Bill Text: NY S07913 | 2015-2016 | General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          7913
                    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
        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] a director  employed
     8  by or receiving compensation from the corporation or a key person of the
     9  corporation  or  an  affiliate  of  the corporation, and does not have a
    10  relative who is, or has been within the last three years, a key [employ-
    11  ee] person of the corporation or an affiliate of the  corporation;  (ii)
    12  has  not received, and does not have a relative who has received, in any
    13  of the last three fiscal years, more than ten thousand dollars in direct
    14  compensation from the corporation or an  affiliate  of  the  corporation
    15  [(other  than reimbursement for expenses reasonably incurred as a direc-
    16  tor or reasonable compensation for service as a director as permitted by
    17  paragraph (a) of section 202 (General and special  powers))];  (iii)  is
    18  not  a  current  employee  of  or  does not have a substantial financial
    19  interest in, and does not have a relative who is a current officer of or
    20  has a substantial financial interest  in,  any  entity  that  has  [made
    21  payments]  provided  payments,  property  or  services  to,  or received
    22  payments, property or services from, the corporation or an affiliate  of
    23  the corporation [for] if the amount paid by the corporation to the enti-
    24  ty  or  received by the corporation from the entity for such property or
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14985-03-6
        S. 7913                             2
     1  services [in an amount which], in any of the last  three  fiscal  years,
     2  [exceeds  the  lesser  of twenty-five thousand dollars or two percent of
     3  such entity's consolidated gross revenues] exceeded the  lesser  of  ten
     4  thousand  dollars  or  two  percent  of such entity's consolidated gross
     5  revenues if the entity's consolidated gross revenue was less  than  five
     6  hundred  thousand  dollars; twenty-five thousand dollars if the entity's
     7  consolidated gross revenue was five hundred thousand dollars or more but
     8  less than ten million dollars; fifty thousand dollars  if  the  entity's
     9  consolidated  gross  revenue was ten million dollars or more; or (iv) is
    10  not and does not have a relative who is a current owner, whether  wholly
    11  or partially, director, officer or employee of the corporation's outside
    12  auditor  or who has worked on the corporation's audit at any time during
    13  the past three years. For purposes of this [subdivision,]  subparagraph,
    14  the  terms:  "compensation"  does not include reimbursement for expenses
    15  reasonably incurred as a director or reasonable compensation for service
    16  as a director as permitted by paragraph (a) of section two  hundred  two
    17  of  this  chapter;  and  "payment"  does not include charitable contrib-
    18  utions, dues or fees paid to the  corporation  for  services  which  the
    19  corporation performs as part of its nonprofit purposes, or payments made
    20  by  the  corporation  at  fixed  or  non-negotiable rates or amounts for
    21  services received, provided that such services by and to the corporation
    22  are available to individual members of the public on the same terms, and
    23  such services received by the corporation are not available from another
    24  source.
    25    (23) "Related party" means (i) any director, officer or key [employee]
    26  person of the corporation or any affiliate of the corporation[,  or  any
    27  other  person  who  exercises  the  powers of directors, officers or key
    28  [employees] persons over the affairs of the corporation or any affiliate
    29  of the corporation]; (ii) any relative of any  individual  described  in
    30  clause  (i)  of  this [subdivision] subparagraph; or (iii) any entity in
    31  which any individual described in clauses (i) and (ii) of this [subdivi-
    32  sion] subparagraph has a thirty-five percent  or  greater  ownership  or
    33  beneficial  interest  or,  in  the case of a partnership or professional
    34  corporation, a direct or indirect ownership interest in excess  of  five
    35  percent.
    36    (24)  "Related  party transaction" means any transaction, agreement or
    37  any other arrangement in which a related party has a financial  interest
    38  and  in  which  the corporation or any affiliate of the corporation is a
    39  participant, except that a transaction shall  not  be  a  related  party
    40  transaction  if:  (i)  the  transaction or the related party's financial
    41  interest in the transaction is de minimis, (ii)  the  transaction  would
    42  not  customarily be reviewed by the board or boards of similar organiza-
    43  tions in the ordinary course of business and is available to  others  on
    44  the  same or similar terms, or (iii) the transaction constitutes a bene-
    45  fit provided to a related party solely as a member of  a  class  of  the
    46  beneficiaries  that  the  corporation  intends to benefit as part of the
    47  accomplishment of its mission which benefit is available to all  members
    48  similarly situated of the same class on the same terms.
