Bill Text: NY S07913 | 2015-2016 | General Assembly | Amended
Bill Title: Relates to the reform of charitable corporations and trust governance.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2016-06-16 - SUBSTITUTED BY A10365B [S07913 Detail]
Download: New_York-2015-S07913-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 7913--B Cal. No. 1331 IN SENATE May 24, 2016 ___________ Introduced by Sen. RANZENHOFER -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Author- ities and Commissions -- reported favorably from said committee, ordered to first and second report, amended on second report, ordered to a third reading, and to be reprinted as amended, retaining its place in the order of third reading -- again amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the not-for-profit corporation law and the estates, powers and trusts law, in relation to reformation of charitable corpo- rations and trust governance; and to repeal certain provisions of the not-for-profit corporation law and the estates, powers and trusts law relating thereto The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subparagraphs 21, 23, 24 and 25 of paragraph (a) of section 2 102 of the not-for-profit corporation law, subparagraphs 21, 23 and 25 3 as amended by chapter 555 of the laws of 2015 and subparagraph 24 as 4 added by chapter 549 of the laws of 2013, are amended to read as 5 follows: 6 (21) "Independent director" means a director who: (i) is not, and has 7 not been within the last three years, an employee or a key person of the 8 corporation or an affiliate of the corporation, and does not have a 9 relative who is, or has been within the last three years, a key [employ-10ee] person of the corporation or an affiliate of the corporation; (ii) 11 has not received, and does not have a relative who has received, in any 12 of the last three fiscal years, more than ten thousand dollars in direct 13 compensation from the corporation or an affiliate of the corporation 14 [(other than reimbursement for expenses reasonably incurred as a direc-15tor or reasonable compensation for service as a director as permitted by16paragraph (a) of section 202 (General and special powers))]; (iii) is 17 not a current employee of or does not have a substantial financial 18 interest in, and does not have a relative who is a current officer of or 19 has a substantial financial interest in, any entity that has [made20payments] provided payments, property or services to, or received EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD14985-09-6S. 7913--B 2 1 payments, property or services from, the corporation or an affiliate of 2 the corporation [for] if the amount paid by the corporation to the enti- 3 ty or received by the corporation from the entity for such property or 4 services [in an amount which], in any of the last three fiscal years, 5 [exceeds the lesser of twenty-five thousand dollars or two percent of6such entity's consolidated gross revenues] exceeded the lesser of ten 7 thousand dollars or two percent of such entity's consolidated gross 8 revenues if the entity's consolidated gross revenue was less than five 9 hundred thousand dollars; twenty-five thousand dollars if the entity's 10 consolidated gross revenue was five hundred thousand dollars or more but 11 less than ten million dollars; one hundred thousand dollars if the enti- 12 ty's consolidated gross revenue was ten million dollars or more; or (iv) 13 is not and does not have a relative who is a current owner, whether 14 wholly or partially, director, officer or employee of the corporation's 15 outside auditor or who has worked on the corporation's audit at any time 16 during the past three years. For purposes of this [subdivision,] subpar- 17 agraph, the terms: "compensation" does not include reimbursement for 18 expenses reasonably incurred as a director or reasonable compensation 19 for service as a director as permitted by paragraph (a) of section 202 20 (General and special powers) of this chapter; and "payment" does not 21 include charitable contributions, dues or fees paid to the corporation 22 for services which the corporation performs as part of its nonprofit 23 purposes, or payments made by the corporation at fixed or non-negotiable 24 rates or amounts for services received, provided that such services by 25 and to the corporation are available to individual members of the public 26 on the same terms, and such services received by the corporation are not 27 available from another source. 28 (23) "Related party" means (i) any director, officer or key [employee] 29 person of the corporation or any affiliate of the corporation[, or any30other person who exercises the powers of directors, officers or key31employees over the affairs of the corporation or any affiliate of the32corporation]; (ii) any relative of any individual described in clause 33 (i) of this [subdivision] subparagraph; or (iii) any entity in which any 34 individual described in clauses (i) and (ii) of this [subdivision] 35 subparagraph has a thirty-five percent or greater ownership or benefi- 36 cial interest or, in the case of a partnership or professional corpo- 37 ration, a direct or indirect ownership interest in excess of five 38 percent. 39 (24) "Related party transaction" means any transaction, agreement or 40 any other arrangement in which a related party has a financial interest 41 and in which the corporation or any affiliate of the corporation is a 42 participant, except that a transaction shall not be a related party 43 transaction if: (i) the transaction or the related party's financial 44 interest in the transaction is de minimis, (ii) the transaction would 45 not customarily be reviewed by the board or boards of similar organiza- 46 tions in the ordinary course of business and is available to others on 47 the same or similar terms, or (iii) the transaction constitutes a bene- 48 fit provided to a related party solely as a member of a class of the 49 beneficiaries that the corporation intends to benefit as part of the 50 accomplishment of its mission which benefit is available to all similar- 51 ly situated members of the same class on the same terms. 52 (25) "Key [employee] person" means any person [who is in a position to53exercise substantial influence over the affairs of the corporation, as54referenced in 26 U.S.C. § 4958(f)(1)(A) and further specified in 26 CFR55§ 53.4958-3(c), (d) and (e), or succeeding provisions to the extent such56provisions are applicable], other than a director or officer, whether orS. 7913--B 3 1 not an employee of the corporation, who (i) has responsibilities, or 2 exercises powers or influence over the corporation as a whole similar to 3 the responsibilities, powers, or influence of directors and officers; 4 (ii) manages the corporation, or a segment of the corporation that 5 represents a substantial portion of the activities, assets, income or 6 expenses of the corporation; or (iii) alone or with others controls or 7 determines a substantial portion of the corporation's capital expendi- 8 tures or operating budget. 9 § 2. Section 114 of the not-for-profit corporation law, as amended by 10 chapter 549 of the laws of 2013, is amended to read as follows: 11 § 114. Visitation of supreme court. 12 Charitable corporations, whether formed under general or special laws, 13 with their books and vouchers, shall be subject to the visitation and 14 inspection of a justice of the supreme court, or of any person appointed 15 by the court for that purpose. If it appears by the verified petition of 16 a member, director, officer or creditor of any such corporation, that 17 it, or its directors, officers, members, key [employees] persons or 18 agents, have misappropriated any of the funds or property of the corpo- 19 ration, or diverted them from the purpose of its incorporation, or that 20 the corporation has acquired property in excess of the amount which it 21 is authorized by law to hold, or has engaged in any business other than 22 that stated in its certificate of incorporation, the court may order 23 that notice of at least eight days, with a copy of the petition, be 24 served on the corporation, the attorney general and the persons charged 25 with misconduct, requiring them to show cause at a time and place speci- 26 fied, why they should not be required to make and file an inventory and 27 account of the property, effects and liabilities of such corporation 28 with a detailed statement of its transactions during the twelve months 29 next preceding the granting of such order. On the hearing of such appli- 30 cation, the court may make an order requiring such inventory, account 31 and statement to be filed, and proceed to take and state an account of 32 the property and liabilities of the corporation, or may appoint a refer- 33 ee for that purpose. When such account is taken and stated, after hear- 34 ing all the parties to the application, the court may enter a final 35 order determining the amount of property so held by the corporation, its 36 annual income, whether any of the property or funds of the corporation 37 have been misappropriated or diverted to any other purpose than that for 38 which such corporation was incorporated, and whether such corporation 39 has been engaged in any activity not covered by its certificate of 40 incorporation. An appeal may be taken from the order by any party 41 aggrieved to the appellate division of the supreme court, and to the 42 court of appeals, as in a civil action. No corporation shall be required 43 to make and file more than one inventory and account in any one year, 44 nor to make a second account and inventory, while proceedings are pend- 45 ing for the statement of an account under this section. 