Amd §§708 & 602, BC L; amd §§603 & 605, N-PC L; amd §28, Rel Corp L; amd §6, Chap 122 of 2020
Provides for the remote conduct of certain practices and procedures relating to board meetings utilizing electronic and/or audio-visual technologies; makes permanent provisions relating to providing for the remote conduct of certain practices and procedures relating to board meetings.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1237 REVISED 04/26/2021
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 providing
for the remote conduct of certain practices and procedures relating to
board meetings; and to amend chapter 122 of the laws of 2020, amending
the business corporation law, the not-for-profit corporation law, and
the religious corporations law relating to providing for the remote
conduct of certain practices and procedures relating to board meetings,
in relation to the effectiveness thereof
PURPOSE OR GENERAL IDEA OF BILL:
This bill would allow business corporations, not-for-profit corpo-
rations, religious institutions, and cooperatives 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 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 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 members to participate in in-person meet-
ings via electronic communications, 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 the notice of meeting for a members
meeting include the means of electronic 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. The religious corporations law is amended by adding a new
section to explicitly authorize the board of trustees of a religious
corporation to determine that board or corporate meetings may be held
solely by means of electronic communications.
Section 6. This act shall take effect immediately.
JUSTIFICATION:
The New York State Business Corporation Law and Not-For-Profit Corpo-
ration Law do not expressly authorize shareholder and member meetings,
respectively, to take place solely via electronic communications. The
New York State Religious Corporations Law, as it pertains to board of
trustee meetings and corporate meetings, in a general sense is similarly
deficient in that regard. Recent executive orders by the Governor in
regard to encouraging social distancing in response to the COVID-19
pandemic have expressly allowed such meetings to take place solely by
electronic communications, and that ability was codified by Ch.122 of
2020 for the duration of COVID-19 state of emergency. Under this author-
ity, meetings have successfully been conducted via electronic communi-
cations and corporations should continue to have this flexibility after
the COVID-19 pandemic ends.
PRIOR LEGISLATIVE HISTORY:
2019-20: S8702/A10768
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
EFFECTIVE DATE:
This act shall take effect immediately.