    49    (25) "Key [employee] person" means any person [who is in a position to
    50  exercise  substantial  influence over the affairs of the corporation, as
    51  referenced in 26 U.S.C. § 4958(f)(1)(A) and further specified in 26  CFR
    52  § 53.4958-3(c), (d) and (e), or succeeding provisions to the extent such
    53  provisions  are  applicable],  whether  or not an employee of the corpo-
    54  ration, who (i) has responsibilities, or exercises powers  or  influence
    55  over the corporation as a whole similar to the responsibilities, powers,
    56  or influence of directors and officers; (ii) manages the corporation, or
        S. 7913                             3
     1  a  segment  of  the corporation that represents a substantial portion of
     2  the activities, assets, income or expenses of the corporation; or  (iii)
     3  alone or with others controls or determines a substantial portion of the
     4  corporation's capital expenditures or operating budget.
     5    §  2.  Section  309 of the not-for-profit corporation law, as added by
     6  chapter 549 of the laws of 2013, is amended to read as follows:
     7  § 309. Personal jurisdiction and service of process  on  non-domiciliary
     8           resident director, officer, key [employee] person or agent.
     9    A  person,  by  becoming a director, officer, key [employee] person or
    10  agent of a corporation is subject to the personal  jurisdiction  of  the
    11  supreme  court  of the state of New York, and in an action or proceeding
    12  by the attorney general under this chapter process may  be  served  upon
    13  such  person  as provided in section three hundred thirteen of the civil
    14  practice law and rules.
    15    § 3. Paragraphs (a) and (e)  of  section  712  of  the  not-for-profit
    16  corporation  law, paragraph (a) as amended by chapter 549 of the laws of
    17  2013 and paragraph (e) as amended by chapter 555 of the  laws  of  2015,
    18  are amended to read as follows:
    19    (a)  [If  the]  The certificate of incorporation [or the], the by-laws
    20  [so provide], or the board[, by resolution adopted by a majority of  the
    21  entire  board, may designate from among its members an executive commit-
    22  tee and other committees] may  create  committees  of  the  board,  each
    23  consisting of three or more directors[, and each of which, to the extent
    24  provided  in  the  resolution  or in the certificate of incorporation or
    25  by-laws, shall have all the authority of the  board].  The  board  shall
    26  appoint  the  members of such committee of the board, except that in the
    27  case of any executive committee or  similar  committee  however  denomi-
    28  nated,  the appointment shall be made by a majority of the entire board,
    29  provided that in the case of a board of  thirty  members  or  more,  the
    30  appointment  shall  be  made by at least three-quarters of the directors
    31  present at the time of the vote, if a quorum is present at that time. In
    32  addition, the by-laws may provide that directors who are the holders  of
    33  certain  positions  shall  be ex-officio, non-voting members of specific
    34  committees. Each such committee shall have the authority of the board to
    35  the extent provided in a board  resolution  or  in  the  certificate  of
    36  incorporation  or  by-laws,  except that no [such] committee of any kind
    37  shall have authority as to the following matters:
    38    (1) The  submission  to  members  of  any  action  requiring  members'
    39  approval under this chapter.
    40    (2)  The  filling  of  vacancies  in  the board of directors or in any
    41  committee.
    42    (3) The fixing of compensation of the directors  for  serving  on  the
    43  board or on any committee.
    44    (4)  The  amendment  or  repeal  of the by-laws or the adoption of new
    45  by-laws.
    46    (5) The amendment or repeal of any resolution of the  board  which  by
    47  its terms shall not be so amendable or repealable.
    48    (6) The election or removal of officers and directors.
    49    (7) The approval of a merger or plan of dissolution.
    50    (8) The authorization  or adoption of a resolution recommending to the
    51  members  action on the sale, lease, exchange or other disposition of all
    52  or substantially all the assets.
    53    (9) The approval of amendments to the certificate of incorporation.
    54    (e) Committees, other than committees of the board, whether created by
    55  the board or by the members, shall be committees of the corporation.  No
    56  such  committee  shall have the authority to bind the board. [Provisions
        S. 7913                             4

     1  of this chapter applicable to officers generally shall apply to  members
     2  of  such committees.] Members of such committees of the corporation, who
     3  may be non-directors, shall be elected or appointed in  the  manner  set
     4  forth  in  the  by-laws, or if not set forth in the by-laws, in the same
     5  manner as officers of the corporation.
