S. 5868--A 2
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; OR (IV) IS NOT AND DOES NOT
HAVE A RELATIVE WHO IS A CURRENT OWNER, WHETHER WHOLLY OR PARTIALLY,
DIRECTOR, OFFICER OR EMPLOYEE OF THE CORPORATION'S OUTSIDE AUDITOR OR
WHO HAS WORKED ON THE CORPORATION'S AUDIT AT ANY TIME DURING THE PAST
THREE YEARS. For purposes of this [subparagraph] SUBDIVISION, "payment"
does not include charitable contributions, DUES OR FEES PAID TO THE
CORPORATION FOR SERVICES WHICH THE CORPORATION PERFORMS AS PART OF ITS
NONPROFIT PURPOSES, PROVIDED THAT SUCH SERVICES ARE AVAILABLE TO INDI-
VIDUAL MEMBERS OF THE PUBLIC ON THE SAME TERMS.
(22) "Relative" of an individual means [his or her] (i) HIS OR HER
spouse[,] OR DOMESTIC PARTNER AS DEFINED IN SECTION TWENTY-NINE HUNDRED
NINETY-FOUR-A OF THE PUBLIC HEALTH LAW; (II) HIS OR HER ancestors,
brothers and sisters (whether whole or half blood), children (whether
natural or adopted), grandchildren, great-grandchildren[, and spouses];
OR (III) THE SPOUSE OR DOMESTIC PARTNER of HIS OR HER brothers, sisters,
children, grandchildren, and great-grandchildren[; or (ii) domestic
partner as defined in section twenty-nine hundred ninety-four-a of the
public health law].
(23) "Related party" means (i) any director, officer or key employee
of the corporation or any affiliate of the corporation, OR ANY OTHER
PERSON WHO EXERCISES THE POWERS OF DIRECTORS, OFFICERS OR KEY EMPLOYEES
OVER THE AFFAIRS OF THE CORPORATION OR ANY AFFILIATE OF THE CORPORATION;
(ii) any relative of any [director, officer or key employee of the
corporation or any affiliate of the corporation] INDIVIDUAL DESCRIBED IN
CLAUSE (I) OF THIS SUBDIVISION; or (iii) any entity in which any indi-
vidual described in clauses (i) and (ii) of this [subparagraph] SUBDIVI-
SION has a thirty-five percent or greater ownership or beneficial inter-
est or, in the case of a partnership or professional corporation, a
direct or indirect ownership interest in excess of five percent.
(25) "Key employee" means any person who is in a position to exercise
substantial influence over the affairs of the corporation, as referenced
in 26 U.S.C. S 4958(f)(1)(A) and further specified in 26 CFR S
53.4958-3(c), (d) and (e), or succeeding provisions TO THE EXTENT SUCH
PROVISIONS ARE APPLICABLE.
S 2. Paragraph (b) of section 515 of the not-for-profit corporation
law, as amended by chapter 549 of the laws of 2013, is amended to read
as follows:
(b) A corporation may pay compensation in a reasonable amount to
members, directors, or officers, for services rendered, and may make
distributions of cash or property to members upon dissolution or final
liquidation as permitted by this chapter. No person who may benefit from
such compensation may be present at or otherwise participate in any
board or committee deliberation or vote concerning such person's compen-
sation; provided that nothing in this section shall prohibit the board
S. 5868--A 3
or authorized committee from requesting that a person who may benefit
from such compensation present information as background or answer ques-
tions at a committee or board meeting prior to the commencement of
deliberations or voting relating thereto. NOTHING IN THIS SECTION OR IN
PARAGRAPH (H) OF SECTION SEVEN HUNDRED FIFTEEN OF THIS CHAPTER SHALL BE
CONSTRUED TO PROHIBIT A DIRECTOR FROM DELIBERATING OR VOTING CONCERNING
COMPENSATION FOR SERVICE ON THE BOARD THAT IS TO BE MADE AVAILABLE OR
PROVIDED TO ALL DIRECTORS OF THE CORPORATION ON THE SAME OR SUBSTANTIAL-
LY SIMILAR TERMS.
S 3. Paragraph (b) of section 702 of the not-for-profit corporation
law is amended to read as follows:
(b) The number of directors may be increased or decreased by amendment
of the by-laws or[, in the case of a corporation having members,] by
action of the members, or of the board under the specific provisions of
a by-law [adopted by the members], subject to the following limitations:
(1) If the board is authorized by the by-laws to change the number of
directors, whether by amending the by-laws or by taking action under the
specific provisions of a by-law [adopted by the members], such amendment
or action shall require the vote of a majority of the entire board.
(2) No decrease shall shorten the term of any incumbent director.
