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A06940 Summary:

BILL NOA06940
 
SAME ASSAME AS S05806
 
SPONSORSimone
 
COSPNSRZebrowski, Bores, Seawright, Lee, Gonzalez-Rojas, Cunningham, Lucas, Levenberg, Pheffer Amato, Gibbs, Shimsky, Simon, Rosenthal D, Tapia, Rozic, Zinerman
 
MLTSPNSR
 
Amd 704, N-PC L
 
Authorizes non-membership not-for-profit corporations to classify boards through the by-laws and not solely through the certificate of incorporation.
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A06940 Actions:

BILL NOA06940
 
05/09/2023referred to corporations, authorities and commissions
05/23/2023reported referred to rules
05/24/2023reported
05/24/2023rules report cal.277
05/24/2023ordered to third reading rules cal.277
06/06/2023passed assembly
06/06/2023delivered to senate
06/06/2023REFERRED TO RULES
06/08/2023SUBSTITUTED FOR S5806
06/08/20233RD READING CAL.786
06/08/2023PASSED SENATE
06/08/2023RETURNED TO ASSEMBLY
10/13/2023delivered to governor
10/25/2023signed chap.573
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A06940 Committee Votes:

CORPORATIONS, AUTHORITIES AND COMMISSIONS Chair:Zebrowski DATE:05/23/2023AYE/NAY:25/0 Action: Favorable refer to committee Rules
ZebrowskiAyeLemondesAye
CookAbsentBlankenbushAye
OtisAyeFriendAye
RozicAyePalmesanoAye
KimAyeAngelinoAye
DilanAyeJensenAye
Pheffer AmatoAyeCurranAye
VanelAyePirozzoloAye
CarrollAye
FallAye
Jean-PierreAye
Gonzalez-RojasAye
ZinermanAye
TapiaAye
JacobsonAye
BoresAye
ShimskyAye
SimoneAye

RULES Chair:Pretlow DATE:05/24/2023AYE/NAY:20/8 Action: Favorable
HeastieExcusedBarclayNay
WeinsteinAyeHawleyExcused
PretlowAyeGiglioNay
CookAyeBlankenbushNay
GlickAyeNorrisNay
AubryAyeRaNay
DinowitzAyeBrabenecNay
ColtonAyePalmesanoNay
MagnarelliAyeReillyNay
PaulinAye
Peoples-StokesAye
BenedettoAye
LavineAye
LupardoAye
ZebrowskiAye
ThieleAye
BraunsteinExcused
DickensAye
DavilaAye
HyndmanAye
RozicAye
BronsonAye

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A06940 Floor Votes:

DATE:06/06/2023Assembly Vote  YEA/NAY: 148/0
Yes
Alvarez
Yes
Carroll
Yes
Flood
Yes
Kim
Yes
Palmesano
Yes
Simpson
Yes
Anderson
Yes
Chandler-Waterm
Yes
Forrest
Yes
Lavine
Yes
Paulin
Yes
Slater
Yes
Angelino
Yes
Chang
Yes
Friend
Yes
Lee
Yes
Peoples-Stokes
Yes
Smith
Yes
Ardila
Yes
Clark
Yes
Gallagher
Yes
Lemondes
Yes
Pheffer Amato
Yes
Smullen
Yes
Aubry
Yes
Colton
Yes
Gallahan
Yes
Levenberg
Yes
Pirozzolo
Yes
Solages
Yes
Barclay
Yes
Conrad
Yes ‡
Gandolfo
Yes
Lucas
Yes
Pretlow
Yes
Steck
Yes
Barrett
Yes
Cook
Yes
Gibbs
Yes
Lunsford
Yes
Ra
Yes
Stern
Yes
Beephan
Yes
Cruz
Yes
Giglio JA
Yes
Lupardo
Yes
Raga
Yes
Stirpe
Yes
Bendett
Yes
Cunningham
Yes
Giglio JM
Yes
Magnarelli
Yes
Rajkumar
Yes
Tague
Yes
Benedetto
Yes
Curran
Yes
Glick
Yes
Maher
Yes
Ramos
Yes
Tannousis
Yes
Bichotte Hermel
Yes
Darling
Yes
Gonzalez-Rojas
Yes
Mamdani
Yes
Reilly
Yes
Tapia
Yes
Blankenbush
Yes
Davila
Yes
Goodell
Yes
Manktelow
Yes
Reyes
Yes
Taylor
Yes
Blumencranz
Yes
De Los Santos
Yes
Gray
Yes
McDonald
Yes
Rivera
Yes
Thiele
Yes
Bores
Yes
DeStefano
Yes
Gunther
Yes ‡
McDonough
Yes
Rosenthal D
Yes
Vanel
Yes
Brabenec
Yes
Dickens
Yes
Hawley
Yes
McGowan
Yes
Rosenthal L
Yes
Walker
Yes
Braunstein
Yes
Dilan
Yes
Hevesi
Yes
McMahon
Yes
Rozic
Yes
Wallace
Yes
Bronson
Yes
Dinowitz
Yes
Hunter
Yes
Meeks
Yes
Santabarbara
Yes
Walsh
Yes
Brook-Krasny
Yes
DiPietro
Yes
Hyndman
Yes
Mikulin
Yes
Sayegh
Yes
Weinstein
Yes
Brown E
Yes
Durso
Yes
Jackson
Yes
Miller
Yes
Seawright
Yes
Weprin
Yes
Brown K
Yes
Eachus
Yes
Jacobson
Yes
Mitaynes
Yes
Septimo
Yes
Williams
Yes
Burdick
Yes
Eichenstein
Yes
Jean-Pierre
Yes
Morinello
Yes
Shimsky
Yes
Woerner
Yes
Burgos
Yes
Epstein
Yes
Jensen
Yes
Norris
Yes
Shrestha
Yes
Zaccaro
Yes
Burke
Yes
Fahy
Yes
Jones
Yes
Novakhov
Yes
Sillitti
Yes
Zebrowski
Yes
Buttenschon
Yes
Fall
Yes
Joyner
ER
O'Donnell
Yes
Simon
Yes
Zinerman
Yes
Byrnes
Yes
Fitzpatrick
Yes
Kelles
Yes
Otis
Yes
Simone
ER
Mr. Speaker