     6    § 4. Paragraph (c) of section 712-a of the not-for-profit  corporation
     7  law is REPEALED.
     8    §  5.  Paragraph  (f) of section 713 of the not-for-profit corporation
     9  law, as added by chapter 549 of the laws of 2013, is amended to read  as
    10  follows:
    11    (f)  No  employee of the corporation shall serve as chair of the board
    12  or hold any other title with similar responsibilities, unless the  board
    13  approves  such  employee  serving  as chair of the board by a two-thirds
    14  vote of the entire board and contemporaneously documents in writing  the
    15  basis  for  the board approval; provided, however, that no such employee
    16  shall be considered an independent director for  the  purposes  of  this
    17  chapter.
    18    §  6.  Paragraph  (a) of section 715 of the not-for-profit corporation
    19  law, as amended by chapter 549 of the laws of 2013, is amended  and  two
    20  new paragraphs (i) and (j) are added to read as follows:
    21    (a)  No  corporation  shall  enter  into any related party transaction
    22  unless the transaction is determined by  the  board,  or  an  authorized
    23  committee  thereof, to be fair, reasonable and in the corporation's best
    24  interest at the time of such determination. Any director, officer or key
    25  [employee] person who has an interest in  a  related  party  transaction
    26  shall  disclose  in  good faith to the board, or an authorized committee
    27  thereof, the material facts concerning such interest.
    28    (i) In an action by any person  or  entity  other  than  the  attorney
    29  general, it shall be a defense to a claim of violation of any provisions
    30  of  this  section  that  a  transaction  was fair, reasonable and in the
    31  corporation's best interest at the time  the  corporation  approved  the
    32  transaction.
    33    (j)  In  an  action  by the attorney general with respect to a related
    34  party transaction not approved in accordance with paragraphs (a) or  (b)
    35  of  this  section at the time it was entered into, whichever is applica-
    36  ble, it shall be a defense to a claim of violation of any provisions  of
    37  this  section  that  (1) the transaction was fair, reasonable and in the
    38  corporation's best interest at the time  the  corporation  approved  the
    39  transaction  and  (2) prior to receipt of any request for information by
    40  the attorney general regarding the transaction, the board has: (A) rati-
    41  fied the transaction by finding in good faith that it was fair,  reason-
    42  able  and in the corporation's best interest at the time the corporation
    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 directors or committee  members  present  at
    48  the  meeting;  (B) documented in writing the nature of the violation and
    49  the basis for the board's or  committee's  ratification  of  the  trans-
    50  action; and (C) put into place procedures to ensure that the corporation
    51  complies  with paragraphs (a) or (b) of this section as to related party
    52  transactions in the future, whichever is applicable.
    53    § 7. Paragraph (a) of section 715-a of the not-for-profit  corporation
    54  law,  as added by chapter 549 of the laws of 2013, is amended to read as
    55  follows:
        S. 7913                             5
     1    (a) Except as provided in paragraph (d) of this section, [every corpo-
     2  ration] the board shall adopt, and oversee the  implementation  of,  and
     3  compliance with, a conflict of interest policy to ensure that its direc-
     4  tors, officers and key [employees] persons act in the corporation's best
     5  interest  and  comply  with applicable legal requirements, including but
     6  not limited to the requirements  set  forth  in  section  seven  hundred
     7  fifteen of this article.
     8    §  8. Subparagraph 2 of paragraph (b) of section 715-a of the not-for-
     9  profit corporation law, as added by chapter 549 of the laws of 2013,  is
    10  amended to read as follows:
    11    (2)  procedures  for  disclosing  a conflict of interest [to the audit
    12  committee or, if there is no audit committee,] or possible  conflict  of
    13  interest  to  the  board  or to a committee of the board consisting of a
    14  majority of independent directors,  and  procedures  for  the  board  or
    15  committee to determine whether a conflict exists;
    16    §  9. Paragraph (a) of section 715-b of the not-for-profit corporation
    17  law, as added by chapter 549 of the laws of 2013, is amended to read  as
    18  follows:
    19    (a)  Except as provided in paragraph (c) of this section, the board of
    20  every corporation that has twenty or more employees  and  in  the  prior
    21  fiscal  year  had  annual revenue in excess of one million dollars shall
    22  adopt, and oversee the implementation of, and compliance with, a  whist-
    23  leblower policy to protect from retaliation persons who report suspected
    24  improper  conduct.  Such policy shall provide that no director, officer,
    25  employee or volunteer of a corporation who in  good  faith  reports  any
    26  action  or  suspected  action taken by or within the corporation that is
    27  illegal, fraudulent or in violation of any adopted policy of the  corpo-
    28  ration  shall  suffer  intimidation, harassment, discrimination or other
    29  retaliation or, in the case  of  employees,  adverse  employment  conse-
    30  quence.