S 4. Paragraph (d) of section 708 of the not-for-profit corporation
law, as amended by chapter 173 of the laws of 1975 and as relettered by
chapter 314 of the laws of 1977, is amended to read as follows:
(d) Except as otherwise provided in this chapter, the vote of a major-
ity of the directors present at the time of the vote, if a quorum is
present at such time, shall be the act of the board. DIRECTORS WHO ARE
PRESENT AT A MEETING BUT NOT PRESENT AT THE TIME OF A VOTE DUE TO A
CONFLICT OF INTEREST OR RELATED PARTY TRANSACTION SHALL BE DETERMINED TO
BE PRESENT AT THE TIME OF THE VOTE FOR PURPOSES OF THIS PARAGRAPH.
S 5. Paragraph (e) of section 712 of the not-for-profit corporation
law, as amended by chapter 549 of the laws of 2013, is amended to read
as follows:
(e) Committees, other than committees of the board, whether created by
the board or by the members, shall be committees of the corporation.
[Such committees of the corporation may be elected or appointed in the
same manner as officers of the corporation, but no] NO such committee
shall have the authority to bind the board. Provisions of this chapter
applicable to officers generally shall apply to members of such commit-
tees. [Such] MEMBERS OF SUCH committees of the corporation, WHO MAY BE
NON-DIRECTORS, shall be elected or appointed in the manner set forth in
the by-laws, or if not set forth in the by-laws, in the same manner as
officers of the corporation.
S 6. Paragraph (e) of section 712-a of the not-for-profit corporation
law, as added by chapter 549 of the laws of 2013, is amended to read as
follows:
(e) Only independent directors may participate in any board or commit-
tee deliberations or voting relating to matters set forth in this
section, PROVIDED THAT NOTHING IN THIS PARAGRAPH SHALL PROHIBIT THE
BOARD OR DESIGNATED AUDIT COMMITTEE FROM REQUESTING THAT A PERSON WITH
AN INTEREST IN THE MATTER PRESENT INFORMATION AS BACKGROUND OR ANSWER
QUESTIONS AT A COMMITTEE OR BOARD MEETING PRIOR TO THE COMMENCEMENT OF
DELIBERATIONS OR VOTING RELATING THERETO.
S 7. Paragraphs (e), (f), (f) and (g) of section 715 of the not-for-
profit corporation law, paragraph (e) as amended and paragraphs (f), (f)
and (g) as added by chapter 549 of the laws of 2013, are amended to read
as follows:
S. 5868--A 4
(e) The fixing of [salaries] COMPENSATION of officers, if not done in
or pursuant to the by-laws, shall require the affirmative vote of a
majority of the entire board unless a higher proportion is set by the
certificate of incorporation or by-laws.
(f) The attorney general may bring an action to enjoin, void or
rescind any related party transaction or proposed related party trans-
action that violates any provision of this chapter or was otherwise not
reasonable or in the best interests of the corporation at the time the
transaction was approved, or to seek restitution, and the removal of
directors or officers, or seek to require any person or entity to:
(1) Account for any profits made from such transaction, and pay them
to the corporation;
(2) Pay the corporation the value of the use of any of its property or
other assets used in such transaction;
(3) Return or replace any property or other assets lost to the corpo-
ration as a result of such transaction, together with any income or
appreciation lost to the corporation by reason of such transaction, or
account for any proceeds of sale of such property, and pay the proceeds
to the corporation together with interest at the legal rate; and
(4) Pay, in the case of willful and intentional conduct, an amount up
to double the amount of any benefit improperly obtained.
[(f)] (G) The powers of the attorney general provided in this section
are in addition to all other powers the attorney general may have under
this chapter or any other law.
[(g)] (H) No related party may participate in deliberations or voting
relating to [matters set forth in this section] A RELATED PARTY TRANS-
ACTION IN WHICH HE OR SHE HAS AN INTEREST; provided that nothing in this
section shall prohibit the board or authorized committee from requesting
that a related party present information AS BACKGROUND OR ANSWER QUES-
TIONS concerning a related party transaction at a board or committee
meeting prior to the commencement of deliberations or voting relating
thereto.
