S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10654
 
                           I N  A S S E M B L Y
 
                               May 10, 2018
                                ___________
 
 Introduced by M. of A. PAULIN -- read once and referred to the Committee
   on Corporations, Authorities and Commissions
 
 AN  ACT  to amend the not-for-profit corporation law, in relation to the
   regulation of key persons
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Paragraph  (a)  and  subparagraph  4  of paragraph (b) of
 section 715-b of the not-for-profit corporation law, as amended by chap-
 ter 466 of the laws of 2016, are 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,
 KEY  PERSON,  employee  or  volunteer of a corporation who in good faith
 reports any action or suspected action taken by  or  within  the  corpo-
 ration that is illegal, fraudulent or in violation of any adopted policy
 of the corporation shall suffer intimidation, harassment, discrimination
 or  other  retaliation  or, in the case of employees, adverse employment
 consequence.
   (4) A requirement that a copy of the  policy  be  distributed  to  all
 directors,  officers,  KEY  PERSONS,  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.
   § 2. Section 716 of the not-for-profit corporation law, as amended  by
 chapter 549 of the laws of 2013, is amended to read as follows:
 § 716. Loans to directors [and], officers AND KEY PERSONS.
   No  loans,  other  than  through the purchase of bonds, debentures, or
 similar obligations of the type customarily sold in public offerings, or
 through ordinary deposit of funds in a bank, shall be made by  a  corpo-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD15305-01-8

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 ration  to  its directors [or], officers OR KEY PERSONS, or to any other
 corporation, firm, association or other entity in which one or  more  of
 its directors [or], officers OR KEY PERSONS are directors [or], officers
 OR  KEY  PERSONS or hold a substantial financial interest, except a loan
 by one charitable corporation to another charitable corporation. A  loan
 made  in  violation  of this section shall be a violation of the duty to
 the corporation of the directors or officers authorizing it  or  partic-
 ipating  in  it,  but the obligation of the borrower with respect to the
 loan shall not be affected thereby.
   § 3. Section 717 of the not-for-profit corporation law, paragraph  (a)
 as  amended  by  chapter  490  of  the laws of 2010 and paragraph (b) as
 amended by chapter 734 of the laws  of  1988,  is  amended  to  read  as
 follows:
 § 717. Duty of directors [and], officers AND KEY PERSONS.
   (a)  Directors  [and],  officers  AND  KEY PERSONS shall discharge the
 duties of their respective positions in good faith and with the care  an
 ordinarily  prudent person in a like position would exercise under simi-
 lar circumstances. The factors set forth in subparagraph  one  of  para-
 graph  (e) of section 552 (Standard of conduct in managing and investing
 an institutional fund), if relevant, must be considered by  a  governing
 board  delegating  investment management of institutional funds pursuant
 to section 514 (Delegation of investment  management)  For  purposes  of
 this  paragraph,  the  term institutional fund is defined in section 551
 (Definitions).
   (b) In discharging their duties, directors  [and],  officers  AND  KEY
 PERSONS,  when  acting in good faith, may rely on information, opinions,
 reports or statements including financial statements and other financial
 data, in each case prepared or presented by: (1) one or more officers or
 employees of the corporation, whom the director believes to be  reliable
 and  competent in the matters presented, (2) counsel, public accountants
 or other persons as to matters which the directors [or], officers OR KEY
 PERSONS believe to be within such person's professional or expert compe-
 tence or (3) a committee of the board upon which they do not serve, duly
 designated in accordance with a provision of the certificate of incorpo-
 ration or the bylaws, as to matters  within  its  designated  authority,
 which  committee  the directors [or], officers OR KEY PERSONS believe to
 merit confidence, so long as in so relying they shall be acting in  good
 faith  and  with  that degree of care specified in paragraph (a) of this
 section.  Persons shall not be considered to be acting in good faith  if
 they  have  knowledge concerning the matter in question that would cause
 such reliance to be unwarranted. Persons who  so  perform  their  duties
 shall  have  no  liability  by  reason of being or having been directors
 [or], officers OR KEY PERSONS of the corporation.
   § 4. Section 718 of the not-for-profit corporation law, as amended  by
 chapter 549 of the laws of 2013, is amended to read as follows:
 § 718. List of directors [and], officers AND KEY PERSONS.
   (a)  If  a  member  or  creditor of a corporation, in person or by his
 attorney or agent, or a representative of the district  attorney  or  of
 the  secretary  of state, the attorney general, or other state official,
 makes a written demand on a corporation to inspect a current list of its
 directors [and], officers AND KEY PERSONS, the corporation shall, within
 two business days after receipt of the demand and for a  period  of  one
 week  thereafter,  make  the  list  available for such inspection at its
 office during usual business hours.
   (b) Upon refusal by the corporation to make  a  current  list  of  its
 directors  [and],  officers  AND  KEY  PERSONS available, as provided in

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 paragraph (a) of this section, the person making a demand for such  list
 may  apply, ex parte, to the supreme court at a special term held within
 the judicial district where the office of the corporation is located for
 an  order  directing  the  corporation  to make such list available. The
 court may grant such order or take such other action as it may deem just
 and proper.
   § 5. Section 720-a of the not-for-profit corporation law, as added  by
 chapter 220 of the laws of 1986, is amended to read as follows:
 § 720-a. Liability  of  directors,  officers  [and],  trustees  AND  KEY
            PERSONS.
   Except as provided  in  sections  seven  hundred  nineteen  and  seven
 hundred  twenty  of  this  chapter,  and except any action or proceeding
 brought by the attorney general or, in the case of a  charitable  trust,
 an  action  or  proceeding against a trustee brought by a beneficiary of
 such trust, no person serving without compensation as a director,  offi-
 cer,  KEY  PERSON or trustee of a corporation, association, organization
 or trust described in section 501 (c) (3) of the United States  internal
 revenue  code shall be liable to any person other than such corporation,
 association, organization or trust based solely on his or her conduct in
 the execution of such office unless the conduct of such director,  offi-
 cer,  KEY PERSON or trustee with respect to the person asserting liabil-
 ity constituted gross negligence or was intended to cause the  resulting
 harm  to  the  person  asserting  such  liability.  For purposes of this
 section, such a director, officer, KEY PERSON or trustee  shall  not  be
 considered  compensated solely by reason of payment of his or her actual
 expenses incurred in attending meetings or otherwise in the execution of
 such office.
   § 6. This act shall take effect immediately.