New York State Assembly

 
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A09969 Summary:

A09969 Actions:

A09969 Committee Votes:

Committee:CORPORATIONS, AUTHORITIES AND COMMISSIONS   Chair:Paulin      
DATE:05/03/2022AYE/NAY:24/0  Action: Favorable         
Paulin
Aye
Lemondes
Aye
Cook
Aye
Blankenbush
Aye
Galef
Aye
Friend
Aye
Quart
Aye
Lalor
Aye
Otis
Aye
Palmesano
Aye
Rozic
Aye
Angelino
Aye
Kim
Aye
Jensen
Aye
Seawright
Aye
Dilan
Aye
Pheffer Amato
Aye
Vanel
Aye
Carroll
Aye
Niou
Aye
Fall
Excused
Jean-Pierre
Aye
Gonzalez-Rojas
Aye
Zinerman
Aye
Tapia
Aye

A09969 Floor Votes:

A09969 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
 submitted in accordance with Assembly Rule III, Sec 1(f)



 
BILL NUMBER: A9969
 
SPONSOR: Paulin

 
TITLE OF BILL:
 
An act to amend the not-for-profit corporation law, in relation to
modernizing such law to align with current practices, streamlining
procedures, and eliminating unnecessary regulatory burdens
 
 
PURPOSE:
 
Relates to the modernization of not-for-profit law to align with current
industry practices related to board member voting and increased usage of
electronic portal technology.
 
 
SUMMARY OF PROVISIONS:
 
Section 1. Amends paragraph (a) of section 614 of the not-for-profit
corporation law to explicitly allow unanimous consent of members to act
without a meeting by electronic means in addition to "electronic mail".
 
Section 2. Amends paragraph (c) on section 705 of the not-for-profit
corporation law to allows for a director appointed or elected to fill a
vacancy to hold office until the end of the term the director as
appointed or elected to fill.
 
Section 3. Amends paragraph (b) of section 708 of the not-for-profit
corporation law to explicitly allow unanimous consent of the Board to
act .without a meeting by electronic means in addition to "electronic
mail".
 
Section 4. Amends paragraph (d) of section 708 of the not-for-profit
corporation law to clarify language ensuring that conflicted directors
who leave a meeting are still present for purposes of a quorum.
 
Section 5 is the effective date.
 
 
JUSTIFICATION:
 
Certain technical fixes to New York's Not-for-Profit Corporation Law
(N-PCL) are needed to account for modern technology and to align with
current practices of not-for-profits. Organizations routinely use vari-
ous electronic portals to collect votes because it is more efficient
than collecting votes by email. This bill would update the law to
explicitly state that the use of such other electronic means is permis-
sible.
 
Additionally, replacement directors can only be elected by the board to
hold office until the next annual members or directors meeting.  Some
practitioners consider this procedure problematic when the board is
classified and a directorship of a class that ends after the next annual
meeting needs to be filled. This bill would amend this section to
provide that vacancies are to be filled for the remainder of an unex-
pired term, but also allow a board to select a different period that
concludes at an annual meeting in order to rebalance uneven class sizes
or achieve other objectives.

Finally, under the N-PCL an action is only approved if a quorum is pres-
ent at the time of the vote. In some instances, a meeting begins with a
quorum, but one or more directors must leave the meeting due to
conflicts, which may result in disrupting the quorum. This bill clari-
fies that conflicted directors who leave a meeting do not disturb the
quorum. These minor technical fixes to the current law will allow
nonprofits to operate more efficiently.
 
 
LEGISLATIVE HISTORY:
 
New Bill.
 
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
 
None.
 
 
EFFECTIVE DATE:
Immediately.

A09969 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          9969
 
                   IN ASSEMBLY
 
                                     April 27, 2022
                                       ___________
 
        Introduced by M. of A. PAULIN -- 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
          modernizing such law to align  with  current  practices,  streamlining
          procedures, and eliminating unnecessary regulatory burdens
 
          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 614 of the  not-for-profit  corpo-
     2  ration law, as amended by chapter 358 of the laws of 2015, is amended to
     3  read as follows:
     4    (a) Whenever, under this chapter, members are required or permitted to
     5  take any action by vote, such action may be taken without a meeting upon
     6  the  consent  of  all  of  the  members  entitled to vote thereon, which
     7  consent shall set forth the action so taken. Such consent may be written
     8  or electronic. If written, the consent must be executed by the member or
     9  the member's authorized officer, director, employee or agent by  signing
    10  such  consent  or  causing  his  or  her signature to be affixed to such
    11  consent by any reasonable means including but not limited  to  facsimile
    12  signature.  If  electronic, the transmission of the consent must be sent
    13  by electronic mail or other  electronic  means  and  set  forth,  or  be
    14  submitted  with,  information from which it can reasonably be determined
    15  that the transmission was authorized by the member. This paragraph shall
    16  not be construed to alter or modify any provision in  a  certificate  of
    17  incorporation not inconsistent with this chapter under which the written
    18  consent  of  less  than  all  of the members is sufficient for corporate
    19  action.
    20    § 2. Paragraph (c) of section 705 of  the  not-for-profit  corporation
    21  law is amended to read as follows:
    22    (c)  [A] Unless otherwise provided in the certificate of incorporation
    23  or bylaws, a director elected or appointed to fill a vacancy in an unex-
    24  pired term shall hold office until the [next annual meeting at which the
    25  election of directors is in the regular order of business]  end  of  the
    26  term  which the director was elected or appointed to fill, or for a term
    27  to be determined by the board which ends at an annual  meeting,  subject
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15478-02-2
        A. 9969                             2
 
     1  to  the limitations on terms of office in paragraph (b) of section seven
     2  hundred three of this article, and until his  successor  is  elected  or
     3  appointed and qualified.
     4    §  3.  Paragraph  (b) of section 708 of the not-for-profit corporation
     5  law, as amended by chapter 549 of the laws of 2013, is amended  to  read
     6  as follows:
     7    (b) Unless otherwise restricted by the certificate of incorporation or
     8  the  by-laws,  any action required or permitted to be taken by the board
     9  or any committee thereof may be taken without a meeting if  all  members
    10  of  the  board  or the committee consent to the adoption of a resolution
    11  authorizing the action. Such consent may be written  or  electronic.  If
    12  written,  the  consent  must be executed by the director by signing such
    13  consent or causing his or her signature to be affixed to such consent by
    14  any reasonable means including, but not limited to, facsimile signature.
    15  If electronic, the transmission of the consent must be sent by electron-
    16  ic mail or other electronic means and set forth, or be  submitted  with,
    17  information  from  which it can reasonably be determined that the trans-
    18  mission was authorized by the director. The resolution and  the  written
    19  consents thereto by the members of the board or committee shall be filed
    20  with the minutes of the proceedings of the board or committee.
    21    §  4.  Paragraph  (d) of section 708 of the not-for-profit corporation
    22  law, as amended by chapter 555 of the laws of 2015, is amended  to  read
    23  as follows:
    24    (d) Except as otherwise provided in this chapter, the vote of a major-
    25  ity  of  the  directors  present at the time of the vote, if a quorum is
    26  present at such time, shall be the act of the board. Directors  who  are
    27  present  at  a  meeting  but  not present at the time of a vote due to a
    28  conflict of interest or related party transaction shall be determined to
    29  be present at the time of the vote  for  purposes  of  [this  paragraph]
    30  determining if a quorum is present at such time.
    31    § 5. This act shall take effect immediately.

A09969 LFIN:

 
NO LFIN

A09969 Chamber Video/Transcript: