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A01025 Summary:

BILL NOA01025
 
SAME ASSAME AS S03917-A
 
SPONSORPaulin
 
COSPNSROtis, Galef, Vanel, Wallace
 
MLTSPNSR
 
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.
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A01025 Actions:

BILL NOA01025
 
01/07/2021referred to corporations, authorities and commissions
02/09/2021reported referred to codes
03/09/2021reported
03/11/2021advanced to third reading cal.162
03/17/2021substituted by s3917a
 S03917 AMEND=A BENJAMIN
 02/01/2021REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
 02/09/20211ST REPORT CAL.327
 02/10/20212ND REPORT CAL.
 02/22/2021AMENDED (T) 3917A
 02/22/2021ADVANCED TO THIRD READING
 03/05/2021PASSED SENATE
 03/05/2021DELIVERED TO ASSEMBLY
 03/05/2021referred to codes
 03/17/2021substituted for a1025
 03/17/2021ordered to third reading cal.162
 03/17/2021passed assembly
 03/17/2021returned to senate
 04/01/2021DELIVERED TO GOVERNOR
 04/06/2021SIGNED CHAP.98
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A01025 Memo:

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.
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A01025 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1025
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                     January 7, 2021
                                       ___________
 
        Introduced by M. of A. PAULIN -- read once and referred to the Committee
          on Corporations, Authorities and Commissions
 
        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
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Paragraph (b) of section 708 of  the  business  corporation
     2  law,  as  amended by chapter 122 of the laws of 2020, is amended to read
     3  as follows:
     4    (b) Unless otherwise restricted by the certificate of incorporation or
     5  the by-laws, any action required or permitted to be taken by  the  board
     6  or  any  committee thereof may be taken without a meeting if all members
     7  of the board or the committee consent in writing to the  adoption  of  a
     8  resolution  authorizing  the  action.  The  resolution  and  the written
     9  consents thereto by the members of the board or committee shall be filed
    10  with the minutes of the proceedings of the board or committee.  For  the
    11  duration of the state disaster emergency declared by executive order two
    12  hundred  two  that began on March seventh, two thousand twenty, or until
    13  December thirty-first, two  thousand  twenty-one,  whichever  is  later,
    14  notwithstanding  any  provision  of  law  to  the  contrary, the written
    15  consent of a member may be made electronically, where  such  consent  is
    16  submitted  via  electronic mail along with information from which it can
    17  be reasonably determined that the transmission was  authorized  by  such
    18  member.
    19    §  2. Paragraph (a) of section 602 of the business corporation law, as
    20  amended by chapter 122 of the laws  of  2020,  is  amended  to  read  as
    21  follows:
    22    (a)  Meetings  of  shareholders  may  be held at such place, within or
    23  without this state, as may be fixed by or under the by-laws, or  if  not