46 § 3. Section 309 of the not-for-profit corporation law, as added by 47 chapter 549 of the laws of 2013, is amended to read as follows: 48 § 309. Personal jurisdiction and service of process on non-domiciliary 49 resident director, officer, key [employee] person or agent. 50 A person, by becoming a director, officer, key [employee] person or 51 agent of a corporation is subject to the personal jurisdiction of the 52 supreme court of the state of New York, and in an action or proceeding 53 by the attorney general under this chapter process may be served upon 54 such person as provided in section three hundred thirteen of the civil 55 practice law and rules.S. 7913--B 4 1 § 4. Paragraphs (a) and (e) of section 712 of the not-for-profit 2 corporation law, paragraph (a) as amended by chapter 549 of the laws of 3 2013 and paragraph (e) as amended by chapter 555 of the laws of 2015, 4 are amended to read as follows: 5 (a) [If the] The certificate of incorporation [or the], the by-laws 6 [so provide], or the board[, by resolution adopted by a majority of the7entire board, may designate from among its members an executive commit-8tee and other committees] may create committees of the board, each 9 consisting of three or more directors[, and each of which, to the extent10provided in the resolution or in the certificate of incorporation or11by-laws, shall have all the authority of the board]. The board shall 12 appoint the members of such committee of the board, except that in the 13 case of any executive committee or similar committee however denomi- 14 nated, the appointment shall be made by a majority of the entire board, 15 provided that in the case of a board of thirty members or more, the 16 appointment shall be made by at least three-quarters of the directors 17 present at the time of the vote, if a quorum is present at that time. In 18 addition, the by-laws may provide that directors who are the holders of 19 certain positions in the corporation shall be ex-officio members of 20 specific committees. Each such committee shall have the authority of the 21 board to the extent provided in a board resolution or in the certificate 22 of incorporation or by-laws, except that no [such] committee of any kind 23 shall have authority as to the following matters: 24 (1) The submission to members of any action requiring members' 25 approval under this chapter. 26 (2) The filling of vacancies in the board of directors or in any 27 committee. 28 (3) The fixing of compensation of the directors for serving on the 29 board or on any committee. 30 (4) The amendment or repeal of the by-laws or the adoption of new 31 by-laws. 32 (5) The amendment or repeal of any resolution of the board which by 33 its terms shall not be so amendable or repealable. 34 (6) The election or removal of officers and directors. 35 (7) The approval of a merger or plan of dissolution. 36 (8) The adoption of a resolution recommending to the members action on 37 the sale, lease, exchange or other disposition of all or substantially 38 all the assets of a corporation or, if there are no members entitled to 39 vote, the authorization of such transaction. 40 (9) The approval of amendments to the certificate of incorporation. 41 (e) Committees, other than committees of the board, whether created by 42 the board or by the members, shall be committees of the corporation. No 43 such committee shall have the authority to bind the board. [Provisions44of this chapter applicable to officers generally shall apply to members45of such committees.] Members of such committees of the corporation, who 46 may be non-directors, shall be elected or appointed in the manner set 47 forth in the by-laws, or if not set forth in the by-laws, in the same 48 manner as officers of the corporation. 49 § 5. Paragraph (c) of section 712-a of the not-for-profit corporation 50 law is REPEALED. 51 § 6. Paragraph (f) of section 713 of the not-for-profit corporation 52 law, as added by chapter 549 of the laws of 2013, is amended to read as 53 follows: 54 (f) No employee of the corporation shall serve as chair of the board 55 or hold any other title with similar responsibilities, unless the board 56 approves such employee serving as chair of the board by a two-thirdsS. 7913--B 5 1 vote of the entire board and contemporaneously documents in writing the 2 basis for the board approval; provided, however, that no such employee 3 shall be considered an independent director for the purposes of this 4 chapter. 