Relates to independent directors and related party transactions.
Ayes (59): Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Farley, Felder, Flanagan, Gallivan, Gianaris, Gipson, Griffo, Grisanti, Hannon, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousins, Tkaczyk, Valesky, Young, Zeldin
Excused (2): Espaillat, Golden
TITLE OF BILL: An act to amend the not-for-profit corporation law, in relation to independent directors and related party transactions; and repealing certain provisions of such law relating thereto
SUMMARY OF PROVISIONS:
Section 1 - repeals paragraph (f) of section 713 of the Not-For-Profit Corporation Law.
Section 2 - amends subparagraphs 21 and 24 of paragraph (a) of section 102 of the Not-For-Profit Corporation Law.
Section 3 - effective date.
PURPOSE & JUSTIFICATION:
To modify the definitions of independent director and related party transactions, and to repeal a provision relating to an employee serving as chair of a board.
Certain not-for-profit corporations specifically hire a person to serve as the chair or president of their board, which is different from the typical situation of an employee-employer relationship. The current language in section 713 (f) does not adequately recognize this and the bill repeals current language with the expectation that a new provision will be enacted next year. The change in the definition of independent director addresses a conflict with the Insurance Law, and the change in the definition of related party transactions is intended to clarify that related party transactions only refer to matters that would come before the board for approval in the normal course of business.
None to state.
This act shall take effect immediately provided that section two shall take effect on the same date an in the same manner as section 29 of Chapter 549 of the Laws of 2013
STATE OF NEW YORK ________________________________________________________________________ 7838 IN SENATE June 13, 2014 ___________Introduced by Sen. RANZENHOFER -- 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 inde- pendent directors and related party transactions; and repealing certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph (f) of section 713 of the not-for-profit corpo- ration law is REPEALED. S 2. Subparagraphs 21 and 24 of paragraph (a) of section 102 of the not-for-profit corporation law, as added by chapter 549 of the laws of 2013, are amended to read as follows: (21) "Independent director" means a director who: (i) is not, and has not been within the last three years, an employee of the corporation or an affiliate of the corporation, and does not have a relative who is, or has been within the last three years, a key employee of the corporation or an affiliate of the corporation; (ii) has not received, and does not have a relative who has received, in any of the last three fiscal years, more than ten thousand dollars in direct compensation from the corpo- ration or an affiliate of the corporation (other than reimbursement for expenses reasonably incurred as a director or reasonable compensation for service as a director as permitted by paragraph (a) of section 202 (General and special powers)); and (iii) is not a current employee of or does not have a substantial financial interest in, and does not have a relative who is a current officer of or has a substantial financial interest in, any entity that has made payments to, or received payments from, the corporation or an affiliate of the corporation for property or services in an amount which, in any of the last three fiscal years, exceeds the lesser of twenty-five thousand dollars or two percent of such entity's consolidated gross revenues. For purposes of this subpara- graph, "payment" does not include charitable contributions, MEMBERSHIP DUES OR PREMIUM PAYMENTS.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15576-01-4 S. 7838 2
(24) "Related party transaction" means any transaction, agreement or any other arrangement, THE APPROVAL OF WHICH WOULD COME BEFORE THE BOARD IN THE ORDINARY COURSE OF BUSINESS, in which a related party has a financial interest and in which the corporation or any affiliate of the corporation is a participant. S 3. This act shall take effect immediately; provided, however, that section two of this act shall take effect on the same date and in the same manner as section 29 of chapter 549 of the laws of 2013, takes effect.