S T A T E   O F   N E W   Y O R K
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                                  10365

                          I N  A S S E M B L Y

                              May 24, 2016
                               ___________

Introduced  by M. of A. BRENNAN -- read once and referred to the Commit-
  tee on Corporations, Authorities 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:

  Section 1. Subparagraphs 21, 23, 24 and 25 of paragraph (a) of section
102 of the not-for-profit corporation law, subparagraphs 21, 23  and  25
as  amended  by  chapter  555 of the laws of 2015 and subparagraph 24 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] A DIRECTOR  EMPLOYED
BY OR RECEIVING COMPENSATION FROM THE CORPORATION OR A KEY PERSON 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 [employ-
ee] PERSON 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 corporation or an  affiliate  of  the  corporation
[(other  than reimbursement for expenses reasonably incurred as a direc-
tor or reasonable compensation for service as a director as permitted by
paragraph (a) of section 202 (General and special  powers))];  (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]  PROVIDED  PAYMENTS,  PROPERTY  OR  SERVICES  to,  or received
payments, PROPERTY OR SERVICES from, the corporation or an affiliate  of
the corporation [for] IF THE AMOUNT PAID BY THE CORPORATION TO THE ENTI-
TY  OR  RECEIVED BY THE CORPORATION FROM THE ENTITY FOR SUCH property or
services [in an amount which], in any of the last  three  fiscal  years,

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

                                                           LBD14985-03-6

A. 10365                            2

[exceeds  the  lesser  of twenty-five thousand dollars or two percent of
such entity's consolidated gross revenues] EXCEEDED THE  LESSER  OF  TEN
THOUSAND  DOLLARS  OR  TWO  PERCENT  OF SUCH ENTITY'S CONSOLIDATED GROSS
REVENUES  IF  THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS LESS THAN FIVE
HUNDRED THOUSAND DOLLARS; TWENTY-FIVE THOUSAND DOLLARS IF  THE  ENTITY'S
CONSOLIDATED GROSS REVENUE WAS FIVE HUNDRED THOUSAND DOLLARS OR MORE BUT
LESS  THAN  TEN  MILLION DOLLARS; FIFTY THOUSAND DOLLARS IF THE ENTITY'S
CONSOLIDATED GROSS REVENUE WAS TEN MILLION DOLLARS OR MORE; 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 [subdivision,] SUBPARAGRAPH,
THE TERMS: "COMPENSATION" DOES NOT INCLUDE  REIMBURSEMENT  FOR  EXPENSES
REASONABLY INCURRED AS A DIRECTOR OR REASONABLE COMPENSATION FOR SERVICE
AS  A  DIRECTOR AS PERMITTED BY PARAGRAPH (A) OF SECTION TWO HUNDRED TWO
OF THIS CHAPTER; AND "payment"  does  not  include  charitable  contrib-
utions,  dues  or  fees  paid  to the corporation for services which the
corporation performs as part of its nonprofit purposes, OR PAYMENTS MADE
BY THE CORPORATION AT FIXED  OR  NON-NEGOTIABLE  RATES  OR  AMOUNTS  FOR
SERVICES RECEIVED, provided that such services BY AND TO THE CORPORATION
are available to individual members of the public on the same terms, AND
SUCH SERVICES RECEIVED BY THE CORPORATION ARE NOT AVAILABLE FROM ANOTHER
SOURCE.
  (23) "Related party" means (i) any director, officer or key [employee]
PERSON  of  the corporation or any affiliate of the corporation[, or any
other person who exercises the powers  of  directors,  officers  or  key
[employees] PERSONS over the affairs of the corporation or any affiliate
of  the  corporation];  (ii) any relative of any individual described in
clause (i) of this [subdivision] SUBPARAGRAPH; or (iii)  any  entity  in
which any individual described in clauses (i) and (ii) of this [subdivi-
sion]  SUBPARAGRAPH  has  a  thirty-five percent or greater ownership or
beneficial interest or, in the case of  a  partnership  or  professional
corporation,  a  direct or indirect ownership interest in excess of five
percent.
  (24) "Related party transaction" means any transaction,  agreement  or
any  other arrangement in which a related party has a financial interest
and in which the corporation or any affiliate of the  corporation  is  a
participant,  EXCEPT  THAT  A  TRANSACTION  SHALL NOT BE A RELATED PARTY
TRANSACTION IF: (I) THE TRANSACTION OR  THE  RELATED  PARTY'S  FINANCIAL
INTEREST  IN  THE  TRANSACTION IS DE MINIMIS, (II) THE TRANSACTION WOULD
NOT CUSTOMARILY BE REVIEWED BY THE BOARD OR BOARDS OF SIMILAR  ORGANIZA-
TIONS  IN  THE ORDINARY COURSE OF BUSINESS AND IS AVAILABLE TO OTHERS ON
THE SAME OR SIMILAR TERMS, OR (III) THE TRANSACTION CONSTITUTES A  BENE-
FIT  PROVIDED  TO  A  RELATED PARTY SOLELY AS A MEMBER OF A CLASS OF THE
BENEFICIARIES THAT THE CORPORATION INTENDS TO BENEFIT  AS  PART  OF  THE
ACCOMPLISHMENT  OF ITS MISSION WHICH BENEFIT IS AVAILABLE TO ALL MEMBERS
SIMILARLY SITUATED OF THE SAME CLASS ON THE SAME TERMS.
  (25) "Key [employee] PERSON" 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], WHETHER OR NOT AN  EMPLOYEE  OF  THE  CORPO-
RATION,  WHO  (I) HAS RESPONSIBILITIES, OR EXERCISES POWERS OR INFLUENCE
OVER THE CORPORATION AS A WHOLE SIMILAR TO THE RESPONSIBILITIES, POWERS,
OR INFLUENCE OF DIRECTORS AND OFFICERS; (II) MANAGES THE CORPORATION, OR
A SEGMENT OF THE CORPORATION THAT REPRESENTS A  SUBSTANTIAL  PORTION  OF

A. 10365                            3

THE  ACTIVITIES, ASSETS, INCOME OR EXPENSES OF THE CORPORATION; OR (III)
ALONE OR WITH OTHERS CONTROLS OR DETERMINES A SUBSTANTIAL PORTION OF THE
CORPORATION'S CAPITAL EXPENDITURES OR OPERATING BUDGET.
  S  2.  Section  309 of the not-for-profit corporation law, as added by
chapter 549 of the laws of 2013, is amended to read as follows:
S 309. Personal jurisdiction and service of process  on  non-domiciliary
         resident director, officer, key [employee] PERSON or agent.
  A  person,  by  becoming a director, officer, key [employee] PERSON or
agent of a corporation is subject to the personal  jurisdiction  of  the
supreme  court  of the state of New York, and in an action or proceeding
by the attorney general under this chapter process may  be  served  upon
such  person  as provided in section three hundred thirteen of the civil
practice law and rules.
  S 3. Paragraphs (a) and (e)  of  section  712  of  the  not-for-profit
corporation  law, paragraph (a) as amended by chapter 549 of the laws of
2013 and paragraph (e) as amended by chapter 555 of the  laws  of  2015,
are amended to read as follows:
  (a)  [If  the]  THE certificate of incorporation [or the], THE by-laws
[so provide], OR the board[, by resolution adopted by a majority of  the
entire  board, may designate from among its members an executive commit-
tee and other committees] MAY  CREATE  COMMITTEES  OF  THE  BOARD,  each
consisting of three or more directors[, and each of which, to the extent
provided  in  the  resolution  or in the certificate of incorporation or
by-laws, shall have all the authority of the  board].  THE  BOARD  SHALL
APPOINT  THE  MEMBERS OF SUCH COMMITTEE OF THE BOARD, EXCEPT THAT IN THE
CASE OF ANY EXECUTIVE COMMITTEE OR  SIMILAR  COMMITTEE  HOWEVER  DENOMI-
NATED,  THE APPOINTMENT SHALL BE MADE BY A MAJORITY OF THE ENTIRE BOARD,
PROVIDED THAT IN THE CASE OF A BOARD OF  THIRTY  MEMBERS  OR  MORE,  THE
APPOINTMENT  SHALL  BE  MADE BY AT LEAST THREE-QUARTERS OF THE DIRECTORS
PRESENT AT THE TIME OF THE VOTE, IF A QUORUM IS PRESENT AT THAT TIME. IN
ADDITION, THE BY-LAWS MAY PROVIDE THAT DIRECTORS WHO ARE THE HOLDERS  OF
CERTAIN  POSITIONS  SHALL  BE EX-OFFICIO, NON-VOTING MEMBERS OF SPECIFIC
COMMITTEES. EACH SUCH COMMITTEE SHALL HAVE THE AUTHORITY OF THE BOARD TO
THE EXTENT PROVIDED IN A BOARD  RESOLUTION  OR  IN  THE  CERTIFICATE  OF
INCORPORATION  OR  BY-LAWS,  except that no [such] committee OF ANY KIND
shall have authority as to the following matters:
  (1) The  submission  to  members  of  any  action  requiring  members'
approval under this chapter.
  (2)  The  filling  of  vacancies  in  the board of directors or in any
committee.
  (3) The fixing of compensation of the directors  for  serving  on  the
board or on any committee.
  (4)  The  amendment  or  repeal  of the by-laws or the adoption of new
by-laws.
  (5) The amendment or repeal of any resolution of the  board  which  by
its terms shall not be so amendable or repealable.
  (6) THE ELECTION OR REMOVAL OF OFFICERS AND DIRECTORS.
  (7) THE APPROVAL OF A MERGER OR PLAN OF DISSOLUTION.
  (8) THE AUTHORIZATION  OR ADOPTION OF A RESOLUTION RECOMMENDING TO THE
MEMBERS  ACTION ON THE SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ALL
OR SUBSTANTIALLY ALL THE ASSETS.
  (9) THE APPROVAL OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION.
  (e) Committees, other than committees of the board, whether created by
the board or by the members, shall be committees of the corporation.  No
such  committee  shall have the authority to bind the board. [Provisions
of this chapter applicable to officers generally shall apply to  members

A. 10365                            4

of  such committees.] 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  4. Paragraph (c) of section 712-a of the not-for-profit corporation
law is REPEALED.
  S 5. Paragraph (f) of section 713 of  the  not-for-profit  corporation
law,  as added by chapter 549 of the laws of 2013, is amended to read as
follows:
  (f) No employee of the corporation shall serve as chair of  the  board
or  hold any other title with similar responsibilities, UNLESS THE BOARD
APPROVES SUCH EMPLOYEE SERVING AS CHAIR OF THE  BOARD  BY  A  TWO-THIRDS
VOTE  OF THE ENTIRE BOARD AND CONTEMPORANEOUSLY DOCUMENTS IN WRITING THE
BASIS FOR THE BOARD APPROVAL; PROVIDED, HOWEVER, THAT NO  SUCH  EMPLOYEE
SHALL  BE  CONSIDERED  AN  INDEPENDENT DIRECTOR FOR THE PURPOSES OF THIS
CHAPTER.
  S 6. Paragraph (a) of section 715 of  the  not-for-profit  corporation
law,  as  amended by chapter 549 of the laws of 2013, is amended and two
new paragraphs (i) and (j) are added to read as follows:
  (a) No corporation shall enter  into  any  related  party  transaction
unless  the  transaction  is  determined  by the board, OR AN AUTHORIZED
COMMITTEE THEREOF, to be fair, reasonable and in the corporation's  best
interest at the time of such determination. Any director, officer or key
[employee]  PERSON  who  has  an interest in a related party transaction
shall disclose in good faith to the board, or  an  authorized  committee
thereof, the material facts concerning such interest.
  (I)  IN  AN  ACTION  BY  ANY  PERSON OR ENTITY OTHER THAN THE ATTORNEY
GENERAL, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS
OF THIS SECTION THAT A TRANSACTION  WAS  FAIR,  REASONABLE  AND  IN  THE
CORPORATION'S  BEST  INTEREST  AT  THE TIME THE CORPORATION APPROVED THE
TRANSACTION.
  (J) IN AN ACTION BY THE ATTORNEY GENERAL WITH  RESPECT  TO  A  RELATED
PARTY  TRANSACTION NOT APPROVED IN ACCORDANCE WITH PARAGRAPHS (A) OR (B)
OF THIS SECTION AT THE TIME IT WAS ENTERED INTO, WHICHEVER  IS  APPLICA-
BLE,  IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS OF
THIS SECTION THAT (1) THE TRANSACTION WAS FAIR, REASONABLE  AND  IN  THE
CORPORATION'S  BEST  INTEREST  AT  THE TIME THE CORPORATION APPROVED THE
TRANSACTION AND (2) PRIOR TO RECEIPT OF ANY REQUEST FOR  INFORMATION  BY
THE ATTORNEY GENERAL REGARDING THE TRANSACTION, THE BOARD HAS: (A) RATI-
FIED  THE TRANSACTION BY FINDING IN GOOD FAITH THAT IT WAS FAIR, REASON-
ABLE AND IN THE CORPORATION'S BEST INTEREST AT THE TIME THE  CORPORATION
APPROVED  THE TRANSACTION; AND, WITH RESPECT TO ANY RELATED PARTY TRANS-
ACTION INVOLVING A CHARITABLE CORPORATION AND IN WHICH A  RELATED  PARTY
HAS  A  SUBSTANTIAL  FINANCIAL  INTEREST,  CONSIDERED ALTERNATIVE TRANS-
ACTIONS TO THE EXTENT AVAILABLE, APPROVING THE TRANSACTION BY  NOT  LESS
THAN  A  MAJORITY  VOTE OF THE DIRECTORS OR COMMITTEE MEMBERS PRESENT AT
THE MEETING; (B) DOCUMENTED IN WRITING THE NATURE OF THE  VIOLATION  AND
THE  BASIS  FOR  THE  BOARD'S  OR COMMITTEE'S RATIFICATION OF THE TRANS-
ACTION; AND (C) PUT INTO PLACE PROCEDURES TO ENSURE THAT THE CORPORATION
COMPLIES WITH PARAGRAPHS (A) OR (B) OF THIS SECTION AS TO RELATED  PARTY
TRANSACTIONS IN THE FUTURE, WHICHEVER IS APPLICABLE.
  S  7. Paragraph (a) 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:
  (a) Except as provided in paragraph (d) of this section, [every corpo-
ration]  THE  BOARD  shall adopt, AND OVERSEE THE IMPLEMENTATION OF, AND

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COMPLIANCE WITH, a conflict of interest policy to ensure that its direc-
tors, officers and key [employees] PERSONS act in the corporation's best
interest and comply with applicable legal  requirements,  including  but
not  limited  to  the  requirements  set  forth in section seven hundred
fifteen of this article.
  S 8. Subparagraph 2 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:
  (2) procedures for disclosing a conflict of  interest  [to  the  audit
committee  or,  if there is no audit committee,] OR POSSIBLE CONFLICT OF
INTEREST to the board OR TO A COMMITTEE OF THE  BOARD  CONSISTING  OF  A
MAJORITY  OF  INDEPENDENT  DIRECTORS,  AND  PROCEDURES  FOR THE BOARD OR
COMMITTEE TO DETERMINE WHETHER A CONFLICT EXISTS;
  S 9. Paragraph (a) 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:
  (a) Except as provided in paragraph (c) of this section, THE BOARD  OF
every  corporation  that  has  twenty or more employees and in the prior
fiscal year had annual revenue in excess of one  million  dollars  shall
adopt,  AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE WITH, a whist-
leblower policy to protect from retaliation persons who report suspected
improper conduct. Such policy shall provide that no  director,  officer,
employee  or  volunteer  of  a corporation who in good faith reports any
action or suspected action taken by or within the  corporation  that  is
illegal,  fraudulent or in violation of any adopted policy of the corpo-
ration shall suffer intimidation, harassment,  discrimination  or  other
retaliation  or,  in  the  case  of employees, adverse employment conse-
quence.
  S 10. Subparagraph 2 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:
  (2)  A requirement that an employee, officer or director of the corpo-
ration be designated to  administer  the  whistleblower  policy  and  to
report  to [the audit committee or other committee of independent direc-
tors or, if there are no such committees, to] the board OR AN AUTHORIZED
COMMITTEE THEREOF CONSISTING OF A  MAJORITY  OF  INDEPENDENT  DIRECTORS,
EXCEPT THAT DIRECTORS WHO ARE EMPLOYEES MAY NOT PARTICIPATE IN ANY BOARD
OR  COMMITTEE  DELIBERATIONS OR VOTING RELATING TO ADMINISTRATION OF THE
WHISTLEBLOWER POLICY, PROVIDED THAT  NOTHING  IN  THIS  PARAGRAPH  SHALL
PROHIBIT  THE  BOARD  OR COMMITTEE FROM REQUESTING THAT A PERSON WITH AN
INTEREST IN THE MATTER PRESENT INFORMATION AS BACKGROUND OR ANSWER QUES-
TIONS AT A COMMITTEE OR BOARD  MEETING  PRIOR  TO  THE  COMMENCEMENT  OF
DELIBERATIONS OR VOTING RELATING THERETO; and
  S 11. Subparagraphs 3, 6, 7 and 8 of paragraph (a) of section 8-1.9 of
the  estates, powers and trusts law, subparagraphs 3, 6 and 7 as amended
by chapter 555 of the laws of 2015 and subparagraph 8 as added by  chap-
ter 549 of the laws of 2013, are amended to read as follows:
  (3)  "Key  [employee]  PERSON"  means any person OTHER THAN A TRUSTEE,
WHETHER OR NOT AN EMPLOYEE, who [is in a position to  exercise  substan-
tial influence over the affairs of the 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] (I) HAS RESPONSIBILITIES, OR EXERCISES POWERS
OF  INFLUENCE OVER THE TRUST AS A WHOLE SIMILAR TO THE RESPONSIBILITIES,
POWERS, OR INFLUENCE OF TRUSTEES AND OFFICERS; (II) MANAGES  THE  TRUST,
OR  A  SEGMENT OF THE TRUST THAT REPRESENTS A SUBSTANTIAL PORTION OF THE

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ACTIVITIES, ASSETS, INCOME OR EXPENSES OF THE TRUST; OR (III)  ALONE  OR
WITH  OTHERS CONTROLS OR DETERMINES A SUBSTANTIAL PORTION OF THE TRUST'S
CAPITAL EXPENDITURES OR OPERATING BUDGET.
  (6)  "Related party" means (i) any trustee or key [employee] PERSON of
the trust or any affiliate of the trust [or any other person  who  exer-
cises  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  individ-
ual described in clause (i) of this [subdivision] SUBPARAGRAPH; or (iii)
an  entity  in which any individual described in clauses (i) and (ii) of
this [subdivision] SUBPARAGRAPH 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 TRUSTEE RECEIVING COMPENSATION FROM THE
CORPORATION OR A key [employee] PERSON 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  thousand
dollars  in  direct  compensation  from the trust or an affiliate of the
trust [(other than reimbursement for expenses or the payment of  trustee
commissions  or  reasonable  compensation  as  permitted  by law and the
governing instrument)]; (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 have a substantial financial interest in,
any entity that has  [made  payments]  PROVIDED  PAYMENTS,  PROPERTY  OR
SERVICES  to, or received payments, PROPERTY OR SERVICES from, the trust
or an affiliate of the trust [for] IF THE AMOUNT PAID BY  THE  TRUST  TO
THE ENTITY OR RECEIVED BY THE TRUST FROM THE ENTITY FOR SUCH 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] EXCEEDED THE LESSER OF TEN
THOUSAND DOLLARS OR TWO PERCENT  OF  SUCH  ENTITY'S  CONSOLIDATED  GROSS
REVENUES  IF  THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS LESS THAN FIVE
HUNDRED THOUSAND DOLLARS; TWENTY-FIVE THOUSAND DOLLARS IF  THE  ENTITY'S
CONSOLIDATED GROSS REVENUE WAS FIVE HUNDRED THOUSAND DOLLARS OR MORE BUT
LESS  THAN  TEN  MILLION DOLLARS; FIFTY THOUSAND DOLLARS IF THE ENTITY'S
CONSOLIDATED GROSS REVENUE WAS TEN MILLION DOLLARS OR MORE; 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 audi-
tor or who has worked on the trust's audit at any time during  the  past
three  years.  For  purposes  of  this  [subdivision,] SUBPARAGRAPH, THE
TERMS: "COMPENSATION" DOES NOT INCLUDE REIMBURSEMENT FOR EXPENSES OR THE
PAYMENT OF TRUSTEE COMMISSIONS OR REASONABLE COMPENSATION  AS  PERMITTED
BY  LAW  AND  THE  GOVERNING  INSTRUMENT; AND "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, OR PAYMENTS
MADE BY THE TRUST AT  FIXED  OR  NON-NEGOTIABLE  RATES  OR  AMOUNTS  FOR
SERVICES  RECEIVED,  PROVIDED THAT SUCH SERVICES BY AND TO THE TRUST ARE
AVAILABLE TO INDIVIDUAL MEMBERS OF THE PUBLIC ON  THE  SAME  TERMS,  AND
SUCH  SERVICES  PROVIDED  TO  THE  TRUST  ARE NOT AVAILABLE FROM ANOTHER
SOURCE.
  (8) "Related party transaction" means any  transaction,  agreement  or
any  other arrangement in which a related party has a financial interest
and in which the trust or any affiliate of the trust is  a  participant,

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EXCEPT  THAT  A TRANSACTION SHALL NOT BE A RELATED PARTY TRANSACTION IF:
(I) THE TRANSACTION OR THE RELATED PARTY'S  FINANCIAL  INTEREST  IN  THE
TRANSACTION IS DE MINIMIS, (II) THE TRANSACTION WOULD NOT CUSTOMARILY BE
REVIEWED  BY THE BOARD, OR BOARDS OF SIMILAR ORGANIZATIONS, IN THE ORDI-
NARY COURSE OF BUSINESS AND IS AVAILABLE TO OTHERS ON THE SAME OR  SIMI-
LAR  TERMS, OR (III) THE TRANSACTION CONSTITUTES A BENEFIT PROVIDED TO A
RELATED PARTY SOLELY AS A MEMBER OF A CLASS OF  THE  BENEFICIARIES  THAT
THE  TRUST  INTENDS  TO  BENEFIT  AS  PART  OF THE ACCOMPLISHMENT OF ITS
MISSION WHICH BENEFIT IS AVAILABLE TO ALL MEMBERS SIMILARLY SITUATED  OF
THE SAME CLASS ON THE SAME TERMS.
  S 12. Subparagraph 3 of paragraph (b) of section 8-1.9 of the estates,
powers and trusts law is REPEALED.
  S 13. Subparagraph 1 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 and two new subparagraphs 7 and 8 are added to read as follows:
  (1) Notwithstanding any provision  of  the  trust  instrument  to  the
contrary, no trust shall enter into any related party transaction unless
the  transaction is determined by the trustees, OR AN AUTHORIZED COMMIT-
TEE THEREOF, to be fair, reasonable and in the trust's best interest  at
the time of such determination. Any trustee, officer or key employee who
has  an  interest  in a related party transaction shall disclose in good
faith to the trustees, or an authorized committee thereof, the  material
facts concerning such interest.
  (7)  IN  AN  ACTION  BY  ANY  PERSON OR ENTITY OTHER THAN THE ATTORNEY
GENERAL, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS
OF THIS PARAGRAPH THAT A TRANSACTION WAS FAIR,  REASONABLE  AND  IN  THE
TRUST'S BEST INTEREST AT THE TIME THE TRUST APPROVED THE TRANSACTION.
  (8)  IN  AN  ACTION  BY THE ATTORNEY GENERAL WITH RESPECT TO A RELATED
PARTY TRANSACTION NOT APPROVED IN ACCORDANCE WITH CLAUSES ONE OR TWO  OF
THIS PARAGRAPH AT THE TIME IT WAS ENTERED INTO, WHICHEVER IS APPLICABLE,
IT  SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS OF THIS
PARAGRAPH THAT (I) THE TRANSACTION  WAS  FAIR,  REASONABLE  AND  IN  THE
TRUST'S BEST INTEREST AT THE TIME THE TRUST APPROVED THE TRANSACTION AND
(II)  PRIOR  TO  RECEIPT  OF ANY REQUEST FOR INFORMATION BY THE ATTORNEY
GENERAL REGARDING THE TRANSACTION, THE TRUSTEES HAVE: (A)  RATIFIED  THE
TRANSACTION BY FINDING IN GOOD FAITH THAT IT WAS FAIR, REASONABLE AND IN
THE  TRUST'S  BEST  INTEREST AT THE TIME THE TRUSTEE APPROVED THE TRANS-
ACTION; AND, WITH RESPECT TO ANY RELATED PARTY TRANSACTION  INVOLVING  A
CHARITABLE  CORPORATION  AND  IN WHICH A RELATED PARTY HAS A SUBSTANTIAL
FINANCIAL INTEREST, CONSIDERED ALTERNATIVE TRANSACTIONS  TO  THE  EXTENT
AVAILABLE, APPROVING THE TRANSACTION BY NOT LESS THAN A MAJORITY VOTE OF
THE TRUSTEES OR COMMITTEE MEMBERS PRESENT AT THE MEETING; (B) DOCUMENTED
IN  WRITING  THE NATURE OF THE VIOLATION AND THE BASIS FOR THE TRUSTEES'
OR COMMITTEE'S RATIFICATION OF THE TRANSACTION; AND (C) PUT  INTO  PLACE
PROCEDURES  TO  ENSURE THAT THE TRUSTEE COMPLIES WITH CLAUSES ONE OR TWO
OF THIS PARAGRAPH AS TO RELATED PARTY TRANSACTIONS IN THE FUTURE, WHICH-
EVER IS APPLICABLE.
  S 14. Subparagraph 1 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:
  (1)  Except  as provided in subparagraph four of this paragraph, every
trust shall adopt a conflict of interest policy to ensure that its trus-
tees, officers and key [employees] PERSONS act in the best  interest  of
the  trust  and  its  beneficiaries  and  comply  with  applicable legal
requirements, including but not limited to the requirements set forth in
this paragraph.

A. 10365                            8

  S 15. Clause (B) 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:
  (B)  procedures  for  disclosing  a conflict of interest [to the audit
committee or, if there is no audit committee,] OR POSSIBLE  CONFLICT  OF
INTEREST to the trustees OR TO A COMMITTEE OF THE TRUSTEES CONSISTING OF
A  MAJORITY  OF INDEPENDENT TRUSTEES, AND PROCEDURES FOR THE TRUSTEES OR
COMMITTEE TO DETERMINE WHETHER A CONFLICT EXISTS;
  S 16. Subparagraph 1 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:
  (1)  Except  as  provided in subparagraph three of this paragraph, THE
TRUSTEES OF every trust that has twenty or more  employees  and  in  the
prior  fiscal  year  had annual revenue in excess of one million dollars
shall adopt a whistleblower policy to protect from  retaliation  persons
who report suspected improper conduct. Such policy shall provide that no
officer,  trustee,  employee  or  volunteer of a trust who in good faith
reports any action or suspected action taken by or within the trust that
is illegal, fraudulent or in violation of  any  adopted  policy  of  the
trust  shall  suffer  intimidation,  harassment, discrimination or other
retaliation or, in the case  of  employees,  adverse  employment  conse-
quence.
  S  17.  Clause (B) 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:
  (B)  A requirement that a trustee, officer or employee of the trust be
designated to administer, the whistleblower policy and to report to [the
audit committee or other committee of independent trustees, or  to]  the
trustees  OR AN AUTHORIZED COMMITTEE THEREOF CONSISTING OF A MAJORITY OF
INDEPENDENT TRUSTEES, EXCEPT THAT TRUSTEES WHO  ARE  EMPLOYEES  MAY  NOT
PARTICIPATE  IN  ANY BOARD OR COMMITTEE DELIBERATIONS OR VOTING RELATING
TO ADMINISTRATION OF THE WHISTLEBLOWER POLICY, PROVIDED THAT NOTHING  IN
THIS  PARAGRAPH SHALL PROHIBIT THE TRUSTEES OR COMMITTEE FROM REQUESTING
THAT A PERSON WITH AN INTEREST IN  THE  MATTER  PRESENT  INFORMATION  AS
BACKGROUND  OR ANSWER QUESTIONS AT A TRUSTEES OR COMMITTEE MEETING PRIOR
TO THE COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING THERETO; and
  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 judgement shall have been rendered.
  S 19. This act shall take effect immediately; provided, however,  that
paragraph  (f) of section 713 of the not-for-profit corporation law made
by section five of this act shall take effect on the same  date  and  in
the  same  manner  as section 132 of chapter 549 of the laws of 2013, as
amended, takes effect.

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

                                10365--A

                          I N  A S S E M B L Y

                              May 24, 2016
                               ___________

Introduced  by M. of A. BRENNAN -- read once and referred to the Commit-
  tee on Corporations,  Authorities  and  Commissions  --  reported  and
  referred  to  the  Committee  on  Codes  -- committee discharged, bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee

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:

  Section 1. Subparagraphs 21, 23, 24 and 25 of paragraph (a) of section
102  of  the not-for-profit corporation law, subparagraphs 21, 23 and 25
as amended by chapter 555 of the laws of 2015  and  subparagraph  24  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 OR A KEY PERSON 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 [employ-
ee] PERSON 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 corporation or an  affiliate  of  the  corporation
[(other  than reimbursement for expenses reasonably incurred as a direc-
tor or reasonable compensation for service as a director as permitted by
paragraph (a) of section 202 (General and special  powers))];  (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]  PROVIDED  PAYMENTS,  PROPERTY  OR  SERVICES  to,  or received
payments, PROPERTY OR SERVICES from, the corporation or an affiliate  of
the corporation [for] IF THE AMOUNT PAID BY THE CORPORATION TO THE ENTI-

