Senate Bill S7361

                                
 
BILL NUMBER: S7361

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the not-for-profit corporation law, in relation to
voting requirements of the board of certain corporations

 
PURPOSE::

To require a two-thirds vote of a corporation's board members present at
the time of the vote, for a proposed consolidation, merger or dissol-
ution of the corporation, so long as there is a quorum at that time.

 
SUMMARY OF SPECIFIC PROVISIONS::

Section one of the bill amends the opening paragraph of paragraph a of
section 902 of the not-for-profit corporation law to require that the
board of a corporation proposing to participate in a merger or consol-
idation shall adopt, by a vote of two-thirds of the board present, if a
quorum is present at that time, of each corporation, or by a vote of the
              

number of directors required under the certificate of incorporation,
by-laws, this chapter, and any other applicable law, a plan of merger or
consolidation.

Section two amends subparagraph 1 of paragraph a of section 1002 of the
not-for-profit corporation law to require a vote by two-thirds of the
directors present at the time of the vote, if a quorum is present at
that time in order to dissolve the corporation.

Section three provides the effective date.

 
JUSTIFICATION::

This bill will amend the Not-for-Profit Corporation Law (NPCL) in
relation to corporate consolidation, merger or dissolution.  Currently,
the NPCL allows boards to authorize such actions by a simple majority of
a quorum of the board, whereas the law requires a higher standard for
other corporate action. For example, to change the number of directors,
the vote of a majority of the entire board is required; to elect an
officer or to purchase or sell real property on behalf of the corpo-
ration, a two-thirds majority vote of the entire board is needed. Since
the decision to merge, consolidate, or dissolve is arguably the most
important decision that a corporation can make, this bill will amend the
NPCL to require a vote in favor of such action by two-thirds of the
directors present at the time of the vote, if a quorum is present at
that time, or alternatively, by a vote of the number of directors
required under the corporation's certificate of incorporation, its
by-laws, this chapter, and any other applicable law.

 
PRIOR LEGISLATIVE HISTORY::  2018: S.8637A/A.10304-B Referred to
Corporations, Authorities and Commissions/ Passed Assembly

 
FISCAL IMPLICATIONS::

None.

 
EFFECTIVE DATE::

On the ninetieth day after it shall have become a law.