NY State Senate Bill 2015-S5310

Senate Bill S5310

2015-2016 Legislative Session

Prohibits certain employees of a not-for-profit corporation from serving on the corporation's governing board or from hiring family members

download bill text pdf

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2016	referred to corporations, authorities and commissions
May 13, 2015	referred to corporations, authorities and commissions

2015-S5310 (ACTIVE) - Details

Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Not-for-Profit Corporation Law
Laws Affected:: Amd §602, N-PC L
Versions Introduced in Other Legislative Sessions:: 2013-2014: S5315
2017-2018: S6221

2015-S5310 (ACTIVE) - Summary

Prohibits certain employees of a not-for-profit corporation from serving on the corporation's governing board or from hiring family members.

2015-S5310 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5310

TITLE OF BILL:  An act to amend the not-for-profit corporation law, in
relation to prohibiting certain employees of a not-for-profit corpo-
ration from serving on the corporation's governing board or from hiring
family members

PURPOSE:

This legislation requires not-profit-corporations to have in their
by-laws policies regarding employees involvement on governing boards,
the hiring of family members of both employees and governing board
members, and the handling of issues arising from conflicts of business
interests. It also provides oversight of these by-laws by the State
Attorney General.

SUMMARY OF PROVISIONS:

Section 1. Amends Section 602 of the not-for-profit corporation law by
adding four new paragraphs as follows:

(g) requires by-laws of a not-for-profit corporation to contain a policy
on:

1. employees serving on a governing body and the percentage of the
membership of the governing body that must be independent of the organ-

ization

2. hiring of family members of employees and governing body members

3. Conflict of interest covering business interests

(h) Requires all by-laws in this section to be available for review by
the Attorney General upon request

(i) Prohibits employees of the not-for-profit corporation from:

1. Serving as Chair of the organization's governing board

2. Serving as a voting member of the organization's governing board

(j) Prohibits any person related to any executive or member of a govern-
ing body by blood or marriage shall be employed by the organization
except with approval of two-thirds of the members of the governing body.

(k) These provisions do not apply to cemetery corporations formed under
Article 15

Section 2:Effective date one year after it shall have become law.

JUSTIFICATION:

This legislation is intended to close current loopholes in State law and
provide a streamlined and fair system across the board for all not-for-
profit corporations in New York State while also providing safeguards
that can be reviewed by the Attorney General.  This legislation will
provide for more oversight of these boards and their actions to ensure
that taxpayers funds are not misappropriated and boards are operating
properly and legally.

LEGISLATIVE HISTORY:

2013-14: S.5315-B Rules/ No Same As

FISCAL IMPLICATIONS:

None to State.

EFFECTIVE DATE:

This act shall take effect one year after it shall have become a law.

2015-S5310 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5310

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              May 13, 2015
                               ___________

Introduced  by  Sen.  MARCELLINO  -- read twice and ordered printed, and
  when printed to be committed to the Committee on Corporations, Author-
  ities and Commissions

AN ACT to amend the  not-for-profit  corporation  law,  in  relation  to
  prohibiting  certain  employees  of  a not-for-profit corporation from
  serving on the corporation's governing board  or  from  hiring  family
  members

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section  602  of  the  not-for-profit  corporation  law  is
amended by adding five new paragraphs (g), (h), (i), (j) and (k) to read
as follows:
  (G)  THE  BY-LAWS  OF  A  NOT-FOR-PROFIT  CORPORATION  SHALL CONTAIN A
PROVISION ON:
  (1) EMPLOYEES SERVING ON SUCH GOVERNING BODY AND THE PERCENTAGE OF THE
MEMBERSHIP OF THE GOVERNING BODY THAT MUST BE INDEPENDENT OF THE  ORGAN-
IZATION;
  (2)  HIRING OF FAMILY MEMBERS OF EMPLOYEES AND GOVERNING BODY MEMBERS;
AND
  (3) CONFLICT OF INTEREST COVERING BUSINESS INTERESTS.
  (H) ALL BY-LAWS REQUIRED IN THIS SECTION SHALL BE AVAILABLE FOR REVIEW
BY THE ATTORNEY GENERAL UPON REQUEST.
  (I) EMPLOYEES OF A  NOT-FOR-PROFIT  CORPORATION  ARE  PROHIBITED  FROM
SERVING  AS  THE  CHAIR  OF  SUCH ORGANIZATION'S GOVERNING BODY AND FROM
SERVING AS A VOTING MEMBER OF SUCH ORGANIZATION'S GOVERNING BODY.
  (J) NO PERSON WHO IS RELATED TO THE CHIEF EXECUTIVE OR ANY MEMBER OF A
GOVERNING BODY BY BLOOD OR MARRIAGE SHALL BE EMPLOYED BY SUCH  ORGANIZA-
TION,  EXCEPT  WITH  THE  APPROVAL  OF  TWO-THIRDS OF THE MEMBERS OF THE
GOVERNING BODY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11030-01-5

S. 5310                             2

  (K) NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, THE  PROVISIONS  OF
PARAGRAPHS  (G), (I) AND (J) OF THIS SECTION SHALL NOT APPLY TO CEMETERY
CORPORATIONS THAT MUST COMPLY WITH ARTICLE FIFTEEN OF THIS CHAPTER.
  S  2. This act shall take effect one year after it shall have become a
law.

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