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04852-01-1

        A. 1025                             2
 
     1  so  fixed,  as determined by the board of directors. For the duration of
     2  the state disaster emergency declared by executive order two hundred two
     3  that began on March seventh, two  thousand  twenty,  or  until  December
     4  thirty-first,  two thousand twenty-one, whichever is later, if, pursuant
     5  to this paragraph or the by-laws of the corporation, the board of direc-
     6  tors is authorized to determine the place of a meeting of  shareholders,
     7  the  board  of directors may, in its sole discretion, determine that the
     8  meeting be  held  solely  by  means  of  electronic  communication,  the
     9  platform/service  of which shall be the place of the meeting for purpose
    10  of this article.
    11    § 3. Paragraph (a) of section 603 of  the  not-for-profit  corporation
    12  law,  as  amended by chapter 122 of the laws of 2020, is amended to read
    13  as follows:
    14    (a) Meetings of members may be held at such place, within  or  without
    15  this state, as may be fixed by or under the by-laws or, if not so fixed,
    16  as  determined  by the board of directors. For the duration of the state
    17  disaster emergency declared by executive  order  two  hundred  two  that
    18  began  on  March seventh, two thousand twenty, or until December thirty-
    19  first, two thousand twenty-one, whichever is later, the board of  direc-
    20  tors  may, in its sole discretion, determine that meetings of members be
    21  held partially or solely by means of electronic communication, the elec-
    22  tronic service and/or platform by which the meeting is held shall be the
    23  place of the meeting for purposes of this article if a meeting  is  held
    24  solely by means of electronic communication. Meetings conducted partial-
    25  ly or solely by means of electronic communications in reliance upon this
    26  paragraph  and  any  member's  electronic participation in such meetings
    27  shall be subject to those guidelines and procedures as the board adopts,
    28  provided the board shall implement reasonable measures  to:  (1)  verify
    29  that  each person participating electronically is a member or a proxy of
    30  a member; (2) provide each member participating  electronically  with  a
    31  reasonable  opportunity  to  participate  in  the  meeting, including an
    32  opportunity to propose, object to, and vote upon a specific action to be
    33  taken by the members, and to see, read or hear the  proceedings  of  the
    34  meeting  substantially  concurrently  with  those  proceedings;  and (3)
    35  record and maintain a record of any votes  or  other  actions  taken  by
    36  electronic communication at the meeting.
    37    §  4. Section 605 of the not-for-profit corporation law, as amended by
    38  chapter 122 of the laws of 2020, is amended to read as follows:
    39  § 605. Notice of meeting of members.
    40    (a) Whenever under the provisions of this chapter members are required
    41  or permitted to take any action at a meeting, written notice shall state
    42  the place, date and hour of the meeting, for the duration of  the  state
    43  disaster  emergency  declared  by  executive  order two hundred two that
    44  began on March seventh, two thousand twenty, or until  December  thirty-
    45  first,  two  thousand twenty-one, whichever is later, the means of elec-
    46  tronic communication, if any, by which members may  participate  in  the
    47  proceedings  of  the  meeting  pursuant  to paragraph (a) of section six
    48  hundred three of this article and, unless it is an annual meeting, indi-
    49  cate that it is being issued by or at the direction  of  the  person  or
    50  persons  calling  the  meeting.  Notice  of a special meeting shall also
    51  state the purpose or purposes for which the meeting is called. A copy of
    52  the notice of any meeting shall be given, personally,  by  mail,  or  by
    53  facsimile telecommunications or by electronic mail, to each member enti-
    54  tled  to  vote  at  such  meeting. If the notice is given personally, by
    55  first class mail or by facsimile  telecommunications  or  by  electronic
    56  mail,  it  shall  be  given  not  less than ten nor more than fifty days