    31    § 10. Subparagraph 2 of paragraph (b) of section 715-b of the not-for-
    32  profit  corporation law, as added by chapter 549 of the laws of 2013, is
    33  amended to read as follows:
    34    (2) A requirement that an employee, officer or director of the  corpo-
    35  ration  be  designated  to  administer  the  whistleblower policy and to
    36  report to [the audit committee or other committee of independent  direc-
    37  tors or, if there are no such committees, to] the board or an authorized
    38  committee  thereof  consisting  of  a majority of independent directors,
    39  except that directors who are employees may not participate in any board
    40  or committee deliberations or voting relating to administration  of  the
    41  whistleblower  policy,  provided  that  nothing  in this paragraph shall
    42  prohibit the board or committee from requesting that a  person  with  an
    43  interest in the matter present information as background or answer ques-
    44  tions  at  a  committee  or  board  meeting prior to the commencement of
    45  deliberations or voting relating thereto; and
    46    § 11. Subparagraphs 3, 6, 7 and 8 of paragraph (a) of section 8-1.9 of
    47  the estates, powers and trusts law, subparagraphs 3, 6 and 7 as  amended
    48  by  chapter 555 of the laws of 2015 and subparagraph 8 as added by chap-
    49  ter 549 of the laws of 2013, are amended to read as follows:
    50    (3) "Key [employee] person" means any person  other  than  a  trustee,
    51  whether  or  not an employee, who [is in a position to exercise substan-
    52  tial influence over the affairs of the trust, as referenced in 26 U.S.C.
    53  section  4958(f)(1)(A)  and  further  specified  in  26  C.F.R.  section
    54  53.4958-3(c),  (d)  and (e), or succeeding provisions to the extent such
    55  provisions are applicable] (i) has responsibilities, or exercises powers
    56  of influence over the trust as a whole similar to the  responsibilities,
        S. 7913                             6
     1  powers,  or  influence of trustees and officers; (ii) manages the trust,
     2  or a segment of the trust that represents a substantial portion  of  the
     3  activities,  assets,  income or expenses of the trust; or (iii) alone or
     4  with  others controls or determines a substantial portion of the trust's
     5  capital expenditures or operating budget.
     6    (6) "Related party" means (i) any trustee or key [employee] person  of
     7  the  trust  or any affiliate of the trust [or any other person who exer-
     8  cises the powers of a trustee or key employee over the  affairs  of  the
     9  trust  or any affiliate of the trust]; (ii) any relative of any individ-
    10  ual described in clause (i) of this [subdivision] subparagraph; or (iii)
    11  an entity in which any individual described in clauses (i) and  (ii)  of
    12  this  [subdivision]  subparagraph  has  a thirty-five percent or greater
    13  ownership or beneficial interest or, in the case  of  a  partnership  or
    14  professional  corporation, a direct ownership interest in excess of five
    15  percent.