S 8. Subparagraph 3 of paragraph (b) of section 715-a of the not-for-
profit corporation law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
(3) a requirement that the person with the conflict of interest not be
present at or participate in board or committee deliberation or vote on
the matter giving rise to such conflict, PROVIDED THAT NOTHING IN THIS
SECTION SHALL PROHIBIT THE BOARD OR A COMMITTEE FROM REQUESTING THAT THE
PERSON WITH THE CONFLICT OF INTEREST PRESENT INFORMATION AS BACKGROUND
OR ANSWER QUESTIONS AT A COMMITTEE OR BOARD MEETING PRIOR TO THE
COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING THERETO;
S 9. Paragraph (c) of section 715-a of the not-for-profit corporation
law, as added by chapter 549 of the laws of 2013, is amended to read as
follows:
(c) The conflict of interest policy shall require that prior to the
initial election of any director, and annually thereafter, such director
shall complete, sign and submit to the secretary of the corporation OR A
DESIGNATED COMPLIANCE OFFICER a written statement identifying, to the
best of the director's knowledge, any entity of which such director is
an officer, director, trustee, member, owner (either as a sole proprie-
tor or a partner), or employee and with which the corporation has a
relationship, and any transaction in which the corporation is a partic-
ipant and in which the director might have a conflicting interest. The
policy shall require that each director annually resubmit such written
statement. The secretary of the corporation OR THE DESIGNATED COMPLI-
S. 5868--A 5
ANCE OFFICER shall provide a copy of all completed statements to the
chair of the audit committee or, if there is no audit committee, to the
chair of the board.
S 10. Subparagraph 3 of paragraph (b) of section 715-b of the not-for-
profit corporation law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
(3) A requirement that a copy of the policy be distributed to all
directors, officers, employees and to volunteers who provide substantial
services to the corporation. FOR PURPOSES OF THIS SUBDIVISION, POSTING
THE POLICY ON THE CORPORATION'S WEBSITE OR AT THE CORPORATION'S OFFICES
IN A CONSPICUOUS LOCATION ACCESSIBLE TO EMPLOYEES AND VOLUNTEERS ARE
AMONG THE METHODS A CORPORATION MAY USE TO SATISFY THE DISTRIBUTION
REQUIREMENT.
S 11. Paragraph (b) of section 1407 of the not-for-profit corporation
law, as amended by chapter 549 of the laws of 2013, is amended to read
as follows:
(b) Type of corporation.
An alumni corporation is a [non-charitable] CHARITABLE corporation.
S 12. Subparagraphs 3, 4, 5, 6 and 7 of paragraph (a) of section 8-1.9
of the estates, powers and trusts law, as added by chapter 549 of the
laws of 2013, are amended to read as follows:
(3) "Key employee" means any person who is in a position to exercise
substantial influence over the affairs of the [corporation] TRUST, as
referenced in 26 U.S.C. section 4958(f)(1)(A) and further specified in
26 C.F.R. section 53.4958-3(c), (d) and (e), or succeeding provisions
TO THE EXTENT SUCH PROVISIONS ARE APPLICABLE.
(4) An "affiliate" of a trust means any entity controlled by, OR in
control of, [or under common control with] such trust.
(5) "Relative" of an individual means [his or her] (i) HIS OR HER
spouse[,] OR DOMESTIC PARTNER AS DEFINED IN SECTION TWENTY-NINE HUNDRED
NINETY-FOUR-A OF THE PUBLIC HEALTH LAW; (II) HIS OR HER ancestors,
brothers and sisters (whether whole or half blood), children (whether
natural or adopted), grandchildren, great-grandchildren[, and spouses];
OR (III) THE SPOUSE OR DOMESTIC PARTNER of HIS OR HER brothers, sisters,
children, grandchildren, and great-grandchildren[; and (ii) his or her
domestic partner as defined in section twenty-nine hundred ninety-four-a
of the public health law].
(6) "Related party" means (i) any trustee or key employee of the trust
or any affiliate of the trust OR ANY OTHER PERSON WHO EXERCISES THE
POWERS OF A TRUSTEE OR KEY EMPLOYEE OVER THE AFFAIRS OF THE TRUST OR ANY
AFFILIATE OF THE TRUST; (ii) any relative of any [trustee or key employ-
ee of the trust or any affiliate of the trust] INDIVIDUAL DESCRIBED IN
CLAUSE (I) OF THIS SUBDIVISION; or (iii) an entity in which any individ-
ual described in clauses (i) and (ii) of this [subparagraph] SUBDIVISION
has a thirty-five percent or greater ownership or beneficial interest
or, in the case of a partnership or professional corporation, a direct
ownership interest in excess of five percent.
(7) "Independent trustee" means a trustee who: (i) is not, and has not
been within the last three years, an employee of the trust or an affil-
iate of the trust, and does not have a relative who is, or has been
within the last three years, a key employee of the trust or an affiliate
of the trust; (ii) has not received, and does not have a relative who
has received, in any of the last three fiscal years, more than ten thou-
sand dollars in direct compensation from the trust or an affiliate of
the trust (other than reimbursement for expenses or the payment of trus-
tee commissions OR REASONABLE COMPENSATION as permitted by law and the
S. 5868--A 6
governing instrument); [and] (iii) is not a current employee of or does
not have a substantial financial interest in, and does not have a rela-
tive who is a current officer of or have a substantial financial inter-
est in, any entity that has made payments to, or received payments from,
the trust or an affiliate of the trust 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 consol-
idated gross revenues; OR (IV) IS NOT AND DOES NOT HAVE A RELATIVE WHO
IS A CURRENT OWNER, WHETHER WHOLLY OR PARTIALLY, DIRECTOR, OFFICER OR
EMPLOYEE OF THE TRUST'S OUTSIDE AUDITOR OR WHO HAS WORKED ON THE TRUST'S
AUDIT AT ANY TIME DURING THE PAST THREE YEARS. For purposes of this
[subparagraph] SUBDIVISION, "payment" does not include charitable
contributions, DUES OR FEES PAID TO THE TRUST FOR SERVICES WHICH THE
TRUST PERFORMS AS PART OF ITS NONPROFIT PURPOSES.
S 13. Subparagraph 5 of paragraph (b) of section 8-1.9 of the estates,
powers and trusts law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
(5) Only independent trustees may participate in deliberations or
voting relating to matters set forth in this [paragraph] SECTION,
PROVIDED THAT NOTHING IN THIS PARAGRAPH SHALL PROHIBIT THE BOARD OR
DESIGNATED AUDIT COMMITTEE FROM REQUESTING THAT A PERSON WITH AN INTER-
EST IN THE MATTER PRESENT INFORMATION AS BACKGROUND OR ANSWER QUESTIONS
AT A COMMITTEE OR BOARD MEETING PRIOR TO THE COMMENCEMENT OF DELIBER-
ATIONS OR VOTING RELATING THERETO.
S 14. Subparagraph 6 of paragraph (c) of section 8-1.9 of the estates,
powers and trusts law, as added by chapter 549 of the laws of 2013, is
amended to read as follows:
(6) No related party may participate in deliberations or voting relat-
ing to [matters set forth in this paragraph] A RELATED PARTY TRANSACTION
IN WHICH HE OR SHE HAS AN INTEREST; provided that nothing in this
section shall prohibit the trustees or designated audit committee from
requesting that a related party present information OR ANSWER QUESTIONS
concerning a related party transaction at a trustees or committee meet-
ing prior to the commencement of deliberations or voting relating to the
related party transaction.
S 15. Clause (C) of subparagraph 2 of paragraph (d) of section 8-1.9
of the estates, powers and trusts law, as added by chapter 549 of the
laws of 2013, is amended to read as follows:
(C) a requirement that the person with the conflict of interest not be
present at or participate in any deliberation or vote on the matter
giving rise to such conflict, PROVIDED THAT NOTHING IN THIS SECTION
SHALL PROHIBIT THE TRUSTEES OR A COMMITTEE FROM REQUESTING THAT THE
PERSON WITH THE CONFLICT OF INTEREST PRESENT INFORMATION AS BACKGROUND
OR ANSWER QUESTIONS AT A TRUSTEES OR COMMITTEE MEETING PRIOR TO THE
COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING THERETO;
S 16. Clause (C) of subparagraph 2 of paragraph (e) of section 8-1.9
of the estates, powers and trusts law, as added by chapter 549 of the
laws of 2013, is amended to read as follows:
(C) A requirement that a copy of the policy be distributed to all
trustees, officers, employees and volunteers, with instructions on how
to comply with the procedures set forth in the policy. FOR PURPOSES OF
THIS SUBDIVISION, POSTING THE POLICY ON THE CORPORATION'S WEBSITE OR AT
THE CORPORATION'S OFFICES IN A CONSPICUOUS LOCATION ACCESSIBLE TO
EMPLOYEES AND VOLUNTEERS ARE AMONG THE METHODS A CORPORATION MAY USE TO
SATISFY THE DISTRIBUTION REQUIREMENT.
S. 5868--A 7
S 17. Subdivision 1 of section 12 of the religious corporations law,
as amended by chapter 244 of the laws of 1981, is amended to read as
follows:
1. A religious corporation shall not sell, mortgage or lease for a
term exceeding five years any of its real property without applying for
and obtaining leave of the court OR THE ATTORNEY GENERAL therefor pursu-
ant to section five hundred eleven of the not-for-profit corporation law
as that section is modified by paragraph (d-1) of [subsection] SUBDIVI-
SION one of section two-b of this chapter OR SECTION FIVE HUNDRED
ELEVEN-A OF THE NOT-FOR-PROFIT CORPORATION LAW, except that a religious
corporation may execute a purchase money mortgage or a purchase money
security agreement creating a security interest in personal property
purchased by it without obtaining leave of the court therefor.
S 18. Severability. If any clause, sentence, paragraph, section or
part of this act shall be adjudged by any court of competent jurisdic-
tion to be invalid, the judgment shall not affect, impair, or invalidate
the remainder thereof, but shall be confined in its operation to the
clause, sentence, paragraph, section or part thereof directly involved
in the controversy in which the judgment shall have been rendered.
S 19. This act shall take effect immediately.