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

                                                           LBD14985-06-6

A. 10365--A                         2

TY  OR  RECEIVED BY THE CORPORATION FROM THE ENTITY FOR SUCH 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] EXCEEDED THE LESSER OF TEN
THOUSAND DOLLARS OR TWO PERCENT  OF  SUCH  ENTITY'S  CONSOLIDATED  GROSS
REVENUES  IF  THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS LESS THAN FIVE
HUNDRED THOUSAND DOLLARS; TWENTY-FIVE THOUSAND DOLLARS IF  THE  ENTITY'S
CONSOLIDATED GROSS REVENUE WAS FIVE HUNDRED THOUSAND DOLLARS OR MORE BUT
LESS THAN TEN MILLION DOLLARS; ONE HUNDRED THOUSAND DOLLARS IF THE ENTI-
TY'S CONSOLIDATED GROSS REVENUE WAS TEN MILLION DOLLARS OR MORE; 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 [subdivision,] SUBPAR-
AGRAPH,  THE  TERMS:  "COMPENSATION"  DOES NOT INCLUDE 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) OF THIS CHAPTER;  AND  "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, OR PAYMENTS MADE BY THE CORPORATION AT FIXED OR NON-NEGOTIABLE
RATES  OR  AMOUNTS FOR SERVICES RECEIVED, provided that such services BY
AND TO THE CORPORATION are available to individual members of the public
on the same terms, AND SUCH SERVICES RECEIVED BY THE CORPORATION ARE NOT
AVAILABLE FROM ANOTHER SOURCE.
  (23) "Related party" means (i) any director, officer or key [employee]
PERSON 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 individual described in clause
(i) of this [subdivision] SUBPARAGRAPH; or (iii) any entity in which any
individual described in clauses  (i)  and  (ii)  of  this  [subdivision]
SUBPARAGRAPH  has  a thirty-five percent or greater ownership or benefi-
cial interest or, in the case of a partnership  or  professional  corpo-
ration,  a  direct  or  indirect  ownership  interest  in excess of five
percent.
  (24) "Related party transaction" means any transaction,  agreement  or
any  other arrangement in which a related party has a financial interest
and in which the corporation or any affiliate of the  corporation  is  a
participant,  EXCEPT  THAT  A  TRANSACTION  SHALL NOT BE A RELATED PARTY
TRANSACTION IF: (I) THE TRANSACTION OR  THE  RELATED  PARTY'S  FINANCIAL
INTEREST  IN  THE  TRANSACTION IS DE MINIMIS, (II) THE TRANSACTION WOULD
NOT CUSTOMARILY BE REVIEWED BY THE BOARD OR BOARDS OF SIMILAR  ORGANIZA-
TIONS  IN  THE ORDINARY COURSE OF BUSINESS AND IS AVAILABLE TO OTHERS ON
THE SAME OR SIMILAR TERMS, OR (III) THE TRANSACTION CONSTITUTES A  BENE-
FIT  PROVIDED  TO  A  RELATED PARTY SOLELY AS A MEMBER OF A CLASS OF THE
BENEFICIARIES THAT THE CORPORATION INTENDS TO BENEFIT  AS  PART  OF  THE
ACCOMPLISHMENT OF ITS MISSION WHICH BENEFIT IS AVAILABLE TO ALL SIMILAR-
LY SITUATED MEMBERS OF THE SAME CLASS ON THE SAME TERMS.
  (25) "Key [employee] PERSON" 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], OTHER THAN A DIRECTOR OR OFFICER, WHETHER OR
NOT  AN  EMPLOYEE  OF  THE CORPORATION, WHO (I) HAS RESPONSIBILITIES, OR
EXERCISES POWERS OR INFLUENCE OVER THE CORPORATION AS A WHOLE SIMILAR TO

A. 10365--A                         3

THE RESPONSIBILITIES, POWERS, OR INFLUENCE OF  DIRECTORS  AND  OFFICERS;
(II)  MANAGES  THE  CORPORATION,  OR  A  SEGMENT OF THE CORPORATION THAT
REPRESENTS A SUBSTANTIAL PORTION OF THE ACTIVITIES,  ASSETS,  INCOME  OR
EXPENSES  OF  THE CORPORATION; OR (III) ALONE OR WITH OTHERS CONTROLS OR
DETERMINES A SUBSTANTIAL PORTION OF THE CORPORATION'S  CAPITAL  EXPENDI-
TURES OR OPERATING BUDGET.
  S  2. Section 114 of the not-for-profit corporation law, as amended by
chapter 549 of the laws of 2013, is amended to read as follows:
S 114. Visitation of supreme court.
  Charitable corporations, whether formed under general or special laws,
with their books and vouchers, shall be subject to  the  visitation  and
inspection of a justice of the supreme court, or of any person appointed
by the court for that purpose. If it appears by the verified petition of
a  member,  director,  officer or creditor of any such corporation, that
it, or its directors, officers,  members,  key  [employees]  PERSONS  or
agents,  have misappropriated any of the funds or property of the corpo-
ration, or diverted them from the purpose of its incorporation, or  that
the  corporation  has acquired property in excess of the amount which it
is authorized by law to hold, or has engaged in any business other  than
that  stated  in  its  certificate of incorporation, the court may order
that notice of at least eight days, with a  copy  of  the  petition,  be
served  on the corporation, the attorney general and the persons charged
with misconduct, requiring them to show cause at a time and place speci-
fied, why they should not be required to make and file an inventory  and
account  of  the  property,  effects and liabilities of such corporation
with a detailed statement of its transactions during the  twelve  months
next preceding the granting of such order. On the hearing of such appli-
cation,  the  court  may make an order requiring such inventory, account
and statement to be filed, and proceed to take and state an  account  of
the property and liabilities of the corporation, or may appoint a refer-
ee  for that purpose. When such account is taken and stated, after hear-
ing all the parties to the application, the  court  may  enter  a  final
order determining the amount of property so held by the corporation, its
annual  income,  whether any of the property or funds of the corporation
have been misappropriated or diverted to any other purpose than that for
which such corporation was incorporated, and  whether  such  corporation
has  been  engaged  in  any  activity  not covered by its certificate of
incorporation. An appeal may be  taken  from  the  order  by  any  party
aggrieved  to  the  appellate  division of the supreme court, and to the
court of appeals, as in a civil action. No corporation shall be required
to make and file more than one inventory and account in  any  one  year,
nor  to make a second account and inventory, while proceedings are pend-
ing for the statement of an account under this section.
  S 3. Section 309 of the not-for-profit corporation law,  as  added  by
chapter 549 of the laws of 2013, is amended to read as follows:
S 309. Personal  jurisdiction  and service of process on non-domiciliary
         resident director, officer, key [employee] PERSON or agent.
  A person, by becoming a director, officer, key  [employee]  PERSON  or
agent  of  a  corporation is subject to the personal jurisdiction of the
supreme court of the state of New York, and in an action  or  proceeding
by  the  attorney  general under this chapter process may be served upon
such person as provided in section three hundred thirteen of  the  civil
practice law and rules.
  S  4.  Paragraphs  (a)  and  (e)  of section 712 of the not-for-profit
corporation law, paragraph (a) as amended by chapter 549 of the laws  of

