOYED BY, ANY ENTITY THAT MADE
51 PAYMENTS TO, OR RECEIVED PAYMENTS FROM, THE TRUST OR ANY AFFILIATE OF
52 THE TRUST FOR GOODS, PROPERTY OR SERVICES EXCEEDING TEN THOUSAND
53 DOLLARS; (III) HAS NOT HAD, AND DOES NOT HAVE A RELATIVE WHO HAS HAD, A
54 MATERIAL FINANCIAL INTEREST IN ANY ENTITY THAT MADE PAYMENTS TO, OR
55 RECEIVED PAYMENTS FROM, THE TRUST OR ANY AFFILIATE OF THE TRUST FOR
56 GOODS, PROPERTY OR SERVICES EXCEEDING TEN THOUSAND DOLLARS; AND (IV) HAS
A. 7772 49
1 NOT RECEIVED, AND DOES NOT HAVE ANY RELATIVE WHO HAS RECEIVED, ANY OTHER
2 COMPENSATION, PAYMENT OR BENEFIT HAVING MONETARY VALUE FROM THE TRUST OR
3 ANY AFFILIATE OF THE TRUST, OTHER THAN REIMBURSEMENT FOR EXPENSES OR THE
4 PAYMENT OF TRUSTEE COMMISSIONS OR OTHER TRUSTEE COMPENSATION AS PERMIT-
5 TED BY LAW AND THE GOVERNING INSTRUMENT.
6 (8) "RELATED PARTY TRANSACTION" MEANS ANY TRANSACTION, AGREEMENT OR
7 ANY OTHER ARRANGEMENT IN WHICH A RELATED PARTY HAS A FINANCIAL INTEREST
8 AND IN WHICH THE TRUST OR ANY AFFILIATE OF THE TRUST IS A PARTICIPANT.
9 (9) "INDEPENDENT AUDITOR" MEANS ANY CERTIFIED PUBLIC ACCOUNTANT
10 PERFORMING THE AUDIT OF THE FINANCIAL STATEMENTS OF A TRUST REQUIRED BY
11 SUBDIVISION ONE OF SECTION ONE HUNDRED SEVENTY-TWO-B OF THE EXECUTIVE
12 LAW.
13 (B)(1) EVERY TRUST REQUIRED TO FILE AN INDEPENDENT CERTIFIED PUBLIC
14 ACCOUNTANT'S AUDIT REPORT WITH THE ATTORNEY GENERAL PURSUANT TO SUBDIVI-
15 SION ONE OF SECTION ONE HUNDRED SEVENTY-TWO-B OF THE EXECUTIVE LAW AND
16 THIS CHAPTER SHALL DESIGNATE AN AUDIT COMMITTEE, CONSISTING OF ONE OR
17 MORE INDEPENDENT TRUSTEES, FOR THE PURPOSE OF OVERSEEING THE ACCOUNTING
18 AND FINANCIAL REPORTING PROCESSES OF THE TRUST AND THE INDEPENDENT
19 CERTIFIED PUBLIC ACCOUNTANT'S AUDIT OF THE TRUST'S FINANCIAL STATEMENTS.
20 AN AUDIT COMMITTEE THAT IS NOT MADE UP OF ALL TRUSTEES SHALL BE OVERSEEN
21 BY AND BE RESPONSIBLE TO THE TRUSTEES. IF A TRUST REQUIRED TO HAVE AN
22 AUDIT COMMITTEE PURSUANT TO THIS PARAGRAPH IS UNDER THE CONTROL OF
23 ANOTHER TRUST OR CORPORATION, THE AUDIT COMMITTEE FUNCTION MAY BE
24 CONDUCTED BY THE TRUSTEES OR THE BOARD OF DIRECTORS OF THE CONTROLLING
25 TRUST OR CORPORATION.
26 (2) THE AUDIT COMMITTEE SHALL, AT A MINIMUM:
27 (I) RETAIN AND EVALUATE THE INDEPENDENT AUDITOR, WHICH SHALL REPORT
28 DIRECTLY TO THE AUDIT COMMITTEE;
29 (II) REVIEW WITH THE INDEPENDENT AUDITOR THE SCOPE AND PLANNING OF THE
30 AUDIT;
31 (III) REVIEW AND DISCUSS WITH THE INDEPENDENT AUDITOR, AT A MINIMUM:
32 (A) THE RESULTS OF ANY AUDIT, INCLUDING BUT NOT LIMITED TO: THE MANAGE-
33 MENT LETTER TO THE TRUST AND ANY MATERIAL RISKS AND WEAKNESSES IN INTER-
34 NAL CONTROLS IDENTIFIED BY THE AUDITOR; (B) ANY RESTRICTIONS ON THE
35 SCOPE OF THE AUDITOR'S ACTIVITIES OR ACCESS TO REQUESTED INFORMATION;
36 (C) ANY SIGNIFICANT DISAGREEMENTS BETWEEN THE AUDITOR AND MANAGEMENT;
37 AND (D) THE ADEQUACY AND PERFORMANCE OF THE TRUST'S ACCOUNTING FUNCTION.
38 (IV) CONSIDER AT LEAST ANNUALLY THE PERFORMANCE AND INDEPENDENCE OF
39 THE INDEPENDENT AUDITOR;
40 (V) OVERSEE ADOPTION, IMPLEMENTATION OF AND COMPLIANCE WITH ANY
41 CONFLICT OF INTEREST POLICY ADOPTED BY THE TRUST PURSUANT TO PARAGRAPH
42 (F) OF THIS SECTION, AND IF APPLICABLE, ANY WHISTLEBLOWER POLICY, IF
43 THIS FUNCTION IS NOT OTHERWISE PERFORMED BY ANOTHER COMMITTEE COMPRISED
44 SOLELY OF INDEPENDENT TRUSTEES; AND
45 (VI) REPORT ITS ACTIVITIES TO THE TRUSTEES AT LEAST ANNUALLY.
46 (3) THE AUDIT COMMITTEE SHALL ADOPT A CHARTER THAT SHALL STATE ITS
47 AUTHORITY AND RESPONSIBILITIES, INCLUDING THOSE PRESCRIBED BY THIS PARA-
48 GRAPH, AND THAT SHALL STATE THE SIZE, COMPOSITION AND FUNCTIONING OF THE
49 AUDIT COMMITTEE.
50 (C)(1) FOR PURPOSES OF THIS PARAGRAPH, "TOTAL COMPENSATION" MEANS (1)
51 ANY COMPENSATION, WHETHER PAID OR ACCRUED, BY OR ON BEHALF OF THE TRUST
52 OR ANY AFFILIATE OF THE TRUST, INCLUDING BUT NOT LIMITED TO SALARY,
53 BONUS, AND DEFERRED COMPENSATION, AND (2) ANY BENEFIT HAVING MONETARY
54 VALUE PROVIDED BY THE TRUST OR ON BEHALF OF THE TRUST OR ANY AFFILIATE
55 OF THE TRUST, INCLUDING BUT NOT LIMITED TO HOUSING ALLOWANCES, LIVING
A. 7772 50
1 EXPENSES, PERQUISITES, FRINGE BENEFITS, EMPLOYER CONTRIBUTIONS TO
2 DEFINED CONTRIBUTION RETIREMENT PLANS AND OTHER RETIREMENT BENEFITS.
3 (2) THE TOTAL COMPENSATION PAID BY A TRUST TO ANY EMPLOYEE OF THE
4 TRUST SHALL BE FAIR, REASONABLE AND COMMENSURATE WITH SERVICES THE
5 EMPLOYEE PROVIDES TO THE TRUST.
6 (3) NO EMPLOYEE OR OTHER INDIVIDUAL WHO MAY BENEFIT FROM COMPENSATION
7 OR BENEFITS PROVIDED BY THE TRUST MAY BE PRESENT AT OR OTHERWISE PARTIC-
8 IPATE IN TRUSTEE OR COMMITTEE DELIBERATION OR VOTE CONCERNING SUCH
9 COMPENSATION OR BENEFITS.
10 (4) EVERY TRUST THAT IS REQUIRED TO BE REGISTERED WITH THE ATTORNEY
11 GENERAL UNDER ARTICLE SEVEN-A OF THE EXECUTIVE LAW AND THIS CHAPTER AND
12 THAT IN THE PRIOR FISCAL YEAR HAD ANNUAL REVENUES IN EXCESS OF TWO
13 MILLION DOLLARS SHALL DESIGNATE A COMPENSATION COMMITTEE OF THE TRUSTEES
14 TO OVERSEE EXECUTIVE COMPENSATION PROGRAMS AND RELATED PRACTICES OF THE
15 TRUST. (I) THE COMPENSATION COMMITTEE SHALL BE COMPRISED OF ONE OR MORE
16 INDEPENDENT TRUSTEES. IF A TRUST CONTROLS ONE OR MORE TRUSTS OR CORPO-
17 RATIONS, THE COMPENSATION COMMITTEE OF THE CONTROLLING TRUST MAY BE
18 DEEMED TO BE THE COMPENSATION COMMITTEE FOR ITS CONTROLLED ENTITIES.
19 (II) THE COMPENSATION COMMITTEE SHALL:
20 (A) REVIEW THE TOTAL COMPENSATION PAID TO THE TRUST'S OFFICERS AND ITS
21 FIVE HIGHEST-COMPENSATED KEY EMPLOYEES. (B) AFFIRMATIVELY DETERMINE THAT
22 THE TOTAL COMPENSATION PAID TO ANY SUCH INDIVIDUAL IS FAIR, REASONABLE
23 AND COMMENSURATE WITH SERVICES PROVIDED TO THE TRUST. IN MAKING THIS
24 DETERMINATION, THE COMPENSATION COMMITTEE SHALL AT A MINIMUM CONSIDER
25 THE FOLLOWING FACTORS: 1. THE TOTAL COMPENSATION PROVIDED TO THE INDI-
26 VIDUAL; 2. RELEVANT BENCHMARK DATA ON THE TOTAL COMPENSATION PAID TO
27 INDIVIDUALS SERVING IN SIMILAR POSITIONS AT TRUSTS OR CORPORATIONS OF
28 SIMILAR SIZE, TYPE, PURPOSE, AND SCOPE; 3. THE INDIVIDUAL'S QUALIFICA-
29 TIONS AND PERFORMANCE; 4. COMPENSATION, PAYMENTS OR ANY OTHER BENEFITS
30 PROVIDED TO THE INDIVIDUAL FROM ANY AFFILIATE OF THE TRUST; AND 5. THE
31 OVERALL FINANCIAL CONDITION OF THE TRUST. (C) MAKE AND KEEP A CONTEMPO-
32 RANEOUS WRITTEN RECORD DESCRIBING THE BASIS FOR ITS DETERMINATION,
33 INCLUDING ITS ANALYSIS OF THE FACTORS SET FORTH IN THIS PARAGRAPH AND
34 HOW ANY RELEVANT DATA WAS OBTAINED AND USED. (D) APPROVE BY NOT LESS
35 THAN A MAJORITY VOTE THE TOTAL COMPENSATION PAID TO EACH SUCH INDIVID-
36 UAL.
37 (D) IF THE COMPENSATION COMMITTEE IS COMPRISED OF FEWER THAN ALL OF
38 THE INDEPENDENT TRUSTEES, THEN: (1) THE COMPENSATION COMMITTEE SHALL
39 RECOMMEND TO ALL OF THE INDEPENDENT TRUSTEES FOR THEIR APPROVAL THE
40 TOTAL COMPENSATION OF EACH INDIVIDUAL THAT THE COMMITTEE HAS AFFIRMA-
41 TIVELY DETERMINED IS FAIR, REASONABLE, AND COMMENSURATE WITH SERVICES
42 PROVIDED TO THE TRUST, AND INCLUDE THEREWITH THE WRITTEN RECORD OF ITS
43 DETERMINATION CREATED PURSUANT TO SUBPARAGRAPH THREE OF THIS PARAGRAPH;
44 (2) UPON REVIEW OF THE RECOMMENDATIONS OF THE COMPENSATION COMMITTEE,
45 THE TRUSTEES SHALL APPROVE BY NOT LESS THAN A MAJORITY VOTE OF THE INDE-
46 PENDENT TRUSTEES THE TOTAL COMPENSATION OF EACH SUCH INDIVIDUAL, WITH
47 ONLY INDEPENDENT TRUSTEES PARTICIPATING IN ANY SUCH VOTE AND ANY
48 DISCUSSION RELATING THERETO; AND (3) THE INDEPENDENT TRUSTEES SHALL KEEP
49 A CONTEMPORANEOUS WRITTEN RECORD OF THE BASIS OF ITS DETERMINATION,
50 INCLUDING AREAS OF AGREEMENT OR DISAGREEMENT WITH THE RECOMMENDATIONS OF
51 THE COMPENSATION COMMITTEE. (4) THE COMPENSATION COMMITTEE MAY RETAIN A
52 COMPENSATION CONSULTANT TO ASSIST IN THE PERFORMANCE OF ITS RESPONSIBIL-
53 ITIES. THE COMPENSATION COMMITTEE SHALL BE DIRECTLY RESPONSIBLE FOR THE
54 APPOINTMENT, COMPENSATION AND OVERSIGHT OF THE WORK OF SUCH CONSULTANT,
55 AND ANY SUCH CONSULTANT SHALL REPORT DIRECTLY TO THE COMPENSATION
56 COMMITTEE. THE COMPENSATION COMMITTEE SHALL, AMONG ITS RESPONSIBILITIES,
A. 7772 51
1 APPROVE THE COMPENSATION PEER GROUP THAT THE COMPENSATION CONSULTANT
2 RECOMMENDS BE USED TO DEVELOP BENCHMARK DATA. (I) PRIOR TO RETAINING ANY
3 SUCH CONSULTANT, THE COMPENSATION COMMITTEE SHALL DETERMINE THAT THE
4 CONSULTANT IS INDEPENDENT AND QUALIFIED TO RENDER ADVICE TO THE TRUST
5 CONCERNING COMPENSATION; PROVIDED THAT NO CONSULTANT MAY BE DETERMINED
6 INDEPENDENT IF SUCH CONSULTANT OR ANY FIRM THAT EMPLOYS SUCH CONSULTANT
7 HAS (A) RECEIVED DIRECTLY OR INDIRECTLY ANY PAYMENT, FEE OR OTHER
8 COMPENSATION FROM THE TRUST OR ANY AFFILIATE OF THE TRUST WITHIN THE
9 PRECEDING TWO YEARS, OTHER THAN REASONABLE AMOUNTS PAID FOR COMPENSATION
10 CONSULTING SERVICES, OR (B) ANY BUSINESS OR PERSONAL RELATIONSHIP WITH
11 THE TRUST OR ANY AFFILIATE OF THE TRUST, OR ANY OF ITS OR THEIR OFFI-
12 CERS, DIRECTORS OR EMPLOYEES, THAT MAY INTERFERE WITH THE ABILITY OF THE
13 CONSULTANT TO PROVIDE OBJECTIVE ADVICE TO THE COMMITTEE. (II) NOTHING IN
14 THIS SUBPARAGRAPH SHALL BE CONSTRUED TO (A) REQUIRE THE COMPENSATION
15 COMMITTEE TO IMPLEMENT OR ACT CONSISTENTLY WITH THE ADVICE OR RECOMMEN-
16 DATIONS PROVIDED BY THE COMPENSATION CONSULTANT TO THE COMPENSATION
17 COMMITTEE; OR (B) AFFECT THE ABILITY OR OBLIGATION OF MEMBERS OF THE
18 COMPENSATION COMMITTEE TO EXERCISE THEIR OWN JUDGMENT IN FULFILLMENT OF
19 THEIR DUTIES TO THE TRUST AND ITS BENEFICIARIES. (5) THE COMPENSATION
20 COMMITTEE SHALL ADOPT A CHARTER SETTING FORTH ITS RESPONSIBILITIES,
21 INCLUDING AS PRESCRIBED BY THIS PARAGRAPH, AS WELL AS REQUIREMENTS
22 CONCERNING THE SIZE, COMPOSITION AND FUNCTIONING OF THE COMPENSATION
23 COMMITTEE.
24 (E) (1) NOTWITHSTANDING ANY PROVISION IN THE TRUST INSTRUMENT TO THE
25 CONTRARY, NO TRUST SHALL ENTER INTO A RELATED PARTY TRANSACTION, UNLESS:
26 (I) THE MATERIAL FACTS AS TO THE RELATED PARTY'S INTEREST IN, AND
27 RELATIONSHIP TO, THE TRANSACTION ARE DISCLOSED IN GOOD FAITH TO THE
28 TRUSTEES; (II) THE TRUSTEES: (A) CONSIDER ALTERNATIVE TRANSACTIONS TO
29 THE EXTENT AVAILABLE AND UPON REASONABLE DILIGENCE DETERMINE THAT SUCH
30 ALTERNATIVE TRANSACTIONS WOULD NOT BE MORE ADVANTAGEOUS TO THE TRUST AND
31 ITS BENEFICIARIES UNDER THE CIRCUMSTANCES; (B) DETERMINE BY A TWO-THIRDS
32 VOTE OF THE TRUSTEES THAT THE RELATED PARTY TRANSACTION IS FAIR, REASON-
33 ABLE AND IN THE BEST INTERESTS OF THE TRUST AND ITS BENEFICIARIES AND
34 APPROVE SUCH TRANSACTION, AND THE RELATED PARTY WITH AN INTEREST IN THE
35 TRANSACTION IS NOT PRESENT AT AND OTHERWISE DOES NOT OTHERWISE PARTIC-
36 IPATE IN ANY DELIBERATION OR VOTING RELATING THERETO; AND (C) CONTEMPO-
37 RANEOUSLY DOCUMENT IN WRITING THE BASIS FOR THEIR DETERMINATION AND
38 APPROVAL OF THE TRANSACTION. THIS SUBPARAGRAPH SHALL NOT APPLY TO ANY
39 COMPENSATION REVIEWED AND APPROVED IN ACCORDANCE WITH SUBPARAGRAPH FOUR
40 OF PARAGRAPH (C) OF THIS SECTION.
41 (2) THE TRUST INSTRUMENT, BYLAWS OR CONFLICT OF INTEREST POLICY OF THE
42 TRUST MAY CONTAIN ADDITIONAL RESTRICTIONS ON RELATED PARTY TRANSACTIONS
43 AND ADDITIONAL PROCEDURES NECESSARY FOR THE REVIEW OR APPROVAL OF SUCH
44 TRANSACTIONS, OR PROVIDE THAT ANY TRANSACTIONS IN VIOLATION OF SUCH
45 RESTRICTIONS SHALL BE VOID OR VOIDABLE.
46 (3) ANY TRUSTEE OR KEY EMPLOYEE WHO HAS AN INTEREST IN A RELATED PARTY
47 TRANSACTION SHALL, PRIOR TO THE TRUSTEES' CONSIDERATION OF THE PROPOSED
48 TRANSACTION, DISCLOSE IN GOOD FAITH TO THE TRUSTEES THE MATERIAL FACTS
49 AS TO SUCH PERSON'S INTEREST IN, AND RELATIONSHIP TO, THE TRANSACTION.
50 THE TRUSTEES SHALL ADOPT AND IMPLEMENT PROCEDURES FOR THE TIMELY DISCLO-
51 SURE OF SUCH FACTS TO THE TRUSTEES.
52 (4) THE ATTORNEY GENERAL MAY BRING AN ACTION TO ENJOIN, VOID OR
53 RESCIND ANY RELATED PARTY TRANSACTION OR A PROPOSED RELATED PARTY TRANS-
54 ACTION THAT VIOLATES ANY LAW OR IS OTHERWISE NOT FAIR, REASONABLE, OR IN
55 THE BEST INTERESTS OF THE TRUST OR ITS BENEFICIARIES, OR TO SEEK OTHER
56 RELIEF, INCLUDING BUT NOT LIMITED TO DAMAGES, RESTITUTION, THE REMOVAL
A. 7772 52
1 OF TRUSTEES, OR SEEK TO REQUIRE ANY PERSON OR ENTITY TO: (I) ACCOUNT
2 FOR ANY PROFITS MADE FROM SUCH TRANSACTION, AND PAY THEM TO THE TRUST;
3 (II) PAY THE TRUST THE VALUE OF THE USE OF ANY OF ITS PROPERTY OR OTHER
4 ASSETS USED IN SUCH TRANSACTION; (III) RETURN OR REPLACE ANY PROPERTY OR
5 OTHER ASSETS LOST TO THE TRUST AS A RESULT OF SUCH TRANSACTION, TOGETHER
6 WITH ANY INCOME OR APPRECIATION LOST TO THE TRUST BY REASON OF SUCH
7 TRANSACTION, OR ACCOUNT FOR ANY PROCEEDS OF SALE OF SUCH PROPERTY, AND
8 PAY THE PROCEEDS TO THE TRUST TOGETHER WITH INTEREST AT THE LEGAL RATE;
9 AND (IV) PAY, IN THE CASE OF WILLFUL CONDUCT, AN AMOUNT UP TO DOUBLE THE
10 AMOUNT OF ANY BENEFIT IMPROPERLY OBTAINED.
11 (5) THE POWERS AND DUTIES OF THE ATTORNEY GENERAL PROVIDED IN THIS
12 PARAGRAPH ARE IN ADDITION TO ALL OTHER POWERS AND DUTIES THE ATTORNEY
13 GENERAL MAY HAVE UNDER THIS CHAPTER OR ANY OTHER LAW.
14 (F)(1) EVERY TRUST SHALL ADOPT A CONFLICT OF INTEREST POLICY TO ENSURE
15 THAT ITS TRUSTEES AND KEY EMPLOYEES ACT IN THE BEST INTEREST OF THE
16 TRUST AND ITS BENEFICIARIES AND COMPLY WITH APPLICABLE LEGAL REQUIRE-
