senate Bill S5315B

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
view actions

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

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

Sponsor Memo

BILL NUMBER:S5315B

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.

(k) These provisions do not apply to cemetery corporations formed
under Article 15

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--B
    Cal. No. 605

                       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 -- recommitted
  to the Committee  on  Corporations,  Authorities  and  Commissions  in
  accordance  with Senate Rule 6, sec. 8 -- reported favorably from said
  committee, ordered to first and second  report,  ordered  to  a  third
  reading,  amended  and  ordered  reprinted, retaining its place in the
  order of third reading

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 five new paragraphs (g), (h), (i), (j) and (k) 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.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10937-04-4

S. 5315--B                          2

  (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.
  (K)  NOTWITHSTANDING  ANY PROVISION TO THE CONTRARY, THE PROVISIONS OF
PARAGRAPHS (G), (I) AND (J) OF THIS SECTION SHALL NOT APPLY TO  CEMETERY
CORPORATIONS THAT MUST COMPLY WITH ARTICLE FIFTEEN OF THIS CHAPTER.
  S  2. This act shall take effect one year after it shall have become a
law.

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