A. 10365--A                         4

2013  and  paragraph  (e) as amended by chapter 555 of the laws of 2015,
are amended to read as follows:
  (a)  [If  the]  THE certificate of incorporation [or the], THE by-laws
[so provide], OR the board[, by resolution adopted by a majority of  the
entire  board, may designate from among its members an executive commit-
tee and other committees] MAY  CREATE  COMMITTEES  OF  THE  BOARD,  each
consisting of three or more directors[, and each of which, to the extent
provided  in  the  resolution  or in the certificate of incorporation or
by-laws, shall have all the authority of the  board].  THE  BOARD  SHALL
APPOINT  THE  MEMBERS OF SUCH COMMITTEE OF THE BOARD, EXCEPT THAT IN THE
CASE OF ANY EXECUTIVE COMMITTEE OR  SIMILAR  COMMITTEE  HOWEVER  DENOMI-
NATED,  THE APPOINTMENT SHALL BE MADE BY A MAJORITY OF THE ENTIRE BOARD,
PROVIDED THAT IN THE CASE OF A BOARD OF  THIRTY  MEMBERS  OR  MORE,  THE
APPOINTMENT  SHALL  BE  MADE BY AT LEAST THREE-QUARTERS OF THE DIRECTORS
PRESENT AT THE TIME OF THE VOTE, IF A QUORUM IS PRESENT AT THAT TIME. IN
ADDITION, THE BY-LAWS MAY PROVIDE THAT DIRECTORS WHO ARE THE HOLDERS  OF
CERTAIN  POSITIONS  IN  THE  CORPORATION  SHALL BE EX-OFFICIO MEMBERS OF
SPECIFIC COMMITTEES. EACH SUCH COMMITTEE SHALL HAVE THE AUTHORITY OF THE
BOARD TO THE EXTENT PROVIDED IN A BOARD RESOLUTION OR IN THE CERTIFICATE
OF INCORPORATION OR BY-LAWS, except that no [such] committee OF ANY KIND
shall have authority as to the following matters:
  (1) The  submission  to  members  of  any  action  requiring  members'
approval under this chapter.
  (2)  The  filling  of  vacancies  in  the board of directors or in any
committee.
  (3) The fixing of compensation of the directors  for  serving  on  the
board or on any committee.
  (4)  The  amendment  or  repeal  of the by-laws or the adoption of new
by-laws.
  (5) The amendment or repeal of any resolution of the  board  which  by
its terms shall not be so amendable or repealable.
  (6) THE ELECTION OR REMOVAL OF OFFICERS AND DIRECTORS.
  (7) THE APPROVAL OF A MERGER OR PLAN OF DISSOLUTION.
  (8) THE AUTHORIZATION  OR ADOPTION OF A RESOLUTION RECOMMENDING TO THE
MEMBERS  ACTION ON THE SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ALL
OR SUBSTANTIALLY ALL THE ASSETS.
  (9) THE APPROVAL OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION.
  (e) Committees, other than committees of the board, whether created by
the board or by the members, shall be committees of the corporation.  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 committees.] 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 5. Paragraph (c) of section 712-a of the not-for-profit  corporation
law is REPEALED.
  S  6.  Paragraph  (f) of section 713 of the not-for-profit corporation
law, as added by chapter 549 of the laws of 2013, is amended to read  as
follows:
  (f)  No  employee of the corporation shall serve as chair of the board
or hold any other title with similar responsibilities, UNLESS THE  BOARD
APPROVES  SUCH  EMPLOYEE  SERVING  AS CHAIR OF THE BOARD BY A TWO-THIRDS
VOTE OF THE ENTIRE BOARD AND CONTEMPORANEOUSLY DOCUMENTS IN WRITING  THE
BASIS  FOR  THE BOARD APPROVAL; PROVIDED, HOWEVER, THAT NO SUCH EMPLOYEE

A. 10365--A                         5

SHALL BE CONSIDERED AN INDEPENDENT DIRECTOR FOR  THE  PURPOSES  OF  THIS
CHAPTER.
  S  7.  Paragraph  (a) of section 715 of the not-for-profit corporation
law, as amended by chapter 549 of the laws of 2013, is amended  and  two
new paragraphs (i) and (j) are added to read as follows:
  (a)  No  corporation  shall  enter  into any related party transaction
unless the transaction is determined by  the  board,  OR  AN  AUTHORIZED
COMMITTEE  THEREOF, to be fair, reasonable and in the corporation's best
interest at the time of such determination. Any director, officer or key
[employee] PERSON who has an interest in  a  related  party  transaction
shall  disclose  in  good faith to the board, or an authorized committee
thereof, the material facts concerning such interest.
  (I) IN AN ACTION BY ANY PERSON  OR  ENTITY  OTHER  THAN  THE  ATTORNEY
GENERAL, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS
OF  THIS  SECTION  THAT  A  TRANSACTION  WAS FAIR, REASONABLE AND IN THE
CORPORATION'S BEST INTEREST AT THE TIME  THE  CORPORATION  APPROVED  THE
TRANSACTION.
  (J)  IN  AN  ACTION  BY THE ATTORNEY GENERAL WITH RESPECT TO A RELATED
PARTY TRANSACTION NOT APPROVED IN ACCORDANCE WITH PARAGRAPHS (A) OR  (B)
OF  THIS  SECTION AT THE TIME IT WAS ENTERED INTO, WHICHEVER IS APPLICA-
BLE, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS  OF
THIS  SECTION  THAT  (1) THE TRANSACTION WAS FAIR, REASONABLE AND IN THE
CORPORATION'S BEST INTEREST AT THE TIME  THE  CORPORATION  APPROVED  THE
TRANSACTION  AND  (2) PRIOR TO RECEIPT OF ANY REQUEST FOR INFORMATION BY
THE ATTORNEY GENERAL REGARDING THE TRANSACTION, THE BOARD HAS: (A) RATI-
FIED THE TRANSACTION BY FINDING IN GOOD FAITH THAT IT WAS FAIR,  REASON-
ABLE  AND IN THE CORPORATION'S BEST INTEREST AT THE TIME THE CORPORATION
APPROVED THE TRANSACTION; AND, WITH RESPECT TO ANY RELATED PARTY  TRANS-
ACTION  INVOLVING  A CHARITABLE CORPORATION AND IN WHICH A RELATED PARTY
HAS A SUBSTANTIAL  FINANCIAL  INTEREST,  CONSIDERED  ALTERNATIVE  TRANS-
ACTIONS  TO  THE EXTENT AVAILABLE, APPROVING THE TRANSACTION BY NOT LESS
THAN A MAJORITY VOTE OF THE DIRECTORS OR COMMITTEE  MEMBERS  PRESENT  AT
THE  MEETING;  (B) DOCUMENTED IN WRITING THE NATURE OF THE VIOLATION AND
THE BASIS FOR THE BOARD'S OR  COMMITTEE'S  RATIFICATION  OF  THE  TRANS-
ACTION; AND (C) PUT INTO PLACE PROCEDURES TO ENSURE THAT THE CORPORATION
COMPLIES WITH PARAGRAPHS (A) AND (B) OF THIS SECTION AS TO RELATED PARTY
TRANSACTIONS IN THE FUTURE.
  S  8. Paragraph (a) 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:
  (a) Except as provided in paragraph (d) of this section, [every corpo-
ration]  THE  BOARD  shall adopt, AND OVERSEE THE IMPLEMENTATION OF, AND
COMPLIANCE WITH, a conflict of interest policy to ensure that its direc-
tors, officers and key [employees] PERSONS act in the corporation's best
interest and comply with applicable legal  requirements,  including  but
not  limited  to  the  requirements  set  forth in section seven hundred
fifteen of this article.
  S 9. Subparagraph 2 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:
  (2) procedures for disclosing a conflict of  interest  [to  the  audit
committee  or,  if there is no audit committee,] OR POSSIBLE CONFLICT OF
INTEREST to the board OR TO A COMMITTEE OF THE BOARD, AND PROCEDURES FOR
THE BOARD OR COMMITTEE TO DETERMINE WHETHER A CONFLICT EXISTS;