17 MENTS, INCLUDING BUT NOT LIMITED TO THE REQUIREMENTS SET FORTH IN PARA-
18 GRAPH (D) OF THIS SECTION.
19 (2) THE CONFLICT OF INTEREST POLICY SHALL INCLUDE, AT A MINIMUM, THE
20 FOLLOWING PROVISIONS:
21 (I) A DEFINITION OF THE CIRCUMSTANCES THAT CONSTITUTE A CONFLICT OF
22 INTEREST; (II) PROCEDURES FOR DISCLOSING A CONFLICT OF INTEREST TO THE
23 AUDIT COMMITTEE OR, IF THERE IS NO AUDIT COMMITTEE, TO THE TRUSTEES;
24 (III) A REQUIREMENT THAT THE PERSON WITH THE CONFLICT OF INTEREST NOT BE
25 PRESENT AT OR PARTICIPATE IN ANY DELIBERATION OR VOTE ON THE MATTER
26 GIVING RISE TO SUCH CONFLICT; (IV) A PROHIBITION AGAINST ANY ATTEMPT BY
27 THE PERSON WITH THE CONFLICT TO INFLUENCE THE DELIBERATION OR VOTING ON
28 THE MATTER GIVING RISE TO SUCH CONFLICT; (V) A REQUIREMENT THAT THE
29 EXISTENCE AND RESOLUTION OF THE CONFLICT BE DOCUMENTED IN THE TRUST'S
30 RECORDS, INCLUDING IN THE MINUTES OF ANY MEETING AT WHICH THE CONFLICT
31 WAS DISCUSSED OR VOTED UPON; AND (VI) PROCEDURES FOR DISCLOSING,
32 ADDRESSING, AND DOCUMENTING RELATED PARTY TRANSACTIONS IN ACCORDANCE
33 WITH PARAGRAPH (D) OF THIS SECTION.
34 (3) THE CONFLICT OF INTEREST POLICY SHALL REQUIRE THAT PRIOR TO A
35 TRUSTEE'S INITIAL APPOINTMENT, AND ANNUALLY THEREAFTER, SUCH TRUSTEE
36 SHALL COMPLETE, SIGN AND FILE WITH THE RECORDS OF THE TRUST A WRITTEN
37 STATEMENT IDENTIFYING ANY ENTITY OF WHICH HE OR SHE IS AN OFFICER,
38 DIRECTOR, TRUSTEE, MEMBER, OWNER (EITHER AS A SOLE PROPRIETOR OR A PART-
39 NER), OR EMPLOYEE WITH WHICH THE TRUST HAS, OR MIGHT BE EXPECTED TO
40 HAVE, A RELATIONSHIP OR A TRANSACTION IN WHICH THE TRUSTEE MIGHT HAVE A
41 CONFLICTING INTEREST. THE POLICY SHALL REQUIRE THAT EACH TRUSTEE ANNUAL-
42 LY RESUBMIT SUCH WRITTEN STATEMENT. THE TRUSTEES SHALL PROVIDE A COPY OF
43 ALL COMPLETED STATEMENTS TO THE CHAIR OF THE AUDIT COMMITTEE, IF THERE
44 IS AN AUDIT COMMITTEE.
45 (4) EVERY TRUST REGISTERED OR REQUIRED TO BE REGISTERED PURSUANT TO
46 SECTION ONE HUNDRED SEVENTY-TWO OF THE EXECUTIVE LAW OR SECTION 8-1.4 OF
47 THIS PART SHALL TRANSMIT SUCH POLICIES TO THE ATTORNEY GENERAL IN THE
48 FORM AND MANNER SPECIFIED BY THE ATTORNEY GENERAL, AND SHALL WITHIN
49 THIRTY DAYS OF ANY MATERIAL CHANGE OF THESE POLICIES PROVIDE THE ATTOR-
50 NEY GENERAL WITH THE CHANGED POLICIES.
51 (5) NOTHING IN THIS PARAGRAPH SHALL BE INTERPRETED TO REQUIRE A TRUST
52 TO ADOPT ANY SPECIFIC CONFLICT OF INTEREST POLICY NOT OTHERWISE REQUIRED
53 BY LAW, OR TO SUPERSEDE OR LIMIT ANY REQUIREMENT OR DUTY GOVERNING
54 CONFLICTS OF INTEREST REQUIRED BY ANY OTHER LAW OR RULE.
55 (G)(1) EVERY TRUST THAT HAS TWENTY OR MORE EMPLOYEES AND IN THE PRIOR
56 FISCAL YEAR HAD ANNUAL REVENUE IN EXCESS OF ONE MILLION DOLLARS SHALL
A. 7772 53
1 ADOPT A WHISTLEBLOWER POLICY TO PROTECT FROM RETALIATION PERSONS WHO
2 REPORT SUSPECTED IMPROPER CONDUCT. SUCH POLICY SHALL PROVIDE THAT NO
3 TRUSTEE, EMPLOYEE OR VOLUNTEER OF A TRUST WHO IN GOOD FAITH REPORTS ANY
4 ACTION OR SUSPECTED ACTION TAKEN BY OR WITHIN THE TRUST THAT IS ILLEGAL,
5 FRAUDULENT OR IN VIOLATION OF ANY ADOPTED POLICY OF THE TRUST SHALL
6 SUFFER INTIMIDATION, HARASSMENT, DISCRIMINATION OR OTHER RETALIATION OR,
7 IN THE CASE OF EMPLOYEES, ADVERSE EMPLOYMENT CONSEQUENCE.
8 (2) THE WHISTLEBLOWER POLICY SHALL INCLUDE THE FOLLOWING PROVISIONS:
9 (I) PROCEDURES FOR THE REPORTING OF VIOLATIONS OR SUSPECTED VIOLATIONS
10 OF LAWS OR TRUST POLICIES, INCLUDING PROCEDURES FOR PRESERVING THE
11 CONFIDENTIALITY OF REPORTED INFORMATION;
12 (II) PROCEDURES FOR HANDLING AND INVESTIGATING VIOLATIONS OR SUSPECTED
13 VIOLATIONS OF LAWS OR TRUST POLICIES;
14 (III) A REQUIREMENT THAT A TRUSTEE OR AN EMPLOYEE OF THE TRUST BE
15 DESIGNATED TO ADMINISTER, IMPLEMENT AND OVERSEE COMPLIANCE OF THE WHIS-
16 TLE-BLOWER POLICY AND TO REPORT TO THE AUDIT COMMITTEE OR OTHER COMMIT-
17 TEE OF INDEPENDENT TRUSTEES, OR TO THE TRUSTEES;
18 (IV) A REQUIREMENT THAT ALL DOCUMENTS CONCERNING INFORMATION REPORTED
19 UNDER THE WHISTLEBLOWER POLICY AND ANY INVESTIGATION RELATING THERETO BE
20 RETAINED BY THE TRUST FOR A MINIMUM PERIOD OF SIX YEARS; AND
21 (V) A REQUIREMENT THAT A COPY OF THE POLICY BE DISTRIBUTED TO ALL
22 TRUSTEES, EMPLOYEES AND VOLUNTEERS, WITH INSTRUCTIONS ON HOW TO COMPLY
23 WITH THE PROCEDURES SET FORTH IN THE POLICY.
24 (3) NOTHING IN THIS SECTION SHALL BE INTERPRETED TO RELIEVE ANY TRUST
25 FROM ANY ADDITIONAL REQUIREMENTS IN RELATION TO INTERNAL COMPLIANCE,
26 RETALIATION, OR DOCUMENT RETENTION REQUIRED BY ANY OTHER LAW OR RULE.
27 S 106. Subdivision 2 of section 711 of the surrogate's court procedure
28 act is amended to read as follows:
29 2. Where by reason of his having wasted or improperly applied the
30 assets of the estate, or made investments unauthorized by law or other-
31 wise improvidently managed or injured the property committed to his
32 charge, INCLUDING BY FAILING TO COMPLY WITH SECTION 8-1.9 OF THE
33 ESTATES, POWERS AND TRUSTS LAW, or by reason of other misconduct in the
34 execution of his office or dishonesty, drunkenness, improvidence or want
35 of understanding, he is unfit for the execution of his office.
36 S 107. Section 202 of the racing, pari-mutuel wagering and breeding
37 law, as amended by chapter 18 of the laws of 2008, is amended to read as
38 follows:
39 S 202. Restriction upon commencement of business. No business corpo-
40 ration organized under the provisions of this article shall engage in
41 the prosecution or management of its business until the whole of its
42 capital stock shall have been subscribed, nor until it shall have filed
43 in the offices where certificates of incorporation were filed, a further
44 certificate stating that the whole of its capital stock has been in good
45 faith subscribed, executed and acknowledged by its president or vice-
46 president and treasurer or secretary, and verified by them to the effect
47 that the statements contained in it are true.
48 Notwithstanding the foregoing, [corporations organized] NO CHARITABLE
49 CORPORATION AS DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO OF
50 THE NOT-FOR-PROFIT CORPORATION LAW OR ANY CORPORATIONS ORGANIZED PRIOR
51 TO JANUARY FIRST, TWO THOUSAND FOURTEEN AS A TYPE C CORPORATION pursuant
52 to section two hundred one of the not-for-profit corporation law [as
53 type C corporations] OR AS A CHARITABLE CORPORATION AS DEFINED IN PARA-
54 GRAPH (A) OF SECTION ONE HUNDRED TWO OF THE NOT-FOR-PROFIT CORPORATION
55 LAW shall [not] engage in the prosecution or management of its business
56 until its certificate of incorporation has been accepted for filing by
A. 7772 54
1 the secretary of state and such confirmation of filing has been filed
2 with the board and the franchise oversight board.
3 S 108. Subdivision 9 of section 171-a of the executive law, as amended
4 by chapter 353 of the laws of 1987, is amended to read as follows:
5 9. "Fund raising counsel." Any person who for compensation consults
6 with a charitable organization or who plans, manages, advises, or
7 assists with respect to the solicitation in this state of contributions
8 for or on behalf of a charitable organization, but who does not have
9 access to contributions or other receipts from a solicitation or author-
10 ity to pay expenses associated with a solicitation and who does not
11 solicit. A bona fide officer, volunteer, or employee of a charitable
12 organization or an attorney at law retained by a charitable organization
13 OR AN INDIVIDUAL ENGAGED SOLELY TO DRAFT APPLICATIONS FOR FUNDING FROM A
14 GOVERNMENTAL AGENCY OR AN ENTITY EXEMPT FROM TAXATION PURSUANT TO
15 SECTION FIVE HUNDRED ONE (C)(3) OF THE INTERNAL REVENUE CODE, shall not
16 be deemed a fund raising counsel.
