Prohibits certain employees of a not-for-profit corporation from serving on the corporation's governing board or from hiring family members.
TITLE OF BILL: 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
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 organization
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 governing 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: New Bill.
FISCAL IMPLICATIONS: None to State.
EFFECTIVE DATE: This act shall take effect one year after it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 5315--B Cal. No. 605 2013-2014 Regular Sessions IN SENATE May 16, 2013 ___________Introduced by Sen. MARCELLINO -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Author- ities and Commissions -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- recommitted to the Committee on Corporations, Authorities and Commissions in accordance with Senate Rule 6, sec. 8 -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading 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.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10937-04-4 S. 5315--B 2
(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. (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.