5 § 7. Paragraph (a) of section 715 of the not-for-profit corporation 6 law, as amended by chapter 549 of the laws of 2013, is amended and two 7 new paragraphs (i) and (j) are added to read as follows: 8 (a) No corporation shall enter into any related party transaction 9 unless the transaction is determined by the board, or an authorized 10 committee thereof, to be fair, reasonable and in the corporation's best 11 interest at the time of such determination. Any director, officer or key 12 [employee] person who has an interest in a related party transaction 13 shall disclose in good faith to the board, or an authorized committee 14 thereof, the material facts concerning such interest. 15 (i) In an action by any person or entity other than the attorney 16 general, it shall be a defense to a claim of violation of any provisions 17 of this section that a transaction was fair, reasonable and in the 18 corporation's best interest at the time the corporation approved the 19 transaction. 20 (j) In an action by the attorney general with respect to a related 21 party transaction not approved in accordance with paragraphs (a) or (b) 22 of this section at the time it was entered into, whichever is applica- 23 ble, it shall be a defense to a claim of violation of any provisions of 24 this section that (1) the transaction was fair, reasonable and in the 25 corporation's best interest at the time the corporation approved the 26 transaction and (2) prior to receipt of any request for information by 27 the attorney general regarding the transaction, the board has: (A) rati- 28 fied the transaction by finding in good faith that it was fair, reason- 29 able and in the corporation's best interest at the time the corporation 30 approved the transaction; and, with respect to any related party trans- 31 action involving a charitable corporation and in which a related party 32 has a substantial financial interest, considered alternative trans- 33 actions to the extent available, approving the transaction by not less 34 than a majority vote of the directors or committee members present at 35 the meeting; (B) documented in writing the nature of the violation and 36 the basis for the board's or committee's ratification of the trans- 37 action; and (C) put into place procedures to ensure that the corporation 38 complies with paragraphs (a) and (b) of this section as to related party 39 transactions in the future. 40 § 8. Paragraph (a) of section 715-a of the not-for-profit corporation 41 law, as added by chapter 549 of the laws of 2013, is amended to read as 42 follows: 43 (a) Except as provided in paragraph (d) of this section, [every corpo-44ration] the board shall adopt, and oversee the implementation of, and 45 compliance with, a conflict of interest policy to ensure that its direc- 46 tors, officers and key [employees] persons act in the corporation's best 47 interest and comply with applicable legal requirements, including but 48 not limited to the requirements set forth in section seven hundred 49 fifteen of this article. 50 § 9. Subparagraph 2 of paragraph (b) of section 715-a of the not-for- 51 profit corporation law, as added by chapter 549 of the laws of 2013, is 52 amended to read as follows: 53 (2) procedures for disclosing a conflict of interest [to the audit54committee or, if there is no audit committee,] or possible conflict of 55 interest to the board or to a committee of the board, and procedures for 56 the board or committee to determine whether a conflict exists;S. 7913--B 6 1 § 10. Paragraph (a) of section 715-b of the not-for-profit corporation 2 law, as added by chapter 549 of the laws of 2013, is amended to read as 3 follows: 4 (a) Except as provided in paragraph (c) of this section, the board of 5 every corporation that has twenty or more employees and in the prior 6 fiscal year had annual revenue in excess of one million dollars shall 7 adopt, and oversee the implementation of, and compliance with, a whist- 8 leblower policy to protect from retaliation persons who report suspected 9 improper conduct. Such policy shall provide that no director, officer, 10 employee or volunteer of a corporation who in good faith reports any 11 action or suspected action taken by or within the corporation that is 12 illegal, fraudulent or in violation of any adopted policy of the corpo- 13 ration shall suffer intimidation, harassment, discrimination or other 14 retaliation or, in the case of employees, adverse employment conse- 15 quence. 