17 S 109. Subdivision 1 of section 172 of the executive law is amended by
18 adding a new paragraph (k) to read as follows:
19 (K) ANY CONFLICT OF INTEREST POLICY AND ANY WHISTLEBLOWER POLICY
20 ADOPTED PURSUANT TO SECTIONS SEVEN HUNDRED FIFTEEN-A AND SEVEN HUNDRED
21 FIFTEEN-B OF THE NOT-FOR-PROFIT CORPORATION LAW OR SECTION 8-1.9 OF THE
22 ESTATES, POWERS AND TRUSTS LAW.
23 S 110. Subdivisions 1 and 2 of section 172-b of the executive law, as
24 amended by section 43 of the laws of 2002, are amended to read as
25 follows:
26 1. Every charitable organization registered or required to be regis-
27 tered pursuant to section one hundred seventy-two of this article which
28 shall receive in any fiscal year gross revenue and support in excess of
29 [two hundred fifty] FIVE HUNDRED thousand dollars [and every charitable
30 organization whose fund-raising functions are not carried on solely by
31 persons who are unpaid for such services] shall file with the attorney
32 general an annual written financial report, on forms prescribed by the
33 attorney general, on or before the fifteenth day of the fifth calendar
34 month after the close of such fiscal year. The annual financial report
35 shall be accompanied by an annual financial statement which includes an
36 independent certified public accountant's audit report containing an
37 opinion that the financial statements are presented fairly in all mate-
38 rial respects and in conformity with generally accepted accounting prin-
39 ciples, including compliance with all pronouncements of the financial
40 accounting standards board and the American Institute of Certified
41 Public Accountants that establish accounting principles relevant to
42 not-for-profit organizations. Such financial report shall include a
43 statement of any changes in the information required to be contained in
44 the registration form filed on behalf of such organization. The finan-
45 cial report shall be signed by the president or other authorized officer
46 and the chief fiscal officer of the organization who shall certify under
47 penalties for perjury that the statements therein are true and correct
48 to the best of their knowledge, and shall be accompanied by an opinion
49 signed by an independent public accountant that the financial statement
50 and balance sheet therein present fairly the financial operations and
51 position of the organization. A fee of twenty-five dollars payable to
52 the attorney general shall accompany such financial report at the time
53 of filing, provided however, that any such organization that is regis-
54 tered with the attorney general pursuant to article eight of the
55 estates, powers and trusts law is required to file only one annual
A. 7772 55
1 financial report which meets the filing requirements of this article and
2 section 8-1.4 of the estates, powers and trusts law.
3 2. Every charitable organization registered or required to be regis-
4 tered pursuant to section one hundred seventy-two of this article which
5 shall receive in gross revenue and support in any fiscal year at least
6 one hundred thousand dollars but not more than [two hundred fifty] FIVE
7 HUNDRED thousand dollars shall file an annual financial report. The
8 annual financial report shall be accompanied by an annual financial
9 statement which includes an independent certified public accountant's
10 review report in accordance with "statements on standards for accounting
11 and review services" issued by the American Institute of Certified
12 Public Accountants. The annual financial statement shall be prepared in
13 conformity with generally accepted accounting principles, including
14 compliance with all pronouncements of the financial accounting standards
15 board and the American Institute of Certified Public Accountants that
16 establish accounting principles relevant to not-for-profit organiza-
17 tions. Such financial report shall be filed with the attorney general,
18 upon forms prescribed by the attorney general on an annual basis on or
19 before the fifteenth day of the fifth calendar month after the close of
20 such fiscal year, which shall include a financial report covering such
21 fiscal year in accordance with such requirements as the attorney general
22 may prescribe. Such financial report shall include a statement of any
23 changes in the information required to be contained in the registration
24 form filed on behalf of such organization. The financial report shall be
25 signed by the president or other authorized officer and the chief fiscal
26 officer of the organization who shall certify under penalties for perju-
27 ry that the statements therein are true and correct to the best of their
28 knowledge. A fee of ten dollars payable to the attorney general shall
29 accompany such financial report at the time of filing, provided, howev-
30 er, that any such organization that is registered with the attorney
31 general pursuant to article eight of the estates, powers and trusts law
32 is required to file only one annual financial report which meets the
33 filing requirements of this article and section 8-1.4 of the estates,
34 powers and trusts law. NOTWITHSTANDING THE REQUIREMENTS OF THIS
35 SECTION, IF UPON REVIEW OF AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S
36 REVIEW REPORT FILED PURSUANT TO THIS SUBDIVISION, THE ATTORNEY GENERAL
37 DETERMINES THAT A CHARITABLE ORGANIZATION SHOULD OBTAIN AN INDEPENDENT
38 CERTIFIED PUBLIC ACCOUNTANT'S AUDIT REPORT, SUCH ORGANIZATION SHALL
39 OBTAIN AND FILE WITH THE ATTORNEY GENERAL AN AUDIT REPORT THAT MEETS THE
40 REQUIREMENTS OF SUBDIVISION ONE OF THIS SECTION WITHIN SIXTY DAYS OF THE
41 ATTORNEY GENERAL'S REQUEST FOR SUCH REPORT.
42 S 111. Subdivision 1 of section 177 of the executive law, as amended
43 by chapter 83 of the laws of 1995, is amended to read as follows:
44 1. The attorney general shall make rules and regulations necessary for
45 the administration of this article including, but not limited to regu-
46 lations and waiver procedures that will ensure that charitable organiza-
47 tions do not have to register twice in relation to the solicitation and
48 administration of assets, AND RULES OR REGULATIONS ALLOWING OR REQUIRING
49 ANY SUBMISSION TO THE ATTORNEY GENERAL TO BE EFFECTED BY ELECTRONIC
50 MEANS.
51 S 112. Section 223 of the education law, as amended by chapter 106 of
52 the laws of 1974, is amended to read as follows:
53 S 223. Consolidation OR MERGER of corporations. Any two or more
54 corporations chartered under the powers of the regents or incorporated
55 under a special act of the legislature or under a general law for
56 purposes for which a charter may be granted by the regents may enter
A. 7772 56
1 into an agreement for the consolidation OR MERGER of such corporations,
2 setting forth the terms and conditions of consolidation OR MERGER, the
3 name of the proposed CONSOLIDATED OR MERGED corporation, the place or
4 places where the institution or institutions to be maintained is or are
5 to be located, the number of its directors, which may be five or more,
6 the time of the annual election and the names of the persons to be
7 directors until the first OR NEXT annual meeting.
8 The agreement must be approved by three-fourths of the trustees or
9 directors of such [corporation] CORPORATIONS at a meeting of the trus-
10 tees or directors of each corporation, separately and specially called
11 for that purpose, which approval, duly verified by the chairman and
12 clerk of such meeting, shall be annexed to the petition. On presenta-
13 tion of a petition, together with the certificate of approval and the
14 agreement for consolidation OR MERGER, and on such notice to interested
15 parties as the regents shall prescribe, and after hearing such inter-
16 ested parties as desire to be heard, the regents may make and execute an
17 order for the consolidation OR MERGER of the corporations on such terms
18 and conditions as the regents may prescribe. When such order is made,
19 such corporations shall become one corporation by the name designated in
20 the order, and shall be subject only to such duties and obligations as a
21 corporation formed under this chapter for the same purposes; and all the
22 property belonging to the corporations so consolidated OR MERGED shall
23 be vested in and transferred to the new OR SURVIVING corporation, which
24 shall be subject to all the liabilities of the former corporations, to
25 the same extent as if they had been contracted or incurred by it. If
26 any corporation so consolidated OR MERGED was incorporated under a
27 special act of the legislature or under a general law pursuant to which
28 its certificate of incorporation was filed with the department of state,
29 the regents shall deliver a certified copy of the order of consolidation
30 OR MERGER to such department.
31 S 113. Paragraph c of subdivision 4 of section 216-a of the education
32 law, as added by chapter 901 of the laws of 1972, is amended to read as
33 follows:
34 c. The following provisions of the not-for-profit corporation law
35 shall not apply to education corporations: section one hundred five,
36 [section one hundred thirteen,] section one hundred fourteen, paragraph
37 (a) of section two hundred one, paragraphs (b) and (c) of section two
38 hundred two, section two hundred five, section three hundred one,
39 section three hundred two, section three hundred three, article four
40 except paragraphs (b) through (p) of section four hundred four and
41 section four hundred five, section five hundred nine, [section five
42 hundred eighteen,] section five hundred twenty-one to the extent that it
43 refers to [section five hundred eighteen,] paragraph (d) of section
44 seven hundred six, article eight except section eight hundred four,
45 section nine hundred seven, [section one thousand eleven,] section one
46 thousand twelve and article fourteen.