‡ Indicates voting via videoconference
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A06940 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6940
 
SPONSOR: Simone
  TITLE OF BILL: An act to amend the not-for-profit corporation law, in relation to authorizing non-membership not-for-profit corporations to classify board of directors in the by-laws   PURPOSE: The purpose of this bill is to authorize non-membership not-for-profit corporations to classify their boards through their by-laws   SUMMARY OF SPECIFIC PROVISIONS: Section 1. Amends Paragraph (a) of section 704 of the not-for-profit Corporation law to remove the clause adopted by the members. Section 2 sets forth the effective date.   JUSTIFICATION: Current not-for-profit corporations law (N-PCL) Section 704 outlines the classification of directors, or the process of staggering the terms of board members such that their terms of service do not all begin and expire at the same time. While this is a critical practice for institu- tional knowledge and organizational stability, Section 704(a) provides that an organization with a board elected by the directors, i.e., a non-membership organization, may only adopt a classified board structure where the certificate of incorporation so authorize. Membership organ- izations, on the other hand, may authorize board classification via a by-law adopted by the members under the current law. In order to be in compliance with this requirement, non-member organiza- tions must either anticipate such growth at the outset as they put their charter documentation in place or amend their certificate of incorpo- ration later in their life cycle in advance of implementing the prac- tice. A common practice for organizations adopting a classified board later in their life cycle is to record the authority in their by-laws. Under the present law, however, organizations that follow this common practice are operating with invalidly composed boards, threatening the authority of their board and therefore calling into question corporate decisions. The current classification of directors' structure under Section 704 of the NPCL is likely a carryover from the Business Corporation Law, which requires corporations to have shareholders (akin to members). Unlike for-profit business corporations, not-for-profits do not have sharehold- ers and many organizations are non-member entities that would benefit from the ability to classify their boards through a by-law To address this concern, N-PCL,704(a) should be revised to strike the language 'adopted by the members.'   PRIOR LEGISLATIVE HISTORY: This is new bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately.
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A06940 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6940
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                       May 9, 2023
                                       ___________
 
        Introduced  by  M.  of A. SIMONE, ZEBROWSKI -- 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
          authorizing  non-membership  not-for-profit  corporations  to classify
          board of directors in the by-laws

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Paragraph (a) of section 704 of the not-for-profit corpo-
     2  ration law, as amended by chapter 847 of the laws of 1970, is amended to
     3  read as follows:
     4    (a) The certificate of incorporation  or  a  by-law  [adopted  by  the
     5  members]  may provide that directors elected or appointed at large shall
     6  be divided into either two, three, four or five classes for the  purpose
     7  of  staggering  their terms of office and that all or some of the direc-
     8  tors elected or appointed otherwise than at large shall be divided  into
     9  the  same  or a different number of classes, not exceeding five, for the
    10  same purpose. All classes of each type  shall  be  as  nearly  equal  in
    11  number as possible and, if provision has been made for cumulative voting
    12  under  section 617 (Cumulative voting), no class shall include less than
    13  three directors.
    14    § 2. This act shall take effect immediately.
 
 
 
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10109-01-3
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