        A. 1025                             3
 
     1  before the date of the meeting; if mailed by any other class of mail, it
     2  shall be given not less than thirty nor more than sixty days before such
     3  date. If mailed, such notice is  given  when  deposited  in  the  United
     4  States mail, with postage thereon prepaid, directed to the member at his
     5  address  as  it  appears  on the record of members, or, if he shall have
     6  filed with the secretary of  the  corporation  a  written  request  that
     7  notices  to him be mailed to some other address, then directed to him at
     8  such other address. If sent by  facsimile  telecommunication  or  mailed
     9  electronically,  such  notice is given when directed to the member's fax
    10  number or electronic mail  address  as  it  appears  on  the  record  of
    11  members,  or,  to  such  fax  number or other electronic mail address as
    12  filed with the secretary of the corporation. Notwithstanding the forego-
    13  ing, such notice shall not be deemed to have been  given  electronically
    14  (1)  if  the corporation is unable to deliver two consecutive notices to
    15  the member by facsimile telecommunication or electronic mail; or (2) the
    16  corporation otherwise becomes aware that notice cannot be  delivered  to
    17  the member by facsimile telecommunication or electronic mail. An affida-
    18  vit  of the secretary or other person giving the notice or of a transfer
    19  agent of the corporation that the notice required by  this  section  has
    20  been  given  shall,  in the absence of fraud, be prima facie evidence of
    21  the facts therein stated. Whenever a  corporation  has  more  than  five
    22  hundred  members, the notice may be served by publication in a newspaper
    23  published in the county in the state in which the  principal  office  of
    24  the  corporation is located, once a week for three successive weeks next
    25  preceding the date of the meeting, provided that the  corporation  shall
    26  also  prominently  post  notice  of  such meeting on the homepage of any
    27  website maintained by the corporation  continuously  from  the  date  of
    28  publication  through  the  date of the meeting. A corporation shall send
    29  notice of meetings by first class mail to any  member  who  requests  in
    30  writing that such notices be delivered by such method.
    31    (b) When a meeting is adjourned to another time or place, it shall not
    32  be  necessary,  unless the by-laws require otherwise, to give any notice
    33  of the adjourned meeting if the time and place to which the  meeting  is
    34  adjourned and, for the duration of the state disaster emergency declared
    35  by  executive  order  two  hundred  two that began on March seventh, two
    36  thousand twenty, or until December thirty-first,  two  thousand  twenty-
    37  one, whichever is later, the means of electronic communications, if any,
    38  by  which  members  may  participate  in  the proceedings of the meeting
    39  pursuant to paragraph (a) of section six hundred three of  this  article
    40  are  announced  at the meeting at which the adjournment is taken, and at
    41  the adjourned meeting any business may be  transacted  that  might  have
    42  been  transacted  on the original date of the meeting. However, if after
    43  the adjournment the board fixes a new  record  date  for  the  adjourned
    44  meeting, a notice of the adjourned meeting shall be given to each member
    45  of  record on the new record date entitled to notice under paragraph (a)
    46  of this section.
    47    (c) Nothing required in paragraphs (a) or (b) of  this  section  shall
    48  limit, restrict or supersede other forms of voting and participation.
    49    § 5. Section 28 of the religious corporations law, as added by chapter
    50  122 of the laws of 2020, is amended to read as follows:
    51    §  28.  Meetings  for  the  duration  of  the state disaster emergency
    52  declared by executive order two hundred two that began on March seventh,
    53  two thousand twenty; electronic communication. For the duration  of  the
    54  state  disaster  emergency  declared  by executive order two hundred two
    55  that began on March seventh, two  thousand  twenty,  or  until  December
    56  thirty-first, two thousand twenty-one, whichever is later, notwithstand-

        A. 1025                             4
 
     1  ing any provision of law, certificate of incorporation or by-laws to the
     2  contrary, if the board of trustees of a religious corporation is author-
     3  ized  to  determine the place of trustee meetings or corporate meetings,
     4  the  board  of  trustees may, in its sole discretion, determine that the
     5  meeting shall be held solely by means of electronic  communication,  the
     6  electronic  service  and/or  platform  through which the meeting is held
     7  shall be the place of the meeting for purposes of this chapter.
     8    § 6. This act shall take effect immediately, provided, however, that:
     9    a. the amendments to paragraph (b) of  section  708  of  the  business
    10  corporation  law  made  by  section one of this act shall not affect the
    11  expiration of such paragraph and shall be deemed to expire therewith;
    12    b. the amendments to paragraph (a) of  section  602  of  the  business
    13  corporation  law  made  by  section two of this act shall not affect the
    14  expiration of such paragraph and shall be deemed to expire therewith;
    15    c. the amendments to paragraph (a) of section 603 of the  not-for-pro-
    16  fit  corporation  law made by section three of this act shall not affect
    17  the expiration of such paragraph and shall be deemed  to  expire  there-
    18  with;
    19    d. the amendments to section 605 of the not-for-profit corporation law
    20  made by section four of this act shall not affect the expiration of such
    21  section and shall be deemed to expire therewith; and
    22    e. the amendments to section 28 of the religious corporations law made
    23  by  section five of this act shall not affect the repeal of such section
    24  and shall be deemed repealed therewith.
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