47 S 114. Section 13 of the religious corporations law, as amended by
48 chapter 705 of the laws of 1970, is amended to read as follows:
49 S 13. Consolidation OR MERGER of incorporated churches. Two or more
50 incorporated churches may enter into an agreement, under their respec-
51 tive corporate seals, for the consolidation OR MERGER of such corpo-
52 rations, setting forth the name of the proposed new corporation OR
53 SURVIVING CORPORATION, the denomination, if any, to which it is to
54 belong, and if the churches of such denomination have more than one
55 method of choosing trustees, by which of such methods the trustees are
56 to be chosen, the number of such trustees, the names of the persons to
A. 7772 57
1 be the first trustees of the new corporation, and the date of its first
2 annual corporate meeting. Such an agreement shall not be valid for
3 United Methodist churches unless proposed by a majority vote of the
4 charge conference of each church and approved by the superintendent or
5 superintendents of the district or districts in which the consolidating
6 churches are located, and by the majority of the members of each of such
7 churches, over the age of twenty-one years, present and voting at a
8 meeting thereof held in the usual place of public worship and called for
9 the purpose of considering such agreement by announcement made at public
10 service in such churches on two Sundays, the first not less than ten
11 days next preceding the date of such meeting. Such agreement shall not
12 be valid unless approved in the case of Protestant Episcopal churches by
13 the bishop and standing committee of the diocese in which such churches
14 are situated and in the case of churches of other denominations by the
15 governing body of the denomination, if any, to which each church
16 belongs, having jurisdiction over such church. Each corporation shall
17 thereupon make a separate petition to the supreme court for an order
18 consolidating OR MERGING the corporations, setting forth the denomi-
19 nation, if any, to which the church belongs, that the consent of the
20 governing body to the consolidation OR MERGER, if any, of that denomi-
21 nation having jurisdiction over such church has been obtained, the
22 agreement therefor, and a statement of all the property and liabilities
23 and the amount and sources of the annual income of such petitioning
24 corporation. In its discretion the court may direct that notice of the
25 hearing of such petition be given to the parties interested therein in
26 such manner and for such time as it may prescribe. After hearing all
27 the parties interested, present and desiring to be heard, the court may
28 make an order for the consolidation OR MERGER of the corporations on the
29 terms of such agreement and such other terms and conditions as it may
30 prescribe, specifying the name of such new OR SURVIVING corporation and
31 the [first] trustees thereof, and the method by which their successors
32 shall be chosen and the date of its first OR NEXT annual corporate meet-
33 ing. When such order is made and duly entered, the persons constituting
34 such CONSOLIDATED OR MERGED corporations shall BE OR become an incorpo-
35 rated church by, and said petitioning churches shall become consolidated
36 OR MERGED under, the name designated in the order, and the trustees
37 therein named shall be the [first] trustees thereof, and the future
38 trustees thereof shall be chosen by the method therein designated, and
39 all the estate, rights, powers and property of whatsoever nature belong-
40 ing to either corporation shall without further act or deed be vested in
41 and transferred to the new OR SURVIVING corporation as effectually as
42 they were vested in or belonging to the former corporations; and the
43 said new OR SURVIVING corporation shall be liable for all the debts and
44 liabilities of the former corporations in the same manner and as effec-
45 tually as if said debts or liabilities had been contracted or incurred
46 by the new OR SURVIVING corporation. A certified copy of such order
47 shall be recorded in the book for recording certificates of incorpo-
48 ration in each county clerk's office in which the certificate of incor-
49 poration of each consolidating OR MERGING church was recorded; or if no
50 such certificate was so recorded, then in the clerk's office of the
51 county in which the principal place of worship or principal office of
52 the new OR SURVIVING corporation is, or is intended to be, situated.
53 S 115. Section 15-a of the religious corporations law, as added by
54 chapter 108 of the laws of 1965, subdivisions 2, 3 and 8 as amended by
55 chapter 381 of the laws of 1985, is amended to read as follows:
A. 7772 58
1 S 15-a. Consolidation of incorporated presbyteries. 1. Two or more
2 incorporated presbyteries may enter into an agreement for the consol-
3 idation OR MERGER of such corporations and such corporations may be
4 consolidated OR MERGED so as to form a single corporation which may be
5 either a new corporation or one of the [constitutent] CONSTITUENT corpo-
6 rations. Said agreement shall set forth the name of the proposed new
7 corporation or the name of the existing corporation if it is to become
8 the consolidated OR MERGED corporation, the method of choosing trustees,
9 the names of the persons to be the first trustees of the new corporation
10 if the consolidated OR MERGED corporation is to be a new corporation and
11 the date of the first annual corporate meeting.
12 2. Such agreement must be authorized and approved by a majority vote
13 of the members of each contracting presbytery taken at a meeting at
14 which a quorum is present duly called in accordance with the form of
15 government of the Presbyterian Church (U.S.A.) and the notice of such
16 meeting shall state the purpose of the meeting.
17 3. Before such agreement is approved as aforesaid, such consolidation
18 OR MERGER must be directed and approved by the Synod of the Northeast
19 and the General Assembly of the Presbyterian Church (U.S.A.).
20 4. Each presbytery shall thereafter join in a petition to the supreme
21 court for an order consolidating OR MERGING the corporation, setting
22 forth the agreement of the contracting presbyteries, the direction and
23 approval of the bodies as set forth in subdivision three [hereof] OF
24 THIS SECTION, a statement of all the property and liabilities and the
25 sources of the annual income of each presbytery and a description of any
26 property held by such presbyteries in trust for specific purposes. In
27 its discretion the court may direct that notice of the hearing of such
28 petition be given to the parties interested therein in such manner as it
29 may prescribe.
30 5. After hearing all the parties interested, present and desiring to
31 be heard, the court may make an order for the consolidation OR MERGER of
32 the presbyteries on the terms of such agreement and such other terms and
33 conditions as it may prescribe, specifying the name of the new corpo-
34 ration or the name the continuing corporation will have if one of the
35 [constitutent] CONSTITUENT corporations is to become the consolidated OR
36 MERGED corporation, the first trustees thereof if a new corporation is
37 to be created and the method by which their successors shall be chosen
38 and the date of the first annual corporate meeting if a new corporation
39 is to be created.
40 6. When such order is made and duly entered, the persons constituting
41 such corporate presbyteries shall become one incorporated consolidated
42 OR MERGED presbytery by, and said petitioning presbyteries shall become
43 consolidated OR MERGED under, the name designated in the order, and the
44 trustees therein named, if it is a new corporation, shall be the first
45 trustees thereof, and if it is a new corporation the trustees thereof
46 shall be chosen by the method therein designated, and all the estate,
47 rights, powers and property of whatsoever nature, belonging to either
48 corporation shall without further act or deed be vested in and/or trans-
49 ferred to the new corporation as effectually as they were vested in or
50 belonging to the former corporations, and the new or continuing corpo-
51 rations shall be liable for all the debts and liabilities of the former
52 corporations in the same manner and as effectually as if said debts or
53 liabilities had been contracted or incurred by the new corporation.
54 7. The order or a certified copy thereof shall be recorded in the book
55 for recording certificates of incorporation in each county clerk's
A. 7772 59
1 office in which the certificate of incorporation of each constituent
2 presbytery was recorded.
3 8. Such consolidated OR MERGED presbytery shall have all the powers
4 and responsibilities conferred upon presbyteries by the constitution and
5 form of government of the Presbyterian Church (U.S.A.).
6 S 116. Section 208 of the religious corporations law, as added by
7 chapter 117 of the laws of 1927, is amended to read as follows:
8 S 208. Consolidation OR MERGER. Any two or more religious corpo-
9 rations of the Jewish faith, incorporated under or by general or special
10 laws, may enter into an agreement for the consolidation OR MERGER of
11 such corporations, setting forth the terms and conditions of consol-
12 idation, the name of the proposed OR SURVIVING corporation, the number
13 of its trustees, the time of the annual election and the names of the
14 persons to be its trustees until the first OR NEXT annual meeting. Each
15 corporation may petition the supreme court for an order consolidating OR
16 MERGING the corporations, setting forth the agreement for consolidation
17 OR MERGER and a statement of its real property and of its liabilities.
18 Before the presentation of the petition to the court the agreement and
19 petition must be approved by two-thirds of the votes cast in person or
20 by proxy at a meeting of the members of each corporation called for the
21 purpose of considering the proposed consolidation OR MERGER in the
22 manner prescribed by section [forty-three of the membership corporations
23 law] SIX HUNDRED FIVE OF THE NOT-FOR-PROFIT CORPORATION LAW. An affida-
24 vit by the president and the secretary of each corporation stating that
25 such approval has been given shall be annexed to the petition. On pres-
26 entation to the court of such petition and agreement for consolidation
27 OR MERGER and on such notice as the court may direct, the court after
28 hearing all the parties interested desiring to be heard, may make an
29 order approving the consolidation OR MERGER. When such order is made
30 and duly entered and a certified copy thereof filed with the secretary
31 of state and in the offices of the clerks of the counties in which the
32 certificates of incorporation of the several constituent corporations
33 were recorded, or if no such certificate was recorded, then in the
34 office of the clerk of the county in which the principal place of
35 worship of the new OR SURVIVING corporation is intended to be situated,
36 such corporations shall become one corporation by the name designated in
37 the order and the trustees named in the agreement for consolidation OR
38 MERGER shall be the [first] trustees of the consolidated corporation.
39 S 117. Section 209 of the religious corporations law, as added by
40 chapter 117 of the laws of 1927, is amended to read as follows:
41 S 209. Effect of consolidation OR MERGER. The consolidated OR MERGED
42 corporation shall possess all the powers of the constituent corporations
43 and shall have the power and be subject to the duties and obligations of
44 a congregation of the Jewish faith formed for like purposes under the
45 religious corporations law. All the rights, privileges and interests of
46 each of the constituent corporations, all the property, real, personal
47 and mixed, and all the debts due on whatever account to either of them,
48 and all things in action, belonging to either of them, shall be deemed
49 to be transferred to and vested in such new corporation without further
50 act or deed; and all claims, demands[.], property, and every other
51 interest, belonging to the several constituent corporations, shall be as
52 effectually the property of the new corporation as they were of the
53 constituent corporations, and the title to all real property, held or
54 taken by deed or otherwise under the laws of this state, vested in the
55 several constituent corporations shall not be deemed to revert or to be
56 in any way impaired by reason of the consolidation but shall be vested
A. 7772 60
1 in the new corporation. Any devise, bequest, gift, grant, or declaration
2 of trust, contained in any deed, will, or other instrument, in trust or
3 otherwise, made before or after such consolidation, OR MERGER to or for
4 any of the constituent corporations, shall inure to the benefit of the
5 consolidated OR MERGED corporation. The consolidated corporation shall
6 be deemed to have assumed and shall be liable for all debts and obli-
7 gations of the constituent corporations in the same manner as if such
8 new corporation had itself incurred such debts or obligations.
9 S 118. Paragraph (c) of subdivision 1 of section 2-b of the religious
10 corporations law, as amended by chapter 490 of the laws of 2010, is
11 amended to read as follows:
12 (c) The following provisions of the not-for-profit corporation law
13 shall not apply to religious corporations: subparagraphs (7) and (8) of
14 paragraph (a) of section one hundred twelve, [section one hundred thir-
15 teen,] section one hundred fourteen, section two hundred one, section
16 three hundred three, section three hundred four, section three hundred
17 five, section three hundred six, article four except section four
18 hundred one, section five hundred fourteen, that portion of section five
19 hundred fifty-five (b) and section five hundred fifty-five (c) which
20 reads "The institution shall notify the donor, if available, and the
21 attorney general of the application, and the attorney general and such
22 donor must be given an opportunity to be heard", section six hundred
23 five, section six hundred seven, section six hundred nine, section eight
24 hundred four, article nine except section nine hundred ten, article ten
25 except as provided in section eleven hundred fifteen, section eleven
26 hundred two, and article fifteen except paragraph (c) of section fifteen
27 hundred seven.
28 S 119. Paragraph (c) of subdivision 1 of section 1-a of the benevolent
29 orders law, as added by chapter 703 of the laws of 1970, is amended to
30 read as follows:
31 (c) The following provisions of the not-for-profit corporation law
32 shall not apply to benevolent orders: [section one hundred thirteen,]
33 section two hundred one, article four, paragraphs (a), (b), and (c) of
34 section eight hundred four, section nine hundred seven, section nine
35 hundred eight, section nine hundred nine, [section ten hundred eleven,]
36 section ten hundred twelve, and article fourteen.
37 S 120. Subdivision 1 of section 1825 of the public authorities law, as
38 amended by chapter 1045 of the laws of 1974, is amended to read as
39 follows:
40 1. The corporation shall (a) be incorporated or reincorporated under
41 [article nineteen of the membership corporations law, or under] section
42 fourteen hundred eleven of the not-for-profit corporation law, or (b) be
43 incorporated under [article two of the membership corporations law, or
44 under] article four of the not-for-profit corporation law, in addition
45 to other purposes, to construct new industrial or manufacturing plants
46 or new research and development buildings and acquire machinery and
47 equipment deemed related thereto or acquire, rehabilitate, and improve
48 for use by others, industrial or manufacturing plants in the area of the
49 state in which an assisted project is to be located, to assist finan-
50 cially in such construction, acquisition, rehabilitation and improvement
51 and to maintain such plants, buildings and equipment for others, and may
52 also be authorized to study and promote, alone or in concert with local
53 officials and interested local groups, the economic growth and business
54 prosperity of the area and the solution of other civic problems of the
55 region which includes such areas[, and (c) if incorporated or reincorpo-
56 rated under the membership corporations law, have complied with the
A. 7772 61
1 requirements of section one hundred thirteen of the not-for-profit
2 corporation law].
3 S 121. Subsection (a) of section 3435 of the insurance law, as added
4 by chapter 220 of the laws of 1986, is amended to read as follows:
5 (a) This section shall apply to public entities as defined in section
6 one hundred seven of this chapter, organizations described by section
7 501 (c)(3) of the United States internal revenue code, [Type B] CHARITA-
8 BLE corporations AS DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO
9 (DEFINITIONS), OF THE NOT-FOR-PROFIT CORPORATION LAW AND formed pursuant
10 to paragraph [(b)] (A) of section two hundred one of the not-for-profit
11 corporation law, and organizations described by section two hundred
12 sixteen-a of the education law.
13 S 122. Subsection (a) of section 6703 of the insurance law, as added
14 by chapter 598 of the laws of 2000, is amended to read as follows:
15 (a) A corporation may be organized as a [type B] CHARITABLE corpo-
16 ration [pursuant to paragraph (b) of section two hundred one] AS DEFINED
17 IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) of the not-
18 for-profit corporation law or as a nonprofit reciprocal insurer under
19 article sixty-one of this chapter to write the kinds of insurance speci-
20 fied in subsection (a) of section one thousand one hundred thirteen of
21 this chapter other than (1) those types of insurance specified in para-
22 graphs one, two, eighteen, twenty-two, twenty-three and twenty-five of
23 such subsection, (2) insurance against legal liability of the insured,
24 and against loss, damage or expense incident to a claim of such liabil-
25 ity arising out of death or injury of any person, due to medical or
26 hospital malpractice by any licensed physician or hospital, and (3)
27 insurance subject to section three thousand four hundred twenty-five of
28 this chapter.
29 S 123. The opening paragraph of subsection (b) of section 6704 of the
30 insurance law, as added by chapter 598 of the laws of 2000, is amended
31 to read as follows:
32 The superintendent may pursuant to this article issue a license to a
33 nonprofit property/casualty insurance company that is organized as a
34 [type B] CHARITABLE corporation [pursuant to paragraph (b) of section
35 two hundred one] AS DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO
36 (DEFINITIONS) of the not-for-profit corporation law if such company:
37 S 124. Subsection (a) of section 6706 of the insurance law, as added
38 by chapter 598 of the laws of 2000, is amended to read as follows:
39 (a) Except as otherwise provided in this article, where inconsistent
40 with this article, or where the context otherwise requires, all of the
41 provisions of this chapter and the rules and regulations of the super-
42 intendent, relating to all insurers and those relating to
43 property/casualty insurance companies transacting the same kind or kinds
44 of insurance shall be applicable to a nonprofit property/casualty insur-
45 ance company organized as a [type B] CHARITABLE corporation AS DEFINED
46 IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) OF THE
47 NOT-FOR-PROFIT CORPORATION LAW AND FORMED pursuant to paragraph (b) of
48 section two hundred one of the not-for-profit corporation law and
49 licensed pursuant to subsection (b) of section six thousand seven
50 hundred four of this article. Where any of such provisions of law refer
51 to a corporation, company or insurer, such references, when read in
52 connection with and applicable to this article, shall mean such a
53 nonprofit property/casualty insurance company.