    16    (7) "Independent trustee" means a trustee who: (i) is not, and has not
    17  been within the last three years, an employee of the trust or an  affil-
    18  iate  of  the  trust,  and  does not have a relative who is, or has been
    19  within the last three years, a trustee receiving compensation  from  the
    20  corporation  or  a key [employee] person of the trust or an affiliate of
    21  the trust; (ii) has not received, and does not have a relative  who  has
    22  received,  in any of the last three fiscal years, more than ten thousand
    23  dollars in direct compensation from the trust or  an  affiliate  of  the
    24  trust  [(other than reimbursement for expenses or the payment of trustee
    25  commissions or reasonable compensation  as  permitted  by  law  and  the
    26  governing  instrument)];  (iii) is not a current employee of or does not
    27  have a substantial financial interest in, and does not have  a  relative
    28  who is a current officer of or have a substantial financial interest in,
    29  any  entity  that  has  [made  payments]  provided payments, property or
    30  services to, or received payments, property or services from, the  trust
    31  or  an  affiliate  of the trust [for] if the amount paid by the trust to
    32  the entity or received by the trust from the entity for such property or
    33  services [in an amount which], in any of the last  three  fiscal  years,
    34  [exceeds  the  lesser  of twenty-five thousand dollars or two percent of
    35  such entity's consolidated gross revenues] exceeded the  lesser  of  ten
    36  thousand  dollars  or  two  percent  of such entity's consolidated gross
    37  revenues if the entity's consolidated gross revenue was less  than  five
    38  hundred  thousand  dollars; twenty-five thousand dollars if the entity's
    39  consolidated gross revenue was five hundred thousand dollars or more but
    40  less than ten million dollars; fifty thousand dollars  if  the  entity's
    41  consolidated  gross  revenue was ten million dollars or more; or (iv) is
    42  not and does not have a relative who is a current owner, whether  wholly
    43  or partially, director, officer or employee of the trust's outside audi-
    44  tor  or  who has worked on the trust's audit at any time during the past
    45  three years. For  purposes  of  this  [subdivision,]  subparagraph,  the
    46  terms: "compensation" does not include reimbursement for expenses or the
    47  payment  of  trustee commissions or reasonable compensation as permitted
    48  by law and the governing instrument;  and  "payment"  does  not  include
    49  charitable  contributions,  dues  or fees paid to the trust for services
    50  which the trust performs as part of its nonprofit purposes, or  payments
    51  made  by  the  trust  at  fixed  or  non-negotiable rates or amounts for
    52  services received, provided that such services by and to the  trust  are
    53  available  to  individual  members  of the public on the same terms, and
    54  such services provided to the  trust  are  not  available  from  another
    55  source.
        S. 7913                             7
     1    (8)  "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 trust or any affiliate of the trust is a participant,
     4  except that a transaction shall not be a related party  transaction  if:
     5  (i)  the  transaction  or  the related party's financial interest in the
     6  transaction is de minimis, (ii) the transaction would not customarily be
     7  reviewed by the board, or boards of similar organizations, in the  ordi-
     8  nary  course of business and is available to others on the same or simi-
     9  lar terms, or (iii) the transaction constitutes a benefit provided to  a
    10  related  party  solely  as a member of a class of the beneficiaries that
    11  the trust intends to benefit  as  part  of  the  accomplishment  of  its
    12  mission  which benefit is available to all members similarly situated of
    13  the same class on the same terms.
    14    § 12. Subparagraph 3 of paragraph (b) of section 8-1.9 of the estates,
    15  powers and trusts law is REPEALED.
    16    § 13. Subparagraph 1 of paragraph (c) 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 and two new subparagraphs 7 and 8 are added to read as follows:
    19    (1)  Notwithstanding  any  provision  of  the  trust instrument to the
    20  contrary, no trust shall enter into any related party transaction unless
    21  the transaction is determined by the trustees, or an authorized  commit-
    22  tee  thereof, to be fair, reasonable and in the trust's best interest at
    23  the time of such determination. Any trustee, officer or key employee who
    24  has an interest in a related party transaction shall  disclose  in  good
    25  faith  to the trustees, or an authorized committee thereof, the material
    26  facts concerning such interest.
    27    (7) In an action by any person  or  entity  other  than  the  attorney
    28  general, it shall be a defense to a claim of violation of any provisions
    29  of  this  paragraph  that  a transaction was fair, reasonable and in the
    30  trust's best interest at the time the trust approved the transaction.
    31    (8) In an action by the attorney general with  respect  to  a  related
    32  party  transaction not approved in accordance with clauses one or two of
    33  this paragraph at the time it was entered into, whichever is applicable,
    34  it shall be a defense to a claim of violation of any provisions of  this
    35  paragraph  that  (i)  the  transaction  was  fair, reasonable and in the
    36  trust's best interest at the time the trust approved the transaction and
    37  (ii) prior to receipt of any request for  information  by  the  attorney
    38  general  regarding  the transaction, the trustees have: (A) ratified the
    39  transaction by finding in good faith that it was fair, reasonable and in
    40  the trust's best interest at the time the trustee  approved  the  trans-
    41  action;  and,  with respect to any related party transaction involving a
    42  charitable corporation and in which a related party  has  a  substantial
    43  financial  interest,  considered  alternative transactions to the extent
    44  available, approving the transaction by not less than a majority vote of
    45  the trustees or committee members present at the meeting; (B) documented
    46  in writing the nature of the violation and the basis for  the  trustees'
    47  or  committee's  ratification of the transaction; and (C) put into place
    48  procedures to ensure that the trustee complies with clauses one  or  two
    49  of this paragraph as to related party transactions in the future, which-
    50  ever is applicable.