16 § 11. Subparagraphs 2 and 3 of paragraph (b) of section 715-b of the 17 not-for-profit corporation law, subparagraph 2 as added by chapter 549 18 of the laws of 2013 and subparagraph 3 as amended by chapter 555 of the 19 laws of 2015, are amended to read as follows: 20 (2) A requirement that an employee, officer or director of the corpo- 21 ration be designated to administer the whistleblower policy and to 22 report to [the audit committee or other committee of independent direc-23tors or, if there are no such committees, to] the board or an authorized 24 committee thereof, except that directors who are employees may not 25 participate in any board or committee deliberations or voting relating 26 to administration of the whistleblower policy; [and] 27 (3) A requirement that the person who is the subject of a whistleblow- 28 er complaint not be present at or participate in board or committee 29 deliberations or vote on the matter relating to such complaint, provided 30 that nothing in this subparagraph shall prohibit the board or committee 31 from requesting that the person who is subject to the complaint present 32 information as background or answer questions at a committee or board 33 meeting prior to the commencement of deliberations or voting relating 34 thereto; and 35 (4) A requirement that a copy of the policy be distributed to all 36 directors, officers, employees and to volunteers who provide substantial 37 services to the corporation. For purposes of this subdivision, posting 38 the policy on the corporation's website or at the corporation's offices 39 in a conspicuous location accessible to employees and volunteers are 40 among the methods a corporation may use to satisfy the distribution 41 requirement. 42 § 12. The section heading and paragraph (a) of section 720 of the 43 not-for-profit corporation law, as amended by chapter 549 of the laws of 44 2013, are amended to read as follows: 45 Actions against directors, officers and key [employees] persons. 46 (a) An action may be brought against one or more directors, officers, 47 or key [employees] persons of a corporation to procure a judgment for 48 the following relief: 49 § 13. Subparagraphs 3, 6, 7 and 8 of paragraph (a) of section 8-1.9 of 50 the estates, powers and trusts law, subparagraphs 3, 6 and 7 as amended 51 by chapter 555 of the laws of 2015 and subparagraph 8 as added by chap- 52 ter 549 of the laws of 2013, are amended to read as follows: 53 (3) "Key [employee] person" means any person other than a trustee, 54 whether or not an employee, who [is in a position to exercise substan-55tial influence over the affairs of the trust, as referenced in 26 U.S.C.56section 4958(f)(1)(A) and further specified in 26 C.F.R. sectionS. 7913--B 7 153.4958-3(c), (d) and (e), or succeeding provisions to the extent such2provisions are applicable] (i) has responsibilities, or exercises powers 3 of influence over the trust as a whole similar to the responsibilities, 4 powers, or influence of trustees and officers; (ii) manages the trust, 5 or a segment of the trust that represents a substantial portion of the 6 activities, assets, income or expenses of the trust; or (iii) alone or 7 with others controls or determines a substantial portion of the trust's 8 capital expenditures or operating budget. 9 (6) "Related party" means (i) any trustee or key [employee] person of 10 the trust or any affiliate of the trust [or any other person who exer-11cises the powers of a trustee or key employee over the affairs of the12trust or any affiliate of the trust]; (ii) any relative of any individ- 13 ual described in clause (i) of this [subdivision] subparagraph; or (iii) 14 an entity in which any individual described in clauses (i) and (ii) of 15 this [subdivision] subparagraph has a thirty-five percent or greater 16 ownership or beneficial interest or, in the case of a partnership or 17 professional corporation, a direct ownership interest in excess of five 18 percent. 19 (7) "Independent trustee" means a trustee who: (i) is not, and has not 20 been within the last three years, an employee of the trust or an affil- 21 iate of the trust, and does not have a relative who is, or has been 22 within the last three years, a key [employee] person of the trust or an 23 affiliate of the trust; (ii) has not received, and does not have a rela- 24 tive who has received, in any of the last three fiscal years, more than 25 ten thousand dollars in direct compensation from the trust or an affil- 26 iate of the trust [(other than reimbursement for expenses or the payment27of trustee commissions or reasonable compensation as permitted by law28and the governing instrument)]; (iii) is not a current employee of or 29 does not have a substantial financial interest in, and does not have a 30 relative who is a current officer of or have a substantial financial 31 interest in, any entity that has [made payments] provided payments, 32 property or services to, or received payments, property or services 33 from, the trust or an affiliate of the trust [for] if the amount paid by 34 the trust to the entity or received by the trust from the entity for 35 such property or services [in an amount which], in any of the last three 36 fiscal years, [exceeds the lesser of twenty-five thousand dollars or two37percent of such entity's