54 S 125. Subdivision 2 of section 2-b of the religious corporations law,
55 as added by chapter 956 of the laws of 1971, is amended to read as
56 follows:
A. 7772 62
1 2. Every corporation to which the not-for-profit corporation law is
2 made applicable by this section is a [type B] CHARITABLE corporation AS
3 DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) OF THE
4 NOT-FOR-PROFIT CORPORATION LAW for all purposes of that law.
5 S 126. Subdivision 2 of section 13-a of the private housing finance
6 law, as added by chapter 547 of the laws of 1971, is amended to read as
7 follows:
8 2. Every corporation to which the not-for-profit corporation law is
9 made applicable by this section is a [type B] CHARITABLE corporation AS
10 DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) OF THE
11 NOT-FOR-PROFIT CORPORATION LAW for all purposes of that law.
12 S 127. Subdivision 5 of section 216-a of the education law, as added
13 by chapter 901 of the laws of 1972, is amended to read as follows:
14 5. Every corporation to which the not-for-profit corporation law is
15 made applicable by this section, is a [type B] CHARITABLE corporation AS
16 DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) OF THE
17 NOT-FOR-PROFIT CORPORATION LAW under all applicable provisions of that
18 law.
19 S 128. Section 579 of the banking law, as amended by chapter 629 of
20 the laws of 2002, is amended to read as follows:
21 S 579. Doing business without license prohibited. Only a [type B not-
22 for-profit] CHARITABLE corporation as defined in [section two hundred
23 one] PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) of the not-
24 for-profit corporation law of this state, or an entity incorporated in
25 another state and having a similar not-for-profit status, shall engage
26 in the business of budget planning as defined in subdivision one of
27 section four hundred fifty-five of the general business law of this
28 state except as authorized by this article and without first obtaining a
29 license from the superintendent.
30 S 129. Subdivision 4 of section 455 of the general business law, as
31 amended by chapter 456 of the laws of 2006, is amended to read as
32 follows:
33 4. Person or entity as used in this article shall not include a [type
34 B not-for-profit] CHARITABLE corporation as defined in [section two
35 hundred one] PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) of
36 the not-for-profit corporation law of this state, or an entity incorpo-
37 rated in another state and having a similar not-for-profit status,
38 licensed by the superintendent, to engage in the business of budget
39 planning as defined in this section.
40 S 130. Paragraph (a) of subdivision 1 of section 458-b of the general
41 business law, as added by chapter 386 of the laws of 1986, is amended to
42 read as follows:
43 (a) Any [type B not-for-profit] CHARITABLE corporation AS DEFINED IN
44 PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) OF THE
45 NOT-FOR-PROFIT CORPORATION LAW licensed pursuant to article [twelve-c]
46 TWELVE-C of the banking law.
47 S 131. Subdivision (b) of section 16.32 of the mental hygiene law, as
48 amended by chapter 669 of the laws of 1995, is amended to read as
49 follows:
50 (b) No loans, other than through the purchase of bonds, debentures, or
51 similar obligations of the type customarily sold in public offerings, or
52 through ordinary deposit of funds in a bank, shall be made by a not-for-
53 profit corporation which is certified as a provider of services pursuant
54 to this article to its employee who receives an annual salary in excess
55 of thirty thousand dollars, or to any other corporation, firm, associ-
56 ation or other entity in which such employee is a director or officer or
A. 7772 63
1 employee or holds a direct or indirect substantial financial interest,
2 except a loan by one corporation incorporated as a [type B] CHARITABLE
3 corporation [pursuant to] AS DEFINED IN PARAGRAPH (A) OF SECTION ONE
4 HUNDRED TWO (DEFINITIONS) OF the not-for-profit corporation law to
5 another type B corporation, or a loan for a temporary or emergency
6 purpose which will further the health and welfare of the employee so
7 long as the purpose and amount of such loan are disclosed to and
8 approved by the board of directors of such agency. Such disclosure shall
9 be filed with the secretary of the corporation and entered in the
10 minutes of the meeting, and, if approved by such board, such disclosure
11 shall also be forwarded in writing to the commissioner and to the direc-
12 tor of community services of each local governmental unit that has, at
13 the time of such disclosure, a contract with such corporation for the
14 rendition of services pursuant to article forty-one of this chapter. A
15 loan made in violation of this section shall be a violation of the duty
16 to the not-for-profit corporation of the directors or officers authoriz-
17 ing it or participating in it, but the obligation of the borrower with
18 respect to the loan shall not be affected thereby.
19 S 132. Subdivision (b) of section 31.31 of the mental hygiene law, as
20 amended by chapter 669 of the laws of 1995, is amended to read as
21 follows:
22 (b) No loans, other than through the purchase of bonds, debentures, or
23 similar obligations of the type customarily sold in public offerings, or
24 through ordinary deposit of funds in a bank, shall be made by a not-for-
25 profit corporation which is licensed as a provider of services pursuant
26 to this article to its employee who receives an annual salary in excess
27 of thirty thousand dollars, or to any other corporation, firm, associ-
28 ation or other entity in which such employee is a director or officer or
29 employee or holds a direct or indirect substantial financial interest,
30 except a loan by one corporation incorporated as [a type B] CHARITABLE
31 corporation [pursuant to] AS DEFINED IN PARAGRAPH (A) OF SECTION ONE
32 HUNDRED TWO (DEFINITIONS) OF the not-for-profit corporation law to
33 another type B corporation, or a loan for a temporary or emergency
34 purpose which will further the health and welfare of the employee so
35 long as the purpose and amount of such loan are disclosed to and
36 approved by the board of directors of such agency. Such disclosure shall
37 be filed with the secretary of the corporation and entered in the
38 minutes of the meeting, and, if approved by such board, such disclosure
39 shall also be forwarded in writing to the commissioner and to the direc-
40 tor of community services of each local governmental unit that has, at
41 the time of such disclosure, a contract with such corporation for the
42 rendition of services pursuant to article forty-one of this chapter. A
43 loan made in violation of this section shall be a violation of the duty
44 to the not-for-profit corporation of the directors or officers authoriz-
45 ing it or participating in it, but the obligation of the borrower with
46 respect to the loan shall not be affected thereby.
47 S 133. Paragraph (f) of subdivision 7 of section 75 of the public
48 lands law, as added by chapter 791 of the laws of 1992, is amended to
49 read as follows:
50 (f) The commissioner, in consultation with the commissioner of envi-
51 ronmental conservation, the secretary of state, the office of parks,
52 recreation and historic preservation and other interested state agencies
53 administering state-owned lands underwater, shall promulgate pursuant to
54 article two of the state administrative procedure act such rules with
55 respect to grants, leases, easements and lesser interests for the use of
56 state-owned land underwater, and the cession of jurisdiction thereof, as
A. 7772 64
1 in his or her judgment are reasonable and necessary to protect the
2 interests of the people in such lands underwater. Such regulations shall
3 include without being limited to: the fees to be charged, consistent
4 with the provisions of this section, including mitigation of such fees
5 in the event of economic hardship on existing commercial enterprises;
6 fee limitations to administrative expenses for municipal uses which are
7 public, non-commercial and offer services free or for nominal fees, and
8 for uses undertaken and operated for public and non-commercial purposes
9 by not-for-profit corporations characterized as ["Type B"] CHARITABLE
10 corporations [pursuant to paragraph (b) of section two hundred one] AS
11 DEFINED IN PARAGRAPH (A) OF SECTION ONE HUNDRED TWO (DEFINITIONS) of the
12 not-for-profit corporation law, and for uses undertaken and operated for
13 public purposes by a corporation formed pursuant to the religious corpo-
14 ration law or by a corporation formed pursuant to A special act of this
15 state and which has as its principal purpose a religious purpose; such
16 further exemptions for projects as the commissioner determines do not
17 represent significant encroachments; limitations on grants, including
18 conversion grants, with respect to underwater lands consistent with the
19 public purposes of this subdivision and limiting such grants to excep-
20 tional circumstances; and factors to be examined in considering an
21 application for a lease, easement or other interest. Those factors shall
22 include without limitation the following: (i) the environmental impact
23 of the project; (ii) the values for natural resource management, recre-
24 ational uses, and commercial uses of the pertinent underwater land;
25 (iii) the size, character and effects of the project in relation to
26 neighboring uses; (iv) the potential for interference with navigation,
27 public uses of the waterway and rights of other riparian owners; (v) the
28 effect of the project on the natural resource interests of the state in
29 the lands; (vi) the water-dependent nature of the use; (vii) and any
30 adverse economic impact on existing commercial enterprises. The final
31 promulgation of rules establishing fees or fee structures shall be
32 subject to the approval of the director of the budget.
33 S 134. This act shall take effect January 1, 2014, provided, however,
34 that section forty-five of this act shall take effect January 1, 2015.