    51    § 14. Subparagraph 1 of paragraph (d) of section 8-1.9 of the estates,
    52  powers  and  trusts law, as added by chapter 549 of the laws of 2013, is
    53  amended to read as follows:
    54    (1) Except as provided in subparagraph four of this  paragraph,  every
    55  trust shall adopt a conflict of interest policy to ensure that its trus-
    56  tees,  officers  and key [employees] persons act in the best interest of
        S. 7913                             8
     1  the trust  and  its  beneficiaries  and  comply  with  applicable  legal
     2  requirements, including but not limited to the requirements set forth in
     3  this paragraph.
     4    §  15.  Clause (B) of subparagraph 2 of paragraph (d) of section 8-1.9
     5  of the estates, powers and trusts law, as added by chapter  549  of  the
     6  laws of 2013, is amended to read as follows:
     7    (B)  procedures  for  disclosing  a conflict of interest [to the audit
     8  committee or, if there is no audit committee,] or possible  conflict  of
     9  interest to the trustees or to a committee of the trustees consisting of
    10  a  majority  of independent trustees, and procedures for the trustees or
    11  committee to determine whether a conflict exists;
    12    § 16. Subparagraph 1 of paragraph (e) of section 8-1.9 of the estates,
    13  powers and trusts law, as added by chapter 549 of the laws of  2013,  is
    14  amended to read as follows:
    15    (1)  Except  as  provided in subparagraph three of this paragraph, the
    16  trustees of every trust that has twenty or more  employees  and  in  the
    17  prior  fiscal  year  had annual revenue in excess of one million dollars
    18  shall adopt a whistleblower policy to protect from  retaliation  persons
    19  who report suspected improper conduct. Such policy shall provide that no
    20  officer,  trustee,  employee  or  volunteer of a trust who in good faith
    21  reports any action or suspected action taken by or within the trust that
    22  is illegal, fraudulent or in violation of  any  adopted  policy  of  the
    23  trust  shall  suffer  intimidation,  harassment, discrimination or other
    24  retaliation or, in the case  of  employees,  adverse  employment  conse-
    25  quence.
    26    §  17.  Clause (B) of subparagraph 2 of paragraph (e) of section 8-1.9
    27  of the estates, powers and trusts law, as added by chapter  549  of  the
    28  laws of 2013, is amended to read as follows:
    29    (B)  A requirement that a trustee, officer or employee of the trust be
    30  designated to administer, the whistleblower policy and to report to [the
    31  audit committee or other committee of independent trustees, or  to]  the
    32  trustees  or an authorized committee thereof consisting of a majority of
    33  independent trustees, except that trustees who  are  employees  may  not
    34  participate  in  any board or committee deliberations or voting relating
    35  to administration of the whistleblower policy, provided that nothing  in
    36  this  paragraph shall prohibit the trustees or committee from requesting
    37  that a person with an interest in  the  matter  present  information  as
    38  background  or answer questions at a trustees or committee meeting prior
    39  to the commencement of deliberations or voting relating thereto; and
    40    § 18. Severability. If any clause,  sentence,  paragraph,  section  or
    41  part  of  this act shall be adjudged by any court of competent jurisdic-
    42  tion to be invalid, the judgment shall not affect, impair, or invalidate
    43  the remainder thereof, but shall be confined in  its  operation  to  the
    44  clause,  sentence,  paragraph, section or part thereof directly involved
    45  in the controversy in which the judgement shall have been rendered.
    46    § 19. This act shall take effect immediately; provided, however,  that
    47  paragraph  (f) of section 713 of the not-for-profit corporation law made
    48  by section five of this act shall take effect on the same  date  and  in
    49  the  same  manner  as section 132 of chapter 549 of the laws of 2013, as
    50  amended, takes effect.