Amd §§708 & 602, BC L; amd §§603 & 605, N-PC L; amd §28, Rel Corp L
Allows corporations to conduct business and meetings electronically either for the duration of the state disaster emergency or until December 31, 2021, whichever is later.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1025
SPONSOR: Paulin TITLE OF BILL:
An act to amend the business corporation law, the not-for-profit corpo-
ration law and the religious corporations law, in relation to allowing
corporations to conduct business and meetings electronically for a
certain period of time
PURPOSE OR GENERAL IDEA OF BILL:
This bill would allow business corporations, not-for-profit corpo-
rations, religious institutions, and cooperatives, for the duration of
the COVID-19 state disaster emergency or December 31st, 2021, whichever
comes later, to hold meetings of shareholders, members, trustees, etc.,
via electronic communication.
SUMMARY OF PROVISIONS:
Section 1. Paragraph (b) of section 708 of the business corporation law
is amended to allow, for the duration of the COVID-19 state disaster
emergency or until December 31, 2021, whichever is later, a director to
give their written consent for the board to take actions without a
formal meeting via electronic means.
Section 2. Paragraph (a) of section 602 of the business corporation law
is amended to allow, for the duration of the COVID-19 state disaster
emergency or until December 31, 2021, whichever is later, the board of
directors to determine a shareholders meeting shall take place solely
via electronic communications, the platform/service of which shall be
the place of the meeting for purposes of Article VI of the business
corporations law.
Section 3. Paragraph (a) of section 603 of the not-for-profit corpo-
ration law is amended to allow, for the duration of the COVID-19 state
disaster emergency or until December 31, 2021, whichever is later,
members to participate in in-person meetings via electronic communi-
cations, or for meetings of members to take place solely via electronic
communications, at the discretion of the board of directors, and to
provide minimum procedure guidelines for members taking part in members
meetings via electronic communications.
Section 4. Paragraph (a) of Section 605 of the not-for-profit corpo-
ration law is amended by requiring, for the duration of the COVID-19
state disaster emergency or until December 31, 2021, whichever is later,
the notice of meeting for a members meeting include the means of elec-
tronic communications, if any, by which members may participate in the
meeting. Additionally, paragraph (b) of section 605 would be amended by
requiring that, for a notice of meeting of an adjourned meeting to
another time and place to not be necessary, the means of electronic
communication, if any, by which members may participate in said
adjourned meeting must be announced at the meeting where the adjournment
is taking place.
Section 5. Section 28 of the religious corporations law is amended by
explicitly authorizing the board of trustees of a religious corporation,
for the duration of the COVID-19 state disaster emergency or until
December 31, 2021, whichever is later, to determine that board or corpo-
rate meetings may be held solely by means of electronic communications.
Section 6. This act shall take effect immediately.
JUSTIFICATION:
Since March of 2020, the Governor put forth several executive orders
that encouraged social distancing in response to the COVID-19 pandemic,
expressly allowing shareholder and member meetings to take place solely
by electronic communication. Then, in June of 2020, the Governor signed
legislation into law that would amend the New York State Business Corpo-
ration Law, Not-For-Profit Corporation Law, and Religious Corporations
law to authorize such meetings to take place electronically throughout
the duration of the emergency declaration set forth in Executive Order
202.2. This ability to avoid in-person meetings is crucial during the
ongoing pandemic.
However, because Executive Orders must be renewed every thirty days,
this leaves corporations with little certainty as to when the emergency
declaration will end and makes it difficult to schedule and plan virtual
shareholder, member, and board of trustee meetings in advance.
This bill would amend the Business Corporation Law, Not-For-Profit Law,
and Religious Corporation law to authorize shareholder, member, and
board of trustee meetings to take place solely via electronic communi-
cations throughout the duration of the emergency declaration or until
December 31, 2021, whichever comes later. Having a set date will allow
corporations to plan meetings ahead of time, particularly 2021 share-
holder meetings. This will provide much-needed certainty, allowing
corporations to make plans and operate as efficiently and safely as
possible in these unprecedented times.
PRIOR LEGISLATIVE HISTORY:
A.11150 of 2020, referred to corporations, authorities, and commissions.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
EFFECTIVE DATE:
This act shall take effect immediately, with provisions.
