senate Bill S5315A

Amended

Prohibits certain employees of a not-for-profit corporation from serving on the corporation's governing board or from hiring family members

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 16 / May / 2013
    • REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 14 / Jun / 2013
    • AMEND AND RECOMMIT TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 14 / Jun / 2013
    • PRINT NUMBER 5315A
  • 08 / Jan / 2014
    • REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 12 / May / 2014
    • 1ST REPORT CAL.605
  • 13 / May / 2014
    • 2ND REPORT CAL.
  • 14 / May / 2014
    • ADVANCED TO THIRD READING
  • 16 / Jun / 2014
    • AMENDED ON THIRD READING 5315B
  • 20 / Jun / 2014
    • COMMITTED TO RULES

Summary

Prohibits certain employees of a not-for-profit corporation from serving on the corporation's governing board or from hiring family members.

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Bill Details

See Assembly Version of this Bill:
A7726A
Versions:
S5315
S5315A
S5315B
Legislative Cycle:
2013-2014
Current Committee:
Senate Rules
Law Section:
Not-for-Profit Corporation Law
Laws Affected:
Amd ยง602, N-PC L

Votes

6
0
6
Aye
0
Nay
0
aye with reservations
0
absent
0
excused
0
abstained
show Corporations, Authorities and Commissions committee vote details

Sponsor Memo

BILL NUMBER:S5315A

TITLE OF BILL: An act to amend the not-for-profit corporation law, in
relation to prohibiting certain employees of a not-for-profit
corporation from serving on the corporation's governing board or from
hiring family members

PURPOSE:

This legislation requires not-profit-corporations to have in their
by-laws policies regarding employees involvement on governing boards,
the hiring of family members of both employees and governing. board
members, and the handling of issues arising from conflicts of business
interests. It also provides oversight of these by-laws by the State
Attorney General.

SUMMARY OF PROVISIONS:

Section 1: Amends Section 602 of the not-for-profit corporation law by
adding four new paragraphs as follows:

(g) requires by-laws of a not-for-profit corporation to contain a
policy on:

1. employees serving on a governing body and the percentage of the
membership of the governing body that must be independent of the
organization

2. hiring of family members of employees and governing body members

3. Conflict of interest covering business interests

(h) Requires all by-laws in this section to be available for review by
the Attorney General upon request

(i) Prohibits employees of the not-for-profit corporation from:

1. Serving as Chair of the organization's governing board

2. Serving as a voting member of the organization's governing board

(j) Prohibits any person related to any executive or member of a
governing body by blood or marriage shall be employed by the
organization except with approval of two-thirds of the members of the
governing body.

Section 2: Effective date one year after it shall have become law.

JUSTIFICATION:

This legislation is intended to close current loopholes in State law
and provide a streamlined and fair system across the board for all
not-for-profit corporations in New York State while also providing
safeguards that can be reviewed by the Attorney General.


This legislation will provide for more oversight of these boards and
their actions to ensure that taxpayers funds are not misappropriated
and boards are operating properly and legally.

LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS:

None to State.

EFFECTIVE DATE:

This act shall take effect one year after it shall have become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5315--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 16, 2013
                               ___________

Introduced  by  Sen.  MARCELLINO  -- read twice and ordered printed, and
  when printed to be committed to the Committee on Corporations, Author-
  ities and Commissions -- committee discharged, bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN  ACT  to  amend  the  not-for-profit  corporation law, in relation to
  prohibiting certain employees of  a  not-for-profit  corporation  from
  serving  on  the  corporation's  governing board or from hiring family
  members

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section  602  of  the  not-for-profit  corporation law is
amended by adding four new paragraphs (g), (h), (i) and (j) to  read  as
follows:
  (G)  THE  BY-LAWS  OF  A  NOT-FOR-PROFIT  CORPORATION  SHALL CONTAIN A
PROVISION ON:
  (1) EMPLOYEES SERVING ON SUCH GOVERNING BODY AND THE PERCENTAGE OF THE
MEMBERSHIP OF THE GOVERNING BODY THAT MUST BE INDEPENDENT OF THE  ORGAN-
IZATION;
  (2)  HIRING OF FAMILY MEMBERS OF EMPLOYEES AND GOVERNING BODY MEMBERS;
AND
  (3) CONFLICT OF INTEREST COVERING BUSINESS INTERESTS.
  (H) ALL BY-LAWS REQUIRED IN THIS SECTION SHALL BE AVAILABLE FOR REVIEW
BY THE ATTORNEY GENERAL UPON REQUEST.
  (I) EMPLOYEES OF A  NOT-FOR-PROFIT  CORPORATION  ARE  PROHIBITED  FROM
SERVING  AS  THE  CHAIR  OF  SUCH ORGANIZATION'S GOVERNING BODY AND FROM
SERVING AS A VOTING MEMBER OF SUCH ORGANIZATION'S GOVERNING BODY.
  (J) NO PERSON WHO IS RELATED TO THE CHIEF EXECUTIVE OR ANY MEMBER OF A
GOVERNING BODY BY BLOOD OR MARRIAGE SHALL BE EMPLOYED BY SUCH  ORGANIZA-
TION,  EXCEPT  WITH  THE  APPROVAL  OF  TWO-THIRDS OF THE MEMBERS OF THE
GOVERNING BODY.
  S 2. This act shall take effect one year after it shall have become  a
law.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10937-02-3

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