consolidated gross revenues] exceeded the less- 38 er of ten thousand dollars or two percent of such entity's consolidated 39 gross revenue if the entity's consolidated gross revenue was less than 40 five hundred thousand dollars; twenty-five thousand dollars if the enti- 41 ty's consolidated gross revenue was five hundred thousand dollars or 42 more but less than ten million dollars; one hundred thousand dollars if 43 the entity's consolidated gross revenue was ten million dollars or more; 44 or (iv) is not and does not have a relative who is a current owner, 45 whether wholly or partially, director, officer or employee of the 46 trust's outside auditor or who has worked on the trust's audit at any 47 time during the past three years. For purposes of this [subdivision,] 48 subparagraph, the terms: "compensation" does not include reimbursement 49 for expenses or the payment of trustee commissions or reasonable compen- 50 sation as permitted by law and the governing instrument; and "payment" 51 does not include charitable contributions, dues or fees paid to the 52 trust for services which the trust performs as part of its nonprofit 53 purposes, or payments made by the trust at fixed or non-negotiable rates 54 or amounts for services received, provided that such services by and to 55 the trust are available to individual members of the public on the sameS. 7913--B 8 1 terms, and such services provided to the trust are not available from 2 another source. 3 (8) "Related party transaction" means any transaction, agreement or 4 any other arrangement in which a related party has a financial interest 5 and in which the trust or any affiliate of the trust is a participant, 6 except that a transaction shall not be a related party transaction if: 7 (i) the transaction or the related party's financial interest in the 8 transaction is de minimis, (ii) the transaction would not customarily be 9 reviewed by the board, or boards of similar organizations, in the ordi- 10 nary course of business and is available to others on the same or simi- 11 lar terms, or (iii) the transaction constitutes a benefit provided to a 12 related party solely as a member of a class of the beneficiaries that 13 the trust intends to benefit as part of the accomplishment of its 14 mission which benefit is available to all similarly situated members of 15 the same class on the same terms. 16 § 14. Subparagraph 3 of paragraph (b) of section 8-1.9 of the estates, 17 powers and trusts law is REPEALED. 18 § 15. Subparagraph 1 of paragraph (c) of section 8-1.9 of the estates, 19 powers and trusts law, as added by chapter 549 of the laws of 2013, is 20 amended and two new subparagraphs 7 and 8 are added to read as follows: 21 (1) Notwithstanding any provision of the trust instrument to the 22 contrary, no trust shall enter into any related party transaction unless 23 the transaction is determined by the trustees, or an authorized commit- 24 tee thereof, to be fair, reasonable and in the trust's best interest at 25 the time of such determination. Any trustee, officer or key employee who 26 has an interest in a related party transaction shall disclose in good 27 faith to the trustees, or an authorized committee thereof, the material 28 facts concerning such interest. 29 (7) In an action by any person or entity other than the attorney 30 general, it shall be a defense to a claim of violation of any provisions 31 of this paragraph that a transaction was fair, reasonable and in the 32 trust's best interest at the time the trust approved the transaction. 33 (8) In an action by the attorney general with respect to a related 34 party transaction not approved in accordance with subparagraph one or 35 two of this paragraph at the time it was entered into, whichever is 36 applicable, it shall be a defense to a claim of violation of any 37 provisions of this paragraph that (i) the transaction was fair, reason- 38 able and in the trust's best interest at the time the trust approved the 39 transaction and (ii) prior to receipt of any request for information by 40 the attorney general regarding the transaction, the trustees have: (A) 41 ratified the transaction by finding in good faith that it was fair, 42 reasonable and in the trust's best interest at the time the trustee 43 approved the transaction; and, with respect to any related party trans- 44 action involving a charitable corporation and in which a related party 45 has a substantial financial interest, considered alternative trans- 46 actions to the extent available, approving the transaction by not less 47 than a majority vote of the trustees or committee members present at the 48 meeting; (B) documented in writing the nature of the violation and the 49 basis for the trustees' or committee's ratification of the transaction; 50 and (C) put into place procedures to ensure that the trustee complies 51 with subparagraphs one and two of this paragraph as to related party 52 transactions in the future. 