A. 10365--A                         6

  S 10. Paragraph (a) 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:
  (a)  Except as provided in paragraph (c) of this section, THE BOARD OF
every corporation that has twenty or more employees  and  in  the  prior
fiscal  year  had  annual revenue in excess of one million dollars shall
adopt, AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE WITH, a  whist-
leblower policy to protect from retaliation persons who report suspected
improper  conduct.  Such policy shall provide that no director, officer,
employee or volunteer of a corporation who in  good  faith  reports  any
action  or  suspected  action taken by or within the corporation that is
illegal, fraudulent or in violation of any adopted policy of the  corpo-
ration  shall  suffer  intimidation, harassment, discrimination or other
retaliation or, in the case  of  employees,  adverse  employment  conse-
quence.
  S  11.  Subparagraphs 2 and 3 of paragraph (b) of section 715-b of the
not-for-profit corporation law, subparagraph 2 as added by  chapter  549
of  the laws of 2013 and subparagraph 3 as amended by chapter 555 of the
laws of 2015, are amended to read as follows:
  (2) A requirement that an employee, officer or director of the  corpo-
ration  be  designated  to  administer  the  whistleblower policy and to
report to [the audit committee or other committee of independent  direc-
tors or, if there are no such committees, to] the board OR AN AUTHORIZED
COMMITTEE  THEREOF,  EXCEPT  THAT  DIRECTORS  WHO  ARE EMPLOYEES MAY NOT
PARTICIPATE IN ANY BOARD OR COMMITTEE DELIBERATIONS OR  VOTING  RELATING
TO ADMINISTRATION OF THE WHISTLEBLOWER POLICY; [and]
  (3) A REQUIREMENT THAT THE PERSON WHO IS THE SUBJECT OF A WHISTLEBLOW-
ER  COMPLAINT  NOT  BE  PRESENT  AT OR PARTICIPATE IN BOARD OR COMMITTEE
DELIBERATIONS OR VOTE ON THE MATTER RELATING TO SUCH COMPLAINT, PROVIDED
THAT NOTHING IN THIS SUBPARAGRAPH SHALL PROHIBIT THE BOARD OR  COMMITTEE
FROM  REQUESTING THAT THE PERSON WHO IS SUBJECT TO THE COMPLAINT PRESENT
INFORMATION AS BACKGROUND OR ANSWER QUESTIONS AT A  COMMITTEE  OR  BOARD
MEETING  PRIOR  TO  THE COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING
THERETO; AND
  (4) 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  12.  The  section  heading  and paragraph (a) of section 720 of the
not-for-profit corporation law, as amended by chapter 549 of the laws of
2013, are amended to read as follows:
Actions against directors, officers and key [employees] PERSONS.
  (a) An action may be brought against one or more directors,  officers,
or  key  [employees]  PERSONS of a corporation to procure a judgment for
the following relief:
  S 13. Subparagraphs 3, 6, 7 and 8 of paragraph (a) of section 8-1.9 of
the estates, powers and trusts law, subparagraphs 3, 6 and 7 as  amended
by  chapter 555 of the laws of 2015 and subparagraph 8 as added by chap-
ter 549 of the laws of 2013, are amended to read as follows:
  (3) "Key [employee] PERSON" means any person  OTHER  THAN  A  TRUSTEE,
WHETHER  OR  NOT AN EMPLOYEE, who [is in a position to exercise substan-
tial influence over the affairs of the trust, as referenced in 26 U.S.C.
section  4958(f)(1)(A)  and  further  specified  in  26  C.F.R.  section

A. 10365--A                         7

53.4958-3(c),  (d)  and (e), or succeeding provisions to the extent such
provisions are applicable] (I) HAS RESPONSIBILITIES, OR EXERCISES POWERS
OF INFLUENCE OVER THE TRUST AS A WHOLE SIMILAR TO THE  RESPONSIBILITIES,
POWERS,  OR  INFLUENCE OF TRUSTEES AND OFFICERS; (II) MANAGES THE TRUST,
OR A SEGMENT OF THE TRUST THAT REPRESENTS A SUBSTANTIAL PORTION  OF  THE
ACTIVITIES,  ASSETS,  INCOME OR EXPENSES OF THE TRUST; OR (III) ALONE OR
WITH OTHERS CONTROLS OR DETERMINES A SUBSTANTIAL PORTION OF THE  TRUST'S
CAPITAL EXPENDITURES OR OPERATING BUDGET.
  (6)  "Related party" means (i) any trustee or key [employee] PERSON of
the trust or any affiliate of the trust [or any other person  who  exer-
cises  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  individ-
ual described in clause (i) of this [subdivision] SUBPARAGRAPH; or (iii)
an  entity  in which any individual described in clauses (i) and (ii) of
this [subdivision] SUBPARAGRAPH 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] PERSON of the trust or an
affiliate of the trust; (ii) has not received, and does not have a rela-
tive who has received, in any of the last three fiscal years, more  than
ten  thousand dollars in direct compensation from the trust or an affil-
iate of the trust [(other than reimbursement for expenses or the payment
of trustee commissions or reasonable compensation as  permitted  by  law
and  the  governing  instrument)]; (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 have a substantial financial
interest in, any entity that  has  [made  payments]  PROVIDED  PAYMENTS,
PROPERTY  OR  SERVICES  to,  or  received payments, PROPERTY OR SERVICES
from, the trust or an affiliate of the trust [for] IF THE AMOUNT PAID BY
THE TRUST TO THE ENTITY OR RECEIVED BY THE TRUST  FROM  THE  ENTITY  FOR
SUCH 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] EXCEEDED THE LESS-
ER  OF TEN THOUSAND DOLLARS OR TWO PERCENT OF SUCH ENTITY'S CONSOLIDATED
GROSS REVENUE IF THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS  LESS  THAN
FIVE HUNDRED THOUSAND DOLLARS; TWENTY-FIVE THOUSAND DOLLARS IF THE ENTI-
TY'S  CONSOLIDATED  GROSS  REVENUE  WAS FIVE HUNDRED THOUSAND DOLLARS OR
MORE BUT LESS THAN TEN MILLION DOLLARS; ONE HUNDRED THOUSAND DOLLARS  IF
THE ENTITY'S CONSOLIDATED GROSS REVENUE WAS TEN MILLION DOLLARS OR MORE;
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  [subdivision,]
SUBPARAGRAPH,  THE  TERMS: "COMPENSATION" DOES NOT INCLUDE REIMBURSEMENT
FOR EXPENSES OR THE PAYMENT OF TRUSTEE COMMISSIONS OR REASONABLE COMPEN-
SATION AS PERMITTED BY LAW AND THE GOVERNING INSTRUMENT;  AND  "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, OR PAYMENTS MADE BY THE TRUST AT FIXED OR NON-NEGOTIABLE RATES
OR  AMOUNTS FOR SERVICES RECEIVED, PROVIDED THAT SUCH SERVICES BY AND TO
THE TRUST ARE AVAILABLE TO INDIVIDUAL MEMBERS OF THE PUBLIC ON THE  SAME

