senate Bill S7838

2013-2014 Legislative Session

Relates to independent directors and related party transactions; repealer

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Archive: Last Bill Status - Passed Senate


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 18, 2014 referred to corporations, authorities and commissions
delivered to assembly
passed senate
ordered to third reading cal.1551
committee discharged and committed to rules
Jun 13, 2014 referred to corporations, authorities and commissions

Votes

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S7838 - Bill Details

Current Committee:
Law Section:
Not-for-Profit Corporation Law
Laws Affected:
Rpld §713 ¶f, amd §102, N-PC L

S7838 - Bill Texts

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Relates to independent directors and related party transactions.

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BILL NUMBER:S7838

TITLE OF BILL: An act to amend the not-for-profit corporation law, in
relation to independent directors and related party transactions; and
repealing certain provisions of such law relating thereto

SUMMARY OF PROVISIONS:

Section 1 - repeals paragraph (f) of section 713 of the Not-For-Profit
Corporation Law.

Section 2 - amends subparagraphs 21 and 24 of paragraph (a) of section
102 of the Not-For-Profit Corporation Law.

Section 3 - effective date.

PURPOSE & JUSTIFICATION:

To modify the definitions of independent director and related party
transactions, and to repeal a provision relating to an employee
serving as chair of a board.

Certain not-for-profit corporations specifically hire a person to
serve as the chair or president of their board, which is different
from the typical situation of an employee-employer relationship. The
current language in section 713 (f) does not adequately recognize this
and the bill repeals current language with the expectation that a new
provision will be enacted next year. The change in the definition of
independent director addresses a conflict with the Insurance Law, and
the change in the definition of related party transactions is intended
to clarify that related party transactions only refer to matters that
would come before the board for approval in the normal course of
business.

LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS:

None to state.

EFFECTIVE DATE:

This act shall take effect immediately provided that section two shall
take effect on the same date an in the same manner as section 29 of
Chapter 549 of the Laws of 2013

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

                                  7838

                            I N  S E N A T E

                              June 13, 2014
                               ___________

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, in relation to inde-
  pendent  directors  and  related  party  transactions;  and  repealing
  certain provisions of such law relating thereto

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

  Section 1. Paragraph (f) of section 713 of the  not-for-profit  corpo-
ration law is REPEALED.
  S  2.  Subparagraphs  21 and 24 of paragraph (a) of section 102 of the
not-for-profit corporation law, as added by chapter 549 of the  laws  of
2013, are amended to read as follows:
  (21)  "Independent director" means a director who: (i) is not, and has
not been within the last three years, an employee of the corporation  or
an affiliate of the corporation, and does not have a relative who is, or
has  been within the last three years, a key employee of the corporation
or an affiliate of the corporation; (ii) has not received, and does  not
have a relative who has received, in any of the last three fiscal years,
more  than  ten  thousand dollars in direct compensation from the corpo-
ration or an affiliate of the corporation (other than reimbursement  for
expenses  reasonably  incurred  as a director or reasonable compensation
for service as a director as permitted by paragraph (a) of  section  202
(General and special powers)); and (iii) is not a current employee of or
does  not  have a substantial financial interest in, and does not have a
relative who is a current officer of  or  has  a  substantial  financial
interest  in, any entity that has made payments to, or received payments
from, the corporation or an affiliate of the corporation for property or
services in an amount which, in any of  the  last  three  fiscal  years,
exceeds  the  lesser  of  twenty-five thousand dollars or two percent of
such entity's consolidated gross revenues. For purposes of this subpara-
graph, "payment" does not include charitable  contributions,  MEMBERSHIP
DUES OR PREMIUM PAYMENTS.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15576-01-4

S. 7838                             2

  (24)  "Related  party transaction" means any transaction, agreement or
any other arrangement, THE APPROVAL OF WHICH WOULD COME BEFORE THE BOARD
IN THE ORDINARY COURSE OF BUSINESS, in  which  a  related  party  has  a
financial  interest and in which the corporation or any affiliate of the
corporation is a participant.
  S  3.  This act shall take effect immediately; provided, however, that
section two of this act shall take effect on the same date  and  in  the
same  manner  as  section  29  of chapter 549 of the laws of 2013, takes
effect.

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