53 § 16. Subparagraph 1 of paragraph (d) of section 8-1.9 of the estates, 54 powers and trusts law, as added by chapter 549 of the laws of 2013, is 55 amended to read as follows:S. 7913--B 9 1 (1) Except as provided in subparagraph four of this paragraph, every 2 trust shall adopt, and oversee the implementation of, and compliance 3 with, a conflict of interest policy to ensure that its trustees, offi- 4 cers and key [employees] persons act in the best interest of the trust 5 and its beneficiaries and comply with applicable legal requirements, 6 including but not limited to the requirements set forth in this para- 7 graph. 8 § 17. Clause (B) of subparagraph 2 of paragraph (d) of section 8-1.9 9 of the estates, powers and trusts law, as added by chapter 549 of the 10 laws of 2013, is amended to read as follows: 11 (B) procedures for disclosing a conflict of interest [to the audit12committee or, if there is no audit committee,] or possible conflict of 13 interest to the trustees or to a committee of the trustees, and proce- 14 dures for the trustees or committee to determine whether a conflict 15 exists; 16 § 18. Subparagraph 1 of paragraph (e) of section 8-1.9 of the estates, 17 powers and trusts law, as added by chapter 549 of the laws of 2013, is 18 amended to read as follows: 19 (1) Except as provided in subparagraph three of this paragraph, the 20 trustees of every trust that has twenty or more employees and in the 21 prior fiscal year had annual revenue in excess of one million dollars 22 shall adopt, and oversee the implementation of, and compliance with, a 23 whistleblower policy to protect from retaliation persons who report 24 suspected improper conduct. Such policy shall provide that no officer, 25 trustee, employee or volunteer of a trust who in good faith reports any 26 action or suspected action taken by or within the trust that is illegal, 27 fraudulent or in violation of any adopted policy of the trust shall 28 suffer intimidation, harassment, discrimination or other retaliation or, 29 in the case of employees, adverse employment consequence. 30 § 19. Clauses (B) and (C) of subparagraph 2 of paragraph (e) of 31 section 8-1.9 of the estates, powers and trusts law, clause (B) as added 32 by chapter 549 of the laws of 2013 and clause (C) as amended by chapter 33 555 of the laws of 2015, are amended to read as follows: 34 (B) A requirement that a trustee, officer or employee of the trust be 35 designated to administer, the whistleblower policy and to report to [the36audit committee or other committee of independent trustees, or to] the 37 trustees or an authorized committee thereof, except that trustees who 38 are employees may not participate in any board or committee deliber- 39 ations or voting relating to administration of the whistleblower policy; 40 [and] 41 (C) A requirement that the person who is the subject of a whistleblow- 42 er complaint not be present at or participate in board or committee 43 deliberation or vote on the matter relating to such complaint, provided 44 that nothing in this subparagraph shall prohibit the board or committee 45 from requesting that the person who is subject to the complaint present 46 information as background or answer questions at a committee or board 47 meeting prior to the commencement of deliberations or voting relating 48 thereto; and 49 (D) A requirement that a copy of the policy be distributed to all 50 trustees, officers, employees and volunteers, with instructions on how 51 to comply with the procedures set forth in the policy. For purposes of 52 this subdivision, posting the policy on the corporation's website or at 53 the corporation's offices in a conspicuous location accessible to 54 employees and volunteers are among the methods a corporation may use to 55 satisfy the distribution requirement.S. 7913--B 10 1 § 20. Severability. If any clause, sentence, paragraph, section or 2 part of this act shall be adjudged by any court of competent jurisdic- 3 tion to be invalid, the judgment shall not affect, impair, or invalidate 4 the remainder thereof, but shall be confined in its operation to the 5 clause, sentence, paragraph, section or part thereof directly involved 6 in the controversy in which the judgement shall have been rendered. 7 § 21. This act shall take effect on the one hundred eightieth day 8 after it shall have become a law; provided, however, that the amendments 9 to paragraph (f) of section 713 of the not-for-profit corporation law 10 made by section six of this act shall take effect on the same date and 11 in the same manner as section 132 of chapter 549 of the laws of 2013, as 12 amended, takes effect.