Protects directors, officers and trustees of certain corporations from liability

BILL NUMBER:S3003

Title of bill

An act to amend the not-for-profit corporation law, in relation to liability of directors, officers and trustees of certain corporations

Summary

This bill would amend Not-For-Profit Corporation law § 720-a to expand New York State's limited liability of directors, officers and trustees of non-profit corporations to include corporations described in the Federal Internal Revenue Code § 501(c)(3) of the Internal Revenue Code.

Justification

Section 501(c)(3) of the IRC exempts from federal taxation those organizations operated exclusively for charitable, scientific, testing for public safety, literary or educational purposes as well as those designated for the prevention of cruelty to children or animals. It was these types of organizations whose directors and officers were given limited liability protection by the Legislature in 1986. Section 501(c)(4) exempts from taxation non-profit organizations operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees or a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational or recreational purposes. Given the similarity between 501(c)(3) and 501(c)(4) organizations, there is no apparent reason why both forms should not be eligible for the protections accorded by § 720-a of the Not-For-Profit Corporation Law. This bill would accomplish this.

Fiscal implication

None.

Effective date

This act shall take effect immediately.