A. 10365--A                         8

TERMS,  AND  SUCH  SERVICES PROVIDED TO THE TRUST ARE NOT AVAILABLE FROM
ANOTHER SOURCE.
  (8)  "Related  party  transaction" means any transaction, agreement or
any other arrangement in which a related party has a financial  interest
and  in  which the trust or any affiliate of the trust is a participant,
EXCEPT THAT A TRANSACTION SHALL NOT BE A RELATED PARTY  TRANSACTION  IF:
(I)  THE  TRANSACTION  OR  THE RELATED PARTY'S FINANCIAL INTEREST IN THE
TRANSACTION IS DE MINIMIS, (II) THE TRANSACTION WOULD NOT CUSTOMARILY BE
REVIEWED BY THE BOARD, OR BOARDS OF SIMILAR ORGANIZATIONS, IN THE  ORDI-
NARY  COURSE OF BUSINESS AND IS AVAILABLE TO OTHERS ON THE SAME OR SIMI-
LAR TERMS, OR (III) THE TRANSACTION CONSTITUTES A BENEFIT PROVIDED TO  A
RELATED  PARTY  SOLELY  AS A MEMBER OF A CLASS OF THE BENEFICIARIES THAT
THE TRUST INTENDS TO BENEFIT  AS  PART  OF  THE  ACCOMPLISHMENT  OF  ITS
MISSION  WHICH BENEFIT IS AVAILABLE TO ALL SIMILARLY SITUATED MEMBERS OF
THE SAME CLASS ON THE SAME TERMS.
  S 14. Subparagraph 3 of paragraph (b) of section 8-1.9 of the estates,
powers and trusts law is REPEALED.
  S 15. Subparagraph 1 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 and two new subparagraphs 7 and 8 are added to read as follows:
  (1)  Notwithstanding  any  provision  of  the  trust instrument to the
contrary, no trust shall enter into any related party transaction unless
the transaction is determined by the trustees, OR AN AUTHORIZED  COMMIT-
TEE  THEREOF, to be fair, reasonable and in the trust's best interest at
the time of such determination. Any trustee, officer or key employee who
has an interest in a related party transaction shall  disclose  in  good
faith  to the trustees, or an authorized committee thereof, the material
facts concerning such interest.
  (7) IN AN ACTION BY ANY PERSON  OR  ENTITY  OTHER  THAN  THE  ATTORNEY
GENERAL, IT SHALL BE A DEFENSE TO A CLAIM OF VIOLATION OF ANY PROVISIONS
OF  THIS  PARAGRAPH  THAT  A TRANSACTION WAS FAIR, REASONABLE AND IN THE
TRUST'S BEST INTEREST AT THE TIME THE TRUST APPROVED THE TRANSACTION.
  (8) IN AN ACTION BY THE ATTORNEY GENERAL WITH  RESPECT  TO  A  RELATED
PARTY  TRANSACTION  NOT  APPROVED IN ACCORDANCE WITH SUBPARAGRAPH ONE OR
TWO OF THIS PARAGRAPH AT THE TIME IT  WAS  ENTERED  INTO,  WHICHEVER  IS
APPLICABLE,  IT  SHALL  BE  A  DEFENSE  TO  A  CLAIM OF VIOLATION OF ANY
PROVISIONS OF THIS PARAGRAPH THAT (I) THE TRANSACTION WAS FAIR,  REASON-
ABLE AND IN THE TRUST'S BEST INTEREST AT THE TIME THE TRUST APPROVED THE
TRANSACTION  AND (II) PRIOR TO RECEIPT OF ANY REQUEST FOR INFORMATION BY
THE ATTORNEY GENERAL REGARDING THE TRANSACTION, THE TRUSTEES  HAVE:  (A)
RATIFIED  THE  TRANSACTION  BY  FINDING  IN GOOD FAITH THAT IT WAS FAIR,
REASONABLE AND IN THE TRUST'S BEST INTEREST  AT  THE  TIME  THE  TRUSTEE
APPROVED  THE TRANSACTION; AND, WITH RESPECT TO ANY RELATED PARTY TRANS-
ACTION INVOLVING A CHARITABLE CORPORATION AND IN WHICH A  RELATED  PARTY
HAS  A  SUBSTANTIAL  FINANCIAL  INTEREST,  CONSIDERED ALTERNATIVE TRANS-
ACTIONS TO THE EXTENT AVAILABLE, APPROVING THE TRANSACTION BY  NOT  LESS
THAN A MAJORITY VOTE OF THE TRUSTEES OR COMMITTEE MEMBERS PRESENT AT THE
MEETING;  (B)  DOCUMENTED IN WRITING THE NATURE OF THE VIOLATION AND THE
BASIS FOR THE TRUSTEES' OR COMMITTEE'S RATIFICATION OF THE  TRANSACTION;
AND  (C)  PUT  INTO PLACE PROCEDURES TO ENSURE THAT THE TRUSTEE COMPLIES
WITH SUBPARAGRAPHS ONE AND TWO OF THIS PARAGRAPH  AS  TO  RELATED  PARTY
TRANSACTIONS IN THE FUTURE.
  S 16. Subparagraph 1 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:

A. 10365--A                         9

  (1) Except as provided in subparagraph four of this  paragraph,  every
trust  shall  adopt,  AND  OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE
WITH, a conflict of interest policy to ensure that its  trustees,  offi-
cers  and  key [employees] PERSONS act in the best interest of the trust
and  its  beneficiaries  and  comply with applicable legal requirements,
including but not limited to the requirements set forth  in  this  para-
graph.
  S  17.  Clause (B) 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:
  (B)  procedures  for  disclosing  a conflict of interest [to the audit
committee or, if there is no audit committee,] OR POSSIBLE  CONFLICT  OF
INTEREST  to  the trustees OR TO A COMMITTEE OF THE TRUSTEES, AND PROCE-
DURES FOR THE TRUSTEES OR COMMITTEE  TO  DETERMINE  WHETHER  A  CONFLICT
EXISTS;
  S 18. Subparagraph 1 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:
  (1) Except as provided in subparagraph three of  this  paragraph,  THE
TRUSTEES  OF  every  trust  that has twenty or more employees and in the
prior fiscal year had annual revenue in excess of  one  million  dollars
shall  adopt,  AND OVERSEE THE IMPLEMENTATION OF, AND COMPLIANCE WITH, a
whistleblower policy to protect  from  retaliation  persons  who  report
suspected  improper  conduct. Such policy shall provide that no officer,
trustee, employee or volunteer of a trust who in good faith reports  any
action or suspected action taken by or within the trust that is illegal,
fraudulent  or  in  violation  of  any adopted policy of the trust shall
suffer intimidation, harassment, discrimination or other retaliation or,
in the case of employees, adverse employment consequence.
  S 19. Clauses (B) and (C)  of  subparagraph  2  of  paragraph  (e)  of
section 8-1.9 of the estates, powers and trusts law, clause (B) as added
by  chapter 549 of the laws of 2013 and clause (C) as amended by chapter
555 of the laws of 2015, are amended to read as follows:
  (B) A requirement that a trustee, officer or employee of the trust  be
designated to administer, the whistleblower policy and to report to [the
audit  committee  or other committee of independent trustees, or to] the
trustees OR AN AUTHORIZED COMMITTEE THEREOF, EXCEPT  THAT  TRUSTEES  WHO
ARE  EMPLOYEES  MAY  NOT  PARTICIPATE IN ANY BOARD OR COMMITTEE DELIBER-
ATIONS OR VOTING RELATING TO ADMINISTRATION OF THE WHISTLEBLOWER POLICY;
[and]
  (C) A REQUIREMENT THAT THE PERSON WHO IS THE SUBJECT OF A WHISTLEBLOW-
ER COMPLAINT NOT BE PRESENT AT OR  PARTICIPATE  IN  BOARD  OR  COMMITTEE
DELIBERATION  OR VOTE ON THE MATTER RELATING TO SUCH COMPLAINT, PROVIDED
THAT NOTHING IN THIS SUBPARAGRAPH SHALL PROHIBIT THE BOARD OR  COMMITTEE
FROM  REQUESTING THAT THE PERSON WHO IS SUBJECT TO THE COMPLAINT PRESENT
INFORMATION AS BACKGROUND OR ANSWER QUESTIONS AT A  COMMITTEE  OR  BOARD
MEETING  PRIOR  TO  THE COMMENCEMENT OF DELIBERATIONS OR VOTING RELATING
THERETO; AND
  (D) 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.

A. 10365--A                        10

  S 20. 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 judgement shall have been rendered.
  S 21. This act shall take effect on  the  one  hundred  eightieth  day
after it shall have become a law; provided, however, that the amendments
to  paragraph  (f)  of section 713 of the not-for-profit corporation law
made by section six of this act shall take effect on the same  date  and
in the same manner as section 132 of chapter 549 of the laws of 2013